Monday, April 26, 2010
Developing countries get a bigger say in the World Bank
From The Hindu
At the end of two days of the annual Spring Meetings of the International Monetary Fund and the World Bank, its constituents endorsed “voice reform” to increase the voting power of developing and transition countries (DTC) in the World Bank by 3.13 per cent, bringing their proportional voice to 47.19 per cent.
World Bank members including India also agreed to boost the “selective capital” of the institution by over $86 billion along with giving developing countries slightly over 47.19 per cent of the total votes. The advanced economies’ share under the new arrangements would drop to under 52.81 per cent.
However Ashok Chawla, Secretary, Department of Economic Affairs Leader of the Indian Delegation to the Development Committee Representing the Constituency consisting of Bangladesh, Bhutan, India and Sri Lanka, said, “What we have in front of us today is not a perfect set of arrangements. It is a compromise package.” Mr. Chawla argued that while a few of the outcomes that the DTC had hoped for had been met, the new structure still had flaws.
He argued that for the future, economic weight must be based on a blend that gives more weight to GDP at purchasing power parity, which captures the dynamism of economic growth and the real economy much better. Mr. Chawla said, “We can live with it today. But the future composition of the blend needs to be debated further.”
At the meetings, the first steps towards voice reform in the International Finance Corporation were also announced. The restructuring included an increase in basic votes and a selective capital increase of $200 million according to which DTC voting power would rise to 39.48 per cent and “move towards a broad and flexible alignment with IBRD [World Bank] shareholding.” Regarding the IFC restructuring Mr. Chawla said, “We support the increase in Basic Votes to 5.55 percent.”
At the end of two days of the annual Spring Meetings of the International Monetary Fund and the World Bank, its constituents endorsed “voice reform” to increase the voting power of developing and transition countries (DTC) in the World Bank by 3.13 per cent, bringing their proportional voice to 47.19 per cent.
World Bank members including India also agreed to boost the “selective capital” of the institution by over $86 billion along with giving developing countries slightly over 47.19 per cent of the total votes. The advanced economies’ share under the new arrangements would drop to under 52.81 per cent.
However Ashok Chawla, Secretary, Department of Economic Affairs Leader of the Indian Delegation to the Development Committee Representing the Constituency consisting of Bangladesh, Bhutan, India and Sri Lanka, said, “What we have in front of us today is not a perfect set of arrangements. It is a compromise package.” Mr. Chawla argued that while a few of the outcomes that the DTC had hoped for had been met, the new structure still had flaws.
He argued that for the future, economic weight must be based on a blend that gives more weight to GDP at purchasing power parity, which captures the dynamism of economic growth and the real economy much better. Mr. Chawla said, “We can live with it today. But the future composition of the blend needs to be debated further.”
At the meetings, the first steps towards voice reform in the International Finance Corporation were also announced. The restructuring included an increase in basic votes and a selective capital increase of $200 million according to which DTC voting power would rise to 39.48 per cent and “move towards a broad and flexible alignment with IBRD [World Bank] shareholding.” Regarding the IFC restructuring Mr. Chawla said, “We support the increase in Basic Votes to 5.55 percent.”
Labels: developing countries, DTC, International Monetary Fund, Narayan Lakshman, World Bank
Tuesday, March 16, 2010
U.S. Fed to hold rates low as economy slowly improves
From The Hindu
Interest rates will be held in the range of 0-0.25 per cent for an extended period in anticipation of “low rates of resource utilization, subdued inflation trends, and stable inflation expectations”, the United States Federal Reserve’s said today.
Following the Fed’s announcement, equity markets closed at an 18-month high and US Treasury yields declined, according to reports.
The Fed’s Federal Open Market Committee, which last met in January, hinted at improving conditions in the U.S. economy, pointing out that business spending on equipment and software rose “significantly” and household spending expanded moderately. However the latter remained constrained by high unemployment, modest income growth, lower housing wealth, and tight credit, the FOMC cautioned.
The FOMC added a note of explanation on its efforts to bolster the mortgage finance market through credit securities purchases. “To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve has been purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt,” it said.
Commenting on the overall macroeconomic picture the FOMC said that economic activity continued to strengthen and that “the labor market is stabilizing”. However, it added that employers remain reluctant to add to payrolls. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.
Nine out of ten members of the FOMC voted for the FOMC to hold rates low. The one dissent vote came from Thomas M. Hoenig, who held that “continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the build-up of financial imbalances and increase risks to longer-run macroeconomic and financial stability.”
