tag:theconversation.com,2011:/global/topics/trade-467/articlesTrade – The Conversation2024-03-28T12:51:11Ztag:theconversation.com,2011:article/2207592024-03-28T12:51:11Z2024-03-28T12:51:11ZTweaking US trade policy could hold the key to reducing migration from Central America<figure><img src="https://images.theconversation.com/files/584593/original/file-20240326-28-qixbyn.jpg?ixlib=rb-1.1.0&rect=0%2C53%2C2995%2C1940&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Employees at the K.P. Textil textile plant in Guatemala City.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/workers-wear-face-masks-as-a-preventive-measure-against-the-news-photo/1226220586?adppopup=true">Johan Ordonez/AFP via Getty Images)</a></span></figcaption></figure><p>Small changes to U.S. trade policy <a href="http://dx.doi.org/10.2139/ssrn.4376016">could significantly reduce the number of migrants</a> arriving at the southern border, according to our peer-reviewed study, which was recently published in The World Economy.</p>
<p>Our research delved into the effectiveness of existing trade agreements in creating jobs in migrant-sending countries, with a focus on Central America. We analyzed the impact that the <a href="https://ustr.gov/trade-agreements/free-trade-agreements/cafta-dr-dominican-republic-central-america-fta">Dominican Republic-Central America Free Trade Agreement</a>, or CAFTA-DR, has had on apparel exports and jobs since being ratified by the U.S. and six countries – Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic – from 2005 to 2009.</p>
<p>CAFTA-DR was aimed at encouraging trade and investment ties. But restrictive provisions, particularly its <a href="https://www.wto.org/english/tratop_e/roi_e/roi_info_e.htm">rules of origin</a>, have hindered the region’s ability to benefit fully from the agreement. Under a “triple transformation” clause, only garments assembled in one of the countries from fabrics and constituent fibers originating from the region qualify for free-trade benefits.</p>
<p>This significantly limits the scope for trade expansion because of the limited range of fabrics produced in the region compared with the global market. For example, it means that <a href="https://sourcingjournal.com/denim/denim-mills/global-denim-market-105089/">many modern fabrics</a>, like the kinds used in some stretchy jeans, do not qualify.</p>
<p>Loosening the rules to allow for new fabrics would not only attract investment and create more jobs for Central Americans, it could also reduce immigration from the region by as much as 67%, <a href="http://dx.doi.org/10.2139/ssrn.4376016">according to our estimates</a>. </p>
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<p>At present, about <a href="https://www.hinrichfoundation.com/research/article/ftas/central-american-emigration/">500,000 people work in the apparel industry</a> in Central America. It is labor-intensive, and expanding exports would increase employment. Our research shows that loosening the rules of origin to include new fabrics from outside the region would create about 120,000 direct jobs. </p>
<p>If a stronger relationship between exports and employment is assumed, this figure could even rise to about 257,500 jobs, our figures show. </p>
<p>And these jobs would be boosted by additional indirect employment around the expanding factories in Central America needed to accommodate the increased trade.</p>
<p>If would-be migrants in Central America instead chose the new apparel jobs in their home countries, we estimate that migration from Central America to the U.S. could fall by 30% to 67%.</p>
<h2>Why it matters</h2>
<p>The migration crisis has taken <a href="https://apnews.com/article/biden-trump-border-immigration-election-c37b1596ecf27d208e94bef592e7e616">center stage in U.S. political discourse</a>, with Republicans in Congress holding up legislation, including aid to Ukraine, over their demands that tougher border security measures be included as part of any package.</p>
<p>In December 2023, the number of U.S. Border Patrol encounters with migrants at the U.S.-Mexico border <a href="https://www.pewresearch.org/short-reads/2024/02/15/migrant-encounters-at-the-us-mexico-border-hit-a-record-high-at-the-end-of-2023/">hit a record high</a> of almost 250,000, and it <a href="https://www.cbp.gov/newsroom/national-media-release/cbp-releases-january-2024-monthly-update">remained high</a> during the first few months of 2024.</p>
<p>While human rights violations, <a href="http://dx.doi.org/10.2139/ssrn.3825251">security issues</a> <a href="https://knowledgehub.transparency.org/assets/uploads/helpdesk/Literature_review_corruption_and_migrations.pdf">and corruption</a> in migrant-sending countries are often cited as driving factors, in many cases, immigrants are <a href="https://www.themarshallproject.org/2023/09/08/migrants-work-permits-adams-asylum">seeking job opportunities</a> that are unavailable in their home countries. </p>
<p>But despite the increased political attention on immigration, trade policy – which could be used to address the scarcity of secure, well-paying jobs in Central American countries with heavy migrant outflows – has largely been absent from either party’s strategy to address the “root causes” of migration.</p>
<p>We believe addressing the root causes of the current border crisis requires creating good jobs in migrant-sending countries. </p>
<h2>What still isn’t known</h2>
<p>We looked only at one industry – apparel – in Central America and the Dominican Republic, a Caribbean nation.</p>
<p><a href="https://doi.org/10.1007/s10290-014-0188-3">Academic reviews suggest</a> that as many as half of all trade agreements have no significant effect on trade flows, and only about one-quarter of them increase trade. In fact, trade agreements may even create barriers to trade by adding additional clauses that are complicated or too restrictive.</p>
<p>The key question is how to make all trade agreements more effective at creating jobs in migrant-sending countries. Identifying and relaxing barriers within trade agreements is, we believe, an important first step toward reducing emigration. </p>
<p><em>The <a href="https://theconversation.com/us/topics/research-brief-83231">Research Brief</a> is a short take on interesting academic work.</em></p><img src="https://counter.theconversation.com/content/220759/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>In 2021, the Mosbacher Institute received funding for Bush School student research from the American Apparel and Footwear Association while Raymond Robertson was the director. The AAFA provided neither funding nor any other form of support, including any direct or indirect support, for the research described in this article.</span></em></p><p class="fine-print"><em><span>Kaleb Girma Abreha does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Relaxing ‘rules of origin’ restrictions in an existing trade deal could add tens of thousands of jobs in Central America.Raymond Robertson, Professor of Economics and Government, Texas A&M UniversityKaleb Girma Abreha, Assistant Research Scientist, Mosbacher Institute for Trade, Economics, and Public Policy, Texas A&M UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2250002024-03-25T15:02:22Z2024-03-25T15:02:22ZGhana’s decades-old ambition to build an integrated aluminium industry faces a new hurdle: the clean energy transition<p>It has been more than 60 years since Ghana’s first post-independence leader Kwame Nkrumah first <a href="https://www.google.co.uk/books/edition/Living_in_the_Shadow_of_the_Large_Dams/4IVSEAAAQBAJ?hl=en&gbpv=1&dq=volta+river+project+in+ghana&pg=PR3&printsec=frontcover">mooted</a> the idea that Ghana should produce aluminium from the country’s ample supply of bauxite.</p>
<p>Under the <a href="https://www.jstor.org/stable/40567076">Volta River Project</a>, Nkrumah’s vision was to construct a dam on Ghana’s Volta River to provide dedicated electricity to a newly built smelter. The smelter was to be run by the <a href="https://thebftonline.com/2023/07/18/valco-needs-us600m-to-modernise-aging-smelter/">Volta Aluminium Company (Valco)</a> in the new industrial city of Tema. </p>
<p>The smelter would be linked to a refinery to process Ghana’s bauxite, currently estimated at <a href="https://www.mining.com/web/ghana-signs-1-2-billion-deal-to-develop-its-bauxite-resources/">900 million tonnes</a>. Ghana has the second largest reserves in Africa after <a href="https://www.usgs.gov/centers/national-minerals-information-center/bauxite-and-alumina-statistics-and-information">Guinea</a>.</p>
<p>Successive Ghanaian governments have pursued this strategy over the decades. The most recent push came in 2017 when the government embarked on its <a href="https://www.youtube.com/watch?v=wwDpGcigkac">latest drive</a> to develop an aluminium producing capacity. </p>
<p>Since then, the Ghana Integrated Aluminium Development Corporation (Giadec) has <a href="https://thebftonline.com/2022/08/25/giadec-seeks-us6bn-for-integrated-aluminium-industry/">invested</a> in <a href="https://giadec.com/giadec-selects-mytilineos-s-a-as-partner-for-project-3a-development-of-bauxite-mine-alumina-refinery/">new mines</a> and is looking to partner with foreign and domestic companies to actualise a harmonised aluminium industry, including an alumina refinery.</p>
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Read more:
<a href="https://theconversation.com/lessons-about-housing-from-ghanas-volta-river-project-50-years-on-123920">Lessons about housing from Ghana's Volta River project 50 years on</a>
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<p>The logic has always been that <a href="https://www.jstor.org/stable/1808850">heavy industries</a> that turn natural resources into useful products are critical for structural transformation. That is, <a href="https://unhabitat.org/structural-transformation-in-developing-countries-cross-regional-analysis">moving an economy</a> “from low productivity and labour-intensive activities to higher productivity and skill-intensive ones”. </p>
<p>Such transformation is also <a href="https://elibrary.worldbank.org/doi/10.1596/978-1-4648-1448-8_ch1">associated</a> with rising wages and living standards. Heavy industries can also reduce reliance on imports. </p>
<p>Recent <a href="https://www.sciencedirect.com/science/article/pii/S2214629622001426">works</a> have identified gaps in geography-specific research on industrial decarbonisation in developing economies. Sub-Saharan Africa is particularly under-researched, with research only really examining the case of <a href="https://static1.squarespace.com/static/52246331e4b0a46e5f1b8ce5/t/62f92860408b4b366da8a572/1660495974819/IDTT+5+WP5_Climate+change+policies+and+trade_202208.pdf">South Africa</a>.</p>
<p>We <a href="https://doi.org/10.1016/j.erss.2023.103337">examined</a> Ghana’s long-standing challenges to the dream of a fully developed aluminium industry. We also assessed the most recent attempts to realise these plans against the backdrop of the energy transition and <a href="https://netzeroclimate.org/sectors/heavy_industry/">industrial decarbonisation</a>. </p>
<p>We found that new uncertainties and challenges stand in the way of Ghana’s latest efforts to develop an integrated aluminium industry. These are linked to the unfolding global energy transition agenda and shifts towards “green” manufacturing. </p>
<h2>Why aluminium</h2>
<p>Aluminium is both a constraint to and an enabler of a <a href="https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-net-zero">net zero</a> future. </p>
<p>On the one hand, it has numerous energy transition <a href="https://european-aluminium.eu/about-aluminium/aluminium-in-use">applications</a>, from solar panels and wind turbines to electricity cables and batteries. </p>
<p>But aluminium is also the <a href="https://doi.org/10.1016/j.jclepro.2019.118004">second most</a> carbon-intensive industry, after steel. It accounts for <a href="https://www.carbonchain.com/blog/understand-your-aluminum-emissions">about 4%</a> of global emissions. Emission-reduction technologies are costly and, in many cases, still being developed. </p>
<h2>Challenges – old and new</h2>
<p>The <a href="https://www.researchgate.net/profile/Theophilus-Acheampong/publication/333834250_Towards_an_Integrated_Aluminium_Industry_in_Ghana_Some_Policy_Considerations/links/5d0832ce299bf1f539cb8c66/Towards-an-Integrated-Aluminium-Industry-in-Ghana-Some-Policy-Considerations.pdf">obstacles</a> Ghana has faced in its aluminium industry over the decades have included a lack of investments in new mines, lack of refinery, limited <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-7660.1987.tb00278.x">electricity</a> for smelting, and a lack of investments to upgrade the existing Valco smelter.</p>
<p>More recently, other constraints have come into play that make it hard for peripheral economies like Ghana to develop and sustain competitive aluminium industries.</p>
<p>Firstly, they are not financially in a position to use the latest sustainable production technologies, such as <a href="https://www.iea.org/energy-system/carbon-capture-utilisation-and-storage">carbon capture, use and storage</a> and <a href="https://www.weforum.org/agenda/2024/01/aluminium-green-transition-technologies-decarbonization/">green hydrogen</a>. These are needed to improve energy intensity and reduce emissions.</p>
<p>Secondly, Ghana faces tough new conditions, known as <a href="https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en">“green taxonomies”</a>, being set by key export markets in the global north. Countries or trading blocs like the <a href="https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en">European Union</a> are demanding that importers in targeted heavy industrial sectors monitor and declare emissions embedded in products. They are also required to buy <a href="https://taxation-customs.ec.europa.eu/system/files/2023-12/Questions%20and%20Answers_Carbon%20Border%20Adjustment%20Mechanism%20%28CBAM%29.pdf">Carbon Border Adjustment Mechanism certificates</a> to offset such emissions. The mechanism, which has already been introduced on a trial basis, will charge levies from January 2026.</p>
<p>There are strong critics of these mechanisms, with some <a href="https://www.energymonitor.ai/carbon-markets/how-cbam-threatens-africas-sustainable-development/">arguing</a> that they <a href="https://www.lse.ac.uk/News/Latest-news-from-LSE/2023/e-May-2023/Africa-could-lose-up-to-25-billion-per-annum-as-a-direct-result-of-the-EUs-CBAM">threaten</a> Africa’s sustainable development. These arguments are unlikely to see the EU dropping these measures. </p>
<p>The third obstacle that Ghana faces revolves around how to make its refineries and smelters produce competitively priced aluminium. The cost of power is a sticking point as it has been in prior years.</p>
<p>According to Ghana’s recently published <a href="https://www.energymin.gov.gh/sites/default/files/2023-09/FINAL%20GHANA%27S%20NATIONAL%20ENERGY%20TRANSITION%20FRAMEWORK_2023_compressed%20%281%29_compressed%20%282%29.pdf">National Energy Transition Framework</a>, natural gas will serve as Ghana’s primary transition fuel. The government argues that it can provide the base load electricity that Ghana requires for industrialisation. </p>
<p>But choosing gas as the energy solution for Ghana’s aluminium chain could jeopardise the export potential of the aluminium it produces. About <a href="https://oec.world/en/visualize/tree_map/hs02/export/gha/show/157601/2019">80%</a> of Ghana’s aluminium is exported to Europe and could be subjected to carbon taxes if production is powered by gas.</p>
<p>Hydro electricity would, in many respects, be the ideal solution. It is Ghana’s cheapest and greenest energy source. And it would allow the country to compete in markets regulated by carbon considerations. </p>
<p>But this isn’t as straightforward as it may seem. If Valco and a new smelter were to operate at envisaged levels of production it would remove almost all the hydropower output of Akosombo Dam from Ghana’s broader electricity mix. The hydropower also plays a key role in bringing down overall <a href="https://rgu-repository.worktribe.com/preview/1721654/ACHEAMPONG%202021%20Ghanas%20changing%20electricity%20%28VOR%29.pdf">electricity prices</a>. </p>
<p>Thus, while hydro electricity may be a technically good solution, it may not be politically acceptable in a country where electricity prices are a key <a href="https://www.bbc.co.uk/news/world-africa-68236869">electoral issue</a>. </p>
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Read more:
<a href="https://theconversation.com/ghanas-electricity-crisis-is-holding-the-country-back-how-it-got-here-217606">Ghana's electricity crisis is holding the country back - how it got here</a>
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<p>Finally, other concerns are emerging around plans to mine bauxite in some of Ghana’s last remaining green forests, including the <a href="https://www.clientearth.org/latest/news/protecting-ghana-s-atewa-range-forest-reserve-from-bauxite-mining">Atewa Forest Reserve</a>. </p>
<p>National and international civil society organisations and environmental activists are resisting the move. Many local businesses support it, however, because of the potential economic gains a mine and refinery would bring. </p>
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Read more:
<a href="https://theconversation.com/ghanas-pact-with-china-to-explore-bauxite-threatens-a-unique-forest-120815">Ghana's pact with China to explore bauxite threatens a unique forest</a>
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<p>These are some of the trade-offs that policymakers must consider.</p>
<h2>Moving forward</h2>
<p>Collectively, these issues may frustrate Ghana’s ambitions once more. </p>
<p>At an international level, peripheral economies like Ghana need clarity about how particular energy technologies will be classified. </p>
<p>Lastly, climate financing and green technology transfer pledges from developed to developing economies need to be honoured. </p>
<p>We suggest the Ghanaian government can overcome some of these issues through dialogue with stakeholders and being frank about the trade-offs involved. But a national discussion about benefits and costs is only possible if it’s clearer what choices around energy will be made.</p><img src="https://counter.theconversation.com/content/225000/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Theophilus Acheampong is affiliated with the IMANI Centre for Policy and Education in Accra, Ghana. He has consulted in a private capacity for the Government of Ghana on the aluminium industry.</span></em></p><p class="fine-print"><em><span>Matthew Tyce does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ghana has spent over 60 years trying to build an aluminium industry.Theophilus Acheampong, Associate Lecturer, University of AberdeenMatthew Tyce, Lecturer in International Political Economy, King's College LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2259922024-03-19T14:03:12Z2024-03-19T14:03:12ZCocoa beans are in short supply: what this means for farmers, businesses and chocolate lovers<p><em>A <a href="https://www.reuters.com/markets/commodities/african-cocoa-plants-run-out-beans-global-chocolate-crisis-deepens-2024-03-13/">shortage</a> of cocoa beans has led to a near shutdown of processing plants in Côte d'Ivoire and Ghana, the two countries responsible for <a href="https://theconversation.com/cocoa-prices-are-surging-west-african-countries-should-seize-the-moment-to-negotiate-a-better-deal-for-farmers-214305">60% of global production</a>. With chocolate makers around the world reliant on west Africa for cocoa, there is significant concern about the impact on the prices of chocolate and the livelihood of farmers. Cocoa researcher Michael Odijie explains the reasons for the shortage.</em></p>
<h2>Why has cocoa production declined sharply in west Africa?</h2>
<p>Three factors are at play: environmental, economic cycle related and human. </p>
<p>One environmental factor is the impact of the El Niño weather phenomenon, which has caused drier weather in west Africa. It has contributed to problems on farms, such as the swollen shoot virus disease. As a result, Ghana has lost harvests from nearly <a href="https://thecocoapost.com/ghana-loses-over-500000-hectares-of-cocoa-farms-to-swollen-shoot-disease/">500,000 hectares</a> of land in recent years.</p>
<p>The economic cycle of cocoa production refers to the inherent patterns of expansion and contraction in cocoa farming. For example, as cocoa trees age, they become susceptible to diseases, requiring high maintenance costs. Historically, farmers have tended to abandon old farms and start anew in fresh forests. Unfortunately, finding new forests is now increasingly difficult. Perhaps the most severe issue of all is the lack of fair compensation for sustainable cocoa production</p>
<p>The human factor includes challenges such as illegal mining, which has overtaken numerous farms in Ghana. Sometimes, farmers lease their land to illegal miners in exchange for payment. These mining activities degrade the quality of the land, making it unsuitable for cocoa cultivation. </p>
<p>The global market for chocolate and chocolate products is on the <a href="https://www.fortunebusinessinsights.com/industry-reports/cocoa-and-chocolate-market-100075">rise</a>. It is projected to grow faster than <a href="https://www.grandviewresearch.com/industry-analysis/chocolate-market#:%7E:text=The%20global%20chocolate%20market%20size,key%20driver%20of%20the%20market.">4% annually</a> over the next few years. This growing demand for cocoa underscores the urgency in addressing the intertwined issues that relate to the industry’s sustainability.</p>
<h2>Have west African governments intervened to help cocoa farmers?</h2>
<p>In February 2024, the Ghana Cocoa Board (Cocobod), regulator of the country’s cocoa sector, secured a <a href="https://www.reuters.com/world/africa/ghanas-cocobod-taps-200-mln-world-bank-loan-rebuild-disease-hit-cocoa-farms-2024-02-16/">World Bank loan</a> of US$200 million to rehabilitate plantations affected by the cocoa swollen shoot virus. The board will take over the disease-ridden farms, remove and replace the afflicted cocoa trees, and nurture the new plantings to the fruiting stage before returning them to the farmers.</p>
<p>This practice of Cocobod taking out loans to assist farmers is a longstanding one in Ghana. For instance, in 2018, Cocobod <a href="https://thecocoapost.com/cocobod-afdb-loan/">used part</a> of a $600 million loan from the African Development Bank to rehabilitate aging plantations and those hit by diseases. And at the start of the current harvest season in October, the <a href="https://www.cighci.org/ghana-announces-cocoa-producer-price-for-2023-24-crop-season/">producer price was raised</a>: farmers are paid more, a move made inevitable by the surge in global prices. Also, Ghana Cocobod has established a <a href="https://starrfm.com.gh/2024/03/cocobod-taskforce-arrests-illegal-mining-gang-leaders-in-atobrakrom/">task force</a> to shield cocoa farms from the harmful impacts of mining. It has cooperated with police to stem the smuggling of cocoa to neighbouring countries, particularly those that offer a stronger currency.</p>
<p>In Côte d'Ivoire, relatively little action has been taken. It appears the government is still assessing the situation. But there have been <a href="https://www.usnews.com/news/world/articles/2024-02-16/ivory-coast-seizes-100-tons-of-cocoa-at-the-border-with-guinea">measures</a> to curb smuggling of cocoa, prompted by the fact that the shortage is driving up prices in neighbouring countries. Côte d'Ivoire does benefit from numerous sustainability programmes initiated by multinational corporations. The current shortage has accelerated these initiatives. Regrettably, some of the programmes do not disclose their data, making it difficult for academics to access and analyse their information.</p>
<p>African governments have yet to address significant structural issues in their interventions.</p>
<h2>How have cocoa farmers and cocoa-producing countries’ economies been affected?</h2>
<p>At the farm level, although the rise in prices may initially appear beneficial to farmers, the reality is not straightforward. A decrease in output leads to fewer harvests on average, which means that, overall, farmers are not earning more. This issue is compounded by recent <a href="https://theconversation.com/ghanas-economic-crisis-expert-insights-into-how-things-got-so-bad-and-what-the-fixes-are-193153">economic challenges in west Africa</a>, such as high inflation and currency devaluation, particularly in Ghana. These factors have resulted in farmers becoming poorer.</p>
<p>Another impact of the output decline is a reduction in local processing. Major African processing facilities in Côte d'Ivoire and Ghana have either ceased operations or reduced their processing capacity because they cannot afford to purchase beans. This likely means that chocolate prices worldwide will surge. This, in turn, adversely affects the local production units that have been emerging in recent years. </p>
<p>However, the bargaining power of west African cocoa-producing countries seems to have increased. Now is an opportune moment for these nations to unite and negotiate more favourable terms for their cocoa farmers. </p>
<h2>Will chocolate makers eventually turn to cocoa alternatives?</h2>
<p>It’s inevitable because continuing to cultivate cocoa under current conditions is unsustainable. I don’t perceive this negatively; I hope it occurs sooner rather than later. In fact, it is already underway with the rise of cocoa butter equivalents, cocoa extenders and artificial flavours (synthetic or nature-identical flavours that mimic the taste of chocolate without the need for cocoa). </p>
<p>The German company Planet A Foods is a leader in this area. It produces cocoa-free chocolate, using technology to transform ingredients such as oats and sunflower seeds into substitutes for cocoa mass and butter. </p>
<p>Overall, this is beneficial for everyone. The demand for cocoa has <a href="https://theconversation.com/the-real-cost-of-your-chocolate-habit-new-research-reveals-the-bittersweet-truth-of-cocoa-farming-in-africas-forests-206082">resulted</a> in mass deforestation and significant carbon emissions, issues that are likely to worsen due to climate change. Moreover, the push for cultivation has led to various forms of labour abuses. Exploring cocoa alternatives is certainly part of the solution.</p><img src="https://counter.theconversation.com/content/225992/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael E Odijie does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Major African cocoa plants in Côte d'Ivoire and Ghana have stopped or cut processing because they cannot afford to buy beans.Michael E Odijie, Research associate, UCLLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2255172024-03-14T13:15:14Z2024-03-14T13:15:14ZBurkina Faso, Mali and Niger hint at a new west African currency: what it’ll take for it to succeed<p><em>On 11 February 2024, the head of Niger’s ruling military junta, General Abdourahmane Tiani, spoke of the <a href="https://www.france24.com/en/video/20240213-niger-hints-at-new-currency-in-step-out-of-colonialisation">possible creation of a common currency</a> with Burkina Faso and Mali. “The currency is a first step toward breaking free from the legacy of colonisation,” he said on national TV, referring to the CFA franc inherited from French colonisation.</em></p>
<p><em>Burkina Faso, Niger and Mali, three former French colonies, have experienced military coups in recent years. They’re now all ruled by military regimes. They also formed a new defence alliance, known as the <a href="https://theconversation.com/burkina-faso-mali-and-niger-have-a-new-defence-alliance-an-expert-view-of-its-chances-of-success-215863">Alliance of Sahel States</a> (AES).</em> </p>
<p><em>The Economic Community of West African States (Ecowas) <a href="https://www.france24.com/fr/afrique/20240226-la-lev%C3%A9e-des-sanctions-contre-le-niger-un-net-changement-de-braquet-pour-la-c%C3%A9d%C3%A9ao">has condemned</a> these coups and imposed sanctions on the countries involved. In response, these countries decided to withdraw from Ecowas. However, they remain members of the <a href="https://www.umoatitres.org/en/commission-de-luemoa/">West African Economic and Monetary Union</a> (Uemoa). Uemoa has a common currency, the CFA franc, which is issued by the Central Bank of West African States (BCEAO).</em></p>
<p><em>The BCEAO and the Banque de France are bound by <a href="https://www.banque-france.fr/fr/banque-de-france/partenariats-afrique-france">cooperation agreements</a> that include the deposit of a portion of foreign exchange reserves at the Banque de France and France guaranteeing the CFA franc.</em></p>
<p><em>Thierno Thioune, an expert on <a href="https://www.researchgate.net/publication/352717047_Interdependance_entre_Politique_monetaire_et_politique_budgetaire_au_niveau_de_l4UEMOA?_tp=eyJjb250ZXh0Ijp7ImZpcnN0UGFnZSI6InByb2ZpbGUiLCJwYWdlIjoicHJvZmlsZSJ9fQ">monetary policies and unions between west African states</a>, analyses the potential implications and feasibility of launching a new currency for the AES member countries.</em></p>
<h2>What conditions must be met for a multilateral currency to work?</h2>
<p>To successfully launch and maintain a multilateral currency, several key factors must be considered.</p>
<p>First, macroeconomic and budgetary policies must be closely coordinated. Rigorous harmonisation of economic and budgetary policies between participating countries is imperative to guarantee the stability of the currency’s value and prevent trade imbalances. This will help maintain the confidence of economic players and promote regional growth.</p>
<p>Second, robust monetary management institutions must be established. Strong institutions responsible for currency management, like a common central bank, are essential. This central bank must have adequate authority to implement an independent and stable monetary policy. This will ensure the preservation of the currency’s value and address cyclical fluctuations. </p>
<p>Third, creating an integrated common market is vital. The unrestricted flow of goods, services, capital and labour is key to driving economic growth and enhancing regional cooperation. The current framework provided by the West African Economic and Monetary Union offers a significant advantage in this regard.</p>
<p>Finally, mechanisms to monitor and resolve crises need to be established. For instance, common reserve funds and <a href="https://www.abc-forex.net/contenu/swap-de-change/swap-devises.php">currency swap arrangements</a> could help address external and internal shocks that may affect the new currency. Currency swaps – when two parties exchange amounts in two different currencies for a certain period at a fixed rate – can be used to manage exchange rate risks and facilitate cross-border financing. </p>
<h2>Are these conditions met in Burkina Faso, Niger and Mali?</h2>
<p>It’s difficult to say whether these conditions have been fully met in the three countries. It would mean having a firm understanding of whether these, among other, conditions have been met: </p>
<ul>
<li><p>harmonisation of government policies</p></li>
<li><p>macroeconomic stability through inflation control</p></li>
<li><p>limit on public debt</p></li>
<li><p>maintenance of a balanced current account.</p></li>
</ul>
