2017 — A Thunderous Clash of Politics, Economies and Policies


January 6, 2017

2017 — A Thunderous Clash of Politics, Economies and Policies

Martin Khor is Executive Director of the South Centre, a think tank for developing countries, based in Geneva.

The Paris agreement, which was adopted in December 2015 and which came into force in record time in October 2016 as a demonstration of international concern over climate change, may face a major test and even an existential challenge in 2017, if Trump fulfils his election promise to pull the US out. Credit: Diego Arguedas Ortiz/IPS.

The Paris agreement, which was adopted in December 2015 and which came into force in record time in October 2016 as a demonstration of international concern over climate change, may face a major test and even an existential challenge in 2017, if Trump fulfils his election promise to pull the US out. Credit: Diego Arguedas Ortiz/IPS.

PENANG, Jan 2 2017 (IPS) – Yet another new year has dawned.   But 2017 will be a year like no other.

There will be a thunderous clash of policies, economies and politics worldwide.   We will therefore be on a roller-coaster ride, and we should prepare for it and not only be spectators on the side-lines in danger of being swept away by the waves.

With his extreme views and bulldozing style, Donald Trump is set to create an upheaval if not revolution in the United States and the world.

He is installing an oil company chief as the Secretary of State, investment bankers in key finance positions, climate sceptics and anti-environmentalists in environmental and energy agencies and an extreme rightwing internet media mogul as his chief strategist

US-China relations, the most important for global stability, could change from big-power co-existence with a careful combination of competition and cooperation, to outright crisis.

Trump, through a phone call with Taiwan’s leader and subsequent remarks, signalled he could withdraw the longstanding US adherence to the One China policy and instead use Taiwan as a bargaining card when negotiating economic policies with China.  The Chinese perceive this as an extreme provocation.

He has appointed as head of the new National Trade Council an economist known for his books demonising China, including “Death by China: Confronting the Dragon”.

Trump seems intent on doing an about-turn on US trade and investment policies, starting with ditching the Trans Pacific Partnership Agreement and re-negotiating the North American Free Trade Agreement.

Other measures being considered include a 45% duty on Chinese products, extra duties and taxes on American companies located abroad, and even a 10% tariff on all imports.

Martin Khor

Thus 2017 will see a rise in protectionism in the US, the extent still unknown.  That is bad news for those developing countries whose economies have grown on the back of exports and international investments.

Europe in 2017 will also be preoccupied with its own regional problems.  The Brexit shock of 2016 will continue to reverberate and several European countries facing elections will see challenges to their traditional values and established order from xenophobic and narrow nationalist parties.

As Western societies become less open to the world and more inward looking, developing countries should revise their development strategies and rely more on domestic and regional demand and investments.

As North-South economic relations decline, this should also be the moment for expanding South-South cooperation, spurred as much by necessity as by principles.

2017 may be the year when resource-rich China, with its huge Road and Belt initiative and its immense financing capacity, fills in the economic void created by western trade and investment protectionism.

But this may not be sufficient to prevent a finance shock in many developing countries now beginning to suffer a reversal of capital flowing back to the US, attracted by the prospect of higher interest rates and economic growth.

Several emerging economies which together received many hundreds of billions of dollars of hot money in recent years are now vulnerable to the latest downturn phase of the boom-bust cycle of capital flows.

Some of these countries opened up their capital markets to foreign funds which now own large portions of government bonds denominated in the domestic currency, as well as shares in the equity market.

As the tide turns, foreign investors are expected to sell off and transfer back a significant part of the bonds and shares they bought, and this new vulnerability is in addition to the traditional external debt contracted by the developing countries in foreign currencies.

Some countries will be hit by a terrible combination of capital outflow, reduced export earnings, currency depreciation and an increased debt servicing burden caused by higher US interest rates.

As the local currency depreciates further, the affected countries’ companies will have to pay more for servicing loans contracted in foreign currencies and imported machinery and parts, while consumers suffer from a rapid rise in the prices of imports.

On the positive side, the currency depreciation will make exporters more competitive and make tourism more attractive, but for many countries this will not be enough to offset the negative effects.

