'Worse than the Taliban' - new law rolls back rights for Afghan women

Jon Boone in Kabul
The Guardian, Tuesday 31 March 2009
Article history

A burqa-clad Afghan woman walks in an old bazaar in Kabul. Photograph: Ahmad Masood/REUTERS
Hamid Karzai has been accused of trying to win votes in Afghanistan's presidential election by backing a law the UN says legalises rape within marriage and bans wives from stepping outside their homes without their husbands' permission.
The Afghan president signed the law earlier this month, despite condemnation by human rights activists and some MPs that it flouts the constitution's equal rights provisions.
Jon Boone reveals Afghanistan's new law denying women's rights Link to this audio
The final document has not been published, but the law is believed to contain articles that rule women cannot leave the house without their husbands' permission, that they can only seek work, education or visit the doctor with their husbands' permission, and that they cannot refuse their husband sex.
A briefing document prepared by the United Nations Development Fund for Women also warns that the law grants custody of children to fathers and grandfathers only.
Senator Humaira Namati, a member of the upper house of the Afghan parliament, said the law was "worse than during the Taliban". "Anyone who spoke out was accused of being against Islam," she said.
The Afghan constitution allows for Shias, who are thought to represent about 10% of the population, to have a separate family law based on traditional Shia jurisprudence. But the constitution and various international treaties signed by Afghanistan guarantee equal rights for women.
Shinkai Zahine Karokhail, like other female parliamentarians, complained that after an initial deal the law was passed with unprecedented speed and limited debate. "They wanted to pass it almost like a secret negotiation," she said. "There were lots of things that we wanted to change, but they didn't want to discuss it because Karzai wants to please the Shia before the election."
Although the ministry of justice confirmed the bill was signed by Karzai at some point this month, there is confusion about the full contents of the final law, which human rights activists have struggled to obtain a copy of. The justice ministry said the law would not be published until various "technical problems" had been ironed out.
After seven years leading Afghanistan, Karzai is increasingly unpopular at home and abroad and the presidential election in August is expected to be extremely closely fought. A western diplomat said the law represented a "big tick in the box" for the powerful council of Shia clerics.
Leaders of the Hazara minority, which is regarded as the most important bloc of swing voters in the election, also demanded the new law.
Ustad Mohammad Akbari, an MP and the leader of a Hazara political party, said the president had supported the law in order to curry favour among the Hazaras. But he said the law actually protected women's rights.
"Men and women have equal rights under Islam but there are differences in the way men and women are created. Men are stronger and women are a little bit weaker; even in the west you do not see women working as firefighters."
Akbari said the law gave a woman the right to refuse sexual intercourse with her husband if she was unwell or had another reasonable "excuse". And he said a woman would not be obliged to remain in her house if an emergency forced her to leave without permission.
The international community has so far shied away from publicly questioning such a politically sensitive issue.
"It is going to be tricky to change because it gets us into territory of being accused of not respecting Afghan culture, which is always difficult," a western diplomat in Kabul admitted.
Soraya Sobhrang, the head of women's affairs at the Afghanistan Independent Human Rights Commission, said western silence had been "disastrous for women's rights in Afghanistan".
"What the international community has done is really shameful. If they had got more involved in the process when it was discussed in parliament we could have stopped it. Because of the election I am not sure we can change it now. It's too late for that."
But another senior western diplomat said foreign embassies would intervene when the law is finally published.
Some female politicians have taken a more pragmatic stance, saying their fight in parliament's lower house succeeded in improving the law, including raising the original proposed marriage age of girls from nine to 16 and removing completely provisions for temporary marriages.
"It's not really 100% perfect, but compared to the earlier drafts it's a huge improvement," said Shukria Barakzai, an MP. "Before this was passed family issues were decided by customary law, so this is a big improvement."
Karzai's spokesman declined to comment on the new law.

The horse has bolted

Current and former leaders of global agencies are leap-frogging each other with increasingly dramatic attempts to give expression to the scale and rapidity of the disintegration and collapse of the world’s financial and economic systems. Their warnings contrast sharply with the feeble efforts of national government agencies like the UK’s Financial Services Authority (FSA).
Michel Camdessus, former managing director of the International Monetary Fund (IMF) went large last week, declaring: “This crisis is the first truly universal one in the history of humanity. No country escapes from it. It has not yet bottomed out.” He was foreshadowing yet another of the IMF’s series of ever-more pessimistic forecasts published yesterday that calmly predicts that the global economy will contract this year for the first time since World War II.Moreover, the impact in the UK will be more severe than in any other developed capitalist economy, the IMF warns. Figures on public finances confirm a rapid spiralling of state debt in the wake of the financial crisis, mounting unemployment and collapsing tax revenues. Next year, the IMF estimates that the Treasury will have to borrow a record 11% of gross domestic product – far more than has ever been borrowed before in British history and higher as a proportion of national wealth than in the United States.Camdessus’s observation makes the otherwise stunning admission in the opening sentences of the report on the global banking crisis from Lord Turner, head of the FSA look pretty tame in comparison. “Over the last 18 months, and with increasing intensity over the last six, the world’s financial system has gone through its greatest crisis for at least half a century, indeed arguably the greatest crisis in the history of finance capitalism,” he writes.After pointing the finger at New Labour for promoting “light touch regulation”, Turner admits that markets are irrational but then insists it’ll be OK, apparently, if we tighten regulations this time around. A phrase about shutting stable doors after the horse has bolted springs to mind.In common with most observers and analysts, Turner mistakenly attributes the global production shutdown, with unemployment spiralling to new records in every country, to bad behaviour in the world of finance. The real source of the crisis actually lies in the system of capitalist production whose expansion is founded on debt of all kinds.Following the 1929 crash, despite multiple failed attempts at government intervention, the crisis stretched throughout the 1930s becoming known in retrospect as the Great Depression. The Second World War reduced the no longer profitable pre-war surplus productive capacity to rubble and bloody corpses.Then, and only then, credit expansion freed the insatiable self-movement of capital expansion in post-war spurts of growth. These produced the transnational corporations, built on cheap labour and the wreckage from a series of worsening crises, and spawned the global financial system which has now disintegrated.Turner wants to get the carnival back on the road, replaying the same show, saying that the global economy needs “the existence of large complex banking institutions providing financial risk management products” which “inevitably involve at least some position taking”.This is wishful thinking. The crisis is incomparably deeper than any other time in history partly because no-one knows the size of the balloons of credit which have yet to burst and the real state of bank finances. For example, no one in government can actually account for the vast sums allocated to bank bail-outs in America and the UK. They have disappeared into a financial black hole.There’s an opportunity to discuss non-capitalist solutions and policies for this dangerous crisis at LEAP’s Capitalism isn’t Working conference next month.Gerry GoldEconomics editor 20 March 2009

lets identify the real causes of the slump

Did you secretly cheer yesterday when Fred Goodwin, the disgraced British banker, had his windows smashed by alleged anti-capitalists who later issued a statement saying: ‘This is just the beginning…’?

I didn’t. Goodwin, the former head of the troubled Royal Bank of Scotland who has caused a stink by refusing to give up his £700,000-a-year pension, is not spiked’s idea of a nice guy; we’re no fan of fat cats. But the attack on his home and his Mercedes S600 is the product of a top-down, officially-sanctioned scapegoating of bankers that is fatally distracting us from getting to grips with the economic crisis, far less finding a way out of it.
The anti-banker fervour, stoked by government ministers keen to avoid blame for the recession and by respectable journalists who like nothing better than having a hate figure, has reached hysterical levels. Perhaps the most shocking thing about yesterday’s assault on Goodwin’s property was not the Baader-Meinhof style use of violence by individuals who are ‘angry’ at ‘rich people’ (1), but the fact that some of Goodwin’s neighbours reportedly said he deserved it.
His home is in the leafiest bit of leafy Edinburgh, the most cloyingly middle-class city in the UK; even there, anti-banker sentiments run riot.
The attack on Goodwin’s property, like the promised protest against the Bank of England during the G20 conference next week, was a physical manifestation of an elite-driven hysteria. In recent months bankers have been demonised, even subjected to a kind of witch hunting, by the powers-that-be. The grilling of four senior bankers by the House of Commons treasury select committee last month turned into a kind of two-minute hate, as bank bosses were given ‘a kicking’ by MPs, were forced to apologise, and were roundly denounced by reporters as ‘sociopaths’ who represented everything ‘rotten’ about greedy modern Britain (2).
Conservative leader David Cameron said it wasn’t enough to make the bankers apologise – some of them should be ‘sent to prison’ (3). A New Labour minister proposed introducing a new law specifically to take back Goodwin’s massive pension, only to backtrack later. Top journalists have become salivatingly obsessed with the bankers’ avarice. Robert Peston, the business reporter for BBC News who broke many of the stories about Goodwin’s pension, says it is ‘wholly plausible’ that ‘top bankers’ greed… has brought the economy to its knees and is causing misery to millions’ (4), as if bankers’ personal desires provoked international recession. Meanwhile, Goodwin’s face has been splashed across the front pages of the tabloids: ‘WE HUNT DOWN FRED’, declared the Sun (5).
The Sun hunted him in order to give him a readers’ petition that said, ‘Dear Fred The Shred, I am in the red so I want back my bread, surely you can get by on less instead’. Now so-called anti-capitalists have hunted his home in order to say, ‘We are angry that rich people, like him, are paying themselves a huge amount of money, and living in luxury, while ordinary people are made unemployed, destitute and homeless. This is a crime. Bank bosses should be jailed.’ That a Sun campaign should have so much in common with an ‘anti-capitalist’ act of violence should surely make some alarm bells ring.

