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AI, Blockchain technology to rescue modern slaves

“A child in Africa has to die so that someone can have a mobile phone; a child in Asia has to die so that you can put on the next fancy dress,” said Sophie Achieng Otiende as the audience — many of them students — in a jam-packed Davos middle school auditorium listened with rapt attention.

As a survivor of trafficking, the Kenyan knows the horrors of forced labor all too well. Otiende was forced to work as a house help by her uncle and his family. She was subjected to physical and sexual abuse just about every day for nearly 10 years — an ordeal that pushed her to the brink of suicide.

Fortunately, Otiende’s resilience trumped her suicidal instincts and she managed to break the fetters of servitude. Today, she works at Nairobi-based NGO Awareness Against Human Trafficking (HAART Kenya), where she works with other survivors to instill in them the belief that “they too can live a full life.”

Otiende survived, but there are an estimated 40 million people — some human rights groups put the number at a staggering 200 million — who remain enslaved across the globe, many of them toiling to make that cheap pair of jeans that we wear or catch the fish that lands on our dinner tables.

James Cockayne, director of the Centre for Policy Research at the United Nations University, says modern slavery is “a result of market failure.”

“It’s a result of us not pricing in the true social costs of the way we run our economies and our lives,” Cockayne told DW. “It means we are not really thinking about the long-term social impacts of our illegal labor exploitation.”

An infographic showing modern slavery by sector

‘Third-largest global crime’

Estimates show that modern slavery generates some $150 billion (€136 billion) in profits each year globally, making it the third-largest global crime after drug trafficking and counterfeit goods smuggling.

Modern slavery is prevalent in almost every country, irrespective of the level of economic development. Of the 40 million victims of modern slavery, 25 million people are in forced labor while the rest are in forced marriage. Nearly three in every four victims are girls or women.

The primary method of enslavement by the private sector is debt bondage, where the victim is forced to use his or her labor to repay a loan. In most cases of modern slavery, the victims are made to sign illegal contracts, which are often flashed as an alibi when the authorities come knocking.

 “We have built an ecosystem that promotes exploitation where it’s profitable for people to abuse others,” Otiende told DW at the WEF in Davos. “We are going to have to undo that system and think of a new system where people are actually important not because there is money in it but just because they are people.”

An infographic showing prevalence of modern slavery

Technology to the rescue

Experts say technologies such as Artificial Intelligence and blockchain can play a huge role in tackling the menace and there are already some green shoots.

Banks are finding ways to analyze their transactions data to spot signs of forced labor, which they say can help law enforcement agencies in identifying the perpetrators.

A tool developed by the US-based Marinus Analytics is using AI like facial recognition to help law enforcement identify victims of human trafficking and bust organized crime gangs. The company says its tool, Traffic Jam, used by law enforcement agencies in the United States, Canada, and the United Kingdom, helped identify 3,000 victims of sex trafficking in 2018.

Hong Kong-based Diginex plans to use blockchain technology to help prevent the exploitation of migrant workers and promote ethical recruitment.

The University of Nottingham in the United Kingdom is using artificial intelligence to analyze satellite imagery to map regions most vulnerable to forced labor.

“Using those techniques we can more easily find the worksites where modern slavery is more likely to occur and that allows us to use our resources more effectively to help those people,” Cockayne said.

Armed with data, authorities are in a better position to punish the offenders. Cockayne cited the example of the Norwegian Sovereign Wealth Fund and how it divested in 33 palm oil companies after it was found they relied on illegal labor supply chains.

Room for improvement

Activists caution against assuming that technology is a quick fix to the problem. They point to the fact that most of the technologies are being developed and used in the developed world, where modern slavery is not as prevalent as it is in the developing countries.

“One of the gaps I see is that people collecting the data and where the data is synthesized and analyzed are two different places  and people collecting the data don’t have the tools or the capacity to collect that data,” said Otiende. “The problem is that if the people who are collecting the data do not have the capacity, it means that the data we are studying is not correct. So, we need to empower to communities and the people who are actually taking care of the victims of trafficking to collect the correct data.”

How many slaves work for you?

While governments are doing their own bit, experts say consumers — unknowingly complicit in slavery — can play a key role in eradicating the menace of servitude by keeping a tab on their slavery footprint.

