On July 1, 2015, the U.N. High Commissioner for Refugees, Antonio Guteress, addressed a congregation of international humanitarian organizations in Geneva about the escalating challenges his agency faced in what is widely being called the greatest refugee crisis the world has ever known.
“For an age of unprecedented mass displacement, we need an unprecedented humanitarian response and a renewed global commitment to tolerance and protection for people fleeing conflict and persecution,” the High Commissioner urged.
In his speech Guteress told listeners, “The moment of truth had arrived.” He was speaking in regards to the tremendous strain the world’s current refugee crisis has placed on the resources of Europe and other host countries. Across the globe, fleeing refugees are migrating at unprecedented rates.
The world’s current refugee crisis cannot be explained in simple terms. It is a complex issue with many factors involved. Political instability, devastating wars and lack of adequate economic opportunities are all reasons why people are leaving their countries in search of greener pastures.
In last month’s United Nations High Commissioner for Refugees (UNHCR) Global Trends Report: World at War, the estimated number of people displaced due to war, conflict and persecution was a staggering 59.5 million at the end of 2014. On average, 42,500 people are newly displaced per day.
A few countries are well known to all, such as Iraq, Afghanistan and Syria, but they do not represent the entire spectrum of refugees. The refugees come from Myanmar, Sudan, Ukraine, Pakistan, North Korea, Mexico and many other South American countries. Most are currently fleeing to Europe, but others are going to the United States, Indonesia and Australia.
It truly is a global refugee crisis.
In a newly published Human Rights Watch report, “The Mediterranean Migration Crisis,” senior analysis reported that in 2014, over 219,000 refugees attempted to navigate the Mediterranean Sea into Europe, which is considered the world’s deadliest crossing. This was up from 60,000 the previous year. So why are people enduring such dangerous undertakings for a better life?
The report interviewed over 150 refugees and asylum seekers from Somalia, Syria, Eritrea and Afghanistan. The migrants echoed similar reasons for leaving their countries—lack of security and basic necessities such as food, water and medicine. Not surprisingly, these are some of the poorest countries in the world with some of the direst need for humanitarian aid.
There is a direct correlation between humanitarian aid and fleeing refugees. The nations with the largest need for humanitarian aid are also responsible for some of the largest number of fleeing refugees.
Humanitarian aid is used to run programs that provide potential refugees with more than just food and water. Humanitarian efforts provide tools for farmers to grow crops that they can sell in market places, providing income to their families and strengthening their local markets.
The aid also provides educational facilities, training people with the skills that they need to be successful. People who are finding economic stability in their own nations are less likely to flee.
However, passing aid to the ailing countries is not the only way the world can help solve the refugee crisis. Host nations and coalitions such as the European Union (EU) need aid to support refugee and asylum seeking processing facilities. The burden of dealing with so many refugees must be equally distributed among developed nations. The blind eye approach many developed countries are practicing is not helping the situation.
Even though the United States is not the destination for the majority of refugees, it is tremendously affected by the issues of extreme poverty that are driving these migrations. An example is the situation in Greece, a country already preoccupied with economic collapse and in desperate need of a bailout. The U.N. reported more than 48,000 refugees entered the country in 2014. The economic pressure of all these issues reduces the buying power of Greece, in turn reducing U.S. exports to the country.
This year, the U.N. has declared that it needs no less than $18.1 billion to meet the needs of over 80 million people. Currently it has only received 26% of that amount.
The United States cannot continue to ignore the global refugee crisis and must work with the EU to provide more aid. The Borgen Project has demonstrated extensively how providing foreign aid in such situations reduces global threats to the United States and bolsters the U.S. economy.
If the United States does not help provide more aid and the refugees continue to flee, years of development and aid will all go to waste. Rebuilding developing nations will be a lot more expensive for future generations, considering there will be no one there left to help rebuild.