<p>At this time, it’s hard to say whether these countries have done this. </p>
<h2>Does their monetary union membership make any difference?</h2>
<p>These three countries have been part of the West African Economic and Monetary Union since 1963. In theory, this should give them some experience in coordinating economic and monetary policies through the CFA franc. </p>
<p>They could have experience with infrastructure, like the Central Bank of West African States (which manages the single currency and monetary policy for member states), that would help them with the transition.</p>
<h2>What are the potential gains and risks of the initiative?</h2>
<p>Despite the risks involved, the initiative could bring several benefits. </p>
<p>Establishing a larger monetary zone can foster greater trade integration and improved resource allocation. </p>
<p>It could enhance the country’s “flexibility” in dealing with external partners. </p>
<p>By joining a new monetary union, these three countries could also benefit significantly from increased trade integration, independence from external partners, lower transaction costs and investor attractiveness. </p>
<p>Nevertheless, this initiative also entails risks, particularly with regard to their position within the West African Economic and Monetary Union and Ecowas. The latter could perceive the creation of a new currency as a threat to their regional influence. It could cause the fragmentation of existing economic blocs. In addition, the departure of the three countries could weaken the solidity of the West African Economic and Monetary Union and Ecowas in terms of economic and political influence. </p>
<p>There are also risks that the currency could quickly lose value. </p>
<p>The new currency could depreciate against the CFA franc. This could have substantial negative repercussions for exporters to other West African Economic and Monetary Union countries.</p>
<p>Second, without proper formal frameworks to control and manage the new currency, speculation and uncertainty regarding its value may emerge. This is why establishing robust institutions to support the management and supervision of the new currency is crucial.</p>
<h2>How will the new currency affect trade in the zone?</h2>
<p>The creation of a new currency by these three nations could, temporarily, have a negative impact on their trade with countries within the current bloc. It could even lead to some turbulence in trade with countries outside it.</p>
<p>The transition to a new currency typically introduces a level of uncertainty among economic actors and trading partners, as questions arise about the currency’s value, convertibility and stability. This adjustment phase can lead to a temporary slowdown in trade.</p>
<p>In addition, the introduction of a new currency often requires legislative and regulatory changes, especially regarding foreign exchange operations and customs duties. These can act as administrative and regulatory barriers and result in delays in commercial transactions.</p>
<p>During the transitional period, there may be fluctuations in exchange rates. This will lead to disparities between the old and new currencies. It can affect price competitiveness between exporters and importers and reduce the overall volume of trade.</p>
<p>The perceptions and attitudes of external partners matter when a new currency is announced. Some trading partners may exhibit reluctance or express doubts regarding its reliability and credibility. This could diminish their willingness to continue trading with member countries of the zone.</p>
<h2>Could the move isolate them?</h2>
<p>The creation of a new currency by these three countries may indeed raise questions about their potential isolation. However, such an initiative should not automatically lead to a diplomatic rupture or total marginalisation.</p>
<p>To avoid this, proactive communication, constructive cooperation and balanced, inclusive regional economic integration are key. This will help mitigate the risks of isolation for Burkina Faso, Mali and Niger in their monetary project.</p><img src="https://counter.theconversation.com/content/225517/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Thierno Thioune has received funding from the Agence Universitaire de la Francophonie (AUF) and the Romanian Government for the "Eugen Ionescu" doctoral programme at the University "Dunarea De Jos" in Galati, Romania. CODESRIA also awarded him a prize as part of its thesis grant programme.</span></em></p>Several conditions must be met to ensure the successful launch and operation of a multilateral currency.Thierno Thioune, enseignant-chercheur, directeur du CREA, Université Cheikh Anta Diop de DakarLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2223882024-02-05T09:27:55Z2024-02-05T09:27:55ZMali, Burkina Faso and Niger want to leave Ecowas. A political scientist explains the fallout<p><em>Mali, Burkina Faso and Niger have sent Ecowas, west Africa’s main political union of 15 countries, a <a href="https://www.aljazeera.com/news/2024/1/28/niger-mali-burkina-faso-announce-withdrawal-from-ecowas">formal notice</a> of their withdrawal from the bloc. The three countries are governed by military rulers who <a href="https://www.wilsoncenter.org/blog-post/coups-africa-even-ecowas">have overthrown</a> democratically elected leaders since 2021.</em></p>
<p><em>The Conversation Africa’s Godfred Akoto Boafo asked political scientist <a href="https://www.leedsbeckett.ac.uk/staff/dr-olayinka-ajala/">Olayinka Ajala</a> about the implications of the withdrawal.</em></p>
<h2>Why are Mali, Niger and Burkina Faso withdrawing?</h2>
<p>The three countries have given <a href="https://www.france24.com/en/africa/20240129-mali-and-burkina-faso-withdraw-from-ecowas">three main reasons</a>.</p>
<p>First is what they call the “<a href="https://www.aljazeera.com/news/2024/1/28/niger-mali-burkina-faso-announce-withdrawal-from-ecowas">illegal, illegitimate, inhumane and irresponsible sanctions</a>” imposed on them for truncating their democracies. </p>
<p>Second is the failure of Ecowas to assist them in their “existential fight against terrorism and insecurity”. </p>
<p>The juntas have also argued that Ecowas has deviated from the founding principles of the organisation and is now <a href="https://www.bbc.co.uk/news/world-africa-68122947">controlled by foreign powers</a>. </p>
<p>In 2001, Ecowas adopted a protocol on democracy and good governance which included a mechanism for unconstitutional changes of government. <a href="https://www.eisa.org/pdf/ecowas2001protocol.pdf">Article 1a</a> of the protocol maintains a “zero tolerance for power obtained or maintained by unconstitutional means”. </p>
<p>Ecowas cited this clause as its reason for suspending the three countries and for imposing sanctions against them.</p>
<p>Ecowas has made it clear that it won’t work with the regimes. Its statements make it clear that it has taken a strong stance because it wishes to deter military coups in other countries within the bloc. </p>
<p>The regional bloc is also clearly frustrated at the lack of interest the three countries have shown in returning to democratic rule. It has asked for a clear and definite transition timetable, especially for Mali and Burkina Faso. </p>
<h2>What impact will the withdrawal have on Ecowas?</h2>
<p>The main impact will be on trade and economic development. Ecowas is primarily an economic community and the loss of any member will affect trade and economic development.</p>
<p>The three countries collectively account for 8% of the <a href="https://countryeconomy.com/countries/groups/economic-community-west-african-states">US$761 billion</a> Ecowas gross domestic product (GDP). In 2022, the total trade volume from the Ecowas region totalled <a href="https://punchng.com/mali-b-faso-niger-exit-may-weaken-277bn-ecowas-trade-report/">US$277.22 billion</a>. </p>
<p>The concern is that the exit of these countries could affect the flow of goods and services in the bloc. </p>
<p>Leaving the bloc could have other knock-on effects too:</p>
<ul>
<li><p>The economic collapse of the countries. These countries have strategic importance, especially in food security. Niger is a key source of onions while Burkina Faso exports tomatoes to the sub-region.</p></li>
<li><p>This would lead to an exodus of citizens to other Ecowas countries, further threatening the stability of the bloc. </p></li>
<li><p>Concerns that the three countries will enter into bilateral relationships with countries that might not be favourable to other Ecowas countries. For example, there are already concerns about Niger’s <a href="https://theconversation.com/niger-and-russia-are-forming-military-ties-3-ways-this-could-upset-old-allies-221696">alliance with Russia</a> after it severed ties with France. </p></li>
</ul>
<h2>What impact will it have on each of the countries?</h2>
<p>The main impact on the countries will be on the movement of people, goods and services. </p>
<p>Under Ecowas, members enjoy unrestricted movement of citizens within the bloc. Citizens of Ecowas countries can live and work in any country in the bloc. For instance, there are more than 5 million citizens of Burkina Faso, Mali and Niger living and working in Côte d'Ivoire alone. Ghana, Togo and Republic of Benin also host large numbers of Nigeriens. </p>
<p>The citizens of all three landlocked countries would no longer be able to travel to other Ecowas states without impediments. Niger also shares a border of over 1,600km with seven states in Nigeria and <a href="https://www.usnews.com/news/world/articles/2024-01-30/analysis-west-africas-brexit-moment-spells-trouble-for-the-region">80% of its trade</a> is done with Nigeria. </p>
<p>The sanctions imposed on Niger by Ecowas are <a href="https://www.crisisgroup.org/africa/sahel/niger/ecowas-nigeria-and-niger-coup-sanctions-time-recalibrate">already affecting</a> citizens of the country. Hardship is likely to increase after the exit if Nigeria decides to police its borders. </p>
<p>Also, depending on how Ecowas agrees to relate to the countries in future, there could be restrictions on goods and services which would further affect the economies of these countries. </p>
<h2>What impact will it have on security in the region?</h2>
<p>The security arrangement might not be affected in the short term. But it could be in the long term. There is already limited security cooperation between the three countries and other Ecowas members. For instance, they have all withdrawn from the G5 Sahel, resulting in the <a href="https://www.aljazeera.com/news/2023/12/6/chad-mauritania-pave-way-to-dissolve-g5-anti-rebel-alliance#:%7E:text=The%20G5%20was%20created%20in,major%20issue%20across%20the%20Sahel.&text=The%20two%20remaining%20members%20of,other%20three%20founding%20countries%20left.">collapse of the organisation</a>. </p>
<p>Although the lack of security support from Ecowas was stated as one of the reasons for exiting Ecowas, a total collapse of existing security infrastructure would affect not only the three countries but also other relatively stable states such as Ghana, Côte d'Ivoire, Togo and Benin. The three states have joined forces to form the <a href="https://www.reuters.com/world/africa/military-led-sahel-states-rally-thousands-support-alliance-2023-12-30/">Alliance of Sahel States</a>, but without support from regional groups such as Ecowas, they will struggle to curtail insurgencies. </p>
<p>Currently, Mali has over 1,000 members of Africa Corps (formerly Wagner group), supported by Russia. There are <a href="https://www.osw.waw.pl/en/publikacje/analyses/2024-01-31/wagner-forces-under-a-new-flag-russias-africa-corps-burkina-faso">100 in Burkina Faso</a>. After months of Burkina Faso insisting it would not engage foreign mercenaries, the first contingent arrived in January 2024 and more are expected soon. Niger also recently agreed to <a href="https://theconversation.com/niger-and-russia-are-forming-military-ties-3-ways-this-could-upset-old-allies-221696">military cooperation</a> with Russia. </p>
<p>This indicates the three countries still require external assistance to combat insecurity. The problem is that Russia is fighting a huge war in Ukraine and might not be able to support the three countries as much as they would require. If the three countries fail to combat insurgence through the newly formed Alliance of Sahel States, the threat will spread to other countries in the bloc and beyond. </p>
<p>Ecowas leaders have indicated that they are willing to have a dialogue with the three countries. I think Ecowas granting some concessions to prevent them from exiting would be in the interest of the bloc and all the citizens of Ecowas countries.</p><img src="https://counter.theconversation.com/content/222388/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Olayinka Ajala does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The decision by the three countries could change the dynamics of Ecowas.Olayinka Ajala, Senior lecturer in Politics and International Relations, Leeds Beckett UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2210582024-01-19T13:03:19Z2024-01-19T13:03:19ZRed Sea shipping disruptions could be avoided in the future by using the Arctic – but it could spell trouble for fragile ecosystems<figure><img src="https://images.theconversation.com/files/569909/original/file-20240117-27-cvnsia.jpg?ixlib=rb-1.1.0&rect=245%2C491%2C5127%2C3145&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/container-cargo-ship-on-icy-waters-752977432">Jean Landry/sHUTTERSTOCK</a></span></figcaption></figure><p>Attacks by Yemeni <a href="https://www.ft.com/content/2e918f9f-bcb4-47e2-9c15-c70a2a8ade5f">Houthi rebels</a> on merchant ships in the Red Sea have hit world trade. Between November and December 2023, the number of containers travelling through the Red Sea each day <a href="https://www.theguardian.com/business/2024/jan/11/global-trade-falls-houthi-attacks-merchant-ships-red-sea">fell by 60%</a> as ships moving goods between Asia and Europe diverted their routes around the Cape of Good Hope at the southern tip of Africa.</p>
<p>This route results in at least <a href="https://classic.searoutes.com/">ten days more</a> sailing time, so has caused freight <a href="https://apnews.com/article/red-sea-yemen-houthis-attack-ships-f67d941c260528ac40315ecab4c34ca3">prices to surge</a> and has triggered costly <a href="https://www.wsj.com/business/tesla-to-halt-production-at-german-car-factory-as-red-sea-conflict-hits-supply-chains-3735e991#">delays to production</a>. The region has become a bottleneck for the global economy before. The Suez canal, a waterway that connects the Mediterranean Sea to the Red Sea, was blocked for six days in 2021 after a container ship called the Ever Given ran aground, disrupting <a href="https://www.allianz.com/en/economic_research/publications/specials_fmo/2021_03_26_SupplyChainDisruption.html">billions of dollars</a> worth of trade.</p>
<p>The cape route has been used each time passage through Suez has been disrupted. But there is an alternative sea passage between Asia and Europe – the <a href="https://www.sciencedirect.com/science/article/abs/pii/S1361920922002589">Northern Sea</a> route. </p>
<p>This route, which runs from the Barents Sea near Russia’s border with Norway, to the Bering Strait between Siberia and Alaska, may be a better option and will soon become available if <a href="https://www.ncei.noaa.gov/access/monitoring/monthly-report/global/202213">global warming continues</a> at the predicted rate. Nevertheless, it currently faces many challenges.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-red-sea-attacks-on-cargo-ships-could-disrupt-deliveries-and-push-up-prices-a-logistics-expert-explains-220110">How Red Sea attacks on cargo ships could disrupt deliveries and push up prices – a logistics expert explains</a>
</strong>
</em>
</p>
<hr>
<h2>An alternative for world trade?</h2>
<p><a href="https://www.nationalgeographic.com/science/article/arctic-summer-sea-ice-could-be-gone-by-2035">Research</a> estimates that summer sea ice around the Siberian coast will be melted completely by 2035. Even if ice cover is not completely removed, the thickness of the sea ice – one of the initial barriers to Arctic shipping – has <a href="https://www.tandfonline.com/doi/abs/10.1080/03088839.2016.1231428">significantly reduced</a> over the past four decades from 3.64 metres to 1.89 metres. Arctic navigation is thus expected to be viable by the <a href="https://www.sciencedirect.com/science/article/abs/pii/S0308597X21004966">beginning of the next decade</a>.</p>
<p>For shipments between Shanghai and Rotterdam, the Northern Sea route reduces the distance that ships will need to travel by around <a href="https://services-webdav.cbs.dk/doc/CBS.dk/Arctic%20Shipping%20-%20Commercial%20Opportunities%20and%20Challenges.pdf">3,000 nautical miles</a> compared to Suez and <a href="https://sea-distances.org/">6,200 miles</a> compared to the cape route. This would <a href="https://www.sciencedirect.com/science/article/abs/pii/S096669231100024X">reduce</a> the amount of time if takes to sail between eastern Asia and northern Europe to 18 days (it currently takes 32 days via Suez). </p>
<p>Arctic navigation is also performed at very slow speeds – <a href="https://www.marineinsight.com/wp-content/uploads/2013/01/The-guide-to-slow-steaming-on-ships.pdf">under 18 knots</a> (roughly 21mph). So, depending on sailing speed and the type of fuel used, a cargo ship that passes through the Northern Sea route could use <a href="https://www.sciencedirect.com/science/article/pii/S0308597X16000038">40% less fuel</a> and generate up to 80% fewer emissions than if it used the Suez route.</p>
<h2>But is it viable?</h2>
<p>Despite its advantages, Arctic navigation is highly seasonal, restricted to the months between <a href="https://www.ocimf.org/document-libary/94-northern-sea-route-navigation-best-practices-and-challenges-1/file">July and November</a>. Navigating ships through the Northern Sea route also requires an escort behind a nuclear-powered icebreaker ship. But the number of icebreakers is limited. Just <a href="https://chnl.no/maps/nsr-shipping-traffic-activities-in-may-2022/">five</a> operated on the Northern Sea route in 2021, rising to <a href="https://www.highnorthnews.com/en/russia-launches-new-nuclear-icebreaker-it-looks-east-northern-sea-route-shipping">nine</a> by 2030. </p>
<figure class="align-center ">
<img alt="A photo taken onboard an icebreaker ship going through an ice field." src="https://images.theconversation.com/files/569914/original/file-20240117-25-nk8mfb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/569914/original/file-20240117-25-nk8mfb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/569914/original/file-20240117-25-nk8mfb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/569914/original/file-20240117-25-nk8mfb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/569914/original/file-20240117-25-nk8mfb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/569914/original/file-20240117-25-nk8mfb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/569914/original/file-20240117-25-nk8mfb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Navigating ships through the Northern Sea route requires an escort behind a nuclear-powered icebreaker ship.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/icebreaker-going-through-ice-fields-arctic-725163385">Katrin York/Shutterstock</a></span>
</figcaption>
</figure>
<p>The Northern Sea route also suffers capacity issues. So-called “mega-vessels” that have a capacity of around 20,000 containers are deployed for trade between Asia and Europe. However, the Northern Sea route is not able to accommodate mega-vessels due to the imposition of restrictions based on the depth of sea ice. </p>
<p>Nowadays, only vessels with a roughly <a href="https://www.sciencedirect.com/science/article/pii/S0964569121001150">5,000 container carrying capacity</a> can easily navigate through the North Sea route during the summer.</p>
<h2>Fragile Arctic ecosystems</h2>
<p>Cargo ships that pass through the Northern Sea route would potentially generate <a href="https://www.sciencedirect.com/science/article/abs/pii/S1361920923002936">fewer carbon emissions</a> than ships that travel through Suez. But this alternative route is subject to other environmental challenges. </p>
<p>Arctic ecosystems take a long time to recover from disturbances like oil spills. Accidents in these sensitive regions may thus cause unimaginable marine pollution. </p>
<p>In 1989, for example, the <a href="https://www.marineinsight.com/maritime-history/the-complete-story-of-the-exxon-valdez-oil-spill/">Exxon Valdez</a> oil tanker ran aground in Prince William Sound, Alaska, spilling more than <a href="https://corporate.exxonmobil.com/who-we-are/technology-and-collaborations/energy-technologies/risk-management-and-safety/the-valdez-oil-spill">250,000 barrels</a> of oil into the sea. The oil spill <a href="https://www.nationalgeographic.com/environment/article/oil-spills-30-years-after-exxon-valdez">killed</a> billions of salmon and more than 300,000 animals from a variety of fish and bird species. </p>
<p>More than 25 years since the spill, four of these species (<a href="https://www.britannica.com/animal/killer-whale">killer whales</a>, <a href="https://www.adfg.alaska.gov/index.cfm?adfg=kittlitzmurrelet.main">Kittlitz’s murrelets</a>, <a href="https://www.adfg.alaska.gov/index.cfm?adfg=marbledmurrelet.main">marbled murrelets</a> and <a href="https://www.britannica.com/animal/pigeon-guillemot">pigeon guillemots</a>) have not been re-encountered in the region.</p>
<p>Many cargo ships also carry ballast water to maintain stability during various stages of their operation. Ballast water is taken on or discharged throughout the ship’s journey. This practice could potentially result in the <a href="https://www.tandfonline.com/doi/full/10.1080/18366503.2015.1093695">migration of invasive species</a> to the unique Arctic ecosystem.</p>
<h2>Routes are changing</h2>
<p>Despite these challenges, Arctic shipping traffic is increasing. Between 2013 and 2017, the volume of cargo traffic on the Northern Sea route <a href="https://www.highnorthnews.com/en/russia-says-northern-sea-route-transport-270m-tons-2035">rose</a> from 2.8 million tons to 10.7 million tons. </p>
<p>In 2023, this had grown to <a href="https://www.rosatom.ru/en/press-centre/news/historical-record-of-the-northern-sea-route-the-cargo-carriage-volume-in-2023-exceeded-36-254-mln-to/">36.2 million tons</a>. And it shows no signs of slowing down. In 2024, Russia’s icebreaker fleet expects to conduct <a href="https://www.highnorthnews.com/en/russia-says-northern-sea-route-transport-270m-tons-2035">1,747 escorts</a> (up from <a href="https://www.rosatom.ru/en/press-centre/news/historical-record-of-the-northern-sea-route-the-cargo-carriage-volume-in-2023-exceeded-36-254-mln-to/">1,218</a> in 2023).</p>
<p>The Northern Sea route is currently not able to accommodate the vessel traffic and amount of cargo that passes through the Suez Canal. But it could be a viable alternative in the future depending on how fast progress is made on tackling global warming and developing a regulatory framework for navigating the Arctic region.</p>
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<img alt="Imagine weekly climate newsletter" src="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p class="fine-print"><em><span>Gokcay Balci receives funding from the British Academy.</span></em></p><p class="fine-print"><em><span>Kemal Akbayirli does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Houthi attacks on ships in the Red Sea have disrupted trade between Asia and Europe – could ships cross the Arctic instead?Kemal Akbayirli, Research Assistant in Maritime Business and Administration, Ordu UniversityGokcay Balci, Assistant Professor in Logistics and Supply Chain, University of BradfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2135212024-01-12T13:29:20Z2024-01-12T13:29:20ZParaguay’s Ciudad del Este: Efforts to force a busy informal commercial hub to follow global trade rules have only made life harder for those eking out a living<figure><img src="https://images.theconversation.com/files/549817/original/file-20230922-25-cd7gvu.jpg?ixlib=rb-1.1.0&rect=110%2C482%2C4476%2C2966&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Vendors at work on a bustling Ciudad del Este street packed with stalls.</span> <span class="attribution"><span class="source">Jennifer L. Tucker</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>Paraguay’s Ciudad del Este is a busy <a href="https://financialtransparency.org/the-tri-border-area-a-profile-of-the-largest-illicit-economy-in-the-western-hemisphere/">South American contraband hub</a> where scrappy Paraguayan vendors and Brazilian traders mix with businessmen from places as far away as Lebanon and South Korea. This hive of activity <a href="https://theconversation.com/a-bank-heist-in-paraguays-wild-wild-west-reveals-the-dark-underbelly-of-free-trade-77125">moves billions of dollars’ worth of consumer goods</a> – everything from smartphones to whiskey. </p>
<p>The city was built as a commercial hub around low taxes and tariffs, benefiting both well-to-do traders and poor workers. In its bustling main market – eight square blocks packed with street vendors, brick-and-mortar businesses and cavernous shopping galleries – thousands of Paraguayans eke out a living selling fake Gucci handbags, fishing poles and even contact lenses.</p>
<p>As a <a href="https://scholar.google.com/citations?user=4TDh378AAAAJ&hl=en&oi=sra">scholar of urban planning</a>, I wanted to learn how this remote city of 300,000 people near <a href="https://iguazufalls.com/news/where-is-iguazu-falls-cities-and-airports/">South America’s spectacular Iguazu Falls</a> blossomed into a key node along a global trade route. </p>
<p>I also wanted to understand the role that thousands of informal Brazilian traders and Paraguayan street vendors have played in trading systems shaped by powerful countries and corporations.</p>
<p>While informal markets are common, poor workers in Ciudad del Este helped build an entire city oriented around global trade. As I <a href="https://ugapress.org/book/9780820364483/outlaw-capital/">explain in my new book</a>, “Outlaw Capital: Everyday Illegalities and the Making of Uneven Development,” policies aiming to legalize trade in Ciudad del Este have hurt these vendors and traders while protecting the illegal commercial activities conducted by more powerful people. </p>
<p><iframe id="kVkXC" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/kVkXC/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Informal work</h2>
<p>Globally, more than <a href="https://www.ilo.org/global/publications/books/WCMS_626831/lang--en/index.htm">2 billion people</a> work informally, or about 2 in every 5 <a href="https://ourworldindata.org/grapher/population-young-working-elderly">people who are of working age</a>.</p>
<p>Informal work includes a wide range of jobs and gigs without state recognition or benefits, like health care or retirement payments.</p>
<p>In Paraguay, an estimated <a href="https://www.statista.com/statistics/1039971/informal-employment-share-paraguay/">70% of all workers are informal</a>.</p>
<p>Yet because law is biased toward formal economies, informal workers often must break rules for their livelihoods. </p>
<h2>Stroessner’s creation</h2>
<p>Traders, small and large, profit through arbitrage. That is, they take advantage of price differences.</p>
<p>To create arbitrage opportunities in Ciudad del Este, the Paraguayan government has long kept its taxes and tariffs low. This strategy, <a href="http://www.slideshare.net/gatoramiro/economas-ilegales-en-la-triple-frontera-paraguay-argentina-y-brasil-fernando-rabossi">recommended by the International Monetary Fund in 1956</a>, has promoted the legal reexportation of merchandise, where goods imported into Paraguay are speedily exported to neighbors.</p>
<p>Alfredo Stroessner, a brutal dictator who <a href="https://doi.org/10.2307/3338752">ruled Paraguay from 1954 to 1989</a>, inaugurated <a href="https://timesmachine.nytimes.com/timesmachine/1987/07/11/467987.html?pageNumber=4">Paraguay’s tradition of state-sanctioned smuggling</a>. He even called it the “<a href="https://www.csmonitor.com/1988/1215/osmug.html">price of peace</a>” because he gained allies by allocating contraband routes to potential rivals.</p>
<p>In the decades since <a href="https://insidestory.org.au/triple-trouble/">Stroessner founded Ciudad del Este in 1957</a>, a regional alliance of traders and local politicians gained control of its contraband networks. As I explain in my book, they continue to have powerful backers in the national government. </p>
<p>The volume of this trade is astounding, at times <a href="https://theconversation.com/a-bank-heist-in-paraguays-wild-wild-west-reveals-the-dark-underbelly-of-free-trade-77125">exceeding the country’s gross domestic product</a>. At its peak in 2011, the value of imported goods legally reexported from Paraguay to its neighbors reached <a href="https://www.cadep.org.py/uploads/2014/12/Informe-Especial-de-Comercio-Exterior-2014-full-color.pdf">US$5 billion</a>. The estimated value of contraband that year was twice as high: <a href="https://www.ft.com/content/dd80bec8-2be5-11df-8033-00144feabdc0">$10 billion</a>.</p>
<p>Alongside contraband and legal commerce, there are also <a href="https://insidestory.org.au/triple-trouble/">allegations of human trafficking</a>, <a href="https://www.bbc.com/news/world-latin-america-45610738">weapons trafficking</a> and <a href="https://ideas.repec.org/a/taf/fglcxx/v8y2007i1p26-39.html">other criminal activity</a> tied to Ciudad del Este. </p>
<h2>‘Globalization from below’</h2>
<p>Tens of thousands of Paraguayan vendors and small-scale Brazilian traders do business in Ciudad del Este. While many are poor, I found that some had gained a foothold in the middle class.</p>
<p>Gustavo Lins Ribeiro, a Brazilian anthropologist, argues that the city exemplifies “<a href="https://doi.org/10.4000/etnografica.3074">globalization from below</a>” because poor workers can profit from global trade, not just international corporations. I heard one local leader call street vendors the “the lungs of Paraguay” because they draw in money from the global economy and circulate it to poor communities across the country.</p>
<p>By the 1990s and 2000s, thousands of independent Brazilian traders, called “<a href="https://doi.org/10.31389/jied.135">sacoleiros</a>” – a Portuguese word meaning “people hauling big bags” – crossed the Friendship Bridge into Paraguay every day. They resold fake leather jackets, linens, watches, CDs and other merchandise they bought in Ciudad del Este in street markets across Brazil.</p>
<p>To gather these goods, sacoleiros traveled from all over Brazil to trade in Ciudad del Este, sometimes journeying for days on buses.</p>
<h2>Eyeing ‘notorious markets’</h2>
<p>In the 2000s, powerful countries promoted trade liberalization and trade rule enforcement through the <a href="https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact1_e.htm">newly established World Trade Organization</a>.</p>
<p>The U.S. government and Brazilian trade groups worried that the flow of counterfeit goods and contraband from Paraguay curbed corporate profits and harmed the U.S. economy. Since 2011, the State Department has expressed these concerns in annual reports on what it calls “<a href="https://ustr.gov/sites/default/files/2023-01/2022%20Notorious%20Markets%20List%20(final).pdf">notorious markets</a>.” </p>