There are many websites and applications that help users find out how many slaves are working for them or how many “slave hours” are needed to support their lifestyle. The websites analyze the products the users own and consume and their supply chains to come up with their slavery footprint.

“Just as we ask what’s my carbon footprint, we need to ask what’s my slavery footprint,” Cockayne said. “We need to be asking the same question from all the businesses we rely on. So, when we buy a pair of jeans; was that made with forced labor, when we buy pet food to give to our dogs and cats; does that include fish that was caught by people who were enslaved on fishing vessels in the high seas. We need to do a lot more to understand our own slavery footprint before we start to tackle the problem.”   

Source: Deutsche Welle: DW.com – Business
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Davos 2020: Is big business coming to save the day?

Walking down the Promenade, Davos’s main street, it almost feels like it’s a charity convention that’s in town, not a gathering of 119 billionaires, lots and lots of hotshot CEOs and business delegates.

“Let’s make business the greatest platform for change,” reads the sign on one corporation’s rented shop front. Another went with “Is growth an illusion?” in bright and curvy neon letters you’d rather expect on the wall of a hipster coffee shop.

Further down the road there’s the “SDG tent” which hosts open sessions on topics like the future of capitalism, sustainable finance or LGBTI rights — all paid for by companies keen to show how committed they are to helping achieve the 17 sustainable development goals (SDGs) set by the UN.

Sustainability — this time for real?

The message companies are trying to send is pretty clear: We have woken up, they want to tell the world. Gone are the days of profit over morals. We now care about the environment. We now care about making this world a better place.

But haven’t companies been telling this story for pretty much as long as the World Economic Forum (WEF) has existed? And still the world is not on track to reach the goals it has set for itself — take the 2015 Paris Climate Agreement or the SDGs. So is big business really going to follow through on its promises this time?

The anti-WEF protestors on the Promenade have certainly made up their minds. “Do you really think that institutions and corporations that have been thinking and doing business in one way may change just like that just to be nice to others?” Sebastian Justiniano asks. “I don’t think so.”

A group of protestors holding up placards in Davos's main street during the 2020 World Economic Forum

Despite an apparent shift in corporate perceptions about sustainability, protestors in Davos remain skeptical about the lofty promises made by the business elites at the World Economic Forum

Changing to make more money

Svein Tore Holsether disagrees. He’s the CEO of Yara, a Norwegian corporation whose main business is the production of synthetic fertilizer. That makes it part of the agricultural sector that accounts for one quarter of global greenhouse gas emissions.

Sitting in a quiet corner in one of Davos’s fancy hotel lobbies, Holsether explains why he wants to turn Yara into a more sustainable company. “I think it represents an incredible business opportunity,” he says. “We run our businesses for profit and that’s something we need in order to reinvest and develop the business.” 

He talks about how Yara shifted their strategy towards developing new solutions after the Paris Climate Agreement. How they, for example, are planning to help farmers maximize yield, so they need less land, which would then be free for trees that would suck carbon emissions out of the air. How this would be good for the environment, food security, the farmers — and, of course, Yara’s bottom line.

“That’s become more and more clear in recent years that companies that are able to adapt their business models to both the challenges but also the opportunities that we see now are also the ones that will survive,” he says.

Go green or go home?

In fact, companies may have less and less of a choice in whether they want to go green or not. The Global Risks Report released ahead of the WEF listed environmental factors as the biggest threat to the world order. Extreme weather and natural disasters caused by climate change do hurt business.

Read more: China’s economic woes threaten to derail climate actions

And even Larry Fink, the CEO of the world’s largest asset manager, BlackRock, recently warned that companies not taking sustainability seriously could run into trouble when looking for financing in the future.

Whether such a market-driven transformation of the economy would happen fast enough is yet another question. Yara’s carbon dioxide emissions, for example, have gone up from around 10 million tons in 2013 to 16.6 tons in 2018, despite the new sustainability strategy.

So if market forces may actually work too slowly to get businesses to behave more sustainably, what can get the job done quicker? Some argue what’s needed is an economic mind shift on what the purpose of a business is.

