POVERTY: The World Bank VS poverty: a game played by its own rules

05 May 2011

The top management of the World Bank, including its president Robert Zoellick, is seriously concerned about the threat of a global food crisis. The financier says that if there is a crisis it will be much more severe than all the preceding food crises ever seen.



Zoellick’s pessimistic expectations are based on the pace at which food prices are currently growing around the world. According to him, there has been a 38% price increase in the global food market, nearly reaching the critical level of 2008.
According to Robert Zoellick, such a situation may increase the poverty around the world. Masterforex-V Academy experts note that it is the World Bank (headed by Mr. Zoellick) that mainly influences the poverty levels of numerous countries by decreasing or increasing their ratings. Consequently, the World Bank and the IMF not only form their monetary and credit policies but also influence the international image of a country and its attractiveness for international investors.
 The WB can announce that the number of the poor in a certain country has dramatically increased and can offer the country’s government a loan, recommendations and instructions on how to make reforms. Ukraine may serve as an example: the WB experts directly influence the pension reform in Ukraine.
The WB can announce a decline in the amount of the poor as the result of its [WB] help. In this case that will be a signal for the country’s government to cooperate with the WB and the IMF. Tajikistan is a striking example: according to the WB, the poor people make up 47.2% of the entire population (it used to be 72%), implying that the poor are those who live on $2.5 a day.

What are Zoellick’s fears based upon?
1. The threat of another global crisis. According to Zoellick, the growing prices on food and crude oil as well as the instability in the Middle East well may lead to another global crisis. Such a statement was made after the meeting of the WB and the IMF in Washington. Any considerable shock is enough to start a crisis. However the major concern is the food price growth.
2. More people around the world find themselves living below the poverty line. According to the WB, since June 2010 the amount of such people has increased by 44M people, which means they cannot spend on food more than $1.25 a day.
3. Continuous price growth. If the prices on food around the world gain 10% more. The amount of those living below the poverty line will be increased by 10M people.
4. Food supply problem. Robert Zoellick says that the problem is urgent and needs to be solved as soon as
possible. Over 1 billion people are currently starving all around the world. Yet the amount grows by 68 people each minute.

What solutions are offered by the WB and IMF?
· First of all they say one shouldn’t trust the macroeconomic indicators of some specific countries. According to Dominique Strauss-Kahn, Managing Director of the IMF, these days many countries are showing sound economic recovery, however it doesn’t mean that the living standards in those countries are improving. For example, Tunis and Egypt were showing economic recovery but the people didn’t feel that their living conditions were somehow changing for the better. It appears that some international financial institution will be determining a country’s living conditions with all the ensuing consequences. Especially notable is that the WB is going to initiate a series of reforms in the Middle East supposedly in order to not lose the young generation of the region.
· In order to do that the WB and the IMF are going to promote the creation of new jobs (in the Middle East and North Africa)
· Monetary policy. Both the institutions are going to directly participate in the development of the countries’ monetary policies.
· They are going to help the developing countries. The G20 Finance Ministers also promised to allocate $35B to help the counties of the Middle East and North Africa. In the short run the IMF and the WB may announce a decline in the poverty level in Egypt, Tunis, Yemen and even in the Eastern (rebellious) part of Libya.
So, the real and urgent problem of global poverty, which by the way has been partially caused by the IMF and the WB’s activity, is under the risk of turning into an efficient tool for political manipulation and speculation. At least it is difficult to believe in the IMF and the WB’s sincere desire to feed the hungry.

