Open Letter to Jacques Barrot, Vice-President, European Commission

TI resists intimidation of Romanian anti-corruption advocate with an open letter to the European Commission

Jacques Barrot
Vice-President
European Commission
Responisble for Justice, Freedom and Security

Dear Mr. Barrot,

Combating corruption takes personal courage. Transparency International (TI), the global anti-corruption organisation, relies on the work of hundreds of courageous advocates worldwide to ensure that the lives of millions are protected from corruption. These advocates are conscientious, dedicated citizens who care about their countries and finding constructive solutions to build a better future. One such advocate, from Transparency International Romania, is currently facing difficulties and I am writing to make you aware of his situation.

Combating corruption often means confronting vested interests and thus produces challenging debates. In advocating for change, TI follows its non-partisan ethos. We not only produce expert research on the causes and effects of corruption but also serve as a partner for constructive discussions and expert debates with governments and the private sector. Such exchanges have been very productive as long as discussions and related disagreements are based on facts.

See full Press Release.

Working Breakfast on the Impact of the Economic Crisis on Africa

The G8 broadened this morning to take in the African countries of Algeria, Angola, Egypt, Ethiopia, Libya, Nigeria, Senegal and South Africa, the IEA, World Bank, IMF, ILO, OECD, WTO and United Nations and the African Union Commission’s representatives. The meeting took the form of a working breakfast

The topics discussed at table were the impact of the global economic crisis, which is hitting the world’s poorest people and threatening to put paid to the progress made in the spheres of health and stamping out hunger and poverty.

The G8 countries and the African countries passed a joint G8-Africa statement on water at the end of the meeting, asserting their determination to build a stronger partnership, based on the principle of shared responsibility, between the African countries and the G8 to broaden access to water and public health.

See full Press Release.

World Bank Cuts Forecast for Developed Economies

Companies in Japan and Germany may have become less gloomy about their prospects in recent months, as surveys showed Monday, but neither they nor businesses elsewhere have much to cheer about as the world economy remains mired in a recession that could see it shrink by about 2.9 percent this year.

Forecasts from the World Bank on Monday highlighted just how painful the recessions will be in various regions, despite mounting signs that the very worst of the downturn may be over.

The bank earlier this month said it expected a deeper global recession, forecasting a 2.9 percent contraction in gross domestic product for this year, rather than 1.7 percent, as it projected as recently as March.

See full Article.

Emerging nations' growth to slow

The World Bank says the economies of developing countries are expected to grow by just 1.2% this year, compared with 5.9% in 2008 and 8.1% in 2007.

And if China and India are excluded, gross domestic product in developing countries is projected to fall by 1.6%.

Its annual Global Development Finance report warns of possible joblessness and poverty in developing nations.

It also forecast the global economy as a whole would shrink by 2.9% this year, against an earlier prediction of 3%.

See full Article.

Scared silly over climate change

We are frightening children with exaggerations – they believe they don't have a future and that the world is going to end

The continuous presentation of scary stories about global warming in the popular media makes us unnecessarily frightened. Even worse, it terrifies our kids.

Al Gore famously depicted how a sea-level rise of 20ft (six metres) would almost completely flood Florida, New York, Holland, Bangladesh, and Shanghai, even though the United Nations says that such a thing will not even happen, estimating that sea levels will rise 20 times less than that.

See full Article.

Eco-Friendly Amsterdam: A Smart City Goes Live

The Dutch city's eco-friendly infrastructure has new power hookups for electric cars, solar panels and household wind turbines.

On the streets of Amsterdam last week, major changes were afoot. The first of 1,200 households installed an energy-saving system from IBM and Cisco aimed at cutting electricity costs. Others were given fresh access to financing from Dutch banks ING and Rabobank to buy everything from energy-saving light bulbs to ultra-efficient roof insulation. And on Utrechtsestraat, a major shopping avenue in the center of the Dutch capital, solar-powered panels on local bus stops were installed to transform the road into a "Climate Street" piloting clean technology.

Amsterdam has long been environmentally friendly. But it is now in the process of getting a lot greener.

The projects are Amsterdam's first steps toward making its infrastructure more eco-friendly. Other projects are expected to follow soon. They include 300 power hookups around the city to recharge electric cars, solar panels that will be installed on Amsterdam's historic 17th century townhouses, and infrastructure upgrades that will allow households to sell energy they generate from small-scale wind turbines or solar panels back to the city's electricity grid for a profit.

See full Article.

The Way We Live Now - Can Democratizing Boards Fix Corporate America?

Let’s say you own a small business, maybe the local car dealership, assuming it is still extant. One day, you are feeling pinched and sell some shares of the business to a few folks in town. To keep things on the up and up, you create a board.

