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Current Economic Development is Unsustainable. How Can We Reverse this Trend?

By Jacques Prescott

In 1987, with the publication of the Brundtland report, the world was confronted once again with the dire reality of a collapsing environment and the concept of sustainable development emerged as a solution. Thirty years later, despite tremendous efforts at the global and local levels, real progress towards sustainability seems to be deterred by the dark forces of the markets, financial systems and corporate lobbies.  What can be done to reverse the situation and achieve sustainable results?

Sustainable Development, A Promising Concept

Following an international consultation chaired by Gro Harlem Brundtland, who was then the Prime Minister of Norway, the UN Commission on Environment and Development published “Our Common Future”.1 This report described the daunting environmental problems of the 1980s: uncontrolled population growth, excessive deforestation and grazing, destruction of tropical forests, extinction of living species, increased greenhouse effect causing climate change, acid rain, erosion of the stratospheric ozone layer, etc. It also emphasised social-economic issues and in particular the perverse effects of unbridled economic growth and over-consumption of resources by the better-off.

The Commission proposed a definition of sustainable development that is still widely recognised and seen as a beacon to guide our efforts towards a better world: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.

The Brundtland report succeeded in demonstrating that the global economy and ecology are deeply intertwined. Beyond the economic interdependence of nations, we must now deal with their ecological interdependence. Since the development crisis is global, the solutions must be as well.

To this end, the report proposed a series of strategic objectives that included changing the quality of economic growth, controlling demographics, meeting basic human needs, preserving and enhancing the resource base, taking into account the environment in developing new technologies and integrating ecological and economic concerns into decision-making.

Brundtland identified solutions that apply on a global scale. For example, reduce energy consumption in industrialised countries and develop renewable energies, encourage massive reforestation in countries affected by desertification, implement tax and land reforms to reduce pressures on ecosystems and adopt an international convention for the protection of biodiversity. Although these measures were aimed primarily at protecting the environment, the Brundtland Report stressed the importance of combating poverty and injustice, which are both causes and effects of environmental problems.

To realise and finance this ecological shift, the Brundtland Commission requested to reform international institutions, notably the World Bank and the IMF, which should better take into account social and environmental objectives and alleviate the debt of the poorest countries. The Commission also recommended a reorientation of military spending for the fight against poverty and inequality and challenged large companies to engage in more responsible production and consumption.

How did we progress since the Brundtland report?

Brundtland’s global perspective and recommendations have guided the United Nations for the past thirty years. From the Earth Summit of Rio in 1992, to the adoption of the 17 global sustainable development goals in 2015 and the 2016 Paris agreement on climate change, governments of the world have time and again agreed on a set of guiding principles, objectives and agendas towards sustainability. Around the world, businesses, institutions, non-government organisations and local authorities followed suit with engagements and actions. As new approaches developed, we have seen the rise of organic farming, renewable energy production, ecological design, environmental certification, corporate social responsibility, responsible investment, green economy, multiple capital accounting, life cycle and sustainability analysis, the greening of production processes and green marketing; the latter all too often leading to unscrupulous green-washing.

This collective action brought its share of progress. The number of people living in extreme poverty has been reduced, more people have access to safe drinking water, fewer children die in early childhood and fewer mothers die during childbirth. We’ve also seen a stabilisation of the stratospheric ozone layer, a promising decline in the rate of deforestation in some regions, and a rapid growth in the renewable energy sector. But the key issues raised by the Brundtland report are left unresolved. A group of 15,000+ scientists from 184 countries recently stated that current economic development clearly is unsustainable, impairing the life-sustaining mechanisms of the biosphere and putting at risk humanity’s future.2 As Professor James H. Brown puts it: “Continual population growth and economic development on a finite Earth are biophysically impossible. They violate the laws of physics, especially thermodynamics, and the fundamental principles of biology. Population growth requires the increased consumption of food, water and other essentials for human life. Economic development requires the increased use of energy and material resources to provide goods, services and information technology”.3

Motivated by short term economic growth at any cost and personal gains, political leaders are more inclined to fulfill the demands of oligarchic lobbies than the legitimate expectations of their constituents.

Under present conditions, the plundering of natural resources and the degradation of the environment continue unabated, climate change threatens more than ever the most vulnerable people and ecosystems, and the planet’s carrying capacity is about to be exceeded. The gap between rich and poor is steadily widening, food insecurity and indebtedness are advancing, democracy is on the wane and propaganda is invading mainstream media. The unprecedented level of prosperity and wealth showed by a bunch of happy few countries and individuals is deceptive and definitely unsustainable as it doesn’t take into account the negative ecological and social impacts of economic activity.

Despite their outspoken commitment to sustainable development, governments fail to deliver positive results on this front. Motivated by short term economic growth at any cost and personal gains, political leaders are more inclined to fulfill the demands of oligarchic lobbies than the legitimate expectations of their constituents. How can you explain otherwise that despite their commitment to reduce GHG emissions, G20 governments still spend nearly four times more on fossil fuels than developing renewable energy?

The Role of Finance and Corporate Sectors

Economics is seen by sustainable development theorists as a tool or a mean to achieve sustainability. Accordingly, the banks and the financial systems, commerce and trade regulators, and private corporations have an inescapable role to play and a responsibility to assume if we ever want to succeed on this path.

In Europe and America, central bank policies are dictated by private bank lobbies. Current economic frameworks promote easy access to credit, leading to overconsumption and outrageous levels of indebtedness. According to the Institute of International Finance, the public and private indebtedness of the 44 richest countries reached 235% of GDP in 2017 compared with 190% in 2007. Governments and people alike are becoming hostages of the banks and their fraudulent monetary system. The 2008 collapse of the banking sector mainly caused by the Federal Reserve policy of low interest rates, easy money, junk mortgages and inadequate banking regulation led to the bankruptcy of thousands of households.4 In recent years the bankruptcy rate of mismanaged private banks around the world reached an outstanding summit to the detriment of numerous small savers. Even though the finance world recently adopted environmentally and socially responsible investments schemes and promoted green funding, their contribution to sustainable development is rather dire. This led the UN and the World Bank Group to issue a roadmap that proposes “an integrated approach that can be used by all financial sector stakeholders – both public and private – to accelerate the transformation toward a sustainable financial system”.5 Will the financial community by itself take effective measures against deregulation, tax evasion, large-scale market manipulation,6 corruption and money laundering? Probably not, unless it is forced to.

Driven by short-term gains and easy money, the business sector is flooding consumers with publicity, promoting questionable lifestyles, cheap short-lived products and encouraging overconsumption and wasting. Extensive use of bribery and corruption to access markets and resources, fiscal evasion, cartelisation, relocation of industrial jobs and social exploitation of workers are just a few of the unsustainable and unacceptable practices plaguing this sector. Despite a welcome engagement in fulfilling the UN sustainable development goals, green reporting and the adoption of social and environmental management standards, the business community has yet to develop and implement a more responsible growth pattern.

According to the Institute of International Finance, the public and private indebtedness of the 44 richest countries reached 235% of GDP in 2017 compared with 190% in 2007.

Similarly, international trade and commerce is controlled by giant multinationals promoting free trade agreements that expand their hegemony at the expense of small-scale local producers. It is a well-known fact that small island sugar cane producing states would simply need to be paid a fair price for their production to become economically sustainable. When will the World Trade Organization genuinely integrate fairness in its decision-making process? When will it act effectively against illegal cartels and trade dumping?

The military-industrial complex or the war/security industry constitutes in itself a major deterrent to sustainable development. This industrial sector has a strong record of engaging in threat inflation. In his recent book, Indefensible – Seven Myths That Sustain the Global Arms Trade,7 author Paul Holden points to “how the defence industry, the military, like-minded leaders and a pliant commercial press can collude to create magnified perceptions of threat to justify unpopular military endeavours, pursue particular foreign policy ideologies and divert massive financial resources to the industries and individuals who will be paid to defuse the threat”. The worldwide increase of military budgets seen in recent years (a rise of 43.6% since 2000 in the US alone to reach $611 billion in 2016;8 according to a 2017 study by Brown University in Rhode Island, a total of $5.6 trillion were spent for the US wars in Iraq, Syria, Afghanistan and Pakistan, and post-9/11 veterans care and homeland security since 20019 is diverting huge amounts of money from badly needed social and environmental investments. According to various reliable sources and analysts, the military activity of the United States and other NATO members conducted under the false pretext of humanitarian motives, would have as main objectives to protect their economic hegemony, eliminate competition and enslave the people by destabilising and destroying emerging countries.

As economist Rodrigue Tremblay, sums it in his book, The Code for Global Ethics,10 humanity needs a serious moral stroke, to continue his march in a context of continuous progress and increased freedom. Finance, business and political leaders suffer from a lack of morality and must therefore adopt and practice a universal code of ethics that improves people’s lives. An ethics that concerned authorities have the responsibility to translate into concrete prescriptions.

A Four-pronged Approach to “Genuine” Sustainability

Thirty years ago the Brundtland report rightly identified the global challenges we are still facing today and offered a realistic way forward. It uncovered fundamental truths and demonstrated the interdependence of environmental protection and the reduction of poverty and the need to respect the biophysical limits of our world. In view of the current environmental and social crises, one must admit that despite the tremendous efforts of dedicated individuals and organisations, the UN and other international institutions chronically failed to counter the real deterrents to sustainable development and particularly neglected to address the deleterious impacts of unbridled economic growth and overconsumption mentioned by Brundtland.

A close look at the negotiation tables of international forums would show a complete control of Western governments over the agendas, resolutions and action plans. Third world states do not even have enough resources to participate to the discussions and even less influence the debates. As a result, most international agreements are designed to support the supremacy of the wealthier over the poorer states. Socially-oriented initiatives and nationalistic policies adopted by progressive developing states are much too often denounced, demonised or directly obstructed by imperialistic governments driven by private lobbies. Should national sovereignty and the rights to development not be respected by all?

Ecologists and a growing number of scientists, economists, jurists, opinion leaders and ordinary people have long advocated a simple strategy for sustainable development based on sobriety, simplicity, joyful austerity, respect and compassion aimed at reducing consumption of assets and resources while providing room for more socially and ecologically responsible investment. But can this be sufficient to convince the wealthiest to change their consuming habits and their ways of doing business?

The Brundtland report paved the way forward to a development centered on collaboration, sustainability, well-being, prosperity and peace. It is our duty to make it happen.

Although there is no quick-fix solution to this complex issue, a four-point ecological strategy proposed as early as 1984 by Michel Jurdant in his seminal book Le défi écologiste11 might provide a lead forward:

raising awareness on the extreme gravity and the deep causes of the global crisis, in order to better understand the relations between consumerism and ecological degradation of the biosphere, and question our current development schemes;

demystifying quantitative economic progress based on technical solutions that contribute to deepen inequalities in favour of a development based on well-being and quality of life;

proposing alternative lifestyles that are more sustainable and respectful;

encouraging a democratic public debate where alternative scenarios are designed and discussed in order to put back decision-making in the hands of local communities.

This strategy might succeed if young and old are adequately educated about the principles of sustainable development; if the financial community and the corporate sector is better regulated and honestly adopt and practice an ethical approach; if we focus on subsidiarity and encourage the accountability of elected officials and leaders; and especially learn to recognise and tame the influence of interest groups.

The Brundtland report paved the way forward to a development centered on collaboration, sustainability, well-being, prosperity and peace. It is our duty to make it happen.

Featured Image: Gro Harlem Brundtland, Chair of the Brundtland Commission on sustainable development 1987 © sciencelibary.info

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About the Author

Jacques Prescott M.Sc., is a biologist and a consultant working for international and local organisations, author of several books, articles, reports and guidelines related to biodiversity and sustainable development policies, strategies and action plans. He is Associate Professor and Chair on eco-advising at Université du Québec à Chicoutimi, Canada.

