Colombia’s New President May Need U.S. Blessing to Realize his Domestic Agenda

A woman paints a mural for Peace and Reconciliation in Colombia. Credit: UNMVC/Jennifer Moreno

By Alexander Kozul-Wright
GENEVA, Aug 9 2022 – For the first time in its contemporary history, Colombia has a left-wing government. The presidency of Gustavo Petro, who took the reins August 8, marks a significant break from the political status quo. He also represents a stiff test for U.S. influence in Latin America.

Colombia is Washington’s most enduring ally in the region, and in recent years their relationship has been built around combatting the nation’s drug cartels. But despite major efforts to curb supply, Colombia remains a top source of cocaine for the United States.

The United Nations Office on Drugs and Crime (UNODC) recently estimated that Colombia’s cocaine harvest hit a record high in 2020. On the back of new coca varieties (the base ingredient for cocaine) and better cultivation techniques, Colombia’s potential output reached 1,228 tonnes in 2020. This was triple the 2010 level and four times greater than in the early 1990s, when Pablo Escobar was at the height of his infamy.

Since launching its controversial ‘war on drugs’ in 1971, successive Republican and Democratic administrations have supplied more than $13 billion in military and economic aid to Colombia. To little avail.

According to a 2021 United States’ Drug Enforcement Agency report, over 90 percent of the cocaine seized in the U.S. originates from Colombia. The U.S. remains the biggest consumer market for Colombian cocaine.

Petro is among those who have denounced the U.S.’s counter-narcotics strategy as counterproductive. In particular, he’s taken aim at US-backed aerial fumigation campaigns to destroy coca fields.

He favours expanding crop substitution programs that provide credit, training and enhanced land rights to rural farmers. For Petro, tackling Colombia’s violent drug trade is bound up with the county’s historic land ownership inequality.

He has also been an ardent critic of Colombia’s free-trade agreement (FTA) with the U.S. for pushing farmers into coca production and for exacerbating Colombia’s over-reliance on fossil fuel and coffee exports.

At the same time, imports from America’s highly subsidized agricultural sector have displaced whole segments of Colombia’s agrarian economy, forcing thousands of farmers into coca production.

Petro’s election campaign called for “smart tariffs” to protect Colombia’s rural farmers from U.S. imports and, by extension, criminal activity. “The free trade agreement signed with the United States handed rural Colombia to the drug traffickers,” he told the Financial Times in May. What’s more, he noted that “agricultural production cannot be increased if we do not renegotiate the FTA.”

An ex-member of the M-19 guerrilla group, Colombia’s new president has vowed to tackle asymmetric trade relations in line with land reform and the drug trade. But he will likely face severe opposition from the armed forces, who themselves fought leftist guerrilla movements during Colombia’s 52-year civil conflict.

Further, the military have a longstanding role in the U.S.-led war on drugs. For his part, Petro has accused Colombia’s top brass of corruption and human rights abuses, even since the Government-Farc peace treaty of 2016.

Elsewhere, the President faces a divided congress and deep hostility from landowning elites. It will require skilful manoeuvring to unite a fractured country around his domestic policies. And even if Petro can generate sufficient national support around his policy aims, he would still need to convince the Biden administration to back-track on the U.S.’s ideological commitment to free trade.

So, what cards can Petro play?

His opening gambit is likely to be a financial argument. While cocaine overdoses claim far fewer lives than opioids, the fiscal costs associated with interceding cocaine into the U.S. are staggering.

Navy and Coast Guard seizures alone cost American taxpayers US$56 billion in 2020, to say nothing of land border expenditures. State funds are also used for cocaine-linked policing, incarcerations and medical treatment.

The current geopolitical landscape may also provide Petro with an unlikely Trump card. Given President Joe Biden’s condemnation of Russia’s invasion of Ukraine, he will be careful avoid pushing Colombia (which he has described as a security “linchpin”) into a closer embrace with Cuba and Venezuela, who are diplomatically aligned with the Kremlin.

To isolate Russia even further, Biden will likely soften America’s stance in renegotiating its FTA with Colombia.

Last month, senior representatives from the Biden administration met with Petro to discuss, among other things, the FTA. While the U.S. has taken tentative steps towards renegotiating the deal, Petro should be wary of a favourable result.

Over the past twenty-five years, an intricate web of government and military bureaucracy has been constructed around U.S.-Colombian counter-narcotics operations. It will be difficult to disentangle.

IPS UN Bureau

 


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Excerpt:

The writer is a Geneva-based researcher for the Third World Network

April Fool’s Inflation Medicine Threatens Progress

By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY and KUALA LUMPUR, Aug 9 2022 – The world economy is on the brink of outright recession, according to the International Monetary Fund (IMF). The Ukraine war and sanctions have scuttled recovery from the COVID-19 pandemic.