<p>The people engaged in this bustling border commerce and their advocates counter that free trade advocates write trade rules to suit their own interests. </p>
<p>Under pressure from the U.S., Brazil sought to curtail smuggling, but failed to distinguish between sacoleiros struggling to make a living and <a href="https://www.routledge.com/Counterfeit-Itineraries-in-the-Global-South-The-human-consequences-of-piracy/Pinheiro-Machado/p/book/9780367594725">big-time contraband and drug runners</a>. Instead, Brazil treated them all as dangerous criminals.</p>
<p>Brazilian officials cracked down on sacoleiros, enforcing laws that they had previously ignored, increasing border surveillance and <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-9493.2012.00463.x">confiscating sacoleiros’ merchandise in raids</a>, and casting them into debt.</p>
<p>This <a href="https://www.abc.com.py/edicion-impresa/economia/investigacion-de-los-puertos-ilegales-de-ciudad-del-este-esta-paralizada-552686.html">pushed informal traders onto riskier routes</a>, like the networks of clandestine ports along the Parana River and Lake Itaipu, which they need to navigate with small wooden skiffs. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/558493/original/file-20231108-15-ede25p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="People lug large amounts of stuff in huge, colorful bags." src="https://images.theconversation.com/files/558493/original/file-20231108-15-ede25p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/558493/original/file-20231108-15-ede25p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/558493/original/file-20231108-15-ede25p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/558493/original/file-20231108-15-ede25p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/558493/original/file-20231108-15-ede25p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=425&fit=crop&dpr=1 754w, https://images.theconversation.com/files/558493/original/file-20231108-15-ede25p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=425&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/558493/original/file-20231108-15-ede25p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=425&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Brazilians carrying goods bought in Ciudad del Este approach the Friendship Bridge, which links the Paraguayan city with Foz do Iguacu, Brazil, in 2010.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/brazilians-carry-goods-they-bought-in-ciudad-del-este-as-news-photo/106896478?adppopup=true">Norberto Duarte/AFP via Getty Images</a></span>
</figcaption>
</figure>
<h2>Formalizing sacoleiros</h2>
<p>As Brazil criminalized sacoleiros, these informal workers fought for policies that would protect their livelihoods.</p>
<p>A Brazil-Paraguay plan called the Unified Trade Regime – <a href="https://www.ultimahora.com/brasil-reglamenta-la-ley-los-sacolerios-n236685">Régimen de Tributo Unificado</a> in Spanish – sought to integrate the sacoleiros into the formal economy and transform them into “micro-entrepreneurs.” </p>
<p>In the new system, registered sacoleiros pay lower taxes on specific consumer goods purchased from registered shops and tracked through an electronic system. The system was designed to differentiate between two flows of goods sold to foreigners: merchandise purchased by bargain-hunting tourists for their own use, and items sacoleiros buy in bulk in Paraguay to sell across the border in Brazil.</p>
<p>Before this system took effect, all visitors could buy merchandise duty-free up to an official limit that fluctuated between $150 and $500.</p>
<p><a href="https://www.scoop.co.nz/stories/WL0805/S00430/cablegate-calling-all-smugglers-brazilian-sacoleiros-bill.htm?from-mobile=bottom-link-01">Despite U.S. attempts to sink the plan</a>, it went into effect in 2012; afterward, only registered businesses could participate in the Unified Trade Regime.</p>
<p>Informal street vendors could not meet these requirements, and were excluded.</p>
<p>Another glitch: Negotiators ignored research recommending a total tax rate of no more than 22%, so as to make smuggling not worth the costs and risks, I learned from a Paraguayan official. Instead, they set the total tax rate at 25%.</p>
<p>Few businesses registered, and the <a href="https://www.abc.com.py/edicion-impresa/suplementos/tres-fronteras/en-tres-anos-de-vigencia-del-rtu-el-resultado-es-escaso-1399351.html">plan faltered</a>.</p>
<p>While the U.S. opposed formalizing sacoleiros, the <a href="https://www.abc.com.py/edicion-impresa/economia/buscan-mayor-formalizacion-empresarial-935481.html">U.S. Agency of International Development funded the research</a> behind a similar plan to formalize trade in the electronic goods sold by more affluent businesses. I found this plan reduced their tax burden to just over 5%.</p>
<p>Differential treatment for informal workers and wealthy traders reflects an imbalance in their negotiating power. I also argue it reflects <a href="https://www.cell.com/one-earth/fulltext/S2590-3322(20)30421-8">common biases against informal workers</a> and their economic realities.</p>
<h2>Protecting some illegal transactions</h2>
<p>Yet state officials protected some illegal arrangements, like ex-President Horacio Cartes’ <a href="https://theconversation.com/how-paraguay-dumps-billions-of-illicit-cigarettes-on-the-global-market-107679">contraband cigarette trade</a>. Despite multiple international complaints, <a href="https://www.moopio.com/informes-ratifican-impunidad-en-la-franja-de-itaipu-durante-era-cartes.html">political pacts protected the clandestine networks</a> transporting his cigarettes to regional markets. </p>
<p>Informal economies can provide livelihood for the millions excluded from formal work, <a href="https://theconversation.com/street-vendors-make-cities-livelier-safer-and-fairer-heres-why-they-belong-on-the-post-covid-19-urban-scene-141675">enliven cities and provide important urban services</a>. I believe efforts to force everyone to follow the rules must be matched by a commitment to protect the livelihoods of poor workers.</p><img src="https://counter.theconversation.com/content/213521/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jennifer L. Tucker received funding from the Fulbright Program, the Social Science Research Council, the Berkeley Center for Latin American and Caribbean Studies and the School of Architecture and Planning at the University of New Mexico</span></em></p>A smuggling crackdown has threatened the livelihoods of the people who are just scraping by in this South American arbitrage economy.Jennifer L. Tucker, Associate Professor of Community & Regional Planning, University of New MexicoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2187212023-12-12T19:17:01Z2023-12-12T19:17:01ZChina-Africa relations in 2023: key moments and events to remember<p>In a year when headlines have been dominated by conflict in Europe and the Middle East, and geo-economic tensions between China and the West, China-Africa relations were, in comparison, a steady and stable norm. </p>
<p>Having followed China-Africa relations for two decades, I wanted to flag a few key moments from this year. These reveal that the relations between China and the continent have focused on building momentum and deepening ties, especially when it comes to trade and the promotion of African exports. </p>
<p>They also highlight China’s growing commitment to supporting the development of African countries. </p>
<h2>China-Africa trade and the expo</h2>
<p>In June, the third <a href="https://eng.yidaiyilu.gov.cn/p/326222.html">China-Africa Economic and Trade Expo</a> was held in Changsha, Hunan province. </p>
<p>It’s the most intensive China-Africa trade event in the calendar because of its scale and focus. It’s also a chance for small and medium enterprises to be involved. </p>
<p>This year’s expo <a href="https://www.scmp.com/news/china/diplomacy/article/3226366/deals-down-hunans-china-africa-trade-expo-reaps-us10-billion">reportedly recorded</a> some 100,000 visitors and agreed some 120 projects worth a total of US$10.3 billion.</p>
<p>The expo allows face-to-face interaction to happen in the hope of developing commercial partnerships and sales. There were deals <a href="http://www.focac.org/zfzs/202306/t20230630_11106280.htm">around essential oils from Madagascar, gems from Zambia, wood carvings from Zimbabwe</a>, and flowers from Kenya. One Chinese food group <a href="https://english.news.cn/20230627/9efd6c4d936b415598b0632ce4e6d2b4/c.html">displayed</a> its first imported batch of Kenyan anchovies to seafood distributors. This helped catapult demand – on one day in September, <a href="http://www.news.cn/fortune/2023-09/07/c_1129848863.htm">52 tons</a> of dried wild Kenyan anchovies landed in Hunan for distribution across China.</p>
<p>There were a few important take-aways from the event: </p>
<ul>
<li><p>It flagged the emerging role of <a href="https://theconversation.com/chinas-africa-strategy-is-shifting-from-extraction-to-investment-driven-from-the-industry-rich-hunan-region-209044">Hunan</a> in China-Africa relations. Hunan is the source of a sizeable share of China’s own food supply. It’s also home to advanced agricultural processing and heavy industry capabilities. </p></li>
<li><p>There were high-level <a href="https://venturesafrica.com/a-slice-of-opportunity-benin-joins-chinas-fruit-export-market/">“green lanes” dialogues</a> where issues in clearing more African fruits, vegetables, and other African products for export to China were discussed. The aim of these dialogues was to support agricultural modernisation in Africa and increase export revenue. </p></li>
<li><p>The emerging Hunan-based <a href="http://www.enghunan.gov.cn/hneng/Government/Bulletin/202306/t20230608_29370776.html">“Africa Brand Warehouse”</a> project used the event to support the entry of more (106 specificially) African brands into major Chinese shopping malls</p></li>
</ul>
<h2>The China-Africa Leaders’ Dialogue</h2>
<p>In August President Xi Jinping visited South Africa for a <a href="https://brics2023.gov.za/">summit</a> of the five-country bloc (Brazil, Russia, India, China and South Africa), Brics. </p>
<p>Parallel to the Brics summit the <a href="https://www.thepresidency.gov.za/press-statements/south-africa-co-chair-china-africa-leaders-round-table-dialogue">China-Africa Leaders’ Dialogue</a> – a dialogue initiated by China and co-chaired by Presidents Xi and Cyril Ramaphosa – was held. </p>
<p>A couple of things stood out from the dialogue.</p>
<p>First, its emphasis on promoting <a href="https://www.thepresidency.gov.za/press-statements/south-africa-co-chair-china-africa-leaders-round-table-dialogue">African integration</a> and <a href="https://www.thepresidency.gov.za/press-statements/south-africa-co-chair-china-africa-leaders-round-table-dialogue">the participation</a> of African regional organisations that play key roles in fostering intra-African trade. Discussions focused on the African Continental Free Trade Area (AfCFTA) and trade-related infrastructure and policy.</p>
<p>Second, Xi <a href="https://www.kzaobao.com/shiju/20230826/145524.html">announced</a> three new plans for Africa relating to agriculture, industrialisation and talent development. The plans aim to address challenges in China-Africa economic relations, such as laggard agricultural productivity, lack of manufacturing and economic diversification, insufficient job creation and educational opportunities. They also aim to address hurdles in Africa’s development. </p>
<p>These actions speak to Xi’s <a href="https://nottingham-repository.worktribe.com/output/735319/the-gravity-of-chinas-african-export-promise">promise</a> to create a “new type of China-Africa strategic partnership”. </p>
<p>This involved the growth of trade, especially with respect to African exports to China. </p>
<p>It would also see a change in the structure of trade. A long-standing <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/twec.12229">pattern</a> is that Africa sells raw materials and buys manufactured goods, which entrenches the continent’s under-development. China is trying to move past this by buying more processed goods, and fostering services like tourism and finance. </p>
<h2>China’s foreign minister comes to Africa</h2>
<p>As has happened every year for at least the past 30 years, China’s foreign minister visited Africa. Qin Gang’s trip in January included visits to Ethiopia, Gabon, Angola, Benin and Egypt.</p>
<p>From my lens, Qin’s visit was conservative in its announcements and continued to demonstrate China’s commitment to the continent. </p>
<p>He cemented important bilateral and multilateral ties, for instance with the African Union and China-Arab relations. </p>
<p>One moment that stood out was the launch of the Horn of Africa Peaceful Development Concept, which aims to bring lasting peace and economic stability to countries of the conflict-afflicted region. This stands out because China has a
<a href="https://blogs.lse.ac.uk/africaatlse/2023/05/11/what-to-make-of-chinas-non-interference-policy-in-africa/">long-held foreign policy doctrine of non-interference</a>, and a much shorter history of US or European-style proactive roles in seeking to foster cross-country peace.</p>
<h2>Infrastructure changes around Lagos</h2>
<p>Various infrastructural developments around Lagos, Nigeria were a milestone in China-Africa relations this year. These will gradually change the scale with which Nigeria can trade with the world. </p>
<p>In April, Lekki Deep Sea Port – Nigeria’s first deep sea port – launched its commercial operations. It’s <a href="https://lekkiport.com/project-overview-structure/">administered</a> by Lekki Port LFTZ Enterprise Limited, a joint venture enterprise owned by a group of investors (comprising China Harbour Engineering Company Ltd and Singapore’s Tolaram Group), the Lagos state government and the federal government of Nigeria through the Nigerian Ports Authority.</p>
<p>The port, one of the largest in Africa, will eventually connect to Lagos’ Rail Mass Transit system. <a href="https://africa.cgtn.com/lagos-set-to-increase-train-trips-on-chinese-built-metro-rail/">The first phase of the rail system, the Blue Line, was opened in September</a>. </p>
<p>The Blue Line was <a href="https://eng.yidaiyilu.gov.cn/p/00L77SUF.html">built by</a> China’s Civil Engineering and Construction Corporation. Its corridor spans 13km and covers five stations. It’s the first rail infrastructure traversing Okokomaiko, a densely populated area of western Lagos, and the Marina district, notable for high-rise commercial offices. </p>
<h2>Into 2024</h2>
<p>Relations look set to keep evolving and growing into the new year. </p>
<p>Later in the year, a Forum on China-Africa Cooperation summit is due to be hosted by China. Typically the forum leads to announcements of new directions in China-Africa ties by both sides, and commercial deals being agreed. </p>
<p>Otherwise, there are some key bilateral anniversaries to be marked, such as the 60th anniversary of China-Tanzania and China-Zambia relations. In addition, China and Tanzania are expected to launch the flagship <a href="https://dailynews.co.tz/tz-sees-investment-fortunes/#google_vignette">East Africa Commercial and Logistics Centre project</a>. This is expected to expand trade and investment ties between China and other landlocked economies within the region.</p><img src="https://counter.theconversation.com/content/218721/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lauren Johnston does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Several key events highlighted the growing ties between China and Africa.Lauren Johnston, Associate Professor, China Studies Centre, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2179572023-11-21T18:01:59Z2023-11-21T18:01:59ZCanada-EU summit: Will Canada push for an end to cultural violence against seal hunters?<iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/canada-eu-summit-will-canada-push-for-an-end-to-cultural-violence-against-seal-hunters" width="100%" height="400"></iframe>
<p><a href="https://www.pm.gc.ca/en/news/news-releases/2023/10/30/canada-host-canada-european-union-summit-newfoundland">Canada is about to host European Union leaders</a> Charles Michel and Ursula von der Leyen at a summit in Newfoundland and Labrador aimed at emphasizing and strengthening Canadian and EU ties. </p>
<p>But it seems a discussion about the EU’s ban on seal product imports, <a href="https://environment.ec.europa.eu/topics/nature-and-biodiversity/trade-seal-products_en#:%7E:text=Since%202009%2C%20the%20Trade%20in,the%20EC%2DSeal%20products%20case.">implemented in 1983 and 2009 respectively</a> due to animal welfare concerns, is not on the agenda. </p>
<p>The EU and leading European nations <a href="https://www.cbc.ca/news/canada/newfoundland-labrador/canada-germany-hydrogen-partnership-nl-1.6559787">like Germany</a> are extremely interested in Newfoundland and Labrador, and Canada more broadly, for access to natural resources. </p>
<p>This interest creates an unprecedented diplomatic opportunity for Canada to put the sealing issue back on the table at the summit. Will Canada let this window of opportunity slip through its proverbial fingers? </p>
<h2>Why discuss sealing now?</h2>
<p>Newfoundland and Labrador <a href="https://doi.org/10.4324/9781003356158">is Ground Zero for anti-sealing activism</a>. </p>
<p>Generations of fishers and their families have endured decades of cultural violence from activists and their supporters. <a href="https://doi.org/10.22584/nr51.2021.002">They have experienced</a> death threats, <a href="https://www.ourcommons.ca/DocumentViewer/en/39-1/FOPO/meeting-22/evidence">threats to kidnap and murder their children</a>, attacks on the ice, racist slurs, xenophobia and stalking and intimidation from protesters and their supporters. </p>
<p>The 2005 documentary <a href="https://www.nfb.ca/film/my_ancestors_were_rogues_murderers/"><em>My Ancestors Were Rogues and Murderers</em></a> by Anne Troake, a Newfoundland filmmaker, highlighted the underrepresented experiences of Newfoundland and Labrador sealers.</p>
<p>The documentary uses Troake’s family experiences as the focal point and includes a profanity-strewn message left from an anti-sealing activist:</p>
<blockquote>
<p>“Would you like a meat hook stuck in your brain? Lay off the animal rights people. I think it’s … reprehensible. You people out there, you don’t even know whose money you’re living off of. You’re living off of central Canada and western Canada. You can’t even make your own … way in life. If you don’t like it, get the fuck out of our country, you fucking assholes.” </p>
</blockquote>
<p><a href="https://biblio.com.au/book/battle-lost-unsuccessful-attempt-save-seal/d/236523951?placement=morelikethis">These types of communications are commonly directed</a> to sealers and their families.</p>
<p>Troake, too, <a href="https://doi.org/10.14430/arctic77177">faced death threats, ethnic slurs and a brick thrown through her home window after releasing her documentary</a>. </p>
<p>The portrayal of sealers as slaughterers <a href="https://www.peta.org/category/campaigns/canadian-seal-slaughter/">is prominent online</a> and in some media coverage, as exemplified by stories in publications that include <a href="https://www.theguardian.com/world/2004/apr/13/animalwelfare.environment"><em>The Guardian</em></a> and <a href="https://www.straight.com/article-209222/end-commercial-canadian-seal-hunt-sight"><em>The Georgia Straight</em></a>. </p>
<h2>What is cultural violence?</h2>
<p>Broadly speaking, culture is <a href="https://doi.org/10.1111/j.1751-9004.2009.00248.x">a system of meanings and practices maintained over time by a group of people</a>.</p>
<p><a href="https://doi.org/10.1177/0022343390027003005">According to Norwegian sociologist Johan Galtung</a>, cultural violence means “aspects of culture … can be used to justify or legitimize direct or structural violence.” </p>
<p>Cultural violence is insidious because it “makes direct and structural violence look, even feel, right – or at least not wrong,” he adds.</p>
<p>Galtung, <a href="https://www.galtung-institut.de/en/home/johan-galtung/">the founder of peace and conflict studies</a>, argues that cultural violence is sometimes portrayed as non-violence, since direct and immediate violence or killings are avoided and it unfolds over a longer time period. But for victims, he argues, this means “the loss of freedom and identity instead of loss of life and limbs.”</p>
<h2>Relevance to Canada-EU trade relations</h2>
<p>The EU has participated in cultural violence against sealers. Its ban is the result of European politicians accepting, unreservedly, activist narratives that essentially portray sealers as monsters.</p>
<p><a href="https://www.ifaw.org/ca-en/projects/ending-the-commercial-seal-hunt-canada">The International Fund for Animal Welfare</a>, in fact, celebrates the fact that the EU ban on seal products occurred at its instigation. </p>
<p><a href="https://www.ctvnews.ca/canada/canada-loses-wto-appeal-eu-seal-products-ban-upheld-1.1833331?cache=yesclipId10406200text%2Fhtml%3Bcharset%3Dutf-80404%2F7.258454">Canada and the EU have fought</a> about the seal product ban before. In 2014, Canada lost its appeal to the World Trade Organization (WTO) on the legality of the ban. </p>
<p>The EU argued the ban is “necessary to protect public morals.” But the EU has issues with its own animal welfare track record. In 2018, <a href="https://op.europa.eu/webpub/eca/special-reports/animal-welfare-31-2018/en/#:%7E:text=We%20concluded%20that%20EU%20actions,to%20promote%20higher%20animal%20welfare">the European Court of Auditors</a> raised serious <a href="https://www.theguardian.com/environment/2018/nov/14/farm-animal-abuses-widespread-across-europe-warn-auditors">concerns over animal abuses in Europe’s farming industry</a>. </p>
<p>In 2023, <a href="https://www.nationalgeographic.com/animals/article/eu-frog-leg-trade"><em>National Geographic</em> reported the EU exhibited “extreme cruelty”</a> towards frogs. A report by the magazine on the frog leg trade found “millions of wild frogs are killed and exported to the EU each year … leading to inhumane practices and population declines of over-exploited species.”</p>
<h2>Sealing industry has evolved</h2>
<p>The EU has also failed to account for changes in the sealing industry. </p>
<p>Fisheries and Oceans Canada <a href="https://www.dfo-mpo.gc.ca/fisheries-peches/seals-phoques/humane-sans-cruaute-eng.html">states that 70 per cent of seals are now hunted with rifles</a>. This is a major shift from the use of clubs.</p>
<p>Additionally, the role of traditional knowledge in fisheries management is changing. <a href="https://www.dfo-mpo.gc.ca/science/documents/mammals-mammiferes/atlantic-seal-phoque-atlantique/appendix5-annex5/ASSTT-Final-report-English.pdf">Fisheries and Oceans Canada</a> now acknowledges that seals affect cod stocks <a href="https://www.cbc.ca/news/canada/newfoundland-labrador/cod-northern-status-1.5972503#:%7E:text=NL-,Seals%20not%20significantly%20affecting%20health%20of%20northern%20cod%20stocks%2C%20says,biomass%20of%20the%20iconic%20groundfish.">after decades of dismissing and downplaying local knowledge</a> on the subject. </p>
<p>Furthermore, the EU remains ambiguous on the difference between subsistence and commercial hunting, and it’s failed to acknowledge and accommodate non-Indigenous subsistence hunting traditions and cultural practices in its ban. </p>
<p>A discussion on the EU seal product ban needs to be reopened. The EU’s role in perpetrating cultural violence against working-class sealers and their families needs to be addressed. </p>
<p>The summit in Newfoundland and Labrador is a prime opportunity for it.</p><img src="https://counter.theconversation.com/content/217957/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Danita Catherine Burke does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The sealing industry has evolved but the EU’s ban on seal imports has contributed to the enduring cultural violence experienced by Canadian sealers.Danita Catherine Burke, Research Fellow, Center for War Studies, University of Southern DenmarkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2162532023-11-08T13:37:55Z2023-11-08T13:37:55ZFresh water is a hidden challenge − and opportunity − for global supply chains<figure><img src="https://images.theconversation.com/files/558062/original/file-20231107-15-72zegz.jpg?ixlib=rb-1.1.0&rect=65%2C5%2C3928%2C2646&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Cargo ships wait at the entrance to the Panama Canal in late September.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/cargo-ships-wait-at-the-entrance-of-the-panama-canal-at-news-photo/1687928473">Luis Acosta/AFP via Getty Images</a></span></figcaption></figure><p>Reports of <a href="https://www.nytimes.com/2023/11/01/business/economy/panama-canal-drought-shipping.html">lengthy shipping delays</a> for vessels traveling through the Panama Canal this year have highlighted the critical but often overlooked role that fresh water plays across global supply chains. Drier than normal conditions in Panama, brought on by El Niño, have <a href="https://www.bbc.com/news/business-67281776">left the region drought-stricken</a> and water levels in the locks that feed the canal lower than normal. This has led to fewer ships being able to pass through the canal each day: only <a href="https://apnews.com/article/panama-canal-locks-reduction-31-ships-061ce1797cb9b0fb8ea7ab44ba04bdf1.html">31 ships</a> currently, compared with 36 to 38 under normal conditions. This means longer waits to move products through the canal and onto store shelves. </p>
<p>The slowdown at the Panama Canal shows how access to fresh water is key to the way goods are made and shipped, <a href="https://www.cnn.com/2023/08/26/economy/panama-canal-supply-chain/index.html">affecting everything</a> from the price of groceries to retail forecasts for the upcoming holiday shopping season. As a <a href="https://harbert.auburn.edu/directory/dustin-cole.html">professor of supply chain management</a>, I think businesses would be wise to pay closer attention to this issue.</p>
<p>But first, you might ask: What does fresh water have to do with ocean freight? Plenty, it turns out.</p>
<h2>Water, water everywhere, and not enough to share</h2>
<p>The Panama Canal is a freshwater connection between two oceans – not a saltwater link, as one might assume. A series of locks on each side of the canal raise cargo freighters nearly 100 feet to human-made lakes that extend across Panama’s isthmus and lower them down to sea level on the other side. </p>
<p>Each crossing by a ship requires <a href="https://1997-2001.state.gov/regions/wha/panama/991206_faqs.html">52 million gallons</a> of fresh water from lakes, rivers and streams across this small country. This creates a trade-off between preserving water for local needs and using it to allow ships to traverse the canal. Less water allocated to the canal means fewer ships can pass through.</p>
<p>This isn’t an isolated phenomenon. Periodic low water levels in the <a href="https://www.wsj.com/articles/mississippi-river-careens-from-floods-to-low-water-threatening-barge-traffic-a6d5758d">Mississippi River</a> and the <a href="https://www.reuters.com/business/low-water-hampers-rhine-river-shipping-germany-2023-06-19/">Rhine River</a> in Germany have impeded barge traffic for years, disrupting supply chains while stoking debate about how to divide limited amounts of fresh water. Recent plans by communities in northern Colorado to <a href="https://insideclimatenews.org/news/10092023/colorado-river-upstream-use-it-before-they-lose-it-2/">build their own reservoirs</a> on tributaries of the Colorado River highlight questions about who owns access to local waterways and how this resource is governed.</p>
<h2>An ancient challenge</h2>
<p>The need to manage water resources isn’t new, with complex water management systems <a href="https://education.nationalgeographic.org/resource/roman-aqueducts/">dating back to the Roman Empire</a> and <a href="https://eal.isas.illinois.edu/projects/ancient-water-management/">even earlier</a>. Humankind has made great progress on water management over the centuries, but in recent years the issue has often taken a back seat to other pressing environmental concerns such as global warming. </p>
<p>Water management is complicated by the fact that businesses and communities sometimes find themselves in conflict: Businesses want to use water for their operations, while communities want to preserve water supplies to ensure that residents’ basic needs are met. At the same time, communities also need the jobs and services that businesses provide. Examples such as the Panama Canal highlight this tension.</p>
<p>Balancing these seemingly contrary needs calls for a deeper look into how much water is used in the making of products people buy and use every day.</p>
<p>As my colleagues and I show in a recent journal article, <a href="https://doi.org/10.1111/poms.13923">water is an important component</a> of almost everything people buy. For example, roughly <a href="https://interestingengineering.com/science/industrial-activity-is-draining-the-world-of-fresh-water">2,600 gallons of water</a> goes into making the fabric for a single pair of jeans. From growing cotton for the fibers needed to manufacturing the denim and getting those jeans onto shelves at The Gap, more and more water is embedded into each pair as it moves through the supply chain. </p>
<p>Essentially, businesses use water to transport water embedded in virtually all products they sell. This is why businesses have more than purely altruistic reasons to address water-related problems: It isn’t just good for society but also their own operations. A lack of water can hamper production and disrupt the supply chains that businesses rely on.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/JS_pnCWNb4Y?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Inside the world’s largest cargo shipping bottleneck. | WSJ.</span></figcaption>
</figure>
<h2>Solutions for businesses</h2>
<p>There are a number of ways in which businesses can improve their water management to reduce their own consumption – and costs – while limiting their exposure to water risks.</p>
<p>First, companies should realize that not everything requires clean water. Wastewater from one process can be used for another that doesn’t require clean water. Similarly, not every process pollutes water, so reuse is easy for wastewater resulting from those processes, such as water used for cooling.</p>
<p>Second, firms can share wastewater between facilities for reuse, a concept called <a href="https://www.sciencedirect.com/topics/earth-and-planetary-sciences/industrial-ecology#">industrial ecology</a>. For example, nutrient-rich water from food production can be used for farm irrigation rather than being discharged.</p>
<p>And third, since water is an excellent medium for heat transfer, rather than trying to cool one area and heat another, companies can connect the systems. For example, global aluminum giant Novelis is deploying hot water used in the casting process at one of its plants in Europe to <a href="https://www.novelis.com/district-heating-with-casting-water/">heat a neighboring building</a>.</p>
<p>Opportunities abound for improving management of fresh water – one of our most precious resources. While stronger government regulations and expanded reporting requirements will help, decisions by businesses themselves can move that needle even more.</p>