References

1. The World Commission on Environment and Development, 1987. Our Common Future. Oxford University Press, Oxford, New York, 400 p.
2. Ripple, W. J. et al., 2017. World Scientists’ Warning to Humanity: A Second Notice. BioScience, Oxford Academics.
3. Brown, J.H., 2015. The Oxymoron of Sustainable Development. Bioscience 65(10):1027-1029
4. Tremblay, R., 2013. The Fed’s Monetary Policy of Zero Interest Rates. Global Research, March 05, 2013.
5. UN Environment and the World Bank Group, 2017. Roadmap for a Sustainable Financial System.
6. Zero Hedge, 2016. Every Single Bloody Market Is Manipulated.
7. Holden, P., 2017. Indefensible – Seven Myths That Sustain the Global Arms Trade. Zed Books, U.K.
8. Beaudoin, D. 2016. Quels pays ont le plus augmenté leur budget militaire? La réponse en carte. Radio-Canada, 20 mai 2016.
9. Crawford, N.C., 2017. United States Budgetary Costs of Post-9/11 Wars Through FY2018: A Summary of the $5.6 Trillion in Costs for the US Wars in Iraq, Syria, Afghanistan and Pakistan, and Post-9/11 Veterans Care and Homeland Security. Watson Institute, Brown University.
10. Tremblay, R., 2010. The Code for Global Ethics: Ten Humanist Principles. Prometheus Books.
11. Jurdant, M., 1984. Le défi écologiste. Éditions du Boréal Express, Montréal, 432 p.

Feed the Future of Agriculture with Vertical Farming

A worker harvests fresh produce from a tower at Sky Greens vertical farm

By Mark Esposito, Terence Tse, Khaled Soufani and Lisa Xiong

One big misconception is that produce grown from nontraditional methods is of lesser quality, and it’s time to put it to rest. In this article, the authors elaborate on the much needed innovative future of agriculture and how it plays as a “new tech” that revolutionises farming.

Restaurants, food trucks, take-out counters, and the like: classic destinations you go to meet friends or just to ensure you get enough calories for the day. Despite the importance of this quotidian activity, food prices are rising at an alarming pace. This has been the recent trend whether you are in Dubai, New York, London, Paris, or Shanghai. Cambridge, UK, is no exception. Mat, a local restaurant owner, revealed: “We are always trying to get the best quality food with appealing prices, but the price just keeps on hiking up.” There is, of course, cheaper meat and produce, but the quality is lower as a result. These lower quality food sources are often laden with heavy pesticides and chemicals for ease of storage and transport. For the consumer, restaurateur, and food retailer, there is no clear picture of how and when food costs might begin to stabilise.
Mat’s situation can be seen as a miniature narrative of the global issue at hand: food pricing pressure triggered by a wearing down of traditional agriculture. On average, food prices have gone up by 2.6% annually in the past two decades on a global scale.1 In the UK, grocery prices have risen 0.2% annually since 2014. In America, the same situation occurs. In 2011 alone, US food prices increased by 5%.2 In the east, China experienced 2.7% food inflation in 2016.3 These ongoing rises in food costs persist around the world and threaten a baseline quality of life as more and more of our disposable income goes into buying food.

 

Trends Analysis: Why is Traditional Farming Frustrating Us?
Traditional farming refers to field farming, which requires labour, amenable weather conditions, adequate sunshine for photosynthesis, irrigation, and pesticides and herbicides to protect crops. These crops then require travelling long distances from farmlands in other continents to get to local tables. These activities in and of themselves do not reveal the reasons why food prices have been rising steadily, but using the DRIVE framework to investigate the megatrends influencing agriculture,4 we can detect reasons why traditional farming is no longer working as well as it used to.

According to the FAO, food production must increase by 70% before the year 2050 in order to meet global food needs.

• Demographic and Social Changes
When compared to the rise in global population, it becomes clear that the global food supply cannot keep up with demand. According to the FAO,5 food production must increase by 70% before the year 2050 in order to meet global food needs. What’s more, this growth must happen against a headwind – urbanisation trends are pushing people away from farming as a profession while taking over arable land at the same time.6
Meanwhile, cultural changes related to diet preferences among younger generations have taken a leap. More people are converting to vegetarianism and “superfoods”; foods like antioxidant-rich kale and protein-packed quinoa are favoured over conventional empty-calorie, carb-heavy foods like potatoes and processed dry pastas. In addition, local food initiatives have become more than a passing phenomenon. Demand for meat and produce from local farms continues to rise in response to environmental concerns and the conviction that fresh, not frozen, is the higher quality, better-tasting food.
• Resource Scarcity
Agriculture takes up more than 70% of global water consumption. This tension over water usage adds to the total cost of agriculture. Food loss in the supply chain is another issue as perishable crops blemish and spoil during harvesting, packaging, processing, and distribution. According a report on food from field to fork, some activities could waste up to 50%.7 Moreover, the distance that some foods must travel shortens the number of days on the market, again cutting down on the amount of food available to consumers.
• Inequality
In addition to longstanding problems with malnutrition and widespread poverty in developing countries, inequalities related to food prices have also arisen in industrialised countries. In places like the US, the cost of fresh foods have led vulnerable populations to opt instead for budget-priced, high-fat processed fast food. The consequence of these food “choices” is a nationwide obesity epidemic as well as an increase in the number of people developing diabetes. As demand for food and the costs of agriculture continue to rise, the prospects of improving these health and hunger conditions for low-income families will not be great.
• Volatility
Agriculture is no stranger to volatility, which remains one of the industries most vulnerable to natural disasters. Climate change has caused more frequent extreme weather events in recent decades, which damages an entire season’s worth of harvest and worsens the rise in food prices. Higher temperatures also make crop pests more rampant. In addition, mutable government rules on crops can also drive up food prices. In the US, current ethanol mandates account for 10-15% of food price hikes. On top of that, regulations on herbicide, pesticide and fertiliser use are also positively related to lower crop yields.8 These forces, which determine the direction of price volatility, are here to stay.

Given these observations and changes seen through the lens of the DRIVE framework,9 the likelihood that traditional farming can continue to be a reliable and affordable source of food production is not that likely at all.

 

Vertical Farming is Born Out of Challenges.
One answer to food supply problems is coming from research labs to our dining tables. Vertical farming, a term coined by Dickson Despommier in his book The Vertical Farm: Feeding the World in the 21st Century in 2010,10 is the agricultural practice of producing food vertically in stacked-up layers. These farms make use of enclosed structures, like warehouses or ship containers, and can also be integrated into skyscrapers. Called “grow houses”, they provide a controlled environment to grow crops using soil pots in a hydroponic or aeroponic system. In this environment, crops receive the right amount of light, nutrients, and heat, regulated by an algorithms monitor. Here are some pioneers in the field:

• AeroFarms: A Local Farm
AeroFarms, harboured in a renovated steel plant in New Jersey, US, uses vertical farming to grow fresh and affordable produce. The annual yield is 130 times greater than that of a traditional field farm with the same surface area, and water consumption is 95% less than field farming, with zero pesticide use.11 One of the main virtues of vertical farming is independence from the land, or, to be more specific, the soil. The company employs aeroponics on a reusable fabric. Rather than exposing crops to sunshine horizontally, AeroFarms uses LED lights and manipulates the light spectrum to best fit their crops’ growth requirements. The products are then sold locally in grocery stores and supermarkets.

• Fujitsu: Vertical Farming for Medical Needs
Fujitsu, who made their name as an electronics maker, has experimented with vertical farming in empty semiconductor plants in Japan. They launched to market a low-potassium lettuce for patients suffering from kidney disease.12 The lettuce has only 100 mg of potassium per 100g of lettuce, which is less than one-fifth of what traditional lettuce contains. Due to the controlled environment, nutrients level can be manipulated to produce this distinctive lettuce. The demand has proven itself, with the market estimated to expand from ￥23.4 billion in 2013 to ￥150 billion in 2025.

• Sky Greens: Growing Produce When There is No Arable Land
Sky Greens is the first vertical farm to feed Singaporean dwellers in the densely populated and farmland-deprived region.13 The imbalance between 250 acres of farmland available to feed a population of five million has pushed growers in the direction of vertical farming. Sky Greens grows vegetables in A-shaped towers with an efficient rotating system for crops to absorb sunlight, which emulates the tropical climate of Singapore. Each tower can produce up to 10 times more than a field farm with the same surface area.

• Growtainer: Ready to Scale
Growtainer operates mobile and high-density vertical farms in modified 20’ or 40’ shipping containers.14 The modular units are simple and user-friendly. With all the necessary utilities set up inside, these small and insulated hydroponics farms can be monitored and operated remotely through the Internet, and even over smartphones with an app. The Growtainer system can be used in schools, restaurants, and military bases for leafy vegetables. Growtainer offers three major advantages: food security, year-round growing capacities, and simple operation. The company is scaling, with an increasing number of clients coming from the northeastern US, Thailand, and Vietnam.

Due to various factors related to geographical location, cultural difference, political support, investor dynamics, and local agricultural market conditions, what works for the above companies might not work for others entering vertical farming. Government policies on funding vary in different countries and even regions within local regulations. Dietary habits can also influence market popularity of certain crops. To identify such trends, partnerships with players in local food supply chains would provide practical insights on local barriers. Other challenges persist. In some regions, people are sceptical of this innovation and misunderstand vertical farming as “artificial vegetables”, which do not come off as particularly appetising. Though there may be no single model for vertical farming, its advantages over traditional field farming cannot be overlooked.
For managers interested in expanding into vertical farming, there are ways to minimise the expensive learning curve and improve their chances of success:

Change the Perception of Farming and Invest in “New Tech”
Traditional farming has been characterised as labour-intensive, vulnerable to climate change, and remote to a modern and urbanised lifestyle. In some places, farmers are associated with poverty, naivety, lack of education, and isolation. Few people are aware that vertical farming is likely to redefine the farming industry and revive its charms for educated young people. In the vertical farm, farmers are the new techies. Accuracy in operations and knowledge of computer-controlled systems and data analytics are prerequisites for vertical farming. Farmers are now data analysts, bio-scientists, and system supervisors. Understanding this transformation in farming provides managers with leverage in communicating the need to embrace vertical farming with different stakeholders.

Promote Farming Innovations and Educate Consumers
The average consumer has the misconception that produce grown with nontraditional methods is of lesser quality and taste. Promotional campaigns are a tactic that companies can use to interact with consumers explicitly to clarify the value of non–field farming crops and educate them on the nutritional and environmental benefits of vertical farming. Like wine-tastings, food-tasting events provide guests with the opportunity to sample hydroponic and aeroponic produce and judge the taste for themselves. These events also lend well to generating social media buzz. Vertical farming is not Frankenstein food, but might as well be without any efforts to educate the public.

Encourage Local Food Culture Through Governments and Food Associations
Governments and relevant associations are excellent networks to push local food culture. They are invested in the local economy, and local food production has been shown to help create employment.15 The Ontario Ministry of Agriculture, Food, and Rural Affairs of Canada actively pursues a regional local food strategy, and they have funded more than $40 million in projects in the province for the 2015-2016 fiscal year.16 Such government support is a sign that local food movements are a source of economic development with no signs of abating.

Vertical farming offers additional choices and growth potential that traditional farming techniques cannot realise. It is economically sensible, environmentally friendly, tech-savvy, and most importantly, health-sensitive.

Change of the Perception of Investors
Investors are essential if vertical farming is to scale successfully. AeroFarms, for instance, required six rounds of funding from nine investors, for a total equity funding around $95.8 million, to get to where they are today.17 To attract the attention of investors, the company does not label itself as a nontraditional farm but rather as “an urban agriculture and cleantech company”.18 Talking points to build consensus include the trend toward using technology to grow nutrient-specific crops like Fujitsu’s low-potassium lettuce. Another key point to stress is the profitability potential. Vertical farming’s high productivity rates, reduced water usage, and quality produce yields higher earnings at lower cost.

 

Conclusion
Vertical farming is not a fairytale; it is happening now. Though vertical farms can never be expected to replace traditional farming entirely, it is likely that they will have to complement each other if we are to meet the food demands of tomorrow. Vertical farming offers additional choices and growth potential that traditional farming techniques cannot realise. It is economically sensible, environmentally friendly, tech-savvy, and most importantly, health-sensitive. From grow house to table, vertical farming is revamping the future of agriculture.

