COMMENT: Metropolis vs. Ex-colonies. Roles reversed?

Source: Daily Mail

PIGS' economic situation is not new. Greece's economy is preparing for its second bailout, after the first one, worth €110bn, failed to boost it. In 2010 its sovereign crisis peaked at a 120% of its GDP (€216bn) and over €20bn were thought to be evaded every year from the Greek tax system. Ireland and Portugal are going through a bailout process, Italy recently announced the biggest spending cuts in decades in an effort to tackle the financial crisis in the country and Spain's economy keeps sinking, with the highest unemployment rate of the whole European Union (almost a 21%), with the collapse of its main industry (building industry) and with financial problems that forced small banks to merge in big entities capable of resisting the crisis.

What is rather new, however, is the situation of some of their former colonies. European powers created a vast network of supplying colonies all around the world, that they exploited for centuries. After lengthy struggles (most of them violent), almost all of these colonies became sovereign states, but in most cases what remained after European colonialism were lawless territories with rivalries that led to bloody civil wars, unexisting economies, and a massive dependence from the ex Metropolis.

Now, tables have turned in some cases. In 2011 Portugal and Spain have become some of the most badly hit economies of the whole European Union. But some of its ex colonies, such as Angola, Paraguay or Brazil are experiencing an economic boom despite the financial crisis.

Public debt in 2010 (% of the GDP)

The difficult situation in Portugal has forced many Portuguese to leave their country, some of them transferring to the ex colonies, trying to find a new life. Exactly the same that people from the ex colonies did until recently, but all the way round.

According to The Economist, in 2007-08 there were 45,000 Portuguese registered in Angola. Only one year later, they were 92,000. Also Angolan banks have started buying stakes in Portuguese banks, as Banco BIC has just done with Banco Português de Negócios. The IMF has forecasted a growth of a 7.8% of Angolan GDP in 2011 and a 10.5% in 2012.

The same can be applied to Brazil, where its two economic giant hubs, Sao Paulo and Rio de Janeiro, fight to be considered the most appealing centre where to invest in the country.

Rio has been designed to host the 2016 Olympics, which will bring millions in cash and investments to Brazil's Treasury. Also, in 2010 foreign direct investment peaked at $7.27bn in Rio and $2.73bn in Sao Paulo. The cost of living in both cities has increased in the last year. In 2011 Rio was the 12th most expensive city where to live in the world (it had been the 29th in 2010). Sao Paulo fared even better, entering the top 10 most expensive cities in the world this year (from the 21st position in 2010).

Spain, formerly regarded as one of the most powerful economies of the world (its GDP grew an average of a 3.5% before the crisis and it was the fourth biggest economy of the European Union), is now surpassed by some of its former colonies. According to the CIA World Factbook, in 2009 Spain entered recession, growing a -3.7%. Last year its GDP still grew a -0.1%. On the other hand, in 2010 Paraguay's GDP grew a 15.3%, Argentina's a 9.2%, Peru's an 8.8% and Uruguay an 8.5%.

On the other hand, it is said that the financial crisis is a worldwide crisis affecting every country, but figures show that the hardest-hit economies are those of the so-called developed countries, such as in Western Europe, US, Canada and Japan. South America, Southern Africa, China and even Eastern Europe are doing relatively well (see map above).

Seeing these figures it is easy to understand why foreign investment is shifting to new markets, and why migration trends might have changed.

By CDR with No comments

COMMENT: On the Scottish referendum

Last May, in the regional elections, Alex Salmond's SNP achieved an outstanding victory, retaining 69 seats in the Scottish Parliament, the SNP's best achievement ever, surpassing their important victory in 2007.

A few days after the elections, Salmond stated that since the final objective of the SNP is the independence of Scotland, the new Scottish Government –which will see a majority of SNP's MSPs, therefore being able to pass any law or bill they want without external support from other parties– would hold a referendum on the Scottish independence in the next few years.

The immediate reaction of conservative politicians was to back the celebration of the referendum as soon as possible, therefore trusting that the majority of Scots do not back the break-up of Britain. But the SNP wants to have a few years to prepare the population for a referendum of this kind, hence it will not take place immediately.

But, first of all, would people in Scotland back a referendum on Scottish independence? And second, what does it really imply?

The first movement of the UK Government was admitting and backing the celebration of the referendum, not opposing it. This does not mean that Cons and LibDems are suddenly on Salmond's side, but it may mean that they really know that a majority of Scots would not back Scottish independence, hence they don't see the referendum as a threat. Indeed past surveys have shown that support for independence among Scots is still too small –around 23%, according to the last Scottish Social Attitudes Survey–.

The SNP has to understand that not all of those who have voted them in the regional elections will back a referendum on Scottish independence.

