Appeal to G20: Stop Gambling on Food & Hunger

More than 100 civil society organizations from all over the world have sent an appeal to the G20 Finance Ministers meeting this weekend under the French presidency in Paris. The appeal urges the G20n for immediate action on financial speculation on food commodities. The document says:

Over the past few years, price hikes in basic foods have created dramatic shortages in many of the world’s poorest countries. In 2008, the world saw a major crisis with skyrocketing prices over a short time span for crops like rice, wheat and corn. Food riots erupted in 25 countries and more than 100 million people were added to the world’s undernourished and starving.

Now, with food prices rising again, a similar crisis could be just around the corner. We urge political leaders and heads of government in the European Union, United States and elsewhere to act immediately to avoid the repetition of such a scenario. While developing solutions to hunger and malnourishment in the world is a huge challenge, reining in financial speculation on agricultural commodities is of paramount importance. With global financial markets still in turmoil, agricultural commodity ‘futures’ have become increasingly attractive to financial investors and speculators. Enormous amounts of capital are flooding these markets, causing sudden food price spikes that can be lethal for low-income families in developing countries. Increased volatility caused by the influx of ‘hot money’ into and out of commodity markets is also causing havoc for farmers, who cannot predict what price their crops will command from one month to the next.

At the moment, action to crack down on excessive speculation in commodity markets is being considered in the US and EU, and in both places there are opportunities to implement reforms that would stabilise food prices. The G20 governments have also identified it as a top priority. This political context represents an historic opportunity to secure a sustainable relationship between financial markets and agricultural markets.

The financial services industry has already spent billions of Euros trying to persuade governments not to limit speculation. These lobbyists represent a small but powerful group of vested interests who are profiting from an activity that is fundamentally harmful to the vast majority of people.

We call on governments and parliamentarians to listen instead to the millions of consumers, workers, farmers, businesses, religious groups, academics, international development activists and others who believe effective controls over financial speculation on agricultural commodities is necessary to defend the world’s poorest people and the world’s food producers from exposure to sudden food price hikes and extreme price volatility.

Rules are needed in several key areas. These include ensuring full transparency and supervision of financial markets in food commodities, imposing strict limits on the level of participation by purely financial actors in commodity futures markets, and banning financial institutions from buying up physical stocks in food and farmland.

This is an urgent matter. Not only because of the live discussions in the US, EU and G20, but mostly because prices in agricultural and food markets are becoming more volatile with each passing month. Unless steps are taken to stop excessive speculation, it is only a matter of time until a disastrous new chapter in the global food crisis begins.

* Please find the signatories >>> here.

Finance Ministers in Paris: Early acid test for G20

The world’s leading economies must act now to stop the price of basic foods from surging further out of the reach of poor people. They must also commit to a Financial Transaction Tax (FTT) to help millions of people hit by the economic crisis and climate change. International agency Oxfam has welcomed the promise of action on these issues from France, the current G20 chair. Oxfam says that this week’s Finance Ministers’ meeting in Paris, on Feb 18-19, is an early acid test as to whether the G20 can turn words into action.

“Finance ministers will define the G20’s development credentials this weekend. They could make or break Sarkozy’s pledges to tackle the food price crisis and push through an FTT,” said Oxfam spokesperson Luc Lampriere. “The G20’s money ministers must now plan how exactly they will deliver on these promises – or otherwise G20 leaders will be left looking like emperors with no clothes.” Oxfam is seeing mounting impacts on poor people as a result of the economic crisis and food price hikes. Countries are being affected differently, but in general poor people are having to spend more of their limited income on food, and are therefore eating less, less often, and in some case less nutritious food. “We see anecdotal evidence of people slipping into food insecurity and malnourishment,” Lampriere said.”We hear about affected rural communities cutting back on health spending and having to sell productive animals earlier than they normally would in order to buy food.”