Of course bankers bear much responsibility for the economic crisis, and it is galling that some of them were effectively rewarded for failing. But simply blaming bankers, simply hating on greedy individuals and their fat pay packets, is wilfully to ignore the larger systemic forces at work in the recession. Government ministers and officials in particular played a key role in encouraging the new systems of financial speculation as a way of generating economic growth and sustaining key areas of public life; indeed, the increasing role of finance in Western economies, from the 1980s to today, has expressed the underlying stagnation of the productive economy. Yet the role of the government and the deeper economic malaise have been largely ignored in public debate, in favour of creating a figure of evil who can be blamed for the financial and moral collapse of modern Britain: the banker.
From Whitehall to White City, from Wapping to some rundown bedsit in Wandsworth inhabited by has-been anarchists, the attacks on bankers have nothing whatever to do with honestly appraising the economic crisis or coming up with some tough solutions or big ideas for overcoming it. Instead this represents a shameless reneging of responsibility by ministers, a populist crusade against evil by respectable journalists, and an opportunistic attack on the rich by the somewhat re-energised rump of the radical left, who cravenly cling to the coat-tails of the elite campaign against ‘sociopaths’ like Goodwin.
There is something almost McCarthyite in this. Of course the scale is different, the victims are different (they’re capitalists rather than communists), and this is no ideological witch hunt but rather an opportunistic scapegoating. But in its creation of caricatured evil men who are held responsible for every wrong in British society and for the ‘misery of millions’ (6), the fingering of bankers echoes earlier attacks on small groups of wicked people. ‘Social disorder in any age breeds mystical suspicion’, said Arthur Miller, whose 1953 play The Crucible compared the Salem witch hunts of the seventeenth century to the McCarthyite anti-communist witch hunts of the time. He argued that during periods of political and social disorientation society will always seek ‘convenient scapegoats’ (7). So it is today. The end result of Brown, the BBC and other bigwigs cynically demonising bankers is physical violence in Edinburgh.
The attack on Goodwin’s home reveals much about the nature of ‘anti-capitalist’ protest today. In physically acting out the disdain for bankers that was first generated by politicians, Britain’s state broadcaster and right-wing tabloids, the stone-throwers unwittingly reveal that ‘anti-capitalist’ agitation these days is little more than an external, physical expression of capitalist society’s own self-loathing. This is not a properly radical or truly independent movement for progress; it is not about understanding contemporary capitalist society in order that we might improve it or change it. Rather it is a screech of rage legitimised by mainstream society’s own discomfort with its creaking economic system. Even worse, the anti-banker sentiment can easily translate into an attack on aspiration itself, as witnessed in many observers’ frequent slips between attacking ‘greedy’ bankers and attacking ‘greedy’ mortgage-grabbing, credit-card-zapping members of the public. With their propagandising and action against ‘the greedy’, ‘anti-capitalists’ merely make a forceful display of the elite’s own loss of faith in wealth and ambition.
We can look forward to more phoney wars between ‘capitalists’ and ‘anti-capitalists’ at next week’s protests around the G20 in London, when bankers have been advised not to wear pinstripe suits in order to avoid being attacked and ‘anti-capitalists’, that dreadlocked militant wing of the Sun, will be demanding that bank bosses be arrested and imprisoned – echoing not Karl Marx but David Cameron. There are far more important things to get angry about than a few individuals’ big bonuses, and far better ways to do something about the capitalist crisis than chasing after former bankers turned pariahs. Forget the phoney war against Goodwin - let’s have a proper war against the cynical blame-avoidance of our rulers and the low horizons of their alleged critics.
Brendan O’Neill is editor of spiked. Visit his website here. His satire on the green movement - Can I Recycle My Granny and 39 Other Eco-Dilemmas - is published by Hodder & Stoughton. (Buy this book from Amazon(UK).)
Seeing red over Fred the Shred, by Rob Lyons
It takes more than money to revive the economy, by Sean Collins
Why rate cuts stir so little interest, by Mick Hume
The Crisis With No Name, by Frank Furedi
The ‘credit crunch’ and the SAD economy, by Phil Mullan
The state won’t be the saviour of the economy, by Frank Furedi
This Marxist isn’t laughing, by Brendan O’Neill
Against austerity, by Brendan O’Neill
There Is (still) No Alternative, by Mick Hume
Congress bales out, by Brendan O’Neill
I don’t predict a riot, by Mick Hume
Bashing the bankers can make you go blind, by Rob Lyons
It’s the politics, stupid, by Phil Mullan
Lehman Brothers: when confidence runs out, by Rob Lyons
Five myths about the Wall Street crisis, by Daniel Ben-Ami
Read more at spiked issue: Financial Crisis.
(1) Sir Fred Goodwin attack: Bank Bosses Are Criminals group claims responsbility, Daily Telegraph, 25 March 2009
(2) Treasury Select Committee MPs don’t have a clue, London Evening Standard, 12 February 2009
(3) Cameron: ‘Send bankers to prison’, Channel 4 News, 15 December 2008
(4) Time to hug a banker?, BBC News, 17 March 2009
(5) We hunt down Fred, Sun, 28 February 2009
(6) Time to hug a banker?, BBC News, 17 March 2009
(7) The Crucible: A Play in Four Acts, Arthur Miller and Maureen Blakesley, Heinemann, 1992