<p>For those who do, their standing in the communities in which they operate will surely benefit – as will their bottom lines.</p><img src="https://counter.theconversation.com/content/216253/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dustin Cole does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Smart water management isn’t just good for the earth. It’s good for business.Dustin Cole, Assistant Professor of Supply Chain Management, Auburn UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2137792023-10-09T13:32:18Z2023-10-09T13:32:18ZClimate hazards aren’t restricted by borders – African countries have taken a big step to address this<p>Climate risks can be complex to deal with because they don’t respect country borders. Hazards in one region can have negative repercussions in another. These are known as transboundary climate risks, and they’re a growing concern. They require coordinated, multinational responses, which can be a challenge given the different priorities and capabilities of each country.</p>
<p>A transboundary climate risk could be due to a shared ecosystem, such as a river basin. For instance the Nile river, which flows through 11 countries, can experience variations in water availability due to changes in the weather. This will affect the millions who depend on it. </p>
<p>Transboundary climate risks can also cross continents and oceans and <a href="https://adaptationwithoutborders.org/knowledge-base/adaptation-without-borders/an-african-perspective-on-transboundary-and-cascading-climate-risks">spawn crises</a> on the other side of the world. These could range from <a href="https://www.who.int/emergencies/situations/drought-food-insecurity-greater-horn-of-africa">food and water shortages</a> to threats to <a href="https://www.sei.org/publications/impacts-on-global-food-trade-networks/">trade</a> and <a href="https://www.france24.com/en/africa/20221106-crisis-on-the-nile-global-warming-and-overuse-threaten-africa-s-longest-river">energy</a>, widening <a href="https://www.imf.org/en/Publications/fandd/issues/2021/09/climate-change-and-inequality-guivarch-mejean-taconet">inequalities</a>, forced <a href="https://adaptationwithoutborders.org/knowledge-base/human-mobility/addressing-the-land-degradation-migration-nexus">migrations</a> and even <a href="https://www.mistra-geopolitics.se/publications/climate-change-trade-and-global-food-security/">geopolitical conflicts</a>. </p>
<p>For instance a drought in East Africa could affect tea production in Kenya. This would lead to an increase in prices for tea drinkers in importing countries, like the UK. Likewise, a typhoon could affect manufacturers in south-east Asia. This could disrupt the supply of electronics to African markets and lead to price hikes or shortages.</p>
<p>Africa is particularly vulnerable. Trade routes, supply chains and shared ecosystems span across the continent. A climate-induced disruption in one country can easily ripple into cascading effects in its neighbours. The coordinated management of transboundary climate risks is both a challenge and a necessity.</p>
<p>At the recent <a href="https://africaclimatesummit.org/">Africa climate summit</a> in Kenya, the African Union and other African stakeholders presented the <a href="https://adaptationwithoutborders.org/knowledge-base/adaptation-without-borders/a-roadmap-for-african-resilience">Roadmap for African Resilience</a> to address this.</p>
<p>The roadmap contains a series of actions meant to enhance coordination between the regional economic communities and member states in addressing and managing transboundary and cascading climate risks. This is an objective of the African Union’s <a href="https://au.int/en/documents/20220628/african-union-climate-change-and-resilient-development-strategy-and-action-plan">Climate Change and Resilient Development Strategy and Action Plan 2022–2032</a>.</p>
<p>Historically, adaptation efforts have largely addressed localised impacts, such as rising sea levels and coastal communities or frequent droughts and their impact on agricultural yields.</p>
<p>As an <a href="https://www.sei.org/people/richard-j-t-klein/">expert</a> on adaptation to climate change, I believe that the significance of this roadmap lies in its comprehensive, continent-wide approach. It recognises that shared challenges require shared solutions. And it underscores Africa’s commitment to taking charge of its climate destiny. This makes the roadmap valuable in the evolving discourse on global climate resilience.</p>
<h2>Unified front</h2>
<p>The Roadmap for African Resilience outlines 25 crucial actions to fortify Africa’s resilience against transboundary climate risks. It has a focus on the risks posed to global supply chains, energy and food markets. </p>
<p>The roadmap’s actions can be grouped into four general plans:</p>
<ul>
<li><p>Recognise the risks: this includes a pan-African transboundary climate risk assessment and the development of risk indicators.</p></li>
<li><p>Govern together: identify the transboundary risks that each country considers most important. These will be included in different areas of policy.</p></li>
<li><p>Implement Africa-wide adaptation: create a plan to find the best ways to strengthen communities against transboundary climate risks. Just resilience principles are embedded into this, such as prioritising the needs of the most vulnerable people and upholding human rights and cultural values. The roadmap also kickstarts a programme to put these ideas into action.</p></li>
<li><p>Mobilise resources for resilience: getting more money from multiple countries to support climate action, making sure private investments match public goals by emphasising systemic resilience, and building capacity to invest together.</p></li>
</ul>
<p>The Roadmap for African Resilience thus offers a holistic, pan-African vision. It not only identifies transboundary climate risks but also proposes a structured approach for collective action. </p>
<p>Implementing the roadmap requires the active involvement of a range of African organisations. These include the United Nations Economic Commission for Africa, the African Union Commission, the African Union Development Agency – New Partnership for Africa’s Development, the African Group of Negotiators Expert Support and the Regional Economic Communities in Africa. In addition, national governments, the private sector, civil society and academia play crucial roles.</p>
<p>The challenge will lie in ensuring cohesive action among these entities. Especially when adaptation to climate risks is a relatively new endeavour for some of the above organisations.</p>
<h2>Significant step</h2>
<p>The inaugural Africa Climate Summit marked a significant step for Africa’s collective commitment to resilience. The roadmap acknowledges the reality of Africa’s intertwined destinies and the need for collaborative solutions to cross-border climate risks.</p>
<p>Given the borderless nature of climate risks, global cooperation must be at the heart of adaptation initiatives.</p>
<p><em>Brenda Ochola, communications and impact officer with the Stockholm Environment Institute, contributed to the writing of this article.</em></p><img src="https://counter.theconversation.com/content/213779/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard J.T. Klein receives funding from the European Commission's Directorate-General for Climate Action (DG CLIMA) and the Swedish research council for sustainable development Formas. He is a member of the steering committee of Adaptation Without Borders—a global partnership working to strengthen systemic resilience to cross-border climate impacts. </span></em></p>Transboundary climate risks can cross borders, continents and oceans to affect communities on the other side of the world. Africa’s new roadmap seeks to address this.Richard J.T. Klein, Senior Research Fellow and Team Leader, International Climate Risk and Adaptation, Stockholm Environment InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2146332023-09-29T03:32:07Z2023-09-29T03:32:07ZForeign policy has been missing from NZ’s election campaign – voters deserve answers to these big questions<p>Tax cuts, crime, the cost of living, potholes and co-governance … these and various other issues are now familiar to most voters. But there has been one major election area missing the serious debate it needs: foreign policy.</p>
<p>Whichever parties form the next government, and whoever becomes prime minister, they will also be charged with negotiating New Zealand’s place in a dynamic and changing world.</p>
<p>Military and security alliances, trade, climate change and foreign aid are all presenting significant challenges. So here are some of the questions any incoming administration should be able to answer to the satisfaction of voters.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1707507978453074023"}"></div></p>
<h2>Defence and security</h2>
<p>Having recently deepened military relationships with <a href="https://www.rnz.co.nz/news/political/488205/australia-new-zealand-sign-army-cooperation-deal">Australia</a> and <a href="https://www.beehive.govt.nz/release/closer-defence-cooperation-between-new-zealand-and-japan">Japan</a>, New Zealand needs to be clear about whether it will join “pillar two” of the AUKUS security pact between the US, UK and Australia.</p>
<p>Directly related to the AUKUS question are the hard military implications: who or what would New Zealand fight for? Were the US and China to square off over Taiwan, with Australia (New Zealand’s only <a href="https://www.dfat.gov.au/about-us/publications/historical-documents/Pages/volume-07/26-australian-new-zealand-agreement-1944">formal ally</a>) drawn into such a conflict, would New Zealand send military help?</p>
<p>Less speculatively, will New Zealand continue to send naval assets to support exercises aimed at defending freedom of the seas, given the very recent history of Chinese <a href="https://www.stuff.co.nz/national/politics/300907470/nz-frigate-confronted-by-chinese-navy-in-south-china-seas-investigation-reveals">military confrontation</a> in the disputed South China Sea?</p>
<p>The Pacific is also in a state of geopolitical flux. New Zealand has upgraded its military relationship with <a href="https://www.beehive.govt.nz/release/new-zealand-and-fiji-strengthen-defence-relationship">Fiji</a>, and the <a href="https://worldview.stratfor.com/situation-report/us-papua-new-guinea-full-text-defense-pact-reveals-significant-us-presence-incoming">US has secured</a> “unimpeded access” to strategic ports and airports in Papua New Guinea. But how does New Zealand respond to the “<a href="https://english.news.cn/20230923/1875e6d9e27f40bb961b234acd935c60/c.html">comprehensive partnership</a>” just announced between China and Timor-Leste covering military exchanges, training and exercises?</p>
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Read more:
<a href="https://theconversation.com/talk-of-a-new-cold-war-is-overheated-but-nz-faces-complex-challenges-in-the-era-of-strategic-competition-212360">Talk of a new Cold War is overheated – but NZ faces complex challenges in the era of ‘strategic competition’</a>
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<h2>Ukraine and defence budgets</h2>
<p>The war in the Ukraine will also demand attention. While New Zealand is not directly involved, it provides military training, financial, legal and humanitarian <a href="https://www.beehive.govt.nz/release/increase-nz-support-ukraine">assistance</a>. Does this continue or ramp up, or does the level of aid depend on what New Zealand’s allies do?</p>
<p>Further to that, what is New Zealand’s official position on what peace would look like for Ukraine? Would New Zealand support a peace deal that involved territory trade-offs or did not include the prosecution of war crimes?</p>
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Read more:
<a href="https://theconversation.com/aukus-is-already-trialling-autonomous-weapons-systems-where-is-nzs-policy-on-next-generation-warfare-207201">AUKUS is already trialling autonomous weapons systems – where is NZ's policy on next-generation warfare?</a>
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<p>Related to that is the uncertainty over US commitment to supporting Ukraine, given some Republican resistance. New Zealand’s next government will face potentially very unpredictable outcomes from the US presidential election in November 2024. What happens if Donald Trump returns to power?</p>
<p>Many of New Zealand’s key allies (including NATO countries) are spending or aiming to spend 2% of GDP (or more) on their militaries. New Zealand currently only spends about 1.5% of GDP. Ideally, voters would know whether that will increase, by how much, and by when. </p>
<p>More specifically, would any extra spending see the New Zealand Defence Force adopt militarised artificial intelligence technologies?</p>
<h2>Trade and sanctions</h2>
<p>An open, predictable and rules-based global economy can no longer be taken for granted. Regional trade integration has been disrupted, with a shift towards unilateral trade policies and agreements. </p>
<p>What is New Zealand’s response, and will local exporters be encouraged and helped to diversify their markets?</p>
<p>Beyond the simple mantras of negotiating new trade agreements with India or the US, how will that diversification and continued growth be achieved?</p>
<p>Will New Zealand support <a href="http://nz.china-embassy.gov.cn/eng/zxgxs/202308/t20230817_11128028.htm">China’s application</a> to join the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership – or would it back <a href="https://www.ey.gov.tw/otnen/6035C94D1B8705A1">Taiwan’s</a>?</p>
<p>Will New Zealand continue to support the use of sanctions outside the United Nations’ system (such as those <a href="https://www.legislation.govt.nz/act/public/2022/0006/latest/whole.html">imposed on Russia</a>), and will it consider extending sanctions to countries for grievous human rights abuses (such as those <a href="https://www.beehive.govt.nz/release/new-sanctions-and-travel-bans-iran#:%7E:text=New%20Zealand%20has%20now%20sanctioned,death%2C%E2%80%9D%20Nanaia%20Mahuta%20said.">imposed on Iran</a>)?</p>
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Read more:
<a href="https://theconversation.com/the-number-8-wire-days-for-nzs-defence-force-are-over-new-priorities-will-demand-bigger-budgets-211182">The 'number 8 wire' days for NZ's defence force are over – new priorities will demand bigger budgets</a>
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<h2>Climate and foreign aid</h2>
<p>Climate change presents extreme challenges domestically and internationally. New Zealand’s overall performance is rated “highly insufficient” by the independent <a href="https://climateactiontracker.org/countries/new-zealand/">Climate Action Tracker</a>. So what will the next government do at a global level?</p>
<p>Where does New Zealand stand on mechanisms such as the <a href="https://www.greenclimate.fund/">Green Climate Fund</a>, the world’s largest multilateral fund dedicated to helping developing countries address the climate crisis, and will it increase <a href="https://www.greenclimate.fund/sites/default/files/document/1706-status-pledges-website-aug-31-2023.pdf">pledged funding</a> for it?</p>
<p>And will New Zealand continue to believe in and support the <a href="https://www.globalmethanepledge.org/#about">Global Methane Pledge</a>, a joint US-European Union initiative to reduce global methane emissions by at least 30% from 2020 levels by 2030?</p>
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Read more:
<a href="https://theconversation.com/new-zealands-strategic-priority-in-the-indo-pacific-is-not-aukus-its-helping-to-defeat-russia-in-ukraine-213354">New Zealand’s strategic priority in the Indo-Pacific is not AUKUS – it's helping to defeat Russia in Ukraine</a>
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<p>The UN sets a target for all developed nations to give 0.7% of their gross national income as aid to developing countries, but New Zealand only manages to give <a href="https://www.oecd.org/dac/financing-sustainable-development/development-finance-standards/official-development-assistance.htm">0.23%</a> – well below the <a href="https://www.oecd-ilibrary.org/sites/10883ac5-en/index.html?itemId=/content/publication/10883ac5-en">OECD average</a>. Will the next government seek to increase or even decrease this? And would it support the creation of a regional development bank or cooperative aid projects with China?</p>
<p>Finally, New Zealand will need to confirm if it will keep taking <a href="https://www.immigration.govt.nz/about-us/what-we-do/our-strategies-and-projects/supporting-refugees-and-asylum-seekers/refugee-and-protection-unit/new-zealand-refugee-quota-programme">1,500 refugees</a> annually.</p>
<p>These are not easy questions. But the New Zealand public should know the answers before they vote – and before the next government positions the country in an increasingly turbulent global order.</p><img src="https://counter.theconversation.com/content/214633/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alexander Gillespie does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>From the war in Ukraine and China’s role in the Pacific, to multi-billion-dollar military decisions, New Zealand will face huge challenges during the next term of government.Alexander Gillespie, Professor of Law, University of WaikatoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2105072023-08-06T08:47:35Z2023-08-06T08:47:35ZAn expanded BRICS could reset world politics but picking new members isn’t straightforward<figure><img src="https://images.theconversation.com/files/540476/original/file-20230801-18384-y0dg77.jpg?ixlib=rb-1.1.0&rect=16%2C127%2C2813%2C1757&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">President Cyril Ramaphosa will host the 15th BRICS Summit in Johannesburg.</span> <span class="attribution"><span class="source">Government Communication and Information System</span></span></figcaption></figure><p>Eager to <a href="https://lmc.icds.ee/lennart-meri-lecture-by-fiona-hill/">escape perceived western domination</a>, <a href="https://www.voanews.com/a/more-countries-want-to-join-brics-says-south-africa-/7190526.html#:%7E:text=Argentina%2C%20Iran%2C%20Saudi%20Arabia%20and,nations%20have%20in%20the%20organization.">several countries</a> – mostly in the global south – are looking to join the <a href="https://brics2023.gov.za/#">Brics</a> bloc. The five-country bloc (Brazil, Russia, India, China and South Africa) is also looking to grow its global partnerships. </p>
<p>What <a href="https://www.gov.za/events/fifth-brics-summit-general-background">began in 2001</a> as an acronym for four of the fastest growing states, BRIC (Brazil, Russia, India and China), is projected to account for 45% of global GDP in purchasing power parity terms by 2030. It has evolved into a political formation as well.</p>
<p>Crucial to this was these countries’ decision to form their own club <a href="http://infobrics.org/page/history-of-brics/">in 2009</a>, instead of joining an expanded G7 as envisioned by former Goldman Sachs CEO <a href="https://www.goldmansachs.com/intelligence/archive/building-better.html">Jim O’Neill</a>, who coined the term “Bric”. <a href="https://link.springer.com/book/10.1007/978-3-030-97397-1">Internal cohesion</a> on key issues has emerged and continues to be refined, despite challenges.</p>
<p>South Africa joined the group after a Chinese-initiated invitation <a href="https://www.gov.za/events/fifth-brics-summit-general-background">in 2010</a>; a boost for then president Jacob Zuma’s administration, which was eager to pivot further to the east. The bloc also gained by having a key African player and regional leader. </p>
<p>Ever since, the grouping has taken on a more pointedly political tone, particularly on the need to <a href="https://www.gov.za/speeches/10th-brics-summit-johannesburg-declaration-27-jul-2018-0000#:%7E:text=We%20recommit%20our%20support%20for,democracy%20and%20the%20rule%20of">reform global institutions</a>, in addition to its original economic raison d’etre.</p>
<p>The possibility of its enlargement has dominated headlines in the run up to its 15th summit in Johannesburg <a href="https://brics2023.gov.za/about-the-summit/">on 22-24 August</a>. </p>
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Read more:
<a href="https://theconversation.com/when-two-elephants-fight-how-the-global-south-uses-non-alignment-to-avoid-great-power-rivalries-199418">When two elephants fight: how the global south uses non-alignment to avoid great power rivalries</a>
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<p>We are political scientists whose <a href="https://www.barnesandnoble.com/w/the-political-economy-of-intra-brics-cooperation-siphamandla-zondi/1140951138">research interests</a> include <a href="https://link.springer.com/book/10.1007/978-3-030-62765-2">changes</a> to the global order and emerging alternative centres of power. In our view, it won’t be easy to expand the bloc. That’s because the group is still focused on harmonising its vision, and the potential new members do not readily make the cut. </p>
<p>Some may even bring destabilising dynamics for the current composition of the formation. This matters because it tells us that the envisioned change in the global order is likely to be much slower. Simply put, while some states are opposed to western <a href="https://www.fmprc.gov.cn/mfa_eng/wjbxw/202302/t20230220_11027664.html">hegemony</a>, they do not yet agree among themselves on what the new alternative should be. </p>
<h2>Evolution of BRICS</h2>
<p>BRICS’ overtly political character <a href="https://link.springer.com/chapter/10.1007/978-3-030-62765-2_1">partially draws</a> on a long history of non-alignment as far back as the <a href="https://www.britannica.com/event/Bandung-Conference">Bandung Conference of 1955</a>. It was attended mostly by recently decolonised states and independence movements intent on asserting themselves against Cold War superpowers – the Soviet Union and the United States. </p>
<p>BRICS has come to be viewed as <a href="https://journals.sagepub.com/doi/full/10.1177/13540661231183352">challenging the counter hegemony</a> of the US and its allies, seen as meddling in the internal affairs of other states. </p>
<p>Reuters estimates that <a href="https://www.reuters.com/world/more-than-40-nations-interested-joining-brics-south-africa-2023-07-20/#:%7E:text=South%20African%20officials%20want%20BRICS,Kazakhstan%20have%20all%20expressed%20interest.">more than 40 states</a> are aspiring to join BRICS. South African diplomat Anil Sooklal says 13 had <a href="https://www.washingtonpost.com/business/energy/2023/05/28/how-brics-became-a-real-club-and-why-others-want-in/5caecc7e-fdb7-11ed-9eb0-6c94dcb16fcf_story.html">formally applied</a> by May 2023.</p>
<p>Many, though not all, of the aspiring joiners have this overtly political motivation of countering US hegemony. The other important incentive is access to funds from the BRICS’ <a href="https://www.ndb.int/projects/">New Development Bank</a>. This is especially pronounced in the post-COVID climate in which many economies are <a href="https://news.un.org/en/story/2023/05/1136727#:%7E:text=Prospects%20for%20a%20robust%20global,Prospects%20report%2C%20released%20on%20Tuesday.">yet to fully recover</a>. Of course the two can overlap, as in the case of Iran.</p>
<p>The notable applicants have <a href="https://www.reuters.com/world/europe/belarus-says-it-has-applied-join-brics-club-russian-ria-agency-2023-07-25/">included</a> Saudi Arabia, Belarus, <a href="https://theconversation.com/ethiopia-wants-to-join-the-brics-group-of-nations-an-expert-unpacks-the-pros-and-cons-209141">Ethiopia</a>, <a href="https://www.reuters.com/world/americas/argentina-says-has-chinas-support-join-brics-group-2022-07-07/">Argentina</a>, <a href="https://www.silkroadbriefing.com/news/2022/11/09/the-new-candidate-countries-for-brics-expansion/">Algeria, Iran</a>, Mexico, and <a href="https://www.aa.com.tr/en/turkiye/turkiye-obvious-nation-for-expanded-brics-says-leading-economist/2896122">Turkey</a>. </p>
<h2>Expanded BRICS</h2>
<p>A strategically expanded BRICS would be seismic for the world order, principally in economic terms. </p>
<p>Key among the club’s reported priorities is <a href="https://foreignpolicy.com/2023/04/24/brics-currency-end-dollar-dominance-united-states-russia-china/">reduction of reliance</a> on the US dollar (“de-dollarisation” of the global economy). One of the hurdles to this is the lack of buy-in by much of the world. Though some states may disagree with the dollar’s dominance, they still see it as the most reliable.</p>
<p>Given the extent of globalisation, it’s unlikely that there will be attempts to chip away at the west’s access to strategic minerals and trade routes as happened during the <a href="https://digitalarchive.wilsoncenter.org/document/speech-president-nasser-alexandria-july-26-1956-extract">Suez Crisis of 1956</a>, at the height of the Cold War.</p>
<p>Instead, the new joiners would likely use their new BRICS membership to better bargain with their western partners, having more options on hand.</p>
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Read more:
<a href="https://theconversation.com/ethiopia-wants-to-join-the-brics-group-of-nations-an-expert-unpacks-the-pros-and-cons-209141">Ethiopia wants to join the BRICS group of nations: an expert unpacks the pros and cons</a>
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<p>Herein lies the challenge (and the paradox) with BRICS expansion. On one hand, the grouping is not yet offering anything concrete to justify such drastic measures as de-dollarisation. On the other, the current five members also need to be selective about who they admit.</p>
<p>Among the considerations must surely be the track record of the applicants as well as their closeness to the west. The experience of having had a right-wing leader such as former Brazilian president <a href="https://theconversation.com/brazils-jair-bolsonaro-is-devastating-indigenous-lands-with-the-world-distracted-138478">Jair Bolsonaro</a> in its midst must have been a lesson about the need to be circumspect when admitting new members.</p>
<h2>Weighing the likely contenders</h2>
<p>In this regard, aspirants such as Saudi Arabia and Mexico seem the least likely to make the cut in the short term. That’s despite the Saudis’ oil wealth and Mexico’s <a href="https://www.voanews.com/a/obrador-mexico-first-leftist-president-in-decades/4463520.html">leftist-progressive</a> leader Andres Manuel Lopez Obrador. Although they might be currently experiencing rocky relations with Washington, they have proven to be capable of rapprochement following previous disagreements with the US, with which they seem inextricably intertwined. </p>
<p>Saudi Arabia has a long-term military relationship with the US, while Mexico is the US’s <a href="https://www.dallasfed.org/research/economics/2023/0711#:%7E:text=and%20border%20region-,Mexico%20seeks%20to%20solidify%20rank%20as%20top,partner%2C%20push%20further%20past%20China&text=Mexico%20became%20the%20top%20U.S.,four%20months%20of%20this%20year.">number-one trading partner</a>. </p>
<p>Of equal importance in the evaluation of potential new members is the relationship the aspirants have with the existing BRICS members. This is because another crucial lesson has been the tiff between two of its largest members, <a href="https://journals.sagepub.com/doi/10.1177/20578911221108800?icid=int.sj-abstract.citing-articles.1">China and India</a>, over their disputed border. As a result of the uneasy relationship between two of its members, the bloc has become alert to the importance of <a href="https://onlinelibrary.wiley.com/doi/epdf/10.1111/1758-5899.13010">direct bilateral relations and dispute resolution</a> among its constituent leaders.</p>
<p>Among the applicants, Saudi Arabia, which has had a fractious relationship with Moscow in the past, seems to face an uphill climb. It also has difficult relations with Iran, another applicant, despite their recent rapprochement.</p>
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<a href="https://theconversation.com/south-africas-role-as-host-of-the-brics-summit-is-fraught-with-dangers-a-guide-to-who-is-in-the-group-and-why-it-exists-206898">South Africa's role as host of the BRICS summit is fraught with dangers. A guide to who is in the group, and why it exists</a>
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<p>The country which seems the most suitable to join BRICS for ideological reasons, and will expand the bloc’s footing in the Caribbean, is Cuba. It enjoys strong ties with the existing members. It also has solid “counter-hegemonic” credentials, having been the bête noire of the US for more than 60 years. </p>
<p>Cuba is also a leader in the Latin American left and enjoys strong ties with many states in Central and South America (particularly with Guatemala, <a href="https://latinarepublic.com/2022/07/20/honduras-and-cuba-sign-a-memorandum-to-strengthen-bilateral-relations/">Honduras</a>, <a href="https://www.plenglish.com/news/2022/07/27/nicaraguan-fm-described-relations-with-cuba-as-endearing/">Nicaragua</a> and <a href="https://www.wilsoncenter.org/publication/venezuela-and-cuba-ties-bind">Venezuela</a>). Membership would boost its influence. </p>
<h2>Character matters</h2>
<p>If an expanded BRICS is to be an agent for change on the world scene, it will need to be capable of action. Having rivals, or states that are at least ambivalent towards each other, seems anathema to that.</p>
<p>Eager to proceed cautiously and expand strategically, the current BRICS states seems likely, at least in the short term, to pursue a <a href="https://www.silkroadbriefing.com/news/2022/11/09/the-new-candidate-countries-for-brics-expansion/">BRICS-plus</a> strategy. In other words, there may emerge different strata of membership, with full membership granted to states that meet the group’s criteria over time. </p>
<p>It is thus not mere expansion, but the character of the expansion which will guide the five principals on whether they grow from that number.</p><img src="https://counter.theconversation.com/content/210507/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Siphamandla Zondi is affiliated with the University of Johannesburg. </span></em></p><p class="fine-print"><em><span>Bhaso Ndzendze does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It is not mere expansion, but the character of the expansion which will guide the five Brics countries on whether they admit new members.Bhaso Ndzendze, Associate Professor (International Relations), University of JohannesburgSiphamandla Zondi, Acting Director: Institute for Pan-African Thought & Conversation, University of JohannesburgLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2104542023-07-26T23:25:51Z2023-07-26T23:25:51ZChris Barrett has a formidable job ahead as the new Productivity Commission chief<p>This week’s appointment of Wayne Swan’s former chief of staff <a href="https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/new-chair-productivity-commission">Chris Barrett</a> to head the Productivity Commission puts the annual <a href="https://www.pc.gov.au/ongoing/trade-assistance/2021-22">Trade and Assistance Review</a> it released this month under a more searching spotlight than usual.</p>
