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Showing posts for "Sub-Saharan Africa"

Cleaning Up Global Supply Chains

by Shannon K. O'Neil
Workers are seen inside a Foxconn factory in the township of Longhua in the southern Guangdong province May 26, 2010. A spate of nine employee deaths at global contract electronics manufacturer Foxconn, Apple's main supplier of iPhones, has cast a spotlight on some of the harsher aspects of blue-collar life on the Chinese factory floor (Reuters/Bobby Yip). Workers are seen inside a Foxconn factory in the township of Longhua in the southern Guangdong province May 26, 2010. A spate of nine employee deaths at global contract electronics manufacturer Foxconn, Apple's main supplier of iPhones, has cast a spotlight on some of the harsher aspects of blue-collar life on the Chinese factory floor (Reuters/Bobby Yip).

The UK’s Modern Slavery Act now requires companies to report efforts to prevent human trafficking and slavery in the making of every part and every process of production, from headquarters down to individual suppliers along production chains. In the United States, the Dodd Frank Act’s disclosure rules for conflict minerals hold mining and technology companies to similar standards. But surveys and reports show companies still fail to monitor their suppliers, let alone prevent abuses.

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This Week in Markets and Democracy: Malaysia’s Corruption Probes, Ghost Workers, and Lax OECD Bribery Laws

by Shannon K. O'Neil
Malaysia's Prime Minister Najib Razak leaves parliament in Kuala Lumpur, Malaysia, January 26, 2016. Malaysia's attorney-general said on Tuesday that $681 million transferred into Prime Minister Najib Razak's personal bank account was a gift from the royal family in Saudi Arabia and there were no criminal offences or corruption involved (Reuters/Olivia Harris). Malaysia's Prime Minister Najib Razak leaves parliament in Kuala Lumpur, Malaysia, January 26, 2016. Malaysia's attorney-general said on Tuesday that $681 million transferred into Prime Minister Najib Razak's personal bank account was a gift from the royal family in Saudi Arabia and there were no criminal offences or corruption involved (Reuters/Olivia Harris).

International Investigations Take Over as Domestic Malaysian Justice Fails
New evidence shows that transfers from troubled state investment fund 1MDB into Malaysian Prime Minister Najib Razak’s personal bank accounts may top $1 billion—$300 million higher than previously thought. Yet Malaysian authorities continue to clear him of wrongdoing. The attorney general’s office ended its case, saying it found no evidence of graft, and Parliament is delaying a long-awaited investigatory report on the fund. The government has also shut down a Malaysian news site reporting on corruption and threatened harsh punishments for journalists who leak “official secrets”—a thinly-veiled warning to would-be whistleblowers. Less politically malleable are international authorities who continue to probe the cross-border case. Singapore recently seized a “large number” of related bank accounts. Criminal proceedings in Switzerland allege misappropriation of up to $4 billion in state money. And in the United States, the Department of Justice opened an inquiry into Najib’s U.S. real estate holdings and the Federal Bureau of Investigation (FBI) into the 1MDB case itself. Najib maintains the money was a political donation from an unnamed Saudi royal, a claim that conflicts with the growing financial paper trail.

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This Week in Markets and Democracy: India’s Growth, U.S. Development Seeks Private Investment, and Ugandan Elections

by Shannon K. O'Neil
Workers erect scaffolding at the construction site of a metro station in Greater Noida on the outskirts of New Delhi, India, September 30, 2015. India's annual infrastructure output growth picked up in August to 2.6 percent from a year ago, mainly driven by higher cement and electricity generation, government data showed on Wednesday (Reuters/Anindito Mukherjee). Workers erect scaffolding at the construction site of a metro station in Greater Noida on the outskirts of New Delhi, India, September 30, 2015. India's annual infrastructure output growth picked up in August to 2.6 percent from a year ago, mainly driven by higher cement and electricity generation, government data showed on Wednesday (Reuters/Anindito Mukherjee).

Can India Avoid Emerging Market Slump?
India outpaced China as the world’s fastest growing economy in 2015, with gross domestic product (GDP) rising 7.5 percent. Consumption by the nation’s 1.3 billion citizens drove the gains, along with public infrastructure spending to upgrade the nation’s roads, railways, ports, and power grids. India’s government is on track to spend over a trillion dollars on infrastructure as part of a 2012-2017 five year plan, as one of the emerging markets able to borrow at low international rates (debt to GDP is for now a manageable 50 percent). Yet private sector investment hasn’t followed suit. Bureaucratic difficulties in acquiring land and permits and financing snafus show how difficult it is to do business – India is ranked 130 of 189 in the World Bank’s Ease of Doing Business Report. A tough external environment led to a decline in exports and an outflow of portfolio investments. To attract the private investment needed for long term growth, Prime Minister Narendra Modi will have to tackle issues including labor regulations, taxes, and onerous import and export documentation.