britain's forgotten civil war

The miners’ strike of 1984-85 remains the most remarkable struggle in British politics during my almost 30-year involvement as a journalist and propagandist. What is even more remarkable is that it has no place in political debate today. Many people have effectively forgotten, and younger generations know little or nothing about that 12-month conflict. The very idea of more than a hundred thousand workers taking part in a strike for jobs that turned into a violent civil war, dividing not only mining communities but the country (my own father spat the word ‘Scargill’ like an expletive), seems so far removed from our current reality that it might as well have taken place not only in another century but on another planet.
Cover illustration byJan Bowman
Yet as we pass the twenty-fifth anniversary of the start of the strike, it still matters, and not just for nostalgic reasons. The defeat of the miners by Margaret Thatcher’s Tory government was a watershed that did much to shape politics as we know it now.
For example, there is much debate about how the current recession might differ from those that went before it. One obvious difference is in the response of those hit by the recession in the UK. There have been mass redundancies, closures, wage cuts and soaring unemployment, with plenty more to come. Yet there have been none of the major strikes and mass demonstrations that marked previous crises, beyond one small confused protest about the employment of foreign contract labour and the plans of a few ‘anti-capitalist’ clowns to run around the City of London on 1 April. Instead people are responding to the recession much more as isolated individuals.
“When it is discussed now, the strike tends to be rewritten from the point of view of today’s preoccupations and prejudices”
These things are all, in part, a legacy of the 1984-85 miners’ strike, which marked the final defeat of the labour movement and the left in Britain. It was the culmination of a process which meant that, while working-class people still worked and were exploited and made redundant, the working class ceased to exist as a collective force in political life. Understanding that past is important in making sense of the present.
Yet the twenty-fifth anniversary of the start of the strike, on 5 March, passed with relatively little serious comment. As a young Marxist I spent time in Yorkshire during the dispute, both writing for the next step, newspaper of the Revolutionary Communist Party (RCP), and trying to organise solidarity action with the strike. As an old Marxist I went back to the north Yorkshire coalfield last month, to discover that not only had all but one of the pits (Kellingley, the Big K) been long since closed and filled with concrete, but that they had been erased from the landscape, turned into country parks and industrial estates and shopping malls and wasteland, as if they had never existed.
It seems as if something similar has been done to the miners’ strike in political terms, writing it out of history with some bizarre consequences. It is slightly surreal, for instance, to hear civil liberties lawyers warn about Britain becoming a ‘police state’ today, 25 years after a paramilitary police army occupied mining communities, arrested 10,000 miners, fought pitched battles, blocked motorways and did much else besides. It was beyond surreal to hear the same warnings about a police state recently given by Stella Rimington, who was the head of MI5 during the state’s war on the miners.
When it is discussed now, the miners’ strike tends to be rewritten from the point of view of today’s preoccupations and prejudices. Thus it is often reduced to an early chapter in the climate change/energy crisis debate, with arguments about whether closing the mining industry was the right thing to do for the environment and whether we now need cleaned-up ‘green coal’ to meet Britain’s power needs.
The energy crisis and the role of coal are important issues to debate today, as readers of spiked and the new book Energise! by James Woudhuysen and Joe Kaplinsky, will know. But it is also important to understand that, at the time, the miners’ strike had nothing to do with any of that. It was not a dispute about energy policy or the environment, nor did it have much directly to do with the economy at all. It was primarily a political struggle between the state and the organised working class, staged by the Thatcher government in order finally to break the power of the traditional labour movement by defeating the strongest of the trade unions. It deserves to be remembered as a civil war, a class war, a battle for power in British society.
“The media played a crucial role in the dispute and the battle for hearts and minds across Britain”
The few books that have been published to mark the twenty-fifth anniversary are welcome aids to situating the strike in its proper context. Marching to the Fault Line, written by two Guardian journalists, plots the story of the miners’ dispute with the government from its antecedents in the 1926 General Strike to the bitter end in March 1985 and the pit closures that followed. It marshals familiar facts alongside new information and interviews with the protagonists to detail the twists and turns of the 12-month strike, providing a useful chronological account for those who were there and those who were not. Shafted is a collection of essays, edited by Granville Williams, focusing on what the media did during the miners’ strike, and the subsequent story that it didn’t tell about the devastating impact of the pit-closure programme on the mining communities. It is published by the Campaign for Press and Broadcasting Freedom, which worked hard to expose media bias against the miners during the dispute itself.
In Marching to the Fault Line, Francis Beckett and David Hencke reveal that, ‘The great strike for jobs started by accident’. Ian McGregor, chairman of the National Coal Board (NCB), had planned to tell the National Union of Mineworkers (NUM) of his plans to close pits and cut 20,000 jobs on 6 March 1984. He expected that NUM president Arthur Scargill would then call a ballot for a national strike – a vote which, based on recent results, McGregor was confident Scargill would lose. However, on 1 March 1984, the South Yorkshire Coal Board director jumped the gun and announced that Cortonwood pit would close in five weeks time. Yorkshire miners walked out in protest, and soon began the process of picketing-out that spread the strike to most areas of the coal industry. By the time McGregor made his planned announcement, the strike that he expected to forestall had already begun.
But while the NCB and the Tory government might have been taken by surprise, they were well prepared for the fight – unlike the miners’ union. Right from the start, observe Beckett and Hencke, ‘The military precision at local and national level to deal with the picketing made the NUM look positively amateurish’.
Having stockpiled coal and chosen its moment to pick the fight, the Tory government deployed every arm of the state machine against the striking miners – from the police and the civil and criminal courts, to the secret services and the social security system, which cut welfare payments to strikers. Some claim that the army were also involved in the picket line battles.
The most remarkable role was played by the police force, which batoned away forever the civilised ‘Dixon of Dock Green’ image of the British Bobby. Under Thatcher’s instructions, the Association of Chief Police Officers activated the National Reporting Centre to coordinate action against the strikers – effectively creating a centralised national police force, something that was not supposed to exist in Britain. They bent, broke and invented the law to suit the needs of the government in the dispute. The level of violence that resulted was unheard of in British industrial disputes. I recall one veteran of the left arguing at the time that, to have any chance of success against the paramilitary police army, the miners would need to have been training in battle formation on local football fields with baseball bats and helmets before the dispute began. But such things were entirely alien to the staid bureaucratic traditions of British trade unionism. When the police launched their assault on the strike, many miners fought back with tremendous spirit, ingenuity and courage. But they were no match for the well-prepared state machine.
“The Tory government deployed every arm of the state machine against the striking miners”
There were three phases of the police war on the miners’ strike. In the first, they massed to close the border to Nottinghamshire and prevent miners from other areas, notably Yorkshire, picketing the working pits. In the second phase, the authorities staged the Battle of Orgreave, a fortnight of clashes outside a coking works between an army of baton-wielding, shield-beating riot cops and the irregular forces of thousands of pickets dressed in shorts and t-shirts.
In the third phase, after the defeat at Orgreave, the demoralised strikers retreated to picket their own pits to try to stop other miners returning to work – where, notes Marching to the Fault Line, ‘the police followed them, very much like a victorious army’. It was during this late stage of the strike that some of the bloodiest violence ensued, as police sealed off pit villages and ran riot through local pubs and streets and homes in a way that few people witnessed and many would not have believed possible. Yet still the miners resisted, as in the Siege of Fitzwilliam, when it seemed an entire community rose up and drove the riot police out of their north Yorkshire pit village. I sat in court during the trial of some of the Fitzwilliam lads, as witnesses gave evidence that the police had handcuffed young miners to lampposts in front of their lines, to discourage stone throwing. They were sent to jail anyway.
Throughout this campaign, much of the national media acted as the propaganda wing of the police and the government. Shafted highlights the infamous episode at Orgreave, when the BBC News edited the film of the clashes to make it appear that the miners had charged first and the police had responded – the reverse of the truth. The BBC insists that it was an honest mistake. Shafted also republishes the John Harris photos, of a charging riot cop on horseback batoning a female photographer, that became for many on the left a defining image of the dispute. Only one national newspaper published it at the time. (Some of us, however, also felt that the emphasis many on the left placed on that picture captured a problem with their image of the strike, depicting the miners and their supporters as helpless victims more than combatants.)
As Shafted emphasises, the media played a crucial role in the dispute and the battle for hearts and minds across Britain. It is also important to avoid the temptation to impose our own media-obsessed political culture on the past. News coverage does not determine the outcome of a real political struggle in the real world. The striking miners fought on despite the overwhelming hostility of the media, because they had a cause and solidarity of their own. The flipside of this, as noted in Shafted by Paul Routledge (The Times’ industrial correspondent during the strike, whom Beckett and Hencke report secretly donated £5,000 to the NUM), is that, ‘The theory that good public relations can win struggles was put to the test in the ambulance workers’ dispute of 1989-90, and found wanting’, as the health unions ‘won the PR campaign but lost the war’ because the Tory government was stronger.
In the miners’ strike, the real balance of forces on the ground was tipped overwhelmingly in the government’s favour by the split in the NUM, as most Nottinghamshire miners continued to work and produce coal through the dispute. The divisions made the war on the miners almost a foregone conclusion. To turn the old chant around: the miners disunited were always likely to be defeated.
“Only a rank-and-file campaign to win a national ballot held the potential to unite the miners and win”
Scargill and the NUM executive refused to hold a national ballot. Because Thatcher and her allies used this as a weapon to accuse the NUM of flouting democracy, mention of a ballot became anathema to many striking miners. Yet as we in RCP argued with them at the time – much to the horror of Scargill’s loyal cheerleaders on the left – only a rank-and-file campaign to win a national ballot held the potential to unite the miners and win. Scargill, however, always seemed to trust his rulebook more than his rank-and-file members, and would not countenance taking that chance. So the divisions deepened and became more bitter – and remain so to this day. There were indeed hardcore scabs in Notts. There were also many ordinary miners unpersuaded by the NUM leaders’ arguments, who became scapegoats for a wider failure of leadership.
The failure of thousands of miners to back the strike also made it almost impossible to organise effective solidarity action amongst other groups of workers – although there were many remarkable examples of support. Shafted republishes two memorable front pages from the Sun, both dated 15 May 1984. The first, as prepared for publication, shows Scargill photographed at the moment his arm was raised in a ‘Nazi-style’ salute to cheering miners, with the headline ‘MINE FUHRER’. The second, as finally published, carries no picture or headline but this statement: ‘Members of all the Sun production chapels refused to handle the Arthur Scargill picture and major headline on our lead story. The Sun has decided, reluctantly, to print the paper without either.’
The class conflict and national trauma of the miners’ strike present such a contrast to the bland, ideology-free politics of today that it might seem incomprehensible. One way some try to make sense of it is by projecting backwards the current obsession with personality politics, to claim that in the end the way the dispute went resulted from a personal squabble between Thatcher and Scargill, both of whom are now widely discredited figures. This does a serious disservice to all concerned, most importantly to the miners.
Beckett and Hencke tend towards such a view, concluding that the prime minister and the NUM leader were both like blundering First World War generals who did great damage to their own sides. The typical Guardian-style implication of this comparison is that it would have been better if the unpleasantness could have been avoided and everything sorted out via civilised negotiation and compromise between more reasonable figures.
But the history of real conflicts cannot simply be ironed smooth 25 years later. The conflict was political, not personal. It was a war, but the trouble was that only one side’s leaders seemed fully to grasp that fact. As Tory cabinet minister Peter Walker spelt out in The Times in July 1984, so far as the government was concerned ‘we are facing a challenge to our whole way of life… This is not a mining dispute. It is a challenge to British democracy and hence to the British people.’ Shortly afterwards, Thatcher compared the miners to the Argentine forces in the Falklands War, branding them as ‘the enemy within’.
“The police handcuffed young miners to lampposts in front of their lines, to discourage stone-throwing”
On the other side, meanwhile, the leaders of the trade union movement and the Labour Party, along with liberal voices such as the Guardian, equivocated, and insisted it must be treated as a normal industrial dispute, and condemned the violence of the pickets at least as loudly as that of the police. It was no contest. Beckett and Hencke recall with horror the occasion when Norman Willis, the useless lump of a TUC general secretary, condemned picket-line violence at a Welsh miners’ rally, only for a symbolic noose to appear above his head, lowered from the roof. But that was what it meant to miners engaged in a life-and-death struggle for their jobs and communities, and how badly they felt let down by their supposed allies.
Whatever any of us thinks of Thatcher now, at the time she delivered a victory for her government and British capitalism, whilst many around her wavered. Defeating the labour movement and shifting the balance of forces in society was arguably Thatcher’s one real achievement in office, paving the way for all that has followed in politics and economics. The fact that neither the Tories, New Labour or their capitalist allies proved capable of replacing the old industries such as mining with anything more than a paper-thin prosperity bought on the never-never does not alter the facts about who won 25 years ago.
As for Scargill, he had many faults – but intransigence and a refusal to give in were not among them. He was the only national labour leader to recognise the political and class character of the conflict, at least rhetorically. Yet away from the rousing rhetoric of his rally speeches, he remained too closely wedded to the NUM tradition of tying miners’ interests to that of the coal industry to make a coherent case, too much of a rulebook-waving bureaucrat to unite and mobilise the rank and file effectively, too trained in the tramline Stalinist attitudes of ‘forward ever, backward never’ to confront the real problems that mounted up during the dispute.
But contrary to what is often claimed, to quote one chapter heading in Shafted, ‘It wasn’t all about Arthur’. It wasn’t Scargill who started the dispute, but Yorkshire miners who walked out in response to the threat of pit closures. It was not Scargill’s intransigence that prolonged the dispute, but the resilience of striking miners – and of the support groups run by miners’ wives – and their refusal to give in to the Tory government.
No doubt there are many lessons to be learned from the defeat of the miners’ strike – not least about the spirit and the strength of ordinary people caught up in extraordinary circumstances, and the importance of political leadership. But the fact that they – we – lost does not mean it was wrong to fight when the alternative was to surrender. (And it was not lost on the ex-NUM militants that the strike-breaking in Nottinghamshire and the formation of the scab Union of Democratic Mineworkers failed to save the Notts coalfield from devastation either, once they had served their purpose.)
As one former Yorkshire miner told me last month, speaking for many that I have met since the strike: ‘I don’t think we could have gone back with any dignity at any time. So it was all out, it was out to the end, win or not. To do a year on strike was not easy, I don’t want to look back with rose-tinted glasses. But given the chance I’d have done exactly the same, I’ve no regrets at all. I just wished that we’d lamped a few more Bobbies.’
Mick Hume is spiked’s editor-at-large.
Marching to the Fault Line, by Francis Beckett & David Hencke, is published by Constable. (Buy this book from Amazon(UK).)
Shafted: the Media, the Miners’ Strike and the Aftermath, edited by Granville Williams, is published by Campaign for Press & Broadcasting Freedom. (Buy this book from Amazon(UK).)