NO EXPECTATIONS "The stockholder is . . . left as a matter of law with little more than the loose expectation that a group of men, under a nominal duty to run the enterprise for his benefit and that of others like him, will actually observe the obligation." — Adolf Augustus Berle and Gardiner Coit Means in "The Modern Corporation and Private Property," 1932

Every year you and the other shareholders get a report from the fellow you hired to manage the dealership. The business runs so smoothly you barely even think about it. Until one day, sales crash and profits, too. You would like to sell your stock, but it is in the tank. So you ring up the manager to see what happened. “Simple,” he says. “I quadrupled my bonus and I forgot to order a line of fuel-efficient cars. My bad.” Then he hangs up.

Feeling a little irritated, you try to contact some of the directors, but they are out driving gas-guzzlers that the manager supplied them and don’t seem inclined to return your calls. Now you are very irritated. As the biggest shareholder, you request that your name be included on the proxy ballot for the next election to the board.

See full Article.

Firm admits overseas corruption

A British engineering company has admitted it was involved in overseas corruption and breaching UN sanctions.

Mabey & Johnson tried to influence officials in Jamaica and Ghana when bidding for public contracts.

It also paid more than $200,000 (£123,000) to Saddam Hussein's Iraq regime, violating the terms of the UN oil for food programme.

The Reading-based firm, which builds temporary bridges, said it regretted its past conduct.

See full Article.

A Quiz For Business Owners

Whether you have a second generation to take over or need to recruit a successor, it is important to be honest about the relationship you have with your business.

This quiz will help you discover where you stand. Count your "yes" answers to the following questions:

1. Is your business less enjoyable now than before?

2. Does your business challenge and excite you less now than it did earlier?

3. Do you think of selling your business more often now than you did previously?

4. Do you find yourself complaining more often than before?

5. Has the business come between you and your loved ones?

See full Quiz.

Australians demand climate action

Thousands of demonstrators have rallied across Australia to demand greater government action to protect the environment from climate change.

The National Climate Emergency Rallies called on Australia to take the lead at the UN environment summit in December in Copenhagen.

Activists also want an end to Australia's dependence on cheap and plentiful supplies of coal.

It is one of the world's worst per capita emitters of greenhouse gases.

See full Article.

Taxation, Innovation and the Environment

Deductions for R&D and technological innovation expenses, and for environmental investments, in the Spanish Corporate Income Tax

The Spanish Corporate Income Tax includes a deduction for expenses on R&D and technological innovation (R&D&I) and a deduction for environmental investments. This report focuses on the environmental effects of the R&D&I deduction and on the effects on innovation of the environmental investments deduction.

The R&D&I deduction applies to expenditures – both current and capital – incurred on R&D and technological innovation, whereas the environmental investments deduction benefits investments devoted to avoiding air pollution from industrial facilities, prevent water pollution and reduce, recover or adequately treat industrial waste. It also benefits purchases of new land-based means of transportation for commercial or industrial use and some investments for the use of renewable energy sources.

Even if the amount deducted has been generally increasing in absolute terms for the last years for both deductions, they are used by a limited number of companies. Their importance is relatively low in terms of the percentage of the total revenue raised by the Corporate Income Tax, and slightly declining. For both deductions, the percentage of companies making use of them grows as their size increases, along with the average size of the deductions. The average deduction for R&D&I is higher, whereas the number of applicants is slightly lower. However, the scope of the environmental investments deduction is significant and, for 2005, it was estimated that most of the investment in environmental protection undertaken in Spain was supported by the tax credit.

See full Study, in pdf format.

Indian farmers to insure themselves against climate change crop failure

UN negotiators at Bonn consider micro-insurance schemes among adaptation measures for Africa, Asia and Latin America

For more than half a million farmers in rural India the age old fear of crops failing due to bad weather could soon be banished, thanks to an innovative insurance scheme that UN negotiators gathering in Bonn this week are considering as a central component of climate change adaptation measures in Africa, Asia and Latin America.

Following a successful trial last month, MicroEnsure, a company specialising in providing insurance to poor communities, plans to launch a scheme next year for up to 600,000 farmers in India's Kolhapur province allowing them to insure against their rice crops failing due to drought or heavy rains during the plants' flowering period.

Chief executive Richard Leftley said micro-insurance policies — so

-called because of their relatively low premiums — will be offered to farmers with loans from the local Kolhapur District Cooperative Bank.

See full Article.

Obama targets US public with call for climate action

Climate impacts report warns of flooding, heat waves, drought and loss of wildlife that will occur if Americans fail to act on global warming

The Obama administration is poised for its most forceful confrontation with the American public on the sweeping and life-altering consequences of a failure to act on global warming with the release today of a long-awaited scientific report on climate change.

