Long before the global recession, Argentina defaulted on a staggering $81 billion of national debt in 2001. The government was able to renegotiate with its bondholders in subsequent years—93 percent of them agreed to make do without the monetary sum previously owed by accepting exchange bonds with lower returns. The remaining holdouts, however, refused the offer—demanding that they be repaid in full despite the country’s continued economic plight.
Moreover, many of the indignant creditors swept in immediately after the default to buy the bonds under-priced. These vulture funds systematically buy up cheap credit from nations in crisis only to sue them later in order to profit. One of the major vulture funds behind Argentina’s ensuing litigation headache is NML Capital. Its owner, Paul Singer, is an American CEO with a net worth of $1.3 billion and is oft-credited as the father of vulture capitalism.
Historically, Singer’s cunning entrepreneurship has spared no mercy. In 1996, he purchased a bond from Peru for $11 million, sued, and received a return of $58 million. In subsequent years, he would go on to sue the Republic of Congo for a sum 40 times the original $10 million he paid and take nearly $40 million of the nation’s oil sales. Argentina, Singer’s latest victim, has likewise been struggling against his tactics.
As a prominent businessman, Singer not only has the financial support but also the political backing he needs to win these big cases. Not only has he made a name for himself as one of the leading contributors to Republican election campaigns, but he has also worked with Democrats to lobby against Argentina through the American Task Force Argentina—which claims to represent hardworking American taxpayers. This allegation, however, could not be any further from the truth. After all, NML Capital is strategically headquartered in the Cayman Islands for tax evasion purposes.
Argentina, on the other hand, has equally eminent supporters. The International Monetary Fund was amicus curiae to Argentina. As Eric LeCompte, Executive Director of Jubilee USA, states, “The IMF understands the ruling will go well beyond Argentina – it will have serious repercussions on poverty around the globe. If these hedge funds win it will harm legitimate investors and poor people.” The Obama administration has expressed similar sentiments and lent vocal support on behalf of Argentina’s national sovereignty.
Although the United States Court of Appeals for the Second Circuit recently upheld a lower court ruling in favor of NML Capital and its fellow hedge funds—ordering Argentina to pay $1.3 billion to the plaintiffs, no measures to enforce the ruling were established.
In the meantime, it remains to be seen whether the case will be granted certiorari by the United States Supreme Court, Argentina’s final platform of hope before President Cristina Fernandez de Kircher is forced to default on even the exchange bonds—which would only serve to further exacerbate the country’s financial quagmire.
If the Supreme Court justices choose to pick up the case and rule in favor of Argentina, they could establish precedent that benefits impoverished nations and legitimate creditors everywhere. Conversely, if the Court of Appeals ruling is upheld, vulture fund activity would go largely unchecked—creating conditions for a bleak world in which developing nations find themselves constantly indebted to unethical lenders and unable to escape from the cycle of poverty.
– Melrose Huang
Sources: Common Dreams, New York Times, IPS, The Guardian, FRANCE 24, Huffington Post
Poverty in Vietnam 101
Poverty in Vietnam still exists, but the country is a great success story. Since the beginning of political and economic reforms in 1986, Vietnam has transformed from being one of the poorest countries in the world to a lower middle-income nation. Per capita income grew from below $100 at the start of the reforms, to $1,130 by 2010. According to the World Bank, the proportion of the population in poverty has fallen from 58% in 1993 to 14.5% in 2008. Vietnam has so far attained five of its ten Millennium Development Goal targets and is working towards achieving two more by 2015.
The country has also made incredible progress in education. Primary and secondary school enrollments for the poor have reached more than 90 and 70% respectively. Rising levels of education and diversification into off-farm activities, such as working in factories, construction sites, or domestic housework have also contributed to poverty reduction.
Although Vietnam has made great progress, the country still faces challenges when tackling further poverty reduction. The prevailing poverty of the ethnic minority in Vietnam is of particular concern. Although Vietnam’s 53 ethnic minority groups make up less than 15% of the population, they accounted for almost 50% of the poor in 2010. Many continue to reside in less productive and more isolated upland regions of Vietnam.
