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February 5, 2019

U.S. sends aid to Colombia-Venezuela border; Maduro rejects help (Reuters)

From the article:

WASHINGTON (Reuters) - The United States has sent food and medicine to Colombia’s border with Venezuela, U.S. officials said on Tuesday, although it is still unclear how the aid will get past the objections of President Nicolas Maduro, who has blocked shipments in the past.

One official with knowledge of the plans, speaking on condition of anonymity, said the aid will be prepositioned at the main Colombian-Venezuelan border crossing at Cucuta.

The U.S. officials said trucks carrying the aid, including high-protein foods, would arrive in Cucuta this week at the request of Venezuelan opposition leader Juan Guaido, who last month declared himself to be the South American nation’s interim president.

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With Maduro in control of Venezuela’s military and all the territory, getting aid in will be hard, said Jeremy Konyndyk, a senior fellow at the Center for Global Development, who has led U.S. government responses to international disasters.

“If the goal here is to alleviate suffering, then you do need to be smart about dealing with the power structure that is in place,” Konyndyk said.

February 5, 2019

The “debt-trap” narrative around Chinese loans shows Africa’s weak economic diplomacy (Quartz Africa)

From the article:

Hugging the shores of the Indian Ocean, Kenya’s Mombasa port is one of the biggest and busiest harbors in East Africa.

Almost 1,800 vessels docked at the port in 2017 alone, with cargo worth over 30 million tons processed—much of it heading to neighboring or landlocked nations including Uganda, Rwanda, Burundi, and DR Congo. Since its opening in the mid-1890s, the seaport has developed to be a rising regional hub and a key cog in Kenya’s growing infrastructural development.

In December, reports surfaced the prized port was used as collateral for the $3.2 billion loan that was used to construct the 470-kilometer (292 miles) rail line between the seaside city and the capital Nairobi. In a leaked report linked to the auditor general’s office, Kenya was said to risk losing its port if it defaulted on the loan, with the Exim Bank of China taking over the port authority’s “escrow account” to regain revenues. Further reports have even noted it goes beyond just one asset that’s been put up as collateral and that “any state” possession was on the table in the event of a non-payment.

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Western leaders, drawing on these examples and wary of China’s rising financial and economic might, have cautioned African states from taking out these loans. Observers have also pointed to the fact Beijing offers financing with fewer strings attached and isn’t part of the global multilateral framework for official creditors known as Paris Club. This has raised questions about the transparency, sustainability and commercial viability of Chinese state-sponsored lending, which have grown tenfold in the past five years in Africa.

And with no officially-published contracts or “no written predictable rules” of how Beijing responds to a loan default, “people are free to speculate,” says W. Gyude Moore, a visiting fellow at the Center for Global Development. Between 2000 and early 2019, there were 85 instances when China canceled or restructured debt globally—including most recently in Cameroon.

The Sri Lanka port remains the only place in the world where Beijing took control of a state asset, with observers noting that officials understood the damages “debt book diplomacy” could bring to China. Yet Beijing’s debt relief or repayment actions, Moore notes, remains “haphazard. It’s unpredictable. There’s nothing written. It’s confusing.”

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Because there’s no frame of reference for Chinese deals, Moore, who previously served as Liberia’s minister of public works, says African governments can improve their capacity to negotiate by drawing support from global litigation services. These include the African Legal Support Facility hosted by the African Development Bank or pro-bono entities like the International Senior Lawyers Program. Mobilizing these resources, he adds, could improve the quality of project selection and the process of delivering them.

February 5, 2019

Targeting farmers on basis of landholding won't benefit large rural population: Expert (The New Indian Express)

From the article:

WASHINGTON: Targeting farmers on the basis of landholding is unlikely to benefit a large section of the rural population in India and will create fiscal burden without solving the actual problem, an expert at an American think-tank has said.

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"There is some evidence that targeting on the basis of landholding would not benefit a large section of the rural population who are equally if not more in distress. This might even backfire politically if the government is seen to be favouring the already well-off farmers," Mukherjee, a policy fellow at the Center for Global Development think-tank, told PTI in an interview.

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"Both completely exclude the urban poor who are growing in number, but the political parties do not consider them to be influential vote banks. So to be clear, there is very little economic basis for these schemes - it should be seen for what they are: a political gimmick before the elections," Mukherjee said.

