SAVING A DYING WORLD
Efe Paul Azino
February 24, 2009
The world is well acquainted with crisis. Two world wars; a catalogue of civil wars, an unending middle eastern battle in Palestine, incessant turmoil in various parts of Africa; the great depression, a string of recessions (1990-1993, 1998 and 2001-2002) with 2008 as the latest addition. Yes. The world has had its fair share of crisis. And after over a decade of prosperity, we are back in the middle of the mire again, frantically trying to pull ourselves out of the global financial mess we open-eyed strayed into.
The current meltdown and the attending economic downturn is not all bad. Truth is, it does have some good inherent. For one, it has shown, more than ever, that the world as we know it has, without issuing any formal notification, changed beyond what prevailing ideologies and institutions can effectively handle. Like Olakunle Soriyan says, Pain is useful and itīs a gift. Most of us would be dead if pain didnīt prove its usefulness, time and again, letting us know that our body system needs attending to. Well, our global governing system sure needs some attending to. And pain, useful as ever, is forcing us to confront this reality.
GLOBALIZATION: NEW REALITIES EMERGE
Globalization heralded a more complex world riddled with opportunities and challenges. It provided the platform upon which emerging economies, like China, India and Brazil have risen and are rising. Economic forecasts show that by the year 2010, Indiaīs knowledge based exports would have surpassed $50billion. Back-office outsourcing in India has seen an annual growth rate of 35%, over the last five years, with an annual revenue of $11 billion, giving employment to over 700, 000 citizens and a projected 2 million by 2012. These are gains of globalization no doubt. And China, since it plunged into the global economic system and joined the WTO in 2001 has sustained two digit growth (an awesome 11.4% in 2007) and insourced as much as $1.38billion. China and India are not alone in milking the multi-breasted gains of globalization. Countries like Indonesia, Malaysia, Philippine, Vietnam, Singapore and Brazil amongst others, have all benefited, to varying degrees, from globalization. But on the flip side of the coin is terrorism, poverty, food shortages, huge energy demands and unstable prices, climate change and yes, the global financial crisis.
As the earth turns, men will continue to give in to their baser selves like they have always done since Cain slew Abel. The only difference now is that the world has become so interconnected. Enough for a failed government in Somalia to have ripple effects, producing pirates that stalk global trade routes like the Gulf of Aden; a terrorist attack in Mumbai, which while dealing India a terrible blow, actually has far reaching impacts touching numerous other nations who lost quality minds in the mindless attack. The world has become so interconnected, militant uprising in Nigeriaīs Niger Delta region can affect global oil prices and a financial crisis, manufactured in the US, can put the whole world on the edge.
So here we are, in an interconnected world torn at the seams, where crisis in one region has the potential to cause a global impact. At no point in history have we needed a coherent strategy aimed at creating and sustaining global peace and stability than we do today. More than 80 percent of the worldīs population live in countries where income differentials are widening. The poorest 40 percent of the worldīs population accounts for 5 percent of global income, the richest 20 percent accounts for three-quarters of world income. Terrorism has remained a thorn in our sides. The reality of global warming is deepening with frightening implications. U.N refugee agencies believe that as many as 50 million people will be displaced by climate-related disasters by 2010, and the figure could hit 200 million by 2050. There is no greater recipe for global instability than these sobering facts. While achieving world utopia may be simplistic, the challenges we face can be confronted and alleviated, enough to integrate more people into the productive mainstream of the global economy, if we create a more strategic framework for responding to globalization. How can this be achieved?
NEEDED: A POST BRETTON WOODS INSTITUTION
If the financial crisis proves anything, it is that new institutional frameworks need to be evolved to regulate global finance. The post-world war two Bretton Woods Institutions are today outmoded. A certain sense of urgency is needed to reposition and empower institutions like the IMF to monitor risks and ensure a standardization of financial products. Capital knows no borders as we well know therefore each nation can no longer be allowed to set the rules for themselves. As we consider reconfiguring global financial regulation in order to ensure more stability, we might do well to consider the wisdom of John Maynard Keynes, who in 1933 suggested the world adopted a unique global reserve currency. Like it or not, reserves all over the world depend on the balance of the American economy, whose dollar is the default reserve currency. We need a unique global reserve currency, whose supply can be increased discretionarily to meet the needs (according to set rules of cause) of countries around the world as they arise. The current UN security council needs to commission a Think-Tank to come up with the framework for a more empowered global financial institution; a framework that will standardize financial products and sober corporate governance; a framework that will include how to manage cross-border bankruptcies as well as the creation of a unique, more stable global reserve currency amongst other factors. For credibility, this institution would have to be created and governed multilaterally. This is what must be done and now is the time to do it.