The report, produced by more than 30 scientists at 13 government agencies dealing with climate change, provides the most detailed picture to date of the worst case scenarios of rising sea levels and extreme weather events: floods in lower Manhattan; a quadrupling of heat waves deaths in Chicago; withering on the vineyards of California; the disappearance of wildflowers from the slopes of the Rockies; and the extinction of Alaska's wild polar bears in the next 75 years.

See full Article.

Further Action Needed to Reinforce Signs of Market Recovery: IMF

* Credit losses have continued to grow; most being borne by banks
* Government action gradually beginning to restore market confidence
* Decisive policy actions required, particularly on bank cleanup, recapitalization

An unprecedented policy response to the global economic crisis—including the recent expansion of resources for international institutions and the IMF’s enhanced lending framework—is gradually beginning to restore market confidence, the IMF said.

But in its semiannual Global Financial Stability Report (GFSR), released April 21, the IMF warned that the challenges to restoring financial stability remain significant.

“Continued decisive and effective action is needed to preserve and strengthen these first signs of improvement, and to help provide a more stable and resilient platform for sustained global growth,” José Viñals, Financial Counsellor and Director of the IMF’s Monetary and Capital Markets Department, said.

In particular, emerging market risks have risen the most in the past six months, the report said. The retrenchment of capital flows is straining economies that have relied on foreign-financed credit growth, while the deteriorating economic environment has increased expected bank writedowns and raised the need for fresh capital in emerging market banks, Viñals told reporters.

A toll on bank balance sheets

The credit deterioration is taking an increasing toll on bank balance sheets, with the IMF emphasizing the need to cleanse them of impaired assets. Writedowns continue to mount as the collapse of economic activity leaves companies and individuals increasingly unable to repay borrowings. Banks will have to rebuild capital as a result of credit losses.

The report uses two scenarios to estimate the amount of capital necessary to restore banks’ buffers to levels that the market believes would permit banks to operate in today’s environment.

• Under one scenario, capital injections totaling $875 billion would be necessary for banks located in the United States and Europe using a common measure of leverage— tangible common equity (TCE) to tangible assets (TA)—of 4 percent, the level prevailing before the crisis. Estimated equity requirements for banks in the United States by the end of 2010 are about $275 billion; for the euro area, $375 billion; for the United Kingdom, $125 billion; and for banks in other advanced economies in Europe outside the euro area, about $100 billion.

• At a somewhat more demanding TCE/TA ratio of 6 percent, the amount of needed capital rises accordingly. Banks would not necessarily have to raise all of this amount. Some of this capital could come from the conversion of preferred shares to common equity or from the implicit guarantees of some governments to cover bank losses on some sets of assets.

The estimates of needed injections are based on the roughly $2.8 trillion losses that banks will incur from the start of the crisis through 2010 and reflect losses already taken and bank earnings this year and next that can be used to bolster capital.TCE is essentially total equity, less preferred shares and intangible assets, while TA reflects loans and other common bank assets less intangible assets such as a goodwill that cannot be measured or counted.

Overall global writedowns

For all financial institutions, the report estimates that writedowns on assets that were originated in the United States will total about $2.7 trillion, up from the roughly $2.2 trillion projected in an interim report in January. The $2.7 trillion writedown (off a total of about $27 trillion in U.S.-originated assets) covers both losses already recognized and those yet to come this year and next and incorporate a number of assumptions about the economic outlook and financial conditions.

The latest GFSR extends its writedown estimates to include losses on loans and related securities that were originated in Europe and Japan (see table), which will total approximately $1.3 trillion.

The Fund estimates that potential writedowns, including about $1 trillion already taken, could be nearly $4.1 trillion on some $58 trillion of assets originated in the United States, Europe, and Japan (although the owners of these assets can be anywhere in the world). The assumptions used to make these broader estimates are subject to significant uncertainty. The estimates could be lower depending upon policy actions and more favorable outcomes than assumed.

Banks will likely bear about two-thirds of the $4.1 trillion in writedowns, which together with their exposure to emerging markets, is about $2.8 trillion in actual and potential writedowns. Writedowns will also be borne by other financial institutions, including pension funds and insurance companies, the GFSR said.

Emerging markets feel the impact

As institutions reduce assets during a period of deleveraging, international capital flows to emerging markets have been curtailed. The effects have been harsh in some cases. The retrenchment from cross-border markets is outpacing the overall deleveraging process. On balance, emerging markets could experience net outflows of private capital in 2009, with but slim chances of recovery in 2010 and 2011. Banks in countries which were dependent on such cross border flows have suffered greatly, but the effects are also being felt by companies in many emerging market.

Within emerging markets, eastern European economies have been the hardest hit. The linkages between western Europe and emerging European banking systems make the region particularly vulnerable. Western European banks may reduce the funding of their eastern European subsidiaries and losses from emerging Europe may damage western European balance sheets. Fortunately, there are promising regional initiatives in which some western banks have agreed to keep credit flowing to the subsidiaries.

