(Source Article: IDB approves $90 million to universal health insurance - IADB.org)
The Inter-American Development Bank recently announced that they would provide a $90 million loan to Ecuador for a universal healthcare program whose first priority is giving access to health insurance to the poor. Despite improvements in overall health in the country, there still remains huge gaps of health-related inequalities that are linked to such factors as income, education, race, etc.
The project will be put into action by Ecuador's Secretariat for the Millennium Development Goals (SODEM) and the Ministry of Public Health. The first phase of the program will seek to improve the quality of services for those in the lowest income quintiles, and gradually work up the income scale. The program will provide a basic package of services: health promotion, collective and individual preventive and curative healthcare. The World Bank also approved $90 million earlier this year to assist in the implementation of this program (see World Bank approves $90 million - World Bank News)
The loan is for 25 years, including a four-year grace period, with interest charges partially covered by the IDB itself. The plan, according to Ecuador’s President, intends to provide universal healthcare to all Ecuadorians by 2015, as part of the MDGs. (see Statement by the President of the Republic of Ecuador – UN.org)
Friday, June 30, 2006
Thursday, June 29, 2006
US economy sees stunning growth
(Source Article: US first-quarter economic growth - Reuters)
During the first quarter, the US economy expanded at 5.6%, the highest growth in almost three years. However, with the increasing cost of gasoline, spending has subsided and that growth rate is fading, experts said. (See US economy expanded at 5.6% - bloomberg.com)
Additionally, the trade deficit widened less than previously expected—all following a paltry 1.7% increase in GDP over the last quarter 2005. This rate wont be sustained with a decreasing amount of spending, but the economy didn’t slow down enough to prevent the Fed Chairman from raising interest rates yet again; on Thursday, the Fed raised rates for the 17th time in a row amidst continuing worries of inflation. Rates went up 5.25%, the highest percentage since March 2001. (see Fed raises rates – Reuters)
The trade deficit last quarter was a staggering US$ 660.9 billion, down from a previously estimated $669.9 billion; this deficit subtracted .24 percentage points from growth, but last month’s estimates expected .55 percentage points to be subtracted. Business investment and increased government spending contributed heavily to the first quarter’s remarkable growth.
Recently a study at UCLA predicted that the US economy will not see a recession in the near future, despite continuing sluggish growth attributed to low consumer spending and a downturn in the housing market—with home values flattening and a potential burst in the real estate bubble, less home equity tapping to fuel consumption will occur. (see US economy to avoid recession - Reuters)
During the first quarter, the US economy expanded at 5.6%, the highest growth in almost three years. However, with the increasing cost of gasoline, spending has subsided and that growth rate is fading, experts said. (See US economy expanded at 5.6% - bloomberg.com)
Additionally, the trade deficit widened less than previously expected—all following a paltry 1.7% increase in GDP over the last quarter 2005. This rate wont be sustained with a decreasing amount of spending, but the economy didn’t slow down enough to prevent the Fed Chairman from raising interest rates yet again; on Thursday, the Fed raised rates for the 17th time in a row amidst continuing worries of inflation. Rates went up 5.25%, the highest percentage since March 2001. (see Fed raises rates – Reuters)
The trade deficit last quarter was a staggering US$ 660.9 billion, down from a previously estimated $669.9 billion; this deficit subtracted .24 percentage points from growth, but last month’s estimates expected .55 percentage points to be subtracted. Business investment and increased government spending contributed heavily to the first quarter’s remarkable growth.
Recently a study at UCLA predicted that the US economy will not see a recession in the near future, despite continuing sluggish growth attributed to low consumer spending and a downturn in the housing market—with home values flattening and a potential burst in the real estate bubble, less home equity tapping to fuel consumption will occur. (see US economy to avoid recession - Reuters)
G8 Nations Pressure Iran Ahead of Annual Meetings
Source: Cnn.com
The annual G8 meetings will take place July 15-17 in St. Petersburg, Russia. Prior to those meetings, member countries are hopeful that Iran will respond to a United Nations proposal dealing with Iran’s nuclear program. All 5 members of the UN Security Council are involved in the pressure.
A statement released by G8 foreign ministers expects a “clear and substantive Iranian response to these proposals” when an Iranian and an European Union representative meet on July 5th. The UN proposal offers economical and political incentives if Iran ceases its uranium enrichment program.
Iran maintains that its programs serve peaceful purposes, while others believe it is seeking a nuclear weapon. In response to a US offer to join the EU in negotiations, Ayatollah Ali Khamenei, Iran’s supreme leader, said “negotiating with America does not have any benefit for [Iran] and we do not need such negotiations.”
The annual G8 meetings will take place July 15-17 in St. Petersburg, Russia. Prior to those meetings, member countries are hopeful that Iran will respond to a United Nations proposal dealing with Iran’s nuclear program. All 5 members of the UN Security Council are involved in the pressure.
A statement released by G8 foreign ministers expects a “clear and substantive Iranian response to these proposals” when an Iranian and an European Union representative meet on July 5th. The UN proposal offers economical and political incentives if Iran ceases its uranium enrichment program.
Iran maintains that its programs serve peaceful purposes, while others believe it is seeking a nuclear weapon. In response to a US offer to join the EU in negotiations, Ayatollah Ali Khamenei, Iran’s supreme leader, said “negotiating with America does not have any benefit for [Iran] and we do not need such negotiations.”
Tuesday, June 27, 2006
Germany’s Europe Minister Comments on European Constitutional Referendums
Source: EUpolitix.com
Günter Gloser, Germany’s Europe minister considers the recent rejections of the European Constitution by voters in France and the Netherlands to be “accidental” and not an obstacle to EU progress.
Gloser was speaking at a launch of a book on the constitution, written by Jean-Claude Piris, the director-general council of the EU’s legal service.
While expressing that all members of the EU need the benefits that will come from the treaty, Gloser concluded that the outcome of the French and Dutch referendums would have been reversed if there was “more positive economic circumstances and better information about the treaty in both countries.”
Gloser stated that Germany is “against [implementing select sections that are uncontroversial]. We know that the treaty will fall apart if we begin—now or in the next months—to extract parts from the treaty and put them into force separately.”
He noted the upcoming elections in France and the Netherlands in the first part of 2007 as important in preventing “the constitutional treaty from being unraveled.”
The comments come ahead of Germany’s assumption of the EU presidency in January, when Berlin will assume the responsibilities of fixing the constitutional problems.
Günter Gloser, Germany’s Europe minister considers the recent rejections of the European Constitution by voters in France and the Netherlands to be “accidental” and not an obstacle to EU progress.
Gloser was speaking at a launch of a book on the constitution, written by Jean-Claude Piris, the director-general council of the EU’s legal service.
While expressing that all members of the EU need the benefits that will come from the treaty, Gloser concluded that the outcome of the French and Dutch referendums would have been reversed if there was “more positive economic circumstances and better information about the treaty in both countries.”
Gloser stated that Germany is “against [implementing select sections that are uncontroversial]. We know that the treaty will fall apart if we begin—now or in the next months—to extract parts from the treaty and put them into force separately.”
He noted the upcoming elections in France and the Netherlands in the first part of 2007 as important in preventing “the constitutional treaty from being unraveled.”
The comments come ahead of Germany’s assumption of the EU presidency in January, when Berlin will assume the responsibilities of fixing the constitutional problems.
Palestinian parties reach agreement
(Source Articles: Hamas and Fatah agree line on Israel - FT.com
Palestinian factions agree to recognize Israel? - CNN.com)
After months of high-tension between the Hamas and Fatah parties (the former being the current ruling party) in Palestine, the two factions have finally reached an agreement that seems to, at least, implicitly recognize Israel as a sovereign nation, though the militant Hamas attempted to cast doubt on that notion.
This agreement comes just days after a crisis began to erupt between Israel and Palestine due to the abduction of an Israeli soldier. On Monday, Israeli troops scrambled to Gaza and began threatening military action if the soldier was not returned. Even Egyptian and French diplomats involved themselves in order to quash a serious backlash from Israel. (see Palestinians and Israelis struggle to resolve crisis - FT.com)
Israeli officials believe that Meshaal, a Hamas leader exiled in Syria, gave the orders to kidnap the Israeli soldier and destroy any chance for peace between Israel and Palestine, but are nevertheless holding the Palestinian authority responsible until the soldier is returned. (see Israel threatens action over kidnapped soldier)
The kidnapping has exposed division amongst Hamas leaders, whose military takes credit for the kidnapping, but whose political branch says the soldier must be freed. Some factions have agreed to provide information to Israel about the missing soldier if the latter agreed to release Palestinians being held in Israeli jails.
Hamas and Fatah have been negotiating for months over whether to implement a plan drafted by both Fatah and Hamas members being held in Israeli jails. This plan would essentially have a Palestinian state side-by-side with an implicitly recognized Israeli state. Nevertheless, Israel and a few Hamas leaders have their doubts about whether the agreement recognizes Israel. Meanwhile, the document is expected to be approved by the leaders of Hamas and Fatah sometime today, and the international community waits to see if it will, indeed, recognize Israel.
Palestinian factions agree to recognize Israel? - CNN.com)
After months of high-tension between the Hamas and Fatah parties (the former being the current ruling party) in Palestine, the two factions have finally reached an agreement that seems to, at least, implicitly recognize Israel as a sovereign nation, though the militant Hamas attempted to cast doubt on that notion.
This agreement comes just days after a crisis began to erupt between Israel and Palestine due to the abduction of an Israeli soldier. On Monday, Israeli troops scrambled to Gaza and began threatening military action if the soldier was not returned. Even Egyptian and French diplomats involved themselves in order to quash a serious backlash from Israel. (see Palestinians and Israelis struggle to resolve crisis - FT.com)
Israeli officials believe that Meshaal, a Hamas leader exiled in Syria, gave the orders to kidnap the Israeli soldier and destroy any chance for peace between Israel and Palestine, but are nevertheless holding the Palestinian authority responsible until the soldier is returned. (see Israel threatens action over kidnapped soldier)
The kidnapping has exposed division amongst Hamas leaders, whose military takes credit for the kidnapping, but whose political branch says the soldier must be freed. Some factions have agreed to provide information to Israel about the missing soldier if the latter agreed to release Palestinians being held in Israeli jails.