— Adnan Khalid
Sources: Human Rights Watch, International Organization for Migration, U.N. 1, U.N. 2, UNHCR
Photo: NGO News Africa
The Impact of World Malaria Day
The answers to eliminating malaria-related deaths have long been tied up in the search for a malaria vaccine. However, Congress’s motion to put the full force of the United States behind a “World Malaria Day” is taking the fate of 3.2 billion people who are considered “high risk” out of the hands of the pharmaceutical labs.
In 2007, the 60th session of the World Health Assembly established the world’s first “Malaria Day.” Commemorated annually on April 25th, World Malaria Day is intended to emphasize and expand the fight against malaria. Through events, forums and awareness campaigns, this initiative pools the resources of the globe to increase accessibility to malaria prevention resources that exist today and ensure that those resources reach the 3.2 billion who live under fear of this threatening disease.
In April of this year, the United States reaffirmed its role in the organization and efforts behind World Malaria Day by passing Senate Resolution 119. Sponsored by Senators Roger Wicker (R-Miss) and Chris Coons (D-Del), this bipartisan bill emphasizes the United States’ strategy to attack malaria’s devastating effects on child and maternal health in sub-Saharan Africa.
“Last year alone, we saw nearly 200 million cases of malaria around the world that led to more than 580,000 deaths. Most of those deaths were children under five years old, and 90 percent of them struck in Africa. These are sobering statistics, but we know that this terrible disease is both preventable and treatable,” said Wicker in a press release.
Although it may seem trivial compared to the creation of a vaccine, there is no arguing with the past results of World Malaria Day. The mortality rate of malaria plummeted by 47 percent globally, and 54 percent in Africa, largely due to the increased rates of expenditure on preventative measures like malaria nets and anti-malarial drugs.
Increased expenditure comes from increased awareness, and increased awareness is one of the central goals of World Malaria Day.
The United States’ recent renewal of their commitment to fighting world malaria has the potential to help reduce the rate of malaria mortality by the remaining 53 percent. This recent bill ensures that the United States will continue to partner the President’s Malaria Initiative (PMI) — started by President Bush in 2005 — with the efforts of WHO and the Global Fund, as well as numerous private and public organizations. Already, the PMI has helped reduce malaria-related deaths by 35 percent and has provided 15 million bed nets, 6 million rapid diagnostic tests and over 4.4 million anti-malarial tablets to the people of Madagascar.
Combined with the efforts of the globe coordinated in forums on April 25th, it is estimated that 4.2 million lives have been saved — and that’s without the creation of an effective vaccine.
However, while these results are promising, there are still nearly $5.1 billion needed to fully fund the efforts of World Malaria Day. As it stands, the total amount of funds are capped at $2.6 billion, which includes the contribution of the PMI.
“As we approach World Malaria Day,” said Coons, “we are reminded of the incredible successes we’ve had in recent years, but we’re also reminded of how much work lies ahead.”
– Emma Betuel
Sources: Senate.gov, USAID, CDC, Congress.gov, World Malaria Day
Photo: The Iran Project
What is Being Done for Human African Trypanosomiasis
Human African Trypanosomiasis (HAT), also known as Sleeping Disease, is prevalent in Sub-Saharan Africa, affecting rural, poverty-stricken populations with close to 10,000 new cases each year. There are 2 strands of the disease: East African Trypanosomiasis and West African Trypanosomiasis. Both strands are only spread in rural Africa via the bite of tsetse flies and cause similar symptoms, but the incubation periods and medications used are slightly different.
A tsetse bite infects the patient with a parasite, which then lives in the host’s lymphatic system and blood stream. There is also a chance that a pregnant woman can pass the infection on to her child. HAT can cause headaches, fever, weakness, joint pain, stiffness and irregular sleep patterns in its first stages. When the infection advances and crosses over into the host’s nervous system, psychiatric disorders, seizures, coma and death can occur.
