Tuesday, March 29, 2005

The Missing $11.5 Trillions from World Economy!!!

[Note: This news item needs to be looked in the perspective of UN Millenium Development Goals which puts a price tag estimated by World Bank, of around $40bn-60$bn till 2015 (i.e., maximum $600bn) needed to eliminate global poverty, improve health, provide universal education, etc. etc....]

Excerpts from a news item published in The Observer (Nick Mathiason, Sunday March 27, 2005):

"The world's richest individuals have placed $11.5 trillion of assets in offshore havens, mainly as a tax avoidance measure. The shock new figure - 10 times Britain's GDP - is contained in the most authoritative study of the wealth held in offshore accounts ever conducted.

The study, by Tax Justice Network, a group of accountants and economists concerned at the escalating wealth held in offshore locations, shows that the world's high-net-worth individuals earn $860 billion each year from their assets.

But there is growing alarm among regulators and campaigners because exchequers worldwide are missing out on at least $255bn of tax each year. Governments appear unable, or unwilling, to prevent the rich employing aggressive strategies to minimise their tax liabilities.

The OECD this weekend confirmed that international tax avoidance is a growing problem that troubles governments not just of rich countries, but middle-income ones as well.

'This is one of the defining crises of our times,' said John Christensen, co-ordinator of the Tax Justice Network and a former economic adviser to the Jersey government. 'One of the most fundamental changes in our society in recent years is how money and the rich have become more mobile. This has resulted in the wealthy becoming less inclined to associate with normal society and feeling no obligation to pay taxes.'

...Individuals such as Rupert Murdoch, Philip Green, Lakshmi Mittal and Hans Rausing - among the world's richest men - all make extensive use of tax havens."


The news item goes on to point out that:

"There is nothing illegal about placing assets and cash offshore.... The $11.5trn does not include the vast amount of money stashed in tax havens by multinational corporations, which are using increasingly sophisticated techniques to run rings round the authorities..."

So, what should one call this phenomenon?:
...money laundering? black money? finacial acumen?..
...globalisation?

or just a symptom of a suicidal economic model?!!!

Ref:
http://observer.guardian.co.uk/business/story/0,6903,1446120,00.html
http://www.undp.org/mdg/
http://www.un.org/millenniumgoals/
http://www.taxjustice.net/all/pdf/Fiscal_paradise.pdf

Saturday, March 26, 2005

Orchestrating Democracy: A Replay in Kyrgyzstan

Suddenly, within last couple of years, the Central Asian countries have acquired "democratic" colours - we had "Rose Revolution" in Georgia, "Orange Revolution" in Ukraine, an almost "Cedar Revolution" in Lebanon...

The latest to join in this well-orchestrated drama is Kyrgyzstan, where recent happenings - the "Tulip Revolution" - gives one a deja vu feeling:

- a regime which is supposed to be authoritarian and corrupt
- an election which is supposed to be rigged
- an "popular" uprising for "freedom", which is shown over and over again by media
- the corrupt,inept autocratic government gives in to popular opposition, and steps down
- new "free" elections are held, and the popular opposition comes to power
...and everyone lives happily ever after.

This a script which has been perfected since the "popular" uprising in Serbia, which ousted Slobodan Milosevic in Oct 2000, after allegations of vote-rigging.

How well this unfolding is choreographed by the "invisible hand" is apparent from this Secret report of the U.S. Ambassador to Kyrgyz Republic Stephen M.Young, sent on December 30, 2004 from Bishkek, Capital of Kyrzygstan

Some excerpts:

"...Taking into account the interests, of our presence in the region and development of democratic society in Kyrgyzstan, our primary goal — according to the earlier approved plans — is to increase pressure upon Akaev to make him resign ahead of schedule after the parliamentary elections. Realizing the plan is of key importance as, we think, the present opposition is not strong enough to challenge the present authorities, though Akaev has claimed he is not going to prolong his terms of office.

We know, Akaev’s adherents suspect the opposition to prepare the same scenario of elections like that one in Georgia and Ukraine. That was indirectly asserted by Akaev at December meeting of the Council of Defense of the KR. In case of prolongation of presidential powers Akaev is most likely to take advantage of the assistance rendered by the Russian-speaking part of the population and other ethnic minorities, as well as of several thousand residents who are on earnings in Russia now. In this connection, for better planning of pre-election tactics we ought to remember that Russia remains the basic employer in Kyrgyzstan. Both the pro-Russian public opinion and popularity of the Russian president are rather strong in some northern regions of the country.