Featured Image: Nice leafy vegetables at the Sky Greens vertical farm in Singapore / Reuters

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About the Authors

Dr. Mark Esposito, PhD., is a Socio-Economic Strategist and bestselling author, researching MegaTrends, Business Model Innovations and Competitiveness. He works at the interface between Business, Technology and Government and co-founded Nexus FrontierTech, an Artificial Intelligence Studio. He holds appointments as Professor of Business and Economics at Hult International Business School and Grenoble Ecole de Management and he is equally a faculty member at Harvard University since 2011. Mark is an affiliated faculty of the Microeconomics of Competitiveness (MoC) network at Harvard Business School’s Institute for Strategy and Competitiveness and is currently co-leader of the network’s Institutes Council.

Dr. Terence Tse is an Associate Professor at ESCP Europe London campus and a Research Fellow at the Judge Business School in the UK. He is also head of Competitiveness Studies at i7 Institute for Innovation and Competitiveness. Terence has also worked as a consultant for Ernst & Young, and served as an independent consultant to a number of companies. Hee has published extensively on various topic of interests in academic publications and newspapers around the world. He has been interviewed by television channels including CCTV, Channel 2 of Greece, France 24, and NHK.

Dr. Khaled Soufani is Professor of Management Practice (Economics) and Director of the Executive MBA in the Judge Business School at the University of Cambridge, where he also directs the Center for Middle Eastern Studies and the Circular Economy Center. He has published extensively in the area of financial management and economic affairs of small and medium- sized enterprises. His current research interests relate to fast-expanding markets and the economics of innovation.

Lisa Xiong is a candidate to the Executive Doctorate of Business Administration at Ecole des Ponts Business School. She works as Teaching Associate for business schools in Europe, UAE and China. Her research interests cover inequalities, Chinese economic development, entrepreneurship and open innovation. Lisa is a linguist and social science investigator. Her ability to navigate both the east and west cultures allowed her to serve different communities, enterprises and clients in different parts of the world.

References

1. Fao.org (2017). FAO food price index. Food and Agriculture Organization of the United Nations. Retrieved from http : //www.fao.org /worldfoodsituation/foodpricesindex/en/ 2. USDA (2017). USDA ERS – Food prices and spending. Retrieved from https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/food-prices-and-spending/

3. Scutt, D. (2017). Inflation in China is heating up fast. Business Insider. Retrieved from http://uk.businessinsider.com/inflation-in-china-is-heating-up-fast-2017-2?r=US&IR=T

4. Esposito, M. and Tse, T. (2017). Thrive in the new normal, DRIVE in uncertainty. The European Financial Review. Retrieved from http://www.europeanfinancialreview.com/?p=5577.

5. Fao.org (2009). Global agriculture towards 2050, How to feed the world. Retrieved from http://www. fao. org/fileadmin/templates/wsfs/docs/Issues_papers/HLEF2050_ Global_Agriculture.pdf

6. See Esposito and Tse, 2017

7. Goldenberg, S. (2016, July 14). From field to fork: the six stages of wasting food. The Guardian. Retrieved from https://www.theguardian.com/environment/2016/jul/14/from-field-to-fork-the-six-stages-of-wasting-food

8. Orland, S. (2012, March 15). Why are food prices so high? Forbes.com. Retrieved from https://www.forbes.com/sites/steveodland/2012/03/15why-are-food-prices-so-high /#25b24bb46962

9. See Esposito and Tse, 2017

10. Despommier, D. 2010. The vertical farm: feeding the world in the 21st century. New York: Thomas Dunne Books

11. AeroFarms (2017). AeroFarms is on a mission to transform agriculture. Retrieved from http://aerofarms.com

12. Matsutani, M. (2014, May 13). Fujitsu harvests low-potassium lettuce grown in semiconductor plant. The Japan Times. Retrieved from http://www.japantimes.co.jp/news/2014/05/13/national/science-health/fujitsu-harvests-low-potassium-lettuce-grown-plant-clean-room/

13. Krishnamurthy, R. (2014, July 25). Vertical farming: Singapore’s solution to feed the local urban population. The Permaculture Research Institute. Retrieved from https://permaculturenews.org /2014/07/25/vertical-farming-singapores-solution-feed-local-urban-population/

14. Growtainer (2017). The portable production facility of the future. Growtainer. Retrieved from http://www.growtainers.com

15. Kneafsey, M., Venn, L., Schmutz, U., Balázs, B., Trenchard, L., Eyden-Wood, T., … and Blackett, M. (2013). Short food supply chains and local food systems in the EU. A state of play of their socio-economic characteristics. JRC Scientific and Policy Reports. Joint Research Centre Institute for Prospective Technological Studies, European Commission.

16. Ontario Ministry of Agriculture, Food, and Rural Affairs (2017). Local Food Report 2016. Retrieved from http://www.omafra.gov.on.ca/english/about/local_food_rpt16.htm#2015

17.Crunchbase (n.d.). AeroFarms. Retrieved from https://www.crunchbase.  com/organization/aerofarms

18. See AeroFarms, 2017.

19. Chang, J. (2014). An analysis of Chinese buzzwords in the snake’s year. Journal of Arts and Humanities, 3(2), pp. 78.­

Skills and Knowledge: An Imperative for Lifelong Learning in the Digital Age

By Bitange Ndemo

Today’s fast-paced and ever-changing world requires societies to adopt a culture of life-long learning. There is much the countries of the Global South can do to close the technology gap between them and the Global North, and capitalise on the many opportunities to empower people to be fit and ready for our future economies.

 

 “The capacity to learn is a gift; the ability to learn is a skill; the willingness to learn is a choice.” – Brian Herbert

 

Introduction

Never in the history of mankind has lifelong learning been such an imperative to sustain economic growth as it is in today’s digital age. The pace of technological change, at least since the invention of the Internet, has been phenomenal and few studies have attempted to capture its disruptive path and how best to adapt to it.

In the past, inventions took much longer to become obsolete. It took more than a century to imagine the demise of the internal combustion engine. Similarly, a child who was born at the dawn of the twenty-first century could hardly identify a rotary phone, which was a common household item barely two decades ago.

In 1965, Intel Co-Founder Gordon Moore predicted that the number of components per integrated circuit would double every 18 to 24 months for at least two decades. To date, this prediction has remained true far beyond the two decades he predicted. These types of improvements have disrupted industries. For example, in a short period of time, digital cameras replaced the film cameras that had been used for over a century. It is for this reason that digital advances are strongly linked to Moore’s prediction, including: quality-adjusted microprocessors,2 sensors, memory capacity, and even the number and size of pixels in digital cameras.3

Jobs have also been disrupted. The World Economic Forum’s Human Capital Index Report 2016 notes that there are jobs today that did not exist 10 years ago. It predicts that at least “65% of children entering primary school today will ultimately end up working in completely new job types that aren’t on our radar yet”.4 Further, the report predicts that the “pace of change is only going to get faster”, owing to rapid advances in such technologies as artificial intelligence, biotechnology, machine learning, the Internet of Things, sensor technologies, and more.

The Capacity to Learn

Despite an individual’s particular areas of knowledge and skills, it is impossible to know what kinds of knowledge will be required to utilise the new technologies that await us in the future.

A key question for policy makers is thus: How do we prepare today’s school children for future jobs that we cannot fully predict and understand? One thing we can be certain about is that in order to acquire the skills and knowledge needed for these unknown future jobs, children must have the capacity to learn.

The “capacity to learn” is far too often an ambiguous concept. Perhaps the closest definition for it can be found in a 1998 quote by Seymour Papert, where he said, “All skills will become obsolete except one, the skill of being able to make the right response to situations that are outside the scope of what you were taught in school. We need to produce people who know how to act when they are faced with situations for which they were not specifically prepared.”

Perhaps in the past, the ability to do something well by using one’s own knowledge, experience, and aptitude could guarantee a lifetime of earnings, but rapid technological advances have changed that narrative.

Enhancing the capacity to learn is a complex process. Wald and Castleberry (2000) suggest that it should be collaborative, considering that learning demands that learners have an understanding of “themselves, their motives, and their thoughts and beliefs, as well as the motives, thoughts, and beliefs of others”.5 According to this view, the capacity to learn demands that individual interests be merged into collective aspirations. An individual cannot acquire the capacity to learn in isolation since society prepares young people to acquire knowledge. Thus it compels society members to have a sense of behaviour that creates a relationship of “trust, belonging, and purposefulness” that is often referred to as “work ethic”. This begins early in life so as to enable an individual to do sensible things while acquiring the necessary knowledge and skills with or without going through formal educational systems.

 

Acquiring the Right Skills

Perhaps in the past, the ability to do something well by using one’s own knowledge, experience, and aptitude could guarantee a lifetime of earnings, but rapid technological advances have changed that narrative. In the last couple of decades, it is common for an individual to acquire and reacquire different skill sets within a short time period. Therefore, the notion of permanent skills does not exist; rather, to be relevant for future jobs, one must embrace a continuous process of acquiring new, relevant skills. For this, society must embrace a culture of lifelong learning and collaboration, accepting that there is truth in Brian Herbert’s line that “the willingness to learn is a choice”.6

 

Knowledge for the Future

Knowledge can be described as the state of being aware, through either experience or education. Studies highlight the key knowledge areas of interest that new pedagogy must embrace to enhance understanding and readiness for future requirements (see Figure 1, below).7 These include: 1) foundational knowledge that incorporates digital literacy and core content, and is cross disciplinary; 2) humanistic knowledge that covers life/job skills, ethical/emotional awareness, and cultural competence, and 3) meta knowledge that focusses on creativity and innovation, problem solving, critical thinking, communication, and collaboration.

 

Figure 1: Key Knowledge Areas for Future Requirements

Source: Kereluik, Mishra, Fahnoe, and Terry (2013) What Knowledge Is of Most Worth: Teacher Knowledge for 21st Century Learning. Journal of Digital Learning in Teacher Education (p. 128). © punyamishra.com 2013

These critical areas have been tested in some private schools in Kenya; however, public schools, especially those in developing countries, still lag as they are typically more rigidly focussed on foundational knowledge. Often public educational systems face funding constraints and over full class rooms and as a result, devote little dedication to developing the skills future workers will need.

 

Policy Failure and Future Concerns for the Global South

Although policy makers everywhere should ensure that the right enabling environment is in place to enhance the capacity to learn and to develop futuristic skills and knowledge, several countries lag behind rich Northern ones, especially in those in the Global South. These countries lack a clear direction on how to close the North – South technology gap, a gap that cannot close until an enabling infrastructure is in place. For example, until 2009, Africa had no high-speed connectivity (see Figure 2). Virtually all countries accessed the Internet through expensive satellite links, which few people could afford. Today, the Internet has become a human-rights issue and a platform to enable lifelong learning. Kereluik et al.’s (2013) model suggests that digital literacy be part of the foundational knowledge for future of learning. Some African countries have embraced this need.

 

Figure 2: Africa’s Changing Connectivity, 2009 to 2012

Source: Oxford Internet Institute

Ndemo (2015) argued that clear and simple policy interventions did, indeed, make the difference in Kenya, where Internet penetration soared from barely 5 percent, in 2009, to 81 percent, in 2017.8 In the process, the country now has the highest number of mobile-money customers, and several apps have been developed to improve productivity in education, agriculture, healthcare, and several other sectors. Key areas of policy intervention have included building comprehensive infrastructures from both undersea cables and terrestrial networks; giving incentives to students to acquire enabling devices (for assistive technology); subsidising broadband for all institutions of higher learning (public and private; the removal of taxes on enabling devices; the certification of operators to develop last-mile infrastructure in rural areas; and the creation of digital centres in rural areas. Although it took some three years before there was widespread use of broadband, the results have been so phenomenal that, in some areas, the economy is leveraging on emerging technologies, such as big data, the Internet of Things, artificial intelligence, and machine learning, so as to offer some of these new and inclusive products.