The East African strain, named for the region that it is typically found, is the least common of the two with only a few hundred people becoming infected each year. This strain moves particularly fast, though, as patients see symptoms within 1-3 weeks and, if left untreated, death can occur within a few months. This strain is also a bit harder to control, as it is a zoological disease—several animals are able to host the parasitic strain.
The West African strain is the most common with 7,000-10,000 new cases reported each year. This strain can be hard to detect because symptoms can take up to a few months to surface and death can occur after the patient has been infected for several years. This strain, even with its prevalence, can be easier to contain, as humans are the primary hosts of infection. Effective treatment of infected humans will help stop the spread of the disease.
There are medications to help people combat the disease, but different medications are used depending on the stage of infection. Detection can be difficult and the medicine can be expensive, which makes treatment less accessible to those infected, as they reside primarily in rural areas. Spinal taps must be administered to ensure that the disease has not breached the central nervous system, which would cause the treatment plan to change. Even after a patient is considered cured, he or she must undergo routine screening, including a spinal tap, for up to two years. Even with precautions in place, relapse remains possible.
Even with few infected tsetse flies and a relatively small number of cases, the disease saw a resurgence of new cases after several years of latent activity. Nevertheless, the number of new cases are once again reducing every year; reports to the World Health Organization (WHO) have gone from 300,000 in 1995, down to just over 17,000 in 2004, below 10,000 in 2009 and only 7,139 in 2010.
Unfortunately, there is no vaccine available for HAT and recovery from a case does not result in immunity, yet progress is being made.
The WHO has taken great measures to aid African countries that are considered endemic: “technical assistance, access to diagnosis, training [and] access to treatment.” When these areas are focused on, things improve. Access to treatment has been a priority for the WHO because the medicine used for the second stage of the West African strain is an arsenic derivative. New treatments are being worked on to reduce the need for medicines that are accompanied by detrimental side effects.
Not every tsetse fly carries the disease, but the higher number of bites a person gets increases a person’s chance of becoming infected. The Centers for Disease Control (CDC) tells U.S. travelers to wear protective clothing when traveling in rural African areas with lots of brush, wear neutral colors that do not attract the flies, inspect vehicles for flies, avoid bushes, and use insect repellent. Repellent does not guaranteed protection against the tsetse fly, but it will help.
This disease’s resurged because it was ignored for a time. With the CDC’s suggestions and the WHO’s work in the field, the disease could become virtually non-existent in a short time if the decline seen in recent years continues. The medication used will help people gain their lives back and once again become productive members in their society. With all the good work being done to get rid of HAT, this disease could become a thing of the past in rural sub-Saharan communities.
– Megan Ivy
Sources: CDC, WHO, PLOS
Photo: the journal.ie
5 Reasons to Join the Peace Corps
Founded by President Kennedy in 1961, the Peace Corps has enabled thousands of Americans to serve abroad. If you’re thinking about a commitment to the Peace Corps, here are five reasons to sign up.
To Help Others
Peace Corps volunteers are driven by the need to serve others. They are typically placed abroad for commitments of 27 months, during which volunteers assist in local development projects.
These projects may deal with issues of food security, global health or gender equality. Volunteers partner with NGOs to ensure measurable results in the communities that they serve.
For example, one of the organization’s global health initiatives is the Stomping Out Malaria program. The initiative seeks to halt the spread of malaria through Africa. Volunteers partner with organizations like Malaria No More to support those who are endangered by the deadly but preventable disease.
To See the World
The mission of the organization is to promote world peace and friendship. Volunteers serve as citizen diplomats abroad and encourage international cooperation. For those who want to see the world, the organization offers a unique opportunity to live and work abroad.
Its volunteers spend several months overseas. Almost 150 countries have received volunteers to date and there are 64 countries that partner with the organization today.
Applicants can select up to three preferred locations and work sectors. It is also possible to select a “wherever I am needed” option that places volunteers in a location that would benefit the most from a Peace Corps placement.
After 27 months of service, volunteers are also given an $8,755 stipend (before taxes). This money can be used for travel once the period of service has ended.