...at present two formations are shaped on the political arena of Kyrgyzstan... First of all, it is the pre-election block For Powers of People. In July 2004 it united six opposition parties, which nominated K.Bakiev, ex-prime minister and MP, as their single candidate for the presidential post. I think he is the most acceptable candidate in the aspect of fruitful development of relations between the USA and Kyrgyzstan. I met Bakiev on repeated occasions. Bakiev expressed his consent to take advantage of the support after his block’s winning in parliamentary elections. As he said, after ambiguous American involvement in elections in Georgia and Ukraine unconcealed American support provided to a candidate might have a negative effect on his political reputation. Furthermore, he was against falling off in relations with Russia by criticizing on behalf of his party Russian intervening in the Ukrainian elections.

....(we need to promote someone) to head up a “puppet” opposition. In this connection, we advise continuing contacts with another prominent representative of the opposition — F.Kulov, whose imprisonment will end in the middle of 2005. Enjoying deserved popularity and being a victim of regime, he will have sufficient potential to struggle for the presidency.

F.Kulov shares and adheres to American concepts of freedom and democracy and can be viewed as a dubbing candidate for the presidency in case our main candidate Bakiev is defeated.

We have mostly succeeded in developing contacts with another leader of the opposition — R.Otunbaeva, ex-Minister for Foreign Affairs. Through the funds allocated to her we managed to lobby setting up and promoting certain NGOs as well as organizing a unified system of mass media for better coverage over the country to spread her statement about non-interference of Russia in internal affairs of Kyrgyzstan.

With a view to providing favorable conditions and helping democratic opposition leaders come to power, our primary goal for the pre-elections period is to arouse mistrust to the authorities in force and Akaev’s incapacitated corruption regime, his pro-Russian orientation and illegal use of “an administrative resource” to rig elections. In this regard, the embassy’s Democratic commission, Soros Foundations, Eurasia Foundation in Bishkek in cooperation with USAID have been organizing politically active groups of voters in order to inspire riots against pro-president candidates.

We have set up and opened financing for an independent printing office — the Media Support center — and AKIpress news agency... We also render financial support to promising non-governmental tele- and radio companies.

...Young people are most likely oriented to the West. Therefore we consider it extremely important to popularize American way of life among them to diminish Russian influence. At least 45 national higher schools have their local Students in Action organizations, which we are planning to use properly during parliamentary and presidential elections. In our opinion, those additional funds ($5 mn) transferred by the Department of State to hold seminars in all leading Universities of Kyrgyzstan and organize training in western countries turned out insufficient.

...I advise focusing on discrediting the present political regime, thus making Akaev and his followers responsible for the economic crisis. We should also take steps to spread information on probable restriction of political freedoms during the election campaign.

It is worthwhile compromising Akaev personally by disseminating data in the opposition mass media on his wife’s involvement in financial frauds and bribery at designation of officials. We also recommend spreading rumors about her probable plans to run for the presidency, etc. All these measures will help us form an image of an absolutely incapacitated president.


It is essential to increase the amount of financial support up to $30 mm to promising opposition parties at the preliminary stage of the parliamentary and presidential elections and allocate additional funds to NGOs...
etc.etc

Stephen M.Young
The U.S. Ambassador to Kyrgyz Republic
"


And here is a remarkable parallel:

  • In December 2004, in the presidential run-up after the "Orange Revolution", the Ukrainian President-to-be, Viktor Yushchenko, had claimed of being poisoned,
  • Now, after the "Tulip Revolution" of Kyrzyg RepublicK Bakeiv, the Intrim President of Kygyzstan is claiming threats on his life

    Welcome to the world of Democratic Coup, Made in USA!!!

    References:
    http://fairuse.1accesshost.com/news4/kabar1.html
    http://news.bbc.co.uk/2/hi/asia-pacific/4385109.stm
    http://www.timesonline.co.uk/article/0,,3-1393172,00.html
    http://abcnews.go.com/International/wireStory?id=615313

  • Thursday, March 24, 2005

    "Aam Aadmi" - The Common Indian

    Last couple of days, on a forum of friends, we have been discussing about India - As a nation, have we progressed or regressed? have we become more liberal and free in out outlook, or have we become more corrupt? are we losing basic human values or are we sheding shackles of needless traditions? etc.