<p>Remarkably, the Commission used the review to target one of the key policies on which the Albanese government was elected. With Chalmers signalling plans for a “<a href="https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/address-chifley-research-centre-conference-national-press-club">new focus</a>”, it might turn out to have been one of the last chances for the “old” Productivity Commission to say (again) what it thinks.</p>
<p>The Commission doesn’t like (and has never liked) <a href="https://www.aumanufacturing.com.au/rescuing-the-productivity-commission-from-itself-by-phillip-toner-and-roy-green">industrial policy</a> – the idea of governments supporting industries in order to help them grow, and where possible to participate in global markets and value chains. </p>
<p>Its Trade and Assistance Review suggests it regards the government’s approach to tackling climate change and the energy transition as an industrial policy in all but name. It wants it subject to its gold standard scrutiny for any misallocation of resources. </p>
<h2>Climate change and energy sticking points</h2>
<p>How disappointing it must have been to have nothing as ambitious to scrutinise under the previous government. Except of course for the <a href="https://www.afr.com/politics/federal/green-tinged-miners-say-it-s-too-early-to-dump-diesel-rebate-billions-20210502-p57o8m">$7.9 billion</a> a year diesel fuel tax rebate, primarily for mining companies, which the Commission’s review studiously omits to treat as support. </p>
<p>The Commission takes particular issue with the government’s intention to promote <a href="https://www.afr.com/policy/economy/labor-s-battery-dream-to-cost-taxpayers-more-than-it-earns-20230719-p5dpiu">battery manufacturing</a> in Australia, an idea with merit given Australia produces 50% of the world’s lithium, has abundant energy to process it, exports almost all of it, and captures as little as <a href="https://www.austrade.gov.au/ArticleDocuments/5572/Lithium-Ion%20Battery%20Value%20Chain%20report.pdf.aspx">0.53%</a> of its final value.</p>
<p>The thinking is that Australian industry might for once move up the value chain and begin the task of diversifying our <a href="https://www.uts.edu.au/acri/research-and-opinion/research-reports/australias-export-mix-industrial-base-and-economic-resilience-challenge">narrow trade and industrial structure</a>, based as it is on the export of unprocessed raw materials.</p>
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<a href="https://theconversation.com/chris-barrett-becomes-new-head-of-the-productivity-commission-as-jim-chalmers-flags-fresh-focus-210277">Chris Barrett becomes new head of the Productivity Commission, as Jim Chalmers flags fresh focus</a>
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<p>In a world where the biggest gains from trade are in knowledge-driven goods and services, a resources dependent industrial structure lacks the economic complexity to achieve these gains, and is increasingly vulnerable to supply chain shocks. </p>
<p>Australia has fallen to <a href="https://atlas.cid.harvard.edu/rankings/country/">91 out of 133 countries</a> in the Harvard economic complexity ranking, which measures the diversity and research intensity of a nation’s export mix, just ahead of Namibia.</p>
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<h2>Australia’s economic complexity is sinking</h2>
<p><em>Ranking out of 133 countries</em></p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/539474/original/file-20230726-19-4rzyn1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/539474/original/file-20230726-19-4rzyn1.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=472&fit=crop&dpr=1 600w, https://images.theconversation.com/files/539474/original/file-20230726-19-4rzyn1.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=472&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/539474/original/file-20230726-19-4rzyn1.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=472&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/539474/original/file-20230726-19-4rzyn1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=594&fit=crop&dpr=1 754w, https://images.theconversation.com/files/539474/original/file-20230726-19-4rzyn1.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=594&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/539474/original/file-20230726-19-4rzyn1.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=594&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Countries improve their economic complexity ranking by increasing the number and complexity of the products they successfully export.</span>
<span class="attribution"><a class="source" href="https://atlas.cid.harvard.edu/rankings/country/">Source: Harvard Economic Complexity Index</a></span>
</figcaption>
</figure>
<hr>
<p>The problem is that while successive commodity booms made Australians richer through appreciation of the dollar, the higher dollar also made a good deal of Australian manufacturing uncompetitive, both domestically and globally. </p>
<p>This is what’s known as “<a href="https://www.investopedia.com/terms/d/dutchdisease.asp">Dutch disease</a>”, a term coined to represent the impact of North Sea gas on Dutch manufacturing in the 1970s, and later, the impact of the UK’s discovery of North Sea oil.</p>
<p>Australia’s de-industrialisation is not as much a case of “<a href="https://www.pc.gov.au/inquiries/completed/productivity/report/productivity-advancing-prosperity-all-volumes.pdf">market failure</a>”, a possibility the Productivity Commission occasionally acknowledges, as one of abject policy failure. </p>
<h2>Norway did things differently</h2>
<p>In contrast, Norway took a public stake in its North Sea oil and gas, imposed a 76% resource rent tax and created the world’s biggest sovereign wealth fund. </p>
<p>Norway is now able to take part in global manufacturing supply chains in a way Australia is not, and is able to build a net zero emissions economy using world-leading research and innovation. </p>
<p>Such an idea is heresy in the parallel universe of the Productivity Commission, which appears to believe Australia should double down on its status as the world’s most efficient quarry and repudiate efforts to add value, as they would supposedly cost more than the benefits they produced.</p>
<p>The remarkable feature of this Productivity Commission approach is that it appears not to be based on evidence. </p>
<h2>Battery manuafcture is worth investing in</h2>
<p>In the case of batteries, <a href="https://www.afr.com/companies/energy/labor-thumbs-its-nose-at-productivity-commission-s-barking-dogs-20230721-p5dq5j">experts</a> have calculated that domestic manufacturing would boost gross domestic product by $55 billion a year, for a total investment of $35 billion through to 2035, and produce a tax take over two years of $30 billion. </p>
<p>Batteries are an example of how to turn a comparative advantage based on natural endowments into a “<a href="https://www.aumanufacturing.com.au/power-australia-power-the-world-by-phil-toner-and-roy-green">competitive advantage</a>”, based on knowledge and ingenuity.</p>
<p>The fundamental problem with the Commission’s approach comes back to reliance on a “static equilibrium” model of the economy, where the assumptions themselves give rise to predictable winners and losers. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/dont-blame-workers-for-falling-productivity-theyre-not-holding-it-back-207594">Don't blame workers for falling productivity: they're not holding it back</a>
</strong>
</em>
</p>
<hr>
<p>The fact productivity growth has stalled in Australia for two decades, and is now accompanied by wage stagnation, might not be due to governments ignoring the Commission’s recommendations, as some like to argue, but rather due to it implementing them. </p>
<p>Meanwhile, industrial policy elsewhere around the world is devised as part of a <a href="https://www.innovationaus.com/roy-green-on-the-urgency-of-the-industry-task-ahead/">dynamic model</a> of growth and innovation, preparing nations for the industries and technologies of the future. </p>
<p>As it is, the Productivity Commission is ill-equipped for the challenges Australia is about to face. Barrett’s task is a formidable one.</p><img src="https://counter.theconversation.com/content/210454/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Roy Green does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Productivity Commission seems to be against manufacturing, even the making of batteries using local materials. The new team at the top might help it think more broadly.Roy Green, Emeritus Professor & UTS innovation adviser, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2093782023-07-17T20:03:17Z2023-07-17T20:03:17ZHow a secret plan 50 years ago changed Australia’s economy forever, in just one night<figure><img src="https://images.theconversation.com/files/537211/original/file-20230713-19-5w34v3.png?ixlib=rb-1.1.0&rect=183%2C113%2C864%2C525&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>At a time when governments are timid, keener to announce <a href="https://www.pc.gov.au/inquiries/completed/productivity/report">reviews</a> than decisions, it’s refreshing to remember what happened 50 years ago today – on July 18 1973.</p>
<p>Inflation had surged to <a href="https://www.datawrapper.de/_/vu9by/">14%</a>. Australia’s biggest customer, the United Kingdom, had joined the <a href="http://news.bbc.co.uk/onthisday/hi/dates/stories/january/1/newsid_2459000/2459167.stm">European Economic Community</a>, agreeing to buy products from it rather than Australia. And the newly formed Organisation of Arab Petroleum Exporting Countries had <a href="https://advisor.visualcapitalist.com/historical-oil-prices/">doubled</a> the price of oil.</p>
<p>The tariffs imposed on imported goods to protect Australian manufacturers from competition were extraordinarily high. For clothing, they reached <a href="https://www.pc.gov.au/inquiries/completed/textile-clothing-footwear-1997/59tcf2.pdf">55%</a>; for motor vehicles, <a href="https://ro.uow.edu.au/cgi/viewcontent.cgi?article=1077&context=commwkpapers">45%</a>.</p>
<p>Then, with absolutely <a href="http://andrewleigh.org/pdf/Trade%20liberalisation%20and%20the%20ALP.pdf">no</a> public indication he had been considering anything as drastic, at 7pm on Wednesday July 18, the recently elected prime minister Gough Whitlam made an <a href="https://pmtranscripts.pmc.gov.au/sites/default/files/original/00002971_0.pdf">announcement</a>.</p>
<h2>Every tariff cut by one quarter overnight</h2>
<p>From midnight, all tariffs would be cut by 25%. As Whitlam put it: “each tariff will be reduced by one quarter of what it is now”.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/537215/original/file-20230713-21-4hds6p.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/537215/original/file-20230713-21-4hds6p.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=964&fit=crop&dpr=1 600w, https://images.theconversation.com/files/537215/original/file-20230713-21-4hds6p.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=964&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/537215/original/file-20230713-21-4hds6p.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=964&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/537215/original/file-20230713-21-4hds6p.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1212&fit=crop&dpr=1 754w, https://images.theconversation.com/files/537215/original/file-20230713-21-4hds6p.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1212&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/537215/original/file-20230713-21-4hds6p.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1212&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://pmtranscripts.pmc.gov.au/sites/default/files/original/00002971_0.pdf">Gough Whitlam's statement</a></span>
</figcaption>
</figure>
<p>If Australian businesses (and the Australian public) were caught by surprise, it was because Whitlam had planned the whole thing in secret.</p>
<p>He had given a six-person committee just three weeks to work out the details.</p>
<p>Although the committee was chaired by the head of the Tariff Board, Alf Rattigan, and included an official from Whitlam’s own department, the department of industry and the department of trade, it met in an obscure location in Canberra’s civic centre rather than in public service offices, where the project might be discovered.</p>
<p>Not included in the committee was a representative of the treasury, which its then deputy head John Stone said “<a href="https://cdn.theconversation.com/static_files/files/2744/Stone__The_Inside_Story_of_Gough%E2%80%99s_Tariff_Cut__in_The_Australian__18_July_2003..pdf">knew nothing</a>” about what was unfolding.</p>
<p>But driving the work of the committee were two academic outsiders – Fred Gruen, an economics professor at the Australian National University and adviser to Whitlam, and Brian Brogan, an economics lecturer at Monash University who was advising the trade minister, Jim Cairns.</p>
<h2>Outsiders, not treasury insiders</h2>
<p>As economists rather than bureaucrats, Gruen and Brogan were able to see benefits where others saw entrenched interests. Going to the tariff board and asking for extra tariffs, whenever it looked as if your prices might be undercut by imports, had become a reflex action for Australian businesses. </p>
<p>In the words of <a href="https://esavic.org.au/385/images/2013_GaryBanks.pdf">Gary Banks</a> – later to become head of the successor to the tariff board, the Productivity Commission: “it was not a shameful thing for a conga line of industrialists to be seen wending its way to Canberra”.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/half-a-century-on-its-time-to-reassess-the-whitlam-governments-economic-legacy-195651">Half a century on, it's time to reassess the Whitlam government's economic legacy</a>
</strong>
</em>
</p>
<hr>
<p>Tariffs were good for business owners, although bad for their customers, who had to pay much higher prices and often got <a href="https://www.afr.com/opinion/bill-scales-the-rise-and-fall-of-the-australian-car-manufacturing-industry-20171018-gz3ky4">worse goods</a>. They were also good for government – bringing in tax revenue.</p>
<p>Whitlam was more interested in bringing down inflation. His announcement said increased competition would </p>
<blockquote>
<p>have a salutary effect upon those who have taken advantage of shortages by unjustified price increases which have exploited the public. </p>
</blockquote>
<p>Any firm seriously hurt by the extra imports could apply to a newly established tribunal for assistance, but the tribunal </p>
<blockquote>
<p>should not provide relief as a matter of course – that is, simply because the question of relief had been referred to it.</p>
</blockquote>
<p>So Whitlam offered “rationalisation assistance” to encourage firms to refocus their operations, and “compensation for closure” where that couldn’t be done and production had to cease.</p>
<p>For displaced workers, the 7pm announcement offered anyone who lost their job retraining, as well as</p>
<blockquote>
<p>a weekly amount equal to his [sic] average wage in the previous six months until he obtains or is found suitable alternative employment. </p>
</blockquote>
<p>Over the next seven years, manufacturing employment fell by <a href="https://www.bitre.gov.au/sites/default/files/report_136_CHAPTER_6_WEB_FA.pdf">80,000</a>, but few of those job losses were immediate. Fifteen months after the 25% tariff cut, fewer than <a href="https://www.jstor.org/stable/20634782?seq=10">6,000</a> people had claimed the wage replacement offered on the night of the announcement.</p>
<p>When Whitlam went to the polls a year after the cut in the double dissolution election of May 1974, 122 university economists signed an <a href="https://pmtranscripts.pmc.gov.au/release/transcript-3267">open letter</a> of support.</p>
<p>The letter said the general thrust of the government’s policy responses had been in the best interests of the nation as a whole, and added,</p>
<blockquote>
<p>more importantly, we seriously doubt that the previous government would have had the wisdom or the courage to undertake it. It had certainly given no indication of moving in that direction while it was in power, even though the need for such policies had become obvious.</p>
</blockquote>
<p>In its later days in office, the Whitlam government was roundly criticised for its irresponsible public spending. Ironically, in its approach to tariffs in the 1970s, it had taken the first steps in a neoliberal direction that characterised western governments of the 1980s.</p>
<p>By acting boldly after decades of inaction, Whitlam showed what a government could do. It was a lesson his Labor successor Bob Hawke took to heart a decade later, when he floated the dollar, revamped Australia’s tax system and put in place a series of further cuts that reduced tariffs to near zero.</p>
<p>It’s something we see less of today.</p><img src="https://counter.theconversation.com/content/209378/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alex Millmow does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Without warning, at 7pm on July 18 1973, Prime Minister Gough Whitlam slashed every single import tariff at once – starting at midnight. It’s the kind of bold political leadership we rarely see today.Alex Millmow, Senior Fellow, Federation University AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2065652023-06-22T12:45:30Z2023-06-22T12:45:30ZA BRICS currency is unlikely to dislodge dollar any time soon – but it signifies growing challenge to established economic order<figure><img src="https://images.theconversation.com/files/533267/original/file-20230621-21-r6auqr.jpg?ixlib=rb-1.1.0&rect=35%2C0%2C4000%2C2658&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A window into a new way of doing global economic business.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/view-of-a-reflection-on-a-window-of-a-man-staring-at-the-news-photo/1258374197?adppopup=true">Rodger Bosch/AFP via Getty Images)</a></span></figcaption></figure><p>Could a new currency be set to challenge the dominance of the dollar? Perhaps, but that may not be the point.</p>
<p>In August 2023, <a href="https://twitter.com/CyrilRamaphosa/status/1633803100308791299">South Africa will host</a> the leaders of Brazil, Russia, India, China and South Africa – a group of nations known by the acronym BRICS. Among <a href="https://www.bloomberg.com/news/articles/2023-05-10/south-africa-urges-careful-debate-on-option-of-introducing-brics-common-currency#xj4y7vzkg">the items on the agenda</a> is the creation of a new joint BRICS currency. </p>
<p>As a scholar who has <a href="https://sites.tufts.edu/cierp/rising-power-alliances-project/">studied the BRICS countries</a> for over a decade, I can certainly see why talk of a BRICS currency is, well, gaining currency. The BRICS summit comes as countries across the world are confronting a changing geopolitical landscape that is <a href="https://theconversation.com/the-global-south-is-forging-a-new-foreign-policy-in-the-face-of-war-in-ukraine-china-us-tensions-active-nonalignment-207078">challenging the traditional dominance of the West</a>. And while the BRICS countries have been seeking to reduce their reliance on the dollar for over a decade, <a href="https://www.bbc.com/news/world-europe-60125659">Western sanctions on Russia</a> after its invasion of Ukraine have accelerated the process.</p>
<p>Meanwhile, <a href="https://www.bbc.com/news/business-65474456">rising interest rates</a> and the recent <a href="https://theconversation.com/a-brief-history-of-debt-ceiling-crises-and-the-political-chaos-theyve-unleashed-205178">debt-ceiling crisis</a> in the U.S. have raised concerns among other countries about their dollar-denominated debt and the demise of the dollar should the world’s leading economy ever default.</p>
<p>That all said, a new BRICS currency faces major hurdles before becoming a reality. But what currency discussions do show is that the BRICS countries are seeking to discover and develop new ideas about how to shake up international affairs and effectively coordinate policies around these ideas. </p>
<h2>De-dollarization momentum?</h2>
<p>With <a href="https://www.bis.org/statistics/rpfx22_fx.htm">88% of international transactions</a> conducted in U.S. dollars, and the dollar accounting for <a href="https://www.cnbc.com/2023/04/24/economic-and-political-factors-behind-acceleration-of-de-dollarization.html">58% of global foreign exchange reserves</a>, the dollar’s global dominance is indisputable. Yet de-dollarization – or reducing an economy’s reliance on the U.S. dollar for international trade and finance – <a href="https://www.reuters.com/markets/signs-de-dollarisation-emerge-dollar-top-currency-jpmorgan-2023-06-05/">has been accelerating</a> following the Russian invasion of Ukraine.</p>
<p>The BRICS countries have been <a href="https://www.cambridge.org/core/elements/can-brics-dedollarize-the-global-financial-system/0AEF98D2F232072409E9556620AE09B0">pursuing a wide range of initiatives</a> to decrease their dependence on the dollar. Over the past year, Russia, China and Brazil have <a href="https://markets.businessinsider.com/news/currencies/dollar-dominance-russia-china-india-brazil-oil-trade-reserve-currency-2023-1">turned to</a> greater use of non-dollar currencies in their cross-border transactions. Iraq, Saudi Arabia and the United Arab Emirates are actively <a href="https://www.dw.com/en/why-the-dollars-dominance-is-declining-in-the-middle-east/a-65662358">exploring</a> dollar alternatives. And central banks have sought to shift more of their currency reserves away from the dollar and <a href="https://www.ft.com/content/ef6ed550-422a-4540-a8af-41ff2ac30e67">into gold</a>.</p>
<p>All the BRICS nations have been critical of the dollar’s dominance for different reasons. Russian officials have been championing de-dollarization to ease the pain from sanctions. Because of sanctions, Russian banks have been <a href="https://time.com/6153951/swift-sanctions-russia/">unable to use</a> SWIFT, the global messaging system that enables bank transactions. And the West froze Russia’s <a href="https://www.businessinsider.com/repo-global-task-force-freeze-330-billion-russia-oligarch-assets-2022-6?utm_medium=ingest&utm_source=markets">US$330 billion</a> in reserves last year.</p>
<figure class="align-center ">
<img alt="Under a banner with Chinese letter and 'XIV BRICS SUMMIT' five screens show the face of five world leaders in front of flags." src="https://images.theconversation.com/files/533301/original/file-20230621-11103-g7nxfu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/533301/original/file-20230621-11103-g7nxfu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=352&fit=crop&dpr=1 600w, https://images.theconversation.com/files/533301/original/file-20230621-11103-g7nxfu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=352&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/533301/original/file-20230621-11103-g7nxfu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=352&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/533301/original/file-20230621-11103-g7nxfu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=443&fit=crop&dpr=1 754w, https://images.theconversation.com/files/533301/original/file-20230621-11103-g7nxfu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=443&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/533301/original/file-20230621-11103-g7nxfu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=443&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">BRICS leaders at the time of the 2022 summit.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/chinese-president-xi-jinping-hosts-the-14th-brics-summit-news-photo/1241486840?adppopup=true">Li Tao/Xinhua via Getty Images</a></span>
</figcaption>
</figure>
<p>Meanwhile, the 2022 election in Brazil reinstated Luiz Inácio Lula da Silva as president. Lula is a longtime proponent of BRICS who previously sought to reduce Brazil’s dependence on and vulnerability to the dollar. He has reenergized the group’s commitment to de-dollarization and spoken about <a href="https://www.reuters.com/article/spain-brazil-lula/update-1-brazils-lula-supports-trading-currency-for-brics-countries-idUSL1N36T1WW">creating a new Euro-like currency</a>.</p>
<p>The Chinese government has also clearly <a href="https://www.fmprc.gov.cn/mfa_eng/wjbxw/202302/t20230220_11027664.html">laid out its concerns</a> with the dollar’s dominance, labeling it “the main source of instability and uncertainty in the world economy.” Beijing directly blamed the Fed’s interest rate hike for causing turmoil in the international financial market and substantial depreciation of other currencies. Together with other BRICS countries, China has also <a href="https://asia.nikkei.com/Politics/International-relations/Xi-rallies-BRICS-against-sanctions-abuse-Cold-War-mentality">criticized the use of sanctions</a> as a geopolitical weapon.</p>
<p>The appeal of de-dollarization and a possible BRICS currency would be to mitigate such problems. Experts in the U.S. are deeply divided on its prospects. U.S. Treasury Secretary Janet Yellen believes <a href="https://finance.yahoo.com/news/treasury-secretary-janet-yellen-says-041422267.html#:%7E:text=Treasury%20Secretary%20Janet%20Yellen%20said,most%20countries%20have%20no%20alternative.">the dollar will remain dominant</a> as most countries have no alternative. Yet a <a href="https://foreignpolicy.com/2023/04/24/brics-currency-end-dollar-dominance-united-states-russia-china/">former White House economist sees a way that</a> a BRICS currency could end dollar dominance.</p>
<h2>Currency ambitions</h2>
<p>Although talk of a BRICS currency has gained momentum, there is limited information on various models under consideration.</p>
<p>The most ambitious path would be something akin to the Euro, the <a href="https://www.ecb.europa.eu/euro/html/index.en.html">single-currency adopted</a> by 11 member states of the European Union in 1999. But negotiating a single currency would be difficult given the economic power asymmetries and complex political dynamics within BRICS. And for a new currency to work, BRICS would need to agree to an exchange rate mechanism, have efficient payment systems and a well-regulated, stable and liquid financial market. To achieve a global currency status, BRICS would need a strong track record of joint currency management to convince others that the new currency is reliable.</p>
<p>A BRICS version of the Euro is unlikely for now; none of the countries involved show any desire to discontinue its local currency. Rather, the goal <a href="http://infobrics.org/post/38136">appears to be</a> to create an efficient integrated payment system for cross-border transactions as the first step and then introduce a new currency. </p>
<p>Building blocks for this already exist. In 2010, the <a href="http://brics2022.mfa.gov.cn/eng/zdhzlyhjz/others/202208/t20220826_10754259.html">BRICS Interbank Cooperation Mechanism</a> was launched to facilitate cross-border payments between BRICS banks in local currencies. BRICS nations <a href="https://www.brics-pay.com/">have been developing “BRICS pay</a>” – a payment system for transactions among the BRICS without having to convert local currency into dollars. And there has been talk of a <a href="https://cointelegraph.com/news/brics-nations-discuss-shared-crypto-to-break-away-from-usd-and-swift">BRICS cryptocurrency</a> and of strategically aligning the development of <a href="https://cyberbrics.info/promoting-brics-economic-integration-via-central-bank-digital-currencies%EF%BF%BC">Central Bank Digital Currencies</a> to promote currency interoperability and economic integration. Since many countries expressed an interest in <a href="https://www.dailymaverick.co.za/article/2023-05-07-countries-of-the-global-south-show-a-surge-of-interest-in-joining-brics-anil-sooklal/">joining BRICS</a>, the group is likely to scale its de-dollarization agenda. </p>
<h2>From BRICS vision to reality</h2>
<p>To be sure, some of the group’s most ambitious past initiatives to set up major BRICS projects to parallel non-Western infrastructures have failed. Big ideas like developing a <a href="https://moderndiplomacy.eu/2018/06/12/brics-setting-up-its-own-credit-rating-agency/">BRICS credit rating agency</a> and creating a <a href="https://jsis.washington.edu/news/reactions-u-s-cybersecurity-policy-bric-undersea-cable/">BRICS undersea cable</a> never materialized. </p>
<p>And de-dollarization efforts have been struggling both at the multilateral and bilateral level. In 2014, when the BRICS countries launched the New Development Bank, its <a href="https://www.ndb.int/wp-content/uploads/2022/11/Agreement-on-the-New-Development-Bank.pdf">founding agreement</a> outlined that its operations may provide financing in the local currency of the country in which the operation takes place. Yet, in 2023, the bank remains heavily <a href="https://www.wsj.com/articles/a-bank-china-backed-to-challenge-the-dollar-now-needs-the-dollar-d9dc27ee">dependent on the dollar for its survival</a>. <a href="https://www.ndb.int/insights/address-by-ndb-president-dilma-rousseff-at-opening-of-the-plenary-session-of-the-8th-annual-meeting-of-the-ndb/">Local currency financing represents</a> around 22% of the bank’s portfolio, although its new president hopes to increase that to 30% by 2026. </p>
<p>Similar challenges exist in bilateral de-dollarization pursuits. Russia and India have sought to develop a mechanism for trading in local currencies, which would enable Indian importers to pay for Russia’s cheap oil and coal in rupees. However, <a href="https://money.usnews.com/investing/news/articles/2023-05-04/exclusive-india-russia-suspend-negotiations-to-settle-trade-in-rupees-sources">talks were suspended</a> after Moscow cooled on the idea of rupee accumulation.</p>
<p>Despite the barriers to de-dollarization, the BRICS group’s determination to act should not be dismissed – the group has been known for defying expectations in the past.</p>
<p>Despite many differences among the five countries, the bloc managed to develop joint policies and survive major crises such as the <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/1758-5899.13010">2020-21 China-India border clashes</a> and the war in Ukraine. BRICS has deepened its cooperation, invested in new financial institutions and has been continuously broadening the range of policy issues it addresses. </p>
<p>It now has a huge network of interlinked mechanisms that connect governmental officials, businesses, academics, think tanks and other stakeholders across countries. Even if there is no movement on the joint currency front, there are multiple issues on which BRICS finance ministers as well as central bankers regularly coordinate – and the potential for developing new financial collaborations is particularly strong. </p>
<p>No doubt, talk of a new BRICS currency in itself is an important indicator of the desire of many nations to diversify away from the dollar. But I believe focusing on the BRICS currency risks missing the forest for the trees. A new global economic order will not emerge out of a new BRICS currency or de-dollarization happening overnight. But it can potentially emerge out of BRICS’ commitment to coordinating their policies and innovating – something this currency initiative represents.</p><img src="https://counter.theconversation.com/content/206565/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mihaela Papa previously received funding for BRICS research from Minerva Research Initiative federal grant.
