At this time 12 months ago, this column had highlighted how the dying year 2010 could be labeled the year of natural calamities, and predicted more on the way.

Sure enough, the year that has just passed witnessed even worse disasters. If 2010 was marked by the Haiti earthquake, 2011 surpassed that in impact (if not in deaths) by the Fukushima triple tragedy of earthquake, tsunami and nuclear accident.

But Fukushima was only the worst of the calamities that included hurricanes in Central and Latin America, drought in parts of Africa, massive floods in Thailand and elsewhere, and many typhoons and storms in the Philippines.

This new year, more is in store from Mother Nature. Extreme weather events are expected to be more frequent and more intense, and some of these are linked to climate change, according to a recent report of the inter-governmental panel on climate change (IPCC).

The extensive flooding in Thailand in October and November, which wreaked havoc on homes, factories, farms and entire towns, is a warning to Malaysians on the intensity of what may happen here someday. The floods that have recently affected many Malaysian states may in future be even more intense and more damaging.

Another disaster in our region was caused by the tropical storm Washi that swept across Mindanao in Southern Philippines in December, killing over 1,000 people and displacing 300,000 in massive flooding, flash floods and landslides.

Better disaster risk preparations would have helped avert the high number of casualties, according to Filipino Senator Loren Legarda, a disaster risk reduction champion for the UN International Strategy for Disaster Reduction (UNISDR).

She called on local authorities throughout Philippines to invest in flood infrastructure, including river embankments, pumping stations, flood walls, drainage systems, storm drains, canals and flood retention areas, noting the high number of casualties caused by Washi could be due to a lack of awareness of the risks involved.

Countries should implement the UNISDR strategy, which aims to guide and coordinate efforts to reduce disaster losses and build more resilient communities and countries.

As Greenhouse Gases continue to increase at an alarming rate in the atmosphere, the effects of climate change are bound to worsen. Thus, a useful New Year resolution that countries should make is to put in much more effort and funds to strengthen disaster preparedness. It will save many lives, homes and other properties.

The new year 2012 will likely suffer from man-made disasters as well. A new world-wide recession is now a larger possibility, as the economic austerity policies across Europe and the deleveraging of its banks take effect this year in reduced demand, higher unemployment, credit tightening and reduced output.

The year will continue to witness the Eurozone governments wrestling to save the Euro. If, as many analysts predict, the policy makers remain behind the curve of events on the ground, then 2012 will be a disaster year for Europe, with recessionary effects on the rest of the world.

If, however, the European leaders and institutions get their act together, then the disaster could yet be averted. But fewer experts believe that policy will finally get ahead and prevent chaos.

As with natural disasters, preparedness for economic slowdown or recession is needed, at least to cushion the effects.

A slowdown in the advanced economies will affect developing countries through the trade and finance channels. On the trade front, developing countries that are more export-dependent must expect to be hit by reduced demand for their products and by lower commodity prices.

On the finance front, developing countries should expect a reversal of the strong capital inflows of the past couple of years as Western funds seek the “safe havens” of their own countries during these uncertain economic times.

Indeed, a significant net outflow of portfolio capital has already begun in several Asian countries, including India, Thailand and Malaysia.

The outflow can be absorbed without much difficulty in countries like Malaysia that have strong current-account surpluses, but can be a significant problem for countries like India which have a current-account deficit and which have relied on capital inflows to cover it.

2011 was a turning point in laying the foundations for the current economic problems. Thus, 2012 could be the year when these problems mature into fully-fledged crises. Thus we should be preparing early for what the year may bring.

This piece was originally published at the Third World Network.

United Nations Climate Change Conference in Durban ended on Sunday morning with the launch of negotiations for a new global climate deal to be completed in 2015.

The new deal aims to ensure “the highest possible mitigation efforts by all Parties”, meaning that the countries should undertake deep Greenhouse Gas emissions cuts, or lower the growth rates of their emissions.

It will take the form of either “a protocol, another legal instrument or an agreed outcome with legal force”.