Hamas and Fatah have been negotiating for months over whether to implement a plan drafted by both Fatah and Hamas members being held in Israeli jails. This plan would essentially have a Palestinian state side-by-side with an implicitly recognized Israeli state. Nevertheless, Israel and a few Hamas leaders have their doubts about whether the agreement recognizes Israel. Meanwhile, the document is expected to be approved by the leaders of Hamas and Fatah sometime today, and the international community waits to see if it will, indeed, recognize Israel.
Monday, June 26, 2006
New US exports plan upsets Beijing
(Source Article: China anger at US exports plan - FT.com)
The US has new proposals underway that will limit exportation of high technology goods to China—a move that has angered not only Beijing, but US industry, whose competitive edge in the Chinese market will be severely affected. The new restrictions are a result of growing concern in US government circles about China’s increasingly powerful military.
Recently, the US Pacific Command invited Chinese military officials to view US military exercises in Guam; observers believe the move had a strategic purpose—to improve US-China military relations and perhaps open up an exchange whereby the US would be invited to view Chinese military exercises, and thus better gauge the strength of China’s increasingly modernized military. (see MAC warns of cozy US-China military relations – TAIPEI Times.com)
Further, after President Hu Jintao’s visit to the US in April, Chinese officials have reiterated their president’s message in aiming to increase dialogue, consideration, cooperation and mutual trust between the two governments—particularly trust in their respective military operations. (see China open to military exchanges with US – Xinhua news)
Will any amount of reassuring diplomacy between the US and China quash fears about the Chinese rise to global power? As the CATO Institute has remarked, most of the fear in the US government about China’s military is simply a result of a perceived need to have a very wide and sweeping US defensive barrier. (see Is Chinese Military Modernization a threat to the US? - CATO.org)
The US has new proposals underway that will limit exportation of high technology goods to China—a move that has angered not only Beijing, but US industry, whose competitive edge in the Chinese market will be severely affected. The new restrictions are a result of growing concern in US government circles about China’s increasingly powerful military.
Recently, the US Pacific Command invited Chinese military officials to view US military exercises in Guam; observers believe the move had a strategic purpose—to improve US-China military relations and perhaps open up an exchange whereby the US would be invited to view Chinese military exercises, and thus better gauge the strength of China’s increasingly modernized military. (see MAC warns of cozy US-China military relations – TAIPEI Times.com)
Further, after President Hu Jintao’s visit to the US in April, Chinese officials have reiterated their president’s message in aiming to increase dialogue, consideration, cooperation and mutual trust between the two governments—particularly trust in their respective military operations. (see China open to military exchanges with US – Xinhua news)
Will any amount of reassuring diplomacy between the US and China quash fears about the Chinese rise to global power? As the CATO Institute has remarked, most of the fear in the US government about China’s military is simply a result of a perceived need to have a very wide and sweeping US defensive barrier. (see Is Chinese Military Modernization a threat to the US? - CATO.org)
Saturday, June 24, 2006
World Bank tackles gas flaring
(Source Article: Reducing the gas burning - World Bank News)
Every year, some 150 billion cubic meters of natural gas (roughly equivalent to 25% of annual US consumption) goes up in smoke as a result of “flaring”—the burning of excess natural gas that’s a byproduct of oil production. It’s been an effective way to process oil, but the World Bank recently warned that it needs to stop, because it’s a huge contributor to greenhouse gas emissions, in addition to being a waste of a valuable energy resource.
The World Bank’s Global Gas Flaring Reduction Partnership (GGFR) is a public-private partnership composed of World Bank officials and representatives of large multinational corporations, such as BP and ExxonMobil, as well as countries from US to Norway. Gas flaring is a problem in countries where oil is being produced that are without adequate facilities to process natural gas that comes to the surface with oil being pumped; flaring has provided a remedy for this natural byproduct. (see GGFR News) Efforts by the GGFR aim to commercialize such natural gas, rather than flare it.
The World Bank’s Bent Svensson says that if carbon dioxide emissions from flaring were stopped, then 13% of the total amount developed countries have agreed to reduce under the Kyoto Protocol would be met. The main barriers preventing such a stoppage, particularly in developing countries, are limited access to international gas markets, lack of resources to put the necessary gas infrastructure in place, and an undeveloped regulatory framework. (see Fact sheet: GGFR)
Despite its own resources, the GGFR cannot by itself implement the necessary infrastructure to completely reduce gas flaring—it relies on private development, but offers financial incentives for such investment. So far, the GGFR consists of member countries who comprise 50% of gas flaring countries, and those members have already agreed on a global standard for flaring reduction—the biggest achievement of the partnership thus far.
Every year, some 150 billion cubic meters of natural gas (roughly equivalent to 25% of annual US consumption) goes up in smoke as a result of “flaring”—the burning of excess natural gas that’s a byproduct of oil production. It’s been an effective way to process oil, but the World Bank recently warned that it needs to stop, because it’s a huge contributor to greenhouse gas emissions, in addition to being a waste of a valuable energy resource.
The World Bank’s Global Gas Flaring Reduction Partnership (GGFR) is a public-private partnership composed of World Bank officials and representatives of large multinational corporations, such as BP and ExxonMobil, as well as countries from US to Norway. Gas flaring is a problem in countries where oil is being produced that are without adequate facilities to process natural gas that comes to the surface with oil being pumped; flaring has provided a remedy for this natural byproduct. (see GGFR News) Efforts by the GGFR aim to commercialize such natural gas, rather than flare it.
The World Bank’s Bent Svensson says that if carbon dioxide emissions from flaring were stopped, then 13% of the total amount developed countries have agreed to reduce under the Kyoto Protocol would be met. The main barriers preventing such a stoppage, particularly in developing countries, are limited access to international gas markets, lack of resources to put the necessary gas infrastructure in place, and an undeveloped regulatory framework. (see Fact sheet: GGFR)
Despite its own resources, the GGFR cannot by itself implement the necessary infrastructure to completely reduce gas flaring—it relies on private development, but offers financial incentives for such investment. So far, the GGFR consists of member countries who comprise 50% of gas flaring countries, and those members have already agreed on a global standard for flaring reduction—the biggest achievement of the partnership thus far.
The Venezuela and US feud
(Source Article: Venezuela fights US bid to keep it off UN panel - MSNBC)
President Chavez is struggling to obtain a seat on the UN’s Security council, while the US aims to prevent that from happening via lobbying in favor of Guatemala. This year, an open seat will become available, and Venezuela has garnered support from countries such as Argentina, Brazil and Syria. To counter such efforts, the US has raised concern that Venezuela’s ties with Iran could hinder current efforts to have the latter halt its nuclear program.
Chavez insists that Venezuela’s presence on the council will allow it to represent the interests of developing economies in South America, and his UN ambassador stated that “[t]he position stated by...the US government – that countries should not vote for us because we represent a danger – shows a lack of respect.” The feud between the two countries continues this week as Chavez announced that oil prices would rise $20 to $30 dollars a barrel if his country implemented an embargo on supplies to the US. (see Venezuela embargo – Reuters)
While, according to Venezuela’s ambassador, the US wields much power in terms of the UN (holding a permanent seat and veto power), Venezuela itself wields considerable power over the global markets in its position as the world’s 5th largest oil exporter. Recently, a US Congressional study announced that the US is not adequately prepared for an embargo by Venezuela—Chavez has threatened to implement such an embargo if the US “continues to ‘plot’ his overthrow”. (see US not ready for Chavez oil ban – MSNBC)
Meanwhile, Chavez continues to search for alternative markets for Venezuela’s crude, in the event it would lose, or stop supplying oil to, the US. However, US officials have stated that attempts by Chavez to find markets elsewhere—including China—would be futile, since Chinese refineries, unlike those Venezuela has in the US, are not configured to process the heavy crude Venezuela produces.
President Chavez is struggling to obtain a seat on the UN’s Security council, while the US aims to prevent that from happening via lobbying in favor of Guatemala. This year, an open seat will become available, and Venezuela has garnered support from countries such as Argentina, Brazil and Syria. To counter such efforts, the US has raised concern that Venezuela’s ties with Iran could hinder current efforts to have the latter halt its nuclear program.
Chavez insists that Venezuela’s presence on the council will allow it to represent the interests of developing economies in South America, and his UN ambassador stated that “[t]he position stated by...the US government – that countries should not vote for us because we represent a danger – shows a lack of respect.” The feud between the two countries continues this week as Chavez announced that oil prices would rise $20 to $30 dollars a barrel if his country implemented an embargo on supplies to the US. (see Venezuela embargo – Reuters)
While, according to Venezuela’s ambassador, the US wields much power in terms of the UN (holding a permanent seat and veto power), Venezuela itself wields considerable power over the global markets in its position as the world’s 5th largest oil exporter. Recently, a US Congressional study announced that the US is not adequately prepared for an embargo by Venezuela—Chavez has threatened to implement such an embargo if the US “continues to ‘plot’ his overthrow”. (see US not ready for Chavez oil ban – MSNBC)
Meanwhile, Chavez continues to search for alternative markets for Venezuela’s crude, in the event it would lose, or stop supplying oil to, the US. However, US officials have stated that attempts by Chavez to find markets elsewhere—including China—would be futile, since Chinese refineries, unlike those Venezuela has in the US, are not configured to process the heavy crude Venezuela produces.
Friday, June 23, 2006
Google Seeks Middle East Expansion
Source: FT
As the Middle East’s and North Africa’s online populations increase, Google, Inc. is seeking to expand its business into the region. It has already gone as far as producing some of its services in Arabic, as part of an effort to increase internet usage in the region.
They have released an Arabic version of their Google News feature, which it the first central platform for Arab media. Other products released include an e-mail service and an English translator.
The hope is that the services will increase political, social, and economic ties in the region and have an effect similar to Arab satelitte television’s launch, according to Hussein Amin, chair of the Journalism and Mass Communications department of the American University in Cairo. He anticipates this effort will lead to an increase in the number of Arabic websites.
