The Rise of the Food Barons

BERLIN – The industrial-agriculture sector has long faced criticism for practices that contribute to climate change, environmental destruction, and rural poverty. And yet the sector has taken virtually no steps to improve quality and sustainability, or to promote social justice.

This is not surprising. Although there are more than 570 million farmers and seven billion consumers worldwide, just a handful of companies control the global industrial-agriculture value chain – from field to shop counter. Given the high profits and vast political power of these companies, changes to the status quo are not in their interest.

Moreover, market concentration in the agriculture sector is on the rise, owing to increased demand for the agricultural raw materials needed in food, animal feed, and energy production. As the middle class in southern countries has grown, its members’ consumption and nutritional habits have changed, boosting global demand for processed foods – and setting off a scramble for market power among multinational agricultural, chemical, and food corporations.

The biggest players in these sectors have been buying out their smaller competitors for years. But now they are also buying out one another, often with financing provided by investors from completely different sectors.

Consider the seed and agrochemical sector, where Bayer, the second-largest pesticide producer in the world, is in the process of acquiring Monsanto, the largest seed producer, for €66 billion ($74 billion). If the United States and the European Union approve the deal, as seems likely, just three conglomerates – Bayer-Monsanto, Dow-DuPont and ChemChina-Syngenta – will control over 60% of the global seed and agrochemical market. “Baysanto” alone would be the proprietor of almost every genetically modified plant on the planet.

With other large mergers also being announced, the global agriculture market at the end of 2017 could look very different than it did at the beginning. Each of the three major conglomerates will be closer to its goal of achieving domination of the seed and pesticide markets – at which point they will be able to dictate food products, prices, and quality worldwide.

The agrotechnical sector is experiencing some of the same changes as the seed sector. The five largest corporations account for 65% of the market, with Deere & Company, the owner of the John Deere brand, in the lead. In 2015, Deere & Company reported $29 billion in sales, surpassing the $25 billion that Monsanto and Bayer made selling seeds and pesticides.

The most promising new opportunity for food corporations today lies in the digitization of agriculture. This process is still in its early stages, but it is gathering momentum, and eventually it will cover all areas of production. Soon enough, drones will take over the task of spraying pesticides; livestock will be equipped with sensors to track milk quantities, movement patterns, and feed rations; tractors will be controlled by GPS; and app-controlled sowing machines will assess soil quality to determine the optimal distance between rows and plants.

To maximize the benefits of these new technologies, the companies that already dominate the value chain have begun cooperating with one another. The John Deeres and Monsantos have now joined forces. The confluence of soil and weather “big data,” new agrotechnologies, genetically modified seeds, and new developments in agrochemistry will help these companies save money, protect natural resources, and maximize crop yields worldwide.

But while this possible future bodes well for some of the world’s largest companies, it leaves the environmental and social problems associated with industrialized agriculture unsolved. Most farmers, particularly in the global South, will never be able to afford expensive digital-age machinery. The maxim “grow or go” will be replaced with “digitize or disappear.” The ETC Group, an American non-governmental organization, has already outlined a future scenario in which the major agrotechnology corporations move upstream and absorb the seed and pesticide producers. At that point, just a few companies will determine everything that we eat.

Indeed, the same market-concentration problem applies to other links in the value chain, such as agricultural traders and supermarkets. And even though food processing is not yet consolidated on a global scale, it is still dominated at the regional level by companies such as Unilever, Danone, Mondelez, and Nestlé. These companies make money when fresh or semi-processed food is replaced by highly processed convenience foods such as frozen pizza, canned soup, and ready-made meals.

While lucrative, this business model is closely linked to obesity, diabetes, and other chronic diseases. Worse, food corporations are also profiting from the proliferation of illnesses for which they are partly responsible, by marketing “healthy” processed foods enriched with protein, vitamins, probiotics, and omega-3 fatty acids.

Meanwhile, corporations are amassing market power at the expense of those at the bottom of the value chain: farmers and workers. International Labor Organization standards guarantee all workers the right to organize, and they prohibit forced and child labor and proscribe race and gender discrimination. But labor-law violations have become the norm, because efforts to enforce ILO rules are often quashed, while trade union members are routinely threatened, fired, and even murdered.

In this hostile climate, minimum-wage, overtime-pay, and workplace-safety standards are openly neglected. And women, in particular, are at a disadvantage, because they are paid less than their male counterparts and often must settle for seasonal or temporary jobs.

Today, half of the world’s 800 million starving people are small farmers and workers connected to the agricultural sector. Their lot will hardly improve if the few companies already dominating that sector become even more powerful. Christine Chemnitz is Head of the Department of International Agricultural Politics at the Heinrich Böll Foundation.

By Christine Chemnitz

Measuring the Internet for Freedom

ROME – Last year, during a wave of deadly political protests in Ethiopia, the government blocked more than 15 media websites and the smartphone chat application WhatsApp. Sites promoting freedom of expression and LGBTQ+ rights, as well as those offering censorship-circumvention tools, such as Tor and Psiphon, were also suppressed.

All of this was uncovered through the use of software called ooniprobe, which is designed to measure networks and detect Internet censorship. Ooniprobe was developed more than five years ago by the Tor-supported Open Observatory of Network Interference (OONI), with which I work, in order to boost transparency, accountability, and oversight of Internet censorship. The software is free and open source, meaning that anyone can use it. And, indeed, tens of thousands of ooniprobe users from more than 190 countries have already done just that.