In a night of high drama, the European Union tried to pressurize India and China to agree to commit to a legally binding treaty such as a protocol, and to agree to cancel the term “legal outcome” from the list of three possible results, as they said this was too weak an option.

The EU and the United States have said they want major developing countries to undertake emissions-cutting obligations similar to them.

This is a departure from the UN Framework Convention on Climate Change (UNFCCC), which distinguishes between the binding mitigation commitments that developed countries have to undertake and the voluntary climate mitigation actions that developing countries should do.

At the closing plenary on 11 December, Indian environment minister Jayanthi Natarajan gave a passionate defence on why India was against committing to a legally binding protocol, and the need to base the new talks on equity.

Why, she asked, should India give a blank cheque by agreeing upfront to joining a protocol when the content of that protocol was not yet known?

“We are not talking about changing lifestyles but about effects on the livelihoods of millions of poor farmers,” she said. “Why should I sign away the rights of 1.2 billion people (to development)? Is that equity?”

Jayanthi said that the resolution on the new round of talks did not even contain the words equity or “common but differentiated responsibilities”, a term in the Convention meaning that rich countries should contribute more than poor ones in the fight against climate change.

(This principle is based on their historical responsibility for causing the accumulated greenhouse gases in the atmosphere and consequent climate change.)

If such a protocol is developed, in which poor countries had to cut their emissions as much as rich countries, “we will be giving up the equity principle. It is goodbye to common and differentiated responsibility. It would be the greatest tragedy.”

Several countries, including China, the Philippines, Pakistan and Egypt, supported India’s position. Eventually, it was agreed that the term “legal outcome” be changed to “agreed outcome with legal force”, and the Conference approved the launching of the new talks.

At the same time, the Durban conference also took steps to wind down the current framework of climate talks, comprising the Kyoto Protocol and the Bali Road Map (a mandate adopted in 2007 at the annual climate talks in Bali, Indonesia).

The Kyoto Protocol was saved from extinction by a decision by mainly European countries (the EU and Norway) to enter a second period of emissions reduction commitments to start in 2013. The first commitment period of cuts ends in December 2012.

However, the Kyoto Protocol implementation has been significantly and perhaps fatally weakened. Japan, Russia and Canada have pulled out of a second commitment period, while Australia and New Zealand notified that they may or may not join in.

With only the European countries left, the Kyoto Protocol may live on till 2017 or 2020, but by then it may already be overshadowed by the new deal.

The sketchy terms of reference of this new deal were remarkable for being so one-sided in favour of developed countries, as the equity principle was conspicuously absent, and the implied principle was that all countries had to take part, and take on a high ambition for total emission cuts.

The Durban conference also finalized details for a new Green Climate Fund, which will start operating with a Board and interim secretariat by early 2012.

At times, the Durban talks looked as if they were going off-track, with disagreements on many issues. Even at the last session on Saturday after the two-week talks were extended by another day, there were grumbles about how the South Africans, who chaired and managed the meeting, were trying to push through resolutions and texts without allowing for changes.

In the end, Durban may be remembered for phasing out climate change frameworks based on equity and launching talks for a new treaty whose contours are yet to be defined.

This post was originally published by the South-North Development Monitor.

Another in a Triple Crisis and Real Climate Economics Blog series on the Durban Climate Change Conference.

The UN Climate Conference is reaching its climax.  Perhaps the most important decision being made is on the future of the global climate regime, and whether it will be as fair as the present one, or less so.  And also whether what is decided is enough to tackle the worsening climate situation on the ground.

The hottest topic is the fate of the Kyoto Protocol.  Japan, Canada and Russia have announced they do not want to undertake a second period of commitment, when the first period expires in 2012.

The developing countries have been fighting for the protocol’s survival and vowed that Durban shall not be the protocol’s burial ground.  All developed countries except the United States had committed to reduce their emissions by a certain percentage under this protocol.

Options have been discussed, either to amend the protocol with a new set of numbers in an annex on how much the emissions would be reduced, or a diluted form of obligation, such as a declaration or a decision.

But for this, the EU wants a concession, that all “major economies” agree to start negotiations for a new legally binding treaty that will take effect in 2020.

