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IMF needs radical reform to halt ‘failed policies’ of privatization and austerity
by Alfred de Zayas, Agnes Callamard
OHCHR, Thomson Reuters Foundation
October 2017
The lending policies of the International Monetary Fund are actively undermining some of the UN’s human rights and development priorities, as well as promoting the “failed” policies of privatization and “austerity”, a UN expert has warned.
“The human rights dimension in lending can no longer be ignored,” Alfred de Zayas, Independent Expert on the promotion of a democratic and equitable international order, told the UN General Assembly in New York.
Unveiling a series of proposals for change, Mr. de Zayas said it was time for “smart” lending policies which encouraged States to honour their human rights and development commitments, rather than hindering the process.
“I deplore the fact that the lending practices of the international financial institutions sometimes go against the aims of the United Nations, not just in the field of human rights, but also in achieving the Sustainable Development Goals,” said Mr. de Zayas, presenting his full report.
“The IMF currently imposes conditions which discourage social spending and therefore hinder States’ fulfilment of their human rights obligations. Often these conditions increase unemployment, lower standards governing labour, health and the environment, and reduce access to free quality education.
“From this point forward, the World Bank and the IMF must work in tandem with the UN system, including with the specialised agencies, funds and programmes, such as the UN Conference on Trade and Development and the ILO.”
The Independent Expert urged the IMF to abandon its “outdated” insistence on “Wild West” privatization, market deregulation and austerity in social services, which he argued had failed to ensure economic stability, had engendered human rights violations and had to be seen as "failed policies".
Instead, Mr. de Zayas proposed an important set of seven conditions which countries should have to accept before receiving loans.
These include a moratorium on military spending, except salaries and pensions, and new laws to tackle individual and corporate tax evasion and fine citizens who illicitly keep money in offshore accounts.
Taxes would also have to be imposed on financial transactions, and it would be unlawful for IMF loan money to be used to pay claims by “vulture funds”, which target situations where debt default is likely, or claims by debt restructuring mechanisms such as holdouts, which also target situations in or near default.
Countries would also have to outlaw tax havens, ensure that all corporations paid tax, ban “profit-shifting” - which sees corporations move profits on paper to the lowest tax jurisdiction - and finally pass and enforce anti-corruption laws.
“These proposals will ensure that States generate the revenue they need to pay back IMF loans, which is in the interest of creditors and currency stability,” said Mr. de Zayas.
“The current policies and practices of the World Bank and IMF have an enormous impact on the lives of millions of people, notably the most vulnerable, the young and the elderly.”
He called on the IMF to revisit its Articles of Agreement to ensure that good financial planning also promoted development and human rights.
“No international financial institution, transnational corporation or trade agreement is above international law. All must respect the overarching international human rights treaty regime. These institutions should also address the concerns of civil society, and the pragmatic recommendations of UN Special Rapporteurs and other independent experts on human rights,” the Independent Expert said.
“Implementing these recommendations will benefit the entire human family. Only through the concerted efforts of IMF and the World Bank, together with the United Nations, will a more democratic and equitable international order emerge,” he concluded.
Oct. 2017
Neoliberal vision of economic development is exacerbating inequality. (Thomson Reuters Foundation)
Agnes Callamard, U.N. Special Rapporteur on summary executions, said a one-size-fits-all model of economic development has exacerbated inequality.
"The restructuring of economies and the neoliberal vision for development is trickling down to every community and is a killer, in many ways," Callamard told the Thomson Reuters Foundation in an interview in Dublin.
Yet she said it did not garner the same attention as political populism and brutal military-style policing, which make huge headlines for instigating violence worldwide.
"Privatisation of certain public services and the ownership of land and water, and more generally the transformation of the economy toward the digital and information economy... all of those factors are creating much instability, and much conflict, including over access to resources."
"In turn, those conflicts translate into violence, and in some cases, extra judicial killing," she added.
Proponents of "neo-liberalism" - under which governments take a back seat and let the private sector lead economic and social development - claim it has been responsible for a reduction in global poverty over the last 40 years. But Callamard said a belief that natural resources must be privatised are "killing so many people" and must be challenged.