To Grow as a Person
Volunteers gain many different skills during their time of service. This can be useful for both personal and career development.
The organization opens new doors to other cultures that would be difficult to experience otherwise. For example, the organization provides instruction in a wide variety of languages.
This is also a great way to build a career. Volunteers learn leadership and teamwork, which are invaluable in almost every professional setting. Employers value cultural awareness and the ability to adapt to difficult situations.
For those looking to start a career in international development, the Peace Corps can be a great way to gain experience and make connections abroad.
To Help Defer Student Loans
Most Peace Corps volunteers are college graduates, which means a lot of volunteers will have some student loan debt. Those who serve in the Peace Corps are still solely responsible for these loans. However, they may qualify for a deferment on federal loans while serving in the Peace Corps.
Additionally, students with Perkins loans may qualify for a partial cancellation of these loans, depending on the length of their Peace Corps service as well as other considerations.
To Join a Growing Network of Returned Volunteers
The benefits of joining the Peace Corps don’t end after 27 months. Returning volunteers join a network of over 200,000 people who have completed their service.
This network can be used to keep in touch, meet other volunteers or assist with reintegration back home. Returned volunteers who are looking for a job will find the network helpful as well.
– Kevin McLaughlin
Sources: Peace Corps 1, Peace Corps 2, Humanitarian Jobs
Photo: MIIS Communications
In Transit: The World’s Fleeing Refugee Crisis
On July 1, 2015, the U.N. High Commissioner for Refugees, Antonio Guteress, addressed a congregation of international humanitarian organizations in Geneva about the escalating challenges his agency faced in what is widely being called the greatest refugee crisis the world has ever known.
“For an age of unprecedented mass displacement, we need an unprecedented humanitarian response and a renewed global commitment to tolerance and protection for people fleeing conflict and persecution,” the High Commissioner urged.
In his speech Guteress told listeners, “The moment of truth had arrived.” He was speaking in regards to the tremendous strain the world’s current refugee crisis has placed on the resources of Europe and other host countries. Across the globe, fleeing refugees are migrating at unprecedented rates.
The world’s current refugee crisis cannot be explained in simple terms. It is a complex issue with many factors involved. Political instability, devastating wars and lack of adequate economic opportunities are all reasons why people are leaving their countries in search of greener pastures.
In last month’s United Nations High Commissioner for Refugees (UNHCR) Global Trends Report: World at War, the estimated number of people displaced due to war, conflict and persecution was a staggering 59.5 million at the end of 2014. On average, 42,500 people are newly displaced per day.
A few countries are well known to all, such as Iraq, Afghanistan and Syria, but they do not represent the entire spectrum of refugees. The refugees come from Myanmar, Sudan, Ukraine, Pakistan, North Korea, Mexico and many other South American countries. Most are currently fleeing to Europe, but others are going to the United States, Indonesia and Australia.
It truly is a global refugee crisis.
In a newly published Human Rights Watch report, “The Mediterranean Migration Crisis,” senior analysis reported that in 2014, over 219,000 refugees attempted to navigate the Mediterranean Sea into Europe, which is considered the world’s deadliest crossing. This was up from 60,000 the previous year. So why are people enduring such dangerous undertakings for a better life?
The report interviewed over 150 refugees and asylum seekers from Somalia, Syria, Eritrea and Afghanistan. The migrants echoed similar reasons for leaving their countries—lack of security and basic necessities such as food, water and medicine. Not surprisingly, these are some of the poorest countries in the world with some of the direst need for humanitarian aid.
There is a direct correlation between humanitarian aid and fleeing refugees. The nations with the largest need for humanitarian aid are also responsible for some of the largest number of fleeing refugees.
Humanitarian aid is used to run programs that provide potential refugees with more than just food and water. Humanitarian efforts provide tools for farmers to grow crops that they can sell in market places, providing income to their families and strengthening their local markets.
The aid also provides educational facilities, training people with the skills that they need to be successful. People who are finding economic stability in their own nations are less likely to flee.
