Tuesday, July 31, 2007

The WTO's TRIPS and TRIPS-Plus Agreements: Economic Development in the Global South, Human Rights and IP Protection

I just wrapped up reading a fairly short but illuminating policy brief produced by the Geneva-based human rights and development research and advocacy group Three-D entitled "How Human Rights Can Support Proposals for A World Intellectual Property Organization (WIPO) Development Agenda". The brief was released back in February of last year, but the timeliness and importance of its conclusions for economic development makes them just as significant now as they were a year and a half ago.

According to the report, we are living in an increasingly technology driven world (it’s rather difficult, I think, to mount a serious argument against this observation), and that the protections currently afforded to the pharmaceutical and software industries in terms of intellectual property (IP) rules is directly “affecting development policies, human rights and other public-interest goals more than ever.”

The authors of the report explain:
Strict IP rules have had an adverse impact on the ability of many governments to fulfill their human rights obligations, [including ensuring] access to affordable medicines, educational goods and adequate food. This trend towards higher IP protection has been stimulated by the adoption of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) in the 1990s, and the harmonization initiatives at the World Intellectual Property Organization (WIPO).

At WIPO, concerns about this trend prompted developing countries to put forward since 2004 a series of proposals in support of a WIPO Development Agenda. The proposals aim to ensure that international IP policy within WIPO takes into account development goals and is coherent with the international obligations of States, including obligations under human rights treaties. Human rights law and mechanisms can support this push for greater development coherence of the international IP regime, and accountability in IP decision-making.


The report goes on to provide some important historical context:

The TRIPS Agreement, which came into force in 1995, set minimum standards of IP protection which all members of the WTO have to implement. Despite international concerns about the impact of the TRIPS Agreement on development, IP standards worldwide continue to increase. These strict IP standards, known as “TRIPS-plus” standards, have emerged in investment agreements, trade agreements and in WIPO treaties. Moreover, the WIPO Secretariat has also been criticized for promoting TRIPS-plus standards at the expense of development concerns in its technical assistance and norm-setting activities.

There have been particular concerns that WIPO’s technical assistance has too often failed to properly take into account the range of public policy goals relevant to IP policymaking in developing countries and tailor advice to respond to their particular economic, social and cultural development needs and circumstances.


These are exactly the kind of concerns you would expect those advocating for improved development policies directed toward the South to have. And I can’t exactly say I was surprised that WTO, WIPO or any of the other institutions created by the North have been bending over backwards to ensure the profitability of MNCs – even when doing so predictably comes at the expense of the poorest citizens in the Least Developed Countries.

The report offers a sobering prognosis if the world’s wealthiest countries don’t begin putting the public health of the world’s poorest and most at-risk population ahead of protecting patent rights for multi-billion dollar pharmaceutical manufacturers:
If this race to the top at WIPO and in other fora continues, the scope for developing and least developed countries to adopt IP policies that respond to their development needs will be further compromised. In so doing, the push for ever-stronger IP standards also stands to undermine the promises in a series of international political commitments such as the United Nations Millennium Development Goals (MDGs), the Johannesburg Declaration on Sustainable Development, and the Sao Paulo Consensus at UNCTAD XI (which promotes the use of “policy space” for development).

Furthermore, if countries are required to implement the high IP standards sought through new multilateral agreements or inappropriate technical assistance, they risk violating their legal obligations under international human rights law, including the right to life, the right to health, the right to education, the right to food, the right to an adequate standard of living, the right to access information, the right to take part in cultural life and to enjoy the benefits of scientific progress.

I recommend reading the whole report to get a very basic understanding of the issues at play here. Some other good resources online include this portal at choike.org, and these other publications from 3D.

Notwithstanding all of the acronyms and complicated-sounding jargon being tossed around by the so-called policy elites on this issue, this is really a fairly straightforward matter at the end of the day. That is to say, it is a matter of determining what the priority of these international bodies should be: Protecting corporate profit margins or saving the lives of millions by ensuring access to the drugs and treatment needed for survival.

However, the horrific reality is the very multilateral organizations created to eliminate poverty in the Developing World have internalized the values and agendas of their managers almost without exception hailing from the Developed World. The continuation of poverty and death in the Least Developed Countries, as well as the phenomenon of increasing inequality of wealth between the wealthiest individuals and nations and the poorest, are direct and foreseeable consequences of these biases.

Sunday, July 29, 2007

Separating the analysts from operators: The CIA's History of Obfuscating and Subverting US National Security

Chalmers Johnson is a foreign policy analyst who used to sound like a disciple of Walt Rostow, (i.e.: a very Cold Warrior), and he has, over the past eight years, begun to sound increasingly like a disciple of Noam Chomsky. That is to say, he has managed to metamorphosize into an eloquent and determined critic of 21st Century American Imperialism and his Blowback trilogy of books represent modern-day classics in terms of their critiques of US military and economic hegemony and the resulting US Global Empire. His direct involvement with the American Empire Project, along with both Tom Engelhardt and Chomsky along with several other prominent writers and activists serves to further burnish his progressive foreign policy credentials.

Posted over at Engelhardt's website TomDispatch this week is an informative and highly engaging review of Tim Weiner's recently published book on the history of the CIA, entitled "Legacy of Ashes." Chalmers' review definitely falls under the must-read category.

My view of the CIA's history is that its best analysts, those who knew what they were talking about and had a good track record in providing information and analysis, were mostly ignored for short-term politically crass reasons that were counterproductive to our commonweal. See, for instance, this November 2003 book review by left-wing academic Gabriel Kolko; he looks at five books, all of which concern the efforts of CIA analysts skeptical of plans to escalate the Vietnam War, and relates how these skeptics’ well-grounded analyses and accurate predictions were systematically ignored by the president and their advisors.

The CIA's clandestine operations, on the other hand, were favorites of nearly every president in the last fifty years of the 20th Century (particularly Ike, JFK, Johnson and Nixon). The clandestine operators were, not surprisingly, horrible, inhumane, counterproductive and they often acted unconstitutionally in the sense that their actions were mostly undertaken without legislative consent or knowledge - and with little in the way of written authorizations in order to give the president plausible deniability of the truth that he in fact had authorized the actions.

Toward the end of his life, Senator Daniel Patrick Moynihan (D-NY), who was actually a Cold Warrior of odious pedigree throughout most of his public career, was very public about wanting to eliminate the CIA because most secrets our leaders hide are merely information already known by our enemies - and again, our best analysts can find things out without skullduggery anyway. I am very sympathetic to the idea that secrecy is overrated, but admit I've been more concerned in recent years about protecting the institution of the CIA because of the manner in which the Cheney-Rove (Bush) administration has been crassly undermining the work of CIA analysts. The outing of Valerie Plame is only the best-known example of the high-handed manner in which the Executive Branch undermines analysts at the CIA who are doing honest analysis and sorting of information on issues of what they like to refer to as "national security".

What the Busheviks have done to CIA analysts is far more extensive, according to noted historian of the CIA Thomas Powers in his 2003 interview with Salon, than the bureaucratic stifling of CIA analyst Sam Adams — who ran afoul of the Pentagon and the aforementioned Walt Rostow among others — by seeking to publicize the actual number of Vietcong militiamen facing US troops (which was being deliberately obfuscated by the Pentagon, and even higher up to Rostrow's office) as part of a coordinated propaganda campaign aimed at misleading Congress and manipulating US public opinion) as well as predicting the 1968 Tet Offensive.

* This post was written by attorney, novelist and blogger Mitchell Freedman — with additional research and copy-editing contributed by Steven Josselson.

Thursday, July 26, 2007

How the Democrats differ on Iraq

Before deciding on who you are going to vote for in the Democratic primaries next year, be sure to read this article by Walter Shapiro in Salon. The multitude of candidates have expressed a fairly wide (but unsurprising) range of views on what next steps the US should take to end the war in Iraq. Some candidates, actually, seem unconcerned with ending the war any time soon, which will certainly hurt their chances of getting their party's nominated.

Kristof revealed

Leave it to Dean Baker to offer up an analogy so cutting and appropriate that New York Times columnist Nicholas Kristof is exposed to the whole world as a hypocrite and intellectual fraud:
NYT columnist Nicholas Kristof apparently believes that he would benefit if the United States had access to a huge supply of foreign columnists who could write as good or better than him and who would be willing to work at a fraction of his salary. That is effectively what he is arguing in his column today when he says that low-income families benefit from being able to obtain cheap imports from China.

Of course low-income families benefit from being able to buy cheaper imported goods, just as Mr. Kristof would be able to pay less for his newspaper and for the products that are advertised there, if NYT columnists would work for $15,000 a year. But, he would lose far more from having to accept a lower salary as a result of foreign competition, just as less educated workers are likely to lose out as a result of being placed in direct competition with low-paid workers in the developing world.

The column also includes gratuitous name-calling (the term "protectionist" is used repeatedly) and the use of the term "free trade" when "trade" would be more appropriate. Where are those Chinese columnists when you need them?

"Off the Record"

A damning briefing paper from the New York-based Center for Constitutional Rights on the Bush administration's responsibility for enforced "disappearances" in the “War on Terror” entitled Off the Record.

From the report:
On September 6, 2006, President George W. Bush revealed that the United States runs a
system of secret detention in the “War on Terror,” but he did not disclose how many individuals were secretly detained. While only the U.S. government knows exactly who remains missing, Off the Record provides the most comprehensive list of these individuals, who are believed to have been subject to an enforced disappearance for which the United States bears responsibility.