Buttressing IMF lending

In response to the widespread nature of the crisis, the IMF overhauled its lending framework and, at its summit in London on April 2, the Group of Twenty industrial and emerging market countries supported a large expansion of the Fund’s resources—from $250 billion to $750 billion. The changes in the IMF’s lending framework include more emphasis on crisis prevention, facilitating larger and more frontloaded financing, and further streamlining conditions attached to IMF loans.

Since the approval of the IMF’s reforms, external credit and credit default swap spreads (essentially the price of insuring repayment) on emerging market sovereign debt have tightened as markets have become reassured that sizeable external resources will be made available as needed.

Further government help

Overall, further decisive and effective policy actions will be needed to stabilize the international financial system. The global response to date has been rapid, but often piecemeal and insufficient to bolster public confidence. In particular, the global banking system needs to be cleansed of its impaired assets. Supervisors must determine whether a bank is viable. Banks that are viable but have insufficient capital will need to receive capital infusions. If such infusions are unavailable from private sources, then public money will have to be used.

In some cases, partial, or even total, government ownership will be required to assure adequate capitalization and an effective restructuring plan. A government should aim to ensure that banks can return to private ownership as expeditiously as possible. Banks that are not viable should be resolved promptly.

Financial policies must work constructively with other macroeconomic policies—both are needed to short-circuit the adverse feedback loop between the financial system and the economy through which deteriorating financial conditions lower economic activity, which in turn makes it harder for companies and individuals to repay borrowings, with an adverse impact on financial conditions. It is essential to stabilize the financial system—without which a robust and sustained economic recovery will be difficult to attain.

Due Diligence in the Boardroom: Buy & Sell Side

When; Tuesday, 15 September, 2009
Where: The Mint, 10 Macquarie Street, Sydney, NSW, AUSTRALIA.

Crowe Horwath GCA (through its Australian representative, WHK Horwath Corporate Finance) has proudly entered into a partnership with the Australian Institute of Company Directors, focused on Mergers and Acquisitions in the current climate. The series, made up of four Directors Briefings, will take an in-depth look at the pursuit of growth by acquisition and the issues for directors and the Board.

Assessing the risks and opportunities of a proposed transaction is vital as a bad decision can affect your business for years.

A comprehensive and well planned due diligence minimises the risk of your business encountering unexpected ‘surprises’ and ensures the due diligence results will assist the board in making a decision that fits the acquisition strategy and the deal structure.

* This briefing is the second in the series and will address the due diligence process: The current economic environment and its impact on directors and due diligence.
* Due diligence planning and the Board setting the right parameters
* Key ingredients for an effective due diligence and considerations for the board The boards role in both an acquisition and a vendor due diligence - issues to focus on, pressures and surprises from real life experience.

See full Details.

A tooth-and-nail fight in House over climate bill

The House of Representatives on Friday began debate on a controversial measure to cap US greenhouse-gas emissions. If passed, the bill would represent the most profound government intervention in America’s energy use since Washington began regulating the fuel economy of vehicles in 1975.

The measure is one of President Obama’s top legislative priorities. Yet the vote to advance the legislation to the House floor was a relatively close 217 to 205, and 30 Democrats defected to vote against it.

Democratic leaders continued to tweak the bill Friday in an effort to win as much support as possible for passage. A final vote was expected in the late afternoon or early evening.

See full Article.

The Vulnerability of Energy Infrastructure to Environmental Change

A joint publication of Chatham House and Global EESE. The paper was originally published in April 2009 but was reissued in July 2009 with additions.

* Much energy infrastructure lies in areas that are predicted to become increasingly physically unstable owing to changes in the environment.
* Already there have been environment-related disruptions to hydroelectric installations, offshore oil and gas production, pipelines, electrical transmission and nuclear power generation.
* As a result of scheduled decommissioning, revised environmental standards, stimulus spending and new development, there is likely to be substantial investment in new energy infrastructure.
* It is critical that new and existing infrastructure be designed or retrofitted for changing environmental conditions.
* It is no longer sufficient only to assess our impact on the environment; now we must also assess the impact of a changing environment on us.

See full Press Release.

Future protection of the oceans could lie in the past

If we don't know our history, then we can't know our future. Historians arguing the relevance of their subject often repeat that mantra.

But one group of researchers is showing how true it is. Members of the History of Marine Animals Project (HMAP) believe that scrutinizing the minutiae of historical documents is the key to protecting our oceans for generations to come.

Our seas and oceans face a series of major threats, including climate change and over-fishing.

But the HMAP is using the evidence of documents such as centuries old tax records and sailor's logs to explore how they have changed - and find the information that will help us understand and protect our oceans for the future. Only by appreciating long-term processes, they argue, can we hope to understand our impact.