On the other hand, the representation of those who want Scottish independence may be exaggerated at the polls. Most of the people do not care about Scottish independence, and therefore do not take part in surveys. However, a referendum with certain kind of legal validity would drive them to vote and show their opinion, therefore lowering the percentage of those who support Scottish independence. The turnout at the last elections only reached 49%, but a referendum on Scottish independence would see a much higher turnout.

Finally, Salmond has always campaigned for an independent Scotland where North Sea oilfields would finance the cost of independence. But in the current financial and economical landscape it is unlikely that the UK Government would cede the complete exploitation of the North Sea oilfields to Scotland, losing billions of yearly revenues.

Those who back independence have to sit down and stop thinking if Scotland could achieve independence, and start thinking whether it could afford it.

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COMMENT: A brief reflection on the Tottenham riots

When you walk down Tottenham High Road you don't see a dangerous, dodgy district; a grey and ugly suburb where criminals wait around every corner to threaten you. Tottenham High Road is, indeed, the main street of a North London neighbourhood. It could be the neighbouring Wood Green. It could also be Stratford, Mile End, Clapham or Hammersmith. It is a neutral place, dotted with small shops, call centres, groceries and so on. Even the part which faces Tottenham's Police Station, one of the hotspots during the riots, is completely normal.

Of course everything can happen and this neighbourhood can change from day to day and turn into a battlefield, as it was the case barely a month ago. But despite its bad reputation, Tottenham does not look like a pretty dangerous zone where to live.

I read in an article in The Economist that most of the faces captured by the CCTV cameras during the riots in Tottenham were those of black people. It, argues the article, does not mean that the riots were merely aroused by the problem of racism. However, as the article points out, most of the other ethnic groups were not involved in the riots. There is a much larger Bangladeshi community in Tottenham, but none of them looted any shop. The same with other Asian communities.

Then, reports the article, behind the riots and the involvement of black people in them, there are a few questions to bear in mind, a few explanations, such as the situation of the black community, which always arouses suspicion among the Police whenever a crime has been committed, whose children tend to be excluded from school and an important percentage of its adults ends up in jail.

The perception of racism among the black community is very sensible, as the article points out. Many people in the riots could have acted violently as a way to express their frustration and their exclusion of society driven by racism.

However, we should start thinking whether the important question is who took place in the Tottenham riots, who looted the shops, and start thinking about what did they loot.


A very basic way to understand the riots as a reaction against racism is pointing out that, if racism –or angst against it– drove the riots, people would have targeted those who are imposing racism. So far nobody at the riots targeted white communities or private houses owned by white people.

On the other hand, the rioters protested against something, of course, but they only targeted shops. And what they looted were goods. But not all kinds of goods they could reach. As a matter of curiosity, Waterstones, a famous bookshop franchise, was not even touched. If protests were driven by racism, rioters would have looted everything they found on their way. But they didn't. They carefully selected those shops with cool fashion brands, electronic goods, sports garment and the kind, and stormed them.

The fact that the rioters only looted this kind of shops shows to what extent what drove the protests was not an actual reaction against racism, but a reaction against the frustration caused by not being able to purchase all those goods advertised on TV. Looters did not touch a book, but they did loot Primark. They stole clothes and TVs, videogames and laptops. In other words, they "used" the tense and extraordinary situation to steal –and take vengeance on their disfavoured situation.

There is no justification for the riots, but they were definitely not caused by racism. They were not a public outcry against the racist Londoner society. Maybe we should rethink the cause of the riots, forget the easy explanation and analyse what really underlies these acts.

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NEW PROJECT: Worldindepth v2.0. What's new?

The new version of Worldindepth is ready to be launched. So what's new?

*First of all I have decided to keep the design as it was, just making minor adjustments, such as changing the pictures featured on the slides. I want people to recognise the website and it would be awkward if I changed the layout and the design completely from time to time. So aesthetically the site looks the same.

*A closer view shows that some categories have disappeared, as it is the case of "Leisure and travel". When I first created Worldindepth I intended to publish some features focusing on different cities in a sort of "touristic, relaxed" way. Then I decided that these kind of features do not match exactly with the aim of the site, and in fact only one feature to the date was published under that category. Therefore I decided to suppress it.

*The order of the sections have varied. The stories and features will be now archived mainly by regions. There still will be a subsection with the old tags (politics, business..etc), but it will be secondary.

*I have gone through the already published pieces, correcting minor mistakes that appeared on them. Now they should be fine.

*The major improvement, and where the core of this refurbishment lies, is on the new categories. You will have noticed that on the secondary section you can find "politics", "business" and "current affairs". But it also features three new sections: "comments", "features" and "interviews".