Tamil Tigers Unwilling to Release Their Hold on 150,000 People

We receive reports of civilians being killed and wounded daily in the ‘no-fire zone, while the Sri Lankan government continues to deny the attacks. The Tamil Tigers’ use of civilians as human shields adds to the bloodshed.”
Brad Adams, Asia director at Human Rights Watch
(New York) - The Sri Lankan army, despite government denials, is indiscriminately shelling the "no-fire zone" in northern Sri Lanka where thousands of civilians are trapped by the Liberation Tigers of Tamil Eelam (LTTE), Human Rights Watch said today, citing new information from the region. More than 2,700 civilians have reportedly been killed over the last two months, and the number of casualties rises daily.
"We receive reports of civilians being killed and wounded daily in the ‘no-fire zone, while the Sri Lankan government continues to deny the attacks," said Brad Adams, Asia director at Human Rights Watch. "The Tamil Tigers' use of civilians as human shields adds to the bloodshed."
A doctor at the makeshift hospital in Putumattalan, inside the government-declared "no-fire zone," told Human Rights Watch over the phone early today that dozens of dead and wounded civilians were being brought to the hospital daily. The interview was interrupted by shelling, audible over the phone; the doctor later explained that an artillery shell had struck approximately 250 meters from the hospital, killing two civilians and wounding seven others. Another shell struck about a kilometer from the hospital, also killing and wounding civilians. (View a map, including the affected areas).
When Human Rights Watch spoke to the doctor at about 5 p.m., he said the hospital had received 14 bodies and 98 wounded that day. He told Human Rights Watch that the shelling appeared to come from the direction of government positions three kilometers to the west.
The doctor described another artillery attack inside the no-fire zone on March 21, 2009:
"Between 10 and 11 a.m. on March 21, a shell hit a shelter about 200 meters from a church in Valayanmadam [three kilometers south of Putumattalan]. When I went to the site in the evening, two bodies were still lying at the site, while three bodies had already been buried. Nine people had been injured."
The Sri Lankan government continues its official denials of any attacks in the no-fire zone, including in discussions with top international officials. For example, in his phone conversation with the United Nations secretary-general, Ban Ki-moon, on March 17, President Mahinda Rajapaksa claimed that "no firing whatever was being carried out on the No Fire or Safe Zones declared by the security forces." (For more information, please visit: http://www.slmfa.gov.lk/index.php?option=com_content&task=view&id=1663&Itemid=75 ).
Collecting accurate information from the conflict zone is extremely difficult, as the government continues to block access for media and independent observers.
Civilian casualties in the 25-year-old armed conflict with the LTTE have skyrocketed since January. According to a UN document reprinted in the media, the UN country team in Sri Lanka has documented 2,683 civilian deaths and 7,241 injuries in the six weeks from January 20 to March 7 (http://www.innercitypress.com/3832_001.pdf ). A copy of the patient list from the makeshift hospital in Putumattalan on file with Human Rights Watch contains the names of 978 people brought to the hospital from March 1 to March 10. According to the list, 79 adults and 40 children died, while 646 adults and 213 children were injured.
Human Rights Watch said that the LTTE continued to prevent 150,000 Tamil civilians from leaving the conflict zone and effectively used them as human shields. During the last two months LTTE only permitted about 4,000 injured civilians and their caretakers to be evacuated by ferryboat by the International Committee of the Red Cross (ICRC).
In one incident reported to Human Rights Watch, a local employee of an international aid agency was wounded and several of his family members killed by a shell that hit a shelter in Putumattalan on March 21. According to information that the aid agency received from its staff on the ground, the employee sustained serious head wounds and his situation is considered critical unless he receives medical treatment. Despite several days of negotiation, however, the LTTE has refused to allow the ICRC to evacuate the man.
On March 17, another aid volunteer was wounded as a result of shelling in the no-fire zone. He did not get needed medical attention and died. (For more information, please visit: http://www.care.org/newsroom/articles/2009/03/srilanka-CARE-aid-worker-killed-20090318.asp?s_src=170960110000&s_subsrc= ).
The situation of the civilians trapped in the conflict zone is aggravated by the acute shortage of food, sanitary facilities, and medication, as international humanitarian agencies cannot deliver sufficient supplies to the conflict area.
A volunteer at the hospital today told Human Rights Watch: "It is really difficult for people to find food, and you can see that over the last four weeks people have lost weight and they get sick because of lack of nutritious food, [lack of adequate] bathing and toilet facilities, as well as lack of medicines in the hospital. We are in a very, very desperate situation. People are suffering."
Top UN officials, including the secretary-general, the under-secretary-general for humanitarian affairs, and the high commissioner for human rights, as well as a number of concerned states, have called on the Sri Lankan government and the LTTE to make protecting civilians a top priority and to take all necessary measures to halt the spiraling humanitarian disaster.
"The Sri Lankan government has responded to broad international concerns with indignation and denials instead of action to address the humanitarian crisis," said Adams.
Human Rights Watch called on the UN Security Council to put Sri Lanka on its agenda and to address urgently the deteriorating situation. It also called on Sri Lanka's key bilateral partners, such as Japan, the United States and India, to make the safety of the trapped civilians a top priority in any discussions of financial assistance.
Last week, Human Rights Watch sent a letter to members of the board of the International Monetary Fund (IMF) about the government's request for a US$1.9 billion loan to address its financial crisis and, according to the Sri Lankan Central Bank's request, to "continue with the resettlement, rehabilitation and reconstruction work in the Northern Province." It has asked the IMF to finalize negotiations on the loan by March 31.
In its letter, Human Rights Watch emphasized that the government's current policies and practices are counterproductive to the stated goal of the IMF loan and urged that IMF board members discuss concrete action the government needs to take to alleviate the humanitarian crisis in the north.

Once beaten for stating the obvious, our time has come

Ten years ago, the anticapitalist movement predicted this recession. Now it must envisage an alternative global future
Comments (116)

Katharine Ainger
The Guardian, Thursday 26 March 2009
Article history
It was 1999 and the summer of corporate love. Many pundits - now talking of "bad apples" and applauding bailouts - were predicting the stockmarket would go up forever. Not coincidentally, it was also a decade ago that the anticapitalist movement emerged with a rambunctious "carnival against capital" in London's Square Mile; the contagion spread to the streets of Seattle where the World Trade Organisation meeting was shut down by protesters later that year.
The movement, which was essentially demanding democratic control over the global economy, wreathed summit after summit of the G8, the WTO and the World Bank with protest and teargas. It was wild, infuriating, diverse and sometimes incoherent, as only a network that encompasses indigenous peoples, radical environmentalists, workers and kids in hoodies could be. The movement was like the child in the crowd as the emperor of global neoliberalism wheeled by, pointing out that his cloaks were woven from financial fictions and economic voodoo.
They must now be credited for their prescience. Today, everybody can see the emperor has no clothes; but as the G20 meets in London next week to ensure financial "stability" for a return to business as usual, it appears rather as though the emperor has rushed back to the very same discredited tailors to bail them out and commission several new outfits.
And what of the movement that predicted the crash? Post 9/11 it lost momentum as it was forced to rechannel energy into fighting rearguard actions against state repression and the war on terror. Yet the less visible but vital processes of developing workable alternatives, building grassroots movements, and popular education continued. The movement also effected a palpable cultural shift of alternative economic ideas and environmental concerns towards the mainstream; in Latin America social movements helped elect governments that were prepared to challenge neoliberal doctrine. Movement demands also foreshadowed a rebalancing of power towards the global south, and helped to delegitimise the institutions of the global economy.
These ideas have never been more relevant or necessary. Clearly we need a vision, and it doesn't look as if the G20, still so in thrall to financial capital, will deliver one. So could this be the hour for a movement that was beaten, teargassed and imprisoned for pointing out the now blindingly obvious?
NGOs, churches and trade unions are mobilising thousands to turn out on 28 March with the demand to "Put people first"; 1 April is "Financial Fools Day", when direct action activists and environmentalists will be setting up a climate camp outside the European Climate Exchange in London - because the same financial system now in crisis is being entrusted to cut emissions through the artificial creation of a market in carbon credits. Meanwhile another group called G20 Meltdown is promising a carnival at the Bank of England. The climate camp has an open process and has worked hard to establish its social base of legitimacy; the carnival is more of a hotchpotch, and it's unclear who will turn up. Perhaps some windows will be broken - and frankly, it would be astonishing if no one was angry enough to do so.
Whatever they decide, the G20 and other leaders are going to be faced with increasing unrest from those paying with their jobs, their social security and their taxes for a crisis not of their making and a bailout not of their choosing. From Haiti to India, people are rioting over food. We are entering a singular moment of climate chaos and food shortages, a social and energy crisis as well as financial meltdown. The solutions the "alter-global" networks have developed offer a way out that is based on whole systems thinking. Fundamental to this vision is an economy that meets the needs of everyone on a planet of finite resources.
Which is why the climate camp in the city, with its slogan "Because nature doesn't do bailouts", is one of the most interesting of all the movements coalescing in London next week. It's a potent mix of seasoned anti-globalisation activists who are skilled in creative direct action and a new generation that is energised and refreshingly undogmatic. The camp has taken a key component of the globalisation movement - the temporary autonomous zones of street parties and convergence centres liberated in cities during summit protests - to a new level, creating a transformational space which prefigures the world they want, featuring everything from wind turbines and composted waste to decentralised decision-making and creative play.
At the end of this year, almost exactly 10 years to the day since Seattle, this new incarnation of the movement will be on the streets during the Copenhagen climate summit demanding real climate justice that does not rely on the current "business as usual" proposals. Perhaps anticapitalism had the right idea at the wrong moment in history. Perhaps its moment has come.
• Katharine Ainger is co-author of We Are Everywhere, a book documenting global social movements.