Those users have contributed to the collection of millions of network measurements, all of which are published on OONI Explorer, arguably the largest publicly available resource on Internet censorship. Thanks to their use of ooniprobe, we uncovered the extent of last year’s wave of censorship in Ethiopia, as well as details of many other cases of censorship elsewhere in the world.

In Uganda, local groups used ooniprobe during last year’s general election, when the government blocked social media. Ooniprobe’s network-measurement data not only confirmed the government’s action; it also uncovered which sites were blocked and the different methods used by Internet Service Providers (ISPs) to implement censorship.

Ooniprobe also came in handy in Malaysia in 2015. Facing accusations that he had transferred nearly $700 million from the state investment fund 1MDB to his personal bank accounts, Prime Minister Najib Razak attempted to block news outlets and blogs that reported on the scandal. It was ooniprobe’s network-measurement software that enabled Malaysian civil-society groups to collect data that serve as evidence of the blocking.

Of course, censorship is not always carried out to protect the politically powerful; it can also be used to reinforce social and cultural norms. In Indonesia, for example, low social tolerance for homosexuality may have played a role in the blocking of numerous LGBTQ+ websites, even though the country does not officially restrict LGBTQ+ rights. Similar factors may have influenced efforts to block sites perceived as overly critical of Islam.

In Thailand, ISPs have, in the last three years, blocked access to a number of sites that are perceived to be offensive toward the country’s royal family. But, here, there is a legal justification: Thailand’s strict prohibition against lèse-majesté protects the royal family’s most senior members from insult or threat. Other cases of legally justified Internet censorship include the blocking of sexually explicit websites in countries where pornography is prohibited.

Then there are cases where the motivation for censorship is unclear. Why, for example, has an online dating site been blocked in Malaysia? In some countries, ISPs appear to be censoring sites at their own discretion. According to ooniprobe data, multiple Thai ISPs simultaneously blocked access to different types of websites – from news outlets to Wikileaks to pornography – indicating that they likely received vague orders from authorities.

Before ooniprobe, such censorship was difficult to detect, leading to a lack of accountability, with governments and ISPs often denying any and all involvement. Even in cases where governments announce official lists of blocked sites, they may leave some targets off. Likewise, ISPs may not always comply with official orders to lift blocks. Vimeo and Reddit, for example, were recently found to be blocked in some networks in Indonesia, even though the official ban on those sites was lifted more than two years ago.

With ooniprobe, users are not only able to expose Internet censorship; they can also acquire substantial detail about how, when, where, and by whom the censorship is being implemented. OONI’s Web-Connectivity Test, for example, is designed to examine whether access to websites is blocked through DNS tampering, TCP/IP blocking, or a transparent HTTP proxy.

Other ooniprobe tests are designed to examine the accessibility of chat apps – namely, WhatsApp, Telegram, and Facebook Messenger – within networks, as well as that of censorship-circumvention tools, such as Tor, Psiphon, and Lantern. OONI also provides software tests that uncover the presence of systems (“middle boxes”) that could potentially be responsible for censorship or surveillance.

The depth of OONI data supports much-needed accountability and oversight. Lawyers can use OONI data to assess the legality of Internet censorship in their countries, and potentially introduce it as evidence in court cases. Journalists, researchers, and human-rights defenders can use the data to inform their work as well. And censorship-circumvention projects like Tor can use OONI findings on emergent censorship events to shape their tools and strategies.

OONI data can help enrich public discourse about the legality, necessity, and proportionality of Internet censorship. That makes it a critical tool for safeguarding human rights on the Internet and beyond.Maria Xynou, a digital rights advocate, manages community research on the study of Internet censorship at the Open Observatory of Network Interference (OONI) project.

By Maria Xynou

China’s Renewable-Energy Revolution

BEIJING – At the start of 2017, China announced that it would invest $360 billion in renewable energy by 2020 and scrap plans to build 85 coal-fired power plants. In March, Chinese authorities reported that the country was already exceeding official targets for energy efficiency, carbon intensity, and the share of clean energy sources. And just last month, China’s energy regulator, the National Energy Administration, rolled out new measures to reduce the country’s dependence on coal.

These are just the latest indicators that China is at the center of a global energy transformation, which is being driven by technological change and the falling cost of renewables. But China is not just investing in renewables and phasing out coal. It also accounts for a growing share of global energy demand, meaning that its economy’s continuing shift toward service- and consumption-led growth will reshape the resource sector worldwide.

At the same time, various other factors are reducing global resource consumption, including increased energy efficiency in residential, industrial, and commercial buildings, and lower demand for energy in transportation, owing to the proliferation of autonomous vehicles and ride sharing.

According to Beyond the Supercycle: How Technology Is Reshaping Resources, a new report from the McKinsey Global Institute (MGI), these trends are slowing the growth of primary energy demand. If rapid adoption of new technologies continues, that demand could peak in 2025. And with less intensive energy use and increased efficiency, energy productivity in the global economy could increase by 40-70% over the next two decades.

While global growth in energy demand is slowing, China’s share of that demand is increasing. By 2035, China may account for 28% of the world’s primary energy demand, up from 23% today, whereas the United States could account for just 12% by 2035, down from 16% today.

China has already made significant progress in reducing its resource intensity: between 1980 and 2010, its economy grew 18-fold, but its energy consumption grew only fivefold. According to World Bank data, that reflects a 70% decline in energy intensity per unit of GDP.

In its 13th Five-Year Plan, the Chinese government aims to reduce energy intensity by a total of 15% between 2016 and 2020. It is already well on its way toward achieving that goal. At the Chinese Communist Party’s National People’s Congress earlier this year, Chinese Premier Li Keqiang reported that China’s energy intensity fell by 5% last year alone.