Interest rates will be held in the range of 0-0.25 per cent for an extended period in anticipation of “low rates of resource utilization, subdued inflation trends, and stable inflation expectations”, the United States Federal Reserve’s said today.
Following the Fed’s announcement, equity markets closed at an 18-month high and US Treasury yields declined, according to reports.
The Fed’s Federal Open Market Committee, which last met in January, hinted at improving conditions in the U.S. economy, pointing out that business spending on equipment and software rose “significantly” and household spending expanded moderately. However the latter remained constrained by high unemployment, modest income growth, lower housing wealth, and tight credit, the FOMC cautioned.
The FOMC added a note of explanation on its efforts to bolster the mortgage finance market through credit securities purchases. “To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve has been purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt,” it said.
Commenting on the overall macroeconomic picture the FOMC said that economic activity continued to strengthen and that “the labor market is stabilizing”. However, it added that employers remain reluctant to add to payrolls. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.
Nine out of ten members of the FOMC voted for the FOMC to hold rates low. The one dissent vote came from Thomas M. Hoenig, who held that “continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the build-up of financial imbalances and increase risks to longer-run macroeconomic and financial stability.”
Labels: FOMC, global economy, global recovery, interest rates, Narayan Lakshman, U.S. Federal Reserve
Clinton downplays Israel-U.S. row
From The Hindu
Seeking to bring down the temperature in a deepening row involving the United States, Israel and Palestine, Secretary Hillary Clinton said, “We have an absolute commitment to Israel’s security… [and] a close, unshakable bond between the United States and Israel.”
However “that doesn’t mean that we’re going to agree,” she added, in a reference to a March 9 Israeli announcement of further housing construction East Jerusalem, which came even as Vice President Joe Biden was in the region to build momentum for talks with Palestine.
The construction of Israeli dwellings on disputed territories has traditionally been a combustion point for the brittle relationship between Israel and Palestine; early on in his tenure President Obama petitioned Israeli Prime Minister Benjamin Netanyahu to halt further construction to give peace in the Middle East a chance.
Earlier this month the Vice President and the U.S. Special Envoy to the Middle East George Mitchell were in Jerusalem and Ramallah to take forward plans for indirect peace talks, the first in over a year, between Mr. Netanyahu and Palestinian President Mahmoud Abbas.
However in what appeared to be a snub to Mr. Biden and Mr. Mitchell the Israeli Interior Ministry announced that permission had been granted for 1,600 new housing units in East Jerusalem. In a strongly worded reaction Mr. Biden said, “I condemn the decision by the government of Israel to advance planning for new housing units in East Jerusalem.”
He said the substance and timing of the announcement was precisely the kind of step that undermined the trust needed right now and “runs counter to the constructive discussions that I’ve had here in Israel.” It was important to build an atmosphere to support negotiations, not complicate them, he added.
A few days later Mr. Netanyahu admitted that that the announcement of the new tenements plan during Mr. Biden’s visit had been “regrettable” and “hurtful,” according to reports – which also suggested that the announcement had even caught Mr. Netanyahu off-guard. The Israeli Prime Minister was also quoted as saying that his government would “examine the chain of events and to ensure procedures” to prevent such an episode from occurring in the future.
However there was no mention of a retraction of the housing construction plan, an omission that clearly angered Secretary Clinton.
On March 12 the State Department reported that she had spoken to Mr. Netanyahu to reiterate the U.S.’s “strong objections” to the announcement in terms of timing and substance; to make clear that the U.S. considered the announcement “a deeply negative signal about Israel’s approach to the bilateral relationship – and counter to the spirit of the Vice President’s trip”; and to reinforce that this action had “undermined trust and confidence in the peace process, and in America’s interests.”
Ms. Clinton’s call apparently did not come without consequences: this week Israeli media quoted Michael Oren, Israel's Ambassador to the U.S, as having told other Israeli officials that U.S.-Israeli relations were at their lowest point since 1975.
On Tuesday Ms. Clinton refuted the claim, saying “Oh, I don’t buy that.” She said that although the U.S. had expressed its dismay and disappointment it was also “committed to achieving the two-state outcome that is the goal.”
In an indication that the ball may lie in Mr. Netanyahu’s court she said, “But I think we’ll see what the next days hold and we’re looking forward to Senator Mitchell returning to the region and beginning the proximity talks.”