She is affiliated with the Carnegie Council for Ethics in International Affairs.</span></em></p>Talk of a joint BRICS currency feeds into ‘decline of the dollar’ rhetoric. But it is the economic bloc’s focus on innovation that will reshape the international system.Mihaela Papa, Adjunct Assistant Professor of Sustainable Development and Global Governance, The Fletcher School, Tufts UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2069692023-06-06T14:29:01Z2023-06-06T14:29:01ZUK PM Sunak visits Washington to strengthen ties, watch baseball – having already struck out on trade deal<figure><img src="https://images.theconversation.com/files/530357/original/file-20230606-21-psgkb.jpg?ixlib=rb-1.1.0&rect=5%2C0%2C3820%2C1784&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">'I don't drink coffee, I take tea' -- the quintessential Englishman in, well, D.C.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/president-joe-biden-meets-with-britains-prime-minister-news-photo/1251744533?adppopup=true">Paul Faith/WPA Pool/Getty Images</a></span></figcaption></figure><p>Alongside <a href="https://www.reuters.com/world/uk/uks-sunak-says-he-wants-build-biden-ties-washington-trip-2023-06-03/">meetings with President Joe Biden</a>, U.S. business leaders and members of Congress, U.K. Prime Minister Rishi Sunak will <a href="https://www.ft.com/content/bac3258e-6051-4658-bdc4-8acfc9410242">take in a baseball game</a> during a Washington trip that starts June 7, 2023. He may be given the honor of <a href="https://www.thetimes.co.uk/article/rishi-sunaks-us-visit-baseball-biden-and-billions-in-investment-lcl8lcjzm">throwing out the first pitch</a>; many at home will be hoping he doesn’t drop the ball.</p>
<p>It is a high-stakes visit for Sunak, his first to Washington since becoming prime minister in October 2022. The British leader will be keen to <a href="https://finance.yahoo.com/news/biden-business-baseball-uk-pms-213136143.html">showcase his close relationship with Biden</a>. And he will want to underscore <a href="https://ecfr.eu/article/sanity-returns-to-british-foreign-policy/">his more stable and pragmatic foreign policy</a>, in contrast to his predecessors, <a href="https://theconversation.com/boris-johnsons-messy-political-legacy-of-lies-scandals-and-delivering-brexit-to-his-base-186601">Boris Johnson</a> and <a href="https://theconversation.com/uk-prime-minister-forced-from-office-amid-economic-turmoil-chaos-in-parliament-and-a-party-in-disarray-192795">Liz Truss</a>.</p>
<p>Yet Sunak, despite being prime minister for less than a year, is under great pressure. His party remains far <a href="https://www.ipsos.com/en-uk/uk-opinion-polls">behind in the polls</a>, less than 18 months before the next general election is held in the U.K. </p>
<p>He has little time to burnish his credentials as a leader, and Washington may not be the most fertile ground to do so. Bilateral relations between London and Washington have been <a href="https://www.ft.com/content/bac3258e-6051-4658-bdc4-8acfc9410242">thorny in recent years</a>, and three topics illustrate the challenges – and possible opportunities – ahead for Sunak: trade, Northern Ireland and security.</p>
<h2>The forgotten trade deal</h2>
<p>Sunak and Biden will have a busy agenda during talks due to take place in the Oval Office on June 8, but one topic will be conspicuously absent. As a <a href="https://www.bloomberg.com/news/articles/2023-05-30/uk-s-sunak-won-t-push-biden-for-trade-deal-on-us-visit-next-week#xj4y7vzkg">Downing Street spokesperson confirmed</a> prior to the trip: “We are not seeking to push a free trade agreement with the U.S. currently.” </p>
<p>This is in stark contrast to what Sunak’s Conservative Party manifesto had touted in the 2019 general election – the second to take place since a 2016 referendum upset the U.K.’s trading setup by triggering the country’s exit from the European Union.</p>
<p>The document promised that in a post-Brexit U.K., 80% of trade would be covered by <a href="https://www.politico.eu/article/uk-conservative-manifesto-explained/">free trade agreements within three years</a>.</p>
<p>Negotiations for a trade deal with the U.S. began in 2020 under the Trump administration, but made limited progress. The pandemic, and the question of access of U.S. agricultural goods to the U.K. market, <a href="https://www.ft.com/content/1fd173a6-8718-4798-b692-685801ec1604">further disrupted talks</a>. In particular, U.K. concerns about <a href="https://www.mercatus.org/research/policy-briefs/removing-barriers-us-uk-agricultural-trade">differing food standard practices in the U.S.</a>, such as chlorine-washed chicken or hormone-treated beef, complicated discussions.</p>
<p>Yet the broad <a href="https://www.americanprogress.org/article/a-new-horizon-in-u-s-trade-policy/">ideological shift in American attitudes toward trade</a> proved the main obstacle. Since taking office, the Biden administration has consistently expressed its skepticism of emulating past free-trade agreements. According to the administration, these deals have too often ended up <a href="https://www.nytimes.com/2023/04/03/us/politics/biden-free-trade.html">impoverishing American workers</a>, while enriching multinational firms. </p>
<p>That shift on trade policy is not limited to members of the administration. Both Democrats and Republicans, even if for different reasons, have become <a href="https://www.politico.com/news/2023/05/25/joe-bidens-economy-trade-china-00096781">more critical of unfettered globalization</a>.</p>
<figure class="align-center ">
<img alt="A man in a lifejacket stands on a boat in front of white cliffs" src="https://images.theconversation.com/files/530355/original/file-20230606-23-psgkb.jpg?ixlib=rb-1.1.0&rect=17%2C147%2C3912%2C2468&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/530355/original/file-20230606-23-psgkb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/530355/original/file-20230606-23-psgkb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/530355/original/file-20230606-23-psgkb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/530355/original/file-20230606-23-psgkb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/530355/original/file-20230606-23-psgkb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/530355/original/file-20230606-23-psgkb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Don’t expect the U.S. to throw a lifeline on trade any time soon.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/BritainPolitics/52fef49e7bc546f4bcc3cbcd3a645ae6/photo?Query=Rishi%20sunak&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=3488&currentItemNo=6">Yui Mok/Pool Photo via AP</a></span>
</figcaption>
</figure>
<p>In lieu of any breakthrough on a trade deal between the two countries, the U.K. has been focusing efforts on <a href="https://www.gov.uk/government/news/trade-minister-in-us-to-sign-fourth-trade-pact-with-a-us-state">striking deals with individual U.S. states</a>. In particular, the U.K. government hopes Rishi’s visit can pave the way for closer partnerships with California and Texas.</p>
<p>But these will have only a modest impact at best, when the U.K. economy is forecast to <a href="https://www.politico.eu/article/uk-recession-economy-inflation-international-monetary-fund-growth-forecast/">grow by only 0.4% in 2023</a>.</p>
<h2>The shadow of Northern Ireland</h2>
<p>With trade unlikely to further cement U.S.-U.K. ties, Sunak will also have to navigate the divisive question of Northern Ireland. There is <a href="https://www.theguardian.com/us-news/2021/jun/10/why-joe-biden-is-so-invested-in-defending-good-friday-agreement">still strong bipartisan support in the U.S. for the 1998 Good Friday Agreement</a>, which ended 30 years of conflict in Northern Ireland. This reflects the historic role played by Democratic and Republican administrations <a href="https://theconversation.com/good-friday-agreement-how-the-us-came-to-be-a-key-broker-in-northern-irelands-peace-deal-202584">in helping to mediate and implement the accord</a>.</p>
<p>In that context, the U.K.’s exit from the EU served only to fuel tension between London and Washington. Brexit negotiations lingered for many years because of the sheer difficulty of reconciling conflicting pressures over the status of Northern Ireland, which is part of the U.K. but borders the Republic of Ireland, which remains an EU member state. </p>
<p>Throughout the prolonged Brexit process, American politicians across the aisle repeatedly expressed <a href="https://www.theguardian.com/us-news/2022/may/20/pelosi-warns-changes-to-northern-ireland-protocol-could-affect-us-trade-deal-with-britain">their concerns to the U.K. government</a>. They emphasized the need to avoid measures that could restore a hard border on the island of Ireland. Among those airing such views was Joe Biden, who <a href="https://twitter.com/JoeBiden/status/1306334039557586944?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1306334039557586944%7Ctwgr%5E707718523194ac7991194adfce8016bce541f538%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Ftheconversation.com%2Fgood-friday-agreement-how-the-us-came-to-be-a-key-broker-in-northern-irelands-peace-deal-202584">warned in 2020,</a> “We can’t allow the Good Friday Agreement that brought peace to Northern Ireland to become a casualty of Brexit.”</p>
<p>Biden’s deeply rooted <a href="https://www.theguardian.com/us-news/2021/jun/10/why-joe-biden-is-so-invested-in-defending-good-friday-agreement">emotional attachment to Ireland</a> has hardly abated since he has been in office. His recent visit in April, for the 25th anniversary of the Good Friday Agreement, was <a href="https://theconversation.com/good-friday-agreement-joe-bidens-historic-visit-to-ireland-comes-during-turbulent-times-203258">rich in personal significance and symbolism</a>. </p>
<p>Most of the trip was viewed as a homecoming, with Biden visiting his ancestral roots in Ireland. His time in Northern Ireland was brief in comparison, with only a <a href="https://www.dailymail.co.uk/news/article-11964121/Joe-Biden-meet-Rishi-Sunak-visit-Belfast-today-no-trade-talks.html">terse meeting with Sunak</a>. And if the message was not sufficiently clear, later remarks by Biden at a fundraiser <a href="https://www.politico.eu/article/joe-biden-northern-ireland-brits-screw-around/">left little doubt</a> as to the president’s feelings. He went to the island of Ireland “to make sure the Brits didn’t screw around” with the region’s peace process, he said.</p>
<p>Sunak did <a href="https://www.ft.com/content/bac3258e-6051-4658-bdc4-8acfc9410242">win some praise for the recent Windsor Framework</a>, which addressed some of the tension over Northern Ireland. But he has yet to solve the prolonged <a href="https://www.ft.com/content/1488bce3-7da9-4d16-b3f1-d4c465e218a5">boycott of power-sharing institutions</a> by the pro-U.K. Democratic Unionist Party.</p>
<p>Nonetheless, Sunak will have his work cut out for him to convince Biden that the U.K. can play a constructive role in further stabilizing Northern Ireland. </p>
<h2>Better off sticking to security and China</h2>
<p>Trade and Northern Ireland will likely bring little joy for Sunak. He will, however, be on far more fertile ground when the discussion shifts to the realm of security.</p>
<p>The prime minister has signaled on many occasions his <a href="https://www.bloomberg.com/news/articles/2023-05-17/sunak-says-uk-aligned-with-us-on-china-mulls-investment-curbs#xj4y7vzkg">very close alignment with the U.S.</a> insofar as tackling China. At the recent G7 summit in Japan, Sunak <a href="https://www.politico.eu/article/britain-prime-minister-rishi-sunak-ranks-china-top-threat-global-security-g7-summit/">defined Beijing</a> as “the biggest challenge of our age to global security and prosperity.” And the March 2023 <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/13/fact-sheet-trilateral-australia-uk-us-partnership-on-nuclear-powered-submarines/">signing of the AUKUS nuclear submarine deal</a> in San Diego further confirmed the U.K.’s tilt to the Indo-Pacific.</p>
<p>Regarding Ukraine, the U.K. has frequently been at the vanguard of providing support and new weapons to Kyiv. In May 2023, Sunak announced a plan, with Dutch Prime Minister Mark Rutte, to <a href="https://www.theguardian.com/world/2023/may/16/uk-and-netherlands-agree-international-coalition-to-help-ukraine-with-f-16-jets">build an “international coalition</a>” to help Ukraine acquire F-16 fighter jets. </p>
<p>Britain also led the way in being the first Western country <a href="https://www.defensenews.com/global/europe/2023/05/15/britain-to-train-ukrainian-pilots-supply-more-missiles-and-drones/">to supply long-range cruise missiles to Ukraine</a>. This was after being the first country to agree to deliver battle tanks to support the Ukrainian army. And that bullishness <a href="https://news.yahoo.com/how-the-uk-helped-convince-the-us-and-its-allies-to-spend-big-to-help-ukraine-in-its-war-with-russia-193918302.html">reportedly played a key part</a> in convincing Washington to lift its objection to sending F-16s to Ukraine.</p>
<p>The alignment in the field of global security will undoubtedly help Sunak’s attempt to ingratiate himself with Biden. But the harder test will be whether this convergence between Washington and London can extend to NATO. </p>
<p>The alliance will hold a crucial summit in Lithuania in July, where it will discuss longer-term plans to support Ukraine. That will include the thorny question of offering NATO membership to Kiev, which does not yet <a href="https://www.washingtonpost.com/national-security/2023/05/14/ukraine-nato-membership-vilnius-summit/">have unanimous support among members</a>.</p>
<p>Even without talk of a trade deal, in terms of agenda items on Sunak’s visit, the bases are loaded. It is questionable whether he can hit a home run though.</p><img src="https://counter.theconversation.com/content/206969/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Garret Martin receives funding from the European Union for the research center he co-directs at American University, the Transatlantic Policy Center.</span></em></p>The UK leader’s visit to the US comes amid trouble at home, with low ratings for his Conservative Party. But don’t expect much joy for Sunak on trade or Northern Ireland.Garret Martin, Senior Professorial Lecturer, Co-Director Transatlantic Policy Center, American University School of International ServiceLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2055192023-06-01T12:30:26Z2023-06-01T12:30:26ZWar in Ukraine might give the Chinese yuan the boost it needs to become a major global currency – and be a serious contender against the US dollar<figure><img src="https://images.theconversation.com/files/528317/original/file-20230525-29-2upko8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">China and the U.S. compete to be the world's largest economy, but the dollar dominates the yuan as a currency.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/sino-us-trade-war-royalty-free-image/1216692156">peng song/Moment Collection/Getty Images</a></span></figcaption></figure><p>The Chinese economy’s sheer size and rapid growth are impressive.</p>
<p>China maintained one of the <a href="https://www.worldbank.org/en/country/china/overview#1">highest economic growth rates</a> in the world for more than a quarter of a century, helping lift <a href="https://www.worldbank.org/en/news/press-release/2022/04/01/lifting-800-million-people-out-of-poverty-new-report-looks-at-lessons-from-china-s-experience">over 800 million people</a> out of poverty in just a few decades. The country is the <a href="https://wits.worldbank.org/CountrySnapshot/en/CHN">largest exporter in the world</a> and the most important trading partner of Japan, Germany, Brazil and many other countries. It has the <a href="https://www.imf.org/external/datamapper/NGDPD@WEO/OEMDC/ADVEC/WEOWORLD">second-largest economy</a> after the U.S., based on the market exchange rate, and the largest <a href="https://databankfiles.worldbank.org/public/ddpext_download/GDP_PPP.pdf">based on purchasing power</a>.</p>
<p>And yet the yuan still lags as a major global currency. The war in Ukraine, which started in February 2022, may change that. </p>
<p>As a <a href="https://www.loyola.edu/sellinger-business/faculty-research/directory/chuluun">professor of finance</a> and <a href="https://www.mheducation.com/highered/product/international-financial-management-eun-resnick/1264413092.html">expert on international finance</a>, I understand how this geopolitical conflict may put China’s currency on the next phase of its path to becoming a global currency – and prompt the onset of the decline of the U.S. dollar from <a href="https://www.bis.org/statistics/rpfx22_fx.htm">its current dominance</a>. </p>
<h2>Chinese yuan’s slow progress</h2>
<p>China has long wanted to make the yuan a global force and has mounted significant efforts to do so in recent years. </p>
<p>For example, the Chinese government <a href="https://www.reuters.com/article/uk-china-economy-yuan/china-launches-yuan-cross-border-interbank-payment-system-idUKKCN0S204320151008">launched the Cross-Border Interbank Payments System</a>, or CIPS, in 2015 to facilitate cross-border payments in yuan. Three years later, in 2018, it launched the world’s <a href="http://www.xinhuanet.com/english/2018-03/26/c_137065815.htm">first yuan-denominated crude oil futures contracts</a> to allow exporters to sell oil in yuan. </p>
<p>China has also emerged perhaps as the <a href="https://hbr.org/2020/02/how-much-money-does-the-world-owe-china">world’s largest creditor</a>, with the government and state-controlled enterprises extending loans to dozens of developing countries. And China is <a href="https://www.cnn.com/2023/04/24/economy/china-digital-yuan-government-salary-intl-hnk/index.html">developing a digital yuan</a> as one of the world’s first central bank digital currencies. Even the trading hours for the yuan were <a href="https://www.reuters.com/article/china-yuan-trading/update-1-china-to-extend-fx-market-trading-hours-to-further-internationalise-yuan-idINL1N33K0GJ">recently extended</a> on the mainland.</p>
<p>Thanks to these efforts, the yuan is now the <a href="https://www.bis.org/statistics/rpfx22_fx.htm">fifth-most-traded currency</a> in the world. That is a phenomenal rise from its <a href="https://www.bis.org/publ/rpfx02.htm">35th place in 2001</a>. The yuan is also the <a href="https://www.swift.com/our-solutions/compliance-and-shared-services/business-intelligence/renminbi/rmb-tracker/rmb-tracker-document-centre">fifth-most-actively used currency</a> for global payments as of April 2023, up from 30th place in early 2011. </p>
<p>Rankings can be misleading, though. The yuan’s average trading volume is still <a href="https://www.bis.org/statistics/rpfx22_fx.htm">less than a 10th</a> of the U.S. dollar’s. Moreover, almost all trading was against the U.S. dollar, with little trading against other currencies.</p>
<p>And when it comes to global payments, the actual share of the yuan is a <a href="https://www.swift.com/our-solutions/compliance-and-shared-services/business-intelligence/renminbi/rmb-tracker/rmb-tracker-document-centre">mere 2.3%</a>, compared with 42.7% for the dollar and 31.7% for the euro. The yuan also constituted <a href="https://data.imf.org/?sk=E6A5F467-C14B-4AA8-9F6D-5A09EC4E62A4">less than 3%</a> of the world foreign exchange reserves at the end of 2022, compared with 58% for the dollar and 20% for the euro.</p>
<figure class="align-center ">
<img alt="Two men shake hands in front of Russian and Chinese flags" src="https://images.theconversation.com/files/528318/original/file-20230525-27-sg2yw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/528318/original/file-20230525-27-sg2yw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=425&fit=crop&dpr=1 600w, https://images.theconversation.com/files/528318/original/file-20230525-27-sg2yw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=425&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/528318/original/file-20230525-27-sg2yw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=425&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/528318/original/file-20230525-27-sg2yw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=534&fit=crop&dpr=1 754w, https://images.theconversation.com/files/528318/original/file-20230525-27-sg2yw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=534&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/528318/original/file-20230525-27-sg2yw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=534&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Russian Prime Minister Mikhail Mishustin meets with Chinese President Xi Jinping in Beijing on May 24, 2023, with the two countries signing a new set of trade agreements.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/russian-prime-minister-mikhail-mishustin-meets-with-chinas-news-photo/1257684729">Alexander Astafyev/Sputnik/AFP</a></span>
</figcaption>
</figure>
<h2>US dollar’s dominance questioned</h2>
<p>The U.S. dollar has reigned supreme as the dominant global currency for decades – and concern about how that benefits the U.S. and potentially hurts emerging markets <a href="https://scholar.harvard.edu/gopinath/publications/dominant-currency-paradigm-0">is not new</a>. </p>
<p>The value of the <a href="https://www.reuters.com/markets/currencies/recession-worries-could-support-dollar-after-monstrous-2022-rally-2022-12-08/">U.S. dollar appreciated significantly</a> against most other currencies in 2022 as the Federal Reserve hiked interest rates. This had negative consequences for residents of almost any country that borrows in dollars, pays for imports in dollars, or buys wheat, oil or other commodities priced in dollars, as these transactions became more expensive. </p>
<p>After Russia invaded Ukraine in early 2022, the U.S. and its Western allies put sanctions on Russia, <a href="https://www.swift.com/news-events/news/message-swift-community">including cutting Russia’s access</a> to the global dollar-based payments system known as the Society for Worldwide Interbank Financial Telecommunication, or SWIFT. That clearly displayed how the dollar can be weaponized. </p>
<p>With Russia largely cut off from international financial markets, it stepped up its trade with China. Russia began <a href="https://www.cnn.com/2022/09/06/energy/china-russian-gas-payments-ruble-yuan/index.html">receiving payments for coal and gas in yuan</a>, and Moscow <a href="https://www.reuters.com/markets/currencies/permitted-share-chinas-yuan-russian-wealth-fund-doubled-60-finmin-2022-12-30/">increased the yuan holdings</a> in its foreign currency reserves. Russian companies like Rosneft <a href="https://www.rosneft.com/press/releases/item/212071/">issued bonds denominated in yuan</a>. According to Bloomberg, the yuan is now the <a href="https://www.bloomberg.com/news/articles/2023-04-03/china-s-yuan-replaces-dollar-as-most-traded-currency-in-russia">most-traded currency in Russia</a>.</p>
<p>Other countries took notice of Russia’s increasing use of the yuan and saw an opportunity to decrease their own dependency on the dollar.</p>
<p><a href="https://www.reuters.com/business/energy/bangladesh-pay-russia-yuan-nuclear-plant-2023-04-17/">Bangladesh is now paying Russia in yuan</a> for the construction of a nuclear power station. <a href="https://www.nasdaq.com/articles/china-completes-first-yuan-settled-lng-trade">France is accepting payment in yuan for liquefied natural gas</a> bought from China’s state-owned oil company. A Brazilian bank controlled by a Chinese state bank is becoming the first Latin American bank to <a href="https://www.bloomberg.com/news/articles/2023-03-30/brazil-takes-steps-to-transact-in-yuan-as-ties-with-china-grow#xj4y7vzkg">participate directly in China’s payments system, CIPS</a>. <a href="https://www.bloomberg.com/news/articles/2023-02-22/iraq-pivots-to-yuan-for-china-imports-in-defense-of-own-currency#xj4y7vzkg">Iraq wants to pay for imports from China in yuan</a>, and even Tesco, the British retailer, <a href="https://www.economist.com/leaders/2013/02/09/yuan-for-the-money">wants to pay for its Chinese imported goods in yuan</a>. </p>
<p>The combined dollar amount of these transactions is still relatively small, but the shift to yuan is significant.</p>
<h2>Yuan still not freely available</h2>
<p>China keeps <a href="https://www.safe.gov.cn/en/2023/0222/2067.html">a tight grip</a> on money coming in and out of the country. Such capital controls and limited transparency in Chinese financial markets mean China still lacks the deep and free financial markets that are required to make the yuan a major global currency. </p>
<p>For the yuan to achieve a truly global standing, it needs to be freely available for cross-border investment and not just serve as a payment medium to accommodate trade. </p>
<p>But the war in Ukraine may have just made it feasible for the yuan to eventually join the ranks of the dollar and the euro – even if the volume isn’t there yet. And any U.S. policy decisions that weaken the reputation and strength of U.S. institutions – such as <a href="https://theconversation.com/voters-want-compromise-in-congress-so-why-the-brinkmanship-over-the-debt-ceiling-206465">the recent drama over raising the debt ceiling</a>, which brought the government to the brink of default – will accelerate the rise of the yuan and decline of the dollar.</p><img src="https://counter.theconversation.com/content/205519/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tuugi Chuluun does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Despite China’s economic power, the yuan lags as a major global currency. Here’s why current US interest rates and sanctions on Russia may change that.Tuugi Chuluun, Associate Professor of Finance, Loyola University MarylandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2040602023-05-21T10:11:03Z2023-05-21T10:11:03ZGrand infrastructure projects aren’t a magic bullet for industrial development – insights from Ghana and Kenya<figure><img src="https://images.theconversation.com/files/522146/original/file-20230420-201-3jeqjy.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Kenya Lamu Port Project</span> </figcaption></figure><p>The African Union’s flagship <a href="https://au.int/en/agenda2063/overview">Agenda 2063</a> initiative prioritises <a href="https://au.int/en/infrastructure-energy-development">large-scale infrastructure development</a> and promises to “link the continent by rail, road, sea and air”. </p>
<p>This is being undertaken in parallel with efforts to improve economic integration. In 2021, the 54 countries on the continent made history when they began trading within the <a href="https://au-afcfta.org/about/">African Continental Free Trade Area</a>. It is the largest free trade area in the world.</p>
<p>Proponents of an approach to development that focuses on <a href="https://www.tandfonline.com/doi/full/10.1080/00343404.2019.1661984">infrastructure</a> claim that improving connectivity will foster industrialisation and planned urbanisation. It gives policy makers tools to create well-planned urban regions that can compete in the global economy and attract foreign direct investment. These, in turn, will foster industrial growth. </p>
<p>The argument goes that setting up <a href="https://www.tandfonline.com/doi/full/10.1080/21622671.2022.2092205">development corridors</a>, <a href="https://elibrary.worldbank.org/doi/abs/10.1596/978-0-8213-8638-5">special economic zones</a>, ‘<a href="https://journals.sagepub.com/doi/10.1177/0042098018793032">new cities</a>,’ and drawing up <a href="https://journals.sagepub.com/doi/full/10.1177/0308518X18763370">city master plans</a> will lead to the development of urban spaces that can be ‘plugged in’ to global production networks. This will boost the productivity and competitiveness of African industry. Ultimately African countries will export more high-value manufactured goods rather than natural resources and unprocessed agriculture commodities.</p>
<p><a href="https://www.tandfonline.com/doi/abs/10.1080/03056244.2023.2171284">Our research</a> calls these claims into question. We assessed the impact of transnational development corridor projects in Kenya and Ghana. We found that in both cases, improved connectivity failed to catalyse industrialisation. Instead, it encouraged land speculation as it opened up new spaces to real estate investment.</p>
<p>This is a problem. Failure to trigger industrial growth risks locking Africa into the global economy as an <a href="https://www.tandfonline.com/doi/abs/10.1080/03056244.2015.1084911">exporter of raw materials</a>. On top of this, cities without industry have <a href="https://link.springer.com/article/10.1007/s10887-015-9121-4">higher levels of inequality</a> than their more industrialised counterparts. </p>
<p>We concluded that infrastructure that links mines to ports isn’t enough. It needs to be accompanied by policies that discourage speculation in land, and encourage productive investment in factories that can process raw materials and provide jobs to the continent’s young urban workforce.</p>
<h2>Infrastructure-led development in Africa</h2>
<p>Poor quality infrastructure is a <a href="https://www.tandfonline.com/doi/full/10.1080/00343404.2019.1661984">legacy of neoliberal structural adjustment </a> programmes imposed on African countries by the International Monetary Fund in the 1980s and 1990s. Governments that received these loans were largely prohibited from investing in infrastructure. But private investors showed little interest in building large-scale transnational logistics and energy infrastructure.</p>
<p>The <a href="https://corporatefinanceinstitute.com/resources/economics/2008-2009-global-financial-crisis/">2008 financial crisis</a> changed everything. Many governments responded by <a href="https://www.sciencedirect.com/science/article/pii/S0305750X19300713">reintroducing national development planning</a>. These included <a href="https://www.tandfonline.com/doi/full/10.1080/13563467.2022.2091534">large-scale infrastructure projects</a>. These projects could be financed because low interest rates in advanced-industrial countries meant that borrowing was cheap. </p>
<p>By 2018 <a href="https://www.sciencedirect.com/science/article/pii/S0016718517303299?via%3Dihub">more than 50 development corridors</a> were in various stages of construction across Africa. Many governments were fully committed to infrastructure-led development. Transportation networks and energy grids were expanded at break-neck speed in a <a href="https://www.tandfonline.com/doi/full/10.1080/23792949.2022.2115933">continental competition</a>.</p>
<h2>Case study 1: Ghana</h2>
<p>The <a href="https://highwayabb.ecowas.int/about-the-project/">Abidjan–Lagos Corridor</a> is a project to build a transnational six-lane highway connecting Ghana’s capital, Accra, to Abidjan, Lome, Cotonou and Lagos. </p>
<p>The project was launched in 2014 by the <a href="https://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/Multinational_-_Approved_-_Study_for_the_Abidjan-_Lagos_Corridor_Highway_Development_Project.pdf">Economic Community of West African States</a> with the support of the African Development Bank and African Union. More than 50% of the corridor traverses Ghanaian territory.</p>
<p>The initiative enjoys broad political support in Ghana. Through his <a href="https://www.trade.gov/market-intelligence/ghana-one-district-one-factor-1d1f-initiative">One District One Factory policy</a>, President Nana Akufo-Addo of the National Patriotic Party has sought to support industrialisation across a range of economic sectors, from textiles to pharmaceuticals. He has <a href="https://www.ghanaweb.com/GhanaHomePage/business/Establish-a-management-authority-to-fast-track-implementation-of-Abidjan-Lagos-Corridor-Dev-t-Project-Akufo-Addo-790926">fast-tracked the Corridor project</a> and lobbied to host the management authority of the project. </p>
<p>The highway is the cornerstone of a rapidly urbanising West African ‘<a href="https://www.elgaronline.com/display/edcoll/9781788972697/9781788972697.00021.xml">megacity region</a>’. Real estate projects range from a <a href="https://www.tandfonline.com/doi/full/10.1080/13563475.2019.1664896">planned new city 50km from Accra</a> to unplanned <a href="https://journals.sagepub.com/doi/abs/10.1177/0042098019851949">urban sprawl</a> that extends throughout the corridor.</p>
<p>The corridor has not significantly boosted Ghanaian industrial capacity. <a href="https://stat.unido.org/sdg/GHA">According to UNIDO data</a>, manufacturing accounted for 14% of Ghana’s GDP in 2008. By 2022 this figure had shrunk to a mere 11.8%. It has, however, created opportunities for real estate speculation.</p>
<h2>Case study 2: Kenya</h2>
<p>We found similar results in Kenya. In 2008 the government launched <a href="https://vision2030.go.ke/">Kenya Vision 2030</a>. This targeted a number of key <a href="https://www.tralac.org/images/docs/8097/kenyas-industrial-transformation-programme-2015.pdf">economic sectors</a>. Agro-processing, textiles, leather and construction materials are some of these. The hope was that it would nearly double manufacturing’s share of gross domestic product.</p>
<p>The Kenyan Government went on an infrastructure spending spree. By 2019 Kenya was undertaking more large-scale infrastructure projects than almost <a href="https://www2.deloitte.com/za/en/pages/energy-and-resources/articles/africa-construction-trends.html">any other country in Africa</a>.</p>
<p>Many of these projects are included in the <a href="https://www.lapsset.go.ke/">Lamu Port–South Sudan–Ethiopia Transport Corridor</a>. This is designed to integrate northern Kenya and its surrounding borderlands into a transnational region that boasts world class logistics infrastructure. In addition, the <a href="http://ke.china-embassy.gov.cn/eng/zxyw/201910/t20191028_6817952.htm">Standard Gauge Railway</a> was built to link Mombasa and Nairobi, while a series of road projects around Nairobi were designed to decongest the city centre.</p>
<p>But Kenya’s manufacturing sector has generally disappointed. <a href="https://stat.unido.org/sdg/KEN">According to UNIDO</a> manufacturing value added as a proportion of GDP decreased from 11.8% in 2008 to a 8.9% in 2022.</p>
<p>The infrastructure boom has, however, accelerated urban sprawl and speculation. Investors have rushed in to secure land adjacent to new projects in <a href="https://dlci-hoa.org/assets/upload/investment-in-the-dry-lands-documents/20200804041053648.pdf">Isiolo and Lamu</a>. North of Nairobi, the Thika Superhighway has catalysed a peri-urban real estate boom. For example, international developer Rendeavour is building a <a href="https://www.rendeavour.com/projects/tatu-city/">new city</a> with state-of-the-art amenities for 150,000 residents. </p>
<p>Elsewhere along the highway local landlords have built high-rise tenements to capitalise on the <a href="https://www.iied.org/sites/default/files/pdfs/migrate/10876IIED.pdf">booming low-end rental market</a>.</p>
<h2>What must be done?</h2>
<p>Our findings do not rule out the possibility that infrastructure-led development could drive industrialisation in the future. But they suggest that it must be accompanied by policy that discourages speculation in land and real estate.</p>
<p>Currently, property in many African cities is not taxed, so many elites consider it the ‘<a href="https://onlinelibrary.wiley.com/doi/full/10.1111/1468-2427.12550">safest bet</a>.’ Levying taxes on property would discourage speculation and generate revenue that could be used for public spending. This approach has <a href="https://www.wiley.com/en-gb/Urban+Land+Rent%3A+Singapore+as+a+Property+State-p-9781118827659">worked in East Asian countries</a> that have successfully achieved industrial transformation. </p>
<p>Without this, infrastructure-led development is likely to contribute to further <a href="https://link.springer.com/article/10.1007/s10887-015-9121-4">urbanisation without industrialisation</a>. African governments will be unlikely to achieve their industrial objectives, and remain dependent on exporting natural resources and agricultural goods.</p><img src="https://counter.theconversation.com/content/204060/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Seth Schindler received funding from the Economic and Social Research Council. </span></em></p><p class="fine-print"><em><span>Tom Gillespie received funding from a University of Manchester Hallsworth Research Fellowship and the UK Foreign, Commonwealth and Development Office-funded African Cities Research Consortium. </span></em></p>Infrastructure that links mines to ports isn’t enough – it needs to be accompanied by policies that encourage productive investment in factories.Seth Schindler, Senior Lecturer in Urban Development & Transformation, University of ManchesterTom Gillespie, Lecturer in Global Urban Development, University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2011192023-05-17T12:39:52Z2023-05-17T12:39:52ZHow China uses ‘geostrategic corruption’ to exert its influence in Latin America<figure><img src="https://images.theconversation.com/files/526566/original/file-20230516-23-rcqcyf.jpg?ixlib=rb-1.1.0&rect=8%2C95%2C5762%2C3746&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The successful courting of Honduras is the latest example of China's influence in Latin America.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/chinese-foreign-minister-qin-gang-and-honduras-foreign-news-photo/1476447324?adppopup=true">Lintao Zhang/Pool/Getty Images</a></span></figcaption></figure><p>Corruption has long been a <a href="https://gjia.georgetown.edu/2022/04/01/radical-transparency-the-last-hope-for-fighting-corruption-in-latin-america%EF%BF%BC/">scourge in parts of Latin America</a>. </p>