    I am sure this kind of discourse is common to any society/nation undergoing changes.... and in such discussions/debates/discourses, often we have a tendency of focusing either only on the best or only on the worst in a society - and taking a position on that (mainstream media further enhances this tendency and cashes on it)...

    ...though India is not the benchmark for Utopia, but history unfolds.... there are common people who are helping it move in a direction, which is often not covered in the main-stream media.... which led me to revisit one of my favourite sites about the grassroot things which are happing in India

    http://www.goodnewsindia.com

    ... and for the first time, I visited the personal page of D V Sridharan, the creator of goodnewsindia, which gives his personal view of India (as he mentions: "Every man has a view of his land and his people. This is mine. Of India....")

    ... and came across one of the most cogent description of the "aam aadmi" - the common man - who fuels India's development. To quote:

    "In every society and country, the most noticed are the celebrities and the wretched. The former gets undue attention and the latter rightly, the much needed spotlight.

    So is it with India's media. At some time or the other an Indian must wonder if the values and energies, (which) the rich, the famous and the powerful represent are all that we are going to depend on to sort the problems of the dispossessed. Is there anything at all 'out there' other than the play of the celebs.?

    My own way out of my depression was to look for little known people and events that add up to a brighter future and publish their stories. Which was how goodnewsindia.com was born.

    During my travels I came across many Indians, who won't make 'news' because they are not in mainstream media's two great constituencies that I mentioned earlier. Nor will these little Indians make it to the main pages of goodnewsindia.com.

    But they are nevertheless the stuff and guts of India. They rarely venture out of their beat, seldom disturb the structures they live in, scarcely interest newsmen, and are almost never unpredictable.

    What is common to them all is this set: a family-centred life, modest ambitions that India can certainly help them attain, a conviction that their country is a good place to be in, that tomorrow will be better than today, a work ethic, an awareness of the power of the systems that surround them - the employer's, state's and God's.

    They stand in lines to vote, send their children to the armed forces,practice their religions, pay their dues, hunt for bargains, treasure their ration cards, fear taking loans, reach out to poor relations, keep in touch with their 'native places', believe in divine justice, spoil their children, care for the elderly, venerate their ancestors, enjoy company picnics, celebrate the festivals, cultivate traditional arts, give alms, believe in destiny...

    It is their collective lives that makes sociologists declare Indians are religious, have family values and are hard-workers.

    Together, these little known people have powered the Indian continuum.

    Material contentment comes easily to the these Indians. And once there, they begin to reflect. What next?: a new group, a skill, a charity, a happening, a journey, a discovery, a belief... the dormant social engineer in them is preparing to act..."

    Sunday, March 20, 2005

    The New "Axis of Evil" - or the emerging Geo-Political "Continental Shift"

    2005 is turning out to be more interesting than what it promised to be. There is a new emerging configuration of geo-strategic forces, which is likely to redefine the world as we know it now.

    So here is a curtain-raiser of the emerging forces/new axis/configurations, which are normally kept hidden under the "mainstream media veil" (giving us a "business-as-usual" semblence of the world):

    I. Behind Iran's Nuclear "Threat":

  • This largely neglected article which was published in The Guardian in June 2004: Iran takes on west's control of oil trading: "Iran is to launch an oil trading market for Middle East and Opec producers that could threaten the supremacy of London's International Petroleum Exchange." - the reason being that this exchange will denominate oil in Euro - thus, breaking the hegemony of petro-dollar."

  • In October 2004, William Clark published this article entitles, The Real Reasons Why Iran is the Next Target: The Emerging Euro-denominated International Oil Marker: "The Iranians are about to commit an "offense" far greater than Saddam Hussein's conversion to the euro of Iraq’s oil exports in the fall of 2000. Numerous articles have revealed Pentagon planning for operations against Iran as early as 2005. While the publicly stated reasons will be over Iran's nuclear ambitions, there are unspoken macroeconomic drivers explaining the Real Reasons regarding the 2nd stage of petrodollar warfare - Iran's upcoming euro-based oil Bourse."