The big idea thrown around at Davos this year was the concept of stakeholder capitalism. It’s the notion that companies do not just have a responsibility to generate profits for their investors but to everyone affected by their actions, like their workforce, consumers or the environment.

Picture of Larry Fink, Chairman and Chief Executive Officer of BlackRock Inc., attends a session on the Economic Outlook on the fourth day of the annual meeting of the World Economic Forum in Davos

BlackRock CEO Lary Fink fired the starting gun for more corporate responsibility by sending a letter to investors in the asset management firm declaring that a “fundamental reshaping of finance” has arrived with the climate crisis

Making stakeholder capitalism work

The economist Mariana Mazzucato is all for it, as long as it’s more than just an empty buzzword. “Given the crisis that we’re facing — not just the climate but also inequality, health systems, the welfare state kind of collapsing in many ways around the world — we don’t have time to bullshit,” she says.

Governments should rethink how they invest in the economy and particularly what they demand in return for it. After all, giving money to companies makes them a stakeholder, and an important one at that. As an example for how this could work, she mentions the German government, which tied public loans to steel companies to their ability to reduce their carbon footprint.

“Make it conditional,” she says. “They have to or they die. That’s what we do in other areas. You can’t abuse children in a factory. There’s the law, you’ll be put out of business. We need to make things mandatory.” She adds though that this would only work with proper metrics in place that make sure businesses deliver on what they’ve promised.

An initiative that’s working on such metrics is the nonprofit World Benchmarking Alliance (WBA). They drew up a list of the world’s 2,000 most influential companies that together make up half of the global economy. Currently, a team of around 50 people is busy ranking them by how they contribute to achieving the various SDGs.

By making these benchmarks available for free, they hope, it will be possible to hold companies accountable and make sure they follow through on their commitments.

“It’s like New Year’s resolutions, right?” says WBA’s CEO Gerbrand Haberkamp. “We know that it’s hard to keep them. And it’s the same for companies. When it’s February, it’s hard to still go to the gym. This is why we need these benchmarks,” he explains.

Where does all that leave us?

So are the shiny sustainability campaigns more than smoke and mirrors? Are businesses really starting to behave more responsibly? Yes, it seems some really are. Not necessarily because they have a big heart, but because it makes commercial sense.

Are they changing fast enough? No, they are certainly not. It’s probably best put in the words of climate scientist Johan Rockström: “We’re still having islands of success in an ocean of ignorance.”

Source: Deutsche Welle: DW.com – Business
Author: Continue reading Davos 2020: Is big business coming to save the day?

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How Irish soccer ended up on the brink of going bust

In normal times, June 15, 2020 would be shaping up to be the biggest night in the history of Irish soccer.

Euro 2020 (the quadrennial international soccer tournament between European nations) will be in full swing then and Dublin is one of 12 host cities. Poland, a nation with a huge immigrant population in Ireland, are scheduled to play in the Irish capital’s Aviva Stadium that night.

Their opponent is not yet known, but it could well be either Ireland or Northern Ireland, depending on how a four-team play-off involving both teams goes in March.

Yet there is still a chance that this potentially mammoth game won’t take place in Dublin. Incredibly, there is even a chance that the Irish team won’t be able to fulfil the fixture, even if they qualify. They might not even get the chance to qualify.

This is all because the Football Association of Ireland (FAI), the governing body for soccer in the Republic of Ireland, is facing the very real risk of liquidation.

Businesses go bankrupt and get liquidated all the time, but national football associations don’t. So how has it come to pass that the national football association of Ireland, a prosperous western European nation in which soccer is the most played sport, finds itself in this bizarre position?

Hail glorious St Patrick

It’s difficult to know where to start in answering that question. As good a place as any is Court 14 of the “Four Courts” in Dublin on the night of Saturday, March 16, last year.

Former FAI CEO John Delaney (picture-alliance/empics/B. Lawless)

The FAI’s disgraced former CEO John Delaney resigned in September

It was very unusual for the court to be in session at that time, late on the eve of the St Patrick’s Day public holiday. John Delaney, then the CEO of the FAI, was seeking a high court injunction to prevent The Sunday Times newspaper publishing a report about a €100,000 ($110,400) payment he had made to the FAI. Why would an employee be making such a large payment to his employer?