On a Financial Transaction Tax, Oxfam says: “This is the zeitgeist tax, a popular and progressive policy worth as much as $400bn a year. It would be small change from those who can most afford it but make a big difference to those who most need it. A financial transaction tax would be like a breath of fresh air clearing away the stench of bankers’ bonuses and offering hope to those trapped by the economic crisis,” he said. Oxfam is calling for an average tax of 0.05% on share, currency, bond and derivative deals. Recent research for Oxfam shows that 56 of the poorest countries in the world face a combined $65bn hole in their budgets as a result of the economic crisis. Oxfam also wants the G20 to endorse a recent finding by the UN High Level Advisory Group on Climate Finance (AGF), that at least $12 billion a year can be raised from levies on international transport, particularly on shipping.

WSF 2011: Getting to grips with landgrabbing

By Gisele Henriques*)

At the 10th World Social Forum, the issue of land grabbing has undoubtedly emerged as one of the most discussed among the hundreds of civil society organisations which have come to Dakar to mobilise and share experiences on their respective struggles. Official data on land grabbing and its magnitude remains elusive and the actual numbers of hectares involved is contested. The FAO estimates that of the land grabs taking place today about 70% is occurring in Africa, the same continent facing the greatest food security challenges. In response CIDSE member Misereor, together with Caritas Senegal, FIAN and NAD sponsored a three day event with partners from Africa, Asia and Latin America, to expose the realities behind this phenomenon and the consequences for local communities.

There are various forces driving the scramble for land. Mining and appropriation of forest resources are not particularly new occurrences. Neither is the acquisition of land by international corporations for plantations, such actions were common in Latin America in the 70s and 80s. What is different now is the rate in which it is happening and the fact that land grabbing is being sanctioned in the name of supporting a green economy. Evidence suggests that one third of the land grabs today are going for the production of agro-fuels, most notably jatropha, maize and sugar for ethanol. These will be supplied to meet the EU’s commitment of blending at least 10% agro-fuels to reduce the use of non-renewable energy sources. According to Ruth Hall of the Institute for Poverty, Land and Agrarian Studies in South Africa, some 5 million hectares have already been grabbed in Africa, to satiate Europe’s thirst for ‘green’ energy. Whilst reduced dependence on non-renewable energy sources is a worthy cause, the commitment has created a business for agro-fuels. This business is having disastrous consequences for small farmers who are being pushed off their land and loosing access to their resources, livelihoods and capacity to feed themselves. It is estimated that the amount of corn used to fill a 4x4 could feed an adult for a year.

In addition to agro-fuel production which displaces food production, oil rich nations and Asian economic powers like China and Korea, are acquiring land to produce food for their own populations. The World Bank estimates that 37% of all the land grabbed globally is going to supply these markets. The land grabbing process is largely legal and is usually sanctioned by governments, who have been encouraged to attract foreign investment if they are to develop”. Globally, there is a generally accepted notion that Africa is a “sleeping giant”, a continent not yet maximizing its economic potential. Land is widely deemed as an abundant resource which could be traded and commoditized to meet the demands of the international market, in turn eradicating poverty in the continent. Evidence suggests just the opposite is taking place. Small farmers, who are deemed unproductive by their government, are finding themselves squeezed off their land and forced into contract servitude. This so-called, ‘empty and vast’ territory is actually their land, which they steward for future generations. Examples for Madagascar, DRC, Benin, Uganda, Nepal, Cambodia, Brazil and Argentina demonstrate that this phenomenon is taking place all over the world.

*) Gisele Henriques is CIDSE Policy and Advocacy Officer on Food, Agriculture and Sustainable Trade (FAST)

New European Social Watch Report: Time for Action

The second European Social Watch Report was launched in Brussels with a roundtable discussion at the European Parliament. The event was chaired by Irish MEP Proinsias De Rossa, who was labour minister and head of country delegation to the Social Summit in 1995, when Social Watch was created. From its mere title, “Time for Action: Responding to Poverty, Social Exclusion and Inequality in Europe and Beyond”, the European Social Watch report reflects the Egyptian political crisis as a true demonstration of its findings.

The report points out that 17% of people in the European Union live below the poverty line. Social Watch looks at Europe's approaches to addressing poverty, social exclusion and inequality both inside the EU and in the wider world. The report examines the issues from different angles, including employment, healthcare, housing and financial exclusion. Since “one child in five is born and grows up with economic and social deprivation” and “twenty per cent of young people are currently living at risk of poverty in the EU”, Mirjam van Reisen argues in the report summary that the policies in place to address poverty and social exclusion are “weak” and “have come under pressure in the aftermath of the financial crisis”.