Over 80 central banks have already raised interest rates so far this year. Except for the Bank of Japan governor, major central bankers have reacted to recent inflation by raising interest rates. Hence, stagflation is increasingly likely as rising interest rates slow the economy, but do not quell supply-side cost-push inflation.

Anis Chowdhury

IMF U-turn unexplained
The IMF chief economist recently advised, “Inflation at current levels represents a clear risk for current and future macroeconomic stability and bringing it back to central bank targets should be the top priority for policymakers”.

While acknowledging the short-term costs of raising interest rates, he has never bothered to explain why inflation targets should be considered sacrosanct regardless of circumstances. Simply asserting inflation will be more costly if not checked now makes for poor evidence-based policy making.

After all, only a month earlier, on 7 June, the IMF advised, “Countries should allow international prices to pass through to domestic prices while protecting households that are most in need”.

The Fund recognized the major sources of current inflation are supply disruptions – first due to pandemic lockdowns disrupting supply chains, and then, delivery blockages of food, fuel and fertilizer due to war and sanctions.

US Fed infallible?
Without explaining why, US Federal Reserve Bank Chair Jerome Powell insists on emulating his hero, Paul Volcker, Fed chair during 1979-87. Volcker famously almost doubled the federal funds target rate to nearly 20%.

Thus, Volcker caused the longest US recession since the 1930s’ Great Depression, raising unemployment to nearly 11%, while “the effects of unemployment, on health and earnings of sacked workers, persisted for years”.

Asked at a US Senate hearing if the Fed was prepared to do whatever it takes to control inflation – even if it harms growth – Powell replied, “the answer to your question is yes”.

Jomo Kwame Sundaram

But major central banks have ‘over-reacted’ time and again, with disastrous consequences. Milton Friedman famously argued the US Fed exacerbated the 1930s’ Great Depression. Instead of providing liquidity to businesses struggling with short-term cash-flow problems, it squeezed credit, crushing economic activity.

Similarly, later Fed chair Ben Bernanke and his co-authors showed overzealous monetary tightening was mainly responsible for the 1970s’ stagflation. With prices still rising despite higher interest rates, stagflation now looms large.

North Atlantic trio
Most central bankers have long been obsessed with fighting inflation, insisting on bringing it down to 2%, despite harming economic progress. This formulaic response is prescribed, even when inflation is not mainly due to surging demand.

Powell recently observed, “supply is a big part of the story”, acknowledging the Ukraine war and China’s pandemic restrictions have pushed prices up.

While admitting higher interest rates may increase unemployment, Powell insists meeting the 2% target is “unconditional”. He asserted, “we have the tools and the resolve to get it down to 2%”, insisting “we’re going to do that”.

While recognizing “very big supply shocks” as the primary cause of inflation, Bank of England (BOE) Governor Andrew Bailey also vows to meet the 2% inflation target, allowing “no ifs or buts”.

While European Central Bank President Christine Lagarde does not expect to return “to that environment of low inflation”, admitting “inflation in the euro area today is being driven by a complex mix of factors”, she insists on raising “interest rates for as long as it takes to bring inflation back to our [2%] target”.

April Fools?
Much of the problem is due to the 2% inflation targeting dogma. As the then Governor of the Reserve Bank of New Zealand – the first central bank to adopt a 2% inflation target – later admitted, “The figure was plucked out of the air”.

Thus, a “chance remark” by the NZ Finance Minister – during “a television interview on April 1, 1988 that he was thinking of genuine price stability, ‘around 0, or 0 to 1 percent’” – has become monetary policy worldwide!

Powell also acknowledged, “Since the pandemic, we’ve been living in a world where the economy has been driven by very different forces”. He confessed, “I think we understand better how little we understand about inflation.”

Meanwhile, Powell acknowledges how changed globalization, demographics, productivity and technical progress no longer check price increases – as during the ‘Great Moderation’.

Bailey’s resolve to get inflation to 2% is even more shocking as he admits the BOE cannot stop inflation hitting 10%, as “there isn’t a lot we can do”.

Although it has no theoretical, analytical or empirical basis, many central bankers treat inflation targeting as universal best practice – in all circumstances! Thus, despite acknowledging supply-side disruptions and changed conditions, they still insist on the 2% inflation target!

Interest rate, blunt tool
Central bankers’ inflation targeting dogma will cause much damage. Even when inflation is rising, raising interest rates may not be the right policy tool for several reasons.

First, the interest rate only addresses the symptoms, not the causes of inflation – which can be many. Second, raising interest rates too often and too much can kill productive and efficient businesses along with those less so.

