News, July 18th

‘Inequality defines our time’: UN chief delivers hard-hitting Mandela day message

Inequality, an issue which “defines our time”, risks destroying the world’s economies and societies, UN Secretary-General António Guterres said in a hard-hitting speech on Saturday.

Mr. Guterres was delivering the 2020 Nelson Mandela Annual Lecture, held online for the first time, in light of the ongoing COVID-19 pandemic. The lecture series held annually by the Nelson Mandela Foundation, on the birthday of the first democratically elected President of South Africa, aims to encourage dialogue by inviting prominent personalities to discuss major international challenges.

Mr. Guterres began by noting that the COVID-19 pandemic has played an important role in highlighting growing inequalities, and exposing the myth that everyone is in the same boat, because “while we are all floating on the same sea, it’s clear that some are in superyachts, while others are clinging to the floating debris.”

Global risks ignored for decades – notably inadequate health systems, gaps in social protection, structural inequalities, environmental degradation, and the climate crisis – have been laid bare, he said. The vulnerable are suffering the most: those living in poverty, older people, and people with disabilities and pre-existing conditions. 

Mr. Guterres pointed out that inequality take many forms. Whilst income disparity is stark, with the 26 richest people in the world holding as much wealth as half the global population, it is also the case that life-chances depend on factors such as gender, family and ethnic background, race and whether or not a person has a disability. 

However, he noted that everyone suffers the consequences, because high levels of inequality are associated with “economic instability, corruption, financial crises, increased crime and poor physical and mental health.”

Protests have been occurring daily in New York City against racism and police violence, following the death of George Floyd.

Colonialism, a historic aspect of inequality, was evoked by the Secretary-General. Today’s anti-racist movement, he said, points to this historic source of inequality: “The Global North, specifically my own continent of Europe, imposed colonial rule on much of the Global South for centuries, through violence and coercion.”

This led to huge inequalities within and between countries, including the transatlantic slave trade and the apartheid regime in South Africa, argued Mr. Guterres, and left a legacy of economic and social injustice, hate crimes and xenophobia, the persistence of institutionalized racism, and white supremacy.

Mr. Guterres also referred to patriarchy, another historic inequality which still resonates women everywhere are worse off than men, and violence against women is, he said, at epidemic levels.

The UN chief, who described himself as a proud feminist, said he was committed to gender equality, and has made gender parity a reality across senior UN posts. He also announced his appointment of South African international rugby captain, Siya Kolisa, as a global champion for the Spotlight Initiative, which aims to engage men in fighting violence against women and girls.

Turning to contemporary inequality, Mr. Guterres said that the expansion of trade, and technological progress, have contributed to “an unprecedented shift in income distribution”. Low-skilled workers are bearing the brunt, he warned, and face an “onslaught” from new technologies, automation, the offshoring of manufacturing and the demise of labor organizations. 

Meanwhile, he continued, widespread tax concessions, tax avoidance and tax evasion, as well as low corporate tax rates, mean that there are reduced resources for social protection, education, and healthcare – services that play an important part in reducing inequality.

Some countries have allowed the wealthy and well-connected to benefit from tax systems, but “everyone must pay their fair share”, said Mr. Guterres, and governments need to tackle the “vicious cycle” of corruption, which weakens social norms and the rule of law, and shift the tax burden from payrolls to carbon, which would help to address the climate crisis. 

Although climate change is a global problem, the effects are felt most keenly by those countries which are least to blame. The issue is likely to become more pronounced in the coming years, and millions risk malnutrition, malaria, and other diseases; forced migration, and extreme weather events. 

The only way towards a fair and sustainable future for all, he suggested, involves what he called a “New Social Contract”, which allows young people to live in dignity; women to have the same prospects and opportunities as men; and protects the vulnerable,  and a “New Global Deal”, which ensures that power, wealth and opportunities are shared more broadly and fairly at the international level.

As part of the New Social Contract, labor market policies would be based on constructive dialogue between employers and workers and would ensure human rights and fundamental freedoms.