NEEDED: G-FORCE
Global frameworks would also be needed to deal with poverty and global peace and security. We cannot address security without addressing terrorism and we cannot address terrorism, to certain extents without addressing poverty. The war on terrorism, as waged by the US and wary members of NATO, in Iraq and Afghanistan, has been on the front burner of the global agenda. But beneath the garb of Islamic fundamentalism is Poverty. The US President-elect has pledged to send in more troops to Afghanistan while pulling out of Iraq. President-elect Obama has also talked about the need to provide economic support, but not with the same zeal as his intentions to send in more troops. The American government is currently in its eight year running, prosecuting the war in Afghanistan. The result has hardly been commensurate with the input. It might do some good to consider the strategy employed thus far and the possibility of trying an alternative approach; an approach that seeks to expend more in building the countries economy than in sustaining and applying military force. The Afghanistan economy is one of the least productive in the world, producing nothing of value. Its literacy rate is 28%, meaning it doesnīt even have the machinery to play in todayīs knowledge economy. Military efforts would have to be employed side-by-side infrastructural building and modern education in the region with more effort pumped into the latter.
It would prove to be a complex endeavour developing a framework for ensuring global security. But nothing would be more relevant. The world, in todayīs nuclear age, desperately needs an all inclusive security pact. This security pact should be forged with full recognition of each regionīs ideological and political differences. Such a system, with the rules determined multilaterally, would guarantee safety for all. It would set up a framework for tackling terrorism and nuclear proliferation. It would forbid any military alliance from advancing its cause at the expense of other sovereign states. Such a move would deter unilateral security undertakings with the nationalistic, hate-driven terrorism they provoke.
None of these much needed global co-operative strategies for stabilizing global finance and security would work, except Super Powers like the US come to terms with the reality of the new world and that the time has come for an all inclusive global governing framework. Today the United States runs the largest economy in the world and can boast of military might unlike no other. The technological and entrepreneurial contributions of the American economy to the world cannot be faulted. Enormous responsibility therefore lies on the shoulders of America, as far as leading the world into developing a global system, which it must be subject to, is concerned. No global financial institution or security coalition will work except nations like America, Europe and Russia cede power to it. The failures of institutions like the IMF and the UN to effectively deal with issues on a global scale is a sad reflection of this. The time has come for a change in attitude, for a strategic integration of more nations into the burden of global governance. This is most crucial. The world has become far too integrated. Every regionīs reality is every regionīs concern. Globalization today demands multilateralism. We cannot tackle the challenges 2009 and the succeeding years will bring if we do not embrace this. We can only hope the Obama administration will be more progressive in dealing with these issues and in making America a first amongst equals.
FUTURE ENERGY: THREAT OR OPPORTUNITY
The clamour for alternative energy has reached fever-pitch. The impacts of this are multi-dimensional across regions. Before the start of the recession, global oil price hovered around $150 per barrel. And alongside the fluctuations in oil prices is climate change. According to the WHO: the warming of the planet will be gradual, but the effects of extreme weather events more storms, floods, droughts and heat waves will be abrupt and acutely felt. Already Malnutrition, much of it caused by periodic droughts, is already responsible for an estimated 3.5 million deaths each year.
For the West, alternative energy is an issue of survival. Already the US imports 70% of oil at a cost of $700 billion a year. Sources of supply are becoming increasingly unreliable and demand is at an all time high. It is becoming apparent that the world is fast approaching a point of inflection, where supply would prove inadequate to match demand. The impacts of this on the global economic order would be too devastating to imagine. This, the west holds in view, hence their frantic search for alternatives. For oil producing regions like the Middle East and Africa, alternative energy is also an issue of survival, but in a different dimension. Getting alternative energy into the mainstream will have a negative impact on the Nigerian economy for example where 80% of the nationīs revenue is derived from oil. But analysts have remained sceptical about funding and getting alternative sources into the mainstream, enough to replace oil. We must however note with all seriousness, that the American nation is about prepared for this transformation and only the absence of political will can stop them. Making the transition will involve pushing against all manners of interest groups, but progressives know this will be done. Itīs just a matter of time. And the world only needs America to forge a technological pathway to green before the know-how is exported. And then technology savvy nations like India and China, large consumers of energy, as we know it, will be off.