The judge ruled against Delaney and The Sunday Times published the story the next day. It was the first in a remarkable series of reports about the dreadful state of the finances of the FAI, which up until then had been presented as being in good health.

As well as the revelations about the extent of the FAI’s difficulties, The Sunday Times published several stories in the weeks and months that followed about personal expenses the FAI covered for Delaney.

It was revealed that on top of a €360,000 annual salary, Delaney also had his €3,000 monthly rent covered by the FAI for many years. He had racked up €40,000 spending on an FAI credit card in just six months on items such as executive dry-cleaning and duty-free shopping.

It was also revealed that Delaney had a remarkable “golden handcuffs” provision in his contract that would see him bank up to €2 million as a “loyalty” payment for remaining at the FAI until 2021. Practically all of this had been systematically hidden from the FAI’s auditors, Deloitte, and indeed, from some members of the board of the FAI itself.

Both Delaney and the FAI scrambled desperately to limit the damage. However, as the scale of the deception and financial disaster became clearer, Delaney was finally forced to step down at the end of September.

Euro 2020 (picture-alliance/dpa/C. Charisius)

Dublin is one of 12 host cities for the 2020 European Championships

From debt free to debt of €62 million

He departed with close to €500,000 in severance pay but the FAI’s problems did not leave with him. Deloitte faced serious criticism for the fact that it had signed off for years on annual accounts that had in fact been wildly inaccurate.

Before The Sunday Times‘ first story, the FAI had presented a picture of robust financial health. Delaney had made a personal crusade of the goal to make the FAI debt-free by the year 2020. Instead, he left the FAI with debts of around €62 million.

Mark Tighe, The Sunday Times journalist whose exhaustive reporting ultimately brought down Delaney, says there is a very real risk that the FAI, a limited business, will not be able to stay in business.

“That is a real and live risk,” he told DW. “They need an €18 million bailout. Their outgoings are far in excess of what they are bringing in.”

At the moment, UEFA, the European governing body, is in discussions with the Irish government over who will ultimately foot the bill to keep Irish football in business.

“This deal hasn’t been done yet between the government and UEFA,” he said. “The risk has receded slightly in the last few weeks and at least these talks are happening. UEFA even met the Bank of Ireland (the FAI’s main creditor) when they were in Dublin.

“But it needs to be resolved in the next few weeks. Ireland matches are coming up and four games in the European Championships are being hosted here.”

John Delaney (Imago Images/Inpho/R. Byrne)

Delaney, left, with his girlfriend Emma Kevlin. Delaney earned €360,000 as FAI boss per year. The association also paid his €3,000 per month rent, while he used FAI credit cards extensively for personal expenses

Turning a surplus into a loss

At the FAI annual general meeting in December, restated accounts were presented for 2016 and 2017. The 2016 figure was adjusted from a €2.3 million surplus to a €66,000 surplus, while the 2017 figure was adjusted from a €2.8 million profit to a €2.9 million loss. A loss of just under €9 million was recorded for 2018.

But how could accounts, signed off by Deloitte, have been so wrong? Tighe explains that there were three elements to the financial mismanagement presided over by Delaney.

On one hand, he was securing front-loaded sponsorship deals to advance funds to the FAI which the sponsors could pull out of at any time. One deal, with the company Frasers Group (formerly Sports Direct), advanced €6 million to the FAI. However, the company pulled the plug on the deal in March.

“Suddenly rather than having €6 million income, you have €6 million extra liability,” says Tighe. “Who agrees to a mad deal like that?”

Then there was Delaney’s personal payments and arrangements, largely hidden from view. When the extent of those liabilities were revealed, the association’s debt deepened sharply.

Amid the growing toxicity of the FAI brand in the face of the crisis, government funding was pulled and the association‘s main sponsor, the Telecommunications firm Three, said it would not renew its contract. It was the perfect storm.

Irish national soccer team supporters (picture alliance/Actionplus)

Experts say the crisis will leave the FAI in financial distress for at least a decade — if it survives at all

Seeking an injury time equalizer

While a reconfigured FAI is currently trying to rebuild itself, its immediate future is anything but secure according to Niamh Brennan, academic director of the University College Dublin Centre for Corporate Governance.