Rising inequality in income and opportunities has also accompanied the recent economic growth and transformation. Some of the poor have limited access to high quality education, health services, and job opportunities, particularly those living in small cities or rural areas.
The Socio-Economic Development Strategy (SEDS) 2011-2012 focuses on structural reforms, social equity, environmental sustainability, and arising issues of macroeconomic stability. It defines three “breakthrough areas”: promoting human resources skills development (particularly for modern industry and innovation), improving market institutions, and infrastructure development. Vietnam aims to lay the foundations for a modern, industrialized society by 2020.
Maintaining the current pace of economic growth in Vietnam is crucial to continued poverty reduction. However, this growth must come with equity and will have to include all regions and groups in the country to become a modern, industrialized society.
– Ali Warlich
Sources: World Bank News, World Bank Data
Photo: Asia News
What is Poverty Reduction?
From hand-outs to hand-ups, nations, non-profits, and individual donors do a great deal towards poverty reduction efforts. These efforts see varying levels of success, as judged against many diverse standards. Though most people have a general idea of what it means to reduce poverty, the concept of poverty reduction as such seems to evade a static definition. On the contrary, “poverty reduction” continues to evolve and grow, alongside poverty reduction strategy innovations.
Many years ago, the United States Agency for International Development, or USAID, began to address global poverty by way of financial contributions to governments of poverty-stricken nations. Early relief initiatives also included donations of agricultural commodities, often dropped in shipments from airplanes and helicopters. The idea was simple: people are hungry, give them food. Since then, the concept of poverty reduction has become a much more complicated idea.
Traditionally, the term has been used as short hand for the kind of economic growth pursued in less-developed nations, by more-developed nations, to achieve a goal of lifting as many people above the poverty line as possible. As years have passed, there has been a shift from hand-outs (i.e. simple financial and agricultural donations) toward long-term poverty reduction, which includes extended relief programs and education programs focused on sustainability in target communities.
At least one paper from the Center for Global Development in Washington D.C. argues that the traditional definition of poverty reduction fails to encompass efforts to reduce poverty that, though not falling into a category of efforts to promote long-term growth in target communities, nonetheless contribute to an ethically tenable position in the fight against global poverty. In this paper, Owen Barder argues that poverty reduction has other dimensions, for example, in the trade-offs between tackling current and future poverty or dealing with the causes and symptoms of poverty.
The danger of ignoring the various dimensions of poverty relief, Barder suggests, lead to the adoption of poverty reduction strategies that fail to take a holistic view of poverty. As a result, relief and aid programs may be less efficient, while aid agencies may be operating on underdeveloped objectives and incentives. For a more in-depth discussion of poverty reduction as an evolving concept and the working paper on this topic, click here.
– Herman Watson
Sources: Center for Global Development,UNDP, UNFPA, USAID
Top 5 Water Crisis Solutions
What an individual considers a “valuable resource” reveals a lot about the economic standing. In developing nations, water is considered a valuable resource. It is access to clean water that separates those who live from those who die in the developing world. The following list gives credence to efforts at alleviating the global water crisis.
1. LifeStraw
According to the joint monitoring efforts of the World Health Organization and UNICEF, 884 million people live without access to adequate drinking water. In response to this staggering statistic, the folks at Vestergaard Frandsen Disease Control Textiles have created the LifeStraw. This cheap, reusable tool allows the user to drink available water without worrying about if it is contaminated. Without any replaceable parts or batteries, the device filters out 99.9999% of waterborne bacteria and 99.9% of waterborne protozoan particles. At under $10 US, the LifeStraw has a one year lifetime worth of clean water consumption. While the LifeStraw is considered nothing more than a short-term solution, it is worthy of adamant praise.