Based on research by six major human rights groups—Amnesty International, Cageprisoners, the Center for Constitutional Rights, the Center for Human Rights and Global Justice at NYU School of Law, Human Rights Watch and Reprieve—Off the Record identifies individuals believed to have been held at some point by the United States in secret sites, all of whom remain missing.

Off the Record provides new information about detainees already identified as “disappeared” (for example, Ali Abdul-Hamid al-Fakhiri, commonly known as Ibn al-Shaykh al-Libi) and names four missing detainees for the first time. It reveals the extent to which the United States illegally uses “proxy detention” to empty its secret sites and demonstrates that far from targeting the “worst of the worst,” the system sweeps up low-level detainees and even involves the detention of the wives and children of the “disappeared,” in violation of their human rights. Off the Record also documents allegations concerning the treatment of detainees while in secret detention, including torture and other cruel, inhuman or degrading treatment or punishment.

Wednesday, July 25, 2007

A change of US plan for Pakistan?

Asia Times reports:
Three top-ranking US officials spoke in unison over the weekend, hinting at direct US military strikes inside Pakistan - White House spokesman Tony Snow, White House Homeland Security Adviser Fran Townsend, and National Intelligence Director Mike McConnell.

The US media have since carried reports quoting unnamed sources that the White House is already weighing "options" involving "deniable covert action" by US special forces inside.

Color me skeptical. I think the Democrats would be more willing to go to war against "ally" Pakistan than the current corrupt administration.

The New Militarism in Chile

"From Military Keynesianism to Global-Neoliberal Militarism", an article from Monthly Review discussing the UN working group on the use of mercenaries for violating human rights, which is investigateing subcontracting by US firms in Chile.

Study on Iraqi Insurgency

Some useful background information on the Iraqi insurgency you won't learn from watching CNN.

*Yes, the report is from 2006, but it's still a valuable brief.

Why China Will Not Cave to Pressure over Trade Imbalance

To wit (from the Power & Interest Report:

In recent weeks, China has come under increased pressure over its growing trade imbalances from the United States and the European Union. Beijing is accused of keeping its currency artificially low in order to subsidize its export-led economy, causing a large trade surplus with the rest of the world. The United States and the European Union have dealt with the issue on a bilateral basis until recently, when they coordinated their actions at the International Monetary Fund (I.M.F.) to increase the surveillance of China's monetary policy.

While Beijing is likely to come under even greater pressure, the prospects for a rapid revaluation of the yuan appear slim. China will continue its policy of gradual appreciation of the yuan, believing that relations between Beijing and the West will not sour beyond repair.

China's Trade Deficit

China continues to be a net exporter, especially to developed countries, as its economy remains in rapid expansion. China's current account surplus reached US$250 billion in 2006, or nine percent of its Gross Domestic Product (G.D.P.). As China moves up the value-added ladder in manufacturing, the surplus is expected to widen. Stephen Green of Standard Charter in Shanghai expects the surplus to grow to $400 billion this year, or 12 percent of China's G.D.P.

Last year China's trade deficit with the United States reached $233 billion, up from $202 billion in 2005. In the first four months of this year, the most recent figures available, the gap has widened by an additional 16 percent.

China's trade gap with Europe is expanding at an even faster rate. In the 12 months leading up to May, China ran a $216.7 billion surplus with Europe. May's $22.45 billion figure was the third-highest monthly surplus on record and a 73 percent increase over the previous year's figure.

The yuan's valuation takes most of the political heat for the persistent, widening deficit. While Beijing officially unpegged the yuan from the U.S. dollar in July 2005, the Chinese currency has only risen by about eight percent against the dollar since.

Calls for China to abandon its policy of gradual appreciation for a more rapid course are growing louder and more frequent in Washington and Brussels as a measure to reverse the growing trade imbalance.

Washington Grows Impatient

The appointment of Henry Paulson as the U.S. treasury secretary helped to relieve some of the pressure on Beijing to revalue its currency. Last year, Paulson quickly established a Strategic Economic Dialogue with his counterparts in Beijing on a wide variety of issues, including currency valuations. After Paulson asked for time to pursue Washington's economic goals with Beijing, a bill aimed at China's currency was pulled from the U.S. Senate. [See: "U.S. Treasury Secretary Paulson's Upcoming Visit to China"]

The trade deficit with China, however, continued to expand and Washington's patience quickly wore thin. In March, the Department of Commerce imposed a tariff on certain papers imported from China. The following month, the Bush administration filed two complaints with the World Trade Organization over intellectual property rights and distribution restrictions for the film and music industries.

Two new bills aimed at Beijing's currency now appear to have strong support in the U.S. Congress. Both bills strive to be World Trade Organization-compliant, but would require tariffs on imports from countries found to be undervaluing their currencies.

Still, while the bill sponsored by Senators Max Baucus and Chuck Grassley appears to have the strongest support in both houses of Congress, the Treasury Department has not yet labeled China a currency manipulator, a prerequisite for the tariffs.

Europe Scolds China over its Currency

While some E.U. countries are fairing well with China in terms of trade (notably, Germany's technology exports have given the country a trade surplus with China), the region as a whole is quickly falling into greater deficit.

Peter Mandelson, the E.U. trade commissioner, used perhaps the bluntest language yet from Brussels to describe its persistent deficit with China. "The current trade balance is artificially inflated," Mandelson told reporters before an economic summit earlier this month. "It is a product of politics, as well as economics. China must take concrete steps to address the problem." While Mandelson and other officials outlined several polices that are contributing to the imbalance, the weak yuan is most often cited as the underlying cause.

Brussels maintains a slight account surplus overall, despite the strong euro and trade deficit with China, so the political pressure for action on China's currency has not yet reached the levels found in Washington. Mandelson's statement, however, was a warning to Beijing that if the situation is not resolved soon, calls for tariffs and sanctions will soon be overwhelming.

Bring in the I.M.F.

With growing political pressure to tackle the trade deficits with China, Washington and Brussels teamed up at the I.M.F. to increase the organization's ability to monitor "all major emerging market currencies." China lobbied hard against the passage of the new measure, which it viewed as aimed at the yuan. Still, because of the voting structure at the organization, the United States and European countries were able to push through the rule change.

In Washington, Secretary Paulson praised the measure, saying it would "permit firmer surveillance in areas such as insufficiently flexible exchange rate regimes." It is hoped that the I.M.F. will provide further evidence that China is intentionally manipulating its currency. This, in turn, would give Washington and Brussels political cover to impose sanctions on Chinese imports.

Why Beijing Refuses to Appreciate

Despite the threat of sanctions, W.T.O. complaints and tariffs, Beijing is unlikely to abandon its policy of gradual appreciation of the yuan. There are numerous reasons for this -- some political, others economic.

Politically, the Chinese government is unlikely to make any sweeping reforms in the run-up to the Chinese Communist Party's 17th National Congress in November. The congress will determine the direction of China's government for the next five years, and until then major alterations on economic issues will be impossible. Even after the conclusion of the congress, other political motivations will likely prevent any rapid appreciation of the yuan.

The Chinese government under President Hu Jintao and Premier Wen Jiabao has stressed "harmonious" economic development in a bid to narrow the gap between the booming coastal regions and China's poorer interior. Beijing fears that a rapid appreciation of its currency will have little effect on exporters in the coastal cities, but could lead to a surge in cheap food imports, undermining the prices farmers from the interior can charge. This would then lead to greater migration from the interior to the coastal regions, and put China's development further out of balance.

Economically, China fears that the rapid appreciation of the yuan could lead to speculative inflows similar to those that swept through Asia in 1997. Thus far, China has avoided rapid swings in its economic growth, and it does not want to take any measures that might bring greater risk to its markets.

Over the long term, however, it will be in Beijing's interest to let the yuan increase in value. There are currently asset bubbles forming throughout China, namely in equities and property. The low interest rates that the central bank must maintain in order to keep the yuan at its current rate are a major cause of this. If interest rates were to increase, it would encourage a broader portfolio of investment options. [See: "Economic Brief: China's Stock Market Bubble"]

Another cause for concern is the growing foreign currency reserves China must accumulate in order to maintain the weak yuan. China is currently struggling to find investment options for the more than $1 trillion it has in foreign reserves, the largest foreign exchange holdings in history. In March, a new agency was created to oversee the investment of a portion of this stockpile. Its first public investment was $3 billion to Blackstone, the private equity firm, ahead of its initial public offering.

While the investment of China's huge reserves has caused much anxiety, excitement, and speculation in the global financial markets, Beijing's main goal is to avoid increasing its foreign reserves further. If the yuan appreciated, it would not have to soak up the excess dollars flowing into its economy, and that money would be freed up to invest back into China's infrastructure, military, or social projects.

Still, China will take a cautious approach to revaluation. Moving too fast would cause Beijing's dollar denominated reserves to decrease in value. Therefore, even after this fall's national congress, it is likely that little will change in Beijing's stance on its currency appreciation.

Conclusion

Ignored in most of this debate is whether or not a rapid appreciation of the yuan would be beneficial to the United States and the European Union. The vast majority of the U.S. account deficit is not due to China; for several years now, the United States has saved too little and spent too much. Because China has been purchasing so much of the U.S. treasury debt in order to maintain the weak yuan, this situation has had little negative effect on the U.S. economy. Were China to abandon its gradual stance, U.S. interest rates would certainly have to rise. This would have a much stronger effect on the U.S. economy than the growth in exports to China could ever make. Europe's situation would be similar, but on a smaller scale.