“The fiscal constraints that developing countries have experienced in previous decades resulting from IMF policies are now confronting European countries” says the report, and as a consequence “the ability of governments to implement their national and international obligation to guarantee social security has been compromised”. Social Watch Europe analyses the reality for groups of people particularly vulnerable to poverty and social exclusion, such as migrants and the Roma. Special attention is given to gender and poverty, as well as the young and old who are more vulnerable to social exclusion. It concludes by calling for a universal standard for social protection. It also concludes that if the EU is to play the global role that it claims then the EU must also establish its own “social floor”.

The Report is available >>> here.

World Social Forum 2011 Dakar: A new direction to tackle global challenges

The world needs a new direction, rather than small course-adjustments. This motto brings CIDSE, members and partner organisations from around the globe to the 2011 World Social Forum (WSF) in Dakar. Between 6 and 11 February the international alliance of Catholic development agencies and partners will discuss the profound changes needed to tackle issues such as hunger, climate change and global financial instability. The World Social Forum offers an alternative and more democratic model of leadership, where people are at the heart of solutions to global challenges.

“Governments have not put in place just and adequate policies to tackle the multiple crises the world faces”, said Bernd Nilles, Secretary General of CIDSE who will attend the forum. “Rising food prices, unresolved climate negotiations, global economic imbalances... they are all symptoms of our failure to act on global challenges. The World Social Forum demonstrates that people want the world to take a new course. It is time that politicians sit up and listen to their ideas.”

The World Social Forum (WSF), designed as an alternative to the World Economic Forum, provides a powerful antidote to a system which puts money rather than people first. In Dakar, CIDSE, its members, and partner organisations will join thousands of people from all over the world to plot out strategies to achieve pro-poor policies in the short term, and find answers to fundamental questions for our future.

More than 250 Economists Call for Trade Reforms to Allow Capital Controls

In a letter delivered 31 January, more than 250 economists urged the Obama administration to reform US trade rules that restrict the use of capital controls. The statement reflects growing consensus among economists that capital controls, while no panacea, are legitimate policy tools for preventing and mitigating financial crises. Signatories include several economists who have been generally supportive of free trade but are critical of the capital control restrictions (e.g., Arvind Subramanian, Senior Fellow of the Peterson Institute for International Economics and Nancy Birdsall, President of the Center for Global Development), as well as former IMF officials (e.g., Olivier Jeanne of Johns Hopkins University) and a Nobel laureate (Joseph Stiglitz).

The United States has trade or investment agreements with 52 countries that restrict the use of capital controls and allow private foreign investors the right to sue governments that violate these restrictions. Several additional deals are in the works, including:
* U.S.-South Korea free trade agreement. Status: pending congressional approval.
* Trans-Pacific Partnership. Status: Trade negotiators from the United States and eight other countries will meet for a 5th round of talks in Chile on 15 February.
* Investment treaty with China. Status: The U.S. government is expected to soon complete a review of its model Bilateral Investment Treaty (BIT), which will accelerate negotiations with China, India, and several other countries. Presidents Obama and Hu “reaffirmed their commitment” to these ongoing negotiations in a 19 January joint statement.

Kevin Gallagher, Boston University professor and research associate at the Global Development and Environment Institute at Tufts University (GDAE), and Sarah Anderson, director of the Institute for Policy Studies Global Economy Project, initiated the statement. In 2009, Gallagher and Anderson examined this issue as members of the Investment Subcommittee of the State Department's Advisory Committee on International Economy Policy. “It’s in the US interest to allow other governments the authority to apply sensible capital controls,” says Anderson. “In a globalized world, expanding the policy options to combat financial crisis makes sense for US businesses, workers, and the environment.” “US trade treaties are inconsistent with the emerging consensus in the economics profession and among the international financial institutions that capital controls are a legitimate part of the toolkit,” says Gallagher. “The US and its trading partners should have all the possible tools available to prevent and mitigate future financial crises.”

>>> Click here for the full statement and list of endorsers.