However, passing aid to the ailing countries is not the only way the world can help solve the refugee crisis. Host nations and coalitions such as the European Union (EU) need aid to support refugee and asylum seeking processing facilities. The burden of dealing with so many refugees must be equally distributed among developed nations. The blind eye approach many developed countries are practicing is not helping the situation.
Even though the United States is not the destination for the majority of refugees, it is tremendously affected by the issues of extreme poverty that are driving these migrations. An example is the situation in Greece, a country already preoccupied with economic collapse and in desperate need of a bailout. The U.N. reported more than 48,000 refugees entered the country in 2014. The economic pressure of all these issues reduces the buying power of Greece, in turn reducing U.S. exports to the country.
This year, the U.N. has declared that it needs no less than $18.1 billion to meet the needs of over 80 million people. Currently it has only received 26% of that amount.
The United States cannot continue to ignore the global refugee crisis and must work with the EU to provide more aid. The Borgen Project has demonstrated extensively how providing foreign aid in such situations reduces global threats to the United States and bolsters the U.S. economy.
If the United States does not help provide more aid and the refugees continue to flee, years of development and aid will all go to waste. Rebuilding developing nations will be a lot more expensive for future generations, considering there will be no one there left to help rebuild.
— Adnan Khalid
Sources: Human Rights Watch, International Organization for Migration, U.N. 1, U.N. 2, UNHCR
Photo: NGO News Africa
Effects of Emerging Technologies on Geopolitics
Although the final episode aired in September of 2013, Futurama remains a popular TV series today as it appeals to a range of generations, from youths to adults. This series is an exaggerated representation of a prediction of 31st century life: exploration and the discovery of life in countless other galaxies, acknowledgement of robots as true life forms and an even greater reliance on up-and-coming technologies.
Although it is a satire, the show does address interesting points about this human-techno relationship that applies even in the 21st century. This is evident, for example, in today’s use of drones.
It is speculated that, in the future, artificial intelligence systems will take over most jobs currently held by humans. Amazon’s new drone delivery system promises faster, more efficient deliveries, thus lessening the need for other methods of package delivery. The drone could drop off a package on someone’s doorstep in approximately 30 minutes or less. While this system, overall, would be more convenient for the general public, it would take out a good number of jobs.
However, there is a bright side to this situation. More jobs relating to drones, such as drone operations and drone assembly, will open to the public, and newer technologies that make these drones easier to operate will open up jobs for those with fewer qualifications.
Another important aspect to address is the ease at which people communicate through technological mediums. According to Kristel van der Elst, head of Strategic Foresight of the World Economic Forum, “Technology will not only allow us to be constantly in contact in an increasingly close-to-reality manner, it will also soon enhance communication beyond what traditional face-to-face interaction could ever allow.” Van der Elst also said that “technology has the potential to redefine the relationships between civil society, government and business.” Communication technology improves the ease of communication in geopolitics around the world.
More often, in the media, there have been discussions about how technology helps and hinders communication. Also addressed is the fact that the more we communicate via this medium, the less private human interaction becomes. Criminals are now turning to new technologies to communicate, and governments have limited abilities to regulate threats of attack.
So, are we to regulate and respect human privacy? Or not to regulate and allow for more criminals to make the utmost use of technology? Authors have suggested that instead of trying to fight the evolution of technology, the government should find new methods of integrating technology into their everyday lives and into geopolitics, which would greatly improve internal operations in local governments as well as appeal to the public.
– Anna Brailow
Sources: Scientific American, GCN, Comedy Central, YouTube
Photo: CNN
Improving Governments Decreases Poverty
A country is as strong as their government, and as the world comes closer to ending global poverty, policies in developing nations are beginning to improve. Poor countries are adopting new ways to help the public and, as a result, find a decline in poverty. When people have access to resources like food, sanitation and education, they have a greater opportunity to improve their lives. Although resources are vital to improving governance, it is just as important to establish equal political participation.