What then becomes of a nation like Nigeria? Would it be overtaken by a green revolution even as it tries to figure its way into the industrial revolution? Except the current administration quits fumbling around clueless, the future portends gloom for the nation. Frantic efforts must now be made to diversify the economy. The Nigerian government and its people will have to work through years of bad habits and clumsily built institutions sustained by greed and corruption to make this happen. Its vision to be one of the top 20 economies come 2020 is nothing short of simplistic and may be a good pointer to the fact that the government has no thorough idea of the situation on ground. The Nigerian government will have to spend more money on educating its people, on funding research and development efforts, forcing its financial institutions to support start-ups with a bias for technology-driven firms. Infrastructures will have to be built with a rapid sense of urgency. The Nigerian economy as it stands today is endangered.
Keeping the big picture in view, the world does need alternative sources of energy. The impact on job creation will be enormous all over the world, not to mention its positive effect on global warming. Every region stands to gain from Future Energy. While the demand of oil can be reduced it cannot be totally eradicated. But the Green Revolution will demand every region raises its game and compete for the next level of innovation. A nation like Nigeria will be forced to look deep within and tap into the ingenuity of its people to create a well diversified economy with benefits for all. And maybe the crisis in the Niger Delta will die a natural death.
But none of this will happen except governments in the west; especially America put its money where its mouth is. Heavy government investment will have to be made in this regard. The Cap and Trade system will need to be rigidly enforced to compel adequate private participation in alternative energy. Cap and trade refers to a system where, a central authority (usually a government or international body) sets a limit or cap on the amount of a pollutant that can be emitted. Companies or other groups are issued emission permits and are required to hold an equivalent number of allowances (or credits) which represent the right to emit a specific amount. The total amount of allowances and credits cannot exceed the cap, limiting total emissions to that level. Companies that need to increase their emission allowance must buy credits from those who pollute less. The transfer of allowances is referred to as a trade. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed. Thus, in theory, those that can easily reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest possible cost to society.
Times like this call human ingenuity to the fore. A synergy between governments and markets will have to evolve. There is little doubt that the world can reinvent itself. Crisis is nothing new to our age-old world. The current global situation is only a platform for the emergence of a new world order. Nations will have to position to be a part of it or be left behind. We are privileged to be alive in this time of crisis, privileged to be global change partners, saving a dying world.
The current meltdown and the attending economic downturn is not all bad. Truth is, it does have some good inherent. For one, it has shown, more than ever, that the world as we know it has, without issuing any formal notification, changed beyond what prevailing ideologies and institutions can effectively handle. Like Olakunle Soriyan says, Pain is useful and itīs a gift. Most of us would be dead if pain didnīt prove its usefulness, time and again, letting us know that our body system needs attending to. Well, our global governing system sure needs some attending to. And pain, useful as ever, is forcing us to confront this reality.
GLOBALIZATION: NEW REALITIES EMERGE
Globalization heralded a more complex world riddled with opportunities and challenges. It provided the platform upon which emerging economies, like China, India and Brazil have risen and are rising. Economic forecasts show that by the year 2010, Indiaīs knowledge based exports would have surpassed $50billion. Back-office outsourcing in India has seen an annual growth rate of 35%, over the last five years, with an annual revenue of $11 billion, giving employment to over 700, 000 citizens and a projected 2 million by 2012. These are gains of globalization no doubt. And China, since it plunged into the global economic system and joined the WTO in 2001 has sustained two digit growth (an awesome 11.4% in 2007) and insourced as much as $1.38billion. China and India are not alone in milking the multi-breasted gains of globalization. Countries like Indonesia, Malaysia, Philippine, Vietnam, Singapore and Brazil amongst others, have all benefited, to varying degrees, from globalization. But on the flip side of the coin is terrorism, poverty, food shortages, huge energy demands and unstable prices, climate change and yes, the global financial crisis.
As the earth turns, men will continue to give in to their baser selves like they have always done since Cain slew Abel. The only difference now is that the world has become so interconnected. Enough for a failed government in Somalia to have ripple effects, producing pirates that stalk global trade routes like the Gulf of Aden; a terrorist attack in Mumbai, which while dealing India a terrible blow, actually has far reaching impacts touching numerous other nations who lost quality minds in the mindless attack. The world has become so interconnected, militant uprising in Nigeriaīs Niger Delta region can affect global oil prices and a financial crisis, manufactured in the US, can put the whole world on the edge.