Thus 2017 will not be kind to the economy, business and the pockets of the common man and woman.  It might even spark a new global financial crisis.

The old year ended with mixed blessings for Palestinians. On one hand they won a significant victory when the outgoing President Obama allowed the adoption of a UN Security Council resolution condemning Israeli settlements in occupied Palestinian territories by not exercising a veto.

The resolution will spur international actions against the expansion of settlements which have become a big obstacle to peace talks.

On the other hand the Israeli leadership, which responded defiantly with plans for more settlements, will find in Trump a much more sympathetic President.  He is appointing a pro-Israel hawk who has cheered the expansion of settlements as the new US ambassador to Israel.

With Trump also indicating he will tear up the nuclear power deal with Iran, the Middle East will have an even more tumultuous time in 2017.

Some countries will be hit by a terrible combination of capital outflow, reduced export earnings, currency depreciation and an increased debt servicing burden caused by higher US interest rates.

In the area of health care, the battle for affordable access to medicines will continue, as public frustration grows over the high and often astronomical prices of patented medicines including for the treatment of HIV AIDS, hepatitis C, tuberculosis and cancers.

There will be more powerful calls for governments to curb the excesses of drug companies, as well as more extensive use of the flexibilities in the patent laws to counter the high cost of medicines.

Momentum will also increase to deal with antibiotic resistance which in 2016 was recognised by political leaders meeting at the United Nations to be perhaps the gravest threat to global health.

All countries pledged to come up with national action plans to counter antibiotic and anti-microbial resistance by May 2017 and the challenge will then be to review the adequacy of these plans and to finance and implement them.

The new year will also see its fair share of natural disasters and a continued decline in the state of the environment.  Both will continue to be major issues in 2017, just as the worsening of air pollution and the many earthquakes, big storms and heat-waves marked the previous few years.

Unfortunately low priority is given to the environment.  Hundreds of billions of dollars are allocated for highways, railways and urban buildings but only a trickle for conservation and rehabilitation of hills, watersheds, forests, mangroves, coastal areas, biodiversity or for serious climate change actions.

2017 should be the year when priorities change, that when people talk about infrastructure or development, they put actions to protect and promote the environment as the first items for allocation of funds.

This new year will also be make or break for climate change.  The momentum for action painfully built up in recent years will find a roadblock in the US as the new President dismantles Obama-initiated policies and measures.

The Paris agreement, which was adopted in December 2015 and which came into force in record time in October 2016 as a demonstration of international concern over climate change, may face a major test and even an existential challenge in 2017, if Trump fulfils his election promise to pull the US out.

But Trump and his team will face resistance domestically including from state governments and municipalities which have their own climate plans, and from other countries determined to carry on without the US on board.

Indeed if 2017 will bring big changes initiated by the new US administration, it will also generate many counter actions to fill in the void left in the world by a withdrawing US or to counter its new unsettling actions.

Many people around the world, from politicians and policy makers to citizen groups and community organisers are already bracing themselves to come up with responses and actions.

Indeed 2017 will be characterised by the Trump effect but also the consequent counter-effects.

There are opportunities to think through, alternatives to chart and reforms to carry out that are anyway needed on the global and national economies, on the environment, and on geo-politics.

Most of the main levers of power and decision-making are still in the hands of a few countries and a few people, but there has also been the emergence of many new centres of economic, environmental and intellectual capabilities and community-based organising.

2017 will be a year in which ideas, policies, economies and politics will all clash, thunderously, and we should be prepared to meet the challenges ahead and not only be spectators.

2016–The Harbinger of Troubled and Uncertain Times in 2017


December 20, 2016

2016–The Harbinger of Troubled and Uncertain Times in 2017

by Martin Khor@www.thestar.com.my

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‘It Is Our Soul’: The Destruction of Aleppo, Syria’s Oldest City : Information Clearing House: ICH
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The year 2016 will be remembered for the West ending its romance with globalisation, and its impact on the rest of the world.

JUST a few days before Christmas, it is time again to look back on the year that is about to pass. What a strange year it has been, and not one we can  truly celebrate!

The top event was Donald Trump’s unexpected victory. It became the biggest sign that the basic framework and values underpinning Western societies since the Second World War have undergone a seismic change.