See full Article.

EU plans new push on bank reform

New European Union laws to drive banks to strengthen capital cushions will be unveiled in October, the Financial Times has learnt, as EU member states intensify a regulatory assault aimed at preventing a repeat of the global financial crisis.

A draft report expected to be backed by EU finance ministers in Brussels onTuesday says that there is a “strong case” for curbing existing rules on banks' funding needs, which critics say exacerbate the ups and downs of economic cycles.

See full Article (paid subscription required).

Regulatory Philosophy Matters

Risk-based supervision sought to spur innovation and reward good behavior but helped bring about the global financial crisis

The causes of the financial crisis are widely acknowledged, but what is less well understood in the public debate is how the philosophical approach to the regulation and supervision of the global financial system played an enabling role in the runup to the current financial crisis. This philosophical approach is often described as the “risk-based supervision” (RBS) framework. It has been adopted by the leading developed economies, as well as many other countries throughout the world. Although the RBS framework can be used to describe a general philosophical approach to regulation and supervision of the entire financial system, I will use the term more narrowly—as it applies to official oversight of the banking system.

At the core of the RBS philosophy lies the view that a banking organization can engage in virtually all forms of financial activity, as long as it has robust risk management systems and sufficient earnings and capital to support those underlying risks. In short, RBS seeks to liberalize the powers of well-managed banks, to spur innovation, and to reward good behavior.

The RBS framework also aims to promote proactive financial sector supervision by early identification and resolution of weak risk management practices, before their effects threaten the stability of both individual banks and the banking system as a whole. Virtually all countries that have adopted this approach have aligned their legal, regulatory, and supervisory approach to support this overarching philosophy.

See full Article.

G8 set to tackle hunger in Africa

On Wednesday, 8 July, world leaders will gather in the earthquake-devastated town of L'Aquila in Italy for the G8 summit hosted by Italian Prime Minister Silvio Berlusconi.

He will be joined by US President Barack Obama, who is also visiting Moscow and will be flying on to Ghana.

The development of Africa is a key part of the G8 summit agenda, following pledges by world leaders at Gleneagles in Scotland in 2005 to increase aid, which were reaffirmed at the G20 London summit in April.

See full Article.

Reports find corporate governance standards slipping across large and mid-caps sectors

A high percentage of listed Australian companies still have significant deficiencies in their corporate governance policies, with less than 16% (39) of the 250 largest companies by market capitalisation achieving best practice standards.

At the same time, of those companies ranked 251-400 by market capitalisation, which are classified as mid-caps, less than 5% (7) demonstrated best practice governance standards in the 2008 financial year.

The 2009 WHK Horwath Large Cap and Mid-Cap Corporate Governance reports, which have been released today, also show a marked increase in the number of listed companies that were totally lacking in corporate governance structures and policies based on their 2008 annual report disclosures.

The separate reports rank the performance of listed companies on key governance factors such as board composition and independence, auditor independence, having separate audit, remuneration and nomination committees in place and carbon emissions disclosures. As well as failing in these areas, the worst performers also have inadequate documentation in areas such as disclosure of related-party transactions or rigorous policies on risk management and share trading.

See full Press Release.

US plans for tighter regulation

The US government is planning a major overhaul of the system of financial regulation to avoid future crises.

The broad outlines of the plan were revealed on Monday by US Treasury Secretary Tim Geithner and White House economic adviser Larry Summers.

The plans will lead to tighter regulation of the biggest financial institutions and a new framework for consumer and investor protection.

See full Article.

An EU fudge on bank reform

European Union leaders avoided a row over bank regulation—but only by being ambiguous

TWO DAYS after Barack Obama announced what he intends to be the biggest overhaul of American financial regulation since the Depression era, the European Union’s leaders, meeting in Brussels on June 18th and 19th, agreed that financial institutions in the 27-country block should be subject to common rules and overseen by new EU-level supervisors able to make binding rulings in disputes between national regulators. The heads of national government also agreed to create a European Systemic Risk Board, charged with providing early warning of potential threats to financial stability. The French president, Nicolas Sarkozy, hailed Britain’s agreement to the plan as a “complete change in Anglo-Saxon strategy” on financial regulation. But was it? The British prime minister, Gordon Brown, insisted he had conceded nothing.

The 27 national leaders offered unanimous backing for the creation of a trio of EU supervisory authorities to watch over the banking, insurance and securities sectors. These would have the power to resolve clashes between national supervisors in financial firms’ home and host countries, and to decree that national supervisors were flouting EU rules. At the moment, multinational banks and other financial institutions are watched over by a patchwork of national bodies, with no clear mechanisms for resolving disputes.

See full Article.