 

Lifelong Learning Mediated by Technology

In Ireland, lifelong learning has been a governing principle of educational policy since 2000. In Learning for life: White paper on adult education, by the Department of Education and Science, lifelong learning is defined as “ongoing, voluntary, and self-motivated”.9 While this policy document addresses adult education, the uncertain future of work means that one’s ability to constantly learn new skills and remain relevant in the job market is paramount.

The uncertain future of work means that one’s ability to constantly learn new skills and remain relevant in the job market is paramount.

The World Economic Forum’s Human Capital Index Report 2016 estimates that 65% of the children who are entering primary school today will ultimately end up working in completely new job types that, as yet, do not exist.10 This means that no specific skills exist that can prepare them for their future work. To fit into these non-existent jobs, these children will have to re-train, perhaps several times over, as the job landscape evolves.

It may not be possible to develop lifelong learning, for different people, without the use of information and communications technologies (ICTs). Stolterman and Croon Fors (2004) described our current situation as “the total and overall societal effect of digitalisation”.11 This interconnectedness and collaboration of people and organisations is being applied in every aspect of life, and education is no exception. Therefore, the future of learning will largely be facilitated by technology. Further, policy makers will have to create an enabling environment that meets these future demands, such as through lifelong learning.

 

Policy Recommendations

Evidence suggests that policy is key to the realisation of an enabling environment that supports the type of learning that is necessary for the future of work.12 This would include making broadband accessible and affordable to all, especially in the Global South. Lifelong learning that is mediated by technologies such as applications or “apps” will make it possible to minimise the cost of leaning materials and their delivery. As such, governments should consider removing or at least reducing taxes and duties on facilitating devices and systems, such as laptops, smart phones, and Internet usage. In order to leave no one behind, there is need for digital literacy training programmes, both in schools and in rural villages.

 

Future Research

The world is in a transformative stage, where new disruptive technologies are emerging almost on a daily basis. Some of these technologies will have far-reaching implications in the world we live in. Big data is already enabling nations to visualise the extent of such problems as poverty in ways we have never seen, and several inclusive products have emerged. Thanks to big data analytics, more people are gaining access to the types of finance and banking facilities that were hitherto not available to them. Future research should focus on the implications of the technologies that underpin digital transformation. These include but are not limited to artificial intelligence; the Internet of Things; machine learning, and other innovations, such as sensors and nanotechnology.

 

Conclusion

The future of work is uncertain yet inevitable and so too is the need for our constant learning and adapting. Strategies that will help us to successfully find and maintain employment include creating an enabling environment that encourages a culture of lifelong learning. The Global South should strive to close the digital divide between it and the rich Northern hemisphere. To this end, we must embrace David Miliband’s 2003 quote, “One of the core functions of 21st century education is learning to learn in preparation for a lifetime of change.”13

 

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About the Author

Bitange Ndemo is an Associate Professor of Entrepreneurship at the University of Nairobi’s Business School. Prof. Ndemo is an advisor and Board member to several organisations including Safaricom one of the leading telecommunication company in Africa, Mpesa Foundation, Research ICT Africa that is based in South Africa. He is a former Permanent Secretary of Kenya’s Ministry of Information and Communication where he was credited with facilitating many transformative ICT projects.

 

Notes

1. Herbert, Brian and Anderson, K. (2001). House Harkonnen. Spectra Books: New York.
2. Myhrvold, Nathan (June 7, 2006). “Moore’s Law Corollary: Pixel Power”. New York Times.
3. Byrne, David M.; Oliner, Stephen D.; Sichel, Daniel E. (March 2013). Is the Information Technology Revolution Over? Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board. Washington, D.C.
4. World Economic Forum Human Capital Index Report (June 2016) Association of Southeast Asian Nations (ASEAN). Kuala Lumpur, Malaysia 1-2 June 2016.
5. Wald, P.J., and Castleberry, M.S. (2000). Educators as learners: Creating a professional learning community in your school. Alexandria, VA: Association for Supervision and Curriculum Development.
6. See for example Bell, S., (2010) Project-Based Learning for the 21st Century: Skills for the Future. Clearing House: A Journal of Educational Strategies, Issues and Ideas, v83 n2 p39-43.
7. Kereluik, K., Mishra, P., Fahnoe C., and Terry, L., (2013) What Knowledge Is of Most Worth: Teacher Knowledge for 21st Century Learning. Journal of Digital Learning in Teacher Education 29:4, 127-140, DOI: 10.1080/21532974.2013.10784716.
8. Ndemo, E B (2015) Political Entrepreneurialism: Reflections of a Civil Servant on the Role of Political Institutions in Technology Innovation and Diffusion in Kenya. Stability: International Journal of Security and Development 4(1):15, DOI: http://dx.doi.org/10.5334/sta.fd.
9. Department of Education and Science (2000). Learning for Life: Paper on Adult Education. Dublin: Stationery Office.
10.World Economic Forum Human Capital Index Report (June 2016) Association of Southeast Asian Nations (ASEAN). Kuala Lumpur, Malaysia 1-2 June 2016.
11. Stolterman, Erik; Croon Fors, Anna (2004). “Information Technology and the Good Life.” Information systems research: relevant theory and informed practice. p. 689.
12. See for example Ndemo, E B (2015) Political Entrepreneurialism: Reflections of a Civil Servant on the Role of Political Institutions in Technology Innovation and Diffusion in Kenya. Stability: International Journal of Security and Development 4(1):15, DOI: http://dx.doi.org/10.5334/sta.fd.
13. David Miliband 2003 Speech Teaching in the 21st century.

How to Make Finance a Force for Sustainability

Golden coins with solar panels and nuclear power plant on a background.

By Dirk Schoenmaker

Traditional finance focusses on financial return, considering the financial sector separate from both society and the environment. In contrast, sustainable finance considers financial, social and environmental returns in combination. In a new essay, I provide a framework for sustainable finance highlighting the move from the narrow shareholder model to a broader stakeholder model. Here he presents the key arguments.

Sustainable development is a holistic concept with three aspects: economic, social and environmental. Humanity is facing numerous sustainability challenges. Looking at the environment, we see climate change, land-use change, biodiversity loss and depletion of natural resources all destabilising the earth. And on the social front, poverty, hunger and a lack of health care reveal that many people live below basic social standards.

Sustainable development means that current and future generations should have the resources they need, such as food, water, health care and energy, without overwhelming the earth’s natural processes. To guide the transformation towards a sustainable and inclusive economy, the United Nations has developed the 2030 Agenda for Sustainable Development, which will require behavioural change.

Why should finance contribute to sustainable development? The main task of the financial system is to allocate funding to its most productive use, but a shift to sustainability means changing our ideas about what is “productive”. Finance can play a role in allocating investment to sustainable companies and projects and thus accelerate the transition to a low-carbon, inclusive and circular economy. So sustainable finance considers how finance (investing and lending) interacts with economic, social and environmental issues.

In this allocation role, finance can assist in strategic decisions on the trade-offs between sustainable goals. Moreover, investors can exert influence over the companies they invest in, so long-term investors can steer companies towards sustainable business practices. Finally, finance is good at pricing risk for valuation purposes, and can thus help to deal with the inherent uncertainty about environmental issues, such as the impact of carbon emissions on climate change. At their core both finance and sustainability look to the future, so there is scope for a new alignment.

A New Framework

Thinking about sustainable finance has gone through different stages over the last few decades (see Table 1). The focus is gradually shifting from short-term profit towards long-term value creation. In a new essay, I analyse these stages and provide a new framework for sustainable finance.

Financial and non-financial firms traditionally adopt the shareholder model, with profit maximisation as the main goal. A first step in sustainable finance (1.0 in Table 1) would be for financial institutions to avoid investing in companies with very negative impacts, such as tobacco, cluster bombs or whale hunting. Indeed, some firms are starting to include social and environmental considerations in the stakeholder model (Sustainable Finance 2.0).

Table 1: Framework for Sustainable Finance

Note: F = financial value; S = social impact; E = environmental impact; T = total value. At Sustainable Finance 1.0, the maximisation of F is subject to minor S and E constraints.

But to move ahead, we need to adopt a stakeholder approach to finance, with benefits accruing to the wider community rather than just shareholders. In the essay, I highlight the tension between the shareholder and stakeholder models. Should policymakers allow a shareholder-oriented firm to take over a stakeholder-oriented firm? Or do we need to protect firms that are more advanced in terms of sustainability? Another key development is the move from risk to opportunity. While financial firms have started to avoid (very) unsustainable companies from a risk perspective (Sustainable Finance 1.0 and 2.0), the frontrunners are now increasingly investing in sustainable companies and projects to create long-term value for the wider community (Sustainable Finance 3.0).

Mobilising Investment Funds for The Long Term

One major obstacle to the adoption of sustainable finance is short-termism. The costs of action are borne now, while the benefits are in the future. The impact of economic activity on society, and even more so on the environment, is typically felt in the long term. So how can financial institutions commit their investment for the long term and steer business towards sustainable practices?

One major obstacle to the adoption of sustainable finance is short-termism. The costs of action are borne now, while the benefits are in the future.

In the essay, I make two concrete proposals. On the institutional front, I propose to introduce “loyalty shares” as an additional reward to shareholders if they have held on to their shares for a so-called loyalty period (for example three, five or ten years). The idea is very simple. Only investors, which have owned the shares over this objective time period of three, five or ten years with a clear starting and end date, get the extra loyalty shares. These loyalty shares are an incentive for institutional investors to pursue a buy-and-hold strategy. A major benefit of incentivising investors to hold onto their shares for the long-term is that it facilitates engagement of (institutional) investors with companies in which they invest. This engagement on environmental, social and governance (ESG) issues is a powerful force to steer companies towards sustainable business practices. Social and environmental externalities take place in the corporate sector, but the financial sector can pressure corporates to address these externalities effectively.

On the investment side, I propose the creation of sustainable retail investment funds. Currently, the main vehicles for retail investors are Undertakings for Collective Investments in Transferable Securities (UCITS). UCITS are collective investment funds operating freely throughout the European Union on the basis of a single authorisation. The UCITS concept includes a transferability requirement, which assumes securities are listed on liquid markets. However, this discourages long-term commitment by investors. While liquidity is useful for retail investors, I suggest that this strict transferability requirement be revised into a concept of “liquidity that ensures a balanced control of in- and outflow of cash by fund managers”. This could be combined with a withdrawal limit on fund shares.

As part of their sustainability agenda, the European Commission should prepare legislation setting up liquid, sustainable retail investment funds or undertakings with an EU-passport. These new “Undertakings for Collective Investments in Sustainable Securities” (UCISS) would replace the requirements on listing and transferability with the concept of sound liquidity management. UCISS would also incorporate a definition of eligible investments meeting enforceable sustainability criteria. The UN Sustainable Development Goals could underpin these criteria.

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About the Author

Dirk Schoenmaker is  a Senior Fellow at Bruegel and a Professor of Banking and Finance at the Rotterdam School of Management, Erasmus University. He is author of “Investing for the Common Good: A Sustainable Finance Framework”, Bruegel Essay and Lecture Series, Brussels.The essay can be downloaded at: http://bruegel.org/2017/07/investing-for-the-common-good-a-sustainable-finance-framework/

The Way to the New Cold War

By Dan Steinbock

Despite continued nuclear threats, all US postwar presidents have failed to reset relations with Russia. Why?

The “New Cold War” between the US and Russia began a decade ago. The elevated tensions in the Korean Peninsula are only a part of the collateral damage around the world.

But what led to the new friction? The simple response is the Wolfowitz Doctrine.

The Wolfowitz Doctrine

“to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere that poses a threat on the order of that posed formerly by the Soviet Union”

In late 1989, Soviet President Mikhail Gorbachev and US President George H. W. Bush declared the Cold War. In February 1990, then-Secretary of State James Baker suggested that in exchange for cooperation on Germany US could make “iron-clad guarantees “that NATO would not expand “one inch eastward”.

As Gorbachev acceded to Germany’s Western alignment on the condition that the US would limit NATO’s expansion, Baker’s own top officials at the Pentagon began to push Eastern Europe in the US orbit.