The United States is not keen at all on having its emissions targets bound in any treaty.  It left the Kyoto Protocol years ago, and its Congress is unlikely to agree to join any new climate treaty.

The US says it can join a new treaty but sets an unfair condition that is unlikely to fly—that developing countries which are major economies also take on similar emission-reduction commitments as the developed nations.  This goes against the equity principle of common but differentiated responsibility.

There is no agreed definition of a “major economy”.  Among developing countries, those with a large population are being targeted. But on a per-capita basis, they are still developing countries, some of them low-income.

In 2010, India was ranked a lowly 132 out of 184 countries in per capita GDP. Its level was US$1370 compared to US$46,860 for the US, according to IMF data.   India in 2008 was ranked 138 in per capita carbon dioxide emission; its level of 1.5 ton compares with 17.5 tons for the US, according to UN data.

It is “major” as an economy or emitter because of its large population (1.2 billion) for which it can hardly be blamed. To ask India to take on the same obligations as developed countries with more than 30 times higher per capita income and over ten times higher per capita emissions is simply unfair.

Even China is a rather ordinary developing country in per capita terms.  Its GNP per capita of  US$4,382 (in 2010) is ranked 92 among countries and its carbon dioxide emissions of 5.3 tons (in 2008) is ranked 77.

Thus, it is unsurprising that developing countries like India and China are not likely to bow to pressure to take on rich-country commitments as a condition for the really rich countries to maintain their present commitments.

If we want a reasonable agreement, it is staring us in the face: the faithful conclusion of the Bali Road Map launched in 2007 and which is the subject of the current round of climate talks.

Under this road map, the developed countries in the Kyoto Protocol would take on their second-period commitments that in aggregate would reach the science-based requirement of 25-40 per cent emissions cut (or more than 40% as demanded by developing countries) by 2020 compared to 1990.

The US (not a Kyoto member) would commit to a comparable effort under the Convention.  The developing countries would take on enhanced actions that would be monitored more stringently.  Rich countries would also provide adequate finance and technology transfer for both mitigation and adaptation.

However this Bali agreement began to unravel in Copenhagen in 2009 when the US proposed a pledging system in which developed countries would only put forward what it was prepared to do, instead of the “top-down” approach in which developed countries make a comparable effort to reach an overall target.

This pledge system was legitimized in Cancun in 2010.  The gross inadequacy of this pledge system was exposed by scientists showing that the present pledges are so low that the world is on track for global warming of  3-4 degrees Celsius or more.

The Europeans now propose to use Durban to launch a process to have a new treaty that includes all countries.

But an agreement mandated by Bali is still being negotiated.  It is better to conclude the present talks as soon as possible (it would not have to wait for 2020) and get as much results as possible from it than to change the mandate now and risk losing whatever is being negotiated.

The Bali road map has the top-down science-based approach as well as comparability of effort by developed countries.  There is no guarantee that a new mandate will have that.  It is better to conclude Bali and consider a new process after that is done.

In Durban’s first week, the developed countries continued their attempt to shift the burden of cutting global emissions on to developing countries.  The US did not want further discussion on how to upgrade the low ambitions in Annex I pledges.  It appeared to want to entrench the pledge system, with each country determining on its own what it can do.

But there are big pressures on developing countries to undertake new obligations for reporting on and monitoring their emissions and their actions, and being subject to international review, far beyond what was agreed in Bali on what they would do.

How the Durban talks end will be seen in the next day or two.  How it will affect the present and future frameworks will have to be analysed after that.

Last week I visited Brazil and found it to be a country on the go.  At a seminar in Rio de Janeiro and later visiting government officials and think-tanks in Brasilia, I found a country Brazil proud of its recent social achievements and embarking on a new development strategy to boost production.

The seminar was aptly titled “New Economic Thinking, Teaching and Policies”, organized by the Ford Foundation, the MINDS economists’ network and hosted by BNDS (the Brazilian Development Bank).

Local and foreign economists and policy makers examined the new Brazilian approach to development, which is now made more challenging because of the expected return of global recessionary conditions.