One of the concerns is that some of the govenrments in the region will pressure Google to release user information. Google maintins that it will not impliment a similar service that it did in China, where it filtered some search results as a result of pressure from the Chinese government.
One of Google’s main competetors, MSN, also plans an Arab e-mail serivce.
As the Middle East’s and North Africa’s online populations increase, Google, Inc. is seeking to expand its business into the region. It has already gone as far as producing some of its services in Arabic, as part of an effort to increase internet usage in the region.
They have released an Arabic version of their Google News feature, which it the first central platform for Arab media. Other products released include an e-mail service and an English translator.
The hope is that the services will increase political, social, and economic ties in the region and have an effect similar to Arab satelitte television’s launch, according to Hussein Amin, chair of the Journalism and Mass Communications department of the American University in Cairo. He anticipates this effort will lead to an increase in the number of Arabic websites.
One of the concerns is that some of the govenrments in the region will pressure Google to release user information. Google maintins that it will not impliment a similar service that it did in China, where it filtered some search results as a result of pressure from the Chinese government.
One of Google’s main competetors, MSN, also plans an Arab e-mail serivce.
Orange Revolution Reunites, Forms New Majority in Ukraine’s Parliament
Source: Fox News
The Orange Revolution, a pro-Western coalition, announced a reunification that will create a 243-seat majority in Ukraine’s 450- member parliament. This new majority aims to position themselves away from Russia.
Former Prime Minister Yulia Tymoskenko, who will return to power when the Cabinet is announced next week, recognized this as a second opportunity for the country to be democratic.
The three parties that formed the coalition have been in negotiations for three months to resolve their views on economic and foreign policy issues. Tymoskenko called for “a smart and predictable economic policy.”
The slight majority will face challenges when contested situations are presented for discussion, such as cooperation with NATO. Many members of the coalition were adversaries in the March elections.
The opposition, a pro-Russian party, has vowed to put up a strong fight against the Orange Revolution.
The Orange Revolution, a pro-Western coalition, announced a reunification that will create a 243-seat majority in Ukraine’s 450- member parliament. This new majority aims to position themselves away from Russia.
Former Prime Minister Yulia Tymoskenko, who will return to power when the Cabinet is announced next week, recognized this as a second opportunity for the country to be democratic.
The three parties that formed the coalition have been in negotiations for three months to resolve their views on economic and foreign policy issues. Tymoskenko called for “a smart and predictable economic policy.”
The slight majority will face challenges when contested situations are presented for discussion, such as cooperation with NATO. Many members of the coalition were adversaries in the March elections.
The opposition, a pro-Russian party, has vowed to put up a strong fight against the Orange Revolution.
Thursday, June 22, 2006
Panama Canal to receive upgrade
(Source Article: Panama seeks to expand canal - FT.com)
Panama is currently asking for international support to finance a $US 5.25 billon dollar expansion to the famous canal within eight years time. Currently, 5% of the world’s trade passes through the canal, and such an expansion would transform the global economy by allowing the biggest ships to sail directly from East Asia to the east coast of the US. Panama, however, needs to win the support of its people through a referendum later this year, as well as gain support from international financiers who will fund half of the project’s cost.
When the canal began operating in 1914, there was not a ship in the world too large to fit through it—but now the biggest container ships cannot fit. The existence of these post-Panamax (those too large to fit through the canal) ships is a result of booming trade between the US and Asia, and the global economy’s eagerness in transporting goods between the two regions. Currently, these vessels sail through the much longer and expensive route via the Suez Canal. The expansion would allow ships 366m long and 49m wide to pass through: larger than any container ship now built, and double the size the canal currently supports.
The expansion would also discourage the construction of competing projects that threaten to render the canal useless; such competition includes the existing Los Angeles-Long Beach port complex, which receives the bulk of Asia-US trade flow, and upcoming ports in Mexico. (see Panama is preparing to beef up canal - LAtimes.com)
The Panamanian government receives some 14% of its $3.4 billion budget from canal revenues—the failure to expand soon could deal a severe blow to that budget. Polls show that 56% of Panamanians favor the expansion—as well as most international shippers, despite the fact that it would result in the price of their tolls nearly doubling over the next 20 years. An increase in toll prices, as well as increased traffic due to increased capacity, would balloon the $489 million in revenues the government currently receives from the canal to nearly $4 billion by 2025. (see Plan to enlarge canal stirs controversy - USAToday)
Panama is currently asking for international support to finance a $US 5.25 billon dollar expansion to the famous canal within eight years time. Currently, 5% of the world’s trade passes through the canal, and such an expansion would transform the global economy by allowing the biggest ships to sail directly from East Asia to the east coast of the US. Panama, however, needs to win the support of its people through a referendum later this year, as well as gain support from international financiers who will fund half of the project’s cost.
When the canal began operating in 1914, there was not a ship in the world too large to fit through it—but now the biggest container ships cannot fit. The existence of these post-Panamax (those too large to fit through the canal) ships is a result of booming trade between the US and Asia, and the global economy’s eagerness in transporting goods between the two regions. Currently, these vessels sail through the much longer and expensive route via the Suez Canal. The expansion would allow ships 366m long and 49m wide to pass through: larger than any container ship now built, and double the size the canal currently supports.
The expansion would also discourage the construction of competing projects that threaten to render the canal useless; such competition includes the existing Los Angeles-Long Beach port complex, which receives the bulk of Asia-US trade flow, and upcoming ports in Mexico. (see Panama is preparing to beef up canal - LAtimes.com)
The Panamanian government receives some 14% of its $3.4 billion budget from canal revenues—the failure to expand soon could deal a severe blow to that budget. Polls show that 56% of Panamanians favor the expansion—as well as most international shippers, despite the fact that it would result in the price of their tolls nearly doubling over the next 20 years. An increase in toll prices, as well as increased traffic due to increased capacity, would balloon the $489 million in revenues the government currently receives from the canal to nearly $4 billion by 2025. (see Plan to enlarge canal stirs controversy - USAToday)
Tuesday, June 20, 2006
Africa’s role in China’s oil search
(Source Article: Wen woos Africa in quest for oil - FT.com)
Wen Jiabao, the Chinese premier, is currently visiting seven African countries in order to stimulate negotiations for oil production on the continent; Wen’s is the third visit this year by a Chinese leader, demonstrating the urgency of China’s demand for the resources available in Africa. On Tuesday, Wen will visit Angola—China’s second largest provider of imported oil, providing over a third of such imports.
Two-way trade between the two countries increased by 35% last year to reach $US 39.7 billion, a fourfold increase since 2001. China is now the continent’s third largest commercial partner, behind the U.S. and France. In exchange for oil supplies, China has made available a $3 billion credit line to Angola in order to help that country recover from its years of war. Some African countries run a trade deficit with China, and eagerly await further development in Africa by the country. (see S.Africa seeks to spur Chinese investment - Reuters)
While Chinese involvement on the continent means an increase in economic development, critics in the US and Europe have said that such involvement impedes efforts to eliminate oppressive regimes in countries like Sudan and Zimbabwe—Chinese deals keep such regimes thriving. (see Chinese PM launches African tour - BBC.com)
Over the weekend, Wen signed 10 oil, natural gas and telecommunications deals with African countries—and also pledged over $100 million to development in the region. China’s oil firms have had an increasing presence on the African continent since the late 1990s, when intense economic growth in China far outpaced domestic oil supplies. (see Chinese premier visits Congo - Houston Chronicle)
Wen Jiabao, the Chinese premier, is currently visiting seven African countries in order to stimulate negotiations for oil production on the continent; Wen’s is the third visit this year by a Chinese leader, demonstrating the urgency of China’s demand for the resources available in Africa. On Tuesday, Wen will visit Angola—China’s second largest provider of imported oil, providing over a third of such imports.
Two-way trade between the two countries increased by 35% last year to reach $US 39.7 billion, a fourfold increase since 2001. China is now the continent’s third largest commercial partner, behind the U.S. and France. In exchange for oil supplies, China has made available a $3 billion credit line to Angola in order to help that country recover from its years of war. Some African countries run a trade deficit with China, and eagerly await further development in Africa by the country. (see S.Africa seeks to spur Chinese investment - Reuters)
While Chinese involvement on the continent means an increase in economic development, critics in the US and Europe have said that such involvement impedes efforts to eliminate oppressive regimes in countries like Sudan and Zimbabwe—Chinese deals keep such regimes thriving. (see Chinese PM launches African tour - BBC.com)
Over the weekend, Wen signed 10 oil, natural gas and telecommunications deals with African countries—and also pledged over $100 million to development in the region. China’s oil firms have had an increasing presence on the African continent since the late 1990s, when intense economic growth in China far outpaced domestic oil supplies. (see Chinese premier visits Congo - Houston Chronicle)
Friday, June 16, 2006
Bill Gates steps down at Microsoft, steps up philanthropy
(Source Article: Gates swaps software for philanthropy - FT.com)
This week Bill Gates announced his plans to greatly reduce his time spent managing Microsoft, the revolutionary software company that he founded and made his billions through, in order to dedicate himself full-time to his NGO, the Bill and Melinda Gates Foundation; the Foundation is worth an estimated $US 35 billion.
A decade ago, Gates’ contributions to the world of philanthropy were relatively modest, but sharp criticism from anti-Microsoft types in the industry, and even from his wife and mother, pushed him to step-up his contributions and become a major player in the world of global development. In 2000, he created the Foundation, pledging that all of his money would eventually go to charity.
Gates began with an interest in spreading access and availability to technology—especially the internet—to those otherwise too poor to afford it in the US, with an emphasis on the inequalities that he felt left minority students behind their peers. It was the same issue of inequality that led him to be concerned and involved with unequal opportunities—particularly access to adequate medicine and care—in poor and developing countries; thus, his Foundation began helping to fund treatments for various diseases plaguing such third-world economies. The foundation contributes large amounts to fighting Malaria and other diseases in Africa, through cooperation with the World Health Organization and UNICEF. (see The foundation that gates built – CNet news)
Gates plans to, within the next two years, give up most control of Microsoft and move his workplace into an office building set aside for the Foundation. This move, as noted by Gates’ longtime friend and Microsoft partner, Steve Ballmer, has Gates poised to become “the greatest philanthropist of all time.” (see Gates calls time on career at Microsoft - FT.com)
This week Bill Gates announced his plans to greatly reduce his time spent managing Microsoft, the revolutionary software company that he founded and made his billions through, in order to dedicate himself full-time to his NGO, the Bill and Melinda Gates Foundation; the Foundation is worth an estimated $US 35 billion.