That’s how the Wolfowitz Doctrine – named by Undersecretary of Defense for Policy Paul Wolfowitz, later the prophet of George W. Bush’s neoconservatives – was developed amid the end of the Cold War.

The Doctrine deemed the US as the world’s only remaining superpower and proclaimed its main objective to be retaining that status. Its first objective was “to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere that poses a threat on the order of that posed formerly by the Soviet Union”.

Bush-Clinton “Shock Therapy” and Russia’s Great Depression

After the dissolution of the Soviet Union in 1991, bilateral ties remained warm between the George H. Bush and Bill Clinton administrations and President Boris Yeltsin until the neoliberal “shock therapy” – the huge privatisation and liberalisation project designed by the World Bank, the International Monetary Fund and the US Treasury – led to a nightmare Depression in Russia.

As Russia struggled for survival, three former Soviet satellites – Poland, Hungary and the Czech Republic – were invited to join the NATO. By the mid-90s, Poland, the Czech Republic, Hungary and the Baltic states were ushered into NATO; against the angry but ultimately futile protests by presidents Yeltsin and Gorbachev.

By then, the 1990s destabilisation had paved way to the rise of President Vladimir Putin who was able to re-stabilise the economy between 2000 and 2008, when Russia enjoyed a major boost from rising commodity prices..

George W. Bush’s NATO Enlargement and Nuclear Primacy Policy

In 2001, President George W. Bush wanted to reset US Russia relations. But if there was a historic opportunity, it was soon lost. After the White House was swept by the 9/11 attacks and neoconservatives’ unilateral foreign policy, it began incursions into Afghanistan and invaded Iraq.

Meanwhile, NATO began looking even further eastward to Ukraine and Georgia, while Moscow’s protests turned angrier.

Most Russians saw the Rose Revolution in Georgia 2003, and US effort to build an anti-ballistic missile defence installation in Poland with a radar station in the Czech Republic, as intrusions into its sphere of interest, along with US efforts to gain access to Central Asian oil and natural gas.

In June 2002, the Bush administration withdrew from the Anti-Ballistic Missile Treaty (ABM), which had been in force for 30 years. The construction of the US missile defence system was feared to enable the US to attack with a nuclear first strike.

The withdrawal was a “fatal blow” to the 1970 Non-Proliferation Treaty (NPT) and led to a world without effective legal constraints on nuclear proliferation. One of its consequences is the ongoing nuclear debacle in the Korean Peninsula.

From Obama Sanctions to Trump’s Reversals

Like Clinton and Bush, President Obama wanted to reset US-Russia relations. By March 2010 both countries agreed to reduce their nuclear arsenals.

Yet, the reset was not supported by his Secretary of State Hillary Clinton, Secretary of Defense Robert Gates and US ambassador to Russia John Beyrle. Subsequently, rising tensions in Crimea were seized to bury the effort.

By the year-end, his administration’s new security strategy named China and Russia as competitive rivals.

What followed was a series of Obama sanctions against Russia in 2014 and 2016, with the support of the European Union (EU).

In the 2016 campaign trail, Trump lauded President Putin as a strong leader, arguing in favour of friendlier relations. Meanwhile, FBI began investigating alleged connections between Trump’s former and current campaign managers and advisers.

In January 2017, Trump and President Putin began phone conferences as the White House still mulled lifting economic sanctions to reset relations with Russia. By May, former FBI chief and the Bush neoconservatives’ loyalist Robert Mueller was appointed to investigate alleged Russian interference in the 2016 US elections.

In the fall, Trump approved still new sanctions on Russia crushing hope for the reset in US-Russian relations. By the year-end, his administration’s new security strategy named China and Russia as competitive rivals.

The Primacy of Wolfowitz Doctrine

It was the Wolfowitz Doctrine that undermined the efforts of four post-Cold War presidents to reset relations with Russia.

In each case, the US “military-industrial complex”– about which President Eisenhower, a five-star general, had warned already in 1961 – has played a critical but low-profile role behind the scenes.

President Clinton did not oppose the military interests, as long as they supported US economic interests. Bush’s inner circle was identical with Pentagon’s ultimate insiders and neoconservative hawks. Obama talked against the military and security complex but, eventually, became its loyal cheerleader. Trump fought efforts to kill the reset of Russia relations – until the appointment of the special counsel.

The Wolfowitz doctrine has prevailed – against all postwar US presidents.

The original version was released by The Manila Times on January 8, 2018.

Featured Image: President George W. Bush, Defense Secretary Donald Rumsfeld, and Deputy Secretary Wolfowitz in March 2003.

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About the Author

Dr. Dan Steinbock is Guest Fellow of Shanghai Institutes for International Studies (SIIS), see http://en.siis.org.cn/. The commentary is part of his SIIS project “China in the Era of Economic Uncertainty and Geopolitical Risk”. For his global advisory activities and other affiliations in the US and Europe, see http://www.differencegroup.net/

Chinese Economy in 2018 and Beyond

By Dan Steinbock

In the coming years, China shall aim at high-quality development, while seeking to forestall financial and international risks.

The recent Central Economic Work Conference marked a historical point in China’s economic development. After Mao’s struggle for the mainland’s sovereignty, and Deng’s economic reforms and opening-up, President Xi’s team seeks complete much of the transition to post-industrial society by the early 2020s.

What does it all mean for Chinese economy in 2018?

New Economic Guidelines at Home

A “moderately prosperous society” will become the reality as China’s growth is likely to remain at 6.8-6.3 percent until the end of the decade. “High-speed” growth, which was typical to intensive industrialisation, is now morphing into “high-quality” growth. Due to China’s huge size, the repercussions will reverberate around the world.

China’s rebalancing from exports and investment to consumption and innovation is likely to be completed around 2030. Meanwhile, per capita incomes are expected to double by 2020. Xi’s Chinese dream is predicated on greater economic focus on quality and equality of development.

Investments in social equity mean less uneven coverage of pension and health care insurance nationwide, better public services, rejuvenation of rural areas, scaling of farming operations, increased spending on high school education and vocational training, affordable housing and extended rural land leases – and an aggressive push to eradicate poverty in China.

A key aspect of the shift is Beijing’s expansive goal to restore blue skies over the mainland by cutting pollutants dramatically by 2020, coupled with efforts to attract investors to put substantial funds into environmental rehabilitation.

The new stress on environmental protection means new technologies in green manufacturing and clean energy; cleaning up air, water and soil pollution; developing green finance; emissions-reduction per targets; and tighter environmental rules.

Forestalling Financial Risks

While the Fed’s Ben Bernanke initiated US central bank’s exit from quantitative easing, Janet Yellen has tightened monetary policies, which Jerome Powell is likely to sustain starting in February 2018. As the European Central Bank is likely to gradually follow in the footprints, monetary tightening will spread.

Chinese policymakers seek to maintain a proactive fiscal and a neutral monetary policy stance, ruling out major stimulus packages and monetary easing. Yet, the People’s Bank of China (PBOC) can rely on Chinese growth to continue 3-4 times faster than in most other major economies.

China’s leverage is significantly higher than that of emerging economies (189% of GDP). But unlike them, China is transitioning to a post-industrial society.

In the coming year, policymakers seek to keep the yuan’s exchange rate basically stable. For years, the currency’s internationalisation was pushed hard in the world stage. After market volatility in 2015, the progress has been slower but more solid. In turn, the gold-backed petro-yuan is likely to bring substantial institutional changes.

While the Chinese stock market experienced a slight correction recently, the status quo is now more stable than in 2015. The PBOC will take an active stance in managing financial-market risks through macro-prudential measures, rather than with policy rate tools. In 2018, it is likely to maintain a broadly neutral stance. Currently, the benchmark lending rate remains 4.35%.

With moderate tightening, inflation pressure has been subdued to less than 2% and growth is steady, probably around 6.8% by the year-end.

Recently, the International Monetary Fund (IMF) noted that China’s credit is high by international levels. The mainland’s total social debt is almost 270% as percentage of the GDP. Yet, despite continued absolute rise, credit-taking is decelerating and the government’s effort to deleverage corporates has started to bite.

Today, China’s leverage is significantly higher than that of emerging economies (189% of GDP). But unlike them, China is transitioning to a post-industrial society. Moreover, advanced economies’ leverage (268% of GDP) exceeds that of China, which is implementing structural reforms that major advanced countries continue to delay.

International Risks

In addition to economic and financial threats, the coming months will introduce new unilateral “America First” pressures. Following US-Chinese friction on intellectual property, the US Commerce Department has launched a trade investigation into Chinese exports of sheet aluminum to the US.

Relying on its multilateral and new “major-country diplomacy,” China’s international statecraft complements its domestic economic policies.

The Trump administration will pursue a more aggressive trade agenda in 2018, while its corporate tax reform, which is likely to penalise the Republicans in mid-term elections, has significant trade implications as well. Most recently, the Trump administration’s new security strategy named China as a competitive rival.

In contrast, China is fostering inclusive multilateralism in its economic, security and trade policies, while the One Belt One Road initiative is proceeding faster than expected. The huge infrastructure is estimated at $4 trillion to $8 trillion over time, which is about 30-60 times the cost of the Marshall Plan at the turn of the 1950s.

Relying on its multilateral and new “major-country diplomacy”, China’s international statecraft complements its domestic economic policies. But it must navigate in the “new normal” – a high-risk international environment in which, ironically, America is now the greatest risk in the global economy.

The original commentary was published by China Daily on December 25, 2017.

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About the Author

Dr. Dan Steinbock is Guest Fellow of Shanghai Institutes for International Studies (SIIS), see http://en.siis.org.cn/. The commentary is part of his SIIS project “China in the Era of Economic Uncertainty and Geopolitical Risk”. For his global advisory activities and other affiliations in the US and Europe, see http://www.differencegroup.net/

China’s One Belt, One Road Initiative Promotes China Over US

OBOR

By Sara Hsu

China’s One Belt One Road initiative is vast and promises to greatly expand China’s soft power in Asia, Europe, and Africa by creating much-needed infrastructure. The US stance on OBOR, however, is unclear, and the lack of a clear stance on OBOR, China, and Asia in general, will ensure a reduced role for the US in the region.

Introduction

China’s expansive One Belt One Road initiative stretches across the continents of Asia, Europe, and Africa and promises to bring a range of infrastructure to numerous developing countries, potentially covering half of the world. The purpose of the project is to engage the nation abroad. China’s Ministry of Foreign Affairs aims specifically to boost intergovernmental communication to promote regional cooperation, coordinate infrastructure plans to ensure connection of infrastructure networks, encourage soft infrastructure development, and improve human connections through international exchanges.1

This is a massive undertaking, and many foreign countries have chosen to participate in order to benefit from infrastructure investment directly or indirectly, despite protests in some areas against environmental and human rights violations. The US position on OBOR, however, is unclear, and a lack of a clear stance has left the US looking on helplessly at the sidelines. This represents a more general failure of US foreign policy in the Asian region.

OBOR Benefits China

Focus on infrastructure allows China to employ its construction firms abroad and generate investment opportunities, both for itself and for other countries. Excess capacity in cement and steel enterprises can be used to provide materials for OBOR projects. OBOR will also help China gain access to trade with less developed countries by reducing trade costs due to improved transportation networks and enhanced trade agreements between nations.

Politically, the project strengthens China’s soft power abroad, boosting China’s stature as a global power. China earns political points for providing assistance to poor countries. The deliverables specified during China’s May 2017 Belt and Road Forum provide an intense work agenda for China, but also promise to massively bolster China’s involvement in Asia and beyond. These include: coordinating development strategies and infrastructure development, expanding industrialisation and trade, increasing financial cooperation, and focussing on people to people exchange.2 All of these items require negotiations with neighbouring governments, understandings based on mutual respect and benefits.

