Analysis

Indian Big Business

“The systemic, long-term nexus between the political elites and big business will not go away anytime soon,” wrote journalist M. K. Venu  in 2015. Writing in the aftermath of Obama’s second visit to India, Venu suggested that “crony capitalism” had to be grasped in a deeper sense to reflect not the odd favors bestowed on this or that industrialist by the government of the day but the system that cemented the ties between state and capital, in this case a handful of family-owned businesses that knew they could always depend on India’s governing class, starting with the prime minister. Venu cited a revealing example of this bond.

Droughts and Dams

Most of Zambia’s grid electricity is generated by hydropower. Over the past decade, recurring droughts—in 2015, 2016, 2019, and now again in 2022—have exposed the deep vulnerabilities in the system. These droughts have unleashed unprecedented power outages, with low reservoir levels constraining hydroelectricity generation capacity. 

Realignments

Luiz Inácio Lula da Silva may have won last month’s presidential elections, but the strength of Bolsonarismo has been confirmed. In both houses of the National Congress, Bolsonarismo and its allies made gains, overcoming the traditional right wing. In the Federal Senate, Bolsonaro’s Liberal Party (PL) won fourteen of the twenty-seven seats up for election, giving it the largest number over all. In the Lower House, despite the fact that the left has regained some ground, the PL nevertheless elected ninety-nine deputies—a larger share than any other party. The rural, evangelical and security caucuses doubled in size. The alignment of the parliamentary forces may be more pragmatic than ideological, but as Souza and Caram put it, the 2022 Congress elected in 2022 is still “the most conservative since 1964.”

The Wall Street Consensus at COP27

At COP26, US Special Envoy for Climate John Kerry sanguinely declared the need to “de-risk the investment, and create the capacity to have bankable deals. That’s doable for water, it’s doable for electricity, it’s doable for transportation.” UN Special Envoy for Climate and head of the Glasgow Financial Alliance for Net Zero (GFANZ) Mark Carney similarly announced GFANZ’s intentions to work in partnership with governments and multilateral development institutions to mobilise its USD130 trillion for green purposes.

The Sacrifice Zone

In September 2022, 62 percent of Chilean voters rejected the country's proposed new constitution. The defeat took many by surprise—the demands to rewrite the existing charter had been loud and seemingly unanimous. For followers of Chile’s extractive industries, however, the results were less surprising. In fact, they reflected deep and long standing tensions at the heart of the country’s green energy transition.

Town & City

Earlier this month, Brazilians went to the polls in an election billed as the most momentous since democratization in 1985. Far-right president Jair Bolsonaro faced off against former two-term president Luiz Inácio “Lula” da Silva. Though Lula did win the first-round election by more than 5 percentage points, or 6 million votes, it was not enough to clear the 50 percent threshold needed for first-round victory. The opponents will face a polarizing run-off on October 30. 

Africa’s Century of Growth?

On May 1, 2014, Nigeria’s then-president, Goodluck Jonathan, addressed a crowd of workers in the country’s capital Abuja.  He declared that “the challenge of the country is not poverty, but redistribution of wealth.” The prompt for his comment was a report issued only a few days prior, which labeled Nigeria, Africa’s most populous country, as one of only five nations that are home to two-thirds of the world’s population living in extreme poverty.

The Finance Gap

UN Secretary General Antonio Guterres’ foreword to the UN’s Inter-agency Task Force on Financing for Development’s 2021 Financing for Sustainable Development report, speaks to a prevalent piece of common sense in global development: Financing for sustainable development is at a crossroads. Either we close the yawning gap between political ambition and development financing, or we will fail to deliver the Sustainable Development Goals (SDGs) by the deadline of 2030. 

Technocracy and Crisis

On September 25, Italians will be called to elect a new Parliament. The snap election follows on the heels of the forced resignation of the government in late July, led by former European Central Bank (ECB) President Mario Draghi. That the country would dismiss such an esteemed prime minister to go to early elections—and while the country is lashed by the interconnected crises of Covid-19, the rise in energy prices, and an impending recession—has been a cause of consternation and confusion for many in the international press. 

A Permanent Bailout?

The 2008 crisis heralded a new age in central banking. The scale and nature of central bankers’ interventions was unprecedented. Traditionally, as lenders of last resort, central banks lend at escalating rates against good collateral to solvent institutions in times of crisis. In 2008 central banks broke every rule in the book: deviating from the principle of full collateralization, they lent to non-bank entities and made outright asset purchases. This exposed their balance sheets to various credit, interest-rate, and market risks. The European Central Bank made asset purchases under an “enhanced credit support” program that dealt in public securities of various credit risks and even provided liquidity in foreign currencies, primarily the US dollar.

Rating Sovereigns

As dark clouds gather on the horizon of the global economy in the third year of the pandemic—with debt stocks swollen, interest costs rising, and growth undermined by energy insecurity and war—policy makers and pundits are anxiously watching sovereign credit ratings as the harbingers of the storm. What will it take to save Italy from the fatal downgrade to junk status that could bring down not just the fourth largest economy in Europe, but the entire eurozone with it? Could much of the developing world be a few downgrades away from devastating debt crises? Such concerns are rooted in past experience. In the late 1990s, a series of rapid-fire sovereign downgrades triggered the Asian financial crisis. In the late 2000s and early 2010s, sovereign downgrades played similar havoc with European countries—pushing Greece into default, and forcing eurozone authorities to take desperate measures to save Cyprus, Ireland, Italy, Portugal, and Spain from the same fate. In both instances, sovereign ratings were blamed not only for having failed to predict the debt servicing difficulties of the countries in trouble, but also for exacerbating the crises via belated and panicked downgrades. Sovereign ratings exercise spectacular—and often disastrous—power in times of crisis.

Pragmatic Prices

European and American traditions of economic theorizing on price control are intimately connected with war—practices and debates over price control peaked amid the two world wars. The experience of the First World War had been one of inflation and limited price controls followed by a sudden liberalization when the war was over. The transition from war to peace gave rise to a sharp boom bust cycle and eventually led to the Great Depression. This experience stood as a warning when the world was once

Odious Debts

In the aftermath of its 2003 invasion of Iraq, the United States was eager to restructure the ailing country’s sovereign debt. International sanctions since the Gulf War meant that Iraq was economically isolated, yet the country had a large stock of unpaid debts issued to governments, financial institutions, and commercial trading partners that dated back to its weapons purchases during the 1980 Iran-Iraq war. 

Development Engines

In December 2021, President Joe Biden announced a proposed consumer tax incentive for electric vehicles (EV) made in the US by unionized autoworkers. The tax incentive aims at tackling climate change while also strengthening unionized jobs. It promises to support the transition to “green technologies,” curtail dependence on fossil fuels, and “decarbonize” the economy while strengthening collective bargaining after decades of state-led efforts to weaken unions.

A New Labor Regime

Since coming to power in 2014, India’s right-wing government led by Prime Minister Narendra Modi has introduced sweeping reforms aimed at strengthening the union government at the expense of the states, and catering to large corporations over smaller establishments and workers.