Seeking to bring down the temperature in a deepening row involving the United States, Israel and Palestine, Secretary Hillary Clinton said, “We have an absolute commitment to Israel’s security… [and] a close, unshakable bond between the United States and Israel.”
However “that doesn’t mean that we’re going to agree,” she added, in a reference to a March 9 Israeli announcement of further housing construction East Jerusalem, which came even as Vice President Joe Biden was in the region to build momentum for talks with Palestine.
The construction of Israeli dwellings on disputed territories has traditionally been a combustion point for the brittle relationship between Israel and Palestine; early on in his tenure President Obama petitioned Israeli Prime Minister Benjamin Netanyahu to halt further construction to give peace in the Middle East a chance.
Earlier this month the Vice President and the U.S. Special Envoy to the Middle East George Mitchell were in Jerusalem and Ramallah to take forward plans for indirect peace talks, the first in over a year, between Mr. Netanyahu and Palestinian President Mahmoud Abbas.
However in what appeared to be a snub to Mr. Biden and Mr. Mitchell the Israeli Interior Ministry announced that permission had been granted for 1,600 new housing units in East Jerusalem. In a strongly worded reaction Mr. Biden said, “I condemn the decision by the government of Israel to advance planning for new housing units in East Jerusalem.”
He said the substance and timing of the announcement was precisely the kind of step that undermined the trust needed right now and “runs counter to the constructive discussions that I’ve had here in Israel.” It was important to build an atmosphere to support negotiations, not complicate them, he added.
A few days later Mr. Netanyahu admitted that that the announcement of the new tenements plan during Mr. Biden’s visit had been “regrettable” and “hurtful,” according to reports – which also suggested that the announcement had even caught Mr. Netanyahu off-guard. The Israeli Prime Minister was also quoted as saying that his government would “examine the chain of events and to ensure procedures” to prevent such an episode from occurring in the future.
However there was no mention of a retraction of the housing construction plan, an omission that clearly angered Secretary Clinton.
On March 12 the State Department reported that she had spoken to Mr. Netanyahu to reiterate the U.S.’s “strong objections” to the announcement in terms of timing and substance; to make clear that the U.S. considered the announcement “a deeply negative signal about Israel’s approach to the bilateral relationship – and counter to the spirit of the Vice President’s trip”; and to reinforce that this action had “undermined trust and confidence in the peace process, and in America’s interests.”
Ms. Clinton’s call apparently did not come without consequences: this week Israeli media quoted Michael Oren, Israel's Ambassador to the U.S, as having told other Israeli officials that U.S.-Israeli relations were at their lowest point since 1975.
On Tuesday Ms. Clinton refuted the claim, saying “Oh, I don’t buy that.” She said that although the U.S. had expressed its dismay and disappointment it was also “committed to achieving the two-state outcome that is the goal.”
In an indication that the ball may lie in Mr. Netanyahu’s court she said, “But I think we’ll see what the next days hold and we’re looking forward to Senator Mitchell returning to the region and beginning the proximity talks.”
Labels: George Mitchell, Hillary Rodham Clinton, Joe Biden, Middle East, Narayan Lakshman, Netanyahu, Secretary of State, U.S. Special Envoy, Vice-President
Tuesday, March 02, 2010
Hillary in Latin-America: uphill all the way
Secretary of State Hillary Clinton with Argentina's President Cristina Fernandez (left) on Monday, during a week-long tour of Latin America.
From The Hindu
Hillary Clinton is midway through a week-long tour of Latin America, as she seeks to rescue the United States’ flagging image in the region.
The Secretary of State will wrestle with a host of thorny issues during her trip, most of which offer but a slim chance of success.
Starting out in Uruguay, where Ms. Clinton attended the inauguration of President José Mujica, she may well have bumped into co-attendee and Venezuelan President Hugo Chavez, one of the most vocal critics of U.S. foreign policy in all of the Southern Cone.
However any formal interactions with Chavez or Evo Morales of Bolivia were earlier ruled out by Assistant Secretary Arturo Valenzuela who said in Washington that “the only bilateral that is on the books is with Cristina Kirchner, the president of Argentina”.
With Venezuela, Bolivia and Ecuador precluded from Ms. Clinton’s itinerary the pressure is on the Secretary to make the most of her interactions with the relatively moderate leaders of Uruguay, Brazil, Argentina, Chile, Guatemala and Costa Rica.
