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Development Channel

Issues and innovations in global economic development

This Week in Markets and Democracy: Brazil’s Lula Charged, Thai Labor Case, Corporate Tax Battles

by Shannon K. O'Neil Friday, September 23, 2016
Brazil's former president Luiz Inacio Lula da Silva attends an event with workers' unions leaders against the privatization of Brazilian state companies and against Brazil's interim President Michel Temer, in Rio de Janeiro, Brazil, June 6, 2016 (Reuters/Ricardo Moraes). Brazil's former president Luiz Inacio Lula da Silva attends an event with workers' unions leaders against the privatization of Brazilian state companies and against Brazil's interim President Michel Temer, in Rio de Janeiro, Brazil, June 6, 2016 (Reuters/Ricardo Moraes).

Brazil’s Lula Charged with Corruption
After months of speculation, Brazilian judge Sérgio Moro allowed bribery charges against former president Luiz Inácio Lula da Silva (Lula) to move forward. He is accused of accepting $1.1 million in improvements for his beachfront apartment from OAS, one of Brazil’s largest construction companies, in exchange for Petrobras contracts. Lula is the latest and most prominent figure to be charged in the Lava Jato investigations, joining dozens of other political and business leaders, including former lower house speaker Eduardo Cunha, former Worker’s Party (PT) treasurer João Vaccari Neto, and construction magnate Marcelo Odebrecht. Next up may be President Michel Temer, already named in Odebrecht’s plea bargain for soliciting illegal campaign contributions during the 2014 presidential election.

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Beyond Supply Chain Transparency Laws

by Guest Blogger for Shannon K. O'Neil Thursday, September 22, 2016
Cresencio Bumanglag, a worker of Dole Food Company, rakes coffee fruits for them to dry at the company's Waialua coffee and cocoa farm on the North Shore of Oahu, in Hawaii November 9, 2011. Leaders of major nations bordering the Pacific will meet from Wednesday to Sunday in Hawaii in an Asia-Pacific Economic Cooperation (APEC) summit on building a regional free trade area and an environmental initiative to help spur world economic growth. Picture taken November 9, 2011 (Reuters/Yuriko Nakao). Cresencio Bumanglag, a worker of Dole Food Company, rakes coffee fruits for them to dry at the company's Waialua coffee and cocoa farm on the North Shore of Oahu, in Hawaii November 9, 2011. Leaders of major nations bordering the Pacific will meet from Wednesday to Sunday in Hawaii in an Asia-Pacific Economic Cooperation (APEC) summit on building a regional free trade area and an environmental initiative to help spur world economic growth. Picture taken November 9, 2011 (Reuters/Yuriko Nakao).

Global trade and the supply chains that support it are undergoing a period of profound change. Supply chains face threats including a resurgence of protectionism, climate change, decaying infrastructure, and human rights abuses. The Development Channel’s series on global supply chains will highlight analysis on emerging trends and challenges. This post is from Zoe Rubin, former intern with the Council on Foreign Relations’ Civil Society, Markets, and Democracy Program. 

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This Week in Markets and Democracy: FIFA Investigations, Corruption in Romania and the Maldives, New South Sudan Report

by Shannon K. O'Neil Friday, September 16, 2016
British comedian known as Lee Nelson (unseen) throws banknotes at FIFA President Sepp Blatter as he arrives for a news conference after the Extraordinary FIFA Executive Committee Meeting at the FIFA headquarters in Zurich, Switzerland July 20, 2015. World football's troubled governing body FIFA will vote for a new president, to replace Sepp Blatter, at a special congress to be held on February 26 in Zurich, the organisation said on Monday (Reuters/Arnd Wiegmann). British comedian known as Lee Nelson (unseen) throws banknotes at FIFA President Sepp Blatter as he arrives for a news conference after the Extraordinary FIFA Executive Committee Meeting at the FIFA headquarters in Zurich, Switzerland July 20, 2015. World football's troubled governing body FIFA will vote for a new president, to replace Sepp Blatter, at a special congress to be held on February 26 in Zurich, the organisation said on Monday (Reuters/Arnd Wiegmann).

FIFA Investigates Its Own Corruption
A year after the United States and Switzerland went after top FIFA officials on fraud, money laundering, and racketeering charges tied to a $150 million corruption scheme, soccer’s international governing body is taking actions itself. The federation fined former vice president Jeffrey Webb $1 million for accepting bribes and banned him for life from the sport. It also opened an investigation on former President Sepp Blatter and two top associates for bribery, corruption, and conflicts of interest, including adding several illegal provisions to their contracts—boosting their combined salaries to over $80 million, and guaranteeing them eight years of pay even if fired for just cause. FIFA’s new dynamism may begin to restore its tarnished reputation, and the information it uncovers could help U.S. and Swiss prosecutors with their own ongoing criminal cases.