As such, it cannot be expected that much will come from the political posturing in Washington and Brussels over the yuan. Beijing will continue to let the yuan appreciate gradually, as it diversifies its foreign exchange holdings and moves up the value-added scale in manufacturing. Washington and Brussels will continue to make noise over their account deficits with Beijing. Nevertheless, the most they probably really want to see from Beijing is the announcement that it will be investing a portion of its massive foreign currency holdings back into the United States and Europe. Expect China to make a move for large purchases in strategic industries to calm U.S. and European fears.

NEW: Inaugural Globalization Digest — July 2007

As an undergraduate student, I developed the occasionally dangerous habit of reading many different books and articles at the same time; often they would deal with related subjects from various perspectives but other times my reading diet would be much more eclectic. Lately, I've found myself reading everything I can get my hands on related to globalization — especially as it relates to international economic development and trade — which is one of the reasons I've decided to focus this blog on these incredibly complex, dynamic and important issues.

The problem is, half the time I find myself jumping to a new article before having truly digesting the one I just finished up. And, more frequently than I'd like, I am not even finishing the 30-page report or the 10-page trend forecast that I have on my desk at a given time. With the incredible amount of interesting information available for free thanks to the Internet, it really isn't that surprising that I suffer from some form of attention deficit disorder.

So I thought perhaps it might be of some benefit to this blog's hard-core loyal readers for me to present what is in effect an online bibliography of relatively recent globalization-related articles I think are worth checking out. Sub-topic to be covered will include - but certainly are not limited to:
IMF/World Bank/WTO governance, transparency and accountability; market and technological integration; intellectual property and patent law; international “free” trade; foreign aid and development policy; the politics of development; land use reform and sustainability; the destruction of cultural diversity; North - South relations; the relationship between globalization and colonization and militarization; debt cancellation; Foreign Direct Investment (FDI); energy policy; human, civil, social and labor rights; market, institutional, market and state building, localization and democratization; income inequality and economic justice; environmental degradation; market liberalization and privatization; and the anti-globalization movement and exploring alternative models to Neoliberalism.

There's an important caveat to all of this: In some cases I may not necessarily agree with all of the analysis or conclusions expressed and in some cases I haven't even finished reading the article, especially if it happens to be a 40-page study. I'll try my best to disclose this in a side-note to the post to keep you informed (and keep me honest).

I'm not sure if this experiment will end up yielding the result I am hoping for, but if it does, I may end up instituting the "Globalization Digest" as a monthly feature at Troubled Times!

Without further ado, let's get started:

IATP/Trade Observatory's Geneva Update: What to do about Doha? A look inside the US
This short analysis from the US-based NGO Institute for Agricultural and Trade Policy (IATP) - published on July 24th - is an indictment of the WTO's leadership, in particular the two ambassadors responsible for heading up the Doha Round negotiations on agriculture and industrial goods and natural resources.

The article notes of the growing frustration surrounding the stalled Doha talks that:
WTO members are a long way from the vision of 2001 when the Doha Round was launched. At that time, WTO members called for an agenda that would reform the existing trading system, rectify past mistakes, and rebalance the inequalities between rich and poor. Instead, the negotiations look like every other round: members came to the table with a set of interests and bargain with the rest of the world, ignoring the needs of poorer members in the process. Each country is offering to ignore the interests of some of its sectors, in which producers and workers will be losers, but only with the hope that other sectors will be winners.

Member governments have made no attempt to look at the bigger picture, either to rectify the existing inequalities among richer and poorer member states, or to balance trade interests with other multilateral obligations-for instance, to tackle climate change or respect workers' rights. WTO Director General, Pascal Lamy reaffirmed this in a speech to the UN Economic and Social Council (ECOSOC) in Geneva earlier this month: "I doubt the negotiations are about morals, it is about trade-offs," he said. (emphasis added)

This reality is not what many developing country members hoped for when they began negotiations on the Doha Agenda. Now all WTO members have to decide whether to accept or reject the whole effort once and for all. The path proposed by Ambassadors Falconer and Stephenson has some appeal to WTO members. It is already laid out and it is familiar. If members decide to go forward on the basis of the current texts, there is a slight chance they could reach agreement in the not too distant future. After years of negotiations, the thought of concluding with an agreement is obviously appealing.

Falconer's agriculture text looks better than past versions from the perspective of many developing country negotiators, building up their hopes. But this path has already been tried, under the Uruguay Round Agreements, and it has not delivered. It is a system that favors the rich and squeezes the poor. (emphasis added)

The author notes that while there remain important principles that are part of today's system of international trade law that ought to be retained, such as prohibitions on export subsidies and rules that ensure governments' trade policies remain "transparent and subject to scrutiny," there remain many more important rules that are in dire need of reform - as well as other rules that need to be addressed but aren't even being put on the agenda at the Doha Round negotiations.

He concludes that "There is no reason for governments to continue accepting such an unbalanced outcome: it is time to build a new framework for the multilateral trading system." It is also necessary, he argues, to confront the "powerful commercial interests who profit from the existing model. He goes on to recommend what he terms an "alternative path" to trade reform that will challenge the status quo's wholly inequitable balance of power between the Global North and South; an imbalance that only serves to further reinforce the rapidly expanding chasm between the world's wealthiest and poorest people.

Costa Rica Doing Better than Countries that implemented CAFTA
I have only recently discovered the progressive watchdog group Public Citizens' "Blog on Globalization and Trade" - appropriately enough called "Eyes on Trade" (EOT) - and I have to say it has become an invaluable resource for staying abreast of the latest news and trends. This post from July 20th is a great example of why I think EOT should be on the top of anyone's reading list. Linking to a recent article by Italian Political Science professor Umberto Mazzei translated over at the Center for International Policy's Americas Program website (until recently managed by the International Relations Center) entitled "Guatemala and Costa Rica: In and Out of CAFTA," EOT notes the widely disparate economic and social outcomes between two Latin American countries: Guatemala which signed on to CAFTA (see here for background) and Costa Rica which rejected the "free" trade pact.

Quoting from Mazzei's article, the blog notes that:
The message is overwhelming: [Guatemala] "sacrificed" itself to the Free Trade Agreement (FTA) with the United States for nothing. The CAFTA model, pushing the Central American economy toward the export of non-traditional goods to the United States, has been a pretext for imposing expensive foreign pharmaceuticals as opposed to cheap, national generic drugs, overwhelming the peasant farmer with subsidized imports, and granting extra-territorial jurisdiction to foreign companies.

Non-traditional exports in Guatemala have decreased instead of increasing—contrary to the objectives of CAFTA. In Costa Rica, which remains outside CAFTA, exports of new products and markets have grown. All indicates that the privileged share in an FTA with the United States is more a hindrance than a help.

The bottom line: Much like its older sibling NAFTA, CAFTA is a disaster for the citizens of target countries; read the entire report over at CIP; and Global Trade Watch should be at the top of your list of blogs to check every morning.

The Richest of the Rich, Proud of a New Gilded Age
Eye-opening report from the New York Times's business reporter Lou Uchitelle, exploring the limitless hubris of Wall Street's "Masters of the Universe". As this article effectively demonstrates, the American people are truly witnessing a return to the "Gilded Age last seen at the turn of the Twentieth Century - complete with Robber Barrons and economic inequality at historically high levels. brought on by our current economic and trade policy

On a tangentially-related topic, check out this post by Tyler Cowen at his Marginal Revolution blog which link to a study by economists Steve Kaplan and Joshua Rauh analyzing - among other things - the changing income distribution in recent decades for Wall Street executives. From the study, we learn that that: "The top 25 hedge fund managers combined appear to have earned more than all 500 S&P 500 CEOs combined (both realized and estimated)."

Read the study linked to in the post, or at least the free abstract as I did.

No Fast Track to Global Poverty Reduction (or, “The Fast Track to Underdevelopment”)
This 7-page policy brief (.pdf) published in April by the Global Development and Environment Group think tank at Tufts University (whose excellent, invaluable website is here is entitled "No Fast Track
to Global Poverty Reduction," and I highly recommend reading it closely because it dispels many of the myths accepted by the Neoliberal Washington Establishment as being nothing more than corporate globalization propaganda.

Here's the key graph in the brief:
Congress should think twice before extending fast track authority [to President Bush] to achieve a new WTO agreement. Most evidence suggests that the emerging set of tariff and subsidy reductions will have little impact on global poverty; according to the World Bank, the number of people living on less than a dollar-a-day will decline by less than one-half of one percent with a Doha deal. More worrisome, some the world’s poorest nations may end up worse off, while some of the poorest people – small farmers – lose ground even in countries the World Bank predicts will gain from an agreement. Finally, the costs of liberalization to poor countries, particularly in lost tariff revenue on which they depend for key government services, make the new WTO agreement anything but friendly to development and poverty reduction. (emphasis added)

Another important contribution from the brief is its section detailing the continually “shrinking and unequal” gains from trade – referring here to those trade pacts implemented under the current multilateral WTO regime. Here, the two authors rhetorically ask what came of the WTO’s promise back in 2005—officially referred to as the Millennium Development Goals or MDG—to cut global poverty in half by the year 2015; they note that the Bank’s poverty projections declined along with its projected “welfare gains” from the economic models it used to predict the outcomes of trade‐policy changes.
The new projections from the World Bank highlighted the shrinking gains from trade for poor countries. With their new data and improved modeling, the projected global gains from full trade liberalization fell from $832 billion to just $287 billion. The developing country share dropped from $539 to $90 billion, underscoring the ways in which the so‐called Development Round was shaping up to be anything but.