"We certainly need to start countering the neoliberal economic discourse because it''s killing at this moment, in the way it''s being implemented at national level."
Speaking at the Platform on Human Rights Defenders, Callamard said she was struck by how many people were attacked for protecting their land and water. Last year was the deadliest on record for such activists, according to watchdog groups.
More than 1,000 people in 25 countries were murdered, harassed, imprisoned or intimidated while fighting for their community''s rights, according to Front Line Defenders.
Another group, Global Witness, said nearly four people were murdered each week last year while defending their homes from mining, dams and agricultural projects. This year is on track to be worse.
Global Witness said the rising violence was driven by an intensifying fight for land and natural resources, with some mining, logging, hydro-electric and agricultural companies disregarding the environment and the rights of people.
Callamard was joined on a discussion panel by human rights defenders for Philippines, South Africa and Colombia, who each pointed to resources as a root cause of violent conflicts between local communities and state-backed big business.
In August, Callamard clashed with Philippine President Rodrigo Duterte after imploring him to end his war on drugs, which has resulted in thousands of deaths by police.
But speaking in Dublin, she said she was equally concerned by violence outside the urban hotspots, where rural Filipinos opposing mining developments have met bloody reprisals.
Callamard called on charities and leaders at the conference to amplify the voices of indigenous people, whose own models of development can be ignored or dismissed as "anti-development".
"We need to understand that economic growth can take many shapes," said Callamard, lauding activists'' different path.
Callamard urged support for legal challenges to unrestrained development, giving local communities new powers. She highlighted recent decisions by courts in New Zealand and India to give rivers the same legal rights as human beings, because they were heavily threatened by human activity.
"These kind of decisions, they are groundbreaking, but they also challenge us in the way we think about nature," she said.
Callamard joins a host of institutions that have called into question the limits of the neoliberal economic model, which has for 40 years dominated thought on economic development.
Last month, the U.N. trade and development agency UNCTAD said the world must ditch austerity and economic neo-liberalism and undertake a global "New Deal" to rebalance the global economy and achieve prosperity for all.
A paper in May of 2016 by senior economists at the IMF, which for 40 years has driven economic liberalisation of global economies, said some neo-liberal policies have increased inequality and are now jeopardising durable global growth.

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State of Food and Agriculture 2017 - Leveraging food systems for inclusive rural transformation
by UN Food and Agriculture Organization
Oct. 2017
Rural areas, too long seen as poverty traps, key to economic growth in developing countries. Sweeping transformations needed to unlock their potential to help feed and employ a younger, more crowded planet.
Millions of young people in developing countries who are poised to enter the labour force in the coming decades need not flee rural areas to escape poverty, argues a new FAO report.
Rural areas actually have vast potential for economic growth pegged to food production and related sectors, The State of Food and Agriculture 2017 says. And with the majority of the world''s poor and hungry living in these areas, achieving the 2030 development agenda will hinge on unlocking that oft-neglected potential, it adds.
Doing so will require overcoming a thorny combination of low productivity in subsistence agriculture, limited scope for industrialization in many places, and rapid population growth and urbanization — all of which pose challenges to developing nations'' capacity to feed and employ their citizens.
There is ample evidence that changes to rural economies can have major impacts. Transformations of rural economies have been credited with helping hundreds of millions of rural people lift themselves up out of poverty since the 1990s, the report notes.
However that progress has been patchy, and demographic growth is raising the stakes.
Between 2015 and 2030, the ranks of people aged 15-24 years are expected to rise by about 100 million, to 1.3 billion. Almost all that increase will take place in sub-Saharan Africa — the lion''s share of it in rural zones.
But in many developing countries — most notably in South Asia and sub-Saharan Africa — growth in the industrial and service sectors has lagged, and they will not be able to absorb the massive numbers of new job seekers set to enter the workforce. Nor will agriculture — in its current form.
So rural people who relocate to cities will likely run a greater risk of joining the ranks of the urban poor, instead of finding a pathway out of poverty. Others will need to look for employment elsewhere, leading to seasonal — or permanent — migration.