Obama seeks a new era of energy exploration in US

Marking Earth Day with a pitch for his energy plan, President Barack Obama on Wednesday called for a "new era of energy exploration in America" and argued that his proposal would help the economy and the environment at once.

"The choice we face is not between saving our environment and saving our economy it's a choice between prosperity and decline," Obama said in his first post-election trip to Iowa, the state that launched him toward the White House. "The nation that leads the world in creating new sources of clean energy will be the nation that leads the 21st century global economy."

But Obama's promise of preserving natural resources and jump-starting the economy ran smack into the reality of this economically struggling town about 30 miles east of Des Moines. The wind energy plant where he spoke, and received a tour beforehand, is a shadow of what it replaced a Maytag Corp. appliances plant that built washers, dryers and refrigerators.

See full Article.

Arctic Meltdown

Scientists say they now have unambiguous evidence that the warming in the Arctic is accelerating.
The Economic and Security Implications of Global Warming

Summary --

Thanks to global warming, the Arctic icecap is rapidly melting, opening up access to massive natural resources and creating shipping shortcuts that could save billions of dollars a year. But there are currently no clear rules governing this economically and strategically vital region. Unless Washington leads the way toward a multilateral diplomatic solution, the Arctic could descend into armed conflict.

The Arctic Ocean is melting, and it is melting fast. This past summer, the area covered by sea ice shrank by more than one million square miles, reducing the Arctic icecap to only half the size it was 50 years ago. For the first time, the Northwest Passage -- a fabled sea route to Asia that European explorers sought in vain for centuries -- opened for shipping. Even if the international community manages to slow the pace of climate change immediately and dramatically, a certain amount of warming is irreversible. It is no longer a matter of if, but when, the Arctic Ocean will open to regular marine transportation and exploration of its lucrative natural-resource deposits.

Global warming has given birth to a new scramble for territory and resources among the five Arctic powers. Russia was the first to stake its claim in this great Arctic gold rush, in 2001. Moscow submitted a claim to the United Nations for 460,000 square miles of resource-rich Arctic waters, an area roughly the size of the states of California, Indiana, and Texas combined.

See full Article.

Geithner Calls for ‘New Rules of the Game’ in Finance

U.S. Treasury Secretary Timothy Geithner said regulation of the U.S. financial system needs a broad overhaul to heal a crippling lack of confidence caused by the credit crisis.

“To address this will require comprehensive reform,” Geithner said in prepared testimony for a House Financial Services Committee hearing. “Not modest repairs at the margin, but new rules of the game.”

Geithner’s proposals would bring large hedge funds, private-equity firms and derivatives markets under federal supervision for the first time. A new systemic risk regulator would have powers to force companies to boost their capital or curtail borrowing, and officials would get the authority to seize them if they run into trouble.

See full Article.

The Elusive Green Economy

It feels like 1977 all over again: economy in the doldrums, crisis in the Middle East, and a charismatic new Democrat in the White House preaching the gospel of clean energy. Can Obama succeed where Carter did not? Yes—but only if we’ve learned the lessons of three decades of failure.

In October 1977, this magazine ran a cover story on the promising field of renewable energy. From today’s vantage point, the article is noteworthy mainly for how uncannily its description of the country’s energy crisis and possible solutions applies to the crisis we’re in now.

The article took as its starting point the national debate that had arisen over a 29-year-old physicist named Amory Lovins, who had come to prominence a year earlier, when he published an essay in Foreign Affairs called “Energy Strategy: The Road Not Taken?” Lovins argued that the country had arrived at an important crossroads and could take one of two paths. The first, supported by U.S. policy at the time, promised a future of steadily increasing reliance on dirty fossil fuels and nuclear fission, and it carried serious environmental risks. At a time before Al Gore was even in Congress, Lovins noted: “The commitment to a long-term coal economy many times the scale of today’s makes the doubling of atmospheric carbon dioxide concentration early in the next century virtually unavoidable, with the prospect then or soon thereafter of substantial and perhaps irreversible changes in global climate.” He dubbed this “the hard path.”

See full Article.

The case for a Glass-Steagall ‘lite’

Since, by common consent, we are immersed in the worst financial crisis since 1929, it is not surprising some of the old remedies are being considered again. More baffling is how quickly one of them is being dismissed.

The Glass-Steagall Act was passed in 1933 in the New Deal reforms of Franklin Delano Roosevelt’s administration. The Act responded to scandals involving Goldman Sachs and National City Bank, and to a fear of JP Morgan’s overweening power, by splitting off investment banking from commercial banking.

On Friday, Paul Volcker, former chairman of the Federal Reserve, said the US could perhaps do with a new version of Glass-Steagall, this time splitting hedge funds, private equity funds and proprietary trading off from Wall Street banks such as Goldman Sachs and Morgan Stanley.