The brief argues, however, that WTO’s “modeling of partial reform under a likely Doha scenario was indeed useful. Specifically, based upon assumed cuts to agricultural subsidies and tariffs as well as industrial tariff reductions – reforms that now ironically could only be appraised as overly ambitious – the Bank’s researchers “projected income improvements of just $96 billion for the world community in 2005. Of that, $80 billion would go to rich countries, with only $16 billion in gains from international trade remaining for the large majority of the world’s population that resides in the Global South.

The authors go on to explain that:
Billions [of dollars] always sound like a lot of money, but these are paltry sums by any reasonable measure. The developing‐country share is less than the annual U.S. food stamp budget. It amounts to less than a penny‐a‐day per person. It is a 0.16 percent one‐time gain that would marginally boost income a decade from now.

How small is that? If you were a typical poverty‐level farmer or worker in the developing world making $100 per month (roughly $4 per day to support your family), your gains from a successful WTO negotiation would be a raise of sixteen cents a month – $100.16. It is no wonder the World Bank finds such meager reductions in poverty.

Following negotiations supposedly focused on developing country needs, rich countries are projected to receive an embarrassing 25 times the per‐capita gains of developing countries. That’s right: we get $79 each a year, they get $3. And that is just the average. A small number of large countries – Brazil, Argentina, China, India, and a few others – capture the bulk of the projected gains for developing countries. Sub‐Saharan Africa would get almost nothing. Bangladesh would end up worse off. Not surprisingly, those projected to lose under Doha are some of the poorest parts of the world outside of China and India. The World Bank’s “likely Doha scenario” counts among the “losers” Bangladesh, Vietnam, the Middle East and North Africa, and Sub‐Saharan Africa (not counting South Africa).

And unfortunately even in those countries projected by the Bank to be winners under the agreement, many poor segments of society will lose. India, for example, may see modest gains in some manufacturing and service industries, but its poorest farmers stand to lose. Subsequent studies have predicted even more dire impacts for the poorest countries. The Carnegie Endowment for International Peace, using more realistic modeling assumptions, released a report shortly after the 2005 Hong Kong ministerial that projected even worse prospects for Bangladesh, East Africa, and Sub‐Saharan Africa. They project China to be by far the biggest developing‐country winner from a Doha deal, capturing nearly half of the still‐small gains from a Doha agreement. That could lead to poverty reductions in China, where many of the world’s poor live, but the authors point out that these losing countries are home to more of the world’s desperately poor (267 million) and nearly as many of the “very poor,” with 486 million living on less than $2/day.

The brief also goes on to detail the hidden costs implicated by the Doha Round, (noting that most discussion of the Doha Round’s development impact have focused only on the potential benefits of the round, neglecting to give close the necessary attention to the costs), as well as putting forward a strong argument for a system that ensures “special treatment” for Developing Countries.

The brief concludes with:
The Doha agreement currently being negotiated fails to make good on the commitment to, as the Doha Declaration states, place developing countries’ “needs and interests at the heart of the Work Programme adopted in this declaration.” That would mean recognizing in practice the need for “special and differentiated treatment” for developing countries, to leave them the policy tools to industrialize and develop. It would mean accepting developing‐country proposals to let countries exempt sensitive food crops such as rice, maize, and wheat from liberalization. In the Doha negotiations, developing countries have put forward many creative proposals to address these problems; they have been routinely ignored.

Extending the President’s trade promotion authority to complete an agreement so hostile to true economic development and so ineffectual in reducing global poverty would be a sad mistake. New global trade rules are needed to better regulate an increasingly integrated world economy dominated by large multinational firms. The United States would be better served by a full debate over its approach to trade and the WTO, and ultimately by policies that strengthen the U.S. economy by increasing the buying power – and welfare – of the world’s poorest residents.

Again, even though I have excerpted from the brief quite substantially, probably more than I really should have, I cannot over-emphasize the need to read the entire document in detail.

IFC in the Middle East
IPS News reports on a recent report released by the Bank Information Center that found “the Middle East and North Africa region (MENA) has become the fastest-growing area for investments from the World Bank's private sector arm, the International Finance Corporation (IFC), which surpassed $1 billion for the first time last year.”

IPS notes that the $1.2 billion in investments in the region last year represents a record-breaking volume of new commitments and nearly double its 2005 investments.

From the article:
"In part, IFC's increased investment in MENA reflects global financing trends. The flood of petrodollars in the MENA region in recent years has spurred new investments and fueled a growing need for local banks, to soak-up and recycle the excess liquidity in the region," [according to the authors].

Most of this money is going to open the region for financial markets services and insurance as well as traditional sectors such as oil, gas and infrastructure projects. More than 200 million dollars were approved for new insurance and financial services projects last year alone.

IFC's investments often signify a greater international private flow of funds since the IFC works to facilitate private sector involvement in the region. It does so by advising governments on the implementation of investor-friendly economic changes, including the privatization of state-owned banks and public utilities such as water and power.

(. . .)

[T]he IFC is also taking advantage of new investment opportunities created by accelerated trade liberalization and privatization reforms in the region, which are often tied to the World Bank and International Monetary Fund (IMF) programs.

(. . .)

[T]he World Bank (. . .) alone increased its lending to the region threefold in the last five years. The region's share of World Bank financing rose from less than 3% of total new approvals in FY02 to over 7% in 2006.

Here’s an interesting development:
Lending to Iraq is also forecast to grow in coming years. The World Bank has approved emergency loans worth around $400 million to the country through its Iraq Trust Fund, while the IFC has committed over $100 million in private sector operations.

For background on why this is so significant, see here , here, here and here.

Finally:
The [BIC] study found that the [World] Bank went into the region with the same ideology it imposes elsewhere in developing nations (. . .) its focus has been on instituting "comprehensive structural reform" to facilitate greater liberalization measures such as the elimination of trade barriers to open up the region to increased private investment and economic integration.

The authors of the report cite many of the Bank's own studies, which have revealed that income inequality in MENA is on the rise, despite increased economic growth and investment.

(Quoting from the report) "The jury is still out about the significance of increased IFI investment in MENA for the region's people. The impacts of the influx of public financing on poverty, inequality, unemployment and the environment in MENA remain to be seen . . . Investment is not an unambiguous good, as it is often portrayed to be, nor is investment itself tantamount to development.”


Vocal rejection of Bank, Fund increasing
Regular readers of Troubled Times are already well aware that the popularity, and even legitimacy of, the World Bank and IMF have taken major hits in recent years. (For just a few examples, see this post from the blog back in April of last year or this one from April of this year) Here are three more recent articles that provide further evidence that the Global South’s hostility to the two multilaterals appears to only be intensifying every month.

First, the economic/corporate globalization watchdog group The Bretton Woods Project (BWP) reports on the growing frustration and disillusionment being loudly expressed by citizens residing in Latin America, East Asia and even Central and Eastern Europe. Although the most vocal criticism continues to come from Latin American countries such as Venezuela and Ecuador, the author notes that:
Latin America is not the only region with gripes against the Fund, as both Russia and China have recently vocalized their rejection of IMF policy prescriptions. Russian president Vladimir Putin called for a restructuring of the international economic architecture, saying that global institutions like the IMF and the WTO should have a much smaller role. He proposed a “new architecture of international economic relations based on trust and mutually beneficial integration”. In April, Russian deputy finance minister Sergei Storchak opposed IMF advice on the spending of oil revenues, saying that oil exporters should be free to spend their revenues however they wish.

China has also continued to reject the IMF’s advice on its exchange rate policy. Despite participating in the Fund’s first multilateral consultations on global imbalances (see Update 54, 51), China continues to resist the idea that its pegged exchange rate is improperly set. The Chinese central bank’s deputy governor, Hu Xiaolian, said in her IMFC statement, “given the limitations of various exchange rate analytical tools, it is well known that the concept of exchange rate misalignment is subject to theoretical weaknesses, their estimates highly unreliable, and therefore could not serve as a criteria or premises for surveillance.” A leader in the China Daily at the time dubbed the IMF's calls for a more flexible exchange rate as "meddling" and "disturbing." The IMF is also facing accelerated declines in its credit outstanding with advance repayments on debt by Macedonia and Bulgaria on top of the completed early repayments by Ecuador and the Philippines.

But perhaps the most ironic of the new World Bank/IMF critics is none other than former US treasury secretary Robert Rubin (see this article from last year by William Greider in The Nation.

BWP notes that:
Complaints are even emanating from [Rubin], who said: “The Bretton Woods system has become outmoded. … these institutions haven’t changed with the times. They need to be rethought and restructured.” And George Schultz, treasury secretary under Gerald Ford, said of the IMF: “If it disappeared tomorrow, I don’t think people would miss it very much.”