Romania Steps Up Anticorruption Efforts, the Maldives Falls Back

Romania’s and the Maldives’ paths are diverging in the fight against corruption. Last week, Romanian prosecutors showed their independence and resolve by charging former Prime Minister Victor Ponta with abuse of office for influence peddling, for nominating a media mogul to parliament in exchange for financing Tony Blair’s 2012 visit. (Ponta resigned last year amid protests over a separate corruption case.) Ponta’s problems follow the interior minister’s resignation over a pending investigation into alleged embezzlement and abuse of power. In contrast, Maldivian President Abdulla Yameen responded to an Al Jazeera documentary exposing his role in a $1.5 billion money laundering scheme by raiding the offices of a local newspaper and human rights NGO. With a cowed judiciary and a stifled press, it is unlikely the increasingly repressive president will face an investigation any time soon.

Corruption Fuels Conflict in South Sudan

A new report from advocacy organization The Sentry documents how South Sudan’s leaders have looted the country throughout three years of brutal conflict that has displaced 2.5 million and left even more destitute. President Salva Kiir and former Vice President Riek Machar have stoked ethnic fighting and killings while making millions from illegal stakes in oil, mining, telecoms, construction, and defense companies. With the ill-gotten proceeds, their families and cronies purchased luxury cars, flew in private jets, and bought lavish properties in Australia, Ethiopia, Kenya, and Uganda. The United States—South Sudan’s largest donor—can help hold these leaders accountable by imposing sanctions, cracking down on money laundering, and helping to seize and return assets.

Managing the Unpredictable Risks in Supply Chains

by Guest Blogger for Shannon K. O'Neil Thursday, September 15, 2016
Firefighters extinguish a fire at a food and cigarette packaging factory outside of Dhaka, Bangladesh, September 10, 2016 (Reuters/Mohammad Ponir Hossain). Firefighters extinguish a fire at a food and cigarette packaging factory outside of Dhaka, Bangladesh (Reuters/Mohammad Ponir Hossain).

Global trade and the supply chains that support it are undergoing a period of profound change. Supply chains face threats including a resurgence of protectionism, climate change, decaying infrastructure, and human rights abuses. The Development Channel’s series on global supply chains will highlight experts’ analysis on emerging trends and challenges. This post is from Sang Kim, Associate Professor at Yale School of Management. 

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This Week in Markets and Democracy: Central America Takes on Corruption, Venezuela’s Protests, G20 Summit

by Shannon K. O'Neil Friday, September 9, 2016
Venezuelans living in Mexico take part in a protest to demand a referendum to remove Venezuela's President Nicolas Maduro at Angel de la Independencia monument in Mexico City, Mexico, September 4, 2016 (Reuters/Edgard Garrido). Venezuelans living in Mexico take part in a protest to demand a referendum to remove Venezuela's President Nicolas Maduro at Angel de la Independencia monument in Mexico City, Mexico, September 4, 2016 (Reuters/Edgard Garrido).

Central America Takes on Corruption 
Central American judiciaries have been stepping up to fight corruption. Last year Guatemala’s attorney general’s office, working closely with UN-backed International Commission against Impunity in Guatemala (CICIG), took down then-President Otto Pérez Molina for stealing tens of millions of dollars in customs duties. Pressured by civil society, the Honduran government agreed to a similar Organization for American States (OAS)-backed body, the Mission to Support the Fight Against Corruption and Impunity in Honduras (MACCIH), to investigate graft after $200 million disappeared from the country’s social security system. And El Salvador’s new Attorney General Douglas Meléndez, sworn in at the start of the year, is prosecuting several high-level officials and former officials with unexplained millions in their bank accounts. While this week’s asylum in Nicaragua for former Salvadorian President Mauricio Funes and his family is a potential setback, the cases themselves represent a sea change in justice for Central America’s Northern Triangle.

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Who Governs Global Value Chains?

by Guest Blogger for Shannon K. O'Neil Tuesday, August 16, 2016
Containers and cars are loaded on freight trains at the railroad shunting yard in Maschen near Hamburg September 23, 2012 (REUTERS/Fabian Bimmer). Containers and cars are loaded on freight trains at the railroad shunting yard in Maschen near Hamburg September 23, 2012 (REUTERS/Fabian Bimmer).

Global trade and the supply chains that support it are undergoing a period of profound change. Supply chains face threats including a resurgence of protectionism, climate change, decaying infrastructure, and human rights abuses. The Development Channel’s series on global supply chains will highlight experts’ analysis on emerging trends and challenges. This post is from Dr. Sherry Stephenson, senior fellow at the International Centre for Trade and Sustainable Development (ICTSD). 

