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Development Channel

Issues and innovations in global economic development

This Week in Markets and Democracy: Rana Plaza Anniversary, Press Freedom Declines, Haiti Election Troubles

by Shannon K. O'Neil Friday, April 29, 2016
A relative holds up a picture of a garment worker in front of the rubble of the collapsed Rana Plaza building (Reuters/Andrew Biraj). A relative holds up a picture of a garment worker in front of the rubble of the collapsed Rana Plaza building (Reuters/Andrew Biraj).

Labor Standards Three Years After Rana Plaza
Three years after Bangladesh’s Rana Plaza garment factory collapse killed or injured over 3,000 people, labor rights remain tenuous. In the wake of the disaster apparel brands, suppliers, and the Bangladeshi government created the Alliance for Bangladesh Worker Safety, a partnership to improve conditions by setting standards and increasing inspections. The Alliance has worked with factories to build emergency exits, install fire hydrants, and rewire electrical systems. It has also blacklisted the worst offenders. Yet it only encompasses those operating under formal contracts. Over half of the nation’s 7,000 factories work in the informal economy. Here, the Bangladeshi government doesn’t enforce Alliance standards, leaving these workers vulnerable.

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This Week in Markets and Democracy: Honduras’ Anticorruption Fight, Freedom House Report, Conflict Minerals Setback

by Shannon K. O'Neil Friday, April 22, 2016
A demonstrator holds a sign that reads "Out JOH", in a reference to Honduras' President Juan Orlando Hernandez, during a march to demand the resignation of Hernandez in Tegucigalpa, August 21, 2015. Thousands of protesters have been continuing demonstrations in Tegucigalpa, calling for the resignation of Hernandez over a $200 million corruption scandal at the Honduran Institute of Social Security (Reuters/Jorge Cabrera). A demonstrator holds a sign that reads "Out JOH", in a reference to Honduras' President Juan Orlando Hernandez, during a march to demand the resignation of Hernandez in Tegucigalpa, August 21, 2015. Thousands of protesters have been continuing demonstrations in Tegucigalpa, calling for the resignation of Hernandez over a $200 million corruption scandal at the Honduran Institute of Social Security (Reuters/Jorge Cabrera).

Honduras’ New Anticorruption Fighter Takes on the President
Last summer allegations that Honduran officials stole more than $200 million dollars from the social security system led to widespread public protests and calls for President Juan Orlando Hernández’s resignation. The scandal spurred the creation of the Mission Against Corruption and Impunity in Honduras (MACCIH), an anticorruption body backed by the Organization of American States (OAS) and modeled after the International Commission Against Impunity in Guatemala (CICIG). Now active, MACCIH officials say they will investigate the case. Given MACCIH’s more limited prosecutorial autonomy and much smaller budget, many wonder if it can match the impressive results of its Guatemalan counterpart, which—working with the attorney general—brought down former president Otto Pérez Molina.

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This Week in Markets and Democracy: Peru’s Elections, Corruption Arrests, and Panama Papers Response

by Shannon K. O'Neil Friday, April 15, 2016
People walk past campaign electoral signs of Peru's presidential candidate Keiko Fujimori in Cuzco, Peru, April 11, 2016 (Reuters/Janine Costa). People walk past campaign electoral signs of Peru's presidential candidate Keiko Fujimori in Cuzco, Peru, April 11, 2016 (Reuters/Janine Costa).

Peru’s Presidential Candidates Head to Second Round
On June 5, Keiko Fujimori, the daughter of former president Alberto Fujimori, will face former finance minister Pedro Pablo Kuczynski in Peru’s presidential runoff election. Questionable decisions by Peru’s electoral board in the first round—disqualifying two competitive candidates and dismissing charges of vote-buying against Fujimori and Kuczynski—boosted Fujimori and clouded the vote’s legitimacy. Now the question will be the anti-Fujimori vote and whether Kuczynski (not a natural campaigner) can consolidate her opposition—much as current president Ollanta Humala did when he beat her in 2011’s second round. Although Fujimori is popular among the rural poor, many remember the corruption and human rights abuses of her father’s presidency, and fear that she could follow in his footsteps.