Yet even within that group her mission is daunting, none more so than the U.S.’s ambition to persuade President Luiz Inácio Lula da Silva to back its efforts to rein in Iran’s nuclear ambitions. While the U.S. is pushing for tougher sanctions against Iran through the United Nations Security Council, Brazil, a non-permanent member of the Council, has indicated its opposition to this.
“The visit also comes as Brazil gears up for general elections in October, with President Lula’s chief of cabinet Dilma Rousseff and governor of São Paulo José Serra the likely rivals in the race for president.”, according to Peter DeShazo of the Centre for International and Strategic Studies.
Argentina may prove to be yet another disappointment. With the Secretary meeting Ms. Kirchner at the peak of a dispute with Britain over sea-routes access to the Falkland Islands, her unexplained cancellation of a visit to Buenos Aires is likely to have bruised egos further.
In Chile, where Ms Clinton will again meet a newly elected leader, President-elect Sebastián Piñera, post-earthquake recovery is likely to crowd out any prior agenda. Trade may especially be marginalised, a likely concern for the U.S. given China’s growing dominance in this area.
The recent creation of the Community of Latin American and Caribbean States, a rival to the Organisation of American States marks some of the frustrations with American hegemonic tendencies. The Community is “a regional organization, whose only clear feature so far is that it will exclude the U.S. and Canada”, according to Kevin Casas-Zamora of Brookings.
If there were any hopes here that things would be different under President Obama, they were belied by U.S. hostility towards Manuel Zelaya in Honduras, an ally of leaders like Chavez and Kirchner. The persistent embargo against all things Cuban has not won them any points for popularity either.
If Ms. Clinton is to win hearts and minds in the Lat-Am region, she will have to convince her audiences over the rest of the week that substantive changes in U.S. foreign policy engagement in the region will follow her earnest interlocutory efforts.
From The Hindu
Hillary Clinton is midway through a week-long tour of Latin America, as she seeks to rescue the United States’ flagging image in the region.
The Secretary of State will wrestle with a host of thorny issues during her trip, most of which offer but a slim chance of success.
Starting out in Uruguay, where Ms. Clinton attended the inauguration of President José Mujica, she may well have bumped into co-attendee and Venezuelan President Hugo Chavez, one of the most vocal critics of U.S. foreign policy in all of the Southern Cone.
However any formal interactions with Chavez or Evo Morales of Bolivia were earlier ruled out by Assistant Secretary Arturo Valenzuela who said in Washington that “the only bilateral that is on the books is with Cristina Kirchner, the president of Argentina”.
With Venezuela, Bolivia and Ecuador precluded from Ms. Clinton’s itinerary the pressure is on the Secretary to make the most of her interactions with the relatively moderate leaders of Uruguay, Brazil, Argentina, Chile, Guatemala and Costa Rica.
Yet even within that group her mission is daunting, none more so than the U.S.’s ambition to persuade President Luiz Inácio Lula da Silva to back its efforts to rein in Iran’s nuclear ambitions. While the U.S. is pushing for tougher sanctions against Iran through the United Nations Security Council, Brazil, a non-permanent member of the Council, has indicated its opposition to this.
“The visit also comes as Brazil gears up for general elections in October, with President Lula’s chief of cabinet Dilma Rousseff and governor of São Paulo José Serra the likely rivals in the race for president.”, according to Peter DeShazo of the Centre for International and Strategic Studies.
Argentina may prove to be yet another disappointment. With the Secretary meeting Ms. Kirchner at the peak of a dispute with Britain over sea-routes access to the Falkland Islands, her unexplained cancellation of a visit to Buenos Aires is likely to have bruised egos further.
In Chile, where Ms Clinton will again meet a newly elected leader, President-elect Sebastián Piñera, post-earthquake recovery is likely to crowd out any prior agenda. Trade may especially be marginalised, a likely concern for the U.S. given China’s growing dominance in this area.
The recent creation of the Community of Latin American and Caribbean States, a rival to the Organisation of American States marks some of the frustrations with American hegemonic tendencies. The Community is “a regional organization, whose only clear feature so far is that it will exclude the U.S. and Canada”, according to Kevin Casas-Zamora of Brookings.
If there were any hopes here that things would be different under President Obama, they were belied by U.S. hostility towards Manuel Zelaya in Honduras, an ally of leaders like Chavez and Kirchner. The persistent embargo against all things Cuban has not won them any points for popularity either.
If Ms. Clinton is to win hearts and minds in the Lat-Am region, she will have to convince her audiences over the rest of the week that substantive changes in U.S. foreign policy engagement in the region will follow her earnest interlocutory efforts.