She says the FAI is “without question” under threat. “I mean, it has just got this extraordinary burden of liabilities and no assets of quality.” She says the FAI’s status as a body of cultural significance will “possibly” save it from liquidation. But even if the association survives, and the Euro 2020 matches take place as normal, she says the FAI is facing years of hardship which will prove very damaging.

“Just like the way Ireland got out of the financial crisis was through austerity, that is what will happen with the FAI. It will be austerity. There won’t be much money for football, it will be all going to serve the liabilities.”

Tighe and his colleague Paul Rowan are currently working on a book about the scandal, titled Champagne Football, due to be released later this year. It will delve further into how Delaney effectively ended up running a national football association without supervision and leaving it on the brink of going bust.

Brennan says she has seen several such cases in her time studying corporate governance and says the FAI affair is a classic case of “board capture,” where a CEO takes complete control of a board and operates outside of meaningful scrutiny.

“Certain types of people get to the top of organizations,” she told DW. “People who are willing to be ruthless, to ruthlessly stamp down on anyone who will prevent them getting to the top. And remember, if you are researching psychopaths, you will typically find them in two places. One is in prisons and secondly, is at the top of organizations.”

For the FAI, its more than 200 permanent staff and its lengthy list of creditors, they are waiting anxiously to see what, if any, deal UEFA can strike with the government. Until such time, their future, as well as the future of Irish football itself, is up in the air.

Source: Deutsche Welle: DW.com – Business
Author: Continue reading How Irish soccer ended up on the brink of going bust

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Tesla market cap surges past Volkswagen to $100 billion

Tesla’s market value surged past $100 billion (€90.2 billion) for the first time on Wednesday, as shares in the Palo Alto-based US automaker rose 8.6% to a new intraday high of $594.50. The stock is up more than 200% since last year’s closing low of $178.97 in June, making Tesla the most valuable US automaker of all time, topping the historic high of Ford in 1999.

On a global scale, the stock’s rally means Tesla is second only to Toyota in market valuation ($235.6 billion) and has overtaken Germany’s Volkswagen group, valued at about $99 billion.

After struggling amid “production hell” over its latest Tesla 3 mass-market model last year, the quick change in Tesla’s fortunes has even won the praise of US President Donald Trump, who marveled about “how it’s come so fast.”

“You go back a year and they were talking about the end of the company and now all of a sudden they are talking about these great things,” Trump told CNBC on Wednesday, adding that his administration would help Tesla in “building a very big plant in the US.”

In terms of numbers, however, the US electric car pioneer is still hugely outsold by the world’s leading automakers, Toyota and Volkswagen. Tesla delivered 367,500 cars in 2019, while its German and Japanese competitors sold more than 10 million each. So how come that Tesla is worth more than its rivals that sell 30 times more cars?

Room to run

Many analysts believe that Tesla’s rise reflects investor expectations that the company will remain at the cutting edge of technological change in the auto industry. Under pressure from a global movement for greener cars, the industry is rapidly transforming away from vehicles powered by the conventional internal combustion engine to electric modes of automobility.

Tesla is generally perceived to be at the forefront of that change. Its new Tesla 3 electric car is designed to be more affordable, costing around half of the $70,000 for previous models — thus fueling expectations of stronger growth. Moreover, Tesla last month begun manufacturing in China, the largest market for electric vehicles (EVs), and has announced a new plant in Germany that could start production by 2021.

Read more: Opinion: Tesla’s Germany plans are no coincidence

Auto industry analysts Dan Ives of Wedbush Securities believes Tesla has gained a headstart over industry rivals who have just begun to develop their own electric cars. “In our opinion, the company has the most impressive product roadmap out of any technology/auto vendor around (which the market cap reflects vs. its traditional auto competitors),” Ives said in a research note on Wednesday, adding that the US carmaker will be the “game-changing driving force” over the next decade.

Infografik größte Hersteller von E-Autos EN

Stefan Bratzel, a researcher at the Center of Automotive Management near Cologne, Germany, thinks the relatively low valuation of traditional automakers, compared with Tesla, is linked to uncertainty over whether they can navigate the looming industry shift. “Tesla has high innovative strength regarding battery-electric vehicles as well as connectivity, which can partly explain the high market capitalization,” he said in a report also published Wednesday.