2. Slingshot
While the LifeStraw does a great service for those in immediate need of clean drinking water, it does not serve the benefit for more than just the user. To meet this problem, Dean Kamen, the famed inventor of the Segway, has invented the Slingshot. Using less energy than the average hair dryer, the Slingshot uses a vapor compression filtration system to produce up to 30 liters of purified water in under an hour. Teaming up with the Clinton Global initiative and Coca-Cola, Kamen aims at bringing this technology to regions and communities still lacking clean drinking water.
3. Solvaten
Swedish for ‘sun water’, the Solvaten water purifying system is spearheading the sustainable water purification market. With a capacity of up to ten liters, the device simply sits in the sun until a blinking light indicates purified water. Although it takes three to four hours to completely purify the water, the sustainability factor outweighs any inconvenience. The device is currently undergoing testing in South America with very positive results.
4. P&G Water Purification Packet
With the water purification packet, Procter&Gamble has joined the fight to end the global water crisis. Remarkably, the team of scientists behind the project has managed to condense the proprietary municipal water sanitation system into a simple packet. By adding the packet to contaminated water, stirring and sitting, the solution has been proven to remove 99.99999% of common waterborne bacteria, 99.99% of common waterborne viruses, and 99.9% of protozoa. To date, P&G can tout that over 5 billion liters of clean drinking water have been made using these packets.
5. Desalination “Water Chip”
It seems ironic that, despite being 2/3 covered by water, our planet faces a global water crisis. The painful truth, however, is that the vast abundance of water we seemingly have at our disposal is not suitable for human consumption. Anyone who has had the misfortune of ingesting a gulp of seawater understands exactly why. To meet this challenge, chemists at the University of Texas, Austin and Marburg, Germany, are developing a 21st century solution to a very old problem. The “water chip” they have developed applies a small voltage to a chip filled with salt water. While this nascent technology is currently only producing nanoliters of clean water at a rate of only 25%, the innovation will be one to keep an eye on in the near future.
– Thomas van der List
Sources: Life Straw, Slingshot, Solvaten, P&G Packet, Water Chip
Photo: PB Works
What Causes Child Poverty in Wealthy Nations?
Today, when most people think of poverty they do not think of nations like the United States and the United Kingdom. Nonetheless, these two countries face serious problems regarding child poverty. Up to 20% of children in the U.S. live in poverty, while the United Kingdom faces some of the world’s highest child poverty rates. In spite of being two of the world’s wealthiest nations, both nations are struggling to address the causes of child poverty.
Leading Causes of Child Poverty
Of the many root causes of child poverty, most sources point to an absence of one parent, particularly the father, as having the greatest impact on a child’s future. In the U.K., 23% of children in two parent families live in poverty, while over 40% of children in single parent households fall into the same category. As women generally earn less in the same professions as men, children in single parent households where the father is absent face an even higher rate of poverty.
Children living with only their mother are
Ethnicity has also been linked to higher child poverty rates in both the U.S. and the U.K. Part of the reason for the correlation between ethnicity and child poverty in the U.S. is due to the level of crime in minority communities. Not only are families in these communities more likely to be the victims of crime, but they are also more likely to have a parent, more often the father, incarcerated than families in areas with less crime. A child whose father has been incarcerated is five to seven times more likely to be incarcerated in their lifetime.
Although unemployment is a major contributor to child poverty, it is not the only problem. In any economy, poor adults often find they are forced to take dead-end jobs, without advancement opportunities, while middle management and other placements are given to college graduates whose families could afford higher education. In these situations, the wage-earning adult from a poor family is only offered part-time work or the position they currently occupy pays too low a salary and the family suffers.
Clearly, the issues related to child poverty are not limited only to less developed nations. Indeed, child poverty rates are surprisingly high in the world’s most developed nations, including the U.S. and the U.K. If we are unable to address these issues in our own countries, how are we to act as role models for the rest of the world?