Jack Straw hails new bill of rights to end the 'me' society

Justice secretary Jack Straw tells the Commons that he could not permit the release of records from 2003 cabinet discussions over the invasion of Iraq. Photograph: PA/PA
A new British bill of rights and responsibilitilies outlined yesterday could enshrine entitlements to welfare, equal treatment, housing, children's wellbeing and the NHS, Jack Straw, the justice secretary, said yesterday. He likened the bill's potential impact to Magna Carta and the 1689 Bill of Rights.
The green paper follows a commitment to the measure made by Gordon Brown the day after he became prime minister, but the proposals have been met with disdain by some cabinet members worried it would simply empower the judiciary, deepen popular frustrations with the Human Rights Act, and be seen as an irrelevance at a time of recession.
Jack Straw likened the bill of right's potential to that of the Magna Carta Link to this audio
The green paper, published yesterday, leaves unresolved the degree to which the bill of rights would be enforceable in the courts or simply be a declared set of principles.
Straw and his minister for justice, Michael Wills, said a bill could entrench some economic rights, balance the Human Rights Act with fresh responsibilities, and also potentially act as a uniying force.
The green paper also seeks to undo some of the unpopularity of the Human Rights Act, by insisting any individual rights needs to be balanced with a responsibility to society.
For instance, it suggests any claims for damages under the Human Rights Act could be more clearly informed by the behaviour of the individual seeking damages.
By emphasising responsibilities, the green paper suggest it might be possible "to end a me society as opposed to a we society in which an unbridled focus on our own individual rights and liberties risks overtaking our collective security and well being". It suggests that responsibilities are entrenched in the British law, but not clearly expressed leading "to a selfish and aggressive assertion of rights in a way which may damage others enjoyment of their own rights".
In uneasy compromise the green paper stresses: "The aim is not to create new avenues of redress for individuals in the courts, but instead seek to influence the behaviour of courts, public bodies and individuals by placing all rights and responsibilities in a single document".
Straw suggested the bill might be useful to courts in interpreting existing rights and responsibilities, including for instance the duty of parents to help their child's education. He stressed the bill would not involve repeal of the Human Rights Act which makes the European convention directly enforceable in British courts.
But the paper was criticised by the Tories for creating more legal confusion by failing to be clear whether it advocated new rights or was simply a cosmetic exercise.
The shadow justice secretary, Dominic Grieve, attacked the culture created by the Human Rights Act, but did not say how he will replace it.
Straw argued in a Commons statement: "A bill of rights from around the world are a combination of symbolism, aspiration and law across a spectrum of legal effect. There need not be a binary choice between the justiciable and the declaratory."
The bill will also include a preamble that would act as a British statement of values, but the green paper yesterday gave no details of its contents.
Straw said it would be enormously valuable to be able to point to a single document setting out agreed rights and responsibilities, and said some countries such as Ireland had found a set of economic rights worthwhile.
Wills said the green paper was deeply relevant to the recession since it could entrench the progressive consensus at a time it is under threat.
At a briefing he said: "Things we took for granted politically a year ago where there was a broad agreement on progressive politics - everyone thought it was a good idea to lay claim to that - can no longer be taken for granted. There is a huge amount of flux in key Conservative circles. We do not know where the Conservatives will end up."

Israel army rides out T-shirt row

Israeli officials have described as "tasteless" and inconsistent with army values a popular military pastime of printing violent cartoons on T-shirts.
An investigation in Haaretz daily says the customised shirts are often ordered when troops finish training courses.
One example shows a pregnant Arab women in the cross-hairs of a sniper's sight with the legend "1 shot 2 kills".
Another design shows a child being similarly targeted with the slogan "the smaller they are, the harder it is".
In both images the people being targeted appear to be carrying weapons. A third T-shirt design shows a dead Palestinian baby and the words "Better use Durex" (condoms).
An army statement said the customised clothing was produced outside military auspices, but it pledged to stamp out the use of such imagery by soldiers.
"The examples presented by the Haaretz reporter are not in accordance with IDF values and are simply tasteless," the military statement said.
"This type of humour is unbecoming and should be condemned."
But it admitted that until now there were no military guidelines governing "acceptable civilian clothing" made by its soldiers.
'Callous attitude'
The Israeli military has faced heavy criticism for causing high levels of civilian casualties during its recent Gaza offensive.
The army frequently says it takes care to avoid civilian casualties and blames Palestinian militants for putting them in harm's way.

Many Israeli combat troops deal with Palestinians in the occupied territoriesA sociologist quoted by Haaretz, Orna Sasson-Levy of Bar-Ilan University, warned the designs could strengthen, stimulate and legitimise aggression towards Palestinians in the occupied territories.
"There is... increasing callousness," she said. "There is a perception that the Palestinian is not a person, a human being entitled to basic rights and therefore anything may be done to him."
The Haaretz investigation discovered numerous T-shirts depicting violence against Palestinians and appearing to celebrate sexual assault.
Other designs appeared to bear witness to officially prohibited practices, such as "confirming the kill" (shooting lifeless enemies' bodies in the head to ensure they are dead), or deliberately harming religious sites and non-combatants.
The shirts are often printed up to mark the end of basic training and other military courses.
'Moral army'
The Tel Aviv clothing firm Adiv, which made many of the shirts, did not comment on the Haaretz report.
It prints up about 500 different patterns for military units each month, Haaretz says, mostly jokes about army life and "a handful reflecting particular aggressiveness, violence and vulgarity".
On Monday, Israel's chief of staff defended his troops against a rising tide of criticism.
"I tell you that this is a moral and ideological army," Lt-Gen Gabi Ashkenazi said in a speech to new recruits.
"I have no doubt that exceptional events will be dealt with. We took every measure possible to reduce harm to the innocent [in Gaza]."
The Haaretz report says the T-shirts tend to be worn strictly in private or in barracks because of adverse civilian reactions and are seen by army psychologists as an expression of bonding within a small, tight-knit unit.
Last week several soldiers were quoted anonymously in the media saying troops had killed Palestinians, including women and children, by hastily opening fire under relaxed rules of engagement in Gaza.