But while Ives believes Tesla shares will have more room to run as the carmaker grows in China — increasing his 2020 price target to $550 — other analysts are more cautious. “Tesla’s tepid 0.3% gain in 2019 domestic unit sales suggests a tapped-out US [market], sales in China skew the US demand picture, which should become clearer by year-end with the ramp-up in Shanghai output,” says Kevin Tynan, senior autos analyst at Bloomberg Intelligence.

According to Bloomberg figures, consensus forecasts for Tesla of $363.92 are still well below where Tesla shares are currently trading, with just 10 analysts rating the stock a buy, compared with 10 holds and 16 sells.

VW girding for further Tesla rise

Gary Black, a former CEO of Aegon Asset Management and now a private Tesla investor, believes Elon Musk’s car company even could earn more than Volkswagen by 2025. He expects Musk to forecast at least 550,000 units for 2020 during next week’s Tesla earnings call.

Surprisingly, predictions that Tesla will continue to rise both in value and output are shared by its biggest rival, Volkswagen. The CEO of the German carmaker, Herbert Diess, no longer believes that Tesla is a niche manufacturer, and has highlighted its role in shaking up the auto industry.

Diess told top Volkswagen executives at an internal meeting in Germany last week that connected vehicles will almost double the time consumers spend online, and that cars will “become the most important mobile device.”

“If we see that, then we also understand why Tesla is so valuable from the view of analysts,” he said.

Volkswagen itself is planning to roll out the world’s largest EV fleet over the next decade, including 75 completely electric models and around 60 hybrid vehicles. The Wolfsburg-based carmaker said it would aim to sell 26 million all-electric vehicles by 2029 and around 6 million hybrid vehicles. For that, it wants to invest €60 billion ($66.3 billion) in the next five years.

Source: Deutsche Welle: DW.com – Business
Author: Continue reading Tesla market cap surges past Volkswagen to $100 billion

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China’s economic woes threaten to derail climate actions

During the winters of 2018, when Beijing’s sky took on a blue hue, its residents could hardly believe it. It was a pleasant surprise for them who had resigned to the Chinese capital’s toxic smog.

The blue skies meant the government’s antipollution drive – prompted in part by massive public anger – was showing results.

It was the latest in a series of measures taken by Beijing over the years to boost its green credentials by cutting down emissions. These measures have seen China — the world’s largest polluter — emerge as the world leader in renewable energy output as well as related technologies such as lithium-ion batteries and electric vehicles.

 “China really deserves enormous credit for making very important progress in the last 20 years to reduce pollution, to advance clean energy and energy efficiency and to show leadership on climate change at a time of really tremendous economic growth that lifted millions of people out of poverty,” Charlotte Pera of the ClimateWorks Foundation said in Davos during the World Economic Forum.

China is on track to meet its commitments made under the Paris Agreement, which includes a pledge to bring emissions to a peak by 2030. A senior government researcher said in September last year that the country could reach the goal as early as 2022 without even introducing tougher policies.

An infographic showing urban and rural carbon emissions in China

Economic woes holding back Beijing

Experts say while China’s climate actions are encouraging, they are not enough and that the country – the largest carbon emitter by far – must increase its commitments to curb emissions by at least three times.

The German government-backed Climate Action Tracker classifies the current Chinese commitment as “highly insufficient,” which means that if all government targets fell in this category then the planet would be warmer by between 3 and 4 degrees Celsius, way above the Paris Agreement’s target of 2 degrees.

China — the largest producer and consumer of coal by a distance — has indicated that it intends to strengthen its commitments made under the Paris Agreement but has so far not committed to it amid a slowing economy, hurt in part by strict environmental regulations.

“It’s quite complicated now to balance the economy and environmental protection in China. So we [China] are not short on challenges,” Ma Jun, founder of Beijing-based NGO Institute of Public and Environmental Affairs, told DW.

Ma said local governments have been pleading with Beijing to relax some of the environmental norms in a bid to get their economies back on track. He also said since last year the country has been witnessing a rebound in carbon-intensive production and an increase in coal consumption, which has somewhat plateaued in the past 5 years.