A decade ago, Gates’ contributions to the world of philanthropy were relatively modest, but sharp criticism from anti-Microsoft types in the industry, and even from his wife and mother, pushed him to step-up his contributions and become a major player in the world of global development. In 2000, he created the Foundation, pledging that all of his money would eventually go to charity.
Gates began with an interest in spreading access and availability to technology—especially the internet—to those otherwise too poor to afford it in the US, with an emphasis on the inequalities that he felt left minority students behind their peers. It was the same issue of inequality that led him to be concerned and involved with unequal opportunities—particularly access to adequate medicine and care—in poor and developing countries; thus, his Foundation began helping to fund treatments for various diseases plaguing such third-world economies. The foundation contributes large amounts to fighting Malaria and other diseases in Africa, through cooperation with the World Health Organization and UNICEF. (see The foundation that gates built – CNet news)
Gates plans to, within the next two years, give up most control of Microsoft and move his workplace into an office building set aside for the Foundation. This move, as noted by Gates’ longtime friend and Microsoft partner, Steve Ballmer, has Gates poised to become “the greatest philanthropist of all time.” (see Gates calls time on career at Microsoft - FT.com)
ADB Announces Medium-Term Strategy
Source: ADB News Release
The ADB announced another step in advancing its Long-Term Strategic Framework. This medium-term strategy, covering 2006-2008, has the goal of “strengthening the poverty-reducing impact of its assistance.”
The ADB has chosen to break up the 15-year period of its Long-Term Strategic Framework, into smaller medium-term strategies in order to address adequately the quickly changing needs of the region. ADB President Haruhiko Kuroda said, "[the new strategy] will strengthen the impact of our assistance on poverty reduction, and better support the efforts of developing member countries to attain the Millennium Development Goals."
The strategy aims to increase income and reduce poverty by stressing advancement of the investment climate. It notes that maximizing the poverty-reducing impact of growth depends on social and rural infrastructure development.
Other aims of the strategy include dealing with the environment, strengthening governance, and dealing with corruption.
The ADB announced another step in advancing its Long-Term Strategic Framework. This medium-term strategy, covering 2006-2008, has the goal of “strengthening the poverty-reducing impact of its assistance.”
The ADB has chosen to break up the 15-year period of its Long-Term Strategic Framework, into smaller medium-term strategies in order to address adequately the quickly changing needs of the region. ADB President Haruhiko Kuroda said, "[the new strategy] will strengthen the impact of our assistance on poverty reduction, and better support the efforts of developing member countries to attain the Millennium Development Goals."
The strategy aims to increase income and reduce poverty by stressing advancement of the investment climate. It notes that maximizing the poverty-reducing impact of growth depends on social and rural infrastructure development.
Other aims of the strategy include dealing with the environment, strengthening governance, and dealing with corruption.
Tuesday, June 13, 2006
Study Says Global Warming is a Threat to Asian Security
Source: CNN.com
Researchers at the Lowy Institute, an Australian think tank, released a report claiming that global warming presents “seriously underestimated” threats to the Asia Pacific region.
The report, titled “Heating up the Planet: Climate Change and Security,” looks at a variety of consequences that could arise from an increase in global temperature. These have the possibility of seriously impacting many facets of the region. Threats range from temperature increases facilitating the spread of malaria and dengue fever; communities and crops destroyed due to rising sea levels; and greater impact of natural disasters, which will stretch the limited resources of countries.
The paper claims that the threat is more serious than historical global temperature fluctuations because the change is happening over a more compact period, which will decrease the counter effects of human and biological adaptation.
They say that a reduction in greenhouse gases is the best way to minimize this risk posed by increasing temperatures.
The Lowy Institute bills itself as “an independent, nonpartisan think tank which conducts original, policy-relevant research about international political, strategic, and economic issues from an Australian perspective.”
Researchers at the Lowy Institute, an Australian think tank, released a report claiming that global warming presents “seriously underestimated” threats to the Asia Pacific region.
The report, titled “Heating up the Planet: Climate Change and Security,” looks at a variety of consequences that could arise from an increase in global temperature. These have the possibility of seriously impacting many facets of the region. Threats range from temperature increases facilitating the spread of malaria and dengue fever; communities and crops destroyed due to rising sea levels; and greater impact of natural disasters, which will stretch the limited resources of countries.
The paper claims that the threat is more serious than historical global temperature fluctuations because the change is happening over a more compact period, which will decrease the counter effects of human and biological adaptation.
They say that a reduction in greenhouse gases is the best way to minimize this risk posed by increasing temperatures.
The Lowy Institute bills itself as “an independent, nonpartisan think tank which conducts original, policy-relevant research about international political, strategic, and economic issues from an Australian perspective.”
Global markets feel effect of risk-averse investors
(Source Article: Global markets slide - FT.com)
On Tuesday, global markets took a turn for the worse when investors shed risky assets (e.g., shares, commodities) in favor of bonds and cash. Emerging markets and their currencies took serious blows, as did gold, silver, and other metals.
Inflation, interest rates and potential slowing of economic growth continue to fuel the panic of investors worldwide. One observer noted that the actions of investors are a response to the approach central banks are taking in order to deal with potential inflation. The Nikkei 225 Average suffered a 4.1% drop; Hong Kong fell 2.5%; Turkish stocks fell 5.7%; and Colombia markets experienced a 9.4% drop. (see Heavy selling again for emerging markets - FT.com)
In the US, consumer spending is slowing down as household incomes are feeling the squeeze from higher energy costs; this slowdown in spending is contributing to the problems prompting the Federal Reserve chairman to raise rates—an approach, as mentioned above, being taken by other central banks. (see Lingering inflation concerns likely to fuel volatility)
Meanwhile, US Federal officials remained spooked by the looming specter of inflation: Cleveland Fed president Sandra Pianalto commented that “this inflation picture…exceeds my comfort level.” Elsewhere in markets, gold took a 6% loss resulting in $569 USD an ounce while silver and copper fell 10% and 7%, respectively.
On Tuesday, global markets took a turn for the worse when investors shed risky assets (e.g., shares, commodities) in favor of bonds and cash. Emerging markets and their currencies took serious blows, as did gold, silver, and other metals.
Inflation, interest rates and potential slowing of economic growth continue to fuel the panic of investors worldwide. One observer noted that the actions of investors are a response to the approach central banks are taking in order to deal with potential inflation. The Nikkei 225 Average suffered a 4.1% drop; Hong Kong fell 2.5%; Turkish stocks fell 5.7%; and Colombia markets experienced a 9.4% drop. (see Heavy selling again for emerging markets - FT.com)
In the US, consumer spending is slowing down as household incomes are feeling the squeeze from higher energy costs; this slowdown in spending is contributing to the problems prompting the Federal Reserve chairman to raise rates—an approach, as mentioned above, being taken by other central banks. (see Lingering inflation concerns likely to fuel volatility)
Meanwhile, US Federal officials remained spooked by the looming specter of inflation: Cleveland Fed president Sandra Pianalto commented that “this inflation picture…exceeds my comfort level.” Elsewhere in markets, gold took a 6% loss resulting in $569 USD an ounce while silver and copper fell 10% and 7%, respectively.
Monday, June 12, 2006
US wants more access to Malaysian markets
(Source Article: US talks push for more Malaysian access - FT.com)
On Monday, the US began talks with Malaysia over a free trade agreement, including demands by Washington for increased access to Malaysia’s financial, construction and car markets, as well as a stronger attempt to rid the region of its rampant piracy of intellectual property. Of particular importance are current tariff barriers on foreign car imports; the US wants to reduce tariffs in order to increase Malaysia's access to US cars. Currently, the market is dominated by Proton, the national carmaker. However, a free trade agreement would also give Proton access to the much larger US car market.
The prime minister of Malaysia will probably face difficulty in trying to fulfill the US demands: he’s currently facing much criticism for his economic reforms, and the demands are politically sensitive given the region’s policy of affirmative action for ethnic Malays. Nevertheless, with the Bush administration’s ability to take advantage of “fast-track” legislative approval of international trade deals expiring in 2007, the two countries continue negotiating. The US is also working on a similar trade deal with Thailand, but is facing similar political problems while a newly elected Thai government makes the transition to power. (see Time running out for US-Thai deal– Houston Chronical)
If a new deal is reached, predictions have bilateral trade doubling by 2010. Malaysia, the United States’ 10th largest trading partner, is of particular importance to the US in that it’s a Muslim country of considerable tolerance, and has proven to be an important ally in the Muslim world. Further, the country takes more US imports than much bigger economies, like India and Indonesia. (see US, Malaysia launch negotiations for FTA – usembassy.gov)
An FTA would allow for increased US exports to Malaysia of a variety of goods and services. Currently, the US is most interested and economically focused on Asia, and thus hopes to cast a web of FTAs, like that which is coming to fruition in Malaysia, throughout the region. (see Malaysia-US trade will double by 2010 – thestar.com)
On Monday, the US began talks with Malaysia over a free trade agreement, including demands by Washington for increased access to Malaysia’s financial, construction and car markets, as well as a stronger attempt to rid the region of its rampant piracy of intellectual property. Of particular importance are current tariff barriers on foreign car imports; the US wants to reduce tariffs in order to increase Malaysia's access to US cars. Currently, the market is dominated by Proton, the national carmaker. However, a free trade agreement would also give Proton access to the much larger US car market.