Profits in hungry times

The current hunger crisis is forcing millions of the world’s most vulnerable people to the edge. The most recent headlines come from Ethiopia but it was Haiti earlier this year that provided a quick snapshot of the dynamics of starvation. Runaway prices for basic staples like rice have driven its people to desperate measures. Some have even tried to stave off hunger by eating mud patties mixed with oil and sugar. Others have turned to protest. When commodity prices peaked earlier this year, food riots broke out across the country. They drew the world’s attention and even forced the Prime Minister to resign, but this has made little difference to government policy. Several months later, the riots are starting again.
Like so many other countries, Haiti was force-fed a diet of structural adjustment programmes that opened it up to cheap, subsidized imports from richer countries. In the early 1980s Haiti was self-sufficient in rice, its main staple crop. But conditions on foreign loans, particularly a 1994 package from the International Monetary Fund (IMF), forced it to open its markets to cheap, subsidized rice from the US and local production was practically wiped out. Since 2007, rice prices have risen by 50 per cent, and the average Haitian can no longer afford their basic foodstuff.
Honduras, another country that was nearly self-sufficient in rice before World Bank intervention, now imports over 80 per cent of its rice needs. Senegal and other West African rice-consuming countries have also seen drastic decreases in domestic rice production following their adoption of structural adjustment programmes. Côte d’Ivoire was a net exporter of rice in the 1970s, but following trade liberalization now imports more than half the rice it consumes. The World Bank’s heavy-handed advice to the Philippines was to back off from its targets for rice self-sufficiency because the world market would take care of its needs. But with the onset of this year’s food crisis, cheaper imports dried up, leaving the Government in a desperate situation – its domestic supply of subsidized rice was nearly exhausted, but it was unable to afford to import because prices demanded by foreign traders were out of reach.
The costs of high-tech agriculture
The ongoing food crisis has been compounded by the way most rice is now farmed. In the 1960s, a ‘green revolution’ model of rice production, based on large-scale use of a few high-yielding varieties, pesticides and chemical fertilizers, was pushed around the world by international donors and research institutes. The push continues today, especially in Africa, through the Consultative Group on International Agricultural Research (CGIAR) and Bill Gates’ Alliance for a Green Revolution in Africa (AGRA). As a result, most of the world’s rice production is now dependent on petroleum-based inputs – and their costs have spiked alongside the rising costs of energy.
The high cost of pesticides and fertilizers has robbed farmers of any benefits they might have seen from higher rice prices. It has also held back increases in production. So, as urban consumers in Haiti protest against high prices, rice farmers in the department of Artibonite, one of Haiti’s few remaining areas of rice production, have taken to the streets to protest against the cost of fertilizer, which, they say, makes it impossible for them to continue farming.
In July, GRAIN met farmers from the Red River Delta of northern Vietnam. They say that the rising cost of fertilizers and pesticides has swallowed up the meagre price increases they are getting for their harvests. According to one leader of a co-operative in Thai Binh province, rice farmers in this part of Vietnam now only make about $6 per season.
IMF-enforced trade policies combined with ‘green revolution’ agricultural practices have set the stage for agribusiness to reap immense profits, especially in times of crisis. Both the traders – with their near-monopoly of the global trade in agricultural commodities – and the handful of companies that control the global fertilizer, seed and pesticide markets are now effectively in a position to hold the world to ransom. While the UN’s Food and Agriculture Organization (FAO) estimates that 50 million more people are now going hungry because of the rise in food prices this year, big agribusiness is making spectacular profits.
A bloody killing
At the height of the food crisis, Cargill, the world’s largest grain trader, was making $471,000 in profit every hour from its grain trading operations. Its fertilizer subsidiary, Mosaic, more than doubled its profits last year. Canada’s Potash Corp, the world’s largest potash producer, made more than $1 billion profit in 2007, an increase of 70 per cent on the previous year. And Bunge, another top global grain trader and fertilizer company, announced profits in excess of $1 billion for the first and second financial quarters of 2008, a growth rate of 471 per cent.
With governments panicking about food supplies and desperate to boost their harvests, corporations such as these can essentially charge whatever they want. In April 2008, the joint offshore trading arm for Mosaic and Potash hiked the price of potash fertilizer by 40 per cent for Southeast Asian buyers and by 85 per cent for those from Latin America. India was forced to pay 130 per cent more than last year; China 227 per cent more.
Speculators are also cashing in on the food crisis and they are often blamed for the sharp increases in the global price of rice and other commodities. At Thailand’s Agricultural Futures Exchange, the average number of contracts being traded each day has trebled in one year, thanks to speculation on rice, and hedge funds and other speculators now represent up to half of the daily contracts being traded. Such speculation has helped send the price of rice soaring, yet few rice farmers are seeing any benefits. Thai farmers say that whereas last year they were getting $308 per tonne of rice delivered to the mills, this year they were receiving just $296, despite the fact that the price of rice to consumers had trebled.
In the name of the corporations
Despite much high-level talk about the food crisis, including a ministerial summit organized by the Food and Agriculture Organization (FAO) of the UN to deal specifically with the matter, nothing concrete has been done. Instead, the current situation is being seized upon as an opportunity to advance corporate control.
What is needed is a real shift in power. The policymakers, scientists and investors who have led us into the current mess cannot be relied upon to get us out of it
Most national programmes in developing countries that have sprung up to deal with the food crisis amount to little more than subsidy schemes for seed and fertilizer companies. The Philippine Government’s central response to the food crisis has been a $1 billion rice self-sufficiency programme that will dedicate a substantial part of the funds to the production and distribution to farmers of subsidized hybrid seeds. But the farmers cannot save seeds from rice hybrids and will therefore be forced to purchase seeds from the company every year. One of the companies supplying seeds for the programme is SL Agritech, a Filipino firm with connections to a Chinese company that has already cornered much of the hybrid rice seed market. Monsanto from the US and Bayer from Germany are also involved. Farmers’ groups and NGOs are alarmed that the programme will merely amount to subsidizing big seed companies – and that it will entrench the Philippines among the world’s biggest rice importers.
Senegal’s response to the crisis, dubbed the Big Agricultural Offensive for Food and Abundance (GOANA), will dedicate over two-thirds of the programme’s $792 million budget to subsidizing the purchase of fertilizers, seeds and pesticides. Given the radical investment and fiscal deregulation that accompany GOANA, many of the foreign-owned companies supplying these products will profit from the scheme. Farmers’ groups in Mali are attacking their Government’s response to the food crisis, called the Rice Initiative, because it focuses on input subsidies. They say that the initiative will put all the benefits into the pockets of the fertilizer and seed dealers.
Corporate land grab
But the corporate rush into rice goes well beyond seeds and fertilizers. Lured by the rise in global prices, companies are quickly moving in to set up ‘vertically integrated’ systems of rice production and trade, often with the backing of governments.
In West Africa, for example, the Dubai-based Stallion Group has started a regional rice farming project valued at about $1.2 billion, in conjunction with Nigeria’s Ministry of Agriculture and Water Resources. The company plans to reach annual rice production of 2.25 million tonnes in Nigeria and 500,000 tonnes in Ghana, and will also be investing in farm machinery, milling capacity and a 700,000-tonnes-per-year fertilizer plant.
Two of Asia’s biggest food corporations, Sime Darby of Malaysia and Charoen Pokphand of Thailand, are moving into rice production under the banner of their home country’s response to the global food crisis. They are starting their programmes with the production and commercialization of their own hybrid seeds and the implementation of large-scale contract production schemes. Similarly, the San Miguel Corporation, the largest food corporation in the Philippines, and the Singapore-based Kuok Group, the world’s largest palm oil conglomerate, have announced joint plans for a $1 billion food production project. It has the support of the Government and the military and will involve a million hectares of public land in the Philippines.
Several cash-rich governments, like China and Saudi Arabia, concerned about their long-term food security, are working with their business sectors and newly created investment vehicles to outsource rice production to other countries. The Government of Laos is considering a proposal from a Chinese company for a land concession which would cover 600,000 hectares of prime irrigated rice land. Chinese companies also have a number of rice ventures in Africa, from Mozambique to Cameroon. Kuwait has leased rice fields in Cambodia for export production and is negotiating similar deals with Laos and Burma, while the United Arab Emirates is leading negotiations between its companies and Pakistan for 600,000 hectares of rice and wheat land. Bahrain too says it has signed long-term rice production and supply deals with Thailand and the Philippines.
Shut down the system
How then to solve the global food crisis? With governments and agribusiness working together in profit-making schemes which ignore the plight of the hungry, short-term fixes will not be enough. Now is the time to break with the past and to mobilize around a new, creative vision. We need a profound change to pull us out of this and the unending series of other crises (climate change, environmental destruction, poverty, conflicts over land and water, migration) that neoliberal globalization has generated.
What is needed is a real shift in power. The policymakers, scientists and investors who have led us into the current mess cannot be relied upon to get us out of it. They have created a profound double vacuum: a policy void and a market sham. The policy void is palpable. Instead of generating bright ideas to build a more sustainable and equitable food system, they only provide knee-jerk responses that amount to more of the same. More trade liberalization. More fertilizers. More genetically modified organisms and hybrid seeds. And more debt to make it all possible. Rewriting the rules of the finance system or clamping down on speculators remain taboo topics. Even the food self-sufficiency policies being adopted in some developing countries (in themselves a very good idea) are often just repeats of failed ‘green revolution’ strategies.
The only credible way forward is to rebuild from the bottom up. The power structure must be inverted. Small farmers, still responsible for most of the food produced, should be the ones setting agricultural policy, not the World Trade Organization, the IMF, the World Bank or government bureaucracies. Peasant organizations and their allies have clear, viable ideas about how to organize production and services and how to run markets and even regional and international trade. Labour unions and the urban poor also have a key role to play in defining food policy.
Those of us outside governments and the corporate sector need to come together as never before. We must build new solidarities and fronts of action both to address the immediate problems of the food crisis and to define long-term solutions. If we don’t work together to facilitate a power shift that puts the needs of the rural and urban poor first, all we can expect is more ‘business as usual’.
GRAIN is a small international NGO which promotes the sustainable management and use of agricultural biodiversity based on people’s control over genetic resources and local knowledge. www.grain.org

Now is the time for a less selfish capitalism

By Richard Layard
Published: March 11 2009 20:02 Last updated: March 11 2009 20:02
What is progress? The Organisation for Economic Co-operation and Development has been asking this question for some time and the current crisis makes it imperative to find an answer. According to the Anglo-Saxon Enlightenment, progress means the reduction of misery and the increase of happiness. It does not mean wealth creation or innovation, which are sometimes useful instruments but never the final goal. So we should stop the worship of money and create a more humane society where the quality of human experience is the criterion. Provided we pay ourselves in line with our productivity, we can choose whatever lifestyle is best for our quality of life.
And what would that involve? The starting point is that, despite massive wealth creation, happiness has not risen since the 1950s in the US or Britain or (over a shorter period) in western Germany. No researcher questions these facts. So accelerated economic growth is not a goal for which we should make large sacrifices. In particular, we should not sacrifice the most important source of happiness, which is the quality of human relationships – at home, at work and in the community. We have sacrificed too many of these in the name of efficiency and productivity growth.
Most of all we have sacrificed our values. In the 1960s, 60 per cent of adults said they believed “most people can be trusted”. Today the figure is 30 per cent, in both Britain and the US. The fall in trustworthy behaviour is clear in the banking sector but can also be seen in family life (more break-ups), in the playground (fewer friends you can trust) and in the workplace (growing competition between colleagues).
Increasingly, we treat private interest as the only motivation on which we can rely and competition between individuals as the way to get the most out of them. This is often counterproductive and does not generally produce a happy workplace since competition for status is a zero-sum game. Instead, we need a society based on positive-sum activities. Humans are a mix of selfishness and altruism but generally feel better working to help each other rather than to do each other down.
Our society has become too individualistic, with too much rivalry and not enough common purpose. We idolise success and status and thus undermine our mutual respect. But countries vary in this regard, and the Scandinavians have managed to combine effective economies with much greater equality and mutual respect. They have the greatest levels of trust (and happiness) of any countries in the world.
To build a society based on trust we have to start in school, if not earlier. Children should learn that the noblest life is the one that produces the least misery and the most happiness in the world. This rule should apply also in business and professional life. People should do work that is useful to society and does not just make paper profits. And all professions – including journalism, advertising and business – should have a clear, professional, ethical code that its members are required to observe. It is not for nothing that doctors form the group most respected in our society – they have a code that is enforced and everyone knows it.
So we need a trend away from excessive individualism and towards greater social responsibility. Is it possible to reverse a cultural trend in this way? It has happened before, in the early 19th century. For the next 150 years there was a growth of social responsibility, followed by a decline in the next 50. So a trend can change and it is often in bad times (such as the 1930s in Scandinavia) that people decide to seek a more co-operative lifestyle.
I have written a book about how to do this and there is room here for three points only. First we should use our schools to promote a better value system – the recent Good Childhood report sponsored by the UK Children’s Society was full of ideas about how to do this. Second, adults should reappraise their priorities about what is important. Recent events are likely to encourage this and modern happiness research can help find answers. Third, economists should adopt a more realistic model of what makes humans happy and what makes markets function.
Three ideas taught in business schools have much to answer for. One is the theory of “efficient capital markets”, now clearly discredited. The second is “principal agent” theory, which says the agents will perform best under high-powered financial incentives to align their interests with those of the principal. This has led to excessive performance-related pay, which has often undermined the motive to work well for the sake of doing a good job and introduced unnecessary tension among colleagues. Finally, there is the macho philosophy of “continuous change”, promoted by self-interested consulting companies, which disregards the fundamental human need for stability – in the name of efficiency gains that are often not realised.
Values matter and they are affected by our theories. We do not need a society based on Darwinian competition between individuals. Beyond subsistence, the best experience any society can provide is the feeling that other people are on your side. That is the kind of capitalism we want.
Lord Layard is at the London School of Economics Centre for Economic Performance. He has written ‘Happiness’ (2005) and co-authored ‘A Good Childhood’ (2009)
Copyright The Financial Times Limited 2009