So here we are, in an interconnected world torn at the seams, where crisis in one region has the potential to cause a global impact. At no point in history have we needed a coherent strategy aimed at creating and sustaining global peace and stability than we do today. More than 80 percent of the worldīs population live in countries where income differentials are widening. The poorest 40 percent of the worldīs population accounts for 5 percent of global income, the richest 20 percent accounts for three-quarters of world income. Terrorism has remained a thorn in our sides. The reality of global warming is deepening with frightening implications. U.N refugee agencies believe that as many as 50 million people will be displaced by climate-related disasters by 2010, and the figure could hit 200 million by 2050. There is no greater recipe for global instability than these sobering facts. While achieving world utopia may be simplistic, the challenges we face can be confronted and alleviated, enough to integrate more people into the productive mainstream of the global economy, if we create a more strategic framework for responding to globalization. How can this be achieved?
NEEDED: A POST BRETTON WOODS INSTITUTION
If the financial crisis proves anything, it is that new institutional frameworks need to be evolved to regulate global finance. The post-world war two Bretton Woods Institutions are today outmoded. A certain sense of urgency is needed to reposition and empower institutions like the IMF to monitor risks and ensure a standardization of financial products. Capital knows no borders as we well know therefore each nation can no longer be allowed to set the rules for themselves. As we consider reconfiguring global financial regulation in order to ensure more stability, we might do well to consider the wisdom of John Maynard Keynes, who in 1933 suggested the world adopted a unique global reserve currency. Like it or not, reserves all over the world depend on the balance of the American economy, whose dollar is the default reserve currency. We need a unique global reserve currency, whose supply can be increased discretionarily to meet the needs (according to set rules of cause) of countries around the world as they arise. The current UN security council needs to commission a Think-Tank to come up with the framework for a more empowered global financial institution; a framework that will standardize financial products and sober corporate governance; a framework that will include how to manage cross-border bankruptcies as well as the creation of a unique, more stable global reserve currency amongst other factors. For credibility, this institution would have to be created and governed multilaterally. This is what must be done and now is the time to do it.
NEEDED: G-FORCE
Global frameworks would also be needed to deal with poverty and global peace and security. We cannot address security without addressing terrorism and we cannot address terrorism, to certain extents without addressing poverty. The war on terrorism, as waged by the US and wary members of NATO, in Iraq and Afghanistan, has been on the front burner of the global agenda. But beneath the garb of Islamic fundamentalism is Poverty. The US President-elect has pledged to send in more troops to Afghanistan while pulling out of Iraq. President-elect Obama has also talked about the need to provide economic support, but not with the same zeal as his intentions to send in more troops. The American government is currently in its eight year running, prosecuting the war in Afghanistan. The result has hardly been commensurate with the input. It might do some good to consider the strategy employed thus far and the possibility of trying an alternative approach; an approach that seeks to expend more in building the countries economy than in sustaining and applying military force. The Afghanistan economy is one of the least productive in the world, producing nothing of value. Its literacy rate is 28%, meaning it doesnīt even have the machinery to play in todayīs knowledge economy. Military efforts would have to be employed side-by-side infrastructural building and modern education in the region with more effort pumped into the latter.
It would prove to be a complex endeavour developing a framework for ensuring global security. But nothing would be more relevant. The world, in todayīs nuclear age, desperately needs an all inclusive security pact. This security pact should be forged with full recognition of each regionīs ideological and political differences. Such a system, with the rules determined multilaterally, would guarantee safety for all. It would set up a framework for tackling terrorism and nuclear proliferation. It would forbid any military alliance from advancing its cause at the expense of other sovereign states. Such a move would deter unilateral security undertakings with the nationalistic, hate-driven terrorism they provoke.
None of these much needed global co-operative strategies for stabilizing global finance and security would work, except Super Powers like the US come to terms with the reality of the new world and that the time has come for an all inclusive global governing framework. Today the United States runs the largest economy in the world and can boast of military might unlike no other. The technological and entrepreneurial contributions of the American economy to the world cannot be faulted. Enormous responsibility therefore lies on the shoulders of America, as far as leading the world into developing a global system, which it must be subject to, is concerned. No global financial institution or security coalition will work except nations like America, Europe and Russia cede power to it. The failures of institutions like the IMF and the UN to effectively deal with issues on a global scale is a sad reflection of this. The time has come for a change in attitude, for a strategic integration of more nations into the burden of global governance. This is most crucial. The world has become far too integrated. Every regionīs reality is every regionīs concern. Globalization today demands multilateralism. We cannot tackle the challenges 2009 and the succeeding years will bring if we do not embrace this. We can only hope the Obama administration will be more progressive in dealing with these issues and in making America a first amongst equals.