Renewables are one reason for China’s declining resource intensity. Hoping to become a world leader in the field, China is already investing more than $100 billion in domestic renewables every year. That is twice the level of US investment in domestic renewable energy and more than the combined annual investment of the US and the European Union.

In addition, China is investing $32 billion – more than any other country – in renewables overseas, with top-tier Chinese companies increasingly taking the lead in global renewable-energy value chains. China’s State Grid Corporation has plans to develop an energy grid that draws on wind turbines and solar panels from around the world. Chinese solar-panel manufacturers are estimated to have a 20% cost advantage over their US peers, owing to economies of scale and more advanced supply-chain development. And Chinese wind-turbine manufacturers, having gradually closed technology gaps, now account for more than 90% of the Chinese domestic market, up from just 25% in 2002.

These trends suggest that China will be a major source of both energy demand and cutting-edge technology, implying that it will have a unique opportunity to provide global leadership. Its experience in reducing energy intensity can serve as a roadmap for developing countries. And its investments in renewables at home and abroad can lead to additional technological breakthroughs that drive down costs for consumers everywhere.

But China will also face challenges as it moves from fossil fuels to renewables within a changing global resource sector. Its economy is still highly dependent on coal, implying sizeable costs as it shifts capacity to other resources such as natural gas and renewables.

Moreover, the construction of solar panels and wind farms in China has outpaced upgrades to its electrical grid, creating a great deal of waste. And Chinese producers, like most others, are feeling increasing pressure to reduce costs and improve efficiency to make up for slower demand growth worldwide.

Despite these hurdles, technological innovation should help Chinese producers realize productivity gains and deliver savings to consumers. According to MGI, by 2035, changes in the supply and demand for major commodities could result in total cost savings of $900 billion to $1.6 trillion worldwide.

The scale of these savings will depend not only on how quickly new technology is adopted, but also on how policymakers and companies adapt to their new environment. But, above all, it will depend on China.

Jiang Kejun is senior researcher at the Energy Research Institute of China’s National Development and Reform Commission. Jonathan Woetzel is a McKinsey senior partner and a director of the McKinsey Global Institute.

By Jiang Kejun and Jonathan Woetzel

The Lost Lesson of the Financial Crisis

LONDON – Ten years ago this month, the French bank BNP Paribas decided to limit investors’ access to the money they had deposited in three funds. It was the first loud signal of the financial stress that would, a year later, send the global economy into a tailspin. Yet the massive economic and financial dislocations that would come to a boil in late 2008 and continue through early 2009 – which brought the world to the brink of a devastating multi-year depression – took policymakers in advanced economies completely by surprise. They had clearly not paid enough attention to the lessons of crises in the emerging world.

Anyone who has experienced or studied developing-country financial crises will be painfully aware of their defining features. For starters, as the late Rüdiger Dornbusch argued, financial crises can take a long time to develop, but once they erupt, they tend to spread rapidly, widely, violently, and (seemingly) indiscriminately.

In this process of cascading failures, overall financial conditions quickly flip from feast to famine. Private credit factories that seemed indestructible are brought to their knees, and central banks and governments are confronted with tough, inherently uncertain policy choices. Moreover, policymakers also have to account for the risk of a “sudden stop” to economic activity, which can devastate employment, trade, and investment.

Marshaling a sufficiently comprehensive response to extreme financial stress becomes even more difficult, if not enough was done during the good times to ensure sustainable and inclusive growth. It becomes harder still when politicians are actively playing the blame game. In the end, the sociopolitical and institutional effects of a crisis can far outlast the economic and financial ones.

All of these lessons would have been useful to advanced-economy policymakers ten years ago. When BNP Paribas froze $2.2 billion worth of funds on August 9, 2007, it should have been obvious that more financial stress would be forthcoming. But policymakers drew the wrong conclusions, primarily for two reasons.

First, it took some time for policymakers to come to grips with the extent of the financial system’s latent instability, which had accumulated under their watch. Second, most policymakers in the advanced world were too dismissive of the idea that they had anything to learn from emerging countries’ experiences.

Unfortunately, these problems are yet to be fully resolved. In fact, there is a growing risk that politicians – many of whom are distracted and sidestepping their economic-governance responsibilities – may be missing the biggest historical insight of all: the importance of an economy’s underlying growth model.

Indeed, advanced-country politicians today still seem to be ignoring the limitations of an economic model that relies excessively on finance to create sustainable, inclusive growth. Though those limitations have been laid bare over the last ten years, policymakers did not strengthen adequately the growth model on which their economies depend. Instead, they often acted as if the crisis was merely a cyclical – albeit dramatic – shock, and assumed that the economy would bounce back in a V-like fashion, as it had typically done after a recession.

Because policymakers were initially captivated by cyclical thinking, they did not regard the financial crisis as a secular or epochal event. The result was that they purposely designed their policy responses to be “timely, targeted, and temporary.” Eventually, it became clear that the problem required a much broader, longer-term structural solution. But by that time, the political window of opportunity for bold actions had essentially closed.

Consequently, advanced economies took too long returning to pre-crisis GDP levels, and were unable to unleash their considerable growth potential. Worse, the growth that they did achieve in the years after the crisis was not inclusive; instead, the excessively wide income, wealth, and opportunity gaps in many advanced economies endured.

The longer this pattern persisted, the more advanced economies’ future growth prospects suffered. And what was previously unthinkable – both financially and politically – started to become possible, even likely.