To some, the mutual benefits are clear. China has noted that increased cooperation with Qatar in OBOR can boost Qatar’s National Vision 2030.3 Lao officials have celebrated the fact that OBOR will cause their country to transform from a “land-locked country” into a “land-linked country”.4 Malaysia released a report in October stating that OBOR would create benefits for all participating countries, including Malaysia.5 In addition, Russian President Vladimir Putin stated in June that the OBOR will benefit both Russia and China.6

…Despite Criticisms Regarding Risk and Rights Violations

China’s state owned enterprises have participated in 1,700 OBOR projects, a staggering number that represents construction of highways, railways, dams, and more.7 As I have discussed elsewhere, it seems unlikely that all of these projects have undergone sufficient due diligence, and they face potential risks of failure over time.8

It also bears mentioning that OBOR appears to be carried out on Chinese terms, with relatively low levels of transparency and lack of specification regarding human rights or environmental considerations. This has gotten China into trouble at times, presenting barriers to completing some projects. For example, popular opposition to the creation of a large industrial zone in Sri Lanka, due to potential land losses, has stalled China’s construction in the area. Protests in Pakistan’s Gilgit-Baltistan broke out during the OBOR summit in Beijing to reject Chinese imperialism, or military occupation of Pakistan.9 Protests have also taken place in Nicaragua against China’s plans to build a second canal, due to the threat of pollution and land seizures.

Despite these caveats, many of the projects will succeed, and ones that do fail may stay afloat for years before they collapse. This will allow China to retain its power abroad for a long time. To date, there has not been a great backlash to China’s rights transgressions. It seems that countries with poor governance records have even welcomed China’s impartial stance toward investing in their economies. As a matter of course, China does not attempt to reprimand countries for human rights and governance abuses. Russia, Iran and Turkey, all authoritarian (or quasi-authoritarian) regimes, have embraced China’s aspirations abroad.

US Muddled on OBOR

The US stance on OBOR under the Trump administration is unclear. While President Trump agreed in April to send a delegate to the OBOR forum held in Beijing this past May, US Secretary of Defense James Mattis came out strongly against the OBOR initiative in October due to its operations in disputed territories. Secretary Mattis stated during a Congressional hearing that “in a globalised world, there are many belts and many roads, and no one nation should put itself into a position of dictating one belt, one road.”10 In response, China stated that it has followed “reasonable and transparent” investment rules.11

American companies are quite in favour of contributing to OBOR, and they often have a better technological advantage over Chinese firms.

American companies are quite in favour of contributing to OBOR, and they often have a better technological advantage over Chinese firms. General Electric (GE) and Honeywell International, for example, are getting involved in selling equipment for OBOR designated projects. GE made $2.3 billion in equipment sales in 2016 for projects along OBOR. Honeywell has organised a sales and marketing team called “East to Rest” just to serve Chinese firms working abroad. Opportunities to provide integrated services for infrastructure projects can boost global sales.12

While the Obama administration never explicitly opposed the OBOR or OBOR-associated institutions, there was little said about directly favouring OBOR projects. In fact, the Obama administration revealed itself to be concerned about the the Asian Infrastructure Investment Bank, which aimed to support OBOR projects. The major complaints were that transparency and good governance may not be a central features of the bank. Reportedly, some American officials even quietly lobbied against the development bank at the time of its proposal.13

The US also proposed a policy very similar to the OBOR policy before OBOR was released. In 2011, the US developed its own New Silk Road policy, which focussed on maintaining stability in Central Asia after US and NATO troops withdrew from Afghanistan. The policy focussed on improving trade between India and Pakistan to Central Asia through Afghanistan by promoting infrastructure construction, with the aim of checking the power of Russia and China.14 In both its regional emphasis and its political orientation, the New Silk Road differed from that of OBOR. However, the US did not put much weight behind its program in the end, allowing China’s silk road proposal to overshadow its concept.

US Stance on OBOR Represents Greater Weakness in Foreign Policy

President Trump has failed to devise a clearly defined position toward Asia and has even failed to grasp the importance of existing protocol, such as the One China policy.

The US stance on OBOR is representative of a greater weakness in foreign policy in the Asian region. President Trump has failed to devise a clearly defined position toward Asia and has even failed to grasp the importance of existing protocol, such as the One China policy. Trump’s childish threats toward North Korea with regard to its nuclear programme and to China and South Korea in terms of trade have worsened relations in the region while raising the spectre of an American economic or military attack.

This can be contrasted to former President Obama’s stance on Asia overall. Obama refocussed US attention from Europe to Asia in a “pivot to Asia”. This policy was often construed to mean that the US would increase activity in the Asian region in order to counterbalance China’s importance in the region using both soft and hard power, via trade agreements such as the Trans Pacific Partnership and military deployments.

Conclusion

The absence of an Asia or China policy under President Trump is evident in the administration’s lack of clear position on OBOR. This deficiency only serves to highlight China’s potential gains from the expansive programme, and will allow for the eastern nation to increase economic and political power.

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About the Author

Sara Hsu is an Associate Professor of Economics at the State University of New York at New Paltz, and have published over six books and fifteen journal articles on the Chinese economy and financial sector. Hsu is a Forbes contributor and a frequent guest on CGTN.

References

1. National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China. 2015. “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road”. http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html, March 28.
2. Xinhua. 2017. Full text: List of deliverables of Belt and Road forum. http://news.xinhuanet.com/english/2017-05/15/c_136286376.htm, May 15.
3. Xinhua. 2016. “China takes Qatar key partner for belt and road initiative: FM”. http://news.xinhuanet.com/english/2016-05/11/c_135351700.htm, May 11.
4. Hutt, David. 2017. “Laos is a key link for China’s Obor ambitions”, http://www.atimes.com/article/laos-key-link-chinas-obor-ambitions/, July 15.
5. Xinhua. 2017. “Malaysia says it stands to reap benefits from Belt and Road Initiative”, http://news.xinhuanet.com/english/2017-10/27/c_136710199.htm . October 27.
6. Baumgartner, Pete. 2017. “China’s Massive ‘One Road’ Project Largely Bypasses Russia, But Moscow Still On Board”, https://www.rferl.org/a/russia-china-one-belt-one-road-project-putin-xi/28579849.html, June 26.
7. Wu, Gang. 2017. SOEs Lead Infrastructure Push in 1,700 “Belt and Road” Projects. http://www.caixinglobal.com/2017-05-10/101088332.html, May 9.
8. Hsu, Sara. 2017. China’s New Silk Road Project May Be Too Big To Succeed. https://www.huffingtonpost.com/entry/china-silk-road_us_
5935a553e4b0099e7fae2fd2
9. Agencies. 2017. “As China opens its One Belt One Road summit, anti-CPEC protests erupt in PoK”, https://timesofindia.indiatimes.com/world/pakistan/as-china-opens-its-one-belt-one-road-summit-anti-cpec-protests-erupt-in-pok/articleshow/58675499.cms, May 15.
10. Press Trust of India. 2017. “US Backs India On ‘One Belt One Road’, Says It Crosses ‘Disputed Territory’.” https://www.ndtv.com/world-news/on-belt-and-road-us-backs-india-says-it-crosses-disputed-territory-1758271, October 4.
11. IANS. 2017. “China says it’s not thrusting Belt and Road”, http://economictimes.indiatimes.com/news/international/world-news/china-says-its-not-thrusting-belt-and-road/articleshow/60971921.cms, October 6.
12. Trentmann, Nina. 2017. “Western Firms Bet Big on China’s Billion-Dollar Infrastructure Project”, https://www.wsj.com/articles/western-firms-bet-big-on-chinas-billion-dollar-infrastructure-project-1494790205, May 14.
13. Perlez, Jane. 2014. “U.S. Opposing China’s Answer to World Bank” https://www.nytimes.com/2014/10/10/world/asia/chinas-plan-for-regional-development-bank-runs-into-us-opposition.html?_r=0., October 9.
14. Kim, Younkyoo and Fabio Indeo. 2013. The new great game in Central Asia post 2014: The US “New Silk Road” strategy and Sino-Russian rivalry.  Communist and Post-Communist Studies 46 (2013) 275–286

Eclipse of US Free-Trade Legacy in Americas and Asia Pacific

US Free-Trade Legacy in Americas and Asia Pacific

By Dan Steinbock

Recently, all major US free trade deals in North America, Latin America and Asia Pacific have fallen under fire. As American legacy in free trade is dimming, there is a new opportunity for real free trade in Asia Pacific.

Recently, Canadian Prime Minister Justin Trudeau concluded a visit to China. The joint talks about a free trade pact began over a year ago. As Trudeau left Beijing, Western media headlined “Trudeau leaves China empty-handed”, while Chinese Foreign Ministry said that “both China and Canada showed willingness to negotiate and sign a free trade agreement”.

In reality, the world of free trade is now in the kind of flux that has not been since the post-1945 era.

If the US withdraws from the North American Free Trade Agreement (NAFTA), that would start a six-month legal process before official termination. While President Trump may see this as a negotiating tool to force Canada and Mexico to accept its demands, the latter may use the time to complete trade talks with Brazil and the European Union (EU).

After the fifth round of NAFTA talks ended amid simmering tensions, Canada and Mexico are hedging their bets against a potential NAFTA collapse by pushing for deals with new partners, particularly with China and other Asian countries.

The Rise and Fall of NAFTA

NAFTA is not just another free-trade agreement. It is America’s post-Cold War blueprint for other free traded agreements (FTAs).

NAFTA is not just another free-trade agreement. It is America’s post-Cold War blueprint for other free traded agreements (FTAs). It came into force in 1994, amid the globalisation boom. Despite fanfares, the key leaders faced a brutal aftermath.

President Bill Clinton’s alleged abuses of public power led to a special counsel in the 1990s. After Prime Minister Brian Mulroney was blamed for fraud by the Canadian Justice Department, he won an out-of-court settlement but reportedly neglected to inform the courts about payments that could have affected the settlement. Mexico’s President Carlos Salinas was appointed WTO’s Director-General and left Mexico as his brothers were prosecuted in a multimillion dollar fraud case; his older brother, a figure in cocaine cartel trade, was convicted for murder; the younger brother was found dead with a plastic bag strapped around his head.

In public, NAFTA was promoted as a receipt for regional success in the US, Canada, and Mexico. Yet, its record has proved mixed. While the agreement has benefited consumers in three countries, it has also contributed to investment outflows, unemployment and offshoring.

Recently, US officials have sought to subdue NAFTA tensions by extending the timetable for renegotiations but that has just poured oil on the simmering fire. In Mexico, tight elections in mid-2018 will complicate the NAFTA talks; in Canada, conservatives are positioning for 2019 elections. 

The Rise and Fall of FTAA

Yet, in the 1990s, Washington’s trade bureaucrats embraced the NAFTA as a blueprint that could be expanded and extended elsewhere. The proposed Free Trade Agreement of the Americas (FTAA) was the first case in point.

Venezuela’s Hugo Chavez condemned the FTAA as a “tool of imperialism”. However, Latin America’s leaders, including then presidents of Brazil, Luiz Inácio Lula da Silva, and Argentina, Néstor Kirchner, did not oppose the FTAA but demanded the pact to eliminate US agriculture subsidies, effective access to foreign (read: US) markets and consideration towards their member states’ needs.

In contrast, Washington sought to extend NAFTA with non-trade-related concessions through the FTAA. Instead of opening South America to free trade, the FTAA split the region into two blocs, as President Lula had predicted.

Historically, the TPP was déjà vu all over again. Not only did it split Asia Pacific; it also divided the United States from within.

The Rise and Fall of TPP

As he had pledged in the campaign trail, Trump killed the Trans-Pacific Partnership (TPP), President Obama’s legacy deal, during his first day in office. But the move did not come out of the blue.

Through the Cold War, most Americans still believed in international engagements, which had bipartisan support in Washington. After the Cold War, Americans have grown more skeptical, even hostile to international commitments.

Historically, the TPP originated from a 2005 free trade deal among Brunei, Chile, New Zealand and Singapore. Its original version had more economic, transparent and inclusive foundations. After 2010, Washington began to lead talks for a significantly expanded FTA, which reflected US interests in Asia and Americas. So the talks were assigned to the new US Trade Representative Michael Froman, a former security and Soviet Union expert.

The new TPP was an integral part of Obama’s “pivot to Asia”. That’s why these negotiations were more geopolitical, secretive and exclusive by nature and China was excluded from the pact.