The Secretary-General called for new social safety nets, including universal health coverage, the possibility of universal basic income, boosted investment in public services, and, to reverse long-standing inequalities, affirmative action programs and other policies to address inequalities in gender, race, or ethnicity.

The UN chief explained that quality education for all, and the effective use of digital technology, will be crucial to achieving these aims.

This would mean doubling education spending in low and middle-income countries by 2030 to $3 trillion a year: within a generation, all children in low- and middle-income countries could have access to quality education at all levels. 

Governments also need to transform the way children are taught, said Mr. Guterres, and invest in digital literacy and infrastructure, and help them to prepare for a rapidly changing workplace that is being upended by technology.

The Secretary-General outlined some of the ways that the UN is supporting these efforts, including The Roadmap for Digital Cooperation, launched at the United Nations in June, which promotes ways to connect four billion people to the Internet by 2030,  and “Giga”, an ambitious project to get every school in the world online. 

The UN chief ended his major strategic vision statement, by invoking the importance of international cooperation and solidarity.

“We belong to each other”, he said. “We stand together, or we fall apart”. 

The world, he concluded, is at breaking point, and it is time for leaders to decide which path to follow. The choice presented by Mr. Guterres, is between “chaos, division and inequality”, or righting the wrongs of the past and moving forward together, for the good of all.

China rolls out mass testing in Xinjiang after new Covid-19 cases

China launched mass health screenings in Xinjiang on Saturday after a spike in coronavirus cases raised fears of a fresh outbreak in the far western province.

The new cases illustrate the continuing difficulty China faces in stamping out the contagion, which emerged in the central Chinese city of Wuhan late last year before spreading around the world.

The new testing regime comes a day after authorities curtailed most flights into regional capital Urumqi and shut down local subway and public transport services.

The city had recorded 17 new coronavirus infections as of Saturday, authorities said in a briefing.

Mass screening for the virus will begin in buildings which had reported new cases and eventually cover all of Urumqi, said local health commission chief Zhang Wei.

“The whole city has entered a ‘wartime state’, and will suspend all kinds of group activities,” an official said at the briefing, according to state media reports.

Urumqi residents were also urged not to leave the city unless absolutely necessary.

Strict lockdowns across the country and widespread Covid-19 testing largely brought the outbreak under control within Chinese borders earlier this year.

But a new cluster emerged in Beijing in June and infected more than 330 people before it was contained, after millions of people living in the capital were tested for transmission.

Xinjiang was one of the first regions to let students return to school in late March after authorities declared an end to the initial wave of the Covid-19 outbreak.

Ethnic Uighurs and other Turkic Muslims make up around half of the remote and landlocked region’s population.

Many of them complain of decades of political and religious oppression by China’s ruling Communist Party, which the government denies.

Creative economic solutions devised to cope with COVID-19

Leaders of many Asian countries have devised numerous plans to stimulate their economies, ensuring people’s lives and helping businesses adapt to the new normal situation.

Nearly half a year since the “toxic wind” of the COVID-19 epidemic swept across the region, many governments in Asia have implemented bailout packages to rescue their hardest hit industries, such as tourism, food and beverage, retail…

In Japan, a subsidy campaign has been prepared to support the “shrinking” tourism industry. Japanese Minister of Land, Infrastructure, Transport and Tourism has recently announced that Japan will deploy a subsidy campaign from July 22 to promote tourism activities in Japan amidst concerns about the risk of a further outbreak.

Accordingly, the Government of Japan will provide up to US$190 per person per night for accommodation and US$95 per day, including travel expenses for tourists.

The Thai government also recently launched policies to rescue the tourism industry. The Government has approved stimulus packages worth US$716.8 million to promote domestic tourism, with the goal of stimulating about 2 million domestic tours in the third quarter of 2020. This domestic stimulus package includes allowances for accommodation, transportation, meals, and entrance fees at attractions.

Meanwhile, in India, in addition to economic stimulus policies, the government has been paying special attention to supporting rural job creation. After India imposed a nationwide lockdown in March this year to prevent the spread of the COVID-19 epidemic, about 100 million migrant workers fell into unemployment, temporarily returning to their hometowns to make a living.