A decade after the start of the crisis, advanced economies still have not decisively pivoted away from a growth model that is overly reliant on liquidity and leverage – first from private financial institutions, and then from central banks. They have yet to make sufficient investments in infrastructure, education, and human capital more generally. They have not addressed anti-growth distortions that undermine the efficacy of tax systems, financial intermediation, and trade. And they have failed to keep up with technology, taking advantage of the potential benefits of big data, machine learning, artificial intelligence, and new forms of mobility, while managing effectively the related risks.

Policymakers in the advanced world lagged in internalizing the relevant insights from emerging economies. But they now have the evidence and analytical capability to do so. It is in their power to avert more disappointments, tap into sources of sustainable growth, and tackle today’s alarming levels of inequality. The ball is in the political class’s court.

Mohamed A. El-Erian, Chief Economic Adviser at Allianz, was Chairman of US President Barack Obama’s Global Development Council and is the author of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse.

By Mohamed A. El-Erian

Decolonizing Western Sahara

BIR LEHLU, WESTERN SAHARA – When Western Sahara was annexed by Morocco in 1975, it had been under Spanish control for nearly a century. But Spain’s grip on the territory had weakened in the dying days of Francisco Franco’s dictatorship. And rather than allowing a process of decolonization, Spain signed the tripartite “Madrid Accords” with Morocco and Mauritania, both of which subsequently moved in to annex the territory. Mauritania relinquished its claim in 1979, but Morocco never left.

Western Sahara’s legal status is crystal clear. In 1963, it was officially recognized as a Non-Self-Governing Territory by the United Nations General Assembly under the UN Charter – a legal status it retains to this day. It is, in short, the last colony in Africa. In 1975, the International Court of Justice (ICJ) affirmed the Saharawi people’s right to self-determination, and found no ties of territorial sovereignty between Morocco and Western Sahara.

Yet Morocco has been allowed to continue illegally occupying Western Sahara for over four decades. And, as is often the case with unwanted occupations, Morocco has asserted its territorial claim through cruel repression, the systematic denial of basic human rights, and attempts to force demographic change – all while plundering Western Sahara’s natural resources.

The Polisario Front fought a war with Morocco until 1991, when the UN brokered a ceasefire agreement. That deal was supposed to set the stage for a referendum on independence in Western Sahara the following year – a democratic solution. But Morocco has prevented it from ever taking place.

Morocco has also repeatedly obstructed progress toward further negotiations. It has done so in defiance of the UN Security Council, even going so far as to bar the UN’s special envoy from travelling to the region to set the stage for talks. At the same time, Morocco’s behavior on the ground – including its repression of the Saharawi people and its illegal exploitation of natural resources – has made reaching a political solution increasingly difficult.

In the 42 years of Morocco’s occupation of Western Sahara, we, the Saharawi people, have seen eight American presidents, six UN secretary-generals, and a battery of UN special representatives and personal envoys of the secretary-general come and go. Through it all, we have maintained our faith in the international community, and in the UN-led political process that was launched in 1991. It is time for that faith to be rewarded.

In its latest resolution on Western Sahara this year, the UN Security Council unanimously called for the launch of a new political process and acknowledged that the status quo is not acceptable. The Security Council recognizes that this is the best route to achieving decolonization in Western Sahara, protecting human rights, enabling self-determination by the Saharawi people, and setting the stage for long-term stability in the territory.

The UN Secretariat, the office of the secretary-general, and the new special envoy for Western Sahara, former German President Horst Köhler, now must work rapidly on creating a mechanism for face-to-face time-bound talks. The progress report that they deliver to the Security Council in six months should establish what that mechanism will be, as well as a timetable for negotiations; it should not just be a record of exploratory efforts.

In the meantime, we in the Polisario Front will continue to work toward securing the rights of the Saharawi people. Whereas other countries often fold to Moroccan pressure, for fear of harming trade deals or cooperation over security and migration, the law has proved to be a reliable ally for the people of Western Sahara. It has been particularly effective in pushing back against Morocco’s continued illegal exploitation of natural resources. This is why we have often turned to the courts when the political process has failed us.

Last December, the European Court of Justice joined the ICJ in stating unequivocally that Morocco has no sovereignty over Western Sahara – a move that could pose a significant challenge to Morocco’s relationship with the European Union. That judgment states clearly that any agreement pertaining to Western Sahara’s natural resources requires the consent of the Saharawi people, who are represented by the Polisario Front, as General Assembly Resolution 34/37 established in 1979.

And the EU is not alone. This past May, the Panamanian authorities detained a Canada-bound ship carrying phosphates that had been illegally mined by a state-owned Moroccan company in occupied Western Sahara. And South African authorities stopped a New Zealand-bound ship containing 54,000 tons of phosphate rock from Western Sahara. The high court in Port Elizabeth sent the case to trial to determine ownership, and the Polisario Front won a major victory – and ownership of the cargo – when Morocco announced that it would not contest the case.

The exploitation of Western Sahara’s natural resources is not only illegal; it also undermines the prospects for a successful political process. We have no intention of abandoning that process. But, if Morocco continues to engage in such activities, we will ensure that its efforts are as costly and cumbersome as possible, both for private companies and state actors. We will fight for our rights in every venue available to us, from national courts to the court of international public opinion.

Over the last four decades, the UN Security Council has repeatedly proved unwilling or unable to bring Morocco to the negotiating table. We, the people of Western Sahara, hope that this time will be different. But, until we know that it is, we will not stand idly by while a hostile occupier tramples on our rights, and pillages our resources.