For decades, Brazil had been the growth power-house of South America, until the economy stalled in the 1980s and 1990s as a result of debt and Washington Consensus policies, which stressed that the state should have a minimal role in economic and social matters.

When Lula de Silva took over as President, he first focused on social development, providing income to millions of poor families under the famous Zero Hunger programme.  Poverty and inequality was reduced.

In its second term, the Lula administration undertook a new phase of “state activism”, explained Glauco Arbix, head of FINEP (an agency that provides finance for technology-lined projects).  The activism included a 2007 growth acceleration plan, a 2008 productive development policy and a 2011 Brazil major plan, which put production and job-creation at the centre.

The “recovery of the state” had three aspects – transformative (dismantling old incorrect policies), corrective (re-orienting and adapting of goals) and constructive (building new institutions and policies).

Deputy finance minister Nelson Barbosa told the seminar that the good terms of trade (export commodity prices have shot up) provided Brazil with revenue to fund the social programmes that helped the poor.

Two major areas of progress have been growth with distribution and reduced inequality; and reducing financial fragility (external debt fell from 43% of GNP in 1995 to 13% while foreign reserves grew to the present 15% of GNP).

Brabosa described the move away from the previous Washington Consensus policies, with Brazil now avoiding extreme choices in policy trade-offs.  There is inflation targeting but also interest rate reduction; a floating exchange rate regime but with reserves accumulation; and fiscal targets while increasing income transfers to the poor and providing incentives for businesses to invest.

Another aspect of Brazil’s new development policy beyond the Washington Consensus is the conviction that economic development requires an active role of the state, said Barbosa.  The state’s roles include regulating the market (including towards sound investment and consumer protection), long-term planning (including infrastructure growth and innovation); sound financial policies; providing universal public services; and re-distributing income.

The Brazilian growth model has gone through three phases – wage-led expansion (with income transfers and higher minimum wages leading to increased consumption and a recovery of investment); investment-led growth (higher public investment and financial incentives to private investment) and the new phase under President Dilma with emphasis on education and innovation to spur long-term growth.

Not everything is rosy, however.  Jose Antonio Ocampo, a Columbia University economics professor and former head of the UN’s Economic and Social Department said in the last 5 to 8 years Brazil had made a promising come-back.   But there are some serious problems – the low investment rate; interest rate is the highest in the region; the high appreciation of the currency, which has affected export competitiveness.

The seminar also heard about a unique Brazilian institution – the Brazilian Development Bank which hosted the seminar in its headquarters.  The Bank (which lends out more than the World Bank) is not only the main facilitator of Brazil’s industrial policy and development projects but also played a key role in formulating the policies that enabled Brazil’s quick  recovery from the 2008-9 recession.

In Brasilia, I met the head of another unique institution, the IPEA, an economics think-tank under the President’s office.  Marcio Pochmann said that IPEA’s priority is to help reposition Brazil in the new world, in which the economic crisis will be deep and prolonged, global governance is under threat and international institutions will weaken.

He noted that the G20 leaders are having a weak response to the crisis.  In this situation, the South must find a stronger voice in global affairs.

I also had a most interesting discussion with Prof. Marco Garcia, a famous historian who is President Dilma’s chief foreign affairs advisor, having also served President Lula in that capacity.  Garcia is obviously a learned man with deep knowledge of the South American region and the world.  He has played a significant role in developing Brazil’s policy towards Asia, Africa and the developed world.

And of course most importantly in South America of which Brazil is the giant.  A significant point he made is that Brazil is promoting a type of regional integration that should be mainly based on production, energy and infrastructure, rather than an integration led by trade liberalization which tends to benefit only the strong countries and could thus cause disharmony among the region’s countries.

The Foreign Minister Antonio Patriota has the unassuming air of a sincere man of diplomacy, but he carries the burden of leading Brazil in WTO and regional trade relations, in the climate negotiations as well as all other aspects of foreign policy, including supporting the President in the G20 Summits.