http://www.profi-forex.us/news/entry4000001393.html

POVERTY: KENYA: Outrage over rising fuel and food prices

20 April 2011 (IRIN)
Hundreds of people took to the streets of Nairobi on 19 April to protest against the rising cost of fuel, which they blame on the government. Referring to the recent condom shortage in the country, the protesters chanted: “We want ugali [maize flour], we don’t want condoms!” as they marched from the centre of the city towards the Houses of Parliament. Spiralling fuel prices have caused sharp increases in the price of food and transport across the country.
“I am here to demonstrate because things have gone high, things like maize flour, sugar and kerosene. I want to ask the government to help the poor people because they are the ones who are in trouble - they are getting very little money,” said Kennedy, a father of three from Kibera, one of Kenya’s largest slums.
According to the World Bank, the price of maize flour, a staple food for many Kenyans, has increased by 27 percent in the past three months.
Last week, the country’s Energy Regulatory Commission announced a KSh9 (US11 cents) increase in the price of petrol per litre in Nairobi to KSh111.17 ($1.32). Diesel rose by 14 percent in the city, while kerosene, the main fuel for low-income households, rose by 8 percent. In response to the fuel crisis, public service vehicles increased their fares by 30 percent, hitting consumers.
Kenya’s Energy Minister, Kiraitu Murungi, attributed the high prices to external factors, such as an increase in the price of crude oil and the depreciation of the Kenyan shilling against the dollar.
Although Finance Minister Uhuru Kenyatta announced 20 and 30 percent tax cuts on diesel and kerosene respectively on 18 April, they did not deter the protests, organized by the Consumers’ Federation of Kenya (COFEK), which claimed they were “too little, too late”.
According to The People’s Parliament (Bunge la Mwananchi), the cuts will have no impact on the price of petrol. “Those cuts do not make any difference - how does that trickle down to me paying KSh70 [$0.83] to go home? It doesn’t trickle down! So women, men, old people have decided - we are going to go the Egyptian way, the Tunisian way,” Dina Awora Guy, the president, told IRIN. “Most of these are man-made crises. The fact that fuel prices are going up all over the world does not mean that Kenya cannot have policies to cater for eventualities like these. “
COFEK blamed the government’s “lack of political will” and “outright corruption” for the crisis and said in a press statement that the government was increasing fuel prices to fundraise for the 2012 general elections. A network of Muslim leaders called on the government to subsidize the cost of basic foodstuffs and to scrap the fuel control mechanism, initially intended to cushion the population against rising fuel prices, but which had instead contributed to the rising prices. Protests also took place in other major cities across the country.

Situation worse in north
In northern Kenya, the sharp increase in fuel prices has hit relief operations, increasing the vulnerability of communities already in the grip of severe drought.
Critical services such as transport, access to health facilities, food distribution and water trucking have been affected, say aid agencies. Already high food prices in the semi-arid region have increased further.
Abdi Galgalo, a volunteer aid worker in Isiolo, told IRIN the high fuel prices had resulted in a chain of problems for local residents. "The fare from Isiolo to Madogashe [about 150km] has doubled from KSh400 [$4.80] to KSh800 [$9.60] and many poor people, including those who have been referred for medical check-ups and treatment to Isiolo town or Nairobi are stranded in remote parts of Isiolo because they cannot afford the fare," he said.
Districts bordering Somalia, such as Mandera, Ijara and Marsabit, have recorded the highest prices of fuel, with a litre of petrol selling for KSh150 ($1.80), compared with KSh111 in Nairobi. A litre of diesel costs KSh140 ($1.60) and paraffin KSh100 ($1.20) a litre.
Galgalo appealed for the government's urgent intervention to save thousands of people and livestock and to facilitate the distribution of relief food, which has remained at a standstill over the past two months.
"A majority of the population in this remote region, almost 80 percent, who previously depended on livestock, now requires relief food, having moved their animals away in search of pasture; they have no milk to sell in order to buy food and shops have foodstuffs which are now too expensive for them," Galgalo said.
Abdullahi Ali, a resident of Sericho in Isiolo, said prices of tomatoes, cabbage and milk, for example, had more than tripled and many families were unable to afford a proper meal.
"This is the most terrible situation I have ever experienced since my childhood and strong tea is now the most common meal for many families. Here in Sericho, we are facing the worst water crisis, with people using weak donkeys, which have eaten nothing, to fetch water more than 40km away," Ali said.
"The current situation has made life in Kenya very tough; I support the demonstrations in Nairobi, our people are too weak, they are faced with a lot of problems the government should act fast to provide food assistance, beans, oil and maize and offer military trucks to transport people and goods."
http://www.irinnews.org/report.aspx?reportID=92532

POVERTY: Billions of dollars: counting the cost of oil price shocks across the developing world

15 March 2011


Share Global and African output could drop by as much as 1% over the next two years as a result of recent oil price rises, according to research from the Overseas Development Institute (ODI). The effects would be most severely felt across some African oil importers where some countries might suffer additional costs worth 4% in GDP
The newly released research contains an oil price vulnerability index detailing country by country levels of exposure to rising prices across the world. The index was created by Dirk Willem te Velde, Head of the ODI’s International Economic Development Group.
An accompanying research study also spells out the possible consequences of drops in GDP, suggesting a 1% drop in African GDP could lead to the loss of 5,000 infant lives and another 10,000 children owing to decreased funding for healthcare services. The study goes on to reveal that it is often the poorest within developing countries that are more exposed to an oil price rise because their consumption is most dependent on oil.
Countries likely to lose more than 3% of GDP as a result of a one-third increase in oil prices include Ghana, Honduras, Lesotho, Swaziland, Togo, Moldova and Nicaragua.