Second, a news analysis by historian and economist Alejandro Reuss in the North American Congress on Latin America’s (NACLA) July/August issue of “Report on the Americas” has a very interesting report (which doesn’t appear to be getting much coverage from the international mainstream press) that:
The backlash against neoliberalism in Latin America is now leading to confrontations between several of the region’s governments and the two major international lending institutions, the World Bank and the International Monetary Fund (IMF). In the span of just a few weeks in May, President Rafael Correa announced that Ecuador was expelling the World Bank’s representative from the country; President Hugo Chávez announced that Venezuela would be withdrawing from both the Bank and the IMF; and Bolivia, Nicaragua, and Venezuela all announced their intention to withdraw from the World Bank–affiliated International Centre for the Settlement of Investment Disputes (ICSID)*. The Venezuelan government has also proposed the formation of a new regional lending institution, the Bank of the South, widely perceived as a challenge to the World Bank and the IMF.

(*For more background on the criticism of the World Bank’s undemocratic, pro-corporate ICSID, see this recent Troubled Times post)
The recent withdrawals from the World Bank, IMF, and ICSID by Latin American governments represent a rejection of the conditions these institutions have imposed on poorer and less powerful countries. The withdrawal from ICSID in particular represents an assertion of the power of sovereign states to determine the conditions under which they will permit foreign investment—a burning issue today in Venezuela, Bolivia, and other Latin American countries. The Venezuelan government has nationalized the largest telecommunications and electricity firms by buying their stock and has asserted control over the country’s oil industry by threatening to expropriate the holdings of any multinational firm that refuses to accept its new status as a minority partner.5 Bolivia has made similar moves over its gas resources.

Reuss concludes:
Some of the recent nationalizations also run counter to the bilateral investment treaties that hold sacrosanct the property rights of multinational corporations. Sovereign states that have entered into agreements, however, may seek to alter them or withdraw from them altogether. If it has no intention of abiding by the rulings of the ICSID, the government of a sovereign state is perfectly entitled to withdraw from it. With the tide turning against neoliberalism, the governments of Venezuela and other Latin American countries appear determined to gain greater control of their resources and to use them for social welfare and economic development projects. Might they face a cutoff of investment by multinational corporations and high finance, or the hostility of powerful governments, as a consequence? That is certainly possible. But it will be a matter of power, not of right.

The answer to this final question will prove to be quite revealing as to the true motives of the Global North and the institutions they created to further their economic interests.

Third, this June newspaper editorial penned by CEPR’s co-director and peerless Latin American economic expert Mark Weisbrot entitled “A new assertiveness for Latin American governments” provides further analysis of Latin Governments’ decisions to withdrawal from the ICSID and its likely political and economic consequences not only for the nations’ citizens but for the multinationals’ leverage in setting the agenda for global economic development.

He concludes his article by offering an observation and prediction:
The new assertiveness of Latin American governments toward foreign investors has proven remarkably successful so far, winning them billions of dollars of new revenues and allowing some of the new democratic governments to deliver on their promises to help alleviate poverty. The conventional wisdom is that these changes are just a temporary result of high prices for oil and other minerals and commodities, and unusually low interest rates – all of which have given developing countries more alternatives and bargaining power. But it is much more likely that these changes are institutional and permanent.

Costly trade with China
This May Briefing Paper (view in .pdf format here) by Economic Policy Institute’s (EPI) Director of International Programs Robert A. Scott reveals that:
Contrary to the predictions of its supporters, China's entry into the [WTO] has failed to reduce its trade surplus with the US or increase overall US employment. The rise in the US trade deficit with China between 1997 and 2006 has displaced production that could have supported 2,166,000 US jobs. Most of these jobs (1.8 million) have been lost since China entered the WTO in 2001. Between 1997 and 2001, growing trade deficits displaced an average of 101,000 jobs per year (. . .)

Since China entered the WTO in 2001, job losses increased to an average of 441,000 per year. Between 2001 and 2006, jobs were displaced in every state and the District of Columbia. Nearly three-quarters of the jobs displaced were in manufacturing industries. Simply put, the promised benefits of trade liberalization with China have been unfulfilled.

Read the entire report if you have the time (it’s only six-and-a-half pages), or at least the conclusion at the end.

Intellectual Property Rights, Trade and Pharma protectionism
Here are three articles on this timely topic. First, check out yet another great report from IPS News on July 20 discussing the WTO's “waiver” on intellectual property rights for Developing Countries, created to allow “poor countries lacking production capacity to address public health emergencies by importing cheap generic versions of patented drugs produced under a compulsory license.” This agreement is better known by its acronym TRIPS, and further background on its specifics are available here.

At the present time, IPS News reports, the European Commission as well as many of its member governments are intent on ratifying a protocol amending TRIPS that would make the waiver permanent. But “[At a] meeting on July 17, the European Parliament's committee on international trade decided to delay giving its assent to ratification because it is not satisfied that the EU is doing enough to boost the supply of vital drugs to the needy.

Quoting from the article:
As not one poor country has invoked the waiver, members of the European Parliament (MEPs) complain that it has proven too complex and ineffective. On July 19, however, the WTO announced that Rwanda had become the first country to announce that it intends to make use of the waiver.

In addition, the article notes that In December 2006, the World Health Organisation (WHO) published the report from its Commission on Intellectual Property Rights, Innovation and Public Health; if you are interested, you can read the entire document from the WHO's website as a .pdf file here.

The report concluded that patents are being used to keep medicines out of the reach of the poor and, without greater clarity on some of the surrounding issues, this situation will persist. Patent pools could help provide the necessary clarity and drive down the prices of medicines.

A separate WHO working group on intellectual property is exploring if that organisation could host an international patent pool system, under which agreements would be negotiated between pharmaceutical firms and governments in poor countries.

EU institutions (were additionally urged to) pay greater heed to the need for 'second-line' treatments. These are especially relevant to diseases like AIDS and tuberculosis, where patients have been found to have built up resistance to their current treatments.


This is a technical, but important IP policy debate with major implications for economic development; I’ll be closely tracking its outcome in the months ahead.

For more on the topic of TRIPS reform and Intellectual Property rights, read this one-page editorial (in .pdf format) released in June by the UK’s International Institute for Sustainable Development (IISD) entitled “The Exhaustion of Intellectual Property Rights: Should Countries Favour Consumers or Private Interests?” It analyzes the findings of a long study released last month by IISD (“Parallel Importation: Economic and social welfare dimensions,” written by Fredrick M. Abbot), and discusses what are known as “exhaustion of rights” under patent, copyright and trademark law. It is explained that: “The WTO’s agreement on Trade-Related Intellectual Property Rights (TRIPS) accords States the liberty to choose their own exhaustion regime from among three possibilities: national, regional or international. What does that mean, and what is the significance of choosing one option over the other?”

Or, put in slightly different terms, how do governments balance the interests of the large number of its citizens acting as consumers— who are usually poorly organized—against the competing interests of the intellectual property rights-holding multinational corporations—which in contrast are usually vocal and well organized. The rest of the editorial, which as I previously noted is really quite short, concerns answering this admittedly confusing but potentially important question.

And finally, check out this editorial that appeared in the June 12th issue of the policy journal Globalization and Health entitled “Balancing Intellectual Monopoly Privileges and the Need for Essential Medicines”; it succinctly considers the TRIPS agreement as well as the recent policy debate regarding the protection of public health interest: particularly pertaining to the Doha Declaration. It authors explain that:
The problem of access to essential medications for the developing world is two-fold. First, research and development (R&D) is principally being driven by market forces, not medical need, when considered in light of estimates of the global burden of disease. Specifically, problems typically inherent to the industrialised world (e.g. impotence, obesity and baldness) are being prioritized over diseases that disproportionately affect the poor, such as TB and malaria. Indeed, 90% of the burden for global disease is carried by a population for whom only three percent of the R&D expenditure is directed.

(. . .)

Increasingly, many large pharmaceutical corporations are not even doing much of in-house R&D, but simply doing venture capital searches for small biotechs to acquire. Second, high prices for brand name and patented pharmaceuticals often create a barrier to access in developing countries. Patent monopoly protection of new drugs allows the inventing company sufficient time to recoup their controversially-estimated R&D costs. Sponsors, however, often seek extra patent reward for innovation via a number of existing 'loopholes'. For example, companies often use bilateral trade agreements to eliminate reference pricing that bases the price of a new drug on pharmacoeconomic evidence, such as its efficacy, safety, and cost- effectiveness relative to comparable existing therapies. Such tactics make patented medications prohibitively expensive for people living in poorer countries. As a result, international trade agreements have become an exceedingly important issue for access to essential medicines and health services.


This online journal is a fantastic resource, and although I don’t know how it’s reputation and prestige stack up to other journals like the New England Journal of Medicine, its editorial board looks to be strong and as a matter of major importance, it is peer-reviewed.

The Future of Trade, Development & International Institutions
This is a reasonably long (16-page) report from the UK-based, Neoliberal/Pro-Market/somewhat-libertarian oriented think tank the Globalization Institute; it does a reasonably good job of critically analyzing the reasons why multilaterals’ current policies and approaches have continuously failed to help lift the Global South out of poverty. Specifically, GI looks at the WTO (as well as evaluating its Doha Round agenda, which we now can reasonably presume has ended in failure); preferential-trade-agreements (PTAs); and the explaining the reasons behind the UN’s profound policy failures in debt relief and international trade and multilateral (IFI) aid programs for the Developing Nations it is responsible for helping. The lack of progress at reforming these policies is also closely considered.