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This Week in Markets and Democracy: Moldova’s Protests, Investors Take on Graft, Corruption’s Costs in Nigeria

by Shannon K. O'Neil
People hold a protest in front of the parliament building in Chisinau, Moldova, January 21, 2016. At least 8,000 people protested in the Moldovan capital on Thursday against the appointment of Prime Minister Pavel Filip, whose hasty swearing-in ceremony at midnight also prompted a government spokesman to resign (Reuters/Viktor Dimitrov). People hold a protest in front of the parliament building in Chisinau, Moldova, January 21, 2016. At least 8,000 people protested in the Moldovan capital on Thursday against the appointment of Prime Minister Pavel Filip, whose hasty swearing-in ceremony at midnight also prompted a government spokesman to resign (Reuters/Viktor Dimitrov).

Moldova’s Corruption Undermines EU Bid
Moldova’s corruption continues despite deepening European Union (EU) ties. New Prime Minister Pavel Filip’s pro-EU party is linked to a $1 billion bank embezzlement scheme that saw nearly 13 percent of gross domestic product (GDP) disappear. Two former prime ministers fell in the scandal, one to a no confidence vote while another is in jail. Now, despite government rhetoric accepting the EU Association Agreement governance statutes and promising to stamp out corruption, protesters are calling for Filip’s resignation. It is unlikely that Moldova will move beyond EU “partner” status anytime soon.

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Nigeria’s 2016 Budget Continues Use of Secretive ‘Security Votes’

by Guest Blogger for Shannon K. O'Neil

In a post originally published on African Arguments, CFR International Affairs Fellow Matthew Page explains that despite President Muhammadu Buhari’s anticorruption progress, the government’s new budget includes allocations for opaque funds that often go missing.

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This Week in Markets and Democracy: Egypt’s Backsliding, UK Transparency Setbacks, New Global Rankings

by Shannon K. O'Neil
Members of security forces keep watch in Tahrir Square before the fifth anniversary of the January 25 uprising, in Cairo, Egypt, January 24, 2016 (Reuters/Mohamed Abd El Ghany). Members of security forces keep watch in Tahrir Square before the fifth anniversary of the January 25 uprising, in Cairo, Egypt, January 24, 2016 (Reuters/Mohamed Abd El Ghany).

United States Undeterred by Egypt’s Democratic Backsliding
Five years after its revolution, Egypt is no closer to democracy. President Abdel Fattah al-Sisi’s government routinely arrests political and social media activists, and has detained tens of thousands of people, many held for months without charges. Raids on news outlets and a law prohibiting journalists from contradicting official government information undermine freedom of expression. Every opposition party boycotted fall 2015 legislative elections and less than a third of the population turned out to vote. Still, the United States seems to be choosing stability over political freedoms. President Obama restored $1.3 billion in annual military assistance cut after Sisi overthrew former president Mohamed Morsi in 2013. And Central Intelligence Agency (CIA) Director John Brennan recently visited Cairo to boost security and counterterrorism cooperation, congratulating Sisi on inaugurating a new parliament.

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This Week in Markets and Democracy: Corruption in Iran, Africa, and Mexico

by Shannon K. O'Neil
Humberto Moreira, a former ally of Mexican President Enrique Pena Nieto, and his lawyer Ulrich Richter (L) leave the Soto del Real penitentiary outside Madrid, Spain, January 22, 2016 (Reuters/Susana Vera). Humberto Moreira, a former ally of Mexican President Enrique Pena Nieto, and his lawyer Ulrich Richter (L) leave the Soto del Real penitentiary outside Madrid, Spain, January 22, 2016 (Reuters/Susana Vera).

Iran’s Sanction Are Gone, but Not Its Corruption

Corruption presents a huge hurdle for Iran. It ranks 136 out of 175 countries in Transparency International’s Corruption Perceptions Index, and 118 of 189 in the World Bank’s Doing Business report. Despite earning $650 billion in oil profits over the last eight years, billions went missing, and little found its way into public goods such as infrastructure. Still, as international sanctions lift, European and Asian companies including Daimler, Airbus, Total, Eni, and Statoil have or are considering ventures. The UK government even published a guide on doing business in Iran, noting the prevalence of customs that violate its Bribery Act.