Brazil believes in South-South cooperation.  It takes its role in the BRICS (the so-far informal but getting more formalized grouping of Brazil, Russia, India, China, South Africa) seriously, as an alliance of big emerging countries that is a counter weight to the developed countries.

But Brazil has also developed strong links with Africa.  And Patriota gave a strong impressions that Brazil is very interested in stronger economic and political relations with Asia, especially China but also Asean.  He will soon attend the Asean ministerial meeting, at which Brazil will be one of the “Asean-Plus” countries for the first time.

The Ministry’s focus will increasingly be on the Rio-Plus-20 Summit on Environment and Development that Rio will host in June 2012.   There are hopes that the 20^th anniversary of the original Rio Summit will be attended by many political leaders and that the Summit will give a much needed boost to multilateral cooperation at a time when the world is facing two increasing crises – economic and environmental.

By next June the global economic crisis will be at a high point, and Brazil will need all its skill to steer the Summit in a way that keeps the flame of multilateralism and international cooperation alive when countries are more tempted to look only after their own interests.

This piece was originally published by the Third World Network.

The last two weeks have seen a clear downward shift in expectations on the global economy.  The dominant view now is that the world has slipped into stagnation that may well become a recession.

Warnings that the economy had entered a “danger zone” generated the gloomy mood at the annual Washington gathering of the International Monetary Fund and World Bank, as well as the G20 finance ministers’ meeting.

Prominent economists are predicting the new crisis will be more serious and prolonged than the 2008-9 Great Recession.

If the United States and its sub-prime mortgage mess was the immediate cause of the last recession, the epicentre this time is the European debt crisis.  The eurozone’s GNP grew by only 0.2% in the second quarter, and the European Commission predicts the rates will be 0.2% and 0.1% in the third and fourth quarters.

As the domino effect of contagion hit one European country after another (rather like how Asian countries were affected in 1998-99), European leaders have scrambled for a solution.

But none has worked so far.  In the Greek debt tragedy, the government has had to announce one painful austerity measure after another, but its economic condition continues to worsen and the social protests and strikes indicate the approach of the political breaking point.  The costs of austerity are already being seen (by the public at least) to outweigh the benefits.

Several British newspapers last week reported a set of big measures to tackle the European crisis was reportedly being worked on by unnamed European officials.

The centrepiece is a Greek debt default with creditors repaid only 50%, and two measures to cushion that shock – an injection of fresh capital into European banks that would suffer big losses from the default, and the boosting of the European bail-out fund from 400-plus billion euros to almost two trillion euros to enable hundreds of billions of euros in new credit to countries like Italy and Spain to prevent them from becoming new debt-crisis economies.

However, this leaked news of a big Plan B was not confirmed by any policy maker, so its status or even existence is unknown. Instead, the news out of Washington last week was of continued paralysis in European policy.

Greece this week is facing a new crunch time – waiting to see if the European institutions and IMF will approve the next bail-out instalment of US$8 billion to service loans that are coming due, and what would happen if they do not. Would it be time then to declare a default?

Meanwhile the United States has its own budget deficit tug-of-war between the President and Congress and between Republicans and Democrats.

What this means is that Europe and the US are not able to make use of the policies (massive increases in government spending, interest rate cuts and pumping of money into the economy) that pulled them quickly out from the last recession.

Moreover, the coordination of policy actions among developed countries (and several developing countries as well, that also undertook fiscal stimulus policies) that fought the last recession no longer seems to exist, at least for now.

Thus the new global slowdown or recession is likely to last longer than the short 2008-9 recession.

The developing countries should thus prepare to face serious problems that will soon land on them.

We can expect a sharp fall in their exports as demand declines in the major economies.  Commodity prices are expected to climb down; they have already started to do so.

There may be a reversal of capital flows, as foreign funds return to their countries of origin. The currencies of several developing countries are already declining and it may be the start of sharper falls.

It’s beginning to look like 2008 all over again. But this time the developing countries are starting this downturn in a weaker state than in 2008, since they have not yet fully recovered from the last shock.

And as the downturn proceeds, there will be fewer cushions to blunt the effects or to enable a rapid recovery.