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Five Questions on Sustainable Investing With Morgan Stanley’s Audrey Choi

by Guest Blogger for Shannon K. O'Neil Tuesday, April 12, 2016
A man fills a glass with water from a spring in Chiffa in Medea Governorate, Algeria (Reuters/Ramzi Boudina). A man fills a glass with water from a spring in Chiffa in Medea Governorate, Algeria (Reuters/Ramzi Boudina).

This post features a conversation with Audrey Choi, chief executive officer of Morgan Stanley’s Institute for Sustainable Investing and managing director of its Global Sustainable Finance Group. Choi talks about the evolving $20 trillion sector, including important U.S. policy changes and her thoughts on where sustainable investing is headed. Read more »

This Week in Markets and Democracy: Panama Papers, Curbing Tax Evasion, U.S. Cuts Tanzania Aid

by Shannon K. O'Neil Friday, April 8, 2016
People demonstrate against Iceland's Prime Minister Sigmundur Gunnlaugsson in Reykjavik, Iceland on April 4, 2016 after a leak of documents by so-called Panama Papers stoked anger over his wife owning a tax haven-based company with large claims on the country's collapsed banks (Reuters/Stigtryggur Johannsson). People demonstrate against Iceland's Prime Minister Sigmundur Gunnlaugsson in Reykjavik, Iceland on April 4, 2016 after a leak of documents by so-called Panama Papers stoked anger over his wife owning a tax haven-based company with large claims on the country's collapsed banks (Reuters/Stigtryggur Johannsson).

Panama Papers Expose Weak Regulations
The “Panama Papers” are an unprecedented leak of 11.5 million files revealing a complex global network of hidden wealth. For four decades, Panamanian law firm Mossack Fonseca helped to set up over 200,000 shell companiesa favored tool for laundering money, stashing ill-gotten resources, and evading taxes—for tens of thousands of clients in over fifty countries, with current and former heads of state among the 143 politicians and cronies named. So far the revelations have forced Iceland’s prime minister and the president of Transparency International’s Chile branch to resign, and upped support for a Brexit given British Prime Minister David Cameron’s involvement. The Panama Papers further expose weaknesses in global financial regulation. More than half of the leaked shell companies are based in UK  territories100,000 in the British Virgin Islands alone—where Cameron has tried to end such anonymity by legally mandating a public registry of companies’ owners. European banks HSBC, Credit Suisse, and UBS are among the ten institutions that worked most frequently with the Panamanian firm to create offshore accounts for clients. Since the leak, countries including the United States and Germany have proposed new legislation to increase transparency around offshore companies.

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Five Things Washington Should Do to Help Latin America Curb Corruption

by Guest Blogger for Matthew Taylor Wednesday, April 6, 2016
Paraguayan prosecutors Hernan Galeano (C), Federico Espinoza (center, R) and Chief Prosecutor Roberto Zacarias hold a news conference in Asuncion, January 8, 2016. Paraguayan state prosecutors on Thursday raided the headquarters of South American soccer confederation CONMEBOL after a request for cooperation from U.S. justice officials probing corruption inside world soccer, the prosecution office said (Jorge Adorno/Reuters). Paraguayan prosecutors Hernan Galeano (C), Federico Espinoza (center, R) and Chief Prosecutor Roberto Zacarias hold a news conference in Asuncion, January 8, 2016. Paraguayan state prosecutors on Thursday raided the headquarters of South American soccer confederation CONMEBOL after a request for cooperation from U.S. justice officials probing corruption inside world soccer, the prosecution office said (Jorge Adorno/Reuters).

This is a guest blog post by Dr. Richard Messick, an anticorruption specialist. It is based on a CFR roundtable discussion on March 24 hosted by Matthew M. Taylor, adjunct senior fellow for Latin America Studies.

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CSMD Spring Break Reading List

by Shannon K. O'Neil Friday, March 25, 2016
People walk on the rock at the Trou aux Biches beach on the Indian Ocean island Mauritius (Reuters/Jacky Naegelen). People walk on the rock at the Trou aux Biches beach on the Indian Ocean island Mauritius (Reuters/Jacky Naegelen).

As Civil Society, Markets, and Democracy (CSMD) heads into spring break, here is what we will be reading.