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This Week in Markets and Democracy: Energy Subsidies, Human Rights in Supply Chains, and Poland’s Democracy Rollback

by Shannon K. O'Neil
A driver waits to fill his car with fuel at a petrol station in Riyadh, Saudi Arabia, December 22, 2015 (Reuters/Faisal Al Nasser). A driver waits to fill his car with fuel at a petrol station in Riyadh, Saudi Arabia, December 22, 2015 (Reuters/Faisal Al Nasser).

Oil Prices Plummet—Will Subsidies Follow?
As crude prices fall below $30 a barrel, oil-producing states face mounting fiscal challenges. Saudi Arabia’s 2015 deficit neared $100 billion, roughly 15 percent of gross domestic product (GDP);Venezuela’s reached 14 percent; and Algeria expects foreign reserves to fall by $30 billion in the coming year to cover its looming fiscal gap. Across commodity-dependent nations finance ministers are looking to cut budgets. Energy subsidies are an obvious target, as these expensive and inefficient payments distort markets and undermine development. In December, Saudi Arabia reduced fuel subsidies and prices went up 50 percent. Algeria promised to cut energy subsidies (though in the short term, they are rising). Even in Venezuela, where citizens pay less for gas than water, rumors are the government is considering a hike. The hesitation? Price increases during recessions don’t go over well; in Venezuela, the unpopular move helped bring Hugo Chavez to power.

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Trade, Anticorruption, and Elections at the Start of 2016

by Shannon K. O'Neil
U.S. Attorney General Loretta Lynch (3rd L) makes remarks at a news conference to announce a law enforcement action relating to FIFA, as (L-R) Assistant U. S. Attorney for Eastern District of New York Evan Norris, U.S. Attorney for the Eastern District of New York Robert Capers, FBI Assistant Director New York Field Office Diego Rodriguez, IRS Criminal Investigation Chief Richard Webber and IRS Special Agent in Charge of Los Angeles Field Office Erick Martinez listen, in Washington, December 3, 2015. Officials Alfredo Hawit and Juan Angel Napout have been arrested by Swiss authorities in the ongoing soccer scandal (Reuters/Mike Theiler). U.S. Attorney General Loretta Lynch (3rd L) makes remarks at a news conference to announce a law enforcement action relating to FIFA, as (L-R) Assistant U. S. Attorney for Eastern District of New York Evan Norris, U.S. Attorney for the Eastern District of New York Robert Capers, FBI Assistant Director New York Field Office Diego Rodriguez, IRS Criminal Investigation Chief Richard Webber and IRS Special Agent in Charge of Los Angeles Field Office Erick Martinez listen, in Washington, December 3, 2015. Officials Alfredo Hawit and Juan Angel Napout have been arrested by Swiss authorities in the ongoing soccer scandal (Reuters/Mike Theiler).

As a new year begins, trade is slower, the drive against corruption continues, and electoral struggles shape fragile democracies. Here are three issues the Civil Society, Markets, and Democracy (CSMD) program will be following in 2016:

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This Week in Markets and Democracy: Modi’s Reform Agenda, the WTO, and 2015 UN Development Report

by Shannon K. O'Neil
A labourer pushes a handcart loaded with sacks containing tea packets, towards a supply truck at a wholesale market in Kolkata, India, June 26, 2015. For years Indian businesses have lobbied for a nationwide sales tax, hoping to replace a chaotic structure that inflates costs and halts their trucks at state borders for duty payments, and to unify the country into one of the world's largest single markets. But after political compromises that finally got a goods and services tax (GST) bill before parliament, they have turned wary (Reuters/De Chowdhuri). A labourer pushes a handcart loaded with sacks containing tea packets, towards a supply truck at a wholesale market in Kolkata, India, June 26, 2015. For years Indian businesses have lobbied for a nationwide sales tax, hoping to replace a chaotic structure that inflates costs and halts their trucks at state borders for duty payments, and to unify the country into one of the world's largest single markets. But after political compromises that finally got a goods and services tax (GST) bill before parliament, they have turned wary (Reuters/De Chowdhuri).

Modi’s Reforms at Odds
A senior official in Indian Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) is pushing a corruption probe that threatens to derail his own party’s Goods and Services Tax (GST). A linchpin of Modi’s economic platform, the reform would replace numerous local and state taxes with a single nation-wide tax. The government expects GST to boost government revenue, attract foreign investment, and add up to two percent to GDP. With the corruption case’s targets—opposition Congress Party leaders Sonia and Rahul Gandhi—denouncing the investigation as politically motivated, the fallout will likely halt Modi’s tax reform in India’s opposition-led upper house. As the Gandhi case advances, the GST may not, putting Modi’s ambitious pro-business and anticorruption agendas at odds.

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