This is why targeting policy support and investment to rural areas to build vibrant food systems and supporting agro-industries that are well connected to urban zones —especially small and medium size cities — will create employment and allow more people to stay, and thrive, in the countryside represents a strategic intervention, the report highlights.
Transformed rural economies won''t necessarily be a panacea that solves all the pressures that drive people to relocate, but they will generate much-needed jobs and contribute to making out-migration more of a choice, rather than a necessity.
"Too often ignored by policy-makers and planners, territorial networks of small cities and towns are important reference points for rural people — the places where they buy their seed, send their children to school and access medical care and other services," FAO Director-General José Graziano da Silva notes in his forward to the report.
"Policy-makers are urged to recognize the catalytic role of small cities and towns in mediating the rural-urban nexus and providing smallholder farmers with greater opportunities to market their produce and share in the benefits of economic growth," he adds.
How urban food demand can spark rural renewal
The State of Food and Agriculture makes the case that needed transformations in rural economies can be sparked by leveraging growing demand for food in urban areas to diversify food systems and generate new economic opportunities in off-farm, agriculture-related activities.
This includes enterprises that process or refine, package or transport, and store, market or sell food, as well as businesses that supply production inputs such as seeds, tools and equipment, and fertilizers or provide irrigation, tilling or other services.
Already, growing demand coming from urban food markets currently consumes up to 70 percent of national food supplies, even in countries with large rural populations, the report notes.
But while urbanization provides a "golden opportunity" for agriculture, it also presents challenges for millions of small-scale family farmers.
Markets that are more profitable can lead to the concentration of food production in large commercial farms, to value chains dominated by large processors and retailers, and to the exclusion of smallholders.
So supportive public policies and investments will be key to harnessing urban demand as an engine for transformative and equitable growth, and measures designed to ensure market participation by small-scale, family-farmers must be hard-wired into policies.
The study lays out three lines for action:
The first involves putting in place a range of policies designed to ensure that small-scale producers are able to participate fully in meeting urban food demands. Measures to strengthen land tenure rights, ensure equity in supply contracts, or improve access to credit are but a few options.
The second is to build up the necessary infrastructure to connect rural areas and urban markets — in many developing countries the lack of rural roads, electrical power grids, storage facilities, and refrigerated transportation systems is a major bottleneck for farmers seeking to take advantage of urban demand for fresh fruit, vegetables, meat and dairy.
The third involves including not just mega-cities into well-connected rural-urban economies but knitting in smaller, more spread-out urban areas as well.
The report stresses that smaller urban centres represent a much overlooked market for food. Half of all urban dwellers in developing countries live in cities and towns of fewer than 500,000 people.
Key numbers
Rural transformation have been taking place since the 1990s; since then, an additional 750 million rural people now have incomes above the moderate poverty line of US$3.10 (PPP) per person per day.
In 1960, 22 percent of the population in developing countries (460 million people) lived in cities and towns. By 2015, that reached 49 percent (3 billion people).
The developing world''s rural population grew by 1.5 billion between 1960 (1.6 billion people) and 2015 (3.1 billion).
In South Asia and sub-Saharan Africa, an average of 1 million and 2.2 million young people, respectively, entered the job market every year between 2010 and 2015.
Large cities with populations from 5-10 million and megacities of 10+ million inhabitants are represent only about 20 percent of the world''s urban dwellers.
In developing countries most urban areas are relatively small - about 50 percent of the total urban population, or 1.45 billion people, live in cities and towns of 500 000 inhabitants or fewer.
Close to half the global population today either lives in cities with fewer than 500 000 inhabitants or in rural areas surrounding them.
Globally, smaller urban areas currently account for about 60 percent of urban food demand. By 2030, the urban population in the world''s less-developed regions will total 4 billion. 80 percent of these urban dwellers will live in Africa, Asia and Latin America.
In 2030 the majority of the world''s urban population will be found in cities with populations of 1 million or less; 80 percent of these people will live in urban areas with fewer than 500 000 inhabitants.
The value of urban food markets in sub-Saharan Africa will likely increase fourfold between 2010 and 2030, from US$313 billion to US$1 trillion.
In East and Southern Africa, the share of urban consumers in the purchased food market is already 52 percent and is forecast to rise to 67 percent by 2040.

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