The aim is classifying the stories by their nature (there were a couple of interviews and not all of the published pieces were strictly features). But it also has another objective, which is where the new worldindepth version lies: Until now I was able to upload a feature from time to time. This is due to the lack of time and because writing a good, long feature takes a lot of time. Therefore it cannot be done from one day to the other.

By creating a new tag, "comments", I will enable a new way to create in-depth stories. I will write a brief comment on a current story. It might not be as long as a feature, but it will definitely be as appealing as a feature, and it will be quicker to write. This will imply that I will be able to offer much more contents, and I will have the chance to publish almost daily.

I will of course keep publishing features from time to time, but an important part of the new worldindepth will lie on the comments.

And this is it. I hope the new worldindepth will be easier to read, and will provide the reader with fresh information more often than before.

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NEW PROJECT: Worldindepth launch

The launch of the new version of Worldindepth will definitely take place on September 1st. The technical issues have been solved and the scheduled date for the launch of the new concept will be met.

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NEW PROJECT: Worldindepth v2.0 launch delayed

Although the new Worldindepth concept initially targeted a launch on August 23, the presentation of the new project is to be delayed until September.

I have decided to keep the schedule under review, but I find it preferable, given that I don't want to rush the launch.

The project has been delayed due to technical and logistic issues, but is progressing well and will be ready for September 1st.

By CDR with No comments

COMMENT: A stagnant economy?

Source: Treasury

The announced cuts and the increase of the taxes are trying to boost the British economy, which now face the hard task of overcoming the hangover left by the deep financial crisis that hit the whole world in 2008. However, Chancellor of the Exchequer, George Osborne, also was forced to announce that despite the reforms and the cuts the 2011 growth forecast for the British economy will be downgraded from 2.1% to 1.7%. Similarly, the forecast for the following year, 2012, will decrease from 2.6% to 2.5%. Finally, the economic forecasts point out that inflation will remain between 4% and 5% in 2011, and will fall to 2.5% in the following year.

The aggressive cuts announced by the British Government will affect various key sectors. The good news is that concerning fuel, the duty is being cut by 1p per litre, and the planned inflation rise in fuel duty, scheduled for last April, was delayed until 2012. These measures will be covered by an extra £2 billion tax applied to the main oil firms present in the North Sea. However, the VAT on fuel will not be reduced. Concerning other key products, the Government won’t reform the planned rises in alcohol and tobacco tax, of 4p on a pint of beer and 15p on a bottle of wine.

Regarding the borrowing, the forecast is £146 billion for this year, £2.5 billion lower than expected. Osborne forecasted that the borrowing will fall to £122 billion in 2012 and £29 billion by 2015-2016. The national debt forecast for this year will reach the 60% of national income, rise to 71% in 2012 and finally fall to 69% by 2015.

Source: Treasury

Is the British economy facing a real threat of stagnation?

All these measures aim at reforming the badly-hit British economy but, will they be enough? Most business groups hailed the Budget, and agreed that would create new jobs, but there are fears among the oil and gas producers, who argue that the £2 billion tax in oil companies will damage a key sector in the UK. On the other hand, the Institute of Fiscal Studies calculated a loss of £200 per household on average after the announced measures were finally applied, last April.

The new measures are regarded as little adjustments that won’t fix the whole problem in the British economy. They are seen as a plan that hopes for growth, rather than an actual plan designed to boost economic growth.

Source: Treasury

Wales, the poorest region in the UK

Wales eyes the Budget with hopes and fears. The planned extra £65 million over the next five years is good for the Welsh economy, yet it fails to balance the negative impact of the announced cuts in the region. Wales is currently the smallest economy of the whole United Kingdom, with an average GDP of less than half as that of London.

Wales also faces the problem of big unemployment rates, the highest of the whole country, peaking at 9%, some 126,000. It is obviously becoming a very worrying problem, and the cuts announced in the previous Budget won’t do any good to it.

The words of Plaid Cymru’s MP, Jonathan Edward, make it clear: “The truth is that the UK Government has no plan B for Wales, and worryingly there is a very real threat of a decade of economic stagnation”.

Yet an extra £65 million over the next five years, including up to £34 million in 2012 is a gift that Wales has to embrace. Yes, it fails to relieve the Welsh economy, but still, it is equivalent to a 0.1% increase in the Assembly Government’s resources. And we see it as the stepping Stone for the recovery of the Welsh economy.

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COMMENT: The Libyan jigsaw

As Gaddafi fights to recover the eastern enclaves ruled by the protesters, uprisings have been registered in the western cities, where oil workers are planning to go on a massive strike that will threaten to paralyse the economy of the country.

