I am late in returning to my blog because I have been travelling almost continuously for the last month. It was a productive and enjoyable set of journeys but has meant there was a lot to catch up with when I got home.
The Extractive Industries Transparency Initiative (EITI) board was due to meet in Jakarta in late October. I therefore called in to East Timor en route. It is a small country that is a member of EITI, and setting a real example in going beyond the minimum requirements. I was involved in providing support for East Timor when I was in government, when they at last got real independence, with the end of the brutal Indonesian occupation in 1999. The Jakarta meeting was a good opportunity to visit.
It is a beautiful place with blue sea and lovely mountains. The population is 1 million and much was destroyed as Indonesia resisted withdrawal. It is therefore poor and has many needs. Oil was discovered after independence but has to be shared with the Australians, who have not been generous in their attitude to sharing. East Timor joined EITI to try to use transparency to avoid the usual oil resource curse.
There are many needs and healthy grumbles. It isn’t easy to set up new institutions and govern well after years of resistance and suffering when everything is needed and there are not enough resources to go around. But I came away feeling optimistic. Oil, offshore does not generate jobs but managed well provides resources for government expenditure. The beauty of the place and the lure of its history could be very attractive to tourists. Tourism, well-managed, can generate many jobs. They also have organic coffee which they sell to Starbucks.
Indonesia emerged from the Suharto dictatorship in 1998. It is a country of 13,000 islands and 700 living languages. It was hit hard by the Asian financial crisis in the late 90s and again, I was involved when in government, in trying to provide support. It has a population of 250 million people and is the most populous Muslim country. It was a Dutch colony, occupied by the Japanese in the Second World War and independent since 1949.
There has been great economic progress in recent years and Indonesia is a member of the G 20, but there is great inequality and poverty, and widespread complaints of corruption. They have just applied to become members of EITI in order to bring some transparency into the mining and oil sector. From Jakarta we went to visit tin mines in Bangka. Tin mining,like mining everywhere, creates environmental destruction and produces resources that are not well shared. They say in Bangka that the Dutch dikes were funded by tin from Bangka. As tin resources have become exhausted and mines have closed, ex-miners work alone often mining tin from the sea in very difficult conditions.
The mine we visited had reopened because tin prices had risen, but with the present downturn, commodity prices will fall and many mines will close again and miners lose their jobs.
From Indonesia I went on to Australia, which has just agreed to do a pilot EITI report so that people in Australia will know more of where the mining resources go to. They have also launched a Mining for Development programme, to share their knowledge of management of mineral resources with developing countries. Australia is booming because of rich mining and China’s nearby markets, but 68% of Australians say they do not feel it brings them benefits. There is not a resource curse in Australia but the increase in the value of the currency has squeezed other parts of the economy. Environmentalists also stress that increasing droughts, floods and fires show that Australia is already beginning to suffer from the effects of climate change.
I spent some time looking at stunning aboriginal art and listening to, and reading about, the aboriginal experience of Western settlement in Australia. It is a cruel story of oppression and ethnic cleansing, as is the story of Western settlement in the US and South America. We are quick to denounce such behaviour in the modern world, and rightly, but we rarely confess to our own record not so very long ago.
From Australia, via Perth and Johannesburg, I went to Maputo for a Cities Alliance meetings and the launch of the Mozambique program. Like the rest of Africa, Mozambique is urbanising fast. It has coal in abundance and newly discovered major gas reserves. It also has great poverty and is a candidate member of the EITI. The international representatives I met were hopeful about its future. The government representatives seem to be persuaded that there must be a national effort to improve conditions for slum dwellers.
Mozambique had a very cruel colonial history as a Portuguese colony, had to fight for its independence and then went through a Civil War orchestrated by apartheid South Africa. It has great poverty, rich mineral resources, a beautiful long coastline, masses of fertile land, weak institutions and a population that has only recently obtained access to education. But the people have a great spirit and dignity and there is every reason to be optimistic about its future.
I came home via Tunis and then after a few days went with a delegation of 100 legislators and journalists from 40 countries to Gaza. The humanitarian situation is better because the tunnels are operating without interference, but the position of women seems to be more marginalised. The siege is still extreme but events in Egypt have made people hopeful. Nonetheless it remains a prison with one and a half million people squashed into an area 25 miles by 6 , cut off from the world and living with constant shortages and risks of bombardment that leave most of its children constantly traumatised.
The US and the EU continue their unforgivable policy of supporting the Israeli siege and continuing bombardment, just as they did the war against Gaza. We should all apologise for this and do more to change the policies of our governments.
At home there is more gloom and doom. There is no doubt that young people in particular are facing great difficulties in finding jobs. But the endless parade of statistics suggesting that retailing and other sectors are in desperate trouble because they have not grown or shrunk very marginally, shows how our system relies desperately on constant economic growth. The OECD reported on 6 December that inequality is growing throughout the OECD area, and the gap between the highest and lowest paid is growing faster in the UK than anywhere else. The average income of the U.K.’s richest 10% is almost £55,000, the bottom 10% average £4700. Only Israel and the US (of OECD countries) are more unequal. The top one percent is pulling away from the rest even faster, and have climbed from 7% of total income in 1970 to 14% in 2005.
There really does seem to be room to sharing what we have more fairly rather than chasing economic growth at any price and in a way that constantly increases inequality.
The crises over the Euro runs on an on. I’m sure that it is true that a common currency can not be sustained in the long term without more centralised economic and financial management. But the European problem, apart from Greece, has not been caused by excessive government spending but irresponsible bank lending. Just like the 2008 crisis, the present crisis is a banking crisis and stronger bank regulation is a key part of the solution. If Mrs Merkel has her way and all Euro countries impose austerity packages, inevitably there will be economic decline across Euroland. We can thank Gordon Brown for preventing Blair from putting the UK into the Euro, but such a decline will hurt UK exports and jobs, in or out.
It is interesting that the present government claims that its austerity package is the reason why the government can borrow more cheaply than those in Euroland. In fact the reason is that we’re not in the Euro and ironically that is thanks to Gordon Brown.
Occupy Wall Street
With the rise of China, Brazil and India, the Arab spring and the financial crisis in the US and Europe, major historical change is clearly underway. The Occupy movement which started in New York in September 2011 and was partly inspired by the Arab spring, has spread to 95 cities across 82 countries. It has been sneered at for not having detailed policy prescriptions, but the movement is united in denouncing growing economic and social inequality. These movements are a clear marker that the boom times are well and truly over, and people are starting to express their disgruntlement. Their slogan, “we are the 99%”, is powerful as is the St Paul’s Square placard “What would Jesus say?”
- In 1970 Goldman Sachs had $49 million capital. It now has 70 billion i.e. its capital has increased 1400 times. In the same period US GDP rose 14 times.
- The top 1% of the US population take nearly 20% of total income.
- In 2007 Beijing issued a blueprint for the development of wind, solar and biofuel activities. Since then wind capacity doubled every year until this year. China is the world’s biggest investor in clean energy. China is still powered largely by coal but has a target of 15% non-fossil fuel buy 2020, up from 8% now. This is equivalent to shifting a country as large as Italy from coal to renewables.
- South Africa has failed to make progress in reducing inequality since the end of apartheid. In 1995 medium per capita expenditure among black South Africans was 333 Rand ($43) per month, whites was 3,454 Rand. By 2008 median black expenditure was R454 and average white per capita expenditure was R5,688, according to the South African National Planning Commission.