The prime minister of Malaysia will probably face difficulty in trying to fulfill the US demands: he’s currently facing much criticism for his economic reforms, and the demands are politically sensitive given the region’s policy of affirmative action for ethnic Malays. Nevertheless, with the Bush administration’s ability to take advantage of “fast-track” legislative approval of international trade deals expiring in 2007, the two countries continue negotiating. The US is also working on a similar trade deal with Thailand, but is facing similar political problems while a newly elected Thai government makes the transition to power. (see Time running out for US-Thai deal– Houston Chronical)
If a new deal is reached, predictions have bilateral trade doubling by 2010. Malaysia, the United States’ 10th largest trading partner, is of particular importance to the US in that it’s a Muslim country of considerable tolerance, and has proven to be an important ally in the Muslim world. Further, the country takes more US imports than much bigger economies, like India and Indonesia. (see US, Malaysia launch negotiations for FTA – usembassy.gov)
An FTA would allow for increased US exports to Malaysia of a variety of goods and services. Currently, the US is most interested and economically focused on Asia, and thus hopes to cast a web of FTAs, like that which is coming to fruition in Malaysia, throughout the region. (see Malaysia-US trade will double by 2010 – thestar.com)
Friday, June 09, 2006
Sudan's food crisis
(Source Article: Middle East must give more aid - FT.com)
James Morris, director of the UN’s WFP (World Food Programme) called out for increased help from Middle East countries; the Middle East currently is only paying a fraction of the amount it should, according to Morris, as millions are facing starvation in the crisis-stuck country of Sudan. Sudan is currently the site of the agency’s largest emergency operation: the WFP is trying to feed some 6.1 million people in the African country.
Hundreds of thousands of soldiers returning home from nearly 21 years of war in the region comprise a large portion of those needing assistance in the southern part of the country. However, more than four million soldiers in the country were displaced as a result of the war, thus more are expected to return—which could result in the biggest migration of people underway at this time in the world. (see WFP director visits Sudan amid crisis - WFP.org)
The WFP has recently been forced to distribute 50% rations as a result of the shortage of funding for its operations. In addition to serving the nutrition needs of those hundreds of thousands of soldiers returning home, the WFP is also feeding resident communities that are currently suffering from chronic food shortages; the WFP plans to feed 2 million people per month up until the October harvest. Unfortunately, those plans will be jeopardized unless donor countries—particularly Middle Eastern countries—begin paying up their fair share. If the operation fails, then recent pacts of peace agreed to by the previously warring factions in the region may unravel, and stability in the region may be lost. (see WFP needs steady funding for Sudan - WFP.org)
As of June 5th, WFP’s operation in Sudan was only 49.6% funded. The Oil-rich (and lately dollar-rich) Middle East, according to Morris, should be contributing anywhere from $250-300 million to the multilateral relief efforts in Sudan—but so far they’re only contributing a paltry 10% of that amount. The US is the largest provider of humanitarian aid to the country, currently giving some $285 million.
James Morris, director of the UN’s WFP (World Food Programme) called out for increased help from Middle East countries; the Middle East currently is only paying a fraction of the amount it should, according to Morris, as millions are facing starvation in the crisis-stuck country of Sudan. Sudan is currently the site of the agency’s largest emergency operation: the WFP is trying to feed some 6.1 million people in the African country.
Hundreds of thousands of soldiers returning home from nearly 21 years of war in the region comprise a large portion of those needing assistance in the southern part of the country. However, more than four million soldiers in the country were displaced as a result of the war, thus more are expected to return—which could result in the biggest migration of people underway at this time in the world. (see WFP director visits Sudan amid crisis - WFP.org)
The WFP has recently been forced to distribute 50% rations as a result of the shortage of funding for its operations. In addition to serving the nutrition needs of those hundreds of thousands of soldiers returning home, the WFP is also feeding resident communities that are currently suffering from chronic food shortages; the WFP plans to feed 2 million people per month up until the October harvest. Unfortunately, those plans will be jeopardized unless donor countries—particularly Middle Eastern countries—begin paying up their fair share. If the operation fails, then recent pacts of peace agreed to by the previously warring factions in the region may unravel, and stability in the region may be lost. (see WFP needs steady funding for Sudan - WFP.org)
As of June 5th, WFP’s operation in Sudan was only 49.6% funded. The Oil-rich (and lately dollar-rich) Middle East, according to Morris, should be contributing anywhere from $250-300 million to the multilateral relief efforts in Sudan—but so far they’re only contributing a paltry 10% of that amount. The US is the largest provider of humanitarian aid to the country, currently giving some $285 million.
IMF to Consider Rebalancing Member Representation
Source: Financial times
The first deputy managing director of the IMF, Anne Krueger, announced a desire to increase the voting share of underrepresented countries. This would favorably impact Asian countries, such as China and South Korea, whose economies have grown much larger than their voting share.
The changes are expected to be agreed to when the IMF members meet in Singapore in September. Kruger stated, “I would like to see something that more accurately reflects appropriate weight in the international economic system. In addition, I hope that when we get that – which won’t happen in the first stage – we can agree on some sort of automatic adjustment mechanism so we would not run up against this problem again.”
The proposal is opposed by some European countries, who believe that adjustments should be limited.
An example of the current disparity in the voting power is shown by looking at China and Belgium. China currently has 2.98 percent of the IMF vote, while Belgium has 2.16 percent. The difference lies in the fact that China’s economy is much larger than Belgium's, as evidenced by China's GDP, which is 6 times greater.
Other organizational topics to be considered are a rebalancing of the managing board and the procedures used to elect executives.
The first deputy managing director of the IMF, Anne Krueger, announced a desire to increase the voting share of underrepresented countries. This would favorably impact Asian countries, such as China and South Korea, whose economies have grown much larger than their voting share.
The changes are expected to be agreed to when the IMF members meet in Singapore in September. Kruger stated, “I would like to see something that more accurately reflects appropriate weight in the international economic system. In addition, I hope that when we get that – which won’t happen in the first stage – we can agree on some sort of automatic adjustment mechanism so we would not run up against this problem again.”
The proposal is opposed by some European countries, who believe that adjustments should be limited.
An example of the current disparity in the voting power is shown by looking at China and Belgium. China currently has 2.98 percent of the IMF vote, while Belgium has 2.16 percent. The difference lies in the fact that China’s economy is much larger than Belgium's, as evidenced by China's GDP, which is 6 times greater.
Other organizational topics to be considered are a rebalancing of the managing board and the procedures used to elect executives.
Thursday, June 08, 2006
IMF tackles global trade imbalances
(Source Article: IMF addresses trade imbalances - FT.com)
The US, Europe, Japan, China and Saudi Arabia will cooperate with the IMF’s efforts to resolve problematic trade imbalances in the world. These countries will engage in IMF’s first multilateral consultations on how to deal with the global economy’s trade imbalances in a way that won’t stifle economic growth.
The IMF said these countries were chosen because they had either large current account surpluses or deficits, and also possess a large share of the global economy. China’s surplus doubled in 2005, exceeding 7% of its GDP; Saudi Arabia, the world’s largest oil exporter, had an account surplus at a staggering 28% of GDP in 2005 and will represent oil producing countries and the Middle East—countries which have had the most surplus growth in the past few years.
The trade relation between the US and China is a major factor in itself—without the trade surplus from the US (about $100 billion), China would have a global trade deficit of about 6.25% of its GDP (see US-China trade imbalance).
The US, Europe, Japan, China and Saudi Arabia will cooperate with the IMF’s efforts to resolve problematic trade imbalances in the world. These countries will engage in IMF’s first multilateral consultations on how to deal with the global economy’s trade imbalances in a way that won’t stifle economic growth.
The IMF said these countries were chosen because they had either large current account surpluses or deficits, and also possess a large share of the global economy. China’s surplus doubled in 2005, exceeding 7% of its GDP; Saudi Arabia, the world’s largest oil exporter, had an account surplus at a staggering 28% of GDP in 2005 and will represent oil producing countries and the Middle East—countries which have had the most surplus growth in the past few years.
The trade relation between the US and China is a major factor in itself—without the trade surplus from the US (about $100 billion), China would have a global trade deficit of about 6.25% of its GDP (see US-China trade imbalance).
Bernanke’s effect on investing
(Source Article: The Bernanke Panic - CNN)
US Fed Chairman Ben Bernanke has lately frightened off US investors with rate hikes; now, he’s not just frightening them here in the US—he’s frightening them world wide.
Investors from Jakarta to Tokyo to Wall Street on Thursday accelerated the sell-off because of fears that the Federal Reserve—and other central banks falling in line—would hinder economic growth through their efforts to combat inflation.
Last month stock markets large and small felt adverse effects after the Fed raised rates for the 16th time in a row—hinting that more hikes are forthcoming. (see Fed raises rates again - CNN) Since that time, losses in stock markets at home and abroad have been as high as 14 percent, with those in emerging markets like Bombay losing as much as 26%.
On Thursday, the European Central Bank, as well as those in South Korea and India, hiked rates, and many analysts expect the US Fed Chairman will hike rates again in June. Still, most economists feel that rates aren’t high enough to spark to life a global recession, with demand in places like China and India keeping many products flowing out of other emerging economies. However, many corps and their executives have a different opinion (see Execs worried about economy - CNN)
US Fed Chairman Ben Bernanke has lately frightened off US investors with rate hikes; now, he’s not just frightening them here in the US—he’s frightening them world wide.
Investors from Jakarta to Tokyo to Wall Street on Thursday accelerated the sell-off because of fears that the Federal Reserve—and other central banks falling in line—would hinder economic growth through their efforts to combat inflation.
Last month stock markets large and small felt adverse effects after the Fed raised rates for the 16th time in a row—hinting that more hikes are forthcoming. (see Fed raises rates again - CNN) Since that time, losses in stock markets at home and abroad have been as high as 14 percent, with those in emerging markets like Bombay losing as much as 26%.
On Thursday, the European Central Bank, as well as those in South Korea and India, hiked rates, and many analysts expect the US Fed Chairman will hike rates again in June. Still, most economists feel that rates aren’t high enough to spark to life a global recession, with demand in places like China and India keeping many products flowing out of other emerging economies. However, many corps and their executives have a different opinion (see Execs worried about economy - CNN)
Wednesday, June 07, 2006
World Bank’s new $1.1 billion loan for Brazil’s Economy
(Source Article: WB approves 1.1 billion for Brazil - Reuters)
Yesterday, the World Bank approved a $1.1 billion loan to Brazil to facilitate improvements of their economy and infrastructure. Particularly, the loan will provide support to Brazil’s fiscal savings program and improve the climate for investing via the reduction of the time and cost of exporting.