Dirk Willem te Velde said:
The reduction in world GDP is because a higher oil price transfers money from countries with a higher propensity to spend to countries with a lower propensity to spend. The fact that many of the poorest countries will feel the most acute effects further compounds the need for these countries to pursue crisis resilient growth strategies. This has to involve becoming more fuel efficient because their vulnerability is rooted in their dependence on fuel intensive production. That way we can better insulate the world’s poorest from such price shocks.”
For more detail, read "Oil prices, poor countries and policy responses", a blog by Dirk Willem te Velde on his study.
http://www.odi.org.uk/news/details.asp?utm_source=newsletter&utm_medium=email&utm_campaign=20110324&id=313&title=billions-dollars-counting-cost-oil-price-shocks-across-developing-world

POVERTY: AFGHANISTAN: Iran fuel ban hurting the poor, says minister

 Photo: Akmal Dawi/IRIN: Rising fuel prices fuel food and medicine price hikes badly affecting the poor (file photo)

KABUL, 13 January 2011 (IRIN) - A sharp rise in fuel prices caused by a recent Iranian fuel export ban, against a backdrop of rising global fuel prices, has bumped up food and medicine prices across Afghanistan, prompting concerns about the welfare of millions of vulnerable Afghans this winter.
Petrol and diesel prices have jumped 10-15 percent (with petrol rising from 45 to 55-58 afghanis a litre) since Iran blocked hundreds of Afghan fuel tankers on its border over two weeks ago. Afghanistan gets 30-40 percent of its fuel from or via Iran, according to the Afghan Ministry of Commerce and Industry (MoCI).
Tehran’s ambassador in Kabul, Fida Hussein Maliki, said his government wants to control fuel exports to or via Afghanistan to ensure that NATO and US military forces in Afghanistan are not using the fuel.
NATO and Afghan officials say the blocked tankers were only importing fuel for Afghan civilians.
“If the fuel was for NATO forces it would not have such an immediate and strong impact on our market,” Anwar-ul-Haq Ahadi, the minister of commerce and industries, told IRIN.
“Transport is the backbone of commerce in this country and when transport is expensive everything is going to be expensive,” he said.
Wheat flour, cooking oil, firewood and some medicines had become slightly more expensive since the fuel prices rose, local merchants and shopkeepers said.
“In winter demand for fuel for heating goes up. Now, not only is fuel expensive but everything else is also getting expensive,” said Haji Abdul Hai, a fuel importer.
Iran’s actions had resulted in over US$100 million losses for Afghanistan as of 10 January, the Afghanistan Trade Chambers said.
Aid agencies such as the UN World Food Programme use hauliers to import aid, and a rise in transport costs could also affect their activities.

Transit access and politics
Landlocked Afghanistan imports fuel, food, medicine and other commodities primarily over land, and relies heavily on the granting of transit access rights.
With US support, a new Afghanistan and Pakistan Trade and Transit Agreement (APTTA) was signed in November 2010 which is supposed to facilitate greater transit and trade.
The country also has a transit agreement with Iran but it is deemed “out of date”, according to MoCI officials.
“As Iran faces increased international sanctions over its nuclear programme, it tries to hit back at the international community by pressuring Afghanistan through transit bans, refugee deportations and other means,” Saifuddin Saihoon, a lecturer at Kabul University’s economy faculty, told IRIN.
Maliki, Iran’s ambassador, rejected such criticisms, saying Tehran had maintained good relations with Kabul.
Despite the presence of about 100,000 US and over 40,000 other NATO forces in Afghanistan, President Hamid Karzai has given assurances that his country would not be used as a launch pad for an attack on Iran.
Iranian officials accuse US/NATO forces of destabilizing regional security and have called for a withdrawal of US-led forces from Afghanistan.
But Afghan ministers are not pleased: “We cannot act at the behest of others [foreign states] and it would be unfair if they [Iranians] keep us under pressure. This is not friendly and Afghans are not satisfied,” said Ahadi, the MoCI minister, adding that trade and transit must be not abused for political purposes.
The Afghan government said it has been looking at the possibility of importing fuel from Kazakhstan and Russia. “We’re not living in an ideal environment,” said Ahadi “so we have to make every effort to mitigate the impact of the current fuel crisis.”
http://www.irinnews.org/report.aspx?ReportID=91624