Emhamed Khadad, an adviser to the president of the Saharawi Arab Democratic Republic, is the Polisario Front’s coordinator with the UN Mission for the Referendum in Western Sahara.

By Emhamed Khadad

The Crown Prince’s New Clothes

PARIS – This June, Bahrain, Egypt, Libya, the Maldives, Saudi Arabia, the United Arab Emirates, and Yemen cut diplomatic and economic ties with Qatar. This Gulf crisis will, one way or another, come to an end. But whether that end will be good for the chief instigator of the crisis, Saudi Arabian Crown Prince Mohammed bin Salman (MBS), remains to be seen.

An extreme but unlikely solution to the crisis could come in the form of military-enforced regime change, whereby the Emir of Qatar, Sheikh Tamim bin Hamad Al-Thani, would be replaced by a more pliant member of the Al-Thani family. In a more likely scenario, Qatar may stop providing sanctuary for a few members of the Muslim Brotherhood and Hamas, and discreetly promise to rein in Al Jazeera, its state-funded television network, which broadcasts throughout the region.

In the latter scenario, diplomats from Kuwait and Oman, who are mediating the dispute, would hold themselves up as peacemakers, and MBS would claim to be a statesman. Western governments worried about the price of oil and the future of America’s Al Udeid Air Base in Qatar would rest easier, at least until the next Gulf crisis. But if MBS continues to pursue headstrong policies, and Qatar keeps using its oil wealth to punch above its weight in regional politics, such a crisis may not be all that far off.

The latest Saudi-Qatari contretemps is hardly an example of the “Thucydides trap,” in which an incumbent hegemon is tempted to suppress a rival whose power is approaching its own. Saudi Arabia is host to around 32 million people, one-third of whom are foreign workers; Qatar is host to just 2.6 million people, 90% of whom are foreign.

Instead, at the heart of the matter is a semi-paranoid conviction among Saudi Arabia’s Sunni Arab leaders that Iran – which is predominantly Shia and non-Arab – is vying for superpower status in the Middle East. The Saudis are convinced that Qatar is aiding Iran in this quest, even though Qatar’s leaders share the Saudis’ Wahhabi brand of Islam.

Of course, Saudi Arabia has some grounds for suspicion. After the Iranian Revolution in 1979, Ayatollah Ruhollah Khomeini advocated revolution throughout the Muslim world. A generation later, Iran has a foothold in Iraq, Lebanon, Syria, and Yemen, where it is helping Houthi rebels disrupt MBS’s ill-considered foray into that country. And now that Saudi Arabia has imposed a blockade on Qatar, Iran has come to the country’s aid, delivering food and allowing Qatar Airways to use its airspace.

It is worth asking whether MBS is misreading political and economic realities. Having been invested with unprecedented powers as the favorite son of King Salman, has he bitten off more than he can chew?

MBS has been Saudi Arabia’s minister of defense since January 2015. But Saudi Arabia’s war in Yemen, now two years old, has become a humanitarian disaster, complete with a naval blockade that has led to widespread famine and 500,000 cases of cholera.

Meanwhile, in the civil war in Syria, the Saudis (and the Qataris) have backed several unsavory Islamist groups, but still have not managed to topple Syrian President Bashar al-Assad’s regime. In the region’s balance of power, the Saudi-sponsored anti-Assad alliance – with America providing air support – pales in comparison to the alliance that Assad’s Shia-affiliated Alawite regime has made with Iran and Russia.

MBS is facing even greater challenges at home. As the world’s petro-state par excellence, Saudi Arabia has long mollified the Saudi populace with dollops of welfare spending. Meanwhile, it has sustained the Wahhabi clerical establishment’s loyalty by keeping social changes to a minimum. But with oil prices remaining relatively low, the Kingdom can no longer rely on its traditional policy of buying friends and buying off enemies.

To his credit, MBS recognizes that things must change. Saudi Arabia’s financial reserves are diminishing, and younger Saudis – whose numbers have quadrupled in the past 30 years – want more freedoms, and will need jobs outside of the oil sector. To address these issues, MBS came up with “Vision 2030,” a bold but not necessarily realistic plan to diversify the economy, privatize part of the national oil company, Aramco, and expand the private sector. In addition, MBS apparently has a plan to create hedonistic tourist resorts to rival those of Dubai.

Given the problems abroad and grumbling at home, where some in the Saudi royal family resent his meteoric ascent, MBS now needs to prove that he has the maturity and experience to lead. Here, he may receive help from an unlikely source. At the end of July, MBS hosted Muqtada al-Sadr, the leader of Iraq’s most powerful Shia militia, for his first visit to Saudi Arabia since 2006. And earlier this year, Iraqi Prime Minister Haider al-Abadi paid a visit to Saudi Arabia, just after the Saudi foreign and energy ministers made trips to Baghdad.

These trips – the first such delegations between the two countries in decades – suggest that Iraq and Saudi Arabia might be forging a new, mutually beneficial relationship. With closer ties to Saudi Arabia, Iraq’s leaders could free themselves from Iran’s overbearing grip on their decision-making, leverage Saudi Arabia’s influence over Iraq’s Sunni tribes, and procure Saudi investments to rebuild Mosul following its recapture from the Islamic State (ISIS).

Saudi Arabia, for its part, stands to gain from Iraq’s success against ISIS, a sworn enemy of the House of Saud, and from its help in calming Shia dissent in Saudi Arabia’s oil-rich eastern province. At the same time, MBS would be able to portray himself as a strategic thinker who is capable of bridging old Arab divides, and limiting Iran’s influence in the region.