RGE Monitor's Newsletter

Greetings from RGE Monitor! The reversal of capital inflows due to deleveraging or losses in financial markets has been one of the most significant effects of the financial crisis on emerging and frontier economies. After a period in 2007 and 2008 when many emerging markets faced the problem of dealing with extensive capital inflows, now capital flows have reversed. Private capital flows in 2009 are expected to be less than half of their 2007 levels, posing pressure on emerging market currencies, asset markets and economies. Countries that relied on readily available capital to finance their current account deficits are particularly vulnerable. Furthermore, capital outflows pose the risk that governments may react with some type of capital controls or barriers to the exit of foreign investments. Foreign direct investment (FDI) is considered by many to be a major and more stable source of financing for many developing countries. FDIs slowed down sharply in recent quarters due to two major factors affecting domestic as well as international investment. First, the capability of firms to invest has been reduced by a fall in access to financial resources, both internally (due to a decline in corporate profits) and externally (due to lower availability and higher cost of finance). Second, the propensity to invest has been affected negatively by economic prospects, especially in cases involving corporations with operations in the developed countries which are hit by a severe recession. In addition, a very high level of perceived risk is leading companies to extensively curtail their costs and investment programs to become more resilient to any further deterioration of the business environment and their balance sheets. The fact that many multinational enterprises can easily shift financial resources from one country to another, adds another degree of uncertainty, contributing to the growing macroeconomic instability in developing countries. The outlook for the flow of portfolio investments is even less encouraging. Redemptions of US$41.2 bn out of EM equity funds in 2008 have fully reversed the record US$40.8 bn inflow of 2007. About half of the EM fund purchases that have occurred since 2003 have now been withdrawn. According to the Institute for International Finance (IIF), net private capital flows to emerging markets are estimated to have declined to US$467 bn in 2008, half of their 2007 level. A further sharp decline to US$165 bn is forecast for 2009, with just over three-quarters of the decline due to deterioration in net flows from commercial banks. Moreover, net lending of international banks to emerging countries (excluding Gulf countries) is expected to fall to US$135 bn in 2009 from US$401 bn in 2007 and US$245 bn in 2008. The World Bank estimates that in 2009, 104 of 129 developing countries will have current account surpluses inadequate to cover private debt coming due. For these countries, total financing needs are expected to amount to more than US$1.4 trillion during the year. External financing needs are expected to exceed private sources of financing (equity flows and private debt disbursements) in 98 of the 104 countries, implying a financing gap in 98 countries of about US$268 bn. Should bank rollover rates be lower than expected, or should capital flight significantly increase, this figure could rise to almost US$700 bn. Well over US$1 trillion in EM corporate debt and US$2½-3 trillion in total EM debt matures in 2009, the majority of which reflects claims of major international banks extended cross-border or through their affiliates and branches located in emerging markets. For most of the reasons presented above, a number of emerging economies have recently imposed controls on capital outflows as a way of managing financial crises. Iceland, Ukraine, Argentina, Indonesia and Russia, among others, have resorted to a number of restrictions on the availability of foreign exchange as a way of dealing with the collapse in global risk appetite. Although those are frequently used as a way of rationing forex during a crisis, there is a risk that capital controls might become a normal part of policymakers’ tool-kits well beyond strict emergency needs. In principle, capital controls permit monetary and fiscal policy to be directed to the stabilization of economic activity without having to worry about a collapse of the currency and its deleterious effects on the sectoral and national balance sheets. The imposition of capital controls should be viewed as temporary, with a gradual relaxation as economic conditions improve and global financial stability returns. Such controls might restrict the ability to attract capital in the future as foreign investors fear that they will be unable to repatriate their profits With rising unemployment and falling real wages, remittances will also subside with pressure on the standard of living, growth and external balances of labor-sending countries. In addition to these private capital flows the reduction of official flows, including development assistance is also set to slow as donors scale back their funding in the face of greater domestic needs. However funds available from multilateral institutions like the IMF and regional development banks may partly offset the decline in other funds and withdrawal of private capital. The G20 seems to have neared an agreement on doubling or tripling the IMF’s lending capacity and regional development banks like the EBRD, ADB and others are boosting their capital base and scaling up their lending to support regional banks. The fall in the price of oil (and the reduction in oil revenues) has eroded the surpluses of oil exporting nations, lowering the funds they have to invest abroad in advanced economies and in emerging markets. Furthermore the need for capital at home (to support domestic banks, finance fiscal stimulus packages, stabilize asset markets) and losses on past investments are leading sovereign investors to privilege liquid assets rather than the riskier assets like equity, corporate bonds and alternatives – which they tended to invest in until mid 2008. The reduction in funds entrusted to the international banking system by countries like Russia and African oil exporters, some of which, the IMF suggests, were re-lent to Eastern European countries, provide further pressure on bank lending. Governments of commodity rich countries are now having to take on a larger role in financing infrastructure projects that had been earmarked as public-private partnerships rather than making significant investments overseas. However, other investors like some of Chinese government institutions may be emerging to take up some of the slack. China recently extended loans to several cash-strapped resource companies and may also be emerging as a source of investment to countries like Pakistan and Kazakhstan. Eastern EuropeEastern Europe’s heavy reliance on external financing may be its Achilles Heel, as it looks set to be the hardest hit of emerging market regions as such financing dries up. Almost every country in the region is either in or close to recession, and the sharp drop-off in capital flows is both a reflection of, and a contributor to, the region’s deteriorating growth prospects. For the last decade, a bonanza of foreign financing has helped the region grow faster than the world average. The region’s capital account liberalization, financial sector reforms and its prospects for convergence with the EU made it an attractive destination for inflows. But that ‘attractive’ status is changing, given the current environment of global credit tightening and given investors’ waning EUphoria. Net private capital flows to the CEE-6 (Poland, Czech Republic, Hungary, Romania, Bulgaria, Turkey) are forecast to fall to around $60 bn in 2009, less than half that received in 2008, according to the Institute of International Finance (IIF). Besides boosting growth, the stream of foreign capital inflows contributed to a build-up of external imbalances in recent years, specifically high current-account deficits. Such deficits are the norm in the region, but the Baltics (Estonia, Latvia, Lithuania), Bulgaria, and Romania stand out for their sky-high deficits (in the double-digits as a % of GDP in 2008), making them particularly vulnerable to a drop-off in capital inflows. While current-account deficits are expected to narrow across the board in Eastern European countries in 2009, the adjustment is painful and has led to concerns over a full-blown balance of payments crisis. Latvia and Hungary have already turned to the IMF for financing. While the region’s heavy dependence on foreign financing has been apparent for years, alarm bells were muted. The rationale was two-fold. One, the region was playing catch-up to the EU and current-account deficits were seen as a normal part of that process. Two, the inflows to the region consisted of relatively ‘safe’ forms of financing. That is, FDI – generally considered more stable and less susceptible to rapid outflows than other capital flows, like portfolio investment - accounted for the majority of inflows, although that is now changing. FDI inflows covered almost 100% of the EU newcomers’ current-account deficits from 2003-2007. However, in 2008, FDI coverage dropped to an estimated 55%, according to the Economist. The recession in Western Europe, the source of the bulk of the region’s FDI inflows, is not helping matters. With the drop-off in FDI, debt - particularly intra-bank lending - has been financing an increasing portion of these countries’ current-account deficits. Nevertheless, intra-bank lending – that is, lending between foreign parent banks and their subsidiaries in the region – is also set to drop off sharply in 2009. Net bank lending to emerging Europe, excluding Russia, is projected to be a meager $22 bn in 2009, down from $95 bn in 2008, according to the IIF. Foreign parent banks, who dominate the region’s banking systems, have pledged to continue to support their CEE subsidiaries, but the global credit crisis has made it difficult for them to maintain previous levels of lending. With the slowdown in both FDI and intra-bank lending, central banks in the region are increasingly being forced to tap their foreign reserves. As for growth, the sharper the decline in capital flows, the sharper the contraction in growth. Future growth prospects hinge on a recovery in capital inflows to the region. Emerging AsiaPrivate capital flows to Asia slowed sharply from US$315 bn in 2007 to around US$96 bn in 2008. Risk aversion, de-leveraging and redemption by investors to offset losses in developed markets contributed to portfolio outflows of US$55 bn in 2008 and foreign bank borrowing slowed from US$156 bn in 2007 to just US$30 bn in 2008. While these trends will continue to erode capital flows to Asia in 2009, albeit at a slower pace, even more resilient flows like FDI and debt inflows will take a hit also. South Korea, India and Indonesia are most vulnerable to capital outflows, however foreign capital fueled credit growth and lending to firms and households even in countries like Hong Kong, Taiwan, Singapore and Vietnam. Therefore, the ongoing liquidity crunch will hit fixed investment, consumer spending, raise credit costs and bank delinquencies as well as undermine asset markets. After emerging Europe, emerging Asia has been most severely hit by the decline in foreign bank borrowing especially firms and banks in South Korea, India, China and Indonesia which relied heavily on foreign capital to drive investment and consumer spending. But despite having high external debt and short-term debt relative to foreign exchange reserves, countries like South Korea, India and Indonesia will be able to meet the debt obligations due in 2009 (over 50% of it to Western European banks) or even roll over debt. After 2008 reversed the portfolio inflows of 2007, outflows might continue