Water: Public or Private

Shayda Edwards Naficy writesLast month, 1,500 organizers in Thessaloniki, Greece risked arrest, placing unofficial ballot boxes by nightfall on street corners throughout the city. Their bravery paid off, as the next day more than 200,000 residents cast a vote on the pending privatization of their water system. Hundreds of volunteers worked around the clock to tally votes under the watchful eye of international observers. As morning dawned, a crowd gathered to hear the results. Before long, a huge cry of victory rose up: the “no” vote won by a resounding 98 percent. Once again, the people’s choice was clear: keep our water in public hands!

You see, in the face of Greece’s flailing economy, global lenders have put enormous pressure on Thessaloniki to privatize its water supply, arguing that doing so would save the city money through promises of cost-cutting and efficiency measures. And Thessaloniki isn’t alone — communities around the world are feeling the heavy hand of lenders (primarily the World Bank) pushing private water as the answer to their water woes. But the residents of Thessaloniki — like those in Jakarta, Indonesia and Nagpur, India — know that with privatization come rate hikes, empty taps, mass worker layoffs and dangerous health and safety violations.

Indeed, though Thessaloniki’s local government continues to doggedly pursue the private water contract, its efforts were recently dealt a critical blow. Just a few weeks ago, Greece’s highest court made a landmark ruling that private water violates the government’s constitutional obligations to protect peoples’ health and well-being. Campaigners in Thessaloniki are expected to launch a new legal action immediately, seizing this precedent to save their water from a corporate takeover.

Such successes are part of the growing wave of grassroots resistance to the threat posed by global water corporations and the institutions – namely, the World Bank — that support them. And Corporate Accountability International is in the thick of it: helping pull back the shiny veneer of the World Bank’s “success” stories to expose the truth. We are providing tools, platforms and resources to help communities protect their most basic precious resource from corporate control.

Successes in Greece and Indonesia demonstrate that civil society wants to keep water in public hands. And yet the World Bank continues its dogmatic promotion of privatization as the solution to our global water crisis — even when evidence clearly shows otherwise.  For instance, it is heavily promoting its project in Nagpur, India as a “success” to be replicated in communities elsewhere in India and throughout the world. This is astounding, given the dire reality on the ground. From extraordinary fees charged to those who can least afford them — and the threat of water cut-offs when they can’t pay the price — to pumping in dirty water from a reservoir filled with waste, and lengthy delays and sky-high cost overruns, the project has been a failure any way you look at it.

Fortunately, there are many groups and people in India who are exposing the truth behind the World Bank’s PR spin. We are working with our allies in India to debunk the World Bank’s claims of success. For example, we’ve partnered with Jammu Anand at the Nagpur Municipal Corporation Employees Union to shine a light on the true cost of the World Bank’s Nagpur project. Together, we launched a joint media release reaching more than 2 million people in over a dozen major press outlets in India and beyond. This media attention ensures that communities targeted by the World Bank for privatization have the information they need to resist the World Bank’s efforts. It also ensures that those who can influence the World Bank to change course on water are gaining a deeper understanding of the full scope of harm caused by poster-child projects like Nagpur.

Should people – or global corporations – control our water?

Water

Journalism: Written by Men based on Male Sources

A recent Pew Research study found that the news was skewed to male points of view.

 

Despite rising numbers of women in the workforce and in journalism schools, the news of the day still largely comes from a male perspective, according to a new study of press coverage.

A broad look across the American news media over the course of nine months reveals that men are relied on as sources in the news more than twice as often as women, a study by the Project for Excellence in Journalism has found.

More than three quarters of all stories contain male sources, while only a third of stories contain even a single female source, according to the study, which was drawn from an examination of 16,800 news stories across 45 different news outlets during 20 randomly selected days over nine months.

The disparity, moreover, holds true across newspapers, cable, network news and the online world.

The findings may strike some observers as ironic given the efforts of many news outlets to increase their audience by reaching out to women—and particularly to younger women, a group that generally is under represented as news consumers.

Pew Research Center’s Journalism Project Newsroom

 

Impact of the New Brics Bank

Ali Bursk Guven writes:  The top news from this year’s BRICS summit was the announcement of a New Development Bank.  Headquartered in Shanghai, the bank will become operational in 2016 with an initial capital of US$50 billion. Its core mandate is to finance infrastructure projects in the developing world.

The bank, announced at the summit in Fortaleza, Brazil, will also have a monetary twin to provide short-term emergency loans, the Contingency Reserve Arrangement. While the bank will be open to all UN members, the reserve will lend only to the contributing BRICS countries in times of crisis.  Impact of the New Brics Bank

Brics New Bank

 

Soccer and the EU Succeed with Longterm Strategies

Harold James writes:  Though a solution to the euro crisis continues to elude European leaders, the foundations of one are not difficult to discern. In fact, Europe’s recent soccer experience – specifically, in the EURO 2012 tournament and this year’s World Cup – provides insight into how to revive Europe’s economy and address its deeper identity problem.  Both soccer and the EU succeed when they plan for the longterm.  Long Term Strategies

Longterm Strategies

Germany Fines UBS $300 Million

Our correspondent Andreas Frank writes:  UBS AG booked a near $300 million charge in the second quarter mainly to settle claims it helped wealthy Germans to dodge taxes, the latest in a string of lawsuits that have targeted its private banking business.