In the report, International Political Economy Professor Razeen Sally looks at the Millennium Development Goals, Tony Blair’s (2005) agenda for the G8 and the Africa Commission Report. In the end, all are all examined, found to be deficient in putting forward a workable, comprehensive solution for achieving their ends, and some alternative policies are suggested.

She explains her preference for favoring “market-based” solutions that focus on increasing market liberalization thusly:
[A] large and sudden increase in aid now is a bad idea for all the old reasons. It will simply overwhelm the supply capacities of already weak and dysfunctional governments. Making it conditional on good-governance criteria is wishful thinking. Given the sums and the short time-frame discussed, it is bound to provide more incentives for bigger, wasteful, corrupt and intrusive government.

Only the utterly naïve or willfully disingenuous can aver that good governance will result from aid that accounts for up to two-thirds of government spending and 20-30 per cent of national income (as is proposed in the Sachs Report). True, there is some evidence to show that well-targeted aid can work in better-governed countries. But there are very few of these in Africa; and claims made on behalf of some of the “poster-children”, such as Uganda and Tanzania, are too confident and premature – and conveniently suit the interests of those in the aid business.

The failure of the state, not of markets, is central to the African tragedy. A big, aid-induced investment push risks making state failure worse rather than helping to build up viable market societies plugged into the world economy. It is a silly and dangerous idea. The Sachs Report, with its big-spending hubris and breathtaking political naivety, should get the Nobel Prize for pettiness and recklessness.

This is not an argument for getting rid of aid altogether. Rather it would be better to take the existing volume of aid and thoroughly restructure it so that it works better to meet a smaller set of limited, realistic goals. Aid should be redirected from middle-income countries that have good access to capital markets to low-income and especially least-developed countries that lack that access. Then it should go to better-governed countries, but carefully and gradually according to clearly defined and well-monitored criteria. There is a case for more aid for specific programmes with clear, precise goals and appropriate mechanisms, e.g. to combat HIV/AIDS and tropical diseases, and meet WTO commitments. Aid should be in the form of grants rather than loans. It should use price-based market mechanisms. And it should bypass governments and deal directly
with private organisations on the ground as much as possible.

(Note that these recommendations follow closely from those regularly advised by NYU economics professor William Easterly. His two books on the topic are fairly accessible to a layperson and provide additional background on the failures of current development policy)

• Rounding out this inaugural Troubled Times Globalization Digest is a short but important blog post by one of the world’s foremost experts on international development, trade and aid policy—and a measured critics of corporate globalization’s excesses—Harvard economist and professor Dani Rodrik (a nice chronological compilation of his research can be found here). His post tackles a similar problem described by Razeen Sally’s GI paper above; its title: “Aid Can Promote Growth, But Don't Rely On It To Do So,” provides a pretty good explanation as to the topic addressed here. He links to a long (42-pages!) paper published by the Institute of International Economics (now known as the “Peterson Institute”, a think tank that has received its share of criticism recently from yours truly) which examines the evidence pointing to a non-linear relationship between foreign aid provided by IFIs to Developing Nations and the level of economic growth they experience.

The IIE paper reveals there is “little robust evidence of a positive (or negative)
relationship between aid inflows into a country and its economic growth (. . .) it also finds no evidence that aid works better in better policy or geographical environments, or that certain forms of aid work better than others. Our findings suggest that for aid to be effective in the future, the aid apparatus will have to be rethought.” This final conclusion appears to be the only proposition all the international economic development experts seem to agree with. But the limitations of relying on an econometric model to help direct policy analysts is not adequately dealt with here, nor are the obvious causality issues that are present properly considered.

The paper’s authors try to account for their frustratingly ambiguous, but perhaps not-so-unanticipated findings:
One explanation may simply be that the effects that even the theory would predict are too small to detect against the background noise, at least using the standard cross-sectional technique. Certainly, the simple theoretical exercise we present later suggests that the predicted positive effects of aid inflows on growth are likely to be smaller than suggested by advocates, even if inflows are utilized well. If noise in the data plagues all findings, then strong claims about aid effectiveness based on cross-country evidence are unwarranted, and aid policies that rely on such claims should be re-examined.

However, the effects of other interventions (such as good policies) on growth are indeed discernible in the data and are robust. If noise in the data is not the entire explanation for the lack of a robust finding, the interesting question then is not “whether” but “why?” That is, what is it that offsets the transfers and subsidized credit inherent in aid and prevents it from having a robust positive effect on growth?

Tuesday, July 24, 2007

In Iraq until 2009?

As these articles seem to indicate, we're going to be there for a while.

The Nation interviews Iraq vets

Check out the article here.

Monday, July 23, 2007

Analysis: Opacity and Legal Loopholes make CIA torture ban unenforceable

You may have had the news on in the background Friday and heard something that sounded vaguely comforting but at the same time quite surprising: President Bush had issued an executive order that would prohibit the CIA from using "torture and cruel, inhuman and degrading treatment, sexual abuse, denigration of religion and serious acts of violence" in its interrogations of suspected al Qaeda operatives and enemy combatants. The US, the president finally seemed to be acknowledging, had finally seen the error of of its ways; no longer would gross violations of the Geneva Conventions be accepted. For just a few examples of egregious war crimes allegedly committed by the US in prosecuting its "War on Terror", see here, here and here.

The world's remaining superpower would yield to the authority of the US Supreme Court's recent Rumsfeld v. Hamdi decision regarding so-called military commissions and resume living up to its obligations under international laws the various conventions to which it had long been a signatory to. Just like the administration already promised to do about a year ago.

But then, you realized that as with everything this administration claims, up is really down, war is peace and as David Cole says in his news analysis in Salon, You Have to Read the Fine Print.

Cole, a law professor at Georgetown who in the last few years has firmly established himself as one of the most knowledgable critics of the Bushies' systematic flouting of the Geneva Convention, notes that:
The executive order prohibits the CIA from using torture and cruel, inhuman and degrading treatment, sexual abuse, denigration of religion and serious "acts of violence" in its interrogations. While one might have thought that the impermissibility of such tactics in official US interrogations would go without saying, it has not been so since 9/11. This is an administration that narrowly defined "torture" to permit the use of sexual abuse, stress positions, injecting suspects with intravenous fluids until they urinate on themselves, prolonged sleep deprivation, exposure to extreme heat and cold and "waterboarding," i.e., simulated drowning.

This is an administration that adopted as official legal policy the counterintuitive and deeply immoral position that international law's ban on "cruel, inhuman and degrading treatment" did not apply to foreigners held by the US outside US borders. And this is an administration that opined that the president could order torture itself if he so chose as a way of "engaging the enemy," notwithstanding a federal criminal statute and ratified treaty banning torture under all circumstances, including war.

Despite it's lofty rhetoric, Cole's analysis reveals the numerous serious flaws with Bush's Executive Order. First, he observes that specific information about the authorized interrogation tactics employed by the CIA remains opaque; Bush's lawyers rationalize this by arguing interrogators need to "keep detainees guessing" about how far they can go in order to interrogate effectively. Cole puts to rest this specious claim by noting that the US Army has publicly revealed its rules of engagement in the form of its Field Manual (whether these regulations are actually followed, on the other hand, remains a separate question).

Second, he points out that "While the executive order flatly forbids torture and cruel, inhuman and degrading treatment, its failure to specify permissible and impermissible techniques seems designed to leave the CIA wiggle room".

Finally, and most importantly, Cole brings to our attention the disturbing reality that:
[T]he order creates no rights enforceable by any victim against the United States or its employees, while expressly offering CIA employees a defense against any attempt to hold them liable for abuse. The ultimate purpose of the law, in other words, is to protect the potential perpetrators, not the potential victims. (Emphasis added)

Nor is there any mechanism for enforcement outside the courts. The International Committee for the Red Cross ordinarily monitors treatment of detainees, and this oversight has historically been a critical safeguard against abuse. But this order applies to interrogation at CIA "black sites," secret prisons into which suspects are "disappeared" for years at a time, and from which the United States has barred the Red Cross or any other outside monitor. "Disappearances" are themselves a fundamental violation of international human rights, in large part because they facilitate abuse, yet this order allows that practice to continue unabated.


In the Washington Post, ace White House columnist Dan Froomkin effectively makes many of the same arguments as Cole.

The key graphs:
Friday's executive order -- compounded by a series of nonresponsive press statements by senior administration officials -- appears to leave CIA interrogators with considerable latitude to engage in harsh tactics that most people would likely consider torture.

And:
[T]he White House still refuses to say which tactics are banned and which are OK. To Bush and his aides, the right of Americans to know what is being done in our name is outweighed by their dubious conviction that such information would serve the enemy. Instead, a White House beset by credibility problems is asking us to trust it.

That final point, I think, pretty much nails the problem with all of this obfuscation.

More critical analysis from (yet another) Georgetown law professor Marty Lederman at Balkinization, William Douglas and Jonathan Landay at McClatchy's, with some good quotes from Human Rights Watch and the Brennan Center for Justice and Think Progress.

Exclusive Book Review: The Missing Peace

Just a few days ago, I was fortunate enough to receive an unsolicited, unpublished but well-written and provocative review of former US-Middle East diplomat Dennis Ross' 2004 book The Missing Peace: The Inside Story of the Fight for Middle East Peace. While I have not yet had the opportunity to read this rather long book, I have read quite a few reviews of it in the mainstream media (this link at website Metacritics will take you to many of them if you are so inclined). Additionally, this interview between Mother Jones and Ross provides some background on the former ambassador's views on the Israel-Palestine conflict.