FUTURE ENERGY: THREAT OR OPPORTUNITY
The clamour for alternative energy has reached fever-pitch. The impacts of this are multi-dimensional across regions. Before the start of the recession, global oil price hovered around $150 per barrel. And alongside the fluctuations in oil prices is climate change. According to the WHO: the warming of the planet will be gradual, but the effects of extreme weather events more storms, floods, droughts and heat waves will be abrupt and acutely felt. Already Malnutrition, much of it caused by periodic droughts, is already responsible for an estimated 3.5 million deaths each year.
For the West, alternative energy is an issue of survival. Already the US imports 70% of oil at a cost of $700 billion a year. Sources of supply are becoming increasingly unreliable and demand is at an all time high. It is becoming apparent that the world is fast approaching a point of inflection, where supply would prove inadequate to match demand. The impacts of this on the global economic order would be too devastating to imagine. This, the west holds in view, hence their frantic search for alternatives. For oil producing regions like the Middle East and Africa, alternative energy is also an issue of survival, but in a different dimension. Getting alternative energy into the mainstream will have a negative impact on the Nigerian economy for example where 80% of the nationīs revenue is derived from oil. But analysts have remained sceptical about funding and getting alternative sources into the mainstream, enough to replace oil. We must however note with all seriousness, that the American nation is about prepared for this transformation and only the absence of political will can stop them. Making the transition will involve pushing against all manners of interest groups, but progressives know this will be done. Itīs just a matter of time. And the world only needs America to forge a technological pathway to green before the know-how is exported. And then technology savvy nations like India and China, large consumers of energy, as we know it, will be off.
What then becomes of a nation like Nigeria? Would it be overtaken by a green revolution even as it tries to figure its way into the industrial revolution? Except the current administration quits fumbling around clueless, the future portends gloom for the nation. Frantic efforts must now be made to diversify the economy. The Nigerian government and its people will have to work through years of bad habits and clumsily built institutions sustained by greed and corruption to make this happen. Its vision to be one of the top 20 economies come 2020 is nothing short of simplistic and may be a good pointer to the fact that the government has no thorough idea of the situation on ground. The Nigerian government will have to spend more money on educating its people, on funding research and development efforts, forcing its financial institutions to support start-ups with a bias for technology-driven firms. Infrastructures will have to be built with a rapid sense of urgency. The Nigerian economy as it stands today is endangered.
Keeping the big picture in view, the world does need alternative sources of energy. The impact on job creation will be enormous all over the world, not to mention its positive effect on global warming. Every region stands to gain from Future Energy. While the demand of oil can be reduced it cannot be totally eradicated. But the Green Revolution will demand every region raises its game and compete for the next level of innovation. A nation like Nigeria will be forced to look deep within and tap into the ingenuity of its people to create a well diversified economy with benefits for all. And maybe the crisis in the Niger Delta will die a natural death.
But none of this will happen except governments in the west; especially America put its money where its mouth is. Heavy government investment will have to be made in this regard. The Cap and Trade system will need to be rigidly enforced to compel adequate private participation in alternative energy. Cap and trade refers to a system where, a central authority (usually a government or international body) sets a limit or cap on the amount of a pollutant that can be emitted. Companies or other groups are issued emission permits and are required to hold an equivalent number of allowances (or credits) which represent the right to emit a specific amount. The total amount of allowances and credits cannot exceed the cap, limiting total emissions to that level. Companies that need to increase their emission allowance must buy credits from those who pollute less. The transfer of allowances is referred to as a trade. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed. Thus, in theory, those that can easily reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest possible cost to society.
Times like this call human ingenuity to the fore. A synergy between governments and markets will have to evolve. There is little doubt that the world can reinvent itself. Crisis is nothing new to our age-old world. The current global situation is only a platform for the emergence of a new world order. Nations will have to position to be a part of it or be left behind. We are privileged to be alive in this time of crisis, privileged to be global change partners, saving a dying world.
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