Labels: Barack Obama, Hillary Clinton, Narayan Lakshman, President, Secretary of State, thorny issues, Uruguay, Venezuela
Saturday, February 27, 2010
Obama steps up pressure on healthcare reform
From The Hindu
Tens of millions of individuals and small business in the United States are being denied affordable and adequate health insurance cover and they cannot wait any longer, President Obama said in his weekly address on Saturday.
In a clear indication of his administration’s intention to step up the pressure on Republicans in the aftermath of last Thursday’s bipartisan healthcare summit, Mr. Obama said, “No final bill will include everything that everyone wants. That’s what compromise is”.
A bipartisan meeting on healthcare reform last week failed to improve the prospects of Congress passing a comprehensive bill. Since then there has been a growing probability that the Democrats may get their proposals passed through reconciliation, a legislative procedure that bypasses the requirement of a 60-seat supermajority.
Alluding to victories in the Winter Olympics by U.S. athletes such as Lindsey Voh, Apolo Ohno and the men’s hockey team, Mr. Obama argued that to compete on the world stage as well as the U.S. did in Vancouver, Congress would have to find common ground on healthcare reform.
“We need to move past the bickering and the game-playing that holds us back and blocks progress for the American people,” he said.
Mr. Obama reiterated that Thursday’s caucus yielded both areas of agreement as well as differences across party lines. The common ground found so far included the rising cost of healthcare, the need for access to an insurance marketplace and pooling of purchasing power.
Reflecting on some of the more bipartisan suggestions coming from the Republican side, he said, “I heard some ideas from our Republican friends that I believe are very worthy of consideration”.
Yet there is a serious divergence of opinions on some critical issues, including whether insurance companies should be held accountable when they deny people care or arbitrarily raise premiums, and on giving tax credits to small businesses and individuals.
Emphasising the impact of such credits on the ordinary American he said, “This would be the largest middle class tax cut for health care in history, and I believe we should do it.”
Co-operate or else
While Mr. Obama said he was willing to move forward with members of both parties on health care if the Republicans were serious about coming together to resolve differences, he also warned that he would be unwilling to wait much longer to get a bill passed.
“The tens of millions of men and women who cannot afford their health insurance cannot wait another generation for us to act. Small businesses [and] Americans with pre-existing conditions cannot wait,” he urged.
Tens of millions of individuals and small business in the United States are being denied affordable and adequate health insurance cover and they cannot wait any longer, President Obama said in his weekly address on Saturday.
In a clear indication of his administration’s intention to step up the pressure on Republicans in the aftermath of last Thursday’s bipartisan healthcare summit, Mr. Obama said, “No final bill will include everything that everyone wants. That’s what compromise is”.
A bipartisan meeting on healthcare reform last week failed to improve the prospects of Congress passing a comprehensive bill. Since then there has been a growing probability that the Democrats may get their proposals passed through reconciliation, a legislative procedure that bypasses the requirement of a 60-seat supermajority.
Alluding to victories in the Winter Olympics by U.S. athletes such as Lindsey Voh, Apolo Ohno and the men’s hockey team, Mr. Obama argued that to compete on the world stage as well as the U.S. did in Vancouver, Congress would have to find common ground on healthcare reform.
“We need to move past the bickering and the game-playing that holds us back and blocks progress for the American people,” he said.
Mr. Obama reiterated that Thursday’s caucus yielded both areas of agreement as well as differences across party lines. The common ground found so far included the rising cost of healthcare, the need for access to an insurance marketplace and pooling of purchasing power.
Reflecting on some of the more bipartisan suggestions coming from the Republican side, he said, “I heard some ideas from our Republican friends that I believe are very worthy of consideration”.
Yet there is a serious divergence of opinions on some critical issues, including whether insurance companies should be held accountable when they deny people care or arbitrarily raise premiums, and on giving tax credits to small businesses and individuals.
Emphasising the impact of such credits on the ordinary American he said, “This would be the largest middle class tax cut for health care in history, and I believe we should do it.”
Co-operate or else
While Mr. Obama said he was willing to move forward with members of both parties on health care if the Republicans were serious about coming together to resolve differences, he also warned that he would be unwilling to wait much longer to get a bill passed.
“The tens of millions of men and women who cannot afford their health insurance cannot wait another generation for us to act. Small businesses [and] Americans with pre-existing conditions cannot wait,” he urged.
Labels: Barack Obama, Healthcare reform, Narayan Lakshman, U.S. President, weekly address
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