The World Bank understands the importance of proper governance and collects data of the progress in developing countries. The data collected includes “Gender Statistics, African Development Indicators, and Education Statistics,” says The World Bank. Keeping track of governments that are improving policies will determine the rate of poverty. Measuring statistics gives a better look at what is working to help improve the lives of those in need.
USAID has taken measures to better the lives of those living in Afghanistan. They have brought safety to the population and voter inclusion for women. “Since 2012, USAID has supported over 1,200 community improvement activities, such as construction of potable water pumps and maintenance for local schools and clinics,” according to USAID’s website. Elections in Afghanistan have greatly improved; representation of women has brought a greater turnout of voters.
Latin America has also experienced economic growth thanks to the efforts of USAID. “Political advances have been notable as well: free elections, vibrant civil society, and responsive governments are mostly the norm,” says USAID. They continue to focus on drug trade, civil rights and natural disasters. However, USAID has improved family planning, revitalization in Haiti and the decline of violence in El Salvador.
The government of a country represents the health and safety that the people are receiving. If development continues to progress, poverty will continue to decline. It is vital that the World Bank continues to track progress and organizations like USAID help those in poor countries.
– Kimberly Quitzon
Sources: World Bank, USAID, USAID 2,
Photo: UN
Water Privatization’s Biggest Offenders
An estimated 783 million people worldwide lack access to clean drinking water. Despite the importance of expanding access to this basic building block of life, many companies instead view water as a commodity to be bottled and sold at the expense of the world’s poor and the environment.
Bottled water is incredibly wasteful. The bottle itself also leads to widespread environmental damage, with more than 85% of globally consumed bottles being thrown in the trash, as opposed to being recycled. Furthermore, 10% of all plastic reaches the ocean, leading to the deaths of an estimated one million birds and marine animals yearly.
Yet, if the environmental impact of bottled water is disgraceful, its impact on human rights is horrifying.
Fiji Water has nearly exclusive access to a 17 mile aquifer on the north coast of Fiji while many Fijians have lived with water shortages resulting in rations as low as 4 gallons of water per family per week. Coca-Cola’s extraction of water in India to produce Dasani, meanwhile, has resulted in water shortages for over 50 villages.
Water extraction has also led to a variety of health problems. The inadequate and unclean water supply in Fiji, for instance, has lead to typhoid outbreaks and parasitic infection. The pollution caused by Coca-Cola through its Indian bottling plants has included dangerous compounds such as lead.
Of course, the causation of health problems through privatization only brings to attention a broader issue in the bottling and privatization of water—the philosophical denial of the right to water. Nestle came under fire in 2013 after the emergence of a video of CEO Peter Brabeck stating that water is not a human right, but a commodity to be given a market value and sold. Nestle owns over 15 bottled water brands, including Poland Springs and San Pelligrino, and has been criticized for its sale of Nestle Pure Life water to the developing world at the expense of the development of clean-water infrastructure. The sale and purchase of bottled water on its own denies the right to water as an infrastructural need, and instead treats it as a commercial product through which the wealthy continue to benefit at the expense of the world’s poor.
Protecting the right to water, globally, is highly important. It is a right which must exist to protect the health, agriculture and infrastructure of the developing world. Water privatizations, and the actions of the companies that control significant portions of the world’s water supply, deny the important progress to be made on this front.
– Andrew Michaels
Sources: Food Is Power, Mother Jones, World Watch, The Guardian, UN Water, Huffington Post,
Photo: Food and Water Watch
Red Cards to Empower Women to Say “No”
Sexual violence can be addressed by two different questions:
1. How can we empower women to prevent sexual violence?
2. How can we empower men to change their attitudes and practices related to sexual violence?
Programs often tend to focus on addressing one question or the other. However, research organizations, such as the International Center for Research on Women, support both methods.
FHI 360, Family Health International, cites international data indicating, “one in three women worldwide experience physical and/or sexual violence by a partner or sexual violence by a non-partner in their lifetimes.”