Still, many questions remain. It is unclear when the disastrous operation in Yemen will end, or whether Iran and Turkey will continue undermining the blockade on Qatar. And it remains to be seen if Qatar will cave to Saudi Arabia and the other Gulf states’ demands – especially the call for Al Jazeera to be shut down.

In any case, none of these developments seems imminent, so the 31-year-old crown prince will have to learn to temper his impetuosity. As the Arab proverb puts it, patience is the key to happiness. John Andrews is the author of The World in Conflict.

By John Andrews

A Greener Grid for East Asia

SYDNEY – Not long ago, the future of nuclear power was in Asia. In 2015, nine of the ten reactors that opened globally were on the continent. But recent declarations by South Korea and Taiwan that they will “go green” have called into question nuclear power’s long-term viability, at least in East Asia. Indeed, 2017 may mark the end of the region’s nuclear love affair – and the start of a new one with renewables.

South Korean President Moon Jae-in and Taiwan’s President Tsai Ing-wen have both set ambitious national agendas to boost renewable energy generation while calling for a phase-out of nuclear. For years, overreliance on traditional fuels discouraged investment in clean technologies for power generation, despite the fact that both countries are innovators in green industries, like energy storage and smart grids. Whereas 22% of South Korea’s energy needs, and 14% of Taiwan’s, are met by nuclear, those ratios are now set to drop dramatically.

Blueprints are still being formulated, but taken together the two countries’ commitments mark a major shift in regional energy planning toward greener, cleaner technologies. Moreover, they will pave the way for increased investment in renewable-power installations, placing their countries on a new competitive footing in the regional market.

South Korea’s strategy calls for a phased withdrawal from the nuclear industry, through non-renewal of existing licenses and bans on future plants. Last month, Moon, who was elected in May and campaigned on a nuclear-free agenda, called for an increase in the use of renewables, to 20% of the country’s total power generation, by 2030, up from the current 5%. He has also pledged to close ten coal-fired power plants by the end of his term in 2022. Currently, coal accounts for about a quarter of the country’s energy consumption. Natural gas would be used as a “bridging fuel” during the transition to greener power.

Given that South Korea currently operates 25 nuclear reactors and had plans to build six more, the shelving of nuclear power is a significant shift in the country’s energy strategy. Indeed, some have expressed doubts about the feasibility of Moon’s plans. There are also questions about how the energy-policy overhaul will affect the country’s lucrative export market for nuclear technology. But Moon remains resolute.

In Taiwan, Tsai is equally committed. Last year, responding to public opposition to nuclear energy in the wake of Japan’s 2011 Fukushima meltdown, Tsai vowed to make Taiwan nuclear-free by 2025. Today, coal and natural gas provide more than two thirds of the country’s electricity needs, with renewables accounting for 5%. Tsai has called for the share of renewables to increase to 20% over the next eight years, with the capacity coming primarily from solar and offshore wind. This new load would easily replace the electricity generated by the country’s six nuclear reactors.

Critics contend that green technologies are not mature enough to replace traditional fuels for industrial-scale energy use. But these claims are a few years too late. Significant declines in start-up costs and energy-storage prices, as well as improved battery performance, have made renewables more competitive than ever. As Francesco Starace, Chief Executive of Enel, Europe’s largest energy company by market capitalization, told the Financial Times in June, renewables are becoming the “cheapest and most convenient way of producing electricity.”

South Korea and Taiwan are not the first East Asian powers to go greener. China has been moving in that direction for years, and now leads the world in installed renewable-energy capacity. But by joining the renewables revolution, Taiwan and South Korea will make it easier for other regional players to enter the market, because expanded investment opportunities will increase competitiveness and further drive down already declining costs.

In fact, if there is one valid criticism of Moon’s and Tsai’s visionary goals, it is that they could be realized even faster. For example, if both leaders were to allow the purchase of renewable power from the planned Global Energy Interconnection or the Asian Super Grid, they could increase the share of green energy more rapidly. South Korea and Taiwan have few natural resources of their own, and are heavily reliant on imported fuel to generate electricity. The introduction of competition to the national monopolies in both countries would also speed the shift to renewables.

But for now, what is most important is the precedent that South Korea and Taiwan are setting. The renewables market in East Asia is about to blossom. When it does, the region’s decades-old dependence on nuclear power will finally be broken.

Sung-Young Kim is a lecturer in international relations at Macquarie University in Sydney. John A. Mathews is a professor of management at the Macquarie Graduate School of Management in Sydney.

By Sung-Young Kim and John A. Mathews

The New Socialism of Fools

BERKELEY – According to mainstream economic theory, globalization tends to “lift all boats,” and has little effect on the broad distribution of incomes. But “globalization” is not the same as the elimination of tariffs and other import barriers that confer rent-seeking advantages to politically influential domestic producers. As Harvard University economist Dani Rodrik frequently points out, economic theory predicts that removing tariffs and non-tariff barriers does produce net gains; but it also results in large redistributions, wherein eliminating smaller barriers yields larger redistributions relative to the net gains.

Globalization, for our purposes, is different. It should be understood as a process in which the world becomes increasingly interconnected through technological advances that drive down transportation and communication costs.

To be sure, this form of globalization allows foreign producers to export goods and services to distant markets at a lower cost. But it also opens up export markets and reduces costs for the other side. And at the end of the day, consumers get more stuff for less.

According to standard economic theory, redistribution only comes about when a country’s exports require vastly different factors of production than its imports. But there are no such differences in today’s global economy.