After the US 2016 election, some TPP partners began to push a revised TPP without the US. In the process, many of them – including Japan – began to hedge between a revised TPP, a bilateral free trade deal with the US, and China-led talks at a Regional Comprehensive Economic Partnership (RCEP).

In November, 11 countries announced their commitment to resurrecting the TPP, without the US. But a new deal would have to be signed and ratified by each country.

Toward Real Free Trade in Asia Pacific

What Asia Pacific really needs is an inclusive free trade agreement. No sustainable free trade pact in the region can ignore either China or the United States, or both.

In fact, the idea of free trade in Asia Pacific has been around since at least 1966 when Japanese economist Kiyoshi Kojima advocated a Pacific Free Trade agreement. Practical measures ensued during the 1994 meeting in Indonesia, when APEC leaders opted for free and open trade and investment in Asia Pacific.

In 2006, C. Fred Bergsten, then chief of the influential US think-tank Peterson Institute for International Economics, made a forceful statement in favour of the Free Trade Area of the Asia Pacific (FTAAP). If the agreement could be achieved, he argued, it would represent the largest single liberalisation in history.

Oddly enough, the Obama Administration set the FTAAP aside to focus on the geopolitical TPP talks.

What Asia Pacific really needs is an inclusive free trade agreement. No sustainable free trade pact in the region can ignore either China or the United States, or both. Perhaps that’s why China now seeks to couple its One Road One Belt initiative with a renewed effort at the FTAAP that would be broader and more inclusive than all past efforts.

The original, shorter commentary was published by South China Morning Post (Hong Kong) on December 18, 2017. 

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About the Author

Dr. Dan Steinbock is Guest Fellow of Shanghai Institutes for International Studies (SIIS), see http://en.siis.org.cn/. The commentary is part of his SIIS project “China in the Era of Economic Uncertainty and Geopolitical Risk”. For his global advisory activities and other affiliations in the US and Europe, see http://www.differencegroup.net/

Runaway Train Towards Full Digitisation of Money and Labour

By Peter Koenig

The other day I was in a shopping mall looking for an ATM to get some cash. There was no ATM. A week ago, there was still a branch office of a local bank – no more, gone. A Starbucks will replace the space left empty by the bank. I asked around – there will be no more cash automats in this mall – and this pattern is repeated over and over throughout Switzerland and throughout western Europe. Cash machines gradually but ever so faster disappear, not only from shopping malls, also from street corners. Will Switzerland become the first country fully running on digital money?

This new cashless money model is progressively but brutally introduced to the Swiss and Europeans at large – as they are not told what’s really happening behind the scene. If anything, the populace is being told that paying will become much easier. You just swipe your card – and bingo. No more signatures, no more looking for cash machines – your bank account is directly charged for whatever small or large amount you are spending. And naturally and gradually a ‘small fee’ will be introduced by the banks. And you are powerless, as a cash alternative will have been wiped out.

The upwards limit of how much you may charge onto your bank account is mainly set by yourself, as long as it doesn’t exceed the banks tolerance. But the banks’ tolerance is generous. If you exceed your credit, the balance on your account quietly slides into the red and at the end of the month you pay a hefty interest; or interest on unpaid interest – and so on. And that even though interbank interest rates are at a historic low. The Swiss Central Bank’s interest to banks, for example, is even negative; one of the few central banks in the world with negative interest, others include Japan and Denmark.

When I talked recently to the manager of a Geneva bank, he said, it’s getting much worse. “We are already closing all bank tellers, and so are most of the other banks.” Which means staff layoffs – which of course makes it only selectively to the news. Bank employees and managers must pass an exam with the Swiss banking commission, for which they must study hundreds of extra hours within a few months to pass a test – usually planned for weekends, so as not to infringe on the banks’ business hours. You got two chances to pass. If you fail you are out, joining the ranks of the unemployed. The trend is similar throughout Europe. The manager didn’t reveal the topic and reason behind the “retraining” – but it became obvious from the ensuing conversation that it had to do with the ‘cashless overtake’ of people by the banks. These are my words, but he, an insider, was as concerned as I, if not more.

Surveillance is everywhere. Now, not only our phone calls and e-mails are spied on, but our bank accounts are too. And what’s worse, with a cashless economy, our accounts are vulnerable to be invaded and robbed by the state, by thieves, by the police, by the tax authority, by any kind of authority – and, of course, by the very banks that have had your trust for all your life. Remember the “bail-in”, the infamous “hair-cut”, first tested in early 2013 in Cyprus? – Bail-ins will become common practice for any bank that has abused its greed for profit and would go belly-up, if there wouldn’t be all those deposits from customers. Even shareholders are not safe. This has been quietly decided some two years ago, both in the US and also by the non-elected white-collar mafia, the European Commission – EC.

The point is, “banks über alles” (“banks above everything”, following Hitler-Nazis’ battle cry “Deutschland Über Alles”). And which country would be better suited to introduce ‘cashless living’ than Switzerland, the epicentre – along with Wall Street – of international Zion-banking. Bank’s will call the shots in the future, on your personal economy and that of the state. They are globalised, following the same principles of deregulation worldwide. They are in collusion with globalised corporations. They will decide whether you eat or become enslaved. They are one of the tree major weapons of the 0.1 % to beat the 99.9% into submission. The other two at the service of the master hegemon’s Full Spectrum Dominance drive, are the war- and security industry and the ever more brazen propaganda lie-machine. Banking deregulation has become another little-propagated rule of the World Trade Organization (WTO). Countries who want to join WTO, must deregulate their banking sector, prying it open for the globalised money-sharks, the Zion-controlled banking conglomerates.

Retrenchment of personnel in the banking employment market is increasing. The news only selectively reports on it, when there are large amounts of jobs being eliminated. Statistics lie everywhere, in the EU as well as in Washington. – Why scare people? They will be scared enough, when they are offered jobs at salaries on which they can barely survive. That’s happening already. It used to be a tactic applied for developing countries: Keep them enslaved by debt and low pay, so they don’t have time and energy to take to the streets to protest – they have to look for food and work, whatever menial jobs they can get, to feed their families. It’s now hitting Europe, the West in general. Some countries way more than Switzerland.

Cashless trials are going on elsewhere, especially in Nordic countries, where selected department stores and supermarkets do no longer take cash. Another monstrous trial has been carried out in India a year ago, in the last quarter of 2016, where from one day to another 80% of the most popular money bills were eliminated, and could only be exchanged for new bills by banks and through bank accounts. And this in an almost pure cash country, where half the population has no bank account, and where remote rural areas have no banks. People were lied to so that the sudden introduction had maximum effect.

It caused massive famine and thousands of people died, as they had suddenly no acceptable cash to buy food – all instigated by the USAID Project “Catalyst”, in connivance with the Indian rulers and central bank. It was a trial. It was a disaster. If it works in India with 1.3 billion people, two thirds of whom live in rural areas and most of them have no bank account, the scam could be applied in any developing country – see also India – India, Death by Demonetization: “Financial Genocide”, The Crime of The Century.1

What is going on in Switzerland is a trial with the high end of populations. How is the upper crust taking to such radical changes in our daily monetary routine? – So far not many protests have been noticed. There is a weak referendum being launched by a group of people who want the Swiss Central Bank be the only institution that can make money, like in the “olden days”. Though a very respectable idea, the referendum has no chance in today’s banking and debt-finance environment, where youth is being indoctrinated with the idea that swiping your card in front of an electronic eye is cool. Today, most money is debt-money, made by private banks, like elsewhere in Europe and the US. Worldwide banking deregulation, initiated by the Clinton Administration in the 1990s – today a rule for any member of the World Trade Organization (WTO) – has made this all possible.

Digitisation and robotisation is just beginning. Staffed check-out counters in supermarkets are disappearing; most of them are converted into automatic check-outs – and that happened within the last year. – Where are the employees gone? – I asked an attendant who helped the customers through the self-checkout. “They joined the ranks of unemployed,” she said with a sad face, having lost several of her colleagues. “It will hit me too, as soon as they don’t need me anymore to show the customers on how to auto-pay.”

Bitcoins

Digitisation also includes the cryptocurrencies, the blockchain moneys floating around – of which the most famous one is Bitcoin. It brings digitisation of money to an apex. The system is complex and seems to lend itself only to “experts”. Cryptocurrencies are fiat money, based on nothing, not even on gold. Cryptos are electronic, invisible and highly, but highly speculative, an invitation for gangsters and fraudsters. It looks as if cryptocurrencies were designed for crooks and speculators.

Bitcoin was allegedly invented by Satoshi Nakamoto which could be a pseudonym of a man or a group of people, suspected to live in the US. “Nakamoto’s” identity is believed to be commonwealth origin, due to the vocabulary used in his writings. One of his close associates is purportedly a Swiss coder, who is also an active member of the cryptocurrency community. He is said to have graphed the time stamp of each of Nakamoto’s more than 500 bitcoin forum posts. Such“‘forum posts” exist in the thousands, worldwide. They form an elaborate network based on algorithms.

Cryptos are electronic, invisible and highly, but highly speculative, an invitation for gangsters and fraudsters. It looks as if cryptocurrencies were designed for crooks and speculators.

Bitcoin was formally created in January 2009 with a fix amount of 21 million “coins”, of which more than half are already in circulation, or “mined” as the jargon goes, and 1 million, or about 4.75% (of the total) can be traced to Nakamoto. This, based on the current market value corresponds to close to US$15 billion. Today’s overall Bitcoin market cap is more than US$ 315 billion. The market is highly volatile. Drastic daily fluctuations are common, especially within the last 12 months. If one of the major Bitcoin holders, like Nakamoto, would capitalise his profit by selling a big portion of his holdings, the Bitcoin price would be in free fall, functioning pretty similar to the regular stock exchange.

On 24 August 2010, when Bitcoin was first traded, its value was US$ 0.06. On 26 December 2017, the coin was worth US$ 15,770, an increase of more than 250,000%. In the last twelve months, its value increased from about US$ 800 in December 2016 to a peak of close to US$ 20,000 in mid-December 2017, an increase of nearly 2,500 %. However, in the last 7 days, after several ups and downs, the price has dropped by about US$ 680, i.e. by more about 4%, and the trend – is uncertain. Perhaps a sign of quick profit-taking? This all shows how unstable this cryptocurrency is, apparently much more so than trading corporate shares on the stock market. And certainly not apt as a every-day currency base.

The number of cryptocurrencies available over the internet as of 27 November 2017 is above 1300 and growing. A new cryptocurrency can be created at any time and by anybody. By market capitalisation, Bitcoin is presently the largest blockchain network (database network, storing data in different publicly verifiable places), followed by Ethereum, Bitcoin Cash, Ripple and Litecoin.

Bitcoin may be the next bubble, bringing down a parallel economy which has already its fingers clawing into our regular western economy. Cryptocurrencies are officially forbidden in Russia and China, though stopping cryptocurrency dealings by individuals is hardly possible. They do not touch the traditional banking system. That’s why major banks hate them. They circumvent the banking suckers, prevent them from making ever higher profits from horrendous commissions, against which the people at large are powerless.

Here is Bitcoin’s positive side. It escapes bank and state controls. If countries’ economies were run on Bitcoins or another cryptocurrency, they would escape US sanctions which function only because western currencies are foster-children of the US-dollar, hence, subject to the dollar hegemony; meaning all international transactions have to pass through a US bank. A typical case is ‘banking blockades’, when Washington decides to stop all international transactions of a country until it submits to the wishes of the empire. It is blackmail; totally illegal, but unless there is a monetary alternative, the (western) world is subject to this system.

Argentina is a case in point. Buenos Aires was forced by a New York judge in June 2014 to pay a New York based Vulture Fund US$1.6 billion, an illegal ruling according to a UN Resolution. Argentina refused to pay, so the judge, interfering in a sovereign nation, blocked more than US$500 million of Argentina’s debt payment to creditors, bringing the country to the brink of a second bankruptcy in 13 years. Eventually, neoliberal Macri negotiated a deal with the Vultures and made a payment in excess of US$ 400 million.