In this context, creating jobs for rural workers is a must-do task right now, so Prime Minister N. Modi has launched the Poor Welfare Employment Campaign valued at about US$6.7 billion. The campaign will focus on building roads, houses, setting up a system of supply of electricity and gas, etc. These projects will give priority to ensuring employment for migrant workers.

In another Asian country, Singapore, the government has quickly turned challenges into opportunities in accelerating the process of digital transformation, in the context of people having to implement social distance.

The E-Commerce Booster Package has been launched to provide consulting services, human resource support and costs for small and medium-sized businesses with little or no e-commerce experience, to help them adapt their businesses to online sales.

It is believed that such creative solutions launched by some countries in Asia could help people, businesses, and economies to stand up and rise strongly after the severe crisis.

Israel imposes sweeping new coronavirus restrictions

Israeli officials hoping to halt a rise in coronavirus cases announced sweeping new restrictions Friday, including who can use gyms and which businesses can stay open on weekends.

The measures being imposed by the Israeli government come amid 1,900 new reported infections Thursday. By late May, Israel had largely contained its coronavirus outbreak following a two-month lockdown — but cases are now on the rise again as the restrictions lifted.

Under new measures, gyms and exercise studios will be closed except for use by competitive athletes. Beaches will be closed on weekends, beginning later this month.

Stores, malls, barber shops, beauty salons and tourist sites will close on weekends, starting Friday. And public gatherings will be limited to 10 people indoors or 20 outside.

In a statement released Friday afternoon, the government also said restaurants would have until early Tuesday to switch to takeout and delivery only.

Restaurants were initially ordered to halt seated dining by Friday evening, but the government later backtracked after an uproar from owners. Restaurateurs said they already had fresh food for the weekend rush and would suffer major financial losses if they had to throw it out.

Israel’s government announced the restrictions after Prime Minister Benjamin Netanyahu said “interim steps” were needed to avoid another general lockdown.

Any violations, The Associated Press said, would be considered a criminal offense.

Despite the growing outbreak, Israel’s death toll from the coronavirus has remained low. Out of the more than 45,000 confirmed cases, 384 have been fatal.

UK set to roll out speedy finger-prick COVID-19 tests:  Report

The UK government is planning to roll out millions of free coronavirus antibody tests which generate instant results following finger-prick after successful secret trials, according to a UK media report.

The home tests, developed by a University of Oxford consortium with diagnostics firms, can tell within 20 minutes if a person has ever been exposed to the deadly virus and have been found to be 98.6% accurate in human trials held in June, ‘The Daily Telegraph reported.

“This rapid test appears to be truly amazing, and it shows we can do this ourselves,” said Sir John Bell, Oxford’s Regius Professor of Medicine who leads the British government’s antibody testing program.

Until now, the only antibody tests approved for use in the UK have involved blood samples sent to laboratories for analysis, which can take days. Now, thousands of prototypes of the new finger-prick have already been manufactured at factories across Britain in anticipation of expected regulatory approval in the coming weeks, the newspaper said.

Eventually, antibody tests are expected to help reveal the levels of immunity that people can build up against COVID-19 but so far it remains unclear if the prevalence of coronavirus antibodies means future immunity from the disease.

Ministers hope the AbC-19 lateral flow test will be available for use in a mass screening program before the end of the year. The new tests have been developed by the UK Rapid Test Consortium (UK-RTC), a partnership between Oxford University and UK diagnostics companies including Abingdon Health based in York.

Dr Chris Hand, the leader of the UK-RTC and chairman of Abingdon Health, revealed that the new UK-made test passed its first major clinical trial last month, involving nearly 300 people and conducted by scientists at Ulster University.

“It was found to be 98.6 per cent accurate, and that’s very good news, Dr Hand told the newspaper.

“We’ve had two shifts of R&D personnel working day and night, seven days a week. This sort of development program would normally take a year. We’ve done it in 10 weeks. We’re now scaling up with our partners to produce hundreds of thousands of doses every month,” he said.