<p>Traditionally, it has funneled down domestic routes, with <a href="https://www.transparency.org/en/press/2022-corruption-perceptions-index-cycle-corruption-organised-crime-instability-americas">local politicians, business interests</a> and <a href="https://www.cfr.org/backgrounder/mexicos-long-war-drugs-crime-and-cartels">drug lords</a> benefiting from graft and dodgy dealings. Indeed, a 2022 report from Transparency International found that 27 out of 30 countries in Latin America and the Caribbean have shown <a href="https://www.transparency.org/en/news/cpi-2022-americas-corruption-criminal-networks-human-rights-abuses">stagnant corruption levels</a> with no improvement in recent years.</p>
<p>But over the last two decades, a <a href="https://www.foreignaffairs.com/articles/united-states/2020-06-09/rise-strategic-corruption">new form of corruption</a> has taken hold in countries in the region, a phenomenon we call “geostrategic corruption.” </p>
<p>It is characterized by external countries using corrupt methods – no-bid contracts, insider financial deals, special relations with those in power – to become stakeholders in multiple facets of the politics, economy and society of a country. China is <a href="https://www.politico.com/newsletters/politico-china-watcher/2021/08/12/adm-faller-china-exploiting-corruption-in-latin-america-493948">a master of the art</a>; the United States, less so.</p>
<p>As <a href="https://pir.fiu.edu/people/political-science-graduate-students/valeriia-popova1/valeriia-popova.html">scholars of</a> <a href="https://pir.fiu.edu/people/faculty-a-z/eduardo-gamarra1/eduardo-gamarra.html">Latin American politics</a>, we have seen how China has used geostrategic corruption to gain a foothold in the region as <a href="https://time.com/6186494/americas-summit-biden-china/">U.S. influence has waned</a>.</p>
<h2>What is geostrategic corruption?</h2>
<p>Geostrategic corruption builds on <a href="https://www.transparency.org/en/news/cpi-2022-americas-corruption-criminal-networks-human-rights-abuses">traditional pervasive patterns</a> of clientelism and patronage. In Latin America in particular, the growth of the drug gangs since the 1980s introduced “narco-corruption” in which police and local officials collude with organized gangs, which are able to “<a href="https://images.transparencycdn.org/images/2021-Report-Resisting-corruption-along-drug-trafficking-routes-Crimjust.pdf">buy protection</a>” from prosecution. </p>
<p>As a result, police, local governments and elected representatives are considered by watchdogs as among <a href="https://www.transparency.org/en/gcb/latin-america/corruption-on-the-rise-in-latin-america-and-the-caribbean">the most corrupt political entities</a> in Latin America, with the region consistently scoring low in annual global <a href="https://www.transparency.org/en/news/cpi-2022-americas-corruption-criminal-networks-human-rights-abuses">corruption perception rating</a>.</p>
<p>This pattern of corruption has coincided with a period in which the U.S. has turned its attention away from Latin America and toward <a href="https://www.brookings.edu/blog/order-from-chaos/2021/09/07/reflections-on-the-long-term-repercussions-of-september-11-for-us-policy-in-the-middle-east/">first the Middle East</a> <a href="https://www.cfr.org/project/us-pivot-asia-and-american-grand-strategy">and then Asia</a>.</p>
<p>The vacuum has largely been filled by China. Trade between the region and China skyrocketed from <a href="https://www.brookings.edu/research/the-geopolitics-of-chinas-rise-in-latin-america/">US$10 billion worth of goods in 2000</a> to <a href="https://www.cfr.org/backgrounder/china-influence-latin-america-argentina-brazil-venezuela-security-energy-bri">$450 billion in 2021</a>. China is now the top trading partner of South America, making up to 34% of total trade in <a href="https://www.cfr.org/backgrounder/china-influence-latin-america-argentina-brazil-venezuela-security-energy-bri">Chile, Brazil and Peru</a>.</p>
<p>China’s expansion in the region is largely driven by the country’s <a href="https://foreignaffairs.house.gov/china-regional-snapshot-south-america/">search for resources</a> such as cobalt, lithium, rare earths, hydrocarbons and access to foodstuffs, which are abundant in Latin America. In the past 20 years, China has also poured <a href="https://www.cfr.org/backgrounder/china-influence-latin-america-argentina-brazil-venezuela-security-energy-bri">massive investments</a> into infrastructure, energy and financial sectors of Latin America.</p>
<p>And China isn’t alone in upping its interest in Latin America. The last two decades have also seen an increase in investment and influence in the region <a href="https://carnegieendowment.org/2018/05/03/russia-playing-geopolitical-game-in-latin-america-pub-76228">from Russia</a> <a href="https://www.iri.org/news/foreign-authoritarian-influence-in-latin-america-irans-growing-reach/">and Iran</a>. </p>
<p>These countries have found Latin America a fertile ground due in no small part to the region’s culture of corruption and weak institutions, we argue. Local criminal networks and the disregard of democratic norms on the ground have made it easier for countries that themselves are <a href="https://www.reuters.com/article/bribes-transparency/chinese-and-russian-firms-fare-worst-in-bribery-index-idINL5E7LV31T20111101">perceived to be dogged by corruption</a> to gain a foothold in Latin America.</p>
<h2>US-China global competition</h2>
<p>China’s presence in the region forms part of the country’s long-term strategic objective to <a href="https://www.lanacion.com.ar/politica/el-embajador-stanley-admitio-que-eeuu-necesita-mas-herramientas-para-poder-competir-con-china-en-nid04052023/">challenge U.S. influence across the globe</a> through economic, military, financial and political means.</p>
<p>That process has been aided by global trends. Countries such as <a href="https://apnews.com/article/china-brazil-lula-xi-jinping-91c34b4a9fb78f263d6f81f1e9a16f49">Brazil</a> and <a href="https://worldcrunch.com/world-affairs/argentina-china-in-americas">Argentina</a> have increasingly sought to diversify bilateral relationship and become less dependent on U.S. trade.</p>
<p>Meanwhile, Russian aggression in Ukraine has seemingly given China more weight on the international scene, with Beijing positioning itself as an <a href="https://apnews.com/article/china-saudi-arabia-iran-global-mediator-45ec807c8fd2b2aa65eef4cc313b739d">alternative diplomatic force</a> to Washington, especially to countries that feel nonaligned to the West. A recent example was seen in March, when Honduras announced it would <a href="https://www.npr.org/2023/03/27/1166177955/honduras-establishes-ties-with-china-after-break-from-taiwan">establish diplomatic relations with Beijing</a> and break off ties with Taiwan – a development that Taiwanese officials say followed the “<a href="https://focustaiwan.tw/politics/202303230006">bribing” of Honduran officials</a>.</p>
<p>What gives China an added competitive edge as it extends its influence is that it is able to eschew constraints that bind many would-be investors in the West – such as environmental concerns or hesitation over a country’s labor rights and level of corruption. Chinese companies are <a href="https://www.csis.org/analysis/corruption-flows-along-chinas-belt-and-road">judged by international watchdogs to be</a> <a href="https://issuu.com/transparencyinternational/docs/2016_transparencyincorporatereporti?e=2496456/37122985">among the least transparent</a> in the world, and bribery watchdogs have long noted Beijing’s <a href="https://images.transparencycdn.org/images/2018_Report_ExportingCorruption_English_200402_075046.pdf">reluctance to prosecute Chinese companies or individuals</a> accused of bribery in regard to foreign contracts. A 2021 study found that <a href="https://www.aiddata.org/publications/banking-on-the-belt-and-road">35% of China’s “Belt and Road” projects</a> worldwide have been marked by environmental, labor and corruption problems.</p>
<p>The U.S. administration, in contrast, is more restricted by <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/29/fact-sheet-the-biden-harris-administrations-abiding-commitment-to-democratic-renewal-at-home-and-abroad/">commitments to encourage democratic development</a> as well as public pressure and international image. Washington does not have the same privilege of <a href="http://afe.easia.columbia.edu/special/china_1950_forpol_principles.htm">diplomatic pragmatism</a> as China. </p>
<p>U.S. companies are, of course, not spotless when it comes to engaging in corrupt practices overseas. But unlike China, the U.S. government is bound to an <a href="https://www.oecd.org/corruption/oecdantibriberyconvention.htm">international treaty</a> <a href="https://www.dw.com/en/governments-turn-a-blind-eye-to-foreign-bribery-transparency-international/a-55252806">prohibiting the use of bribes</a> to win contracts. Moreover, the U.S. <a href="https://www.law.cornell.edu/uscode/text/15/78dd-1">Foreign Corrupt Practices Act</a> strictly prohibits American companies from bribing foreign officials; China has no such equivalent.</p>
<h2>Chinese corruption in the region</h2>
<p>Chinese investment <a href="https://www.csis.org/analysis/populism-china-and-covid-19-latin-americas-new-perfect-storm">has been easier where populist regimes govern</a> and where the rule of law has long been undermined, such as <a href="https://worldjusticeproject.org/rule-of-law-index/country/Argentina">Argentina</a>, <a href="https://worldjusticeproject.org/rule-of-law-index/country/2022/Bolivia/">Bolivia</a> and <a href="https://worldjusticeproject.org/rule-of-law-index/country/2022/Venezuela%2C%20RB/">Venezuela</a>.</p>
<p>For example, in Bolivia during the 14-year tenure of President Evo Morales, Chinese companies <a href="https://www.reuters.com/article/us-bolivia-lithium-china/bolivia-picks-chinese-partner-for-2-3-billion-lithium-projects-idUSKCN1PV2F7">achieved a major foothold</a> in key sectors of the economy that has translated into a monopoly over the lithium industry there, despite a <a href="https://asia.nikkei.com/Spotlight/Caixin/China-consortium-to-develop-lithium-deposits-in-Bolivia">strong anti-mining movement in the country</a>.</p>
<p>Geostrategic corruption in Argentina is firmly rooted at the local level, in provinces and regions across the country, <a href="https://icaie.com/2023/03/new-report-the-prc-feudal-governors-and-no-accountability-lithium-mining-in-argentinas-northwest-district/">feudal-like governors</a> have enabled a <a href="https://www.batimes.com.ar/news/world/argentina-retains-low-score-in-global-corruption-ranking.phtml">sophisticated corruption network</a> that China has seemingly used to invest in everything from <a href="https://www.reuters.com/business/energy/argentina-wants-china-fully-fund-83-bln-nuclear-plant-amid-cash-shortfall-2022-04-05/#:%7E:text=The%20South%20American%20nation%20signed,faces%20a%20tighter%20fiscal%20outlook.">nuclear plants</a> and building lithium battery plants to constructing a satellite-tracking <a href="https://foreignpolicy.com/2019/02/08/us-military-warns-of-threat-from-chinese-run-space-station-in-argentina/">deep-space ground station</a>, railroads, <a href="https://foreignpolicy.com/2022/05/23/argentina-china-us-imf-bri-debt-economy-summit-americas/">hydroelectric plants</a>, research facilities and <a href="https://www.scmp.com/news/china/diplomacy/article/3213774/argentina-revives-possibility-chinese-fighter-jet-purchase-renewing-beijings-hopes-jf-17-south">maybe even fighter jets</a>.</p>
<p>In Ecuador, such projects <a href="https://www.nytimes.com/2018/12/24/world/americas/ecuador-china-dam.html">include a dam</a> built in exchange for <a href="https://theglobalamericans.org/2019/12/latin-america-and-china-choosing-self-interest/">oil contracts</a>; the Coca Codo Sinclair hydroelectric plant, which <a href="https://www.reuters.com/article/ecuador-power-china-idUSL1N2OW10M">developed massive cracks soon after construction</a>; and the Quijos hydroelectric project, which <a href="https://www.elcomercio.com/actualidad/empresa-china-electrica-ecuador-incumplida.html">failed to generate promised volumes of power</a>. Similarly, the Chinese-financed Interoceanic Grand Canal in Nicaragua was estimated by opponents of the project to <a href="https://thediplomat.com/2019/08/nicaraguas-chinese-financed-canal-project-still-in-limbo/">irreversibly impact the ecosystem and displace about 120,000 people</a>, while local activists faced <a href="https://www.amnesty.org/en/documents/amr43/6515/2017/en/">harassment, violence and unlawful detention</a>. </p>
<p>In Venezuela, China initiated but never completed construction of a multibillion dollar <a href="https://apnews.com/article/3367297bb5cc4fc497579164f679ec75">bullet train line</a>, and an iron mining deal not only allowed the Asian country to buy Venezuela’s iron ore at a price 75% below market, but also turned out to be an instance of Chinese predatory financing, leaving Venezuela in a catastrophic <a href="https://dialogochino.net/en/trade-investment/40016-a-dream-deal-with-china-iron-ore-that-ended-in-nightmarish-debt-for-venezuela/">$1 billion debt</a>. Likewise, in Panama, port concessions and a high-speed train line were <a href="https://dialogochino.net/en/trade-investment/34472-has-chinas-winning-streak-in-panama-ended/#:%7E:text=A%20Chinese%20proposal%20for%20a%20US%244.1%20billion%20high,was%20cancelled%20and%20recast%20as%20a%20public-private%20partnership">frozen or canceled</a>, while the investor is under <a href="https://www.newsroompanama.com/business/big-time-chinese-investor-in-panama-under-probe-cloud">investigation</a> in China.</p>
<p>Throughout the region, Chinese firms have been <a href="https://www.reuters.com/article/us-venezuela-corruption/venezuela-charges-five-officials-with-embezzling-china-funds-idUSBRE9670VW20130708">cited in numerous</a> <a href="https://www.bnamericas.com/en/news/bolivias-roads-agency-raided-following-bribe-allegation">cases involving bribery</a> <a href="https://cuencahighlife.com/attorney-general-opens-bribery-investigation-of-chinese-construction-company-projects/">and kickback schemes</a> that have enriched local officials in return for contracts and access.</p>
<h2>What does it mean for the US?</h2>
<p>This use of geostrategic corruption works to the direct detriment of U.S. interests. </p>
<p>In Argentina and Bolivia, Chinese expansion means that sectors that are crucial for the success of the U.S.’s green energy goals are increasingly under Beijing’s hold. It also undermines U.S. efforts to counter corruption and human rights abuses in the region. </p>
<p>And U.S. companies are unable to compete. The Biden administration has set <a href="https://www.wilsoncenter.org/sites/default/files/media/uploads/documents/Nearshoring%20and%20Renewable%20Energy-%20Building%20on%20the%20Los%20Angeles%20Summit%20of%20the%20Americas.pdf">high standards for U.S. investment</a> in the very sectors where the Chinese have a strong foothold. These include <a href="https://www.whitehouse.gov/wp-content/uploads/2022/10/Biden-Harris-Administrations-National-Security-Strategy-10.2022.pdf">transparency and accountability</a>, as well as commitments to environmental, labor and human rights standards.</p>
<p>President Joe Biden has stated that adherence to these standards is what distinguishes U.S. foreign investments from its competitors. But it does hamstring American companies when it comes to competing with China.</p>
<p>In the meantime, while the U.S. is looking for answers and trying to figure out how to reestablish influence in Latin America, China is quietly and pragmatically increasing its presence in the region.</p><img src="https://counter.theconversation.com/content/201119/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>As an academic and as director of a university research center, I've received funding from foundations, US government agencies, and multilateral institutions.</span></em></p><p class="fine-print"><em><span>Valeriia Popova does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As US influence in Latin America has waned, Beijing has been able to expand business interests in the region on the back of shady practices.Eduardo Gamarra, Professor of Politics and International Relations, Florida International UniversityValeriia Popova, Professor of Politics and International Relations, Florida International UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2040522023-05-11T14:28:45Z2023-05-11T14:28:45ZSouth Africa walks a tightrope of international alliances - it needs Russia, China and the west<figure><img src="https://images.theconversation.com/files/524899/original/file-20230508-20523-doks87.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">China's President Xi Jinping, left, and Russian President Vladimir Putin cement bonds at the Kremlin in March. </span> <span class="attribution"><span class="source">Vladimir Astapkovich/Sputnik/AFP via Getty Images.</span></span></figcaption></figure><p>Relations between the People’s Republic of China and Russia on one hand and the west, specifically the US, on the other have become increasingly tense in recent times. For the US, China and Russia <a href="https://www.whitehouse.gov/wp-content/uploads/2022/11/8-November-Combined-PDF-for-Upload.pdf#page=7">represent authoritarian regimes</a>. For China, the US is the <a href="https://www.fmprc.gov.cn/mfa_eng/wjbxw/202302/t20230220_11027664.html">source</a> of global insecurity. </p>
<p>With a few exceptions like <a href="https://www.politico.eu/article/emmanuel-macron-china-america-pressure-interview/">France</a> and the <a href="https://www.bbc.com/news/uk-65382211">UK</a>, the west sees the presence of Russia and China in the BRICS bloc (which also includes Brazil, India and South Africa) as contaminating the entire bloc as well as their relations with the individual BRICS member countries. This is especially so for the US.</p>
<p>This view reflects the <a href="https://theconversation.com/united-states-the-end-of-an-illusion-of-omnipotence-186421">weakening global power</a> of the US, especially its <a href="https://www.theguardian.com/commentisfree/2022/jul/29/putin-ruble-west-sanctions-russia-europe">inability to isolate Russia in Europe</a> and to contain the influence of China in Asia and the developing world. </p>
<p>The growing tensions pose a political and economic challenge for South Africa. This is especially so for US-South Africa relations. Part of my <a href="https://repository.up.ac.za/handle/2263/84257">doctoral thesis</a> focused on BRICS and its efforts to democratise the post-Cold War international order, which, by US admission, has <a href="https://www.whitehouse.gov/wp-content/uploads/2022/11/8-November-Combined-PDF-for-Upload.pdf">come to an end</a>. This is an important admission because the US is <a href="https://www.whitehouse.gov/briefing-room/speeches-remarks/2023/04/27/remarks-by-national-security-advisor-jake-sullivan-on-renewing-american-economic-leadership-at-the-brookings-institution/?s=09">aware</a> that the unilateral power it used to interact with the rest of the world after the collapse of the Soviet Union in 1989 is now subject to competition by many forces, both economic and political. </p>
<p>I argue that South Africa should not choose between its BRICS or EU and US partnerships. It should keep its relations with the west while remaining within BRICS because of its economic prospects. The west remains economically significant for South Africa, but the BRICS bloc is important for South Africa’s economic adaptability. </p>
<h2>The BRICS bloc</h2>
<p>BRICS is effectively a forum for cooperation among regional powers that seek to democratise the international political economy. The bloc has used the (<a href="https://www.dfat.gov.au/trade/organisations/g20">G20</a>) platform – the group of 19 industrialised countries plus the European Union – to establish cohesion on issues such as international financial stability, climate change mitigation and sustainable development. </p>
<p>At its 2011 summit, the bloc called for an end to the long reign of the US dollar as <a href="https://www.washingtonpost.com/world/china-other-developing-brics-nations%20seek-change-in-global-economic-order/2011/04/14/AFarMgdD_story.html">the world’s reserve currency</a> (de-dollarisation). The <a href="https://www.thebalancemoney.com/2008-financial-crisis-3305679">2008 credit crisis</a> had illustrated the inadequacy of the world monetary system, with <a href="https://economictimes.indiatimes.com/news/international/brics-seek-lower-dependence-on-dollar-higher-scrutiny-of-commodity-futures/articleshow/7986576.cms?from=mdr">the US dollar at the centre</a>. But it was the Russia-Ukraine war, when <a href="https://www.theguardian.com/world/2023/feb/20/sanctions-war-russia-ukraine-year-on-vladimir-putin">US sanctions against Russia backfired</a>, which quickened efforts at de-dollarisation. </p>
<p>The emergence of BRICS not only strengthens south-south relations, it weakens the <a href="https://www.cambridge.org/core/journals/review-of-international-studies/article/brandt-line-after-forty-years-the-more-northsouth-relations-change-the-more-they-stay-the-same/8646CE553D2F986BD33B67352FFC5814">inequality</a> that characterises north-south relations. Much of the global south is developing fast enough for it to not only demand a more equitable world order, but also to finance it. </p>
<p>This brings us to international governance.</p>
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Read more:
<a href="https://theconversation.com/south-africa-and-russia-president-cyril-ramaphosas-foreign-policy-explained-198430">South Africa and Russia: President Cyril Ramaphosa's foreign policy explained</a>
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<p>The BRICS bloc serves as a counterweight to some of the excesses of US unilateralism that’s been a feature of global governance since the <a href="https://theconversation.com/how-the-fall-of-the-berlin-wall-30-years-ago-resonated-across-africa-126521">end of the Soviet Union in 1989</a>. For instance, although the 2001 NATO invasion of Afghanistan was illegal under <a href="https://www.e-ir.info/2013/11/06/was-the-nato-invasion-of-afghanistan-legal/">international law</a> and the 2003 invasion of Iraq was equally <a href="https://www.theguardian.com/world/2004/sep/16/iraq.iraq">unlawful</a>, neither the US nor NATO have been prosecuted. Thus, the US has for some time undermined global governance. </p>
<p>The BRICS bloc’s efforts to democratise global governance will support international accountability.</p>
<p>Democratising financial and governance institutions is important in addressing many of the issues that concern the developing world.</p>
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<img alt="Two men shake hands in from of Chinese and South African flags." src="https://images.theconversation.com/files/524903/original/file-20230508-247781-sxlgnl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/524903/original/file-20230508-247781-sxlgnl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=405&fit=crop&dpr=1 600w, https://images.theconversation.com/files/524903/original/file-20230508-247781-sxlgnl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=405&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/524903/original/file-20230508-247781-sxlgnl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=405&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/524903/original/file-20230508-247781-sxlgnl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=508&fit=crop&dpr=1 754w, https://images.theconversation.com/files/524903/original/file-20230508-247781-sxlgnl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=508&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/524903/original/file-20230508-247781-sxlgnl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=508&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">South African president Cyril Ramaphosa with President Xi Jinping.</span>
<span class="attribution"><span class="source">GCIS</span></span>
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<p>The emergence of the BRICS bloc has overshadowed the G7+ meetings while centralising the G20 as an international platform for political and economic coordination. So South Africa’s <a href="https://www.news24.com/fin24/economy/japan-invites-african-union-to-g7-excludes-south-africa-20230417">exclusion</a> from May 2023’s G7+ meeting in Japan doesn’t count for much. </p>
<h2>South Africa and the west</h2>
<p>Pretoria’s biggest trading partners are the EU and the US. South Africa is the largest US and EU trading partner in Africa, with the US totalling R289 billion (about US$16 billion in 2021) and the EU totalling a trade of <a href="https://www.tralac.org/documents/publications/trade-data-analysis/4471-south-africa-global-trade-update-2021/file.html">R699 billion (about US$ 38 billion in 2021</a>. </p>
<p>South Africa also benefits from the preferential access to US markets for some of its exports in terms of the African Growth and Opportunity Act (<a href="https://agoa.info/news/article/16131-agoa-time-as-2025-approaches-opportunities-for-improvements-eyed.html#:%7E:text=AGOA%20is%20set%20to%20expire,how%20it%20should%20be%20extended.">AGOA</a>.</p>
<p>But the country is politically tied to the emergent multipolar world led by China, and broadly BRICS.</p>
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Read more:
<a href="https://theconversation.com/south-africas-foreign-policy-new-paper-sets-the-scene-but-falls-short-on-specifics-188253">South Africa's foreign policy: new paper sets the scene, but falls short on specifics</a>
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<p>Even France and the UK have begun to understand the need to balance their own interests with China against their interests with their traditional ally, the US. </p>
<p>So South Africa’s national interests demand that it carefully navigate western anxieties caused by its BRICS ties. It needs to show that its membership of the bloc doesn’t make it anti-west.</p>
<h2>BRICS’ growing economic importance</h2>
<p>Immediately after South Africa joined BRICS in 2010, China invested in several projects, including expanding Durban’s <a href="https://orcasia.org/2022/07/china-in-the-indian-ocean-region-ports-and-bases/#:%7E:text=Port%20of%20Durban%2D%20The%20Durban,by%20Shanghai%20Zhenhua%20Heavy%20Industries.">port</a>. This is the largest and busiest shipping terminal in sub-Saharan Africa. </p>
<p>Trade and investment links between South Africa and China have improved too. By the end of 2021, South Africa’s exports to China reached over US$33 billion and China’s investment into South Africa <a href="https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zwjg_665342/zwbd_665378/202204/t20220416_10668699.html">totalled</a> over US$25 billion, creating over 400,000 local jobs since 2008. </p>
<p>Investments from South Africa into BRICS countries have surged since it became a bloc member. BRICS total trade amounted to <a href="https://www.tralac.org/documents/publications/trade-data-analysis/4471-south-africa-global-trade-update-2021/file.html">R666 billion</a> (about US$36 billion] in 2021. And China is an important trading partner for South Africa standing at R479 billion (about US$26 billion), above the US. </p>
<p>Trade between South Africa and BRICS has yet to reach the level of trade with the EU and the US, but the BRICS bloc gives the country an opportunity to diversity its investment portfolio and destination. </p>
<p>China has <a href="https://data.worldbank.org/indicator/SP.POP.TOTL?locations=CN">1.4 billion people</a> and the US has just over <a href="https://www.census.gov/popclock/">300 million</a>, so market access to China is important to any emerging economy. BRICS countries are currently responsible for roughly 31.5% of the global <a href="https://thenewscrypto.com/economic-power-shift-brics-nations-outpace-g7-in-global-gdp/">GDP</a> while the G7 have come down to roughly 30%. </p>
<h2>Navitaging anxieties</h2>
<p>Of course, the problem of South Africa’s strained relations with the west is not South Africa’s. The problem is that the west, specifically the unilateral power that the US represents, approaches the global order as if it’s a process that flows from its benevolence. </p>
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Read more:
<a href="https://theconversation.com/how-values-interests-and-power-must-shape-south-africas-foreign-policy-150478">How values, interests and power must shape South Africa's foreign policy</a>
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<p>For its own interests, South Africa must carefully navigate western anxieties about BRICS, and demonstrate that there is a common future for both the west and others in a multipolar world.</p><img src="https://counter.theconversation.com/content/204052/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Thapelo Tselapedi does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The US’s negative attitude towards BRICS reflects its own weakening global power, especially its inability to isolate Russia in Europe and to contain China’s growing influence.Thapelo Tselapedi, Politics lecturer, Rhodes UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2041532023-04-27T15:28:38Z2023-04-27T15:28:38ZHow dirty old used cars from the US and Europe carry on polluting … in Africa – podcast<figure><img src="https://images.theconversation.com/files/521946/original/file-20230419-26-f2kde2.jpg?ixlib=rb-1.1.0&rect=164%2C203%2C6307%2C4104&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Used cars that get exported from places like Europe, Japan and the U.S. are most often shipped to countries in Africa where they are resold. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/second-hand-cars-are-seen-on-september-16-2022-on-display-news-photo/1243394733?adppopup=true">Yanick Folly/Getty Images</a></span></figcaption></figure><p>The typical car will go for its last drive sometime between its <a href="https://www.aarp.org/auto/trends-technology/how-long-do-cars-last/">10th and 15th year on Earth</a>. At this point, the vast majority are sent to be recycled or sold for parts. But for a few autos, a second lease on life awaits, as a significant percentage are <a href="https://theconversation.com/ghana-wants-fewer-polluting-old-cars-on-the-road-but-its-going-about-it-the-wrong-way-198805">exported from richer nations to developing nations</a> for a few more years on the road. </p>
<p>In countries across Africa and Latin America, old used cars from places like the U.S. and Europe provide vital access to transportation to people who would otherwise be unable to afford their own vehicles. While this process extends the lives of these cars, the practice is not without problems, in particular with regards to pollution and passenger safety. </p>
<p>In this episode of The Conversation Weekly, we speak with two researchers about why richer countries export used cars, what impacts they have in developing nations and whether import restrictions are effectively stemming the rise in pollution and accidents caused by this practice.</p>
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<p><a href="https://scholar.google.com/citations?user=ipjfrosAAAAJ&hl=en&oi=sra">Paul Bledsoe</a> is adjunct professorial lecturer at the Center for Environmental Policy at the American University in the U.S., where he specializes in energy, natural resources and climate change.</p>
<p>He says that “the process of retiring still-functioning cars off the road is going to speed up as electric vehicles become cheaper to buy and operate. And so when that happens, you may see a huge influx of used combustion-engine vehicles hitting the secondary market.” Bledsoe is concerned that, without the adequate policies in place, developing nations could see pollution skyrocket over the next decade as a result.</p>
<p><a href="https://scholar.google.com/citations?user=ui5w_DoAAAAJ&hl=en&oi=ao">Festival Godwin Boateng</a> is a research fellow at the Center for Sustainable Urban Development, at Columbia University in the U.S. He studies sustainable development in Africa through a postcolonial lens and has looked into the issue of old cars.</p>
<p>“Between 2015 and 2018 some 14 million used vehicles were exported from the European Union, Japan, and the U.S., with 40% of them ending up in African countries,” explains Boateng. “Just in Ghana, for every hundred vehicles on the road, 80 to 90 are used vehicles.”</p>
<p>While Festival recognized that used cars fill an important gap in providing transportation opportunities in Ghana, he says over 50% of used cars are over 15 years old. “So they tend to be really old and highly polluting. And to make matters waste, they tend to do modifications to these vehicles, which make them even more polluting.”</p>
<p>In an effort to combat the harms of old cars, in 2020, Ghana passed a new <a href="https://doi.org/10.1016/j.trip.2021.100384">law aiming to restrict the import of cars</a> that are more than 10 years old. With exports of old cars expected to increase as electric vehicles take over Western markets, policies like the law Ghana passed in 2020 may become more relevant.</p>
<p>Listen to the full episode of The Conversation Weekly to learn more about how old cars get to places like Ghana, the mixed bag of benefits and harms they have once they arrive and the ways to improve this situation.</p>
<hr>
<p>This episode was written and produced by Mend Mariwany, who is also the executive producer of The Conversation Weekly. Eloise Stevens does our sound design, and our theme music is by Neeta Sarl.</p>
<p>You can find us on Twitter <a href="https://twitter.com/TC_Audio">@TC_Audio</a>, on Instagram at <a href="https://www.instagram.com/theconversationdotcom/">theconversationdotcom</a> or <a href="mailto:podcast@theconversation.com">via email</a>. You can also subscribe to The Conversation’s <a href="https://theconversation.com/newsletter">free daily email here</a>. A transcript of this episode will be available soon.</p>
<p>Listen to “The Conversation Weekly” via any of the apps listed above, download it directly via our <a href="https://feeds.acast.com/public/shows/60087127b9687759d637bade">RSS feed</a> or find out <a href="https://theconversation.com/how-to-listen-to-the-conversations-podcasts-154131">how else to listen here</a>.</p><img src="https://counter.theconversation.com/content/204153/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paul Bledsoe consults for the Progressive Policy Institute, and is president of Bledsoe & Associates, LLC, a strategic public policy firm specializing in energy, natural resources and climate change, among other issues.</span></em></p><p class="fine-print"><em><span>Festival Godwin Boateng does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Older imported cars pose risks to motorists and spew pollution. Some countries, including Ghana, are taking steps to limit the harms of this piece of the vehicle life cycle.Mend Mariwany, Producer, The Conversation Weekly, The Conversation Weekly PodcastDaniel Merino, Associate Science Editor & Co-Host of The Conversation Weekly Podcast, The ConversationLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2015382023-04-22T16:20:10Z2023-04-22T16:20:10ZFast fashion still comes with deadly risks, 10 years after the Rana Plaza disaster – the industry’s many moving pieces make it easy to cut corners<figure><img src="https://images.theconversation.com/files/522252/original/file-20230421-26-yyte0s.jpg?ixlib=rb-1.1.0&rect=3%2C3%2C1019%2C679&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Activists in Dhaka demand safe working conditions in 2019, on the anniversary of the Rana Plaza collapse.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/industry-all-bangladesh-council-activists-protest-to-news-photo/1139075620?adppopup=true">Mamunur Rashid/NurPhoto via Getty Images</a></span></figcaption></figure><p>On April 24, 2013, a multistory garment factory complex in Bangladesh called Rana Plaza collapsed, <a href="https://www.bbc.com/news/world-asia-22476774">killing more than 1,000 workers</a> and injuring another 2,500. It remains the worst accident in the history of the apparel industry and one of the deadliest industrial accidents in the world.</p>
<p>Several factories inside the complex <a href="https://www.forbes.com/sites/clareoconnor/2014/04/26/these-retailers-involved-in-bangladesh-factory-disaster-have-yet-to-compensate-victims/?sh=3444108c211b">produced apparel for Western brands</a>, including Benetton, Primark and Walmart, shining a spotlight on the unsafe conditions in which a sizable portion of Americans’ cheap clothing is produced. The humanitarian tragedy hit home as wealthy nations’ shoppers wrestled with their own complicity and called for reforms – but a decade later, progress is still patchy.</p>