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Tackling Climate Change Through Agriculture

by Guest Blogger for Shannon K. O'Neil Thursday, March 24, 2016
A farmer burns a paddy field in Thailand's Nakhonsawan province, north of Bangkok, Thailand, August 14, 2015 (Reuters/Chaiwat Subprasom). A farmer burns a paddy field in Thailand's Nakhonsawan province, north of Bangkok, Thailand, August 14, 2015 (Reuters/Chaiwat Subprasom).

Emerging Voices highlights new research, thinking, and approaches to development challenges from contributing scholars and practitioners. This post is from Dr. D. Michael Shafer, president and founder of Warm Heart Worldwide and professor emeritus of political science at Rutgers University. Warm Heart is a community-based development organization dedicated to building socially- and economically-sustainable communities in rural areas of northern Thailand.

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This Week in Markets and Democracy: Brazil’s Crisis Snowballs, Deferred Corruption Prosecutions, U.S. Bets on Cuba

by Shannon K. O'Neil Friday, March 18, 2016
Brazil's President Dilma Rousseff (R) greets former president Luiz Inacio Lula da Silva during the appointment of Lula da Silva as chief of staff, at Planalto palace in Brasilia, Brazil (Reuters/Adriano Machado). Brazil's President Dilma Rousseff (R) greets former president Luiz Inacio Lula da Silva during the appointment of Lula da Silva as chief of staff, at Planalto palace in Brasilia, Brazil (Reuters/Adriano Machado).

Brazil’s Corruption Crisis Snowballs
Brazil’s corruption investigations expanded to encompass the former and current president. Federal police detained and questioned former President Luíz Inácio Lula da Silva (“Lula”) over whether he personally benefited from the Petrobras bribery scheme. São Paulo state prosecutors then separately filed to arrest him on money-laundering charges. In a plea bargain, Senator Delcídio do Amaral claimed current President Dilma Rousseff knew about Petrobras bid-rigging and tried to stop the criminal probe. Abroad, Argentine prosecutors are investigating if their own officials received kickbacks, and my colleague Matt Taylor predicts the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) could bring FCPA charges against Petrobras. And in what most perceive as a cynical move to defy justice, Lula joined Rousseff’s cabinet as chief of staff, removing him from the jurisdiction of both state and federal courts (only the Supreme Court can now try his case). As millions take to the streets in outrage, the political consequences may come more quickly than the legal ones.

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This Week in Markets and Democracy: Nike’s Bribes in Kenya, Elections in Benin and Niger, and Women’s Anticorruption Role

by Shannon K. O'Neil Friday, March 11, 2016
A policeman is seen outside the gates of Riadha House the Athletic Kenya (AK) Headquarters during a protest in capital Nairobi November 23, 2015. Dozens of Kenyan athletes stormed the athletics federation headquarters in Nairobi on Monday, locking out officials and demanding that top Athletics Kenya (AK) bosses step down following allegations of graft and doping cover-ups (Reuters/Noor Khamis). A policeman is seen outside the gates of Riadha House the Athletic Kenya (AK) Headquarters during a protest in capital Nairobi November 23, 2015. Dozens of Kenyan athletes stormed the athletics federation headquarters in Nairobi on Monday, locking out officials and demanding that top Athletics Kenya (AK) bosses step down following allegations of graft and doping cover-ups (Reuters/Noor Khamis).

Nike Bribes, Will the United States Prosecute?
Bank records and emails show Nike paid a $500,000 “commitment bonus” to Kenya’s athletics federation, and hundreds of thousands more in “honoraria.” Though allegedly to support poor runners, Kenyan prosecutors say athletics officials quickly transferred the money to their personal bank accounts. Yet the United States cannot use the Foreign Corrupt Practices Act (FCPA) against the mega brand. The law only covers U.S. companies that bribe “foreign officials” and “public international organizations.” Sports associations are private, so outside the FCPA’s jurisdiction. In taking on FIFA, the U.S. Department of Justice (DOJ) worked around the FCPA, indicting foreign and U.S. officials for laundering money through U.S. banks, not bribery. The United States may need to do the same in the Nike case if it wants to follow up on President Obama’s pointed criticisms of Kenyan corruption with legal actions.

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