Under government plans, the tests will be distributed to healthcare professionals first before being made available for millions of people to use at home, who would then send in their results to a central database.

“If coronavirus is like flu and people need an annual vaccine, we will need mass antibody testing to measure people’s antibody response to that vaccine. That’s part of the plan,” explained Dr Hand.

Unlike many rivals, the UK-RTC version uses the “full-length spike protein” part of the virus to capture so-called IgG antibodies as blood passes through the home test. If the result is positive, two pink lines appear within 20 minutes.

A UK Department of Health and Social Care spokesperson said: “We have received an extraordinary response to our call to action to supply antibody tests, and we continue to work with industry to identify further tests that are safe and accurate to be used at home.

“While these tests will help us better understand how coronavirus is spreading across the country, we do not yet know whether antibodies indicate immunity from reinfection or transmission.”

World Bank Group President David Malpass: Remarks for G20 Finance Ministers and Central Bank Governors Meeting

World Bank Group President David Malpass released the following remarks for today’s virtual G20 Finance Ministers and Central Bank Governors Meeting:

The pandemic has triggered the deepest global recession in decades, and what may turn out to be one of the most unequal in terms of impact.  People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.  Adding to the inequality problem, growth and investment prospects are weak and the dominant stimulus in advanced economies is through massive central bank asset purchases, which provides selective support to higher rated bonds and bondholders in their own markets.

For the poorest countries, poverty is rising rapidly, median incomes are falling, and growth is deeply negative.  Debt burdens – already unsustainable for many countries – are rising to crisis levels.

Meanwhile, investors are reaching for yield, as interest rates look set to be low-for-long.  This provides short-term support for some governments, but with economic fundamentals deteriorating, it risks complacency and a downward spiral into a new debt crisis that is likely to go beyond the poorest countries.  If this proceeds, it will weigh for decades on people in developing countries.

The World Bank is substantially increasing the pace of our grants and loans for developing countries as they respond to the crisis, but it won’t be enough.  We expect the development challenges to deepen and become even more severe over the next year.

Today, I’m going to focus on debt suspension, debt reduction, debt resolution, and debt transparency.  We’re recommending several actions that will be key factors in responding to the crisis and strengthening the recovery.

I urge you to extend the time frame of the Debt Service Suspension Initiative (DSSI) through end 2021 and commit to give the initiative as broad a scope as possible.  We’ve made a great deal of progress with DSSI in a short period of time, but more needs to be done.

Eligibility of official bilateral claims should extend to all external long-term public and publicly guaranteed debt, including the external debts of SOEs with either explicit or implicit government guarantees.

To maximize much needed support to eligible countries, all official bilateral creditors, including national policy banks, should implement the DSSI in a transparent manner.

For example, full participation of the China Development Bank as an official bilateral creditor is important to make the initiative work.

This type of broad scope for DSSI can help achieve large benefits for the poorest countries.  To give you a rough quantification, borrowing countries participating in DSSI have identified $8.4 billion in eligible savings in their 2020 debt service payments, but data provided to the G20 by creditors have identified only $5 billion in debt service deferrals, a $3.4 billion gap or shortfall in debt relief.

We urge the G20 to request the disclosure of the terms of the rescheduling of any DSSI eligible debt.  Creditors need comparability of treatment.  Paris Club creditors see the benefit of this, but some major creditors are not participating fully.  For DSSI to be fully effective, there should be a standard minimum set of debt-restructuring information.  This will avoid the secretive rescheduling that are underway in some countries, such as Angola and Laos, often with undisclosed grace periods and terms.  This fragmentation disfavors other creditors and the people in the debtor country.

Comparable treatment needs to extend to commercial creditors of DSSI-participating governments.  They should discontinue their collection of payments from the poorest countries, particularly from those IDA countries at elevated risk of debt distress that receive IDA grant resources.  I’ve been disappointed by the lack of progress so far in the midst of a global emergency and urge the commercial creditors to form an effective group to help discontinue their collections from the poorest countries.