  • Suddenly, after re-election of GBW, the focus of US shifted to Iran - one of the "axis of evil". Dick Cheney made it clear that, "Iran is a top threat to world peace and Middle East stability, accusing Tehran of sponsoring terrorism against Americans and building a "fairly robust new nuclear program."... In an interview aired on MSNBC... a few hours before President Bush's inaugural address, Cheney warned that Israel "might well decide to act first" militarily to eliminate Iran's nuclear capabilities if the United States and its allies fail to solve the standoff with Tehran diplomatically.... "Given the fact that Iran has a stated policy that their objective is the destruction of Israel, the Israelis might well decide to act first, and let the rest of the world worry about cleaning up the diplomatic mess afterwards," Cheney said."

  • Only time will tell if Scott Ritter's assertion that US will attack Iran by June 2005 or not. In fact, in January 2005, Seymour Hersch had also mentioned the next target being Iran: "Bush has an aggressive and ambitious agenda for using that control—against the mullahs in Iran and against targets in the ongoing war on terrorism—during his second term... In my interviews, I was repeatedly told that the next strategic target was Iran. “Everyone is saying, ‘You can’t be serious about targeting Iran. Look at Iraq, "the former intelligence official told me. “But they say, ‘We’ve got some lessons learned—not militarily, but how we did it politically. We’re not going to rely on agency pissants.’"
    [NOTE: for those not in the know, Scott Ritter was the former UN weapons inspector in Iraq, who had challenged US assertion that Iraq has WMDs back in September 2002; and Seymour Hersch was was the journalist who had exposed the Abu Ghraib happenings]

    II. ...Enter Venezuela:

    In the meanwhile, other partnerships and alliances are emerging. And one of the major player is Venezuela (Venezuela's importance is in being the 4th largest oil supplier to the US, accounting for 12-14% of latter's oil imports, and 60% of Venezuela's crude production). Thus, diversifying its partners is in Venezuela's interest, which is precisely what it has been doing last few months. For instance:

  • About 10 days back the visiting Iranian President Mohammad Khatami and his Venezuelan counterpart President Hugo Chavez signed over a $1bn bilateral trade agreements, which include, "encouragement and support of investment, avoidance of double taxation, shipping and marine trade as well as MoUs on oil, gas and petrochemistry..."

  • Within last couple of months, Venezuela has also signed deals with China: "Chinese Vice President Zeng Qinghong and Venezuelan President Hugo Chavez signed 17 bilateral agreements and also discussed cooperation in mining, oil and gas projects, as well as technological partnership... Venezuela is the world's fifth-largest oil exporter. China, which faces a significant energy shortfall, is looking to strengthen energy cooperation with oil-exporting countries." China already operates two oil fields in Venezuela. Under the new agreements, it would develop 15 declining oil fields in eastern Venezuela, build a plant in Venezuela to produce boiler fuel used in Chinese power plants, and participate in much larger projects, like exploring for oil in the Orinoco belt, which has one of the world's great deposits of crude oil, etc.

  • ... and with India



  • It is not surprising that US Administation sees Venezuelan President Hugo Ch├ívez as a threat who needs to be contained.

  • Clearly, Venezuela's future with US is limited. In February, Hugo Chavez announced that he planned to sell Citgo, a Venezuelan-owned refining and distribution network in the US, clearly signaling his intent to divert Venezuelan exports away from the US market.

  • This month, Chavez caused much anxiety when he threatened to cut-off oil supplies to US: "President Hugo Chavez has recently accused President Bush of plotting to assassinate him, made suggestive comments about Secretary of State Condoleezza Rice, visited Fidel Castro in Cuba and bashed the United States... But concern in Washington has been rising as Chavez has worked feverishly in recent months to match his words with deeds...Since threatening to cut off oil shipments to the United States, which buys 1.5 million barrels a day from Venezuela, Chavez has been traveling the globe looking for new markets and allies to unite against "the imperialist power." He recently signed energy deals with France, India and China, which is searching for new sources of oil to power its industrial expansion."


    III. The Re-emerging Russia:

    After the collapse of the Berlin Wall - and the Russian Empire - the world had given up on Russia (in fact, Francis Fukoyama went on to commemorate it by writing The End of History - i.e., the good won over the evil, and everyone lived happily ever after).

    However, since its turnaround in 1999, a renewed Russia has emerged as a new force to contend with. It has emerged as the second largest producer of crude oil after Saudi Arabia, and exports 70% of its produce (more than 70% of this goes to EU).