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The established order represented by Hillary Clinton was resoundingly defeated by the tumultuous wave Trump generated with his promise to stop the United States from pandering to other countries so that it could become “great again”.

Early in the year came the Brexit vote shock, taking Britain out of the European Union. It was the initial signal that the liberal order created by the West is now being quite effectively challenged by their own masses.

Openness to immigrants and foreigners is now opposed by citizens in Europe and the US who see them as threats to jobs, national culture and security rather than beneficial additions to the economy and society.

The long-held thesis that openness to trade and foreign investments is best for the economy and underpins political stability is crumbling under the weight of a sceptical public that blames job losses and the shift of industries abroad on ultra-liberal trade and investment agreements and policies.

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Thus, 2016 which started with mega trade agreements completed (Trans-Pacific Partnership) or in the pipeline (the Transatlantic Trade and Investment Partnership between the US and Europe) ended with both being dumped by the President Elect, a stunning reversal of the decades-old US position advocating the benefits of the open economy.

2016 will be remembered as the year when the romance in the West with “globalisation” was killed by a public disillusioned and outraged by the inequalities of an economic system tilted in favour of a rich minority, while a sizeable majority feel marginalised and discarded.

In Asia, the dismantling of the globalisation ideal in the Western world was greeted with a mixture of regret, alarm and a sense of opportunity.

Many in this region believe that trade and investment have served several of their countries well. There is fear that the anti-globalisation rebellion in the West will lead to a rapid rise of protectionism that will hit the exports and industries of Asia.

As Trump announced he would pull the US out of the TPP, China stepped into the vacuum vacated by the US and pledged to be among the torchbearers of trade liberalisation in the Asia-Pacific region and possibly the world.

The change of direction in the US and to some extent Europe poses an imminent threat to Asian exports, investors and economic growth. But it is also an opportunity for Asian countries to review their development strategies, rely more on themselves and the region, and take on a more active leadership role.

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China made use of 2016 to prepare for this, with the Asian Infrastructure Investment Bank taking off and the immense Belt and Road Initiative gathering steam. Many companies and governments are now latching on to the latter as the most promising source of future growth.

The closing months of 2016 also saw a surprising and remarkable shift in position by the Philippines (and Malaysia too for a different set of reasons), whose new President took big steps to reconcile with China over conflicting claims in the South China Sea, thus defusing the situation – at least for now.

Unfortunately, the year also saw heart-rending reports on the plight of the Rohingya in Myanmar, and the deaths of thousands of Syrians including those who perished or were injured in the end-game in Aleppo.

On the environmental front, it is likely 2016 will be the hottest year on record, overtaking 2015. This makes the coming into force in October of the Paris Agreement on climate change all the more meaningful.

But there are two big problems. First, the pledges in the agreement are grossly insufficient to meet the level of emissions cuts needed to keep the world safe from global warming, and there is also insufficient financing to support the developing countries’ climate actions, whether on mitigation or adaptation.

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And second, there is a big question mark on the future of the Paris agreement as Trump had vowed to take the US out of it.

The biggest effect of 2016 could be that a climate skeptic was elected US President.In the area of health, the dangers of antibiotic resistance went up on the global agenda with a declaration and day-long event involving political leaders at the United Nations in September.

There was growing evidence and stark warnings in 2016 that we are entering a post-antibiotic era where medicines will no longer work and millions will die from infection and ailments that could once be easily treated by antibiotics.

The world will also be closing in a mood of great economic uncertainty. In 2016 the world economy overall didn’t do well but also not too badly, with growth rates projected at 2.4 to 3%.

But for developing economies like Malaysia, the year ended with worries that the high capital inflows of recent years are reversing as money flows back to the US. The first in an expected series of interest rate increases came last week.

All in all, there was not much to rejoice about in 2016, and worse still it built the foundation for more difficulties to come in 2017.

So we should enjoy the Christmas/New Year season while we can. Merry Christmas to all readers!

Martin Khor (director@southcentre.org) is executive director of the South Centre.