<p>As <a href="https://michiganross.umich.edu/faculty-research/faculty/ravi-anupindi">a professor of operations and supply chain management</a>, I believe it is important to understand how the complex and fragmented supply chains that are the norm in the clothing industry create conditions where unsafe conditions and abuse can flourish – and make it difficult to assign responsibility for reforms.</p>
<h2>Shamed into action?</h2>
<p>Rana Plaza was <a href="https://www.dhakatribune.com/bangladesh/2022/06/05/the-worst-industrial-disasters-in-bangladesh-since-2005">not the first garment industry accident in Bangladesh</a>. While the government had stringent building codes “on the books,” <a href="https://ces.ulab.edu.bd/sites/default/files/Building_Code_Analysis-hi.pdf">they were rarely enforced</a>. Most workers lacked the information and power to demand safe working conditions.</p>
<p>Yet the fact that the Rana Plaza collapse was not only a humanitarian crisis, but a public relations crisis, prompted swift action by international organizations and Western brands and clothing retailers. A campaign for <a href="https://ranaplaza-arrangement.org/">full and fair compensation</a> for families of victims was launched immediately, facilitated by <a href="https://www.ilo.org/global/about-the-ilo/lang--en/index.htm">the International Labor Organization</a>, a U.N. agency. Within a few months, two initiatives were designed to bring garment factories in Bangladesh up to international standards: the European-led <a href="https://bangladeshaccord.org/">Accord for Fire and Building Safety</a>, and the American-led <a href="https://www.business-humanrights.org/en/latest-news/bangladesh-alliance-for-bangladesh-workers-safety-announces-end-of-its-tenure/">Alliance for Bangladesh Worker Safety</a>.</p>
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<a href="https://images.theconversation.com/files/522273/original/file-20230421-1623-jworr4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Uniformed rescue workers stand on top of a slab on top of a collapsed cement building." src="https://images.theconversation.com/files/522273/original/file-20230421-1623-jworr4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/522273/original/file-20230421-1623-jworr4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=393&fit=crop&dpr=1 600w, https://images.theconversation.com/files/522273/original/file-20230421-1623-jworr4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=393&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/522273/original/file-20230421-1623-jworr4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=393&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/522273/original/file-20230421-1623-jworr4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=494&fit=crop&dpr=1 754w, https://images.theconversation.com/files/522273/original/file-20230421-1623-jworr4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=494&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/522273/original/file-20230421-1623-jworr4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=494&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Rescue and recovery personnel on the site of the Rana Plaza factory collapse in 2013.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/BangladeshBuildingCollapse/7f235631839d40e4ad3cbba1e0825166/photo?Query=(renditions.phototype:horizontal)%20AND%20%20(%22rana%20plaza%22)%20&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=297&currentItemNo=295">AP Photo/Wong Maye-E</a></span>
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<p>While the two initiatives differed in some important ways, both shared the common goal: to improve building and fire safety by leveraging the purchasing power of the member companies. In other words, Western brands would insist that production partners get up to standard or take their business elsewhere.</p>
<p>Altogether, the two agreements covered about 2,300 supplier factories. The coalitions conducted factory inspections to identify structural and electrical deficiencies and developed plans for factories to make improvements. The initiatives also laid the groundwork to form worker safety committees <a href="https://iosh.com/news/bangladesh-project-success-story/">and to train workers</a> to recognize, solve and prevent health and safety issues. Member companies set aside funds for inspections and worker training, <a href="https://cleanclothes.org/issues/faq-safety-accord">negotiated commercial terms</a> and <a href="https://www.wsj.com/articles/alliance-sets-plan-to-finance-bangladesh-factory-upgrades-1417791607">facilitated low-cost loans</a> for factory improvements.</p>
<p>Both were five-year agreements: the Alliance <a href="https://www.business-humanrights.org/en/latest-news/bangladesh-alliance-for-bangladesh-workers-safety-announces-end-of-its-tenure/">was sunsetted in 2018</a>, whereas the Accord operated for a few more years before handing operations over to the locally created <a href="https://www.business-humanrights.org/en/latest-news/bangladesh-rmg-sustainability-council-to-take-over-accord-operations-after-281-days/">Readymade Sustainability Council</a> in June 2020.</p>
<h2>The record since</h2>
<p>The onus and expense of making these improvements, however, were largely to be borne by the suppliers – a substantial financial burden for many factories, especially considering the low cost and slim profit margins of the clothes they were producing. </p>
<p>Under the Alliance and the Accord, thousands of factories were inspected for building and fire safety, identifying problems such as lack of fire extinguishers and sprinkler systems, improper fire exits, faulty wiring and structural issues. At the end of five years, both initiatives reported that <a href="https://issuu.com/nyusterncenterforbusinessandhumanri/docs/nyu_bangladesh_ranaplaza_final_rele?e=31640827/64580941">85%-88% of safety issues were remediated</a>. Around half of the factories completed more than 90% of initial remediation, while over 260 of the original 2,300 factories under the initiatives were suspended from contracting with member companies.</p>
<p>In addition, more than 5,000 beneficiaries, including injured workers and dependents of victims, were compensated <a href="https://ranaplaza-arrangement.org/">through the Rana Plaza Arrangement</a>, receiving an average of about US$6,500.</p>
<p>Overall, I believe that these initiatives have been successful in bringing safety issues to the forefront. In terms of infrastructure improvements, however, while there has been decent progress, much still needs to be done; for example, the initiatives covered just about <a href="https://pages.stern.nyu.edu/%7Etwadhwa/bangladesh/downloads/beyond_the_tip_of_the_iceberg_report.pdf">one-third of all the garment factories in Bangladesh</a>. Importantly, neither addressed company sourcing practices.</p>
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<a href="https://images.theconversation.com/files/522275/original/file-20230421-26-smyb9q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A woman in a pink shawl stares at the camera, with a green field amid tall buildings behind her." src="https://images.theconversation.com/files/522275/original/file-20230421-26-smyb9q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/522275/original/file-20230421-26-smyb9q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/522275/original/file-20230421-26-smyb9q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/522275/original/file-20230421-26-smyb9q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/522275/original/file-20230421-26-smyb9q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/522275/original/file-20230421-26-smyb9q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/522275/original/file-20230421-26-smyb9q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Family of Rana Plaza victims look at their relatives’ graves as they mark the disaster’s anniversary in 2017.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/dhaka-bangladesh-april-24-2017-relatives-of-rana-plaza-news-photo/672595062?adppopup=true">Rehman Asad/NurPhoto via Getty Images</a></span>
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<h2>Clothes yesterday and today</h2>
<p>To understand why so much apparel manufacturing takes place in substandard conditions, we need to understand the underlying economic forces: extensive outsourcing to countries with low wages in the quest to meet demand for more – and cheaper – clothing to sell to customers in the West.</p>
<p>In the 1960s, the average American family <a href="https://www.kqed.org/lowdown/7939/madeinamerica">spent 10% of its income on clothing</a>, buying 25 pieces of apparel – almost all of it made in the United States. Fifty years later, around the time of the Rana Plaza disaster, the average household was spending only about 3.5% of its income on clothing – but buying three times as many items, 98% of which were imported.</p>
<p>Over these decades, low-income countries in Asia and Latin America started producing more garments and textiles. Apparel production is labor-intensive, meaning these countries’ lower wages were a huge attraction to brands and retailers, who gradually started shifting their sourcing.</p>
<p>On a $30 shirt, for example, a typical retailer markup is close to 60%. The factory makes a profit of $1.15, and the worker <a href="https://theconversation.com/years-after-the-rana-plaza-tragedy-bangladeshs-garment-workers-are-still-bottom-of-the-pile-159224">makes barely 18 cents</a>. Were a similar shirt produced in the U.S., labor costs would <a href="https://www.cnn.com/2013/05/02/world/asia/bangladesh-us-tshirt/index.html">be closer to $10</a>.</p>
<p>As labor costs rose in China, Bangladesh became <a href="https://qz.com/389741/the-thing-that-makes-bangladeshs-garment-industry-such-a-huge-success-also-makes-it-deadly">a very appealing alternative</a>. Garment exports now account for 82% of <a href="https://bgmea.com.bd/page/Export_Performance">the country’s export total</a>, and the industry <a href="https://www.bsr.org/en/blog/what-if-all-garment-workers-in-bangladesh-were-financially-included">employs 4 million people</a>, about 58% of whom are women. </p>
<p>The growth of this sector has <a href="https://dspace.bracu.ac.bd/xmlui/handle/10361/482">reduced poverty</a> significantly and also <a href="https://doi.org/10.1016/j.jdeveco.2015.01.006">empowered women</a>. To meet the rapid growth of the apparel industry, however, many buildings were converted to factories as quickly as possible, often without requisite permits. </p>
<h2>Everyone and no one</h2>
<p>A common way that foreign companies source products from low-cost countries like Bangladesh is through intermediaries or agents. For example, when a brand places a large order with an authorized factory, the factory in turn may <a href="https://issuu.com/nyusterncenterforbusinessandhumanri/docs/nyu_bangladesh_ranaplaza_final_rele?e=31640827/64580941">subcontract part of the production to smaller factories</a>, often without informing the brand.</p>
<p>This highly competitive environment, with people at each step of the process looking for the lowest price and no guarantee of longer-term relationships, gives suppliers incentives to cut corners – particularly when under extreme pressure to deliver on time. This can translate into <a href="https://www.reuters.com/article/us-bangladesh-worker-rights/bangladesh-urged-to-stop-worker-abuse-in-garment-industry-idUSKBN20W25O">exploitative labor practices</a> or unsafe conditions that violate local laws, but enforcement capacity is weak. </p>
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<span class="caption">Nilufer Begum, an injured garment worker who survived the Rana Plaza disaster, during a 2018 interview with AFP in her small tea stall.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/in-this-photograph-taken-on-april-17-2018-nilufer-begum-an-news-photo/949797208?adppopup=true">Munir Uz Zaman/AFP via Getty Images</a></span>
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<p>In their constant quest for lower prices, buyers may turn a blind eye to these practices. The supply chain’s opaqueness, especially when brands do not source directly, makes it difficult to investigate and remediate these practices. Since the 1990s, international <a href="https://www.degruyter.com/document/doi/10.7591/9781501727290-004/pdf">scrutiny of labor conditions</a> has grown, but reform efforts largely ignored building and fire safety, the prime reason for the Rana Plaza collapse. Because multiple buyers would often use the same factory, no single buyer felt obligated to invest in the supplier to ensure better conditions.</p>
<p>Garments traverse a complex global supply network by the time they reach stores thousands of miles away. Workers are caught in this web, exploited by factory management that is seldom held responsible by governments either <a href="https://www.npr.org/2013/05/09/182637164/bangladeshs-powerful-garment-sector-fends-off-regulation">unwilling or unable to enforce laws</a>. Western brands escape the scrutiny of their governments by outsourcing production to low-cost countries and absolve themselves of direct responsibility. And consumers, eager for a bargain, shop for the lowest price. </p>
<p>This complex system makes it hard to assign ethical responsibility, because everyone, and therefore no one, is guilty.</p><img src="https://counter.theconversation.com/content/201538/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ravi Anupindi is affiliated with Fair Labor Association. </span></em></p>Ten years after the collapse at Rana Plaza in Bangladesh, the garment industry’s deadliest disaster, reforms are incomplete. The opaqueness of today’s complex supply chain is part of the problem.Ravi Anupindi, Professor of Technology and Operations, University of MichiganLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2027742023-04-03T13:58:22Z2023-04-03T13:58:22ZArchaeology shows how hunter-gatherers fitted into southern Africa’s first city, 800 years ago<figure><img src="https://images.theconversation.com/files/517897/original/file-20230328-18-wuvyra.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Archaeologists excavate inside and outside Little Muck Shelter, in the Mapungubwe National Park, South Africa. </span> <span class="attribution"><span class="source">Photo: Tim Forssman</span></span></figcaption></figure><p>Where the Limpopo and Shashe Rivers meet, forming the modern border between Botswana, South Africa and Zimbabwe, lies a hill that hardly stands out from the rest. One could easily pass it without realising its <a href="https://www.worldhistory.org/Mapungubwe/">historical significance</a>. It was on and around this hill that what appears to be southern Africa’s <a href="https://www.sciencedirect.com/science/article/pii/S0278416508000585?casa_token=P89TPB8OTZQAAAAA:z6ePLUM4rXsAeoe1cIT8Rlak97kN_WKb6U6WDUj3-CdoENgY51DhYgQjwZWa607Bt8zUqcM-xh0">earliest</a> state-level society and urban city, <a href="https://whc.unesco.org/en/list/1099/#:%7E:text=Mapungubwe%20is%20set%20hard%20against,abandoned%20in%20the%2014th%20century.">Mapungubwe</a>, appeared around 800 years ago.</p>
<p>After nearly a century of <a href="https://www.sciencedirect.com/science/article/pii/S0278416508000585?casa_token=P89TPB8OTZQAAAAA:z6ePLUM4rXsAeoe1cIT8Rlak97kN_WKb6U6WDUj3-CdoENgY51DhYgQjwZWa607Bt8zUqcM-xh0">research</a>, we’ve learnt quite a lot about this ancient kingdom and how it arose among early farmer society and its involvement in global trade networks. However, before farmers settled the region, this terrain was the home of hunter-gatherer groups, who have hardly been acknowledged despite, as it seems, their involvement in the rise of Mapungubwe.</p>
<p>My <a href="http://harproject.co.za/">team</a> and I have been working in northern South Africa at sites that we believe will help us recognise the roles played by hunter-gatherers during the development of the Mapungubwe state in a bid to generate a more <a href="https://www.tandfonline.com/doi/full/10.1080/0067270X.2023.2182572">inclusive representation of the region’s past</a>. </p>
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<p>Our primary study site is called <a href="https://youtu.be/-pXqChyJK_s">Little Muck Shelter</a>. It is in the <a href="https://www.sanparks.org/parks/mapungubwe/">Mapungubwe National Park</a> and about 4km south of the Limpopo River. The shelter is fairly large with a protected area under a high ceiling and a large open space in front. It also has many paintings on its walls, including elephants, kudu, felines, people, and a stunning set of giraffes. This art was produced by hunter-gatherers and it is generally considered to refer to the spirit-world and the activities of shamans therein.</p>
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<a href="https://images.theconversation.com/files/517893/original/file-20230328-418-niw4qi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/517893/original/file-20230328-418-niw4qi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/517893/original/file-20230328-418-niw4qi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=243&fit=crop&dpr=1 600w, https://images.theconversation.com/files/517893/original/file-20230328-418-niw4qi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=243&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/517893/original/file-20230328-418-niw4qi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=243&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/517893/original/file-20230328-418-niw4qi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=305&fit=crop&dpr=1 754w, https://images.theconversation.com/files/517893/original/file-20230328-418-niw4qi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=305&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/517893/original/file-20230328-418-niw4qi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=305&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Two beautifully painted giraffe are at the centre of the site in orange and red. These have been traced using digital software to limit contact with the art which may lead to damage.</span>
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</figure>
<p>The results from our research shows two things. First, hunter-gatherers lived in the area while the Mapungubwe Kingdom arose. Second, during this time they were part of the economy that assisted with the appearance of elite groups in society, and they had access to this wealth. When combined this tells us that we cannot think about Mapungubwe’s history without including hunter-gatherer societies. They were present and a part of these significant developments.</p>
<p>Why is this important? One of the foundational developments that took place that led to the rise of the Mapungubwe Kingdom was the accumulation of wealth. It drove the appearance of hierarchies in society and marked prestige. These trade goods were valuable items usually possessed by elite groups. And yet, hunter-gatherers, through exploiting their own skills, were able to obtain related goods at a time when these items were contributing to significant transformations in society. That they had access to wealth during this period likely shows us that their role in local society was valued and they were entrenched in the local economy in a way that we’ve not previous recognised.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/rock-art-as-african-history-what-religious-images-say-about-identity-survival-and-change-198812">Rock art as African history: what religious images say about identity, survival and change</a>
</strong>
</em>
</p>
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<h2>Unearthing evidence of trade</h2>
<p>We were attracted to Little Muck Shelter because of previous work at the site in the late 1990s that showed intense trade between hunter-gatherers and farmers took place from the shelter. To understand this better, we needed a larger archaeological assemblage to verify, or refine, what we thought might be taking place. </p>
<p>We also wanted to more closely examine the depths that dated between AD 900 and 1300, during which the processes leading to Mapungubwe began and ultimately concluded, in order to clearly show a hunter-gatherer presence during this period as well as their participation in local economic networks.</p>
<p>To do this, we needed to dig. Archaeological excavations are a slow and meticulous process that involve the careful removal of layers of artefact-bearing deposits with a very strict control of depth and location within an excavation trench.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/517895/original/file-20230328-490-ahjvsh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/517895/original/file-20230328-490-ahjvsh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/517895/original/file-20230328-490-ahjvsh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=594&fit=crop&dpr=1 600w, https://images.theconversation.com/files/517895/original/file-20230328-490-ahjvsh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=594&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/517895/original/file-20230328-490-ahjvsh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=594&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/517895/original/file-20230328-490-ahjvsh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=747&fit=crop&dpr=1 754w, https://images.theconversation.com/files/517895/original/file-20230328-490-ahjvsh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=747&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/517895/original/file-20230328-490-ahjvsh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=747&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Field team member Siphesihle Kuhlase shows a broken bangle while others remove deposit in search of artefacts.</span>
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</figure>
<p>Following this is a lengthy period of analysis that adheres to rigorous protocols to ensure consistency in identifying artefact types, their production techniques or methods, how they were used, and what they were made from.</p>
<p>We then piece all this evidence together in our attempt to understand past ways of living. From our results, we were able to trace a hunter-gatherer history that intertwined with the rise of Mapungubwe. </p>
<p>Our first and important task was to show that hunter-gatherers were still around when Mapungubwe appeared. To date, we’ve examined about 15,000 stone tools from a sample of our excavations and identified a set of finished tools that are the same as those produced by hunter-gatherers for millennia before farmer groups appeared. We believe that this consistency in cultural material over such a long span of time clearly shows that hunter-gatherers were living in the shelter when farmers were in the area.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/518128/original/file-20230329-18-sklool.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Stone tools, glass and shell beads, bone points, pieces of copper jewellery and pottery" src="https://images.theconversation.com/files/518128/original/file-20230329-18-sklool.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/518128/original/file-20230329-18-sklool.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=894&fit=crop&dpr=1 600w, https://images.theconversation.com/files/518128/original/file-20230329-18-sklool.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=894&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/518128/original/file-20230329-18-sklool.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=894&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/518128/original/file-20230329-18-sklool.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1124&fit=crop&dpr=1 754w, https://images.theconversation.com/files/518128/original/file-20230329-18-sklool.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1124&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/518128/original/file-20230329-18-sklool.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1124&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A range of artefact types found at hunter-gatherer sites like Little Muck Shelter. Stone scrapers (A) and backed tools (B), which were used for producing goods and hunting, respectively, glass beads (C), traded into central Africa from the east African coastline, and larger ostrich eggshell beads (D), bone points or needles (E), broken pieces of copper jewellery (F) and pottery (G), and a grooved stone used to either sharpen metal tools, round ostrich eggshell beads, or finish and polish bone tools (H).</span>
<span class="attribution"><span class="source">Tim Forssman</span></span>
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<p>We then wanted to look more closely at the trading economy. From the moment farmer groups appeared in the region, during the early first millennium AD, hunter-gatherers shifted their <a href="https://harproject.co.za/?p=203">craft activities</a>. Rather than mostly producing goods made from hide, wood and shell, they began making mostly bone implements and did so until the end of the Mapungubwe Kingdom at AD 1300. This suggests that the interactions hunter-gatherers had with farmers from when they first arrived stimulated change in their crafted wares.</p>
<p>Why did they change their crafting activities? At the same time that these shifts took place, we recorded the appearance of trade wealth in the form of ceramics and glass beads, initially, and then metal. These goods were never made by hunter-gatherers and are common at farmer settlements, indicating exchange between these two communities. It indicates that hunter-gatherers responded to new market opportunities through emphasising their own skill sets.</p>
<p>Our work to identify more evidence that shows a hunter-gatherer involvement in these processes continues. We are trying to find out in what other ways they were involved and whether they themselves developed a more complex society.</p><img src="https://counter.theconversation.com/content/202774/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span><a href="mailto:tim.forssman@ump.ac.za">tim.forssman@ump.ac.za</a> receives funding from the National Research Foundation of South Africa and the Palaeontological Scientific Trust. </span></em></p>Hunter-gatherers were an important part of the development of the Mapungubwe Kingdom in southern Africa – a fact that history has tended to neglect.Tim Forssman, Senior Lecturer, University of MpumalangaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1985972023-02-06T13:47:09Z2023-02-06T13:47:09ZChina’s demand for Africa’s donkeys is rising. Why it’s time to control the trade<figure><img src="https://images.theconversation.com/files/507537/original/file-20230201-14-y1ilnp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Women walk with their donkeys in Ethiopia's Amhara region.</span> <span class="attribution"><span class="source">Buena Vista Images/GettyImages</span></span></figcaption></figure><p>In recent years, there’s been a huge, rising demand for donkey hides in China, where they are used to make an ancient health-related product called <em>ejiao</em>. <em>Ejiao</em> is made from collagen <a href="https://www.thedonkeysanctuary.org.uk/end-the-donkey-skin-trade/what-is-ejiao">that’s been extracted</a> from donkey hides mixed with herbs and other ingredients to create medicinal and health consumer products. It’s believed to have <a href="https://www.thechinastory.org/yearbooks/yearbook-2017/forum-conspicuous-consumption/feasting-on-donkey-skin/">properties that strengthen</a> the blood, stop bleeding and improve the quality of both vital fluids and sleep. </p>
<p><em>Ejiao</em> <a href="http://www.xinhuanet.com/english/2018-12/21/c_137690073.htm">sells for about</a> US$783 per kilo and the Chinese market for it has increased <a href="https://new.qq.com/rain/a/20220609A032D100">from about US$3.2 billion in 2013 to about US$7.8 billion in 2020</a>. This recent rise in demand is driven by several factors, including rising incomes, popularisation of the product via a television series, and an ageing population (age is a key demographic driving demand). In addition, <em>ejiao</em> is sometimes prescribed by doctors and the cost can newly be covered by health insurance. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/507853/original/file-20230202-2164-klq9tc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/507853/original/file-20230202-2164-klq9tc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/507853/original/file-20230202-2164-klq9tc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/507853/original/file-20230202-2164-klq9tc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/507853/original/file-20230202-2164-klq9tc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/507853/original/file-20230202-2164-klq9tc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/507853/original/file-20230202-2164-klq9tc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Ejiao.</span>
<span class="attribution"><span class="source">HelloRF Zcool/Shutterstock</span></span>
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<p>The demand for <em>ejiao</em> has led to a shortage of donkeys in China and increasingly worldwide. Countries in Africa have been particularly affected. </p>
<p>Africa is home to the highest number of donkeys in the world: about <a href="http://data.un.org/Data.aspx?q=ass&d=FAO&f=itemCode%3a1107">two-thirds</a> of the estimated global population of 53 million donkeys in 2020. Exact figures on how many hides are exported to China aren’t available due to a growing illicit trade, but there are indications. A <a href="https://www.mdpi.com/2076-2615/12/9/1073">study</a> of South Africa’s donkey population, for instance, suggests that it went from 210,000 in 1996 to about 146,000 in 2019. This was attributed to the export of donkey hides.</p>
<p>In a <a href="https://saiia.org.za/wp-content/uploads/2023/01/SAIIA_OP-339_ChinaAfricaDonkeys.pdf">recent paper</a> I examined the trends, issues and prospects for the Africa–China donkey trade. My information came from interviews, literature and news reviews in English and Chinese. </p>
<p>My findings are that the scale of the donkey trade, both illicit and legal, poses a challenge for many countries in Africa, especially in terms of its impact on the most marginalised communities. Besides donkey welfare, a big part of the challenge is how affordable donkeys are locally. Donkeys have a valuable, ancient role as a workhorse and losing access to them creates a huge problem for poor households. The other part of the challenge is regulatory. Only when the donkey hide trade is fully regulated - and export numbers are able to be very limited - might the trade work without adverse consequences for the poor. </p>
<p>This was also highlighted by a <a href="https://www.thecitizen.co.tz/tanzania/news/east-africa-news/trade-in-donkey-skins-still-unpopular-in-east-africa-4069512">recent survey</a> of the <a href="https://www.eac.int/">East African Community</a> which found that the region was not ready for the mass slaughter and unregulated trade of donkeys. Millions of vulnerable East Africans rely on donkeys for a living and are at risk of losing out through the donkey skin trade. </p>
<h2>Value of donkeys</h2>
<p>Donkeys are <a href="https://thehorse.com/features/beasts-of-burden-africas-working-horses-and-donkeys/">estimated to support about 158 million people in Africa</a>. In rural areas, the presence of a donkey in a household helps to alleviate poverty and frees women and girls from household drudgery. </p>
<p>Donkeys are one of the simplest, most sustainable and affordable means of transporting people, goods and farm inputs and outputs from home to farm to market and vice versa, as well as to water wells and other places. Even in harsh environments donkeys can travel long distances with a heavy load, limited fluids, and without showing signs of fatigue. They are a durable household asset. </p>
<p>Donkey ownership increases productivity and lessens hard work by, for example, reducing the loads women must otherwise carry themselves. In Ghana, for instance, owning a donkey was <a href="https://www.mdpi.com/2076-2615/11/11/3154?type=check_update&version=1">found to save</a> adults about five hours of labour a week, and children 10 hours a week. The presence of a donkey also freed girl children to go to school.</p>
<p>Donkeys can also carry heavy loads of firewood and water. This means people need to make fewer trips. This <a href="https://www.mdpi.com/2076-2615/11/11/3154?type=check_update&version=1">frees up labour</a> and time for other income generating activities, such as sowing someone’s farm for money.</p>
<p>The value of having a donkey in the household is evident. The loss of a donkey to a household in rural Kenya is <a href="http://erepo.usiu.ac.ke/11732/7197">associated with</a> an increased risk of poverty – children drop out of school, and there’s less water security and more economic fragility. This makes the donkey trade a sensitive topic.</p>
<h2>Government responses</h2>
<p>Rising Chinese demand for donkeys has elicited a variety of responses by governments across Africa. </p>
<p>Tanzania, for example, attempted to create a formal donkey industry and trade. But, in 2022, <a href="https://www.capitalethiopia.com/2022/06/19/tanzania-bans-donkey-slaughter-to-stop-risk-of-extinction/">authorities banned it</a> because legal supply couldn’t keep up with demand. Female donkeys typically produce only a few foals each in a lifetime. </p>
<p>In Kenya, public outrage – largely due to the rise of donkey prices and diminishing supply – led to a ban on exports in February 2020. Kenya’s donkey exporters, however, <a href="https://global.chinadaily.com.cn/a/202008/07/WS5f2cf3e0a31083481725eeea.html">took their case</a> against the ban to Kenya’s High Court in June 2020, and won.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-kenya-has-banned-the-commercial-slaughter-of-donkeys-121455">Why Kenya has banned the commercial slaughter of donkeys</a>
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<p>Elsewhere, countries such as Botswana, Burkina Faso, Mali, Niger, Senegal and Tanzania banned donkey exports. Others, such as South Africa, banned or limited the donkey trade with requirements for established slaughterhouses and related quotas. </p>
<p>However, the implementation of donkey bans varies according to the strength of the regulatory capacity in each country - and how easy it is to smuggle things across borders.</p>
<p>In South Africa’s case, export quotas have merely sent the trade underground. This leads to more donkey theft. Illicitly traded hides from South Africa are <a href="https://www.voanews.com/a/africa-s-donkeys-are-being-stolen-and-slaughtered-for-chinese-medicine-/6651256.html">typically</a> from donkeys that are slaughtered inhumanely in the bush or in sub-standard slaughterhouses in Lesotho. Then they are exported to China. </p>
<p>Poverty also fosters the trade, which in turn can lead to further impoverishment. Donkey owners, needing a short-term income windfall, will <a href="https://www.thebrooke.org/news/world-animal-day-research-shows-detrimental-effect-donkey-skin-trade-families">sell their animal</a>. It may then be slaughtered and traded illegally and lead to diminished income-earning opportunity in the medium and long run. </p>
<h2>What needs to be done</h2>
<p>A recent <a href="https://panafricandonkeyconference.org/">Pan-African Donkey Conference</a> called for a <a href="http://www.environewsnigeria.com/pan-african-conference-seeks-15-year-ban-on-donkey-slaughter/#:%7E:text=%E2%80%9CTo%20curb%20this%20unsustainable%20exploitation,and%20other%20donkey%20related%20products.">15-year continent-wide moratorium</a> on the trade to allow supply to recover and regulatory capacity to be enhanced. </p>
<p>The <em>ejiao</em> industry in China is well organised and resourced. A handful of major firms and one province dominate the industry in China, and they are represented by the Shandong Ejiao Industry Association. </p>
<p>A China-Africa donkey hide trade may be possible if African countries get organised, form associations and establish a dialogue with the Shandong Ejiao Industry. The aim would be to work out sustainable mechanisms, prevent damage to local interests and help to counter the illicit trade. </p>
<p>In parallel to this, it would be important for animal welfare agencies in China to raise awareness of the illicit and damaging impact of the illicit donkey hide trade. </p>
<p>For now, I believe that the trade is premature. Better regulatory standards are needed by China’s <em>ejiao</em> industry such that illegally traded and stolen donkey hides are not part of the industry. Deeper cooperation across African countries would also help to preserve the ancient role of the donkey in supporting trade and the continent’s most vulnerable and geographically isolated groups.</p><img src="https://counter.theconversation.com/content/198597/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lauren Johnston does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The demand for donkey hides to produce ejiao has led to a shortage of donkeys in China and increasingly worldwide.Lauren Johnston, Senior Researcher, South African Institute of International AffairsLicensed as Creative Commons – attribution, no derivatives.