    A change in Russian policies will have impacts, e.g.,

  • In Feb '05, Russia dissmissed US protests about supplying arms to Venezuela, and described them as "biased and unfounded" (Actually, Venezuela's neighbour, and rival, Columbia, has been the 3rd largest recepient of US arms "aid" - after Israel and Egypt - for many decades). A message last week, from Russia's foreign minister Sergei Lavrov to his Venezuelan counterpart Ali Rodriguez on the occasion of the 60th anniversary of the establishment of diplomatic relations between the two countries, reads: "Much has been done over the past decades in the material sphere of cooperation which has inviting prospects in such areas as high technologies, oil and gas industry, energy, aluminum production, military-technical cooperation, trade, investments and others"

  • Last month, Russia ended its de facto dollar peg and moved to align rouble with euro:"Russia... abandoned efforts to tie the rouble’s movement closely to the dollar and switched to shadowing both the euro and the US currency... The move heightened expectations that other countries operating de facto dollar pegs, such as China, could follow suit... With 81 per cent of Russia’s oil exports currently sold to Europe, the move also provoked fresh speculation that Russia could decide to denominate its oil in euros. Russia is the world’s second-largest oil exporter, behind Saudi Arabia."

  • Last month, Russia signed an agreement with Iran to help it set up a Nuclear Power plant by next year


    IV. The China Shift:

  • The real emerging "China Threat" for US is that European Union has replaced US as China's largest trading partner. In 2004, China's trade with Europe in 2004 was worth $177.2 billion, with the United States $169.6 billion, and with Japan $167.8 billion.

  • As a consequence, during 2004, China's central bank cut the share of its foreign reserves held in U.S. dollar assets, reducing it from 83% to 76%. This shift suggests "that the United States might no longer be able to rely on Asia to finance growing deficits, investment bank Lehman Brothers said in a report this week.... The bank "is slowly diversifying its FX (foreign-exchange) reserves away from U.S. dollars," said the report, written by London-based analyst Shruti Sood."

  • Not much reported in the mainstream media, in December, 2004, China rocked the geopolitical boat by signing a $100bn oil deal with Iran: "Billed as the "deal of the century" by various commentators, this agreement is likely to increase by another $50 to $100 billion, bringing the total close to $200 billion, when a similar oil agreement, currently being negotiated, is inked not too far from now... The gas deal entails the annual export of some 10 million tons of Iranian liquefied natural gas (LNG) for a 25-year period, as well as the participation, by China's state oil company, in such projects as exploration and drilling, petrochemical and gas industries, pipelines, services and the like."

    V. ... and India Joins:

    Just the headlines during last couple of months:

  • India Ready to Invest $25Bn in Russia’ Oil Industry

  • last month, India signed a gas pipeline deal with Iran, despite US opposition

  • India has signed a deal to take a 49% stake in a Venezuelan oil field, boosting energy ties between one of Asia's biggest consuming economies and one of the world's largest exporters

  • India, China set for big-rig oil partnership to take stake in Kazakhstan's oil and gas exploration projects


    VI. To Conclude... - The Continental Shift:

    What we are witnessing is a sort of continental shift, in which the US$ global hegemony may become "He-He money", turning the flow of the world trade topsy-turvy.

    This article, published a couple of days back, reports some other tremors, e.g.,:

  • Japan, the largest holder of US$ in foreign reserves, plans to "diversify" its FX basket.

  • The Basel-based Bank of International Settlement (BIS) indicates that US$ holding in India (the 6th largest country with FX reserves) fell from 68% to 43% during 2001-2004.
  • The BIS data also shows that Asian central and commercial banks reduced their US$ deposits from 81% to 67% during 2001 and 2004.

  • A survey by Lehman Brother showed that showed that almost 70 per cent of the 56 Central Banks had increased their exposure to the euro in four months, between September and December, last year. This means that the exposure to the US dollar was reduced.

    ....Perhaps, the best indicator of this changing scenario/equation is that:
  • last month, when South Korea (a US "client state" for half a century - having the 4th largest FX reserves) made an announcement that it may diversify its FX portfolio, the US$ went into a tumble...

    ... interesting times ahead..

  • Saturday, March 19, 2005

    Chinese Economy: The Other Side of "The Divide"

    China is often quoted as an "economic phenomenon" ... and virtually everywhere, as an example of "economic growth" due to liberalisation/free-trade/capitalism/etc...