But this review by freelance journalist Justin Soutar is likely the most critical analysis I've come across so far. I don't agree with many of Soutar's conclusions: I think that while Ross may indeed have been biased in his support for Israel, much of the blame for the ongoing violence can be laid at the Palestinian leaders' doorstep as well as Israel’s. I am convinced that many readers who have strong opinions as to the Israel-Palestine conflict (and who doesn't) will be forced to reconsider some of their assumptions and perhaps gain a new perspective on this maddeningly complex tragedy. I’m publishing it on my blog in the spirit of presenting controversial arguments, even those that strongly contradict my own beliefs, so that other opinions other than my own can be debated.

If you are interested in submitting a manuscript for publication, be it a book review, news analysis or something else that fits with the editorial content of this blog, see this FAQ for instructions. I am less concerned with whether I agree with your opinion; what really matters to me when I am making my decision is that your arguments are both logical and strongly supported by factual evidence (from reliable sources) and that your ideas are expressed both coherently and eloquently. Length can be anywhere from 500 words to 5,000.

So please feel free to let me know what you think of Soutar's article in the comments section and enjoy!

• • •


WHY IS PEACE “MISSING”?

By Justin Soutar


The Missing Peace: The Inside Story of the Fight for Middle East Peace, Dennis Ross, 740 pages, HarperCollins, New York, 2004.


There is no lack of books on the Arab-Israeli conflict, but few achieve the depth and rich detail of Dennis Ross’ The Missing Peace: The Inside Story of the Fight for Middle East Peace. No serious student of the conflict should pass it by. During the twelve years (1988 to 2000) that Ross enjoyed the status of preferred US peace diplomat for the Middle East, he acquired a wealth of invaluable experience. Under President George Bush as Director of Policy Planning for the US State Department, and then under President Clinton as Special Middle East Coordinator, he became intimately acquainted with the problems and hopes of the different Arab and Israeli peoples.

The resulting book is based on his painstaking memoirs and offers a goldmine of unknown, behind-the-scenes historical information you can’t find anywhere else: bold attempts, secret successes, discarded ideas, engaging anecdotes, and disturbing failures involved in the peace process. Like a stained-glass window, these bits of history together compose a detailed picture of the Arab-Israeli conflict—and why peace is “missing”—from the perspective of one seasoned diplomat.

Ross offers insightful, if not always accurate, descriptions of the personalities involved in the peace process. President Clinton is represented as an eager mediator who champions the cause of Palestinian Chairman Yasser Arafat and becomes a hero to the Palestinian people while attempting to keep the Israelis happy. Secretary of State Madeline Albright comes off as thoughtful, persuasive to both sides, deferential to Arafat, and rather enigmatic. Clever tactician and manipulator operating at several levels, swayed by the opinions of his subjects, Syrian President Hafez al-Assad gradually, partially “came around” to regular peace talks with Israelis, through Ross’s efforts.

The reader has to admire Ross’s intense determination to settle the Palestinian-Israeli conflict. No matter what difficulties or reverses bedeviled the peace process, he refused to give up. He could always wrestle at least a miniscule bit of progress from one side or both, as in the March 1991 “two-track approach” that restarted direct talks between Israel (then ruled by the uncompromising Prime Minister Yitzhak Shamir) and the Palestinian people. Another example recounted in detail in the book is how Ross squeezed a 13 percent Israeli troop movement from the Palestinian West Bank, brief delays in illegal settlement construction, and release of uncharged Palestinian prisoners out of Israel’s stubborn Prime Minister Binyamin Netanyahu. Throughout his career as a peace negotiator, the indefatigable Ross made hundreds of trips around the Middle East, often working around the clock and in the middle of vacations to solve disagreements between the parties.

Nevertheless, Ross’s ideological slant represents a major weakness. He subscribes to the extremist worldview that dictates an illegal and unjust, joint Israeli and American domination of the Middle East politically, economically and militarily as the only viable response to “Islamic” terrorism. Playing dumb is the method he uses to disguise and push this radical ideology. For example, he claims Yasser Arafat “made up stories about Israeli atrocities”, then a few pages later wonders why “[t]here wasn’t a new day, just a repetition of Arab hostility toward Israel.”

He does not see fit to acknowledge that frequent Israeli crimes provoke Arab hostility. In his mind, the Arabs are an insincere, weak, childish, dishonorable and innately aggressive lot. When Syrian President Hafez al-Assad demands his people’s rights to territorial sovereignty, he is pictured as “throwing a tantrum”; but when Israeli Prime Ministers demand their people’s rights to territorial sovereignty, they are pictured as “refusing to give in to terror." These double standards are clear instances of racism designed to exonerate Israel and justify its continued denial of Arab human rights.

Ross begins the first chapter by pointing out, “There is little prospect of mediating any conflict if one does not understand the historical narratives of each side.” Unfortunately, Ross does not understand either the Palestinian or the Israeli historical narratives very well. The chapter’s title, “Why Israelis and Palestinians See the World the Way They Do”, hints at his method: to learn the factors building each side’s attitudes, beliefs, perceptions, and actions. Working to carefully alter those factors in the right direction, Ross contends, is the key to peace. Thanks to his fanatical “Israel-first” ideology, his grasp of the Palestinian side is superficial and distorted.

The most glaring example of inconsistency is provided by the issue of Palestinian refugees. Throughout the book, Ross derides their inalienable right of return to Israel as a “perceived right” and brands Arab insistence on it as “bad behavior”, supporting their illegal permanent displacement. Israel’s forcible expulsion of one million Palestinians from both Jewish and Arab areas of Palestine in the late 1940s is to the Palestinian psyche what 9/11 is to us Americans: a catastrophe to be marked for all generations on their historical narrative. Yet Ross blames the Palestinian refugees themselves for their problem. In fact, the evicted Palestinians are still the legal and rightful owners of all the so-called Jewish “settlements” planted inside and outside Israel—and that until this stolen property is returned, the conflict will persist.

Ross’s Israeli extremism leads to denial of other Palestinian rights as well. During the book’s account of talks over control of the historic Jewish city of Hebron in the mid-1990s, Arafat points out a discrepancy. In the draft understandings, Palestinians living in designated zone H-1 of the ancient city were forbidden to keep and bear arms, while Israeli tanks could invade it at any time. This obvious injustice demonstrated Israel’s aggressive thrust, but Ross lumps the innocent Palestinian majority and the Palestinian terrorist minority into one giant menace to Israel to justify its illegal ban on Palestinian arms.

In addition to the 1948 evacuation of Palestinians, the reader should be aware that internationally documented Israeli crimes against the Palestinian people include the expulsion of 150,000 more Arabs from the Syrian Golan Heights in its 1967 war; cutting down Palestinian orchards and capping their wells to sabotage the Palestinian economy; chasing the entire Palestine Liberation Organization into Lebanon as punishment for the terrorist attacks of a few Palestinians, then subjecting Palestinian and Lebanese civilians alike to indiscriminate bombing raids during the 1980s Lebanese civil war; using poison gas during the generally peaceful 1987 Palestinian demonstrations; and bulldozing thousands of Palestinian homes from 1967 to the present.

All of these misdeeds—which are just the tip of the Israeli iceberg—have contributed to the longstanding Arab hostility toward Israel. What is more, the anti-Americanism of Palestinians and Arabs is a result of longtime, massive and disproportionate US military and economic support for Israel, which has enabled it to carry out these offenses. But none of these facts figure into Ross’s equation for building trust and commitment between the two sides. A peace divorced from history and the real world is no peace at all.

“In the zero-sum world of Arab-Israeli relations”, Ross notes that “every advance brought new problems.” Why? Because Ross lacked the willingness to confront Israel’s Zionist extremists just as firmly as he denounced Palestinian extremists. Every time he helped orchestrate a concession to the Palestinian or Syrian people, Israeli radical Zionists would howl with protest and agitate against it, some even perpetrating terrorist crimes. Then the next time around, Ross would typically back-pedal and strive to lower the expectations of Arab leaders, which would lead to increased Arab civilian terrorism, which in turn would prompt tighter Israeli security over Palestinian territory and punitive measures, finally deadlocking the peace negotiations and necessitating a fresh start.

Holes in Ross’s radical American-Israeli worldview are inescapable. On page 199, for example, he relates an experience in Israel that he says made him feel “uneasy”. He had helped establish a “Cairo channel” of talks between Israeli foreign minister Shimon Peres, Egyptian foreign minister Amre Moussa and PLO chairman Yasser Arafat on the subject of Palestinian elections. Upon arriving in Israel to assist those negotiations, Ross was greeted by violent demonstrations: radical Zionists seizing Arab territory, blocking traffic and committing terrorist attacks on innocent Palestinians in several villages to stop the peace process.

But he forged on with negotiations, which would soon lead to the 1995 Taba agreement—and win Prime Minister Yitzhak Rabin his subsequent assassination at the hands of one such Zionist terrorist. In an unusually candid admission, Ross notes that the Israeli government was either unable or unwilling to fight Israeli terrorism. The implications of that statement are enormous, not the least of which is that a state permitting terrorist crimes by its own citizens cannot possibly make lasting peace with its neighbors. By failing to address this massive and disturbing reality, Ross generates an equation for peace that doesn’t add up.