– Herman Watson
Sources: Child Poverty Action Group, The Future of Children, Fight Poverty, The Guardian, Barnardo’s
New Agriculture Methods Utilized by Small Farmers
When this issue of global poverty and hunger is discussed, one topic is often central to the conversation is the impact of small-scale farmers. In the developing world, these farmers are essential not only for providing food for their communities, but also for creating jobs and improving the local economy. While many experts are adamant that encouraging small farmers to participate in the “global cash economy” – meaning that farmers operate primarily to sell crops for cash – is the most effective way to diminish global poverty, others are advocating for a new approach.
New Methods Aid Small Farmers
This new method focuses on “non-mentised agriculture” and acknowledges other factors besides the sales of surplus crops as a way to alleviate hunger and poverty. Another term for this new method is the concept of ‘value-chains,’ the link between “input suppliers, farmers and markets.” The Gates Foundation, the Alliance for a Green Revolution in Africa, USAID’s Feed the Future, and the G8’s New Alliance for Food Security and Nutrition support the utilization of value-chains and are confident in its ability to decrease global poverty.
Value-chains differ from the cash economy model by acknowledging that, although farmers need to earn money from their crops, not all of the crops will be sold on the market. One way farmers are doing this is by switching from growing cotton, which is strictly a cash crop and harmful to the environment, to other types of food crops (like rice, maize and soybeans in Ghana). Value-chains also call for more interaction between small farmers, markets, financiers, equipment services and other forms of agriculture training.
By working with these other groups, small-scale farmers will be able to better financially manage their farms and decrease production costs in order to increase surplus crops and earn a profit. With this method, financers also have the opportunity to invest in small farms. It is through improving agriculture strategies and creating business-minded farmers that profits will begin to increase not by farming primarily cash crops. However, because the chain-value method does not rely on many cash transactions, any economic improvements for farms go widely unreported. Once government officials develop a better tool for measuring such progress in the agriculture community, the impact of the chain-value will be better understood.
– Mary Penn
Sources: Al Jazeera, Vibe Ghana
Photo: Vocabulary
Vulture Capitalism Circles Argentina and Developing World
Long before the global recession, Argentina defaulted on a staggering $81 billion of national debt in 2001. The government was able to renegotiate with its bondholders in subsequent years—93 percent of them agreed to make do without the monetary sum previously owed by accepting exchange bonds with lower returns. The remaining holdouts, however, refused the offer—demanding that they be repaid in full despite the country’s continued economic plight.
Moreover, many of the indignant creditors swept in immediately after the default to buy the bonds under-priced. These vulture funds systematically buy up cheap credit from nations in crisis only to sue them later in order to profit. One of the major vulture funds behind Argentina’s ensuing litigation headache is NML Capital. Its owner, Paul Singer, is an American CEO with a net worth of $1.3 billion and is oft-credited as the father of vulture capitalism.
Historically, Singer’s cunning entrepreneurship has spared no mercy. In 1996, he purchased a bond from Peru for $11 million, sued, and received a return of $58 million. In subsequent years, he would go on to sue the Republic of Congo for a sum 40 times the original $10 million he paid and take nearly $40 million of the nation’s oil sales. Argentina, Singer’s latest victim, has likewise been struggling against his tactics.
As a prominent businessman, Singer not only has the financial support but also the political backing he needs to win these big cases. Not only has he made a name for himself as one of the leading contributors to Republican election campaigns, but he has also worked with Democrats to lobby against Argentina through the American Task Force Argentina—which claims to represent hardworking American taxpayers. This allegation, however, could not be any further from the truth. After all, NML Capital is strategically headquartered in the Cayman Islands for tax evasion purposes.
Argentina, on the other hand, has equally eminent supporters. The International Monetary Fund was amicus curiae to Argentina. As Eric LeCompte, Executive Director of Jubilee USA, states, “The IMF understands the ruling will go well beyond Argentina – it will have serious repercussions on poverty around the globe. If these hedge funds win it will harm legitimate investors and poor people.” The Obama administration has expressed similar sentiments and lent vocal support on behalf of Argentina’s national sovereignty.