    This multi-media link on "China's Great Divide" (by New York Times) shows the other side of this growth.

    http://tinyurl.com/49zx8

    ... sadly, watching it also reminds one of the other "fast growing economy" - India!!

    have a look - it takes about 5 minutes ...and as the site says: "click on the links to learn more"

    Tuesday, March 08, 2005

    Iraq is Not Vietnam, But...

    So Often, during last couple of years, the anti-iraq war lobby has compared Iraq War with Vietnam War. On the other hand, those committed to bringing freedom to Iraq have always ridiculed and discounted such a comparison as absurd and superficial. As Donald Rumsfeld had pointed out in one of his media conferences: "It's a different time, it's a different era, it's a different place."
    The following two graphs finally prove that Iraq is not Vietnam!!!...




    ...it may be worse!!!

    sources:
    1. http://tinyurl.com/5hvf7
    2. http://www.lies.com/wp/2005/03/05/february-deaths/

    Saturday, March 05, 2005

    On Free and Fair Elections...

    A press release from US President's office, dated March 4th has this interesting statement by the spokesperson, about why US wants the Syrian troops to withdraw from Lebenon:

    "...the President continues to say they need to leave now... the international community is standing with the Lebanese people in their desire to have free and fair elections. And that means Syria needs to get out, so that we can ensure that those... elections are free and fair."

    The spokesperson was right, since elections held under occupation are illegal and illegitimate under International Law.

    Though, of course, there can be exceptions, as this month old news item about another elections (held under conditions of occupation, shoot-on-sight curfews, closed borders, and a ban on cars and travel restrictions within the country, etc.) shows:

    WASHINGTON, Feb. 3, 2005 – The general in charge of coalition forces in Iraq took to the airwaves Feb. 2 to thank troops in the country for their work in the success of Iraq's Jan. 30 national assembly election.

    Speaking on Freedom Radio, the American Forces Network's radio operation that broadcasts news and entertainment to U.S. forces throughout Iraq, Army Gen. George W. Casey Jr. said he wanted personally to thank Multinational Force Iraq troops "for their contribution to that great Iraqi success on Sunday... You shaped history on Sunday... and I wanted you to feel very, very proud about what you've done."

    Friday, March 04, 2005

    Subsidized Global "Free Trade" - I (Farm and Agriculture)

    It is the modern "economic thinking"(??!!) - or one may say that it has become a fashion statement for being seen as one who has a liberal, global, modern mindset - to talk about the benefits of "free-trade", "free-market", "global competitiveness", etc., etc.

    More specifically, one theme which keeps recurring in the public discourse on business - and is perpetuated by the mainstream media, education, and investment analysts almost as a dogma - is:

    Government should not protect/subsidize sectors/industries/cpmpanies; in the brave new world of global free-market, each should compete on one's own strenth - and flourish or perish, as the case may be.

    Underlying this theme and its proposal are two assumptions:

    1. worldover the shift is towards a "free trade/ market", in which companies/countries compete in a fair and transparent environment, based on their strengths... and the only way a country (e.g., India) can get integrated into this huge potential is by dropping the trade-barriers/subsidies and any other kind of protection to not-so efficient industries/ sectors/ companies. Only by participating in this "level-playing field" can we become competitively strong and encourage those companies, which have their mettle, to flourish and compete (in the true spirit of Social Darwinism).

    2. The other countries - specially, the developed ones (e.g., USA, the G7, etc.) epitomise this shift to "free trade" doctrine. And given their prosperity and growth, are examples worth following.


    In this part, here are some interesting random facts about Global Farm/Agricultural Trade, which show how the "free" global trade actually thrives on government subsidies.

    [To be fair, no country calls them "subsidies" - they are given under nice-sounding names like, Export Incentives, Market Loss Assistance, Oilseed Programs, Deficiency Payments, Property Tax Concessions, Market Gain Loans, Agricultural Conservation Programs, Common Agricultural Policy, Freedom-to-Farm Program, etc., etc.]

  • On average, subsidies provided by EU to its farmers account for 1/3 value of its total farm produce; subsidies in US account for 20% of the value of the farm produce.

  • On average, A farmer in EU receives subsidy of US$17,000/annum, while an American farmer receives average subsidies of US$16,000/annum. In contrast, an average farmer in developing/less-developed countries earns even less than US$1,000/year.