In the United States, a balance-of-payments surplus in finance means that more Americans will be employed as construction workers, capital-goods producers, and nurses and home health aides. Similarly, a surplus in services means that more Americans will work not only as highly educated (and well-remunerated) consultants in steel-and-glass eyries, but also as, say, janitors and housekeepers in motels outside of Yellowstone National Park.

At the same time, a deficit in manufacturing may create more manufacturing jobs abroad, in countries where labor costs are low relative to capital; but it destroys relatively few jobs in the US, where manufacturing is already a highly capital-intensive industry. As Stanford University economist Robert Hall has been pointing out for three decades, more Americans are employed selling cars than making them. The commodities that the US imports from abroad embody a significant amount of relatively unskilled labor, but they do not displace much unskilled labor in America.

So, at least in theory, the shift in US employment from assembly-line manufacturing to construction, services, and caretaking may have had an impact on the overall distribution of income in terms of gender, but not in terms of class. Why, then, has there been such strong political resistance to globalization in the twenty-first century? I see four reasons.

First and foremost, it is easy for politicians to pin the blame for a country’s problems on foreigners and immigrants who do not vote. Back in 1890, when politicians in the Habsburg Empire routinely blamed Jews for various socioeconomic ills, the Austrian dissident Ferdinand Kronawetter famously observed that “Der Antisemitismus ist der Sozialismus der dummen Kerle”: anti-Semitism is the socialism of fools. The same could be said of anti-globalization today.

Second, more than a generation of inequitable and slower-than-expected economic growth in the global North has created a strong political and psychological need for scapegoats. People want a simple narrative to explain why they are missing out on the prosperity they were once promised, and why there is such a large and growing gap between an increasingly wealthy overclass and everyone else.

Third, China’s economic rise coincided with a period in which the global North was struggling to reach full employment. Contrary to what the followers of Friedrich von Hayek and Andrew Mellon have always claimed, economic readjustments do not happen when bankruptcies force labor and capital out of low-productivity, low-demand industries, but rather when booms pull labor and capital into high-productivity, high-demand industries.

Thus, neoliberalism does not just require open and competitive markets, global change, and price stability. It also depends on full employment and near-permanent booms, just as economist John Maynard Keynes had warned in the 1920s and 1930s. In recent decades, the neoliberal order failed to deliver either condition, most likely because doing so would have been impossible even with the best policies in place.

Fourth, policymakers did not do enough to compensate for this failure with more aggressive social policies and economic and geographic redistribution. When US President Donald Trump recently told upstate New Yorkers that they should leave the region and seek jobs elsewhere, he was simply echoing the past generation of center-right politicians in the global North.

The global North’s current political and economic dilemmas are not so different from those of the 1920s and 1930s. As Keynes noted then, the key is to produce and maintain full employment, at which point most other problems will melt away.

And, as the Austro-Hungarian economist Karl Polanyi argued, it is the role of government to secure socioeconomic rights. People believe that they have a right to live in healthy communities, hold stable occupations, and earn a decent income that rises over time. But these presumed rights do not stem naturally from property rights and claims to scarce resources – the coins of the neoliberal realm.

It has been ten years since the global financial crisis and the start of the “Great Recession” in the global North. Governments still have not repaired the damage from those events. If they do not do so soon, the “-isms” of fools will continue to wreak havoc in the decades ahead.

J. Bradford DeLong, a former deputy assistant US Treasury secretary, is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research.

By J. Bradford DeLong

Making “Women’s Work” Count

ISTANBUL – Over the next few months, the 12,000 employees based at Apple’s headquarters in Cupertino, California will complete their move to an extravagant new campus. The “spaceship,” covering 2.8 million square feet, includes a two-story yoga studio, running paths, and even revolutionary pizza boxes that keep slices crisp. One thing it does not have, however, is daycare.

When it comes to ignoring the importance of childcare for working parents, Apple is far from unique. And that omission places a powerful drag on parents’ ability to achieve their economic potential, with women suffering the most.

Worldwide, women carry out twice as much unpaid domestic and care work – including raising children, caring for sick or elderly family members, and managing the household – as men do. In Mexico, India, and Turkey, women do three times more care work than men.

This “gender chore gap” limits women’s choices, as it impedes their ability to obtain formal education, secure good jobs, and achieve equal pay. Indeed, though women around the world actually work more than men in total (including both paid and unpaid work), they earn one quarter less, on average, hold only one quarter of executive positions in the private sector, and occupy less than one quarter of all seats in national parliaments. Only half of working-age women worldwide are in the paid labor force, compared to more than three quarters of men.

This situation is slowly beginning to change. Unpaid household and care work is gradually shedding its reputation as “women’s work,” and men today are assuming more household responsibilities than their fathers and grandfathers did. Some countries, particularly in Europe, are revising traditional leave policies so that parents can choose how to allocate time off after the birth of a child.

More broadly, the value of unpaid household and care work – not just for children and family members, but also for the long-term health of societies and economies – is increasingly being recognized. Efforts to measure the contribution of care work to national economies have produced estimates ranging from 20% to 60% of GDP.

In 2015, United Nations member states adopted the Sustainable Development Goals (SDGs), which call for recognizing, reducing, and redistributing unpaid care work – a measure long proposed by feminist economists and gender-equality advocates. The question now is what can actually be done to meet this objective.

The responsibility will lie, first and foremost, with governments. After all, while businesses or neighborhood associations may offer childcare options to working parents, costs and quality vary widely. Government action is needed to ensure that care services cover all who need them – from preschool children to the sick, the disabled, and the elderly – and that they are universally accessible and affordable.