Although the United States Court of Appeals for the Second Circuit recently upheld a lower court ruling in favor of NML Capital and its fellow hedge funds—ordering Argentina to pay $1.3 billion to the plaintiffs, no measures to enforce the ruling were established.
In the meantime, it remains to be seen whether the case will be granted certiorari by the United States Supreme Court, Argentina’s final platform of hope before President Cristina Fernandez de Kircher is forced to default on even the exchange bonds—which would only serve to further exacerbate the country’s financial quagmire.
If the Supreme Court justices choose to pick up the case and rule in favor of Argentina, they could establish precedent that benefits impoverished nations and legitimate creditors everywhere. Conversely, if the Court of Appeals ruling is upheld, vulture fund activity would go largely unchecked—creating conditions for a bleak world in which developing nations find themselves constantly indebted to unethical lenders and unable to escape from the cycle of poverty.
– Melrose Huang
Sources: Common Dreams, New York Times, IPS, The Guardian, FRANCE 24, Huffington Post
Proposed Begging Ban in Finland
Politicians from the National Coalition Party, Centre Party and Swedish People’s Party have proposed a ban against begging in Finland. Ban supporters see begging as an annoyance and want to fine perpetrators, predominately the Roma (or “gypsies”) who are most infamous for begging in Helsinki, the Finnish capital.
Proponents of the ban see it as a positive move for human rights in Finland, where many are coerced into begging by sex traffickers and street criminals. The European group The Group of Experts on Action against Trafficking in Human Beings (GRETA) advocates for the ban for this very reason.
Opposers of the ban see it as a violation of human rights, as it prevents those who are begging out of free will from obtaining help from the more advantaged. The Roma population has substantially increased over the last few years due to their migration from Eastern Europe into Scandinavia, increasing the number of poor people in need of assistance there. University of Helsinki’s Professor of Constitutional Law, Tuomas Ojanen points out the problematic implications of the fledgling law, stating: “(m)eans other than a prohibition on begging should be pursued to deal with the human rights issues related to the poverty of, and systematic discrimination against, Roma people.” Historically, the Roma have been treated poorly and shouldered the blame for many societal problems. One must not forget that the Roma were persecuted in the Holocaust in much the same way as Jews, with anywhere from 200,000-1,000,000 killed by the Nazis from 1939-45.
Is a ban on begging really necessary in Finland? The ban may curb the “annoyance” of beggars asking for money, but what will it accomplish in the long run? It certainly will not result in a greater reduction of poverty. After all, a beggar is begging for money, and will be unable to pay a fine if he or she is required to pay one. Yes, a ban may be conducive to ending forced begging and sex trafficking in Finland, but it will only worsen the situation of the Roma in the region. Further disenfranchising an already downtrodden people is a high price to pay for ending a petty irritation.
– Josh Forgét
Sources: Romanies and the Holocaust: A Reevaluation and an Overview, Ice News, The Human Rights Blog
MIT Researchers Find the Viral Gene in Microfinance
The central problem of many anti-poverty efforts is a failure to actually reach the poor. Often, the programs themselves are faulty or broken. Much of the time, however, the problem is demand-side: The poor don’t trust the aid programs and don’t want to participate.
Two MIT researchers think they have found a solution, however. Esther Duflo and Abhijit Banerjee, co-founders of the Jameel Poverty Action Lab (J-PAL), decided to measure an oft-overlooked factor in community development: social influence, or what they call “diffusion centrality.” Using their new metrics, they think they have found a key to motivating demand-side participation in charitable efforts.
In their recent paper, “The Diffusion of Microfinance,” they argue that finding the right “social injection points” is key to successful beneficial programs. They studied microfinance programs in 75 villages in southwestern India for five years, conducting extensive surveys to determine how participation in microfinance flowed along social networks. They paid especially close attention to social pressure points like village leaders, teachers, and business owners. What they found surprised them.
Although some of the typically well-connected socialites were excellent vehicles for transmitting participation in the programs, they were not as good as you would think. Many ranked low on their diffusion centrality index. Even people’s friends—the quintessential source of social pressure—had little effect on participation.