The largest part of the loan ($601.5 million) will help finance initiatives to be decided by the country’s treasury. An additional $501.25 million will finance improvements on roads and transportation, while the remaining $37.5 million will help finance a “poverty reduction program in rural areas in the northeastern state of Ceara.”
The World Bank has recently congratulated the South American country for its “blend of mature macroeconomic management and policies...[helping to enhance] social equity”.” Currently, the World Bank helps finance over fifty projects in the country, totaling an $8 billion investment.
Yesterday, the World Bank approved a $1.1 billion loan to Brazil to facilitate improvements of their economy and infrastructure. Particularly, the loan will provide support to Brazil’s fiscal savings program and improve the climate for investing via the reduction of the time and cost of exporting.
The largest part of the loan ($601.5 million) will help finance initiatives to be decided by the country’s treasury. An additional $501.25 million will finance improvements on roads and transportation, while the remaining $37.5 million will help finance a “poverty reduction program in rural areas in the northeastern state of Ceara.”
The World Bank has recently congratulated the South American country for its “blend of mature macroeconomic management and policies...[helping to enhance] social equity”.” Currently, the World Bank helps finance over fifty projects in the country, totaling an $8 billion investment.
Tuesday, June 06, 2006
Meeting Millennium Development Goals Relies on Gender Equality
ADB News Release
A report issued by the ADB, the UN Development Program, and the UN Economic and Social Commission for Asia and the Pacific states that gender equality is necessary if the MDGs are to be met.
The report, titled “Pursuing Gender Equality Through the [MDGs] in Asia and the Pacific,” states that gender discrimination in the region is still widespread, even though social and economic benefits of equality have been shown.
ADB Vice-President Geert van der Linden said, “For Asia and the Pacific to achieve the MDGs, women's full participation, involvement in and contribution to the development process is needed.”
Equality in education is the one target of the MDGs that is faring the best. Unfortunately, this has not led to equality in other facets of society, such as employment, economic participation, access to healthcare, or political participation.
There are two gender specific MDGs—maternal health and women’s empowerment.
The paper offers some courses of action directed at meeting the equality goals. It does this while acknowledging that “strong political commitment” is necessary in addition to a change in “prevailing social norms and attitudes.”
For a related article on Cambodia’s novel approach to increasing female enrollment in secondary education, see this news release.
A report issued by the ADB, the UN Development Program, and the UN Economic and Social Commission for Asia and the Pacific states that gender equality is necessary if the MDGs are to be met.
The report, titled “Pursuing Gender Equality Through the [MDGs] in Asia and the Pacific,” states that gender discrimination in the region is still widespread, even though social and economic benefits of equality have been shown.
ADB Vice-President Geert van der Linden said, “For Asia and the Pacific to achieve the MDGs, women's full participation, involvement in and contribution to the development process is needed.”
Equality in education is the one target of the MDGs that is faring the best. Unfortunately, this has not led to equality in other facets of society, such as employment, economic participation, access to healthcare, or political participation.
There are two gender specific MDGs—maternal health and women’s empowerment.
The paper offers some courses of action directed at meeting the equality goals. It does this while acknowledging that “strong political commitment” is necessary in addition to a change in “prevailing social norms and attitudes.”
For a related article on Cambodia’s novel approach to increasing female enrollment in secondary education, see this news release.
Remittances in the Americas
(Source Article: Brazilian Remittances - InterAmerican Dev. Bank)
Remittances (money sent by expatriates living and working abroad to their home countries) are playing an increasingly important role in finance in the Americas – the total amount of remittances in 2005 to Latin America and the Caribbean regions reached a staggering US$53.6 billion in 2005, almost equaling the $61.6 billion in total FDI in the region. (see FDI flows into Latin America remain the same - ECLAC)
Brazilian immigrants living abroad are pumping as much as $6.4 billion (compared to $15 billion in FDI) annually into the country’s economy – the second highest amount of remittances for a Latin American country; Mexico, the recipient of the largest amount of remittance cash flows, received $20 billion in 2005—an approximately $5 billion increase from 2004. In Mexico, remittances have actually surpassed FDI: FDI in Mexico in 2005 was approximately $17 billion. (see Mexico leads Latin America in attracting FDI - STATE.gov)
Given the growing role of remittances in the region, many banks are beginning to offer products and services that allow remittances to flow more securely and unencumbered than before. As of now, however, the majority of Brazilians living abroad send their remittances via wire-transfer services like Western Union. But in the U.S., Bank of America has been proactive in tailoring its services to Hispanics who wish to send money back home – last year the bank launched a free nationwide remittance program. (see BoA announces free nationwide remittance program - prnewswire.com)
While this, ultimately, has meant more cash flows into the countries receiving them, officials encourage the region to try to attract more FDI—a type of investment that has seen stagnant to little growth. Comparatively, remittances to Mexico have increased yearly since 1960, when they amounted to just $84 million. (see US, Mexico deepen economic ties - Dallasfed.org)
In the US, remittances have been criticized by some observers as detrimental to the US economy (in that it's money that could be spent here); are remittances a less efficient and productive route for cash flows to developing countries in Latin America than, say, FDI?
Remittances (money sent by expatriates living and working abroad to their home countries) are playing an increasingly important role in finance in the Americas – the total amount of remittances in 2005 to Latin America and the Caribbean regions reached a staggering US$53.6 billion in 2005, almost equaling the $61.6 billion in total FDI in the region. (see FDI flows into Latin America remain the same - ECLAC)
Brazilian immigrants living abroad are pumping as much as $6.4 billion (compared to $15 billion in FDI) annually into the country’s economy – the second highest amount of remittances for a Latin American country; Mexico, the recipient of the largest amount of remittance cash flows, received $20 billion in 2005—an approximately $5 billion increase from 2004. In Mexico, remittances have actually surpassed FDI: FDI in Mexico in 2005 was approximately $17 billion. (see Mexico leads Latin America in attracting FDI - STATE.gov)
Given the growing role of remittances in the region, many banks are beginning to offer products and services that allow remittances to flow more securely and unencumbered than before. As of now, however, the majority of Brazilians living abroad send their remittances via wire-transfer services like Western Union. But in the U.S., Bank of America has been proactive in tailoring its services to Hispanics who wish to send money back home – last year the bank launched a free nationwide remittance program. (see BoA announces free nationwide remittance program - prnewswire.com)
While this, ultimately, has meant more cash flows into the countries receiving them, officials encourage the region to try to attract more FDI—a type of investment that has seen stagnant to little growth. Comparatively, remittances to Mexico have increased yearly since 1960, when they amounted to just $84 million. (see US, Mexico deepen economic ties - Dallasfed.org)
In the US, remittances have been criticized by some observers as detrimental to the US economy (in that it's money that could be spent here); are remittances a less efficient and productive route for cash flows to developing countries in Latin America than, say, FDI?
IBM triples investment in India’s emerging economy
(Source Articles:
IBM's $6bn India investment - FT.com
IBM's $6bn India investment - Reuters)
IBM plans to triple its investment in India to approximately $US 6 billion over the next three years; the change of plans displays IBM’s seriousness over the opportunity in India’s information technology sector: “I am not going to miss the [India] opportunity,” said Sam Palmisano, IBM’s CEO.
The large investment amount far exceeds that recently announced by a trio of fellow US computer products companies: Microsoft, Intel and Cisco plan to invest a combined $3.9 billion in India.
The increase in demand for IT services stems from the expansion of and access to internet connectivity across the country—as well as strengthening competition from India based IT companies.
IBM is India’s largest multinational firm, with 43,000 staff in 14 cities—compared to 4,900 just four years ago. And the growth of the company’s presence is likely to continue as 21 million college graduates, many trained in computer related skills, will enter the Indian workforce by the end of the decade; the software services sector is likely itself to grow by 25% within the next year.
Last year, IBM hired 15,500 staff in India while shedding roughly 10,000 in Europe. Such investment can only be positive for India, coupled with its approximately 8% annual GDP growth. However, the country's economy is still at risk from the volatility of private capital markets (see Private capital flows - CIFD Post)
IBM's $6bn India investment - FT.com
IBM's $6bn India investment - Reuters)
IBM plans to triple its investment in India to approximately $US 6 billion over the next three years; the change of plans displays IBM’s seriousness over the opportunity in India’s information technology sector: “I am not going to miss the [India] opportunity,” said Sam Palmisano, IBM’s CEO.
The large investment amount far exceeds that recently announced by a trio of fellow US computer products companies: Microsoft, Intel and Cisco plan to invest a combined $3.9 billion in India.
The increase in demand for IT services stems from the expansion of and access to internet connectivity across the country—as well as strengthening competition from India based IT companies.
IBM is India’s largest multinational firm, with 43,000 staff in 14 cities—compared to 4,900 just four years ago. And the growth of the company’s presence is likely to continue as 21 million college graduates, many trained in computer related skills, will enter the Indian workforce by the end of the decade; the software services sector is likely itself to grow by 25% within the next year.
Last year, IBM hired 15,500 staff in India while shedding roughly 10,000 in Europe. Such investment can only be positive for India, coupled with its approximately 8% annual GDP growth. However, the country's economy is still at risk from the volatility of private capital markets (see Private capital flows - CIFD Post)
Monday, June 05, 2006
Managing the Avian Flu problem
(Source Article: Managing the Avian Flu in South Asia - WB news)
The World Bank recently noted a few major challenges that impede the task of stopping the spread of the bird flu problem in South Asia: weak health infrastructure, high density populations and illiteracy.
According to Julian Schweitzer, WB’s director for Human Development in South Asia, the inability to carry out “effective surveillance” of the spread of the disease renders the risk of it running out of control much higher. Additionally, the important role poultry plays in the livelihood of the region’s societies further exacerbates the problem.