The red card program has been used in Ethiopia and South Africa to address the first question of female empowerment.
When women attempt to avoid unwanted violence or contact from men, the word “no” often does not work. A comprehensive study by the ICRW indicates that the high prevalence of rape in Croatia, Mexico, Chile, Rwanda, and India is partially due to the fact that for some men, “no means yes”.
The red card programs train young women to be assertive in preventing unwanted sexual behavior from men. The analogy of the red card in soccer is used because both men and women associate the red card with the notion to stop some kind of action. Young women are provided with actual red cards that can help them be more assertive when they want to say “no” to unwanted behavior. Of course, “no” should mean “no,” and sexual violence can never be justified by a lack of “prevention” on the part of the victim. The only way to end rape is to have rapists stop raping.
The idea is that because the word “no” often does not work, the action of displaying the red card can be more effective. In Ethiopia, about half of the students who received training on the red card program have used it to “say no to sugar daddies, to abusive professors, to avoid violence, to refuse alcohol and other substances, and to insist on condom use.”
In South Africa, the program was implemented through Sonke Gender Justice Network, Grassroots Soccer and other NGOs. Mass media forms such as television and radio were used to target many people. Over 1,000 people completed the red card training with Sonke and over 12,000 people completed the program with Grassroots Soccer.
While the red card programs are innovative approaches to provide women with the power to avoid unwanted behavior in the immediate time, the ultimate goal would be for “no” to actually mean “no,” and for men to recognize and respect this. This is why institutions such as ICRW also support research and programs that will change the attitudes and practices of men.
– Iliana Lang
Sources: FHI 360 1, FHI 360 2, HCRW Publications, Africa Entertainment,
Photo: FHI 360
Commodities Speculation, Food Pricing and Security
During the beginnings of the Great Recession in 2008 and the years that followed, food prices went haywire. Indexes of food prices skyrocketed and took years to reach levels that even resembled normalcy. According to the United Nations, the crisis caused more problems with food security for the poor and drove even more people into poverty as food prices became a higher burden to bear. At least 130 million people were pushed into poverty in 2008 as a result of the food crisis and high pricing.
The idea of speculating what the future might hold in order to make some money is not new. In fact, the method has been used in virtually every market, with the exception of planned economies. Speculation by buyers and sellers in the market is actually helpful for reducing price volatility in markets for things such as food, as buyers and sellers can bet against price increases or decreases as a form of insurance against volatility.
However, problems can arise when non-commercial speculators enter the scene. These entities are generally financial institutions or investors. Excessive non-commercial speculation is bad for the health of the market because what is essentially calculated gambling on assets can actually end up increasing price volatility in the market, an issue that then causes people to become uncertain about the future.
Large amounts of uncertainty are not good for market coordination. In April and March of 2008, soybean and corn price volatility was upwards of 30% for each commodity (60% for wheat in March of the same year). These absurd outcomes have been largely attributed to the role of non-commercial speculators in the market. Other speculative tools such as commodity index funds, which use algorithms based on various different financial indicators to decide how to “bet,” facilitate even more speculative problems.
These speculative problems have caused the massive disruption of food supply chains and pricing. In 2014 the European Commission began to implement new regulations on securities markets (where commodities speculation takes place via “futures” and “options”). The new regulations were made to help avoid both the catastrophes of the 2008 financial crisis and the cascading problems that came with them, such as the food pricing speculation that drove millions into greater deprivation and the lack of reliable access to food at costs decided by market forces. These reforms were a step forward, and one of the first times serious measures had been introduced.
Although these concepts may seem quite far removed from the impoverished around the globe, financial markets can, and do, have reverberating effects around the global economy. In conjunction with the financial crisis, food speculation took a toll on those most in need and led to increased hardship across the board. However, as the European Commission demonstrated, measures can be taken to reduce the risks of excessive non-commercial speculation in markets. Responsibly done, commercial speculation can be a tool for increased market efficiency and stability. Without regulations in place, securities and commodities markets can become more sinister.