even in 2009 led by India, Taiwan and South Korea. The main drivers will likely be domestic risks (GDP growth and export slowdown, lower corporate earnings, easing fiscal and external balances), not just global factors. This might exacerbate equity market sell-offs in India, Thailand, Philippines, China, Vietnam, Singapore and Hong Kong so that valuations, in spite of being attractive in markets like Hong Kong, Indonesia, Singapore and Vietnam, might trend down further. Fiscal stimulus and subsidy spending are affecting fiscal balances and raising external financing needs of countries like Malaysia, Philippines, India, Vietnam and Indonesia. Others like China will boost domestic bond issuance. While yields will go up, bond issuance might continue to face a tepid response due to risk aversion in EMs, flight to safe-haven (the U.S.!), narrowing interest rate differential with the U.S., risk of ratings downgrade, and expectations of limited currency appreciation in the near term. The global credit crunch, high credit costs and export contraction have also taken a toll on FDI into Asia, a large share of which is export-related. China, Indonesia, Malaysia and Vietnam where FDI accounts for a large share of total fixed investment, are most affected. FDI to China began slowing in the second half of 2008, and has been declining for the last five months as the global outlook began to worsen, and revaluation expectations were reversed. The decline in corporate profits though poses a bigger risk to investment as retained earnings are the biggest contributor to investment. Moreover, large lay-offs across the world, especially in the West and the GCC will impact countries dependent on remittances such as Philippines, Vietnam and India, challenging the financing of current account balances and also domestic demand in some countries. Capital outflows have pulled down most Asian currencies since 2008 led by South Korea, Malaysia, Singapore, India, Indonesia and Taiwan. In response, many central banks like India, South Korea, Thailand, Philippines, Vietnam and Indonesia have run down foreign exchange reserves to defend their currencies. And even Chinese reserve growth has been much more subdued, with the most recent numbers suggesting that China may have experienced capital outflows in several months in Q42008 and Q12009. Amid dollar squeeze, countries like Indonesia have imposed restrictions on currency conversion and US$ outflows, while others like India have eased foreign investment rules to attract the much needed capital. Waning capital inflows will put pressure on the BOP as shrinking exports affect the current account, especially for those running trade and/or current account deficits – South Korea, India, Thailand, Vietnam, Indonesia and Philippines and those running surpluses like China and Taiwan will run narrower surpluses. Nevertheless, large foreign reserve accumulation and current account balances will contain risks of BOP and currency crises like in 1997-98. Asian central banks have also been actively injecting dollar liquidity, entering swap agreements (South Korea, Indonesia, Singapore, Hong Kong), easing credit costs for firms, and expanding Asian reserve pooling under the Chiang Mai Initiative to relieve selling pressure on their currencies. The expansion of Asian Development Bank’s resources, as advocated by the G20 will provide further financing to avert the reversal of other development assistance and avoid balance of payments pressure. Commonwealth of Independent StatesWhile Russia’s current account has yet to sink into deficit as the sharp fall in the rouble and lack of credit led imports to contract more than exports, a deficit is likely in 2009 if the oil price stays below $50 a barrel. Furthermore portfolio and direct inflows have been reduced, leaving Russian corporates to seek funds from the government to meet their outstanding liabilities accrued when credit was cheap. With the global IPO and bond markets frozen, Russia is trying to raise funds at home. The government is stepping back from its plans to implicitly guarantee all the foreign liabilities, but it has provided significant funds to the banking sector and will increase spending to offset the withdrawal of foreign investment. Some Russian officials find the ideal of capital controls very attractive, though Putin worries that it will offset the opportunity for the rouble to become a regional currency. Like Russia, banks in countries like Kazakhstan and Ukraine borrowed heavily while international capital was cheap and have accumulated large foreign debts, many of which are coming due in 2009 and 2010. This has put pressure on the banking system that has been frozen out of international credit markets and is facing domestic liquidity shortages and the rising domestic costs of external debts after currency depreciation, which might increase defaults and lead to a pattern of non-payments. The Ukraine with its wide current account deficit is particularly vulnerable and has turned to the IMF to avoid a balance of payments crisis. Kazakhstan by contrast will rely on its past savings and may seek Chinese funds. Remittances are the largest source of external financing for many Central Asian countries, accounting for at least 20% of the regions GDP in total - they account for over 30% of the GDP of Kyrgystan and Tajikistan. The deteriorating economic situation in Russia, rising unemployment and the quota cuts for foreign workers have reversed migration trends and drastically reduced remittances flows to many CIS countries, in the face of current account deterioration as well as the social and political unrest that an influx of returning labor could trigger. Latin AmericaHistorically, Latin America was poorly placed to handle external capital market shocks, as it typically did little to save in expansion phases, remaining quickly vulnerable to deterioration in both real and financial external conditions. Key parts of the region remain prone to these problems: both Argentina and Venezuela are now facing much more challenging conditions in an environment of lower commodity prices. Ecuador has already defaulted. By contrast, other countries in the region appear relatively well placed to handle global difficulties, in large part because of their relative prudence in the post 2002 global credit boom. Foreign currency borrowing by the public sector was sharply curtailed (although not that by the private sector). Owing mainly to a fall in commodity prices, the region’s aggregate current account will be in deficit of about $65 bn in 2009. The accumulation of substantial foreign exchange reserves provides some leeway to finance the deficit, while reduced levels of dollar-denominated public debt allow currency depreciation to occur without raising solvency concerns. In Brazil, the balance of payments printed only a slight surplus in 2008, US$2.9 bn compared to a huge surplus of US$87.4 bn in 2007. For 2009, the data so far suggest a much weaker reading as well. In fact total flow of FDI of only US$11 bn is expected in 2009, down from US$45 bn in 2008 reflecting the sluggishness of capital markets and the sharp contraction in the advanced economies, the main sources of those flows in the past. At the same time, some recovery of portfolio flows is likely if there is a marginal bounce back in risk appetite vis-à-vis 2008. Total capital and financial accounts inflow might amount to around US$17 bn, nearly matching the estimated current account deficit of US$19.2 bn, characterizing a nearly zero balance of payments for 2009. Mexico experienced a significant decrease in FDI and portfolio inflows in Q42008 (-US$ 3.6 bn vs. US$ 11.9 bn in Q42007) as growth expectations for the U.S. and Mexico were revised significantly lower, credit conditions abroad tightened (deleveraging), and global risk appetite dried up. However, assets held abroad increased sharply (by US$ 8.1 bn vs. a decrease of US$ 3.7 bn in 4Q07), thus compensating for the shortage in capital inflows. Overall, the capital account ended up with a slightly wider surplus in 2008 (US$ 20.9 bn vs. +US$ 20.8 bn in 2007) and was enough to finance the much larger current account deficit (of US$ 15.5 bn vs. US$ 8.2 bn in 2007). Although workers' remittances are considered part of the current account, they are an important source of capital inflows and for the first time since 1995 they declined to US$25.1 bn in 2008 (US$ 26 bn in 2007). In 2009, the current account deficit will most likely widen (US$ 25 bn). Pairing this with a flat capital account result in 2009 (US$ 21 bn), the balance of payment deficit should amount to roughly US$4 bn. In Colombia, unfriendly growth and financial external conditions are impacting capital flows. The most recent data (to February 2009) suggest an outflow of US$ 140 mm vs. an inflow of US$ 1.75 bn in the first two months of 2008. The central bank stated that the outflow was mainly explained by 'other special operations' (US$ 1.7 bn), which are most likely related to transfers to the treasury and the central bank intervention mechanism in the FX market (options) to control for volatility, among others. Moreover, capital flows were impacted by a decline in FDI (32% to US$ 1.2 bn) and in remittances (7% y/y to US$ 800mn). AfricaThe reduction in capital flows, especially private capital and the fall in commodity prices is undermining Africa’s recent high growth rates. With investors now fleeing to safe assets rather than seeking out yields, exotic investments like African equities and government bonds are finding it difficult to attract capital even as official sector flows also seem to be scaled back. Official development assistance, FDI inflows and remittances that have contributed to financing current account imbalances in a number of African economies in recent years are set to drastically decline in 2009 threatening to offset economic gains they helped to achieve. Furthermore commodity exporters like Nigeria who recently ran surpluses are now facing the prospect of current account deficits even as the reduction in energy and metals prices reduces FDI to the continent including in Southern Africa’s mining sector. Estimates suggest that FDI to Sub-Saharan Africa fell sharply by about 21% in 2008, a trend likely to worsen in 2009. This means that governments with ambitious investment and development programs will need to revise their current spending and financing plans downwards. Furthermore with contraction in credit, and risk aversion, portfolio flows are increasingly difficult to attract, with outflows reported from most African exchanges. Most of the region’s equity markets are dominated by domestic investors though but the reduction in global liquidity and bank lending has created vulnerabilities for banks, especially in Nigeria. Overall, there were no international bond issues by African countries in 2008 compared with US$ 6.5 bn in 2007. Remittance inflows from Africans working abroad, estimated at US$3 bn in 2007, are bound to fall because they originate from advanced economies that are experiencing deteriorating economic situations and rising unemployment. Remittances between African countries (eg from South Africa to others) have also fallen along with the contraction in the mining sector. The UN estimates that aid flows will need to double by 2010 to meet the cost of financing the Millennium Development Goals. Yet core development aid has declined by 4% since industrialized nations committed to increasing it at the Gleneagles summit in 2005. France and Ireland are considering cutting aid budgets as the cost of the recession rises and while President Obama pledged to double the country’s aid budget eventually the timeline is unclear. According to the IMF a 1% drop in global growth leads to a 0.5% fall in growth in Sub-Saharan Africa but given the freezing of capital flows the effects could be more pronounced with the region likely to grow less than 3% in 2009.