Killing the Mekong, Dam by Dam


November 30, 2016

Killing the Mekong, Dam by Dam

by Tom Fawthrop

Image Credit: Tom Fawthrop

SIPHANDONE, LAOS — Explorers, travelers, and traders have long been enchanted by the magical vistas and extraordinary biodiversity of the Mekong, especially here.

Swirling rapids roar through the surrounding forest to unleash the magnificent Khone Phapheng Falls in southern Laos. The surrounding myriad islands and forested islets, dotted among the tranquil waterways and braided channels of the Mekong, inspire awe and wonder. This is Siphandone (Four Thousand Islands) district of Southern Laos, nestled alongside the Cambodian border.

However, the serenity of Siphandone has recently been rudely disrupted by the dynamite-blasting of rocks, shattering the tranquil reverie of this ecotourism paradise.

Malaysia’s Mega-First and the Don Sahong Dam

The ugly intrusion of earth-moving trucks in this picturesque landscape has accompanied the launching of the Don Sahong dam, a joint venture of Malaysian company Mega-First (MFCB) and the government of Laos, in January 2016. The dam has gone ahead without approval from the Mekong River Commission and in defiance of wide-ranging protests from regional NGOs and downstream countries Cambodia and Vietnam.

In 2012 the bitterly contested first dam on the Lower Mekong, the Xayaburi dam, a $3.8 billion project based on Thai investment and controlled by Bangkok engineering company Ch.Karnchang, began its controversial construction.

According to scientists, both dams pose a major threat to fish migration and food security.

Chhith Sam Ath the Cambodian Director of the World Wide Fund for Nature (WWF), told The Diplomat, “The Don Sahong Dam is an ecological time bomb that threatens the food security of 60 million people living in Mekong basin. The dam will have disastrous impacts on the entire river ecosystem all the way to the delta in Vietnam.”

The Lao government plans to build nine dams on the mainstream Mekong, and hundreds more on other rivers and tributaries, claiming that this is the only path to development for one of the region’s poorest countries.

Just across the river from the Don Sahong dam site, on the Cambodian side of the Mekong, ecotourists gather at the Preah Romkel commune. This correspondent witnessed tourists poised with their cameras, trying to catch a glimpse of the three remaining Irrawaddy Dolphins clinging onto their fragile home despite being under daily siege from the dam-builders. This wetlands zone has been a popular destination for ecotourism in both Laos and Cambodia, but WWF warns that damming the Mekong will soon drive all the remaining dolphins to extinction.

The Malaysian dam developers and the Lao Energy Ministry have airily dismissed all the protests, claiming that their fish mitigation engineering – the expansion and widening of two other channels – can fix the problem.

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Irrawaddy or Mekong River Dolphin by Tammy Yee (pic above)

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The future site of the dam across the Sahong Channel is recognized by fishery experts as the only one out of seven braided channels of the Mekong that is deep enough and wide enough for large fish to migrate, providing effective fish passage around the rapids, rocks, and waterfalls year round. Now the dam construction has diverted all the water from the channel, and it will permanently block this natural fish migration route and passageway.

The Malaysian dam developers and the Lao Energy Ministry have airily dismissed all the protests, claiming that their fish mitigation engineering – the expansion and widening of two other channels – can fix the problem.

The Xayaburi dam also claims that its “fish-friendly turbines,” fish ladders, and locks can protect at least 28 species of fish that have been targeted for special attention by Poyry Energy the Swiss-based company hired to supervise the engineering and fish mitigation.

However the Poyry presentation and research by fish consultants Fishtek shows there are at least 139 fish species that would be blocked from swimming past the dam.

Fish mitigation on these two dams may look impressive in presentation videos, but Dr. Ian Baird, who has published many studies on Mekong fisheries, notes that “this is a high risk experiment, as these sort of mitigation measures have never been attempted before on tropical rivers.”

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The Mekong Crisis: When Ecology and Economy Suffer in Tandem

The mighty Mekong, flowing for 4,630 km through the heart of Southeast Asia, is in deep crisis. The delta in Vietnam is both shrinking and sinking.