In the last days the Libyan government has ceded some enclaves in both the eastern and the western regions of the country to the protesters who demand democratic reforms and the end of the dictatorship of Muammar Gaddafi, in power since 1969. Reports say that the ruling Libyan government has ordered to open fire against the protesters in the capital Tripoli, and organizations such as Human Rights Watch claim that there are more than 300 killed.

Protests in the main cities of the country have been repressed with brutality by the regime. Gaddafi has warned that he won't flee the country, and has threatened to start an open civil war if protests don't end immediately. In the meantime thousands of foreigners have fled the country as the protests increase.

Despite the turbulent situation of the country, Col Gaddafi's son, Said al-islam Gaddafi stated that the everything was "normal" in the main cities, where "ports, schools and airports are all open", he said.

font: CIA factbook

The current unrest in Libya has been a matter of discussion everywhere in the last days. John Griffiths, from the Socialist Worker Party in Wales, said that these uprisings in the Arab World have common features: "All of these countries have repressive regimes, but for decades they could offer bread to the population. Now they can't anymore. There is great luxury and wealth next to poverty, huge numbers of graduates leaving universities and a high unemployment rate. These are increasingly unpopular regimes with high levels of repression", stated.

Libya has many bonds with European countries. Gaddafi has an excellent relation with Italian Premier Silvio Berlusconi, and other European economies maintained a good relation with the Libyan regime until the first clashes took place. United Kingdom also had trade agreements with Gaddafi, according to Griffiths: "Three months ago we were selling weapons to colonel Gaddafi to repress his people", said.

Currently Wales has tight bonds with Libya. There is a Libya-Wales Exchange association, which seeks to tighten collaboration between both countries in different areas such as culture, business and education. On the other hand, Cardiff University hosts a Libyan students society, and Cardiffians find the situation in Libya very worrying.

"The situation there is very bad. The problem is that these countries have been ruled by dictators and now they have to fight to get freedom", said Alen Gordon, from Cardiff.

The arab minorities in Cardiff also have their voice about the matter. Raed Baconi, from Lebanon, argued that "it is time for people to speak. The government has to work for the people, not for them, and now we are seeing that people are fighting to have the chance to speak". Ahmed Boulaz, an Algerian emigré, expressed his hope for a democratic future in the region: "What is happening in the arab countries reminds me of what happened in eastern Europe twenty years ago. The problem is that this dictators might be replaced by other dictators, that's why this is a very delicate moment for these countries. People have to make sure that they get a real democracy now", stated.

The unrest in Libya, one of the main oil exporters in the world, has also had a major impact in the price of crude oil. It has hit the $110 per barrel for the first time in the last three years, and it is likely that the prices will rise even further in the next days.

font: article.wn.com

Oil prices

As the situation worsens in the positions held by the rebels, a fear of an open civil war has hit the whole country. The situation seemed to be controlled by the rebel forces, who were firmly advancing to the capital Tripoli from their main base in Benghazi, in the east of the country. However in the last days a counter-offensive carried out by forces loyal to Col.Gaddafi has undermined the tenacity of the rebels.

An offensive with tanks and air raids have hit the rebels, stopping their march towards the capital. The main fear now is that the conflict will be stuck for months and the situation will worsen.

The latest armed struggles in Libya also have had a direct impact on the price of the oil, rising almost $7 since last Monday and reaching $115 per barrel, the highest price since September 2008, where the price rose triggered by the economic crisis.

The clashes between the rebel forces and the Libyan army have hit the oil terminal at Ras Lanuf, damaging the factory. Experts fear now that the price of the oil will reach another historical maximum, as Col.Gaddafi prepares to bomb oil factories in the rebel territories in order to undermine the economic income they generate and retake the control of the region.

The main consequence is the instability of the stock markets around the world. Investors fear that the uprisings in Tunisia, Egypt and, above all Libya will spread to other oil-producing Arab countries, stopping the oil exports and therefore hitting the world markets.

Experts warn that an open civil war in Libya would hit very badly the world's economy by stopping the oil exports and therefore rising the crude oil prices.

In order to avoid nervousness among the investors, the US Government has admitted that is considering tapping its oil reserves to give more confidence to the stock markets and to try to stop the rising of the oil crude prices.

On the other hand both Britain and France are pushing to win support at the United Nations with the objective of setting a no-fly zone which won't allow Col.Gaddafi's forces to bomb the oil facilities in the eastern territories held by the rebels.

Libya is currently one of the main oil-producing countries, holding around 2% of the world's oil reserves. The production of crude oil has fallen since the start of the riots. Before the uprisings Libya produced 1.6 million barrels per day, and after almost one month of unrest the output has fallen to 1 million barrels per day.

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