Third, by slowing the economy, higher interest rates discourage investment in new technology, skill-upgrading, plant and equipment, adversely affecting the economy’s long-term potential.

Fourth, higher interest rates will raise debt burdens for governments, businesses and households. Borrowings accelerated after the 2008-09 global financial crisis, and even more during the pandemic.

Monetary tightening also constrains fiscal policy. A slower economy implies less tax revenue and more social provisioning spending. Higher interest rates also raise living costs as households’ debt-servicing costs rise, especially for mortgages. Living costs also rise as businesses pass on higher interest rates to consumers.

Policy innovation
The recent inflationary surge is broadly acknowledged as due to supply shortages, mainly due to the new Cold War, pandemic, Ukraine war and sanctions.

Increasing interest rates may slow price increases by reducing demand, but does not address supply constraints, the main cause of inflation now. Anti-inflationary policy in the current circumstances should therefore change from suppressing domestic demand, with higher interest rates, to enhancing supplies.

Raising interest rates increases credit costs for all. Instead, financial constraints on desired industries to be promoted (e.g., renewable energy) should be eased. Meanwhile, credit for undesirable, inefficient, speculative and unproductive activities (e.g., real estate and share purchases) should be tightened.

This requires macroeconomic policies to support economic diversification, by promoting industrial investments and technological innovation. Each goal needs customized policy tools.

Instead of reacting to inflation by raising the interest rate – a blunt one-size-fits-all instrument indeed – policymakers should consider various causes of inflation and how they interact.

Each source of inflation needs appropriate policy tools, not one blunt instrument for all. But central bankers still consider raising interest rates the main, if not only policy against inflation – a universal hammer for every cause of inflation, all seen as nails.

IPS UN Bureau

 


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Managing sea cucumber fisheries in the Pacific region: a one-day training to educate key stakeholders in New Caledonia

By External Source
Aug 9 2022 (IPS-Partners)

Holothurians, also known as sea cucumbers, are an important source of income for coastal communities in the Pacific. Their exploitation has grown over the past decades, targeting international markets. In some parts of the world, they are considered a delicacy where they can fetch very high prices consequently, they are being overfished in some areas of the Pacific region.

In 2021 Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) added two of the highest value sea cucumber species to its Appendix 2 list, which means that exporting countries are now required to prove that these species are fished in a sustainable way otherwise exporting them is prohibited.

Organised by the Pacific Community (SPC), in the framework of the PROTEGE project, two training sessions on the identification of sea cucumbers, and particularly of the two CITES-listed species, were organised for New-Caledonian local authorities on 18 and 19 July, with representatives of the Fiji Ministry of Fisheries assisting with the training.

The training included a presentation of the provisions of the environment code relating to sea cucumber fishing in New Caledonia, explanations by the Veterinary, Food and Phytosanitary Inspection Service (SIVAP) about the implications of a CITES listing of species, and a step-by-step process to correctly identify 14 species of sea cucumbers, in their live and processed forms. The training is one of the actions held by SPC’s Climate Change and Environmental Sustainability (CCES) and Fisheries Aquaculture and Marine Ecosystems (FAME) Divisions to promote sustainable ecosystems management.

The training was held at a local exporter’s processing plant, which allowed participants to handle and observe the sea cucumber species they should be able to identify. To further assist, an identification guide produced by SPC for New Caledonia was distributed to each participant. A test to validate the knowledge acquired was organised at the end of the day. Its success rate reached 100%!

Sea cucumbers are vital to many communities in the Pacific Islands region, providing a rare opportunity for cash income, particularly in remote areas. They also play a critical role in the health of the marine environment by cleaning the sediments from which they extract their food. They support the development of seagrass beds, which are refuge and food for marine organisms such as fish, dugongs and turtles. For all these reasons, the proper management of this resource is of paramount importance.

The Pacific Community will organise other training sessions in New Caledonia in September and will develop similar trainings for the region in coming months.

Know more about holothurians of commercial interest in the tropical Pacific: https://bit.ly/3oEWVHw

Would you like to learn more about how to identify holothurians? Watch these video tutorials: https://www.youtube.com/watch?v=7cWawjqWVLU

About PROTÉGÉ

PROTEGE (“Pacific Territories Regional Project for Sustainable Ecosystem Management” or “protect” in French) is an initiative designed to promote sustainable and climate-change-resilient economic development in the European Pacific overseas countries and territories (OCT) by emphasising biodiversity and renewable resources. Implemented by the Pacific Community (SPC) and the Secretariat of the Pacific Regional Environment Programme (SPREP), PROTEGE is a regional cooperation project that supports the public policies of the four Pacific OCTs, i.e. New Caledonia, French Polynesia, Wallis & Futuna and Pitcairn.