See full Article.

China says "carbon tariffs" proposals breach WTO rules

Proposals to impose "carbon tariffs" on imported products will violate the rules of the World Trade Organization as well as the spirit of the Kyoto Protocol, China's Ministry of Commerce said.

In a statement posted on its website, the ministry said collecting carbon duties from foreign products would enable developed countries to "protect trade in the name of protecting the environment."

"This will not help strengthen confidence that the international community can cooperate to handle the (economic) crisis, it also will not help any country's endeavors during the climate change negotiations, and China is strongly opposed to it," the statement said.

See full Article.

G8 eyes climate as summit includes emerging powers

Leaders of the world's richest nations and major developing powers meet on Thursday to seek common ground on global warming and international trade, with the poorer countries seeking concessions.

U.S. President Barack Obama will chair the climate discussions, but hopes of agreeing ambitious goals have faded after China and India rejected demands to halve the emissions of greenhouse gases by 2050.

The talks come on the second of a three-day Group of Eight summit, with discussions broadened to include the heads of new economic powerhouses in recognition that the world's problems cannot no longer be dealt with by an elite few.

See full Article.

U.S. carbon tariffs, still long way off, draw Asia ire

China and India lashed out on Friday at the possibility of tariffs slapped on carbon-intensive exports, even though analysts said proposed U.S. measures were years away and would be hard to implement.

Green protectionism is likely to cause unease at next week's G8 meeting in Italy and separate 17-member Major Economies Forum gathering. It is also a growing concern in U.N. talks that aim to seal a broader climate pact at the end of the year in Copenhagen.

China, the world's top greenhouse gas emitter, said carbon tariffs would violate the rules of the World Trade Organization as well as the spirit of the U.N.'s Kyoto Protocol.

See full Article.

Foreign bribery and OECD countries: a hollow commitment?

Transparency International (TI) will, on 23 June, publish its 2009 Progress Report on the OECD Anti-bribery Convention, a report assessing the extent to which 36 signatory states are enforcing the ban on foreign bribery by companies based in their countries. These countries account for the majority of global exports and foreign investment.

The fifth annual report also includes major non-OECD exporters China, India and Russia. Case studies of recent investigations and prosecutions involving bribery schemes by major corporations are highlighted as well.

See full Press Release.

Moving Beyond the Crisis: Global Outlook and Policy Challenges

Keynote address by John Lipsky, First Deputy Managing Director, IMF To Turkish Industrialists’ and Businessmen's Association (TÜSIAD)

It is an honor to address this distinguished forum. I have been asked to discuss the challenging topic of when and how it will be possible to move beyond the current Great Recession that has been unfolding since the US economy's downturn began in late 2007. While the latest data point to a slowing of the global contraction, the timing and pace of the global economic recovery remains uncertain. Moreover, it is clear that whatever comes next will not simply be a return to the status quo ante. Rather, if a new global expansion is to be sustained, it will have to be based on rebalanced sources of growth across countries and regions. Moreover, the current crisis has made it abundantly clear that a substantial strengthening is needed regarding international collaboration in the design and implementation of economic and financial sector policies.

In my remarks today I will discuss the outlook and risks for the global economy, highlighting the key challenges facing policymakers—both in the coming months and over the longer term—as they seek to lay the foundation for a resurgence in global growth. I will conclude with a few remarks on how global developments are challenging the Turkish economy.

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$9 Million in Grants Available for Nixing Air Pollution

The Bay Area Air Quality Management District wants you to reduce air pollution.

The agency announced it has more than $9 million in grants left to support projects that reduce diesel pollution. This could be an opportunity for cleantech companies working on emissions control devices or new vehicles or engine technologies that pollute less than old and aging technologies.

In total the Air District has set aside $23 million for diesel reducing projects this year. But $13 million already has been awarded to projects by Fremont Paving Inc, to retrofit scraping and grading vehicles, Gallo Family Vineyards to repower six stationary irrigation pump engines and others.

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BA boss: Airline passengers will have to pay for pollution

Airline passengers will have to pay for the environmental impact of their journeys through fare increases if carriers join a global emissions trading scheme, according to British Airways boss Willie Walsh.

Airlines could contribute $5bn (£3bn) a year to help developing countries fight climate change if a scheme goes ahead, according to the Aviation Global Deal Group, whose members include BA, Virgin and Air France-KLM.

Under one version the industry would be limited to an amount of carbon dioxide emissions – for instance, 97% of 2005 emissions in 2005 – and would receive free carbon permits equating to 85% of its permitted emissions, and would bid for the rest. A proportion of those auction proceeds would go to developing countries.

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G8 leaders to set emissions goals

The G8 leaders are set this week to deliver their strongest statement so far on global warming.