Beyond services, however, achieving the SDGs’ targets will require policy change. Most important, governments must establish requirements for parental and family leave programs. Together with private companies, they can also provide monetary incentives for men and women to share household and care work more equally. Such policies have proved effective not only in Northern Europe – the most commonly cited model – but also in Eastern European countries like Lithuania, Estonia, and even Hungary, demonstrating that they can be applied anywhere.

At a time when many governments, particularly in the developing world, are faced with severe fiscal constraints, such interventions may seem farfetched. But spending on the care sector should be viewed as an investment, not a cost. A recent study in Turkey showed that one dollar of public money invested in the care sector could create 2.5 times as many jobs as a dollar invested in the construction industry. More than half of those jobs – decent jobs that could raise incomes and living standards, particularly for poor households – would go to women.

International institutions can play an important role in helping governments to seize the opportunities presented by investment in the care sector. In the former Yugoslav Republic of Macedonia, the United Nations Development Programme undertook an initiative that helped women who had mostly worked at home their entire lives to find jobs in the care sector, enabling them to make use of their skills, by caring for children and for young adults with disabilities, while earning an income.

As populations grow and age, the care sector will only increase in importance. Adapting to these new circumstances now will give countries a considerable advantage, as it bolsters women’s rights and freedoms, generates jobs, and make societies more equal. So what are we waiting for? Bharati Sadasivam is the United Nations Development Programme’s regional gender adviser for Eastern Europe and Central Asia.

By Bharati Sadasivam

Empowering Africa’s Humanitarians

NAIROBI – The scale of human suffering currently engulfing drought-stricken Somalia is almost indescribable. It is difficult to find words to convey the devastation and misery gripping the country, now in the midst of a prolonged period of record-low rainfall. I have watched emaciated herds of livestock drop, lifeless, into the dust, and been present when people’s futures evaporated in front of their eyes.

But if words cannot do justice to the magnitude of the crisis, they can guide the world’s response. And in that regard, let me be unequivocal: unless the international community overhauls its approach to delivering aid in Africa, the cycle of suffering will continue.

Somalia’s current catastrophe is not unique. Millions of Africans, in more than a dozen countries, are facing similar struggles, as failed harvests and persistent conflict fuel severe food insecurity. By some estimates, East African farmers have lost up to 60% of their livestock – their main source of income – in the first half of 2017. In the face of such overwhelming hardship, I am more angry than sad.

The world should be angry, too. So many proud and dignified people have been stripped of their livelihoods and forced to rely on one tiny meal a day, or nothing at all. Worse, these tragedies were avoidable; we knew these crises were coming.

Drought and hunger are slow-motion calamities that, with adequate planning and sufficient resources, can be averted. But time and time again, humanitarian assistance in Africa has come up short, as it did in Somalia in 2011 and 2012; in Niger in 2005; and in Ethiopia during the 1980s. Then, as now, food insecurity was predicted long before the first hunger pangs were felt. But the warnings did not yield an effective global response.

As a medical doctor, I am acutely aware of how hunger, malnutrition, cholera, and other drought-related illnesses affect Africans, especially young children and nursing and expectant mothers. The effects of hunger on physical and mental health can be irreversible, and often keep people locked in a lifetime of poverty. We must alter this trajectory, before the next crisis strikes, by converting anger into action.

For starters, the aid community must be smarter about how it solicits and allocates resources like food and funding. Humanitarian organizations like mine have always operated with limited human and financial resources, and have been expected to do more with less. But isn’t it time we do more with more? The United Nations estimates that Somalia, Nigeria, Yemen, and South Sudan will need a combined $6.3 billion this year to avoid widespread famine. So far, with half the year gone, only about a third of this sum has been raised.

Moreover, and perhaps most important, international aid organizations must rethink how and with whom they work. More emphasis needs to be placed on building lasting solutions, and that means working more closely with local partners on the ground. This is not a new idea, but it is a solution that has not yet stuck.

Local actors are best positioned to reach the most vulnerable and marginalized members of any community. Strong local actors are critical to sustaining services long after multinational aid agencies have turned their attention elsewhere. What local constituents need is the resources and capacity to take the lead.

Unfortunately, at the moment, only a fraction of international emergency funding goes directly to local agencies. Worse, there is little dedicated support available for helping local organizations grow and mature. Because of these shortcomings, multinational organizations often find it difficult to hand over responsibilities once the most urgent needs have been met.

When local responders are supported in leadership roles, the results are exceptional. In Somalia, for example, the Somali Red Crescent Society has established dozens of mobile health clinics capable of serving some of the country’s most vulnerable populations. The Red Crescent, which operates in areas of instability and violence that are often off limits to government health services, has helped reduce the severity of malnutrition and cholera emergencies.

Best of all, when such emergencies abate, local capacity remains. Thanks to funding and training offered by my organization and others, the Somali Red Crescent will provide, on a continuing basis, maternal and child health support, vaccination programs, outpatient clinics, and other forms of community-based health care. This is just one example of the positive role that local humanitarian actors can play when fully empowered.

Changing the global humanitarian paradigm will not be easy; change on this scale never is. But the alternative – an endless cycle of hunger, disease, and needless death – is unacceptable. Africa’s suffering has left many speechless. That is why our actions must speak louder than our words. Fatoumata Nafo-Traoré is Regional Director for Africa for the International Federation of Red Cross and Red Crescent Societies.

By Fatoumata Nafo-Traoré

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