The Guardian cites figures estimating that large financial institutions including JP Morgan, Goldman Sachs, Morgan Stanley and others made billions of dollars off non-commercial speculation in food commodities between the years of 2010 and 2012.
– Martin Yim
Sources: Institute for Agriculture and Trade Policy, United Nations, Reuters, The Guardian
Photo: The Ecologist
Aid and Economic Opportunity in Ethiopia
Thirty years ago, Ethiopia was hit by a crippling famine that set it on a path of sluggish growth and poverty. However, that is beginning to change, as aid and economic opportunity in Ethiopia are growing tremendously.
In the past several years, Ethiopia has averaged around 10% growth, a staggering number and an incredible economic opportunity for foreign investors. The country was attracting only about $100 million in foreign direct investment seven years ago, but in 2014 Ethiopia drew in $1.2 billion. The country is taking a state-led approach to attracting investment; it just wrapped up its 5-year Growth and Transformation Plan. This plan is intended to expand social services and infrastructure, ensure macroeconomic stability, and enhance agricultural and manufacturing productivity. The net result of these changes has been a more stable investment environment, and international investors are beginning to take notice.
These investors include China, Turkey, India, some European firms and the United States. China is especially involved in infrastructure projects, having constructed a passenger railway in Addis Ababa, the nation’s capital, in addition to the construction of several dams. Turkey, India and China have all recognized Ethiopia as a good new manufacturing hub, with some of those countries’ largest manufacturers of paint, shoes and textiles relocating to the country and taking advantage of the cheaper labor costs and tax incentives.
As foreign investment in Ethiopia strengthens, the United States remains somewhat reserved in taking advantage of Ethiopian markets. In 2013, the World Bank ranked Ethiopia 127 out of 185 countries in terms of the ease of doing business. The U.S. State Department also describes how bureaucracy and a restriction on investing in key industries can hinder business objectives. American investors have traditionally been wary of investing in countries dominated by state-owned enterprises such as telecommunications, power and finance industries of which the Ethiopian government still controls.
Despite sluggishness by U.S. investors, a few key enterprises are taking advantage of the increased affluence in the country. Boeing recently signed a deal with Ethiopia’s largest airline to provide 20, 737 MAX 8s, worth a total of $2.1 billion, and with a provision to possibly supply 15 more. This deal is a huge indication of the growth potential of Ethiopian industries, which only 30 years ago were nowhere close to capable of generating demand for expensive aircraft produced by Boeing. A few U.S. private equity firms such as KKR and Blackstone have also made deals in the country, investing in infrastructure and floriculture, more evidence of a shift in the investment climate.
Ethiopia’s economic successes have both been enhanced and supported by international aid efforts in the past several decades. The country was among the most successful in hitting Millennium Development Goals benchmarks—halving child mortality, doubling access to clean water and quadrupling primary school enrollment in the past 15 years. These advances have no doubt provided a solid foundation for Ethiopia to transform into the rapidly emerging market it is today.
Despite double-digit growth, Ethiopia still needs help. While its economic successes have lifted millions out of abject poverty, the country still ranks 173 out of 186 countries on the U.N. Human Development Index, which measures quality of life. Per capita income is about $560, among the lowest in the world. And addressing public health challenges is an ongoing issue; malnutrition and infant mortality are still relatively high.
Growth, emerging markets and aid go hand-in-hand. While Ethiopian economic successes should be celebrated as a pathway to reducing poverty, they should also be taken as an indication of the effectiveness of previous poverty reduction efforts. There is a synergy between existing economic growth and continued foreign aid, which can enhance the quality of life for the poorest in Ethiopia, ensuring that Ethiopia becomes the next best place for the United States to do business.
– Derek Marion
Sources: Ethics And Internatioal Affairs, The Africa Report, Financial Times, US State Department, World Bank
Photo: Flickr