Back in late 2012, German state prosecutors in the city of Bochum begun an investigation into UBS clients on suspicion of personal tax evasion. UBS were just one of several Swiss banks that formed part of the probe and it took the opportunity in its latest quarter to finally settle with the German authorities and resolve the issue.
The Zurich-based lender’s offices in Germany were searched last year as part of a probe sparked by a CD with details of UBS clients that was purchased by the German state of North Rhine-Westphalia (NRW).

UBS, which faces a separate probe in Germany and similar probes in Belgium and France, took a 254 million Swiss franc charge and said it aimed to have all its German clients come clean by year-end, from more than 95 percent.

Yet the charge is only one of a slew of legal issues with which the bank is contending. It hiked its provisions against future litigation to nearly 2 billion francs but warned this might still not be enough to cover possible fines and charges.

The bank has taken a strategic decision to scale back its risky investment banking operations in favour of private banking and asset management, but remains under threat from possible past market transgressions.

The settlement in the German tax case comes less than a week after a 15-month French inquiry into UBS escalated, with the bank put under formal investigation on allegations it laundered the proceeds of tax evasion.

UBS was ordered to stump up a 1.1 billion euro ($1.5 billion) guarantee payment, which it called “unprecedented and unwarranted” and will appeal.

Switzerland effectively ended its long-cherished banking secrecy in May by agreeing to join other countries in sharing tax information, once a standard method of sharing is agreed.

Meanwhile, Swiss banks have spent years attempting to clear their accounts of undeclared accounts under massive international crackdowns on tax evaders.
The legal problems have overshadowed a near two-year overhaul to shrink UBS’ investment bank, abandoning riskier activities in its bond trading arm.  The ultimate goal of its restructuring drive is bigger dividends. UBS aims to return at least half of its profits to shareholders if it can maintain capital – which stands at 13.5 percent under new global rules – at or above current levels through to the end of 2014 and achieve a ratio of 10 percent when applying its own stress tests.

Profit at its private bank plunged 43 percent on the cost of the German settlement. The unit, which is measured by its ability to win fresh funds from new and existing clients, took in 10.7 billion francs in net new money.

Swiss bank UBS saw 15.4 percent growth in its wealth management business for 2013, firmly securing its position as world leader in the sector, with close to $2 trillion of assets under management.

If growth continues at its current rate, the bank – which currently runs $1.96 trillion – will become the first wealth manager to hit the $2 trillion “milestone”. This would mark a transition in the scale of global wealth management.
Database UBS Fined

Can Manufacturing Help the US Economy?

The decade that preceded the 2008 financial crisis was marked by massive global trade imbalances, as the United States ran large bilateral deficits, especially with China. Since the crisis reached its nadir, these imbalances have been partly reversed, with America’s trade deficit, as a share of GDP, declining from its 2006 peak of 5.5% to 3.4% in 2012, and China’s surplus shrinking from 7.7% to 2.8% over the same period. But is this a temporary adjustment, or is long-term rebalancing at hand?

Many have cited as evidence of more durable rebalancing the “onshoring” of US manufacturing that had previously relocated to emerging markets. Apple, for example, has established new plants in Texas and Arizona, and General Electric plans to move production of its washing machines and refrigerators to Kentucky.

US Manufacturing Revived?

US Manufacturing Revived?

Why the Netherlands Response to the MH17 Crash is Measured

There are good reasons for Russian companies to locate in the Netherlands. The first is well known: taxes. Netherlands has tax treaties with more than ninety countries and a tax regime that allows tax-free money to flow through the Netherlands.

The Netherlands is also attractive because their legal system provides unique protection against the wrath of Putin. This was particularly evident in recent years in the settlement of the bankruptcy of what was once Russia’s largest oil company was: Yukos Oil.

Between 2006 and 2013 an obscure legal conflict between the Dutch branch of Yukos and its Russian curator was fought in the Dutch courts. The Supreme Court decided this conflict end of 2013 in favor of Yukos Oil.

Yukos Oil was the oil company of Russian oligarch Mikhail Khodorkovsky. Khodorkovsky was one of the richest Russians in the nineties, when Russia was known as the Wild East. He had received oil concessions after the fall of communism.  His bank Menatep was supposed to organize the state auctions for oil concessions, but strangely enough, only one bidder appeared at the auction.