This US blackmail would not have been possible had Argentina been able to make its foreign transactions in Bitcoins or another cryptocurrency. Venezuela has created the “petro”, a hydrocarbon and gold based national cryptocurrency to escape dollar-caused inflation and for some of its foreign transactions, thereby also escaping the sanctions stranglehold of Washington. Had Greek and Cyprus citizens had a cryptocurrency alternative to the euro, they would not have been subject to the cash control imposed by the European Central Bank.

On the other hand, funding of terror organisations, like ISIS, cannot be disrupted, if the terror group deals in cryptocurrencies. – This shows, for good or for bad, Bitcoins, or cryptocurrencies are for now unique in resisting censure and blackmail, or any kind of authoritarian outside interference in electronic money transactions.

Cashless Living

For the latter we must wake up to see the propaganda fraud going on before our eyes, and to resist the robot and electronic money onslaught being unleashed on us.

If Switzerland accepts the change to digital money, a country where until relatively recently most people went to pay their monthly bills in cash to the nearest post office – then we, in the western world, are on a fast track to total enslavement by the financial institutions. It goes, of course, hand-in-hand with the rest of systematic and ever faster advancing oppression and robotisation of the 99.9% by the 0.1%.

We are currently at cross-roads, where we still can either decide to follow the discourse of a new electronic monetary era, with ever less to say by “We, the People” about the product of our work, our money; or whether, We, the People, will resist a banking/finance system that has full control over our financial resources, and which can literally starve us into submission or death, if we don’t behave. In order to resist we need an alternative monetary system or monetary network, away from the dollar-euro hegemony – and cryptocurrencies, as structured today, are no alternative.

All the more important is the ascent of another economy, another payment and transfer scheme which already exists in the East, the Chinese International Payment System (CIPS), effectively a replacement of SWIFT, totally privately run and linked to the US-dollar and US banks. The world needs a multipolar currency system, based on the real economic output of a country or society, as is the case in China and Russia, not one based on fiat money as is the current western economy.

Will Switzerland, the stronghold of world finance, along with New York, London and Hong Kong, resist the temptation of increased profit, power and control, offered by digital money? – We, the People, have still the chance to decide either for continuing rotting in a fraud economy, based on wars and greed – for which digital money, exacerbated by cryptocurrencies, is a new tool for a new maximising profit bonanza on the back of the common people; or do we opt for an honest future and for a life that leaves us free to take sovereign political and monetary decisions in a full cash society. For the latter we must wake up to see the propaganda fraud going on before our eyes, and to resist the robot and electronic money onslaught being unleashed on us.

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About the Author

koenig-webPeter Koenig is an economist and geopolitical analyst. He is also a former World Bank staff and worked extensively around the world in the fields of environment and water resources. He lectures at universities in the US, Europe and South America. He writes regularly for Global Research, ICH, RT, Sputnik, PressTV, The 4th Media, TeleSUR, TruePublica, The Vineyard of The Saker Blog, and other internet sites. He is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed – fiction based on facts and on 30 years of World Bank experience around the globe. He is also a co-author of The World Order and Revolution! – Essays from the Resistance.

Reference

1. http://www.globalresearch.ca/india-death-by-demonetization-financial-genocide-the-crime-of-the-century/5569859

Jerusalem – The Straw that Breaks the Empire’s Back?

By Peter Koenig

 

When President Trump on 6 December 2017 declared unilaterally Jerusalem as the capital of Israel to where the US Embassy shall relocate, he violated UN Resolutions, international law, common sense and went against all diplomatic efforts to eventually bring peace to the region, not to speak about 130 countries that have already voiced opposition to such a decision. And this, before the Peace Process is coming to an end, at which point the 1993 Oslo Peace Accords would play out. They are also called the Road Map for Peace, between Palestine and Israel, which foresees a two-state solution and accordingly a mutual decision on Jerusalem becoming the capital city for both Palestine and Israel. These Oslo Peace Accords are still valid today.

But Mr. Trump may not have a clue that such a Peace Accord even exists. And his handlers obviously had no interest of telling him. – And even if they did, it would make no difference, because the exceptional nation has no scruples demolishing any agreements of the past, regardless whether or not it – the US of A – were party to the shaping of them. – See also the Iranian Nuclear Deal.

By the same token, Washington does not give a hoot about international law and UN Resolutions. We are talking about the only and perfect rogue state the world has known in the past two centuries, by far surpassing, actually without any comparison with the western customarily accused villains, like Zimbabwe, North Korea, Iran, Syria, Venezuela, Cuba – and all those that refuse to bend to the Chief-Rogue-State, the United States of America.

In fact, what Trump has done, was just confirming what previous US Administrations had already as an objective, namely following the so-called “Jerusalem Embassy Act of 1995“, with which the US Congress already 20 years ago, requested and prepared this step by legislation that says, “Since 1950, Jerusalem is the Capital of the State of Israel…”. Never mind and, of course not reported by the mainstream media, that immediately after promising the US Embassy would be moved to Jerusalem, Trump signed a “waiver” postponing the move indefinitely, or until the international situation becomes “clear(er)”. – Who does the US Congress think they are – God the Almighty? To decide over the “Holy City”, Jerusalem, the historic centre of the three-religion monotheist culture of 5,000 years of Judo-Christianism, also incorporating Islam, is an act of arrogance without comparison.

This insensitive Trump decision or affirmation at this point in time – another one in his basket of disasters – brought everything else but peace to the region, and especially to Palestine. It caused unrest, angry demonstrations from people who are basically fighting with their bare hands; protests which were immediately oppressed with firepower and violence by the Israeli military and police force, killing people in the Israel imposed ghetto of Gaza and the West Bank – i.e. in Palestine, what should become an independent state.

This insensitive Trump decision or affirmation at this point in time – another one in his basket of disasters – brought everything else but peace to the region, and especially to Palestine.

Instead of bringing peace, Trump killed the aspiration of peace, he de facto killed the notion of a two-state solution – and he effectively isolated the US from literally the rest of the world. Was this a bold provocation inspired by Trump’s Zionist masters, a trial balloon to find out how much of impunity the world would tolerate?

At no time was even mentioned that Jerusalem, if anything, might also be the capital of Palestine. The Motherland of Israel, let’s not forget, Palestine, was ignored. Palestine was provoked into protests, just to be brutally suffocated by the Israeli defense Forces (IDF). They do this with sadistic pleasure, like killing helpless flies. All this prompted by the criminal and irresponsible behaviour of the President of the United States, the exceptional Nation – or rather his invisible handlers behind the throne.

But the propaganda mantra must go on – the lie that declaring Jerusalem the capital of Israel was good for the Middle East, was good for peace, was and still is repeated over and over again, like a mantra, tras-mantra, tras-mantra – by Trump and his mannequins, his foreign affair puppets, Rex Tillerson and Nikki Haley, who is masquerading as Washington’s UN Ambassador, repeating over and over again, the same lie, the same lie, the same lie, in the hope, as the common saying goes after Goebbels, Hitler’s Propaganda Minister, if repeated enough, the lie becomes the truth. Do these clowns really believe that if a world renown repeat-liar keeps repeat-lying the globes populace believes that the repeat-lie becomes the truth?

The people at large have moved forward towards awakening since the horrendous murderous lies about Iraq with weapons of mass destruction that weren’t; about Gaddafi horrors committed to his people, which he didn’t, to the contrary, he provided them with free education, health services and cutting edge medical facilities, with free infrastructure and a broad social safety net; or UN-proven lies about Bashar Al-Assad’s poison gas used against his own people; the lies about Iran’s nuclear program that never was; the lies about Russia’s meddling in Ukraine, when it is now amply proven that the Maidan massacre was planned and carried out via the US Embassy in Kiev and through US and NATO military and paid mercenaries; the lies about the US and NATO fighting against ISIS which Washington created – and the list of lies go on – endlessly.

The entire vassal state of the European Union, country after country – led by the three “Ms”, Germany’s Merkel, France’s Macron, and the UK’s May – have said they would not go along with Trump’s decision and moving their Embassies to Jerusalem. Bravo! – Will this decision last, or will there be some high-power arm-twisting by Washington? – Is Washington still able to do arm-twisting, economic sanctions? Haven’t they noticed yet, that the west, even the hitherto puppet West, is gradually but surely moving away from the Atlantic Alliance towards the East. Probably for purely selfish economic and financial reasons, though some western politicians may look deeper and see the light, what I call, the Future is in the East.

What is also mazing though, is that nobody seems to even question the basics – the right of the self-styled emperor Trump, the typical emperor without cloths – intervening with the decision of another nation’s capital city. Of course, we know that Trump’s buddy and family friend, Bibi Netanyahu, holds and/or twists arms (smilingly) with the Donald on Jerusalem through the infamous family relations of the two warrying aggressors and through the seemingly unbeatable Zion-power the western world is being subjected to.

Trump, with this unwise decision, may have brought Jerusalem back to the 12th Century, the ages of the Crusades, when in 1187, on behalf of the Muslim Ayyubids Dynasty, Sultan Saladin, a Sunni Muslim, of Kurdish origins, besieged and eventually re-conquered the so-called Christian Kingdom of Heaven, invaded and stolen by the “Christian” emperors of Rome two-hundred years earlier.

Perhaps Mr. Trump nilly-willy has started a new Arab Crusade against the artificially imposed Kingdom of Israel, artificially implanted in the land of Palestine, implanted by the Zionists who used the power of the British Empire which at that time was colonising Palestine, to corrupt the freshly created UN system in 1948 to cut up and destroy Palestine – see the Balfour Declaration, below. The British Foreign Secretary, Arthur Balfour, wrote on 2nd November 1917, hundred years ago, to Lord Rothschild, a leader of the British Jewish community, suggesting the carving up of Palestine the creation of a State of Israel. The “proposal” was to be transmitted to the Zionist Federation of Great Britain and Ireland. Lord Rothschild was co-drafter of the letter. The text of the declaration was made official by publication in the media on 9 November 1917.

 


 

The idea was eventually carried out by a UN Resolution in 1948, bringing about the State of Israel on 14 May 1948, the day Palestine became a non-country and enslaved to Israel.

Behind the Trump strategy lays a broader objective, the creation of a Greater Israel, that would stretch from the Euphrates to the Nile, cutting through Saudi Arabia, absorbing Jordan, a large portion of Syria and most of Egypt’s Sinai Peninsula. This is to make Israel a Middle Eastern super-power, sitting on a huge junk of the sub-continent’s energy wealth and on most of the Middle east’s fresh water reserves, on behalf of the Anglo-Zionist Empire.

It is yet to be seen whether this bold and aggressive move by Trump went a step too far; whether this impunity is the straw that may break the empire’s back.

It is yet to be seen whether this bold and aggressive move by Trump went a step too far; whether this impunity is the straw that may break the empire’s back.

What if nobody – not even the traditional allies – participates in this nefarious endeavour to move their embassies from Tel Avia to Jerusalem?

What if sanctions that Washington undoubtedly may dish out to those who do not obey its orders do no longer work?

What if this Trump lunacy opens the gates to the East even further for all those who have been fed-up with the empire’s financial-, fury-and-fire, and propaganda-crusades to conquer the world; and that this Washington insanity leads them to a new healthier, promising and honest economic system striving towards equality – of which we know already the fundamental bedrock – the multi-trillion New Silk Road, President Xi’s One Belt Initiative?

 

Featured Image: Israeli Prime Minister Benjamin Netanyahu shakes hands with President Donald Trump | AP Photo

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About the Author

koenig-webPeter Koenig is an economist and geopolitical analyst. He is also a former World Bank staff and worked extensively around the world in the fields of environment and water resources. He lectures at universities in the US, Europe and South America. He writes regularly for Global Research, ICH, RT, Sputnik, PressTV, The 4th Media, TeleSUR, TruePublica, The Vineyard of The Saker Blog, and other internet sites. He is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed – fiction based on facts and on 30 years of World Bank experience around the globe. He is also a co-author of The World Order and Revolution! – Essays from the Resistance.

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