It is also clear that there is an absence of a global economic governance system, in which the developing countries can also participate in.

All countries are affected when the global economy goes into a tail spin. Once again, the developing countries are not responsible for the new downturn, but they will have to absorb the ill effects.  Yet there is no forum in which they can put forward their views on how to lessen the effects of the crisis on them and what the developed countries should do.

As the new crisis unfolds, there will be renewed calls for reforms to the international financial and economic system.  This time there should be a more serious reform process, otherwise more crises can only be expected in the future.

This piece was originally published by Third World Network.

The outcome of the 1992 Earth Summit was large in ambition but poor in implementation.  With the world in even larger crisis, the search is on for stronger institutions, as a meeting in Solo last week revealed.

“Sustainable development” came into vogue as a result of the United Nations’ Earth Summit in Rio, Brazil, in 1992.

The term is widely taken to mean that environmental, economic and social goals have to be taken together into account and if possible “blended”, when policies are being made and actions taken, internationally and nationally.

It is now enjoying a revival – a hotly debated one – since the United Nations will hold another summit in Rio in 2012, to mark the 20^thanniversary.

Putting all three elements – economic, social and environmental – together in the policy mix was Rio 1992’s achievement.

Making policies only on the basis of economic goals like high economic and export growth is simply not balanced, as the environment can be badly damaged and natural resources can soon run out (and thus growth is not sustainable).

Similarly, environmental goals should not be pursued in a one dimensional way, as the burden may be unfairly pushed onto poor nations or communities.  This may happen if poor countries are asked to take on drastic emission cuts, without providing them with funds and technology, or if prices of energy and water are raised significantly to better reflect their ecological value but measures are not taken at the same time to shield the poor.

Thus the three pillars must balance each other. The sustainability concept is great. Unfortunately, that did not stop the world getting into a much deeper environment crisis, and into the gravest economic crisis since the second world war.

What went wrong?  What can be done? Which institutions are needed to turn the goals of sustainable development into reality?

To answer these questions, the beautiful Indonesian town of Solo, made famous by the melodious song Bengawan Solo, played host last week to a UN-organised high-level dialogue on the institutional framework for sustainable development, with 300 policy makers, diplomats, NGOs and experts attending.

The main consensus was that there has been a big implementation problem – the goals of sustainable development have not been not implemented, either at the global level (such as in the UN, or IMF and WTO) or in national policy making.

A major reason is the weakness of absence of institutions. The UN’s Commission on Sustainable Development, the main agency to follow up on the 1992 Rio Summit, has too small a secretariat and meets for only three weeks in a year.

All three sustainable development pillars – environment, economic and social – are very weak at the UN.  The agencies interact too little, if at all, with one another.  The governments do not have adequate fora, such as a powerful UN economic committee to discuss the financial crisis and economic recession, or a UN environment committee with authority to act.

This weakness is also reflected at the country level.  National councils of sustainable development were set up after Rio 1992, but many have not functioned well. Economic policies are still made with little regard for the environment.

I was one of the speakers in the panel debate on how to reform the institutions that deal with sustainable development.  Former UN economic department chief, Nitin Desai, said it was no longer enough to treat “sustainable development” as a concept to “bridge” the economy with the environment.  Rather, it must be an umbrella concept and structure that integrates the three pillars.

Many reform options were considered.  The first is to have minimal or incremental changes by simply calling for strengthening existing institutions.  This was considered by most to be insufficient for the tasks in tackling the world’s problems.

The second is to convert the UN Environment Programme into a more powerful world environment organization.  However the United States made it clear they cannot support or join a new international organization.  Besides an environment agency is considered by many developing countries as being less than a full body dealing with sustainable development and its three pillars.

The third option, which many speakers including myself dwelt on, is to set up a new Sustainable Development Council with a overarching general structure (which Ministers and heads of governments would take part in) and which integrates the three pillars and also deals with funding and technology transfer).

Under this umbrella would be the three pillars (economic, social, environment), each having their own committee, which would help coordinate the work of various UN agencies.