What they did find is that, barring any presumptions about connectedness, individuals who ranked in the 90th percentile of diffusion centrality were the gatekeepers to large-scale participation. When they were the first ones targeted by microfinance efforts, the programs ultimately reached 11% more people—from their perspective, a huge jump in participation.
“I think this work will lead to more innovative research on how social networks can be used more effectively in promoting poverty alleviation programs in poor countries,” says Lori Beaman, a professor of economics at Northwestern University and a J-PAL affiliate. “It significantly moves forward our understanding of how social networks influence people’s decision-making.”
– John Mahon
Sources: MIT, Stanford, New Yorker
Photo: MIT
New Plan for Women’s Rights in Morocco
A new plan was recently released to advance women’s rights in Morocco over the next four years. The plan, called “IKRAM,” will provide shelter for domestic violence victims, increase educational opportunities for girls, and increase the percentage of women in public office.
While the plan is commendable, some women’s rights activists believe it falls far short of what is necessary. Morocco reformed its family law in 2004, but many of these reforms are circumvented by conservative judges. Sex outside of marriage remains illegal.
The reform raised the legal age for marriage from 15 to 18, but according to 2010 data, courts have allowed minors to marry in 90% of cases. In 2012 the global community was shocked by the suicide of a young girl who was forced to marry her rapist by her parents and a conservative judge.
Advocates of women’s rights believe a pressing issue is amending the 475 law. The 475 law allows statutory rape charges to be dropped if the two individuals involved are married. This encourages rapists to marry their victims to avoid all charges. Conservative judges support this action as they believe it will save the girls’ honor. While there are rumors that the government will review the penal code, it is uncertain how they plan to approach it or if they will take women’s rights into consideration.
The government has set up a committee that will monitor IKRAM and ensure that its goals are met. This committee will monitor action across all ministries. The committee will also advocate legislation supporting women’s rights.
– Callie D. Coleman
Sources:Open Equal Free,New York Times,Al Monitor,All Africa
Photo: Monsite
Charlize Theron on HIV/Aids Campaign in South Africa
On July 29, Academy Award-winning actress Charlize Theron urged the youth of South Africa to educate themselves about HIV/AIDS in order to stay healthy. The speech took place after her meeting with President Jacob Zuma, where they discussed South Africa’s response to HIV/AIDS and her role as a UNAIDS messenger of peace. UNAIDS is the joint United Nations program on HIV/AIDS.
The South African-born actress told reporters at the Union Building in Pretoria, “We are all here to support you. You are the future of this country and I am asking you to seize the opportunity to lead healthy and empowered lives.”
“It’s always very special for me to be able to come home and even more when I have a chance to lend my support to the youth of this country,” said Theron, speaking to the youth wearing a red AIDS ribbon.
Known for her glamorous red carpet photos, perfume advertisements, and movie roles, Theron said South Africa has come a long way in its response to the HIV epidemic, but too many girls and young women are still falling through the cracks and should not be forgotten. The social stigma associated with the virus in some areas of South Africa still needs to be addressed. Women should be empowered enough to protect themselves whether or not they chose to be sexually active, Theron said.
Theron went on to say she regarded a safe school environment, with teachers and counselors who were equipped to help, as key effort in the response to HIV/AIDS. In 2009 Theron was named the UN Messenger of Peace, tasked with promoting efforts to end violence against women. The Africa Outreach Project is one of her projects which, according to the UN, provides funding for a mobile health and computer clinic that visits high school and rural communities affected by HIV/AIDS.
Zuma proudly welcomed Theron back home. “We had a very good discussion, which we believe is going to give us a big push,” he stated to reporters. He applauded South Africa’s success in increasing life expectancy, praising Health Minister Aaron Motsoaledi. He said in his hometown of Nkandla, people could now talk about HIV/AIDS without fear.
After the briefing, photographers swarmed for one last photo of the glamorous movie star.
– Scarlet Shelton
Sources: All Africa
Photo: Firstpost