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One of the main advantages of UBI is that it is universal - no targeting is necessary. India is replete with lessons of how difficult it is to target schemes to particular beneficiaries, leading to misallocation, corruption and leakage. Aadhaar and Jan Dhan would not be able to solve the targeting problem," he argued.

Mukherjee said that "half-baked policies" will do more harm than good, both in the short and the long term.

"They will create fiscal burden without solving the actual problem. Just think of farm loan waiver - how much damage it has done, but still politicians think it is the only way to get votes.

I sincerely hope the cash transfer program doesn't go the same way," he said.

February 5, 2019

Trump pick for World Bank chief spent years criticizing its mission (Washington Post)

From the article:

Even before his nomination has been publicly confirmed, David Malpass, President Trump’s pick to run the World Bank, faces mounting attacks on his competence and support for the bank’s mission.

Malpass, undersecretary of the treasury for international affairs, is an outspoken critic of the bank and its sister organization, the International Monetary Fund. The president plans to nominate the former Wall Street economist to head the bank, a pillar of the global order that Trump opposes, as soon as Wednesday.

The appointment will likelytrigger another clash between Trump’s “America First” views and the decades-old consensus over management of the global economy. Since 1944, when international financial institutions were created near the end of World War II, the U.S. has selected the bank’s president while European countries have controlled the top IMF job.

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“Trump poses a unique threat to the international system. He’s nominating somebody, not just of dubious qualifications, but somebody who is committed to undermining the multilateral mission of the bank,” said Justin Sandefur, a senior fellow at the center for Global Development.

February 4, 2019

Trump to choose Treasury's Malpass to lead World Bank: sources (Reuters)

From the article:

WASHINGTON, Feb 4 (Reuters) - The Trump administration has notified World Bank shareholders that President Donald Trump intends to pick senior Treasury Department official David Malpass as the U.S. nominee to lead the development lender, people familiar with the decision said on Monday.

The nomination of Malpass would put a Trump loyalist and a skeptic of multilateral institutions in line to lead the World Bank, which committed nearly $64 billion to developing countries in the year ended June 30, 2018.

Politico, which first reported the decision, said it would be announced on Wednesday, citing unidentified administration officials.

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Justin Sandefur, a senior fellow with the Center for Global Development, said the choice showed that the Trump administration was trying to undermine a key global institution and urged other countries to nominate alternative candidates.

“They have a choice. It’s a simple majority vote, the U.S. has no veto in this election and there are many better candidates,” Sandefur said in an emailed statement.

The World Bank will accept nominations from Thursday through March 14 and up to three candidates could advance to a board vote.

Picked up by CNBC

February 4, 2019

Before Trump’s State of the Union, a Look at How Last Year’s Promises Fared (The New York Times)

From the article:

In his first State of the Union address last year, President Trump outlined his vision for an “America first” approach to overhauling the immigration system, revitalizing manufacturing and prioritizing national interests abroad.

As Mr. Trump prepares to deliver his second address on Tuesday, which is also expected to highlight the president’s immigration agenda, here’s an assessment of his progress on the promises he made last year.

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Foreign policy

THE PROMISE: “That is why, tonight, I am asking the Congress to pass legislation to help ensure American foreign-assistance dollars always serve American interests, and only go to America’s friends.”

Status: Unfulfilled.

Congress ignored Mr. Trump’s calls to drastically reduce foreign aid, instead approving budgets that included billions more than the president had requested, and made no significant changes to foreign aid policy.

Sarah Rose, an analyst at the Center for Global Development, said the administration had been constrained by Congress — and its own “fundamental inconsistency” in funneling money to friends and allies while simultaneously giving aid to countries that might not otherwise receive it in order to counter China’s influence.

Mr. Trump has threatened to cut off aid to Central American countries over migrant caravans, and Nikki R. Haley, the former ambassador to the United Nations, had proposed making aid contingent on support for American-backed policies at the United Nations.

Yet the amount of assistance given to Honduras, Guatemala and El Salvador has been typical. And while the United States did end funding for Palestinian refugees in August, it did not follow through on withholding aid from countries that voted for a United Nations resolution condemning Mr. Trump’s decision to recognize Jerusalem as the capital of Israel, said Jeremy Konyndyk, a former director of the foreign disaster assistance program at the United States Agency for International Development.