When Putin came to power, Khodorkovsky accused the new president – ironically – corruption. In 2003, Khodorkovsky was arrested on suspicion of tax fraud. Eventually, he was sentenced to eight years in prison and was Yukos Oil – or what was left of it – was declared bankrupt in Russia.  But a significant portion of the assets of Yukos Oil was still stuck in a Dutch company: Yukos Finance BV.  The Russian administrator tried to sell these Dutch possessions.

The Yukos bankruptcy court and the Dutch were, according to tax expert Ronald Holtkamp JDsupra,  ‘a great stimulus for the influx of Russian companies in the Netherlands.”

The presence of so many shell companies also creates opportunities for stronger sanctions. Since so many assets of Russian companies are structured in the Netherlands, freezing of assets or other financial measures would disrupt finance in the Netherlands.

The U.S. sanctions were still significantly more stringent. For example, on the U.S. list were all the names of the largest oil producer Rosneft, the second largest gas producer Novatek and the third largest bank Gazprombank. All companies allies of Putin lead. In addition, the U.S. also focused on people like Timchenko, who are not yet on the European list.

For the U.S. it is easier to sanction because they have a limited economic relationship with Russia. But vervlochtendheid of Netherlands and other continental countries, Russia is huge. In particular, the dependence on Russian gas makes a confrontation with Russia economically painful.

The European foreign ministers nonetheless accelerated expansion of the sanctions list with more people and businesses.  The European ministers also threatening further sanctions which certain sectors of the Russian economy, such as defense and financial markets if Russia takes enough away from the Ukrainian separatists.

That is no idle threat. The European economy may be economically dependent on Russia, Russian companies can be crippled due to their mailbox operations at a financial blockade Netherlands. Not for nothing did the German newspaper Die Welt noted that ‘if there is one country on which sanctions can cause pain it is the Netherlands.”

The Netherlands Reluctant to Impose Sanctions on Russia

 

Global Currency Values: Big Mac Index

 

Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible. Yet the Big Mac index has become a global standard, included in several economic textbooks and the subject of at least 20 academic studies. For those who take their fast food more seriously, we have also calculated a gourmet version of the index.

This adjusted index addresses the criticism that you would expect average burger prices to be cheaper in poor countries than in rich ones because labour costs are lower. PPP signals where exchange rates should be heading in the long run, as a country like China gets richer, but it says little about today’s equilibrium rate. The relationship between prices and GDP per person may be a better guide to the current fair value of a currency. The adjusted index uses the “line of best fit” between Big Mac prices and GDP per person for 48 countries (plus the euro area). The difference between the price predicted by the red line for each country, given its income per person, and its actual price gives a supersized measure of currency under- and over-valuation.   BigMacValueWorldwide

Big Mac Global Value

 

Does Added Value Mean Wealth Creation?

Ricardo Hausmann writes:  Poor countries export raw materials such as cocoa, iron ore, and raw diamonds. Rich countries export – often to those same poor countries – more complex products such as chocolate, cars, and jewels. If poor countries want to get rich, they should stop exporting their resources in raw form and concentrate on adding value to them. Otherwise, rich countries will get the lion’s share of the value and all of the good jobs.

Poor countries could follow the example of South Africa and Botswana and use their natural wealth to force industrialization by restricting the import of minerals in raw form (a policy known locally as “beneficiation”). But should they?  Added Value and Wealth Creation

Manufacturing Chocolate

Chinese Business Schools Teach Western Style

More business schools in China are tapping experience from the West and elsewhere to meet the country’s growing demand for business elites.

Earlier this month, Shanghai’s Fudan University and London Business School jointly launched a business degree program. Their Global Masters in Management program boasts a combination of teaching modes and real-life experience from East and West. It will include business immersion through company projects.  Leading Chinese companies will mentor some of these managers.

The partnership with London Business School, one of the world’s top business education institutions, will help us reach a higher level in terms of expertise. It will also help draw out the best of the management systems employed in both the East and West, aiding the development of more capable leaders in the future,” Lu said.
Andrew Likierman, dean of the London school, said: “This program will give its graduates a ‘two-world’ mindset, combining direct exposure to China and the West. The balance of theory and practice will ensure that students gain a head start in the competition for the world’s best business jobs.”

Fudan’s business school has also worked with other prestigious schools overseas to carry out cooperative programs. The university has worked with Washington University to launch the Executive MBA program, which prepares senior-level professionals in China and other parts of Asia for global leadership.
“As the nation’s commerce takes off, it has become important for companies’ higher management to have a better understanding of the thriving Chinese economy and business practices. We have already seen the growing demand from employers for business talent with profound experience in China and the West,” said David Huang, a veteran headhunter who has worked in a multinational talent recruiter in Beijing.
“In this regard, how to provide a combined education with global vision and practical knowledge suitable for the local market becomes an issue,” he said.
Many consider Chinese business schools to have experienced a late start compared with those in the West. They have also faced a number of challenges, including lagging training modes, insufficient practical cases to draw on and ignorance about career design for students.
Over the past years, these schools have been implementing global strategies to help plug these gaps.

Chinese Business Schools