Beginning with outbreaks in South-East Asia in 2003, the avian flu has now spread to parts of Europe, nine Asian countries, and 224 cases have been reported in humans, with 127 of those resulting in death. Despite the increasing spread of the disease, most of those countries that, just this past January, pledged approximately $2 billion to fight avian flu have yet to pay up – only $286 million of the $2 billion has been disbursed. (see Only a few nations have met bird-flu commitments - WB press release)
India has been cited as taking some of the most effective steps towards limiting the spread of the disease, having culled hundreds of thousands of chickens and shut down many poultry farms – such steps are imperative when the virus is detected. The World Bank, in support of such steps, ensures adequate compensation of such farmers whose operations have to be shut down in order to prevent the farmers from not reporting presence of the disease. Additionally, the Bank’s funding aims to improve clinical diagnosis, preventive measures and response capacity of local health systems.
Avian flu poses a severe risk to the economy via the possibility that it might mutate into a virus capable of being transmitted easily from human-to-human – and it would be something that humans have limited immunity to. According to the Global Development Finance Report, released last week, “a severe avian flu pandemic in South Asia could reduce output by almost 5 percent of GDP, constituting a major recession.”
In related news, today the Bank took proactive steps to helping fund Armenia’s Avian Influenza Preparedness Project, a project seeking to prepare the government of that country to deal with the infectious disease appearing in the human population. (see WB supports Armenia’s efforts against bird flu)
The World Bank recently noted a few major challenges that impede the task of stopping the spread of the bird flu problem in South Asia: weak health infrastructure, high density populations and illiteracy.
According to Julian Schweitzer, WB’s director for Human Development in South Asia, the inability to carry out “effective surveillance” of the spread of the disease renders the risk of it running out of control much higher. Additionally, the important role poultry plays in the livelihood of the region’s societies further exacerbates the problem.
Beginning with outbreaks in South-East Asia in 2003, the avian flu has now spread to parts of Europe, nine Asian countries, and 224 cases have been reported in humans, with 127 of those resulting in death. Despite the increasing spread of the disease, most of those countries that, just this past January, pledged approximately $2 billion to fight avian flu have yet to pay up – only $286 million of the $2 billion has been disbursed. (see Only a few nations have met bird-flu commitments - WB press release)
India has been cited as taking some of the most effective steps towards limiting the spread of the disease, having culled hundreds of thousands of chickens and shut down many poultry farms – such steps are imperative when the virus is detected. The World Bank, in support of such steps, ensures adequate compensation of such farmers whose operations have to be shut down in order to prevent the farmers from not reporting presence of the disease. Additionally, the Bank’s funding aims to improve clinical diagnosis, preventive measures and response capacity of local health systems.
Avian flu poses a severe risk to the economy via the possibility that it might mutate into a virus capable of being transmitted easily from human-to-human – and it would be something that humans have limited immunity to. According to the Global Development Finance Report, released last week, “a severe avian flu pandemic in South Asia could reduce output by almost 5 percent of GDP, constituting a major recession.”
In related news, today the Bank took proactive steps to helping fund Armenia’s Avian Influenza Preparedness Project, a project seeking to prepare the government of that country to deal with the infectious disease appearing in the human population. (see WB supports Armenia’s efforts against bird flu)
U.S. corporations turning green
(Source Article: Is Corporate America going green? - Reuters)
A once dismissive Corporate America now appears to be taking the call to environmental sustainability seriously. Just a few years back, global warming was largely shrugged off as speculative, but now a group of major companies are striving for a greener image.
General Electric, one of the largest corporations in the world, and DuPont are putting effort into greatly reducing greenhouse gas emissions at their facilities and to produce more energy-efficient products for consumers.
Sales of GE eco-friendly products (e.g., anything from washing machines to jet engines) reached over $US 10 billion last year, and GE intends to double that by 2010, as well as increase its research spending on eco-friendly product development by $1.5 billion.
As noted in a CIFD post from last month (see The “Wal-Mart Effect” on Healthcare), Wal-Mart itself is also taking seriously the call to environmental sustainability – and has already made several eco-friendly implementations into its operations, and plans on increasing such implementations, including opening a “new store prototype” within four years that will reduce greenhouse gas emissions by up to 30%. (see Wal-Mart's Sustainability Strategy)
American corporations aren’t the only ones taking the environment seriously these days; solar-powered water heaters are fast becoming a widely used source of renewable energy in energy-hungry China: At least 30 million Chinese households now have one. These solar panels are so cheap (costing anywhere from $US 190 to about 2,000 dollars, depending on model) and so efficient (they can effectively heat water in winter with temps around 20 below, and with heavily polluted and cloud-covered skies) that they quickly pay for themselves – and the environment benefits, to boot. (see Energy-hungry China and solar-heaters - Reuters)
As state governments in the US begin to feel the pinch from the rise in oil costs, perhaps China is serving as a model to the whole world on the need to implement more renewable energy sources (see States feel sting from energy costs - Reuters)
Environmental sustainability is becoming increasingly critical to the viability and effectiveness of development and growth in the world of finance -- are such measures taken now "too-little, too-late" ?
A once dismissive Corporate America now appears to be taking the call to environmental sustainability seriously. Just a few years back, global warming was largely shrugged off as speculative, but now a group of major companies are striving for a greener image.
General Electric, one of the largest corporations in the world, and DuPont are putting effort into greatly reducing greenhouse gas emissions at their facilities and to produce more energy-efficient products for consumers.
Sales of GE eco-friendly products (e.g., anything from washing machines to jet engines) reached over $US 10 billion last year, and GE intends to double that by 2010, as well as increase its research spending on eco-friendly product development by $1.5 billion.
As noted in a CIFD post from last month (see The “Wal-Mart Effect” on Healthcare), Wal-Mart itself is also taking seriously the call to environmental sustainability – and has already made several eco-friendly implementations into its operations, and plans on increasing such implementations, including opening a “new store prototype” within four years that will reduce greenhouse gas emissions by up to 30%. (see Wal-Mart's Sustainability Strategy)
American corporations aren’t the only ones taking the environment seriously these days; solar-powered water heaters are fast becoming a widely used source of renewable energy in energy-hungry China: At least 30 million Chinese households now have one. These solar panels are so cheap (costing anywhere from $US 190 to about 2,000 dollars, depending on model) and so efficient (they can effectively heat water in winter with temps around 20 below, and with heavily polluted and cloud-covered skies) that they quickly pay for themselves – and the environment benefits, to boot. (see Energy-hungry China and solar-heaters - Reuters)
As state governments in the US begin to feel the pinch from the rise in oil costs, perhaps China is serving as a model to the whole world on the need to implement more renewable energy sources (see States feel sting from energy costs - Reuters)
Environmental sustainability is becoming increasingly critical to the viability and effectiveness of development and growth in the world of finance -- are such measures taken now "too-little, too-late" ?
Friday, June 02, 2006
World Bank's new cash plan for Pakistan
(Source Article: World Bank increases PK support - WB News)
The World Bank is poised to implement a new Country Assistance Strategy program for Pakistan—a flexible lending program including some US$6.5 billion over the next three years.
The immediate priority of the lending program is the impact of last October’s earthquake: about $1 billion will be used for reconstruction and recovery. Additionally, most of the money in the program will be focused on infrastructure development: energy, water, transport and human development.
During the past 6 years, Pakistan has experienced substantial economic growth: the growth rate increased from an average of 3.3 percent during 1997-2002 to an astounding 8.4 percent in 2004-2005.
Despite the progress being made in Pakistan, officials say it will be difficult to achieve the Millenium Development Goals for infant mortality, child malnutrition, and primary education completion, to name a few.
WB’s vice president for South Asia commented that sustained growth in the region will depend upon further improvement of macroeconomic management and faster progress in the improvement of quality of life for Pakistanis, especially women. (see WB's new Pakistan plan - BBC news)
Perhaps key to this goal is one part of the WB’s operations in Pakistan: the Pakistan Poverty Alleviation Fund (PPAF). The fund allows access to small loans for Pakistanis interested in starting their own small businesses, or to those communities who collectively invest in infrastructure schemes such as road paving and well digging. Such a plan allows the WB to tailor its development assistance to the locals—whose knowledge of their plight is imperative to improvement. (see Ten things about PK and WB - WB.org)
The World Bank is poised to implement a new Country Assistance Strategy program for Pakistan—a flexible lending program including some US$6.5 billion over the next three years.
The immediate priority of the lending program is the impact of last October’s earthquake: about $1 billion will be used for reconstruction and recovery. Additionally, most of the money in the program will be focused on infrastructure development: energy, water, transport and human development.
During the past 6 years, Pakistan has experienced substantial economic growth: the growth rate increased from an average of 3.3 percent during 1997-2002 to an astounding 8.4 percent in 2004-2005.
Despite the progress being made in Pakistan, officials say it will be difficult to achieve the Millenium Development Goals for infant mortality, child malnutrition, and primary education completion, to name a few.
WB’s vice president for South Asia commented that sustained growth in the region will depend upon further improvement of macroeconomic management and faster progress in the improvement of quality of life for Pakistanis, especially women. (see WB's new Pakistan plan - BBC news)
Perhaps key to this goal is one part of the WB’s operations in Pakistan: the Pakistan Poverty Alleviation Fund (PPAF). The fund allows access to small loans for Pakistanis interested in starting their own small businesses, or to those communities who collectively invest in infrastructure schemes such as road paving and well digging. Such a plan allows the WB to tailor its development assistance to the locals—whose knowledge of their plight is imperative to improvement. (see Ten things about PK and WB - WB.org)
ECB Issues Warning Concerning Hedge Funds
Source: Financial Times
For the first time, the European Central Bank (ECB) specifically addressed hedge funds in its most recent “financial stability review.” They categorized the risk hedge funds pose as “major.”
The problem they see is that the various funds are becoming too similar in their individual diversification. More plainly, the vast majority of hedge funds available are all are comprised of very similar components.
Due to this close positioning of the funds, the fear is that a change in business conditions could lead to a comparable reaction by the various funds' managers. According to Lucas Papademos, the vice-president of the ECB, if a this occurs, the “implication for asset prices are going to be more pronounced.”