The loss of nutrient-rich sediment is wrecking havoc on the delta region. All large dams trap sediment and deprive the downstream areas of vital nutrients. Vietnam is suffering from huge sediment loss, running at 50 percent less than the regular flow. Rampant sand-mining in Cambodia and Vietnam has also aggravated the delta’s acute sediment shortage.

The miraculous but fragile ecosystem that connects the Four Thousand Islands in Laos, Tonle Sap in Cambodia, and the delta in Vietnam is directly threatened by these two dams – the Don Sahong and the Xayaburi (in addition to all the damage done by six Chinese dams upstream from Laos). Now a third dam at Pak Beng has been announced by the Lao government.

A new WWF report has drawn attention to how the dramatic decline in the health of the Mekong is not only an ecological disaster, but also a serious threat to the economy of the region. With a fresh perspective on how ecology and economy are intimately linked together, the report reminds all stakeholders, “Economic growth in the Greater Mekong region depends on the Mekong River, but unsustainable and uncoordinated development is pushing the river system to the brink.”

WWF’s lead coordinator for Water and Energy Security in the Greater Mekong, Marc  Goichot, sees the delta as crucial to Vietnam’s economic future. “It produces 50 percent of the country’s staple food crops and 90 percent of its rice exports. It is one of the most productive and densely populated areas of Vietnam, home to 18 million people. Vietnam cannot lose the delta.”

But right now Vietnam is losing it. The delta is shrinking and unless there is a major policy turnaround on the Mekong, scientists in Can Tho have warned that 27 percent of its GDP, furnished by the delta, could evaporate during the next 20 years.

The strong momentum toward damming the Mekong has been greatly assisted by the widely held perception that dams are a reliable source of energy, producing great economic benefits.

The Mekong River Commission, the World Bank, and USAID have promoted dam-building with this approach, billed as “Sustainable Hydropower.”

The prevailing assumption has been that trade-offs, including negative environmental impacts, are inevitable, but we should not worry too much because improved environmental impact assessments (EIAs) and effective mitigation would provide adequate safeguards to protect ecosystems. It is only recently that researchers have been submitting these assumptions to closer scrutiny.

The credibility of this narrative is increasingly being challenged. Dr. Philip Hirsch a Mekong specialist, concluded after decades of inspecting dams that “some hydro-power impacts can simply not be mitigated – only compensated. And compensation systematically falls short.”

Most fisheries experts in the region familiar with the Sahong and Xayaburi dam projects consider that the mitigation experiment is a risky venture into uncharted waters and cannot be relied on to protect fisheries and the ecosystem.

Whereas the apparent benefits of hydropower can easily be quantified in terms of electricity, the financial losses inflicted by dams have been consistently underestimated or ignored by economists and governments.

The combined fisheries assets for the MRC countries are now valued at $17 billion and vital to the food security of tens of millions.

On the other side of the ledger, energy from 11 scheduled dams may yield economic benefits valued at $33.4 billion according to an international study on hydropower impacts on the Mekong based at Mae Fa Luang University in Chiang Rai.

But set against losses from a denuded river system and huge losses of fisheries, sediment, agricultural produce, and livelihoods, this same study predicts a loss of $66.2 billion, resulting in an overall negative impact of $21.8 billion if all 11 dam projects go ahead.

According to one of the three authors, Dr. Apisom Intralawan, “hydropower benefits have been over-stated in these figures (2015) and based on current economic data we are about to revise them.”

Hirsch confirms that “many studies show that the real costs of hydropower outweigh the benefits but the projects still go ahead.”

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Can The Mekong Survive?

Wetlands ecology specialist  Nguyen Huu Thien, a Vietnamese scientist based in the delta’s capital Can Tho, concluded The sure thing we know, if the delta cannot support its population of 18 million, then people will have to migrate – migrate everywhere. The dams are sowing the seeds of social instability in the region.”

The only way forward, says the Vietnamese Director of Hanoi’s Institute of Economics, Tran Ding Thien, is for Mekong countries to move beyond what he calls “the small-pond mentality.”

That seems unlikely at the moment. In Laos, Daovong Phonekeo, director general of Laos’ Department of Energy Policy and Planning, told Voice of America: “For the development of the Mekong River, we don’t need consensus!”