They are likely to agree that the world ought to cut greenhouse gas emissions by 50% by 2050 - with rich nations reducing them by 80%.

The group will probably also say that any human-induced temperature rise should be held to 2C - a level considered to be a danger threshold.

The US has previously objected to such a clause.

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Kroll Predicts Corruption Costs Could Total $500 Billion Worldwide

Kroll Predicts Corruption Costs Could Total $500 Billion Worldwide, as FBI Braces for Next Wave of Financial Fraud Tied to Stimulus Spending

Government stimulus funding totaling $5 trillion has unintentionally introduced new opportunities for fraud and corruption worldwide, according to the latest edition of the Kroll Global Fraud Report. The report reinforces the global risk consultancy’s consistent call for greater transparency and compliance among organizations worldwide, and coincides with FBI Director Robert Mueller’s recent announcement that corruption and fraud tied to stimulus spending may be the “next wave” in financial fraud cases.

Data from Transparency International, the global coalition against corruption, puts into perspective the heightened risk brought on by today’s financial crisis. According to the coalition, corruption can raise procurement contract costs by at least 10% in a stable economy – an equivalent of $500 billion in corrupt gains – but in emergency situations those costs can rise as high as 30% of the overall cost of the contract.

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Breaking the Climate Deadlock report on how world leaders can tackle climate change with technology

Tony Blair will today call for immediate action on energy efficiency and a definitive commitment to develop the next generation of the technological revolution needed to get the world started down the low-carbon path.

The ‘Technology for a Low Carbon Future’ report comes just days before President Obama chairs a meeting of the major economies to discuss progress towards a new global climate agreement at Copenhagen later this year.

The report finds that 70% of the reductions needed by 2020 can be achieved by investing in energy efficiency – lighting, vehicles, buildings and motors - and reducing deforestation.

The report concludes that the strategy that should be adopted at the MEF and into Copenhagen should be to focus on existing energy efficiency and renewable energy technologies, along with efforts to halt deforestation, which can deliver major short-term cuts in emissions, while we invest in next generation technologies – carbon capture and storage, new approaches to nuclear and solar, and emerging biotech based solutions – that will drive down emissions through to the middle of the century.

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Re-Engineering the Earth

As the threat of global warming grows more urgent, a few scientists are considering radical—and possibly extremely dangerous—schemes for reengineering the climate by brute force. Their ideas are technologically plausible and quite cheap. So cheap, in fact, that a rich and committed environmentalist could act on them tomorrow. And that’s the scariest part.

If we were transported forward in time, to an Earth ravaged by catastrophic climate change, we might see long, delicate strands of fire hose stretching into the sky, like spaghetti, attached to zeppelins hovering 65,000 feet in the air. Factories on the ground would pump 10 kilos of sulfur dioxide up through those hoses every second. And at the top, the hoses would cough a sulfurous pall into the sky. At sunset on some parts of the planet, these puffs of aerosolized pollutant would glow a dramatic red, like the skies in Blade Runner. During the day, they would shield the planet from the sun’s full force, keeping temperatures cool—as long as the puffing never ceased.

Technology that could redden the skies and chill the planet is available right now. Within a few years we could cool the Earth to temperatures not regularly seen since James Watt’s steam engine belched its first smoky plume in the late 18th century. And we could do it cheaply: $100 billion could reverse anthropogenic climate change entirely, and some experts suspect that a hundredth of that sum could suffice. To stop global warming the old-fashioned way, by cutting carbon emissions, would cost on the order of $1 trillion yearly. If this idea sounds unlikely, consider that President Obama’s science adviser, John Holdren, said in April that he thought the administration would consider it, “if we get desperate enough.” And if it sounds dystopian or futuristic, consider that Blade Runner was set in 2019, not long after Obama would complete a second term.

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Rich countries and climate change: Hot, wet and costly

Officials in America and Britain report on how a changing climate could batter their countries

IF YOU want to persuade voters to make difficult choices in order to tackle climate change, it helps to make clear precisely how their own homes might be affected by shifting weather patterns. Although climate change is widely expected to do most damage in poor countries, where large and vulnerable populations are most likely to be battered and displaced in the coming decades, rich ones will be affected too. This week two governments, in America and in Britain, set forth reports detailing what changes might be in store at home.

In America, on Tuesday June 16th, a team of scientists representing different federal agencies offered some grim reading. Their report begins with a gloomy but plausible assumption that politicians will fail to agree upon mandatory caps on emissions of greenhouse gases, such as carbon, which are helping to warm the planet. It then sketches out different scenarios, which vary according to economic and population growth at home and abroad, and by the development of technology. Broadly, these are pessimistic. Temperatures across the United States are expected to rise, on average, within a range of 2.2-6.4ºC (4-11.5ºF) by the end of this century.

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