  • On average, in developing countries around 60% of population is dependent on agriculture for their livelihood, as compared to less than 5% in EU, and around 2-3% in US.

  • In rich countries, agriculture typically represents less than 2% of total national income and employment. In contrast, agriculture accounts for anywhere between 17 and 35 percent of GDP in middle-to-low income countries.

  • Developing countries are responsible for one-third of total agricultural trade exports.

  • Farm subsidies given by EU under its Common Agricultural Policy (CAP) is equal to the GDP of Spain. Though tinkered with a couple of years back, they will continue till 2013.

  • In Canada, the average cow receives more funding from the government than is earned by the average worker in sub-Saharan Africa.

  • A study of agricultural subsidies in Canada during 1990-99, conducted by Urban Renaissance Institute found that for every $1.0 that Canadian farmers earned over this decade, federal and provincial governments supplied an average of $3.76 in agricultural subsidies.

  • Agricultural tariffs in the European Union (EU) and the United States are four to five times greater than those applied to manufactured goods and sometimes exceed 100 percent.

  • According to The International Food Policy Research Institute, the sub-Saharan Africa can increase its income by over $3 billion dollars if wealthy nations reduced their farm support.

  • Beef and sugar are the most protected products in the EU. Without these tariffs, even the poorest African countries could produce exportable surpluses of these commodities.

  • The EU accounts for 40 percent of the world's white sugar market, and the EU's Common Agricultural Policy (CAP) lowers the price of sugar by 15 percent.

  • US applies tarrifs as high as 242% on most sugar imports.

  • US controls 40% of the global cotton market, and by subsidising cotton production by $3.4bn (2001 figures), was able to drive down global cotton prices. West Africa lost US$190 million in 2001 because of low global cotton prices, exacerbating foreign debts and balance-of-payment constraints.

  • Rice is one of the most distorted cereal commodities on the global market. Both wealthy and poor countries use a variety of methods to control their rice imports and exports. Japan charges an over-quota tariff on the import of grains other than wheat - @491%!!! in 1999. The European Union uses export subsidies to promote export, and is responsible for 95 percent of global export subsidies on rice. The United States uses credit guarantees for rice farmers and also sends out a sizable portion of its export rice crop as food aid.

  • Contrary to what one may expect, the subsidies in rich countries do not go to small-farmers, and is not equitably distributed. The major recepients are the large, big "agri-business" farm owners. Take for instance, the $171bn direct farm subsidy bill 2001 of USA:
    -top 10 percent of recipients (most of whom earn over $250,000 annually) received 73% of all farm subsidies in 2001, while only 12% went to bottom 80%;
    -Growers of corn, wheat, cotton, soybeans, and rice received more than 90 percent of all farm subsidies, while growers of most of the 400 other domestic crops were completely shut out of farm subsidy programs;
    -among the recepient of farm subsidies there are also many Fortune500 companies, e.g., Cheveron, Caterpillar, Kimberley Clark, John Hancock Mutual Life Insurance, Archer Daniels Midland, Eli Lily, etc.;
    -Some of the individual recepients of farm subsidies included, David Rockfeller, Ted Turner, Bob Dole, Ken Lay, etc.

  • Without reform of agricultural trade barriers in industrialized countries, import liberalization in the developing world - a inevitable condition for assistance from World Bank/ IMF - perpetuates unfair competition. For example, when Haiti opened its rice market in 1995, it drove prices down 25 percent and displaced local farmers.

  • According to The International Food Policy Research Institute the biggest losers due to developed nations farm subsidies are the third world countries. The third world, which exports $20 billion in agricultural products, would probably export $60 billion in the absence of the farm subsidies prevalent in the EU, America, Canada, and Japan. Third world farmers directly lose $24 billion annually in lost sales.
    Sources:
    http://www.ifpri.org/media/trade/tradefacts.htm
    http://www.ifpri.org/media/trade20030826.htm
    http://www.ifpri.org/media/trade/tradebrief.htm
    http://tinyurl.com/osed
    http://www.heritage.org/Research/Agriculture/BG1542.cfm
    http://www.time.com/time/global/feb2002/articles/sweet.html
    http://en.wikipedia.org/wiki/Agricultural_subsidy
    http://tinyurl.com/6m9a4

  •