It is true that the 1995 Mekong Agreement does not provide for any veto on controversial dam projects, but it does enshrine principles of international river cooperation and good water governance that are undermined by the Lao government’s penchant for unilateralism.

Stuart Orr, WWF’s leader for Water Resources Practice, observes that “Water underpins our agricultural systems, our energy production, manufacturing, ecosystems, food security, and our wellbeing as humans. So if economic growth is to continue better river management is called for, that respects the limits of the ecosystem.”

Can the once mighty Mekong alter its currently blighted course of unregulated development, and this alarming rate of depletion of its natural resources?

“One step is that before we build any more dams, new green energy technologies need to be explored,” argues Hirsch. “It would be a tragedy to see the world’s greatest inland fishery destroyed for lack of imagination in applying cost-effective innovative solutions”

There also needs to be a new river-wide consensus that ultimately will have to include China.

Tran decries this small-minded approach, which clings to the “little pond of sovereignty” and cannot grasp the bigger picture of sharing water resources and respecting the whole river.

In this perspective of international scientific cooperation the Mekong should not belong to any one nation. As Tran, speaking at Mekong conference held in Can Tho in April, declared:

“If the Mekong is turned into a series of ponds and reservoirs, it is a loss not only for the region it is a loss for the world. The water that fuels the dams belongs to us all. We need to create an International Mekong Foundation and protect it.”

Tom Fawthrop is a freelance  journalist and film-maker based in Southeast Asia.

Killing the Mekong, Dam by Dam

Mahathir: Climate Change and The End of Man


August 27, 2016

Mahathir: Climate Change and The End of Man

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We now admit that the climate is changing. But we must also be aware that the so-called natural disasters are happening more frequently, and are more violent. And these cataclysms are happening in more places than before.

We see floods in New York, tsunamis in Sumatera and Fukushima, non-active volcanoes erupting, repeated volcanic eruptions in the same location, prolonged winters, high temperatures for months in many countries, tornadoes which wreck whole countries, typhoons of unprecedented strength and huge forest fires which consume parts of towns.

Is it just climate change which we hope will come to an end. Can we expect to go back to the years when the weather behaves in predictable cycles, i.e in the regularity of the seasons, the levels of the seas, the rise and fall of the tides, and the habitability of this planet we call Earth.

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We now accept that the Earth is much older than we use to think. We also know that it was not always like what it is now. We know that the human race appeared probably only a few hundred thousand years ago.

We know that there was a time when dinosaurs inhabited the earth. They disappeared but they left their skeletons so that we cannot deny that they existed even though they were strange creatures unlike the animals we see today. Perhaps the crocodile is the only surviving species from the age of the dinosaurs.

We know that there were at least two ice ages, when the whole world was covered with a thick layer of ice. Life as we know today could not have survived the cold. Nothing could grow on the ground covered with the thick layer of ice. Even dinosaurs could not have survived, as there was no vegetation for them to feed on.

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The ice melted to form oceans. The oceans and the seas receded and land masses appeared. We know the land masses grow and sundered, drifting apart to form continents. We are told the Himalaya is still growing taller. The process is very slow, but it is growing if we compare heights over the years.

The land masses too change in shape so that the shorelines change even during our times. We have found sea-shells on land very far from the sea, on mountains even.

We know all these had happened in the past. It cannot be that all these changes and processes stopped because civilised man now occupy this earth.

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The process of change on this earth must be continuous. It must be continuing.Men have always believed in the end of the world. Almost every religion talks of the Last Day of the earth. But we really do not know when it will happen. Could it be that we are progressing towards it even now.

It may take a hundred thousand years. But can we expect the changes to cease. Can we expect the volcanoes and the quakes, the violent storms, tsunamis and tornadoes, the floods and landslides etc to remain mild or benign as they used to be. I should think not.

Instead we must expect increasing frequency and violence of the natural cataclysms. The world may become so hot that living things cannot survive. The world may become so cold, the third Ice Age, that living things cannot thrive either.

For humanity it can mean the end of their world.So it is true, what the religions warn us about. For Muslims there has never been any doubt. There will be kiamat. Perhaps the scientists too will finally admit that for men the world has come to an end.But  whether they do or not the end will come.