A fourth option would be to have the same structure and activities, but inside the existing UN Economic and Social Council, instead of establishing a new Council.

At the closing, Indonesian Environment Minister Dr. Gusti Muhammad Hatta, presented the “Solo Messages”, or his view of the meeting’s conclusions.

These included the need for political commitment and implementation of sustainable development objectives, with each pillar being integrated with the other two pillars, and the need to enhance the sustainable development institutions both globally and nationally.  New and additional financing and technology transfer are also essential.

In his concluding remarks, Sha Zhukang, the UN economic and social chief, who is in charge of the Rio Plus 20, pointed to the proposal to form a sustainable development council, aimed at integrating the three pillars at a high level within the UN.  This should be explored further, including answering many questions in detail.

The national and local sustainable development institutions should also be strengthened so they can address the new challenges of the 21^stcentury.

The important themes that have emerged are the need for “integration, implementation, coordination and coherence”, according to Sha.

These four are indeed some of the key elements that need tackling, if we are to get action going on sustainable development, so that we do not have to lament the continued deterioration of the world’s conditions, another ten years from now.

Many more meetings will be held between now and mid-2012, when the new Earth Summit takes place.

Triple Crisis blogger Martin Khor originally published this article in Third World Network.

The political deadlock in Washington on whether and how to increase the United States’ debt limit is causing anxiety over a possible default and over a new global economic downturn.

The deepening of the Eurozone debt crisis last week through contagion spreading to Italy was more than matched by the growing chance that the United States government would not be able to pay its bills or service its debts starting 2 August.

Week-long negotiations took place between the US President, and the Democrat and Republican party leaders to avert a partial closing down of the federal government.

The US presently has a limit to its federal debt of $14.29 trillion. This limit will be reached by 2 August. Congress has to approve raising this limit before then, or else the Administration will have to postpone meeting some of its financial commitments.

The Federal Reserve chairman Ben Bernanke warned that default would send shockwaves throughout the global economy.

The alarm bells rang even louder when two rating agencies, Moody’s and Standard and Poor, warned they might downgrade US debt from its AAA status if the political impasse continues.

There are several reasons why the world, and especially the developing countries, should be alarmed at this situation.

Read the full article at the Third World Network.

A string of bad economic news in the past week shows the rich countries in a deepening crisis — increased joblessness in the United States, no solution in sight for the Greek debt crisis and contagion to other European countries.

There was more bad news about the global economy last week.  It looks as if the major developed economies are facing worsening problems that will not go away.

This does not augur well for the developing world, as it is still dependent on the richer economies.

An economic slowdown in the United States was indicated by last week’s data of a rise in unemployment to 9.2% and only 18,000 new non-farm jobs created in June.

President Obama’s on-going battle with the Republicans to get Congressional approval to increase the government’s debt limit and avert a default is also likely to end with an agreement to slash government spending. That will have a depressing effect on the economy.

Read the full article on the Third World Network.

A conference last week in Beijing heard plans by China and other counties for achieving green low-carbon development to combat climate change.  Despite an upbeat mood, the difficulties are many and serious.

Despite the slow progress in the global climate negotiations, some developing countries are already taking their own climate actions to reduce emissions and adapt to the effects of climate change.

Of course, their actions will fall far short of what is required, unless the funds and technology expected as a result from the global talks materialize.  And unless the developed countries also cut their emissions greatly and leave more “carbon space” to the developing countries.

Read the full post at the Third World Network.

There is great uncertainty about the future of the world economy and developing countries should prepare now for the next crisis, according to prominent experts at a finance seminar in Geneva last week.

THE world economy will be going through a period of uncertainty and turbulence in the next few years and the developing countries should prepare to face this challenge and avoid being overwhelmed.

Several experts gave this warning at a workshop on options for developing countries in the global financial turbulence held in Geneva on May 25.

If the lessons of the last financial crisis are not acted on through coordinated global action, there will be a bigger crisis soon, and an even bigger one after that, warned Yilmaz Akyuz, chief economist of the South Centre.

Read the full article at The Star Online.