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A Game of Inches: The Uncertain Fight Against Corruption in Latin America

by Matthew Taylor Wednesday, August 10, 2016
A boy holds a sign which reads, "No more corruption" during a demonstration demanding the resignation of Guatemalan President Otto Perez Molina, in downtown Guatemala City, May 30, 2015 (Reuters/Jorge Dan Lopez). A boy holds a sign which reads, "No more corruption" during a demonstration demanding the resignation of Guatemalan President Otto Perez Molina, in downtown Guatemala City, May 30, 2015 (Reuters/Jorge Dan Lopez).

Harvard’s inimitable Matthew Stephenson this week published a thought-provoking blog post comparing anticorruption efforts in Asia and Latin America. Crudely summarizing Stephenson’s argument, a few years ago many looked to Asia as the gold standard in anticorruption efforts, in part because of the success of independent and effective anticorruption agencies (ACAs) in the region. But recent news of political meddling with Hong Kong’s ACA, brazen kleptocracy in Malaysia’s state development fund, and efforts to water down reform in Indonesia all suggest that the pendulum is swinging in a less positive direction. By contrast, Stephenson is optimistic about the important gains made in recent years in Latin America, including by Guatemala’s International Commission Against Impunity (CICIG), Brazil’s Car Wash investigation, elections in Peru and Argentina that highlighted voter frustration with corruption, and Mexico’s “3 out of 3” reforms.

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Amid Slowing Trade, What’s Next for Global Supply Chains?

by Guest Blogger for Shannon K. O'Neil Tuesday, August 2, 2016
Employees sort boxes and parcels at the logistic centre of a express delivery company, after the Singles Day online shopping festival, in Wuhan, Hubei province, China, November 12, 2015 (Reuters/Stringer). Employees sort boxes and parcels at the logistic centre of a express delivery company, after the Singles Day online shopping festival, in Wuhan, Hubei province, China, November 12, 2015 (Reuters/Stringer).

Global trade and the supply chains that support it are undergoing a period of profound change. Supply chains face threats including a resurgence of protectionism, climate change, decaying infrastructure, and human rights abuses. The Development Channel’s series on global supply chains will highlight experts’ analysis on emerging trends and challenges. This post is from Wolfgang Lehmacher, head of supply chains and transport industry at the World Economic Forum (WEF) USA.

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This Week in Markets and Democracy: New Panama Papers, 1MDB Scandal Developments, Turkey Targets Press

by Shannon K. O'Neil Friday, July 29, 2016
Turkish President Tayyip Erdogan leaves after a news conference following the National Security Council and cabinet meetings at the Presidential Palace in Ankara, Turkey, July 20, 2016 (Reuters/Umit Bektas). Turkish President Tayyip Erdogan leaves after a news conference following the National Security Council and cabinet meetings at the Presidential Palace in Ankara, Turkey, July 20, 2016 (Reuters/Umit Bektas).

New Panama Papers Expose Africa’s Offshore Dealings
The International Consortium of Investigative Journalists (ICIJ) released a second round of Panama Papers. The documents reveal how private firms, business executives, and corrupt officials in fifty-two of Africa’s fifty-four nations hired Panamanian law firm Mossack Fonseca to set up shell companies—many to avoid taxes and hide bribes. Some 1,400 anonymous companies had links to African oil, gas, and mining businesses, facilitating the more than $50 billion in illicit financial outflows from the continent each year. The new releases should give authorities evidence to go after assets at home and abroad—where billions in corruption proceeds are stashed.

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This Week in Markets and Democracy: Mexico’s Anticorruption Reforms, South Africa’s Anticorruption Setbacks, Venezuela’s Slow-Motion Coup

by Shannon K. O'Neil Friday, July 22, 2016
Venezuela's President Nicolas Maduro (R) speaks, while Venezuela's Defense Minister Vladimir Padrino Lopez stands next to him, during a ceremony commemorating the 200th death anniversary of South American independence hero Francisco de Miranda in Caracas, Venezuela July 14, 2016 (Reuters/Carlos Garcia Rawlins). Venezuela's President Nicolas Maduro (R) speaks, while Venezuela's Defense Minister Vladimir Padrino Lopez stands next to him, during a ceremony commemorating the 200th death anniversary of South American independence hero Francisco de Miranda in Caracas, Venezuela July 14, 2016 (Reuters/Carlos Garcia Rawlins).

Mexico’s New Anticorruption Tools
President Enrique Peña Nieto signed into law long-awaited rules to step up Mexico’s fight against corruption. He had to veto an earlier version that would have forced private firms that receive government money to reveal their income and assets. The new measures mandate that all public servants disclose their assets, income, and tax returns. They also set up an independent prosecutor’s office and up the punishments for bribery, embezzlement, and influence peddling. While some civil society groups had hoped for more, the new anticorruption system provides new and stronger tools for those eager to take on bad behavior.

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