“The issue is that he made a promise that was well beyond his ability to accomplish,” Mr. Konyndyk said. “The president is not a monarch and can’t just do things unilaterally.”

February 4, 2019

As Jim Kim steps down, a tumultuous World Bank presidency comes to an end (Devex)

From the article:

LONDON — On Oct. 2, 2012, the World Bank’s Preston Auditorium is packed with staff waiting to catch a glimpse of their new leader. Jim Kim, the 12th president of the world’s most influential development bank, enters the auditorium to cheers and applause. Some staff hold up their phones and iPads to film his remarks.

“Never has the world been more in need of what we can do,” Kim, a medical doctor and public health leader, tells the enthusiastic crowd.

Fast-forward two years and the cheers have turned to boos when Kim walks onto that same stage. Staff routinely take to the bank’s internal message system — and to the press — to rail against Kim’s deeply unpopular reform package, made worse by the revelation that the chief financial officer leading the cuts has been given a nearly $100,000 bonus. The once inspiring Kim is now seen by many as an arrogant autocrat, hiring and firing employees at will.

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The Syrian refugee crisis exposed another gap in the bank’s financial arsenal. Jordan and Lebanon, middle-income countries that were ineligible for concessional financing, were buckling under the pressure of an enormous influx of refugees. Kim tasked his team with finding a solution. They created the Global Concessional Financing Facility, which allowed the bank to break its own rules in cases where individual countries were shouldering global responsibilities to host refugee populations.

Getting the bank to focus on these global shocks — the “big challenges facing our sector” — was the most important part of Kim’s legacy, according to Cindy Huang, a senior policy fellow at the Center for Global Development.

“The strength the bank brings to these conversations [is] difficult to overestimate,” she said.

February 4, 2019

World Bank Critic Is Nominee to Lead Lender (The Wall Street Journal)

From the article:

WASHINGTON—President Trump will nominate David Malpass, one of the World Bank’s sharpest critics within his administration, to be the next leader of the bank.

The president will formally announce Mr. Malpass as the American nominee to lead the world’s largest development bank on Wednesday, according to administration officials.

As the Treasury Department’s undersecretary for international affairs, Mr. Malpass has attracted attention for his criticism of the World Bank, especially over its lending to China. He has argued the country has become wealthy enough that it no longer needs to borrow from the World Bank. Mr. Malpass has also been part of the U.S. team negotiating trade with China.

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“David Malpass is a Trump loyalist who has committed economic malpractice on a wide range of topics, from dismissing the first signs of the 2008 global financial crisis to flirting with the abolition of the IMF,” said Justin Sandefur, a senior fellow at the Center for Global Development, a think tank focused on global poverty. “The question now is whether other nations represented on the World Bank’s board of governors will let the Trump administration undermine a key global institution.”

January 31, 2019

Flush With Cash, China Continues to Borrow Billions from World Bank (NPR)

From the article:

During the Cold War, communist China shunned the capitalist World Bank. But once China embraced the institution in 1980 it quickly became one of the bank's largest borrowers of all time – taking out loans of more than $60 billion over the last four decades.

Today China is sitting on cash reserves of some $3 trillion. It's the world's second largest economy behind the U.S. It directly lends more money to other nations each year than the $2 billion or so it borrows from the World Bank.

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An analysis of the World Bank lending to China released earlier in January found that most of the new loans are focused in the poorer, inland parts of China. The analysis by the Center for Global Development also found that about 38 percent are targeted for what the bank calls "global public goods"-- issues that affect people beyond China's borders such as climate change and pollution.

"China is the world's largest polluter today and the biggest single category of expenditures for the World Bank is in this area," says Scott Morris, a senior fellow at the Center for Global Development and the lead author of the report.

January 31, 2019

World Bank President Jim Yong Kim bows out as the development lender looks for relevance (Deutsche Welle)

From the article:

Jim Yong Kim is officially leaving as president of the World Bank on February 1. His departure comes three years ahead of schedule and reveals the lender's confusion about its role in a globalized world.

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And how much can multilateral development banks raise in total? The Center for Global Development has estimated that all of them put together — not just the World Bank but also regional lenders such as the Asian Development Bank — can spend about $116 billion a year, out of which only about $45 billion is earmarked for infrastructure investment.

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