He claims that Arafat chose to adopt his status as a victim, which “meant that the international community or the United States should assume responsibility for resolving the conflict, and relieve him of it.” Not so at all. To the end Arafat did his utmost to resolve the conflict, despite running into Israeli brick walls (such as radical Zionist terrorism) at every turn. That’s what earned him the undisputed acclaim of the Palestinian people.

Terms in the “Israeli sociology” which Ross describes such as “unquestioned strength”, “creating facts on the ground”, and “self-reliance” are euphemisms for “arrogance”, “oppression” and “violation of international law”. Instead of merely recounting the experiences of a disinterested diplomat, the book’s highly professional yet readable style seems calculated to give Ross’s extremist ideas a moderate cover and to indoctrinate them, together with his bigoted way of thinking, into the unsuspecting reader’s mind. As the primary architect of the Middle East peace process for twelve years, Ross never swayed from this overarching doctrine: to advance the foremost strategic, political, economic, and military interests of the US and Israel.

Together, the final chapter “Learning the Lessons of the Past” and epilogue sum up Ross’s overall view of why the Israeli-Palestinian conflict remains unresolved to date—and how he thinks it should be resolved. He expresses outright arrogance: “It will always be Israel’s Arab partner, and not Israel, who decides if a deal can be done.” Ross seems to forget that Israeli terrorism and injustice has long endangered the peace process.

Just as unfair is his portrait of Arab leaders. While he is correct that Hafez al-Assad of Syria, King Hussein of Jordan, and others were not democratically elected, to say that they lack legitimacy with their peoples is a bald-faced lie. Even Iraqis preferred the repressive rule of Saddam Hussein to chaos and war. In another piece of propaganda, Ross says that leaders of Arab nations refuse to accept Israeli rights and needs. The fact of the matter is that Arab leaders receive and confirm their legitimacy by standing up courageously for the basic human rights of their people. The remarkably tight bond between most Arab leaders and their subjects demonstrates their legitimacy and proves Ross wrong.(*** Emphasis added for these two sentences; please see the end of this post for editorial comments)

On page 726, an important clue to Ross’s political philosophy is inadvertently revealed. He claims that fairness is ultimately a “subjective” idea. If that were true, organizations such as the Anti-Defamation League and Fairness and Accuracy in Reporting would be no fairer than their enemies, and Fox News could be “Fair and Balanced” for you but not for me. On the contrary, this appeal to subjectivism is designed to advance American-Israeli global interests by sneaking around the universal principles of justice laid down by God in the human heart. Such a trick allows Ross to define what is fair and just. Anything that impedes American-Israeli domination of the world is unfair and unjust—in Ross’s eyes. To say that nothing will stand in our way, not even God’s inalienable principles of justice, is classic extremism. The Palestinian right to return, statehood, and the international character of Jerusalem are all sacrificed to the pride and unrestrained appetite for wealth and power of these two dominant nations.

Despite his fervent support for the “War on Terrorism” and especially the war in Iraq, Ross airs plenty of criticism of President Bush’s strategy for peace in the Middle East. He notes with dismay that the US president did not appoint a peace envoy to replace him. Furthermore, he explains how the Bush administration made a number of fallacious assumptions and blunders which have collectively halted the peace process, including its defeatist refusal to pressure Israeli Prime Minister Ariel Sharon to discuss peace with Yasser Arafat.

Ross explains that the administration’s obsession with Iraq has dominated our entire policy toward the Middle East; involving the EU, Russia, and the UN in America’s “road map” to Middle East peace was in fact designed to gain their support for the Iraq war; he strongly criticizes this approach. Moreover, persistent misunderstandings doomed the "road map" from the beginning: “It was almost as if the administration felt that the "road map" to peace would be self-implementing. But how could it be? It had not been negotiated with the parties. It had fifty-two paragraphs, and each side interpreted each one differently.”

The book’s abundant incoherence and hypocrisy come together in the final chapter and epilogue. To distract the reader from the book’s extremist “Israel-first” worldview, a sufficient number of true statements are woven through these conclusions (just as they are sprinkled throughout the volume). While Ross maintains previously that terrorism “could not be appeased” and repeatedly warns against “giving in to terror”, in the end he capitulates to Israeli fundamentalists: “domestic Israeli politics dictated appeasing the settlers.” Ross contends Israel should withdraw from the occupied territories and “some” settlements; but if Palestinians had taken chunks of Israeli land, he would certainly demand every inch of it back. He says that “Arafat never went through any transformation at all” and promoted hostility to Israel, yet Ross witnessed him recognize the state of Israel in the Oslo Accords against Palestinian terrorist protests in 1993.

Most contradictorily of all, he defends the 30-foot high Israeli apartheid wall, which he terms a “fence”, being constructed in the middle of the Holy Land to protect Israel from Palestinian terrorism. Ross’s acceptance of this wall is a metaphor for his acceptance of Israeli extremism. Though he is right to insist that terrorism must stop, a wall cannot stop either Palestinian or Israeli terrorism. It will impede, not facilitate, the transformation of attitudes and policies which he prescribes as necessary for peace. Furthermore, he states Israel must surrender control over much of the occupied territory (which it has appeared to start doing), but the wall tightens that control.

Ross goes on to make the specious claim that Palestinian terrorism is not a result of the Arab-Israeli conflict. He says it serves as a “pretext to divert attention and anger away from internal failings and onto the US and Israel,” which the Arab media makes “responsible for every conceivable ill.” In Ross’s imaginary world, scheming Arab leaders stir up hatred of Israel and America among their people, leading to terrorist acts, which are then used to deflect attention from their own criminal government. However, the US and Israel are largely responsible for perpetrating the conflict. And Palestinian terrorism is a reaction to injustice, not a game of follow-the-leader.

But on the positive side, after dismissing the radical “Israel-first” ideology, I found The Missing Peace more readable and informative than I had anticipated. Given its sheer bulk, I thought it would be endlessly technical, but Ross’s prose flows in a simple, jargon-free style. Catchwords and technical terms are promptly defined. The depth of historical information it contains about the Arab-Israeli dispute during the relatively quiescent period between the Cold War and the September 11th tragedy is truly invaluable.

Nevertheless, it’s crucial to read between the lines when studying this volume, since hundreds of polished sentences are highly deceptive and misleading. Far from the truth-teller or myth-dispeller he claims to be, Ross is a knowledgeable historian and talented propagandist. A little critical thinking pulls apart at the seams the extremist worldview which infects the entire book. In sum, The Missing Peace is an absorbing narrative of the epic conflict of our time--and how the radical American-Israeli ideology threatens to dash all hope for peace.


Copyright © 2007 by Justin Soutar. This article may not be reproduced in whole or in part without the explicit written permission of the copyright holder.


• • •


***Frankly, I don't think this argument is sustained by the facts, although I would be willing to review and publish as an update additional supporting evidence. Well-respected and unbiased human rights NGOs such as Amnesty International and Human Rights Watch have for many years documented Middle East dictators' numerous violations of international law with respect to the human rights of their citizens, let alone war crimes committed against Israeli civilians. See here, here, here and here for just a few examples.
-Steven Josselson

Furthermore, given the fact that the leaders of these countries are more often than not not democratically elected by their citizens, nor do citizens enjoy basic civil rights such as freedom of speech or assembly in many cases, it is unclear how one could definitively claim that their autocratic rule is somehow legitimized--without coercion--by public opinion. It seems even more dubious that these dictators stand up for their "subjects" (ironically Mr. Soutar's word choice, not mine) human rights given the aforementioned evidence.

I would stress that I am not implying that Israel isn't also responsible for the commission of human rights violationsvis-à-vis the Palestinian people who live in desperate conditions in the Territories; but I do think as a matter of intellectual honesty it is important not to simply give the dictators of Arabic countries surrounding Israel with a free pass in response.

Update: Soutar responds:
I just want to clarify what I said about Arab leaders. You stated: "I would stress that I am not implying that Israel isn't also responsible for the commission of human rights violations vis-à-vis the Palestinian people who live in desperate conditions in the Territories; but I do think as a matter of intellectual honesty it is important not to simply give the dictators of Arabic countries surrounding Israel with a free pass in response."

I apologize if I did not articulate well enough my position on the subject of Arab leaders' legitimacy. Nowhere do I give the Arab leaders a free pass. I admitted, for example, that the rule of Saddam Hussein was "repressive". In addition, the approval ratings of anti-American leaders by their own people--throughout the Middle East as a whole--tend to be favorable by a landslide. Moreover, the legitimacy of particular leaders can change drastically. The fiercely anti-American Ayatollah Khomeini was wildly popular when he flew into Iran in 1979, but he quickly became so ruthless that by 1982 the people were opposed to his rule.

As a general rule, the legitimacy of an Arab leader is inversely proportional to his support for American and Israeli foreign policies. That is certainly not the only factor in rendering a leader legitimate, but in the modern Middle East it is the key factor. As much as the US government has tried to hide the fact, the American-leaning rulers of Saudi Arabia, Egypt and Pakistan are repressive and seriously unpopular in their respective countries--yet they all are hanging onto office.

One last thought: a leader need not win an election by popular vote in order to be legitimate. The Arabs have had monarchies for thousands of years, and if that is the kind of government that suits them, let them have it.


Update #2: Soutar can be reached via email at justin_86 [at] earthlink.net.