Even with these immediate steps – a longer suspension of debt payments; a DSSI scope that includes more debt and more official bilateral creditors; participation by commercial creditors; and the World Bank’s large positive net flows – many of the poorest countries won’t be able to make the resulting debt burdens sustainable in the medium term.  The economic repercussions from the pandemic are expected to inflict lasting scars on growth through lower investment, erosion of human capital, and the retreat from global trade and supply linkages.

I urge the G20 to open the door to consultations about the debt overhang itself and effective ways to reduce the net present value of both official bilateral and commercial debt for the poorest countries.

We also need to improve the debt resolution process.  The sovereign debt environment has expanded in size – the debt overhang – and also in fundamental ways that create great challenges for debt resolution.  For example, private creditors to sovereigns are playing a growing role; and much of the official bilateral credit comes from outside the Paris Club.

Looking longer term, creditors’ rights frequently take precedence over the people in the debtor countries, adding to the difficulty of debt resolutions.  The international community needs to recognize this imbalance if we are going to achieve effective debt resolutions or adjust the process in a way that encourages good outcomes.

Debt transparency, including the transparency of debt restructurings discussed earlier, is of course the starting point for more balanced debt resolutions.

In addition, strengthening debt resolution practices and putting a framework in place to support countries with weak capacity would help.  Key jurisdictions in which debt disputes are frequently resolved need to consider the significant shifts in the way poor countries have contracted debt in recent years.  Legal measures could be put in place to prevent application of inflated penalty rates of interest; and to inhibit, under certain clearly defined terms, the excessive attachment of assets of poor countries in debt distress.

And while a lot of attention has been focused on external financial liabilities of government, we also need to make progress in helping countries with long-term contractual commitments related to restrictive purchase agreements that result in long-term financial burdens.  These long-term commitments can pose a crushing burden on the poor and become a permanent obstacle to our goal of broad-based growth and shared prosperity.

The final area I wanted to discuss is debt transparency.  Debt transparency is critical for several reasons: creditors need to fully assess the debt sustainability of their potential borrowers, citizens need to be able to evaluate their leaders for the debt they take on, and borrowers need to design strategies based on a clear understanding of their debt.

In June 2020, the World Bank further strengthened our initiative to enhance debt transparency by announcing five key transparency principles and by publishing additional public debt data from the Debtor Reporting System (DRS).

Transparency needs to extend to the terms, conditions, and nature of public debt and to the legal aspects such as confidentiality clauses and collateral.  The lack of transparency in all these areas impedes investment and often leaves the people in the borrowing country with poor outcomes.

Transparency should extend to debt like instruments, including long-term bilateral deposits and central bank “swap lines.”  These are sometimes used as multi-year funding sources.  Such long-term commitments can obscure the true level of indebtedness and should be fully disclosed and, as appropriate, included in the analysis of debt sustainability.

We’re working well with debtor countries on transparency and want to go further in the G20 to allow reconciliation of the debt data and provide transparency when there are gaps.  By October 2020, we will publish our new DRS dataset that includes 2019 data, and we are working hard toward clarifying some of the data gap.

We encourage borrowing countries to publicly report more debt data and creditors to disclose details on their official loans.  The World Bank fully discloses the objectives, conditions, and terms of every loan when it is made, and think this is important in getting good development outcomes.  When countries enter into debt-creating contracts, they should make them public.  Transparency in this area would help both debtors and creditors protect their rights, which in the end is critical to increasing both the quantity and quality of investment. 

There is substantial resistance to this degree of transparency because many parts of the current system rely on asymmetric information, where one party or another takes advantage as the contract is written.  That cycle is hard to break, and there is noticeable reluctance of creditors, and even debtors, to go in the direction of balanced debt resolutions and transparency of debt and investment contracts.  Balancing the built-in protection of vested interests will be hard, but it is critical for better development outcomes.  

In conclusion, the situation in developing countries is increasingly desperate.  Time is short.  We need to act quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency.

Published by jim

Curator of things...

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