There is evidence of concern stemming from the increased popularity of hedge funds. Considering the view that there is an “essential lack of any possible remedies,” there have been calls for close monitoring and “greater transparency” of hedge funds.
For more focused discussion of hedge funds, please view our FAQ concerning hedge funds, available here.
For the first time, the European Central Bank (ECB) specifically addressed hedge funds in its most recent “financial stability review.” They categorized the risk hedge funds pose as “major.”
The problem they see is that the various funds are becoming too similar in their individual diversification. More plainly, the vast majority of hedge funds available are all are comprised of very similar components.
Due to this close positioning of the funds, the fear is that a change in business conditions could lead to a comparable reaction by the various funds' managers. According to Lucas Papademos, the vice-president of the ECB, if a this occurs, the “implication for asset prices are going to be more pronounced.”
There is evidence of concern stemming from the increased popularity of hedge funds. Considering the view that there is an “essential lack of any possible remedies,” there have been calls for close monitoring and “greater transparency” of hedge funds.
For more focused discussion of hedge funds, please view our FAQ concerning hedge funds, available here.
The new Dollar sell-off
(Source Article: Dollar sell-off centers on Middle East - FT.com)
Speculation that Asian central banks are selling dollars for euros has once again begun as the dollar has experienced a 7.5 percent slide against the euro since the start of March. However, this time it’s not east Asian banks such as those in China, but instead the dollar-rich banks of the Middle East.
With oil prices hitting all-time highs, and the official currency paid for oil being the dollar, Middle Eastern banks are full to the brim with the US currency; oil revenues for export countries surged from $US 256 billion in 2002 to more than $600 billion in 2005. Thus, it’s not surprising that Middle Eastern banks would be slashing their dollar reserves and adding euros—but diversification is happening much quicker than analysts originally thought, prompting concern, and suggesting that there’s more to the story; some believe that Middle Eastern nations are actively seeking to reduce the proportion of dollars in their reserves.
For instance, the United Arab Emirates has said that it might sell dollars in order to raise the percent of euros in its reserves from 2 to 10%. Other countries are studying the appeal of the euro over the dollar.
Early last month, the IMF began a series of talks with the US, China and other major countries in order to coordinate top-priority meetings about dealing with imbalances in the global economy related to the dollar sell-off’s effects on financial markets. Analysts predicted that the euro could rise to $1.40 over the next 12 months, from its current level close to $1.29 (see IMF acts to avoid markets meltdown - The Observer).
Speculation that Asian central banks are selling dollars for euros has once again begun as the dollar has experienced a 7.5 percent slide against the euro since the start of March. However, this time it’s not east Asian banks such as those in China, but instead the dollar-rich banks of the Middle East.
With oil prices hitting all-time highs, and the official currency paid for oil being the dollar, Middle Eastern banks are full to the brim with the US currency; oil revenues for export countries surged from $US 256 billion in 2002 to more than $600 billion in 2005. Thus, it’s not surprising that Middle Eastern banks would be slashing their dollar reserves and adding euros—but diversification is happening much quicker than analysts originally thought, prompting concern, and suggesting that there’s more to the story; some believe that Middle Eastern nations are actively seeking to reduce the proportion of dollars in their reserves.
For instance, the United Arab Emirates has said that it might sell dollars in order to raise the percent of euros in its reserves from 2 to 10%. Other countries are studying the appeal of the euro over the dollar.
Early last month, the IMF began a series of talks with the US, China and other major countries in order to coordinate top-priority meetings about dealing with imbalances in the global economy related to the dollar sell-off’s effects on financial markets. Analysts predicted that the euro could rise to $1.40 over the next 12 months, from its current level close to $1.29 (see IMF acts to avoid markets meltdown - The Observer).
Thursday, June 01, 2006
Chavez Lambastes US at OPEC Meeting
(Source Article: OPEC unites against Chavez Rhetoric - FT.com)
Venezuela’s president spewed anti-US rhetoric Thursday at OPEC ministers, who responded by rejecting his demand that the cartel cut oil production.
Venezuela, one of OPEC’s founder-members, is also the 5th largest oil producer in the world. Nevertheless, Saudi Arabia, another founder-member, has rallied against Venezuela’s attempts to use OPEC against the United States (e.g., pushing the idea that oil should be sold in euros instead of dollars), the cartel’s number-one customer.
OPEC produces 30 million barrels of oil a day, approximately 40% of the world’s output. Venezuela was seeking up to a 1million b/d cut in that production. Analysts warned that a further reduction in output could have adverse consequences on economic growth and increase inflation.
OPEC may grow in size as “energy nationalism”, Chavez's main goal these days, takes hold in many oil-producing countries, who see the high prices as a way to maximize their resources revenue. The cartel is, for the first time in 30 years, considering adding members—namely Sudan and Angola. Angola’s production has increased some 80% in the past 10 years to around 1.25 million barrels a day. (see Sudan and Angola at OPEC's doors - FT.com)
Venezuela’s president spewed anti-US rhetoric Thursday at OPEC ministers, who responded by rejecting his demand that the cartel cut oil production.
Venezuela, one of OPEC’s founder-members, is also the 5th largest oil producer in the world. Nevertheless, Saudi Arabia, another founder-member, has rallied against Venezuela’s attempts to use OPEC against the United States (e.g., pushing the idea that oil should be sold in euros instead of dollars), the cartel’s number-one customer.
OPEC produces 30 million barrels of oil a day, approximately 40% of the world’s output. Venezuela was seeking up to a 1million b/d cut in that production. Analysts warned that a further reduction in output could have adverse consequences on economic growth and increase inflation.
OPEC may grow in size as “energy nationalism”, Chavez's main goal these days, takes hold in many oil-producing countries, who see the high prices as a way to maximize their resources revenue. The cartel is, for the first time in 30 years, considering adding members—namely Sudan and Angola. Angola’s production has increased some 80% in the past 10 years to around 1.25 million barrels a day. (see Sudan and Angola at OPEC's doors - FT.com)
Private Capital Flows in Emerging Markets
(Source Article: Capital Flows in Emerging Markets - WB News)
Developing countries enjoyed record-breaking net private capital flows in 2005— totaling US$ 491 billion. A number of factors fueled the increase in such flows: privatizations, mergers and acquisitions, external debt refinancing, and strong investor interest in local-currency bond markets in Asia and Latin America, according to the World Bank in its annual Global Development Finance Report.
This increase is reflective of an estimated GDP growth of 6.4 percent in low and middle-income countries in 2005, compared to a 2.8 percent growth in developed countries; China and India were largely responsible for such a high average, as their GDPs experienced 9.9 and eight percent growth, respectively.
Despite impressive growth last year, these emerging markets are highly susceptible to the volatility often created by private capital flows. The lead author of the World Bank’s report said, “[t]his moment is so critical to give these countries the time to develop their markets.”
Low level interest rates in the developed world have allowed leveraging for investors who borrow cheaply to pick up higher returns on an offer elsewhere—“[i]f these foreigners withdraw, local market rates go up and that’s an area we’re worried about,” commented the report’s author. (see World Bank alert on emerging markets - FT.com)
India is already being affected by the volatility of private capital flows; since the market there peaked on May 11, foreign funds have sold US$ 2.4 billion of Indian equities in the cash market, with approximately US$ 800 million being withdrawn in just two days. Such rapid withdrawals have caused many to fear that the country will not be able to finance its growing current account deficit. These withdrawals also shake the confidence of potential future investors, making it difficult for the government to attract them. (see Deficit finance fear in India - FT.com)
With a ballooned trade deficit of $4.2 billion in April, JP Morgan expects India’s deficit to reach 3.6 percent of its GDP this year.
The report also shows an increase in capital flows between developing countries (often referred to as “south-south flows”), and that such flows are growing more rapidly than those between developed and developing countries (“north-south” flows). For instance, Foreign Direct Investment between developing countries in 2003 reached $47 billion (37% of total FDI in developing countries), a tremendous increase from the $14 billion in 1995. World Bank officials commented that these developing countries have the potential to change the face of development finance—especially if their growth continues to outpace that of developed countries. (see Changing the face of development finance? - WB News)
Developing countries enjoyed record-breaking net private capital flows in 2005— totaling US$ 491 billion. A number of factors fueled the increase in such flows: privatizations, mergers and acquisitions, external debt refinancing, and strong investor interest in local-currency bond markets in Asia and Latin America, according to the World Bank in its annual Global Development Finance Report.
This increase is reflective of an estimated GDP growth of 6.4 percent in low and middle-income countries in 2005, compared to a 2.8 percent growth in developed countries; China and India were largely responsible for such a high average, as their GDPs experienced 9.9 and eight percent growth, respectively.
Despite impressive growth last year, these emerging markets are highly susceptible to the volatility often created by private capital flows. The lead author of the World Bank’s report said, “[t]his moment is so critical to give these countries the time to develop their markets.”
Low level interest rates in the developed world have allowed leveraging for investors who borrow cheaply to pick up higher returns on an offer elsewhere—“[i]f these foreigners withdraw, local market rates go up and that’s an area we’re worried about,” commented the report’s author. (see World Bank alert on emerging markets - FT.com)
India is already being affected by the volatility of private capital flows; since the market there peaked on May 11, foreign funds have sold US$ 2.4 billion of Indian equities in the cash market, with approximately US$ 800 million being withdrawn in just two days. Such rapid withdrawals have caused many to fear that the country will not be able to finance its growing current account deficit. These withdrawals also shake the confidence of potential future investors, making it difficult for the government to attract them. (see Deficit finance fear in India - FT.com)
With a ballooned trade deficit of $4.2 billion in April, JP Morgan expects India’s deficit to reach 3.6 percent of its GDP this year.
The report also shows an increase in capital flows between developing countries (often referred to as “south-south flows”), and that such flows are growing more rapidly than those between developed and developing countries (“north-south” flows). For instance, Foreign Direct Investment between developing countries in 2003 reached $47 billion (37% of total FDI in developing countries), a tremendous increase from the $14 billion in 1995. World Bank officials commented that these developing countries have the potential to change the face of development finance—especially if their growth continues to outpace that of developed countries. (see Changing the face of development finance? - WB News)
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