An infographic comparing China's coal consumption vs the rest of the world

The BRI conundrum

China’s ambitious Belt and Road Initiative (BRI) — a gargantuan global infrastructure development project mostly backed by Beijing — has also left environmentalists concerned. The colossal project involves setting up coal plants, building power stations, mines and factories across 70 countries, many of them with poor environmental oversight.

Climate change expert and leading economist Nicholas Stern put the concerns in perspective: “You just look at the numbers. China is close to a quarter of the world’s emissions and the Belt and Road countries are at least two times the population of China, they have income per capita about half that of China. In 20 years, they would have income per capita equal to China’s,” he said. “So, that’s two more Chinas in terms of income in 20 years, outside China. If they have emissions that look like China has now, then 3 degrees Celsius is dead and buried.”

Stern said China must stop supporting coal-based investments Belt and Road countries if it was serious about its commitment to green the project.

Firm commitment?

China is working on its 14th 5-year plan, covering 2021-2015. Environmentalists are hoping that Beijing makes tougher policies related to climate change and the BRI.

“What would China’s ramp-up of ambitions look like, because China would look to ramp up, it promised to do that in Paris and China keeps its promises. It’s very important that that promise is to peak emissions during the 14th plan that means by 2025,” Stern said. “Saying so in the 14th plan is absolutely critical because that goes into Chinese Law. That’s the way in which the Chinese leadership is judged.”

Ma is not convinced the government would actually do so. He says the government has a different priority at this point in time: stabilizing the economy.

Source: Deutsche Welle: DW.com – Business
Author: Continue reading China’s economic woes threaten to derail climate actions

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G7 nations falling behind on fight against corruption

The governments of the top world economies are struggling to combat corruption, according to a report Thursday by graft watchdog Transparency International (TI).

The annual Corruption Perceptions Index (CPI) saw a significant drop in the performance of G7 countries, with Transparency International urging governments to address issues with party political financing.

What the report found:

  • The United States landed its worst score in eight years — garnering 69 out of 100 points and dropping to rank 23.
  • Canada saw the largest drop compared to last year, falling four points.
  • France and the UK also saw their scores drop
  • Out of the G7 countries, only Germany and Japan saw no change, while Italy gained a point.
  • The top spot was a tie between Denmark and New Zealand with 87 points each.
  • Somalia, South Sudan and Syria landed at the bottom of the list.
  • Greece, Guyana and Estonia saw the most improvement, while Canada, Nicaragua and Australia dropped the most between 2012 and 2019.

Read more: Maldives: Fighting corruption and construction in a tropical paradise

Infografik Korruptionsindex EN

Problematic party financing

The report noted that countries where political party financing and elections are open to influence from special-interest groups were less able to combat corruption.

“Governments must urgently address the corrupting role of big money in political party financing and the undue influence it exerts on our political systems,” Transparency International head Delia Ferreira Rubio said.

‘Clear link between corruption and instability’

The lowest-ranked countries in this year’s index — Somalia, South Sudan, Syria and Yemen — are all areas caught up in violent conflicts and political instability.

“Unfortunately, those countries are in turmoil and in violence and war. Which shows us clearly the link between corruption and instability,” Marwa Fatafta, TI’s regional advisor for the Middle East and North Africa, told DW.

When broken down by region, sub-Saharan Africa fared the poorest in terms of corruption. Mokgabo Kupe, TI’s regional coordinator for Southern Africa, said part of the problem is that foreign companies attracted by the region’s mineral wealth are not investing their profits back into the local economy or in development projects.

“Where does that leave African economies? I think for the most part a lot of them are really struggling. There are not a lot of resources for health care — much less for anti-corruption,” Kupe told DW.

Malta and Brazil in spotlight

Transparency International warned that corruption is “weakening democracy” and “undermining the rule of law” in Malta and Brazil.

Malta dropped several points this year to land a score of 54, with the report accusing the Maltese government of “dragging its feet” in investigations into the murder of journalist Daphne Caruana Galizia — who was killed in 2017 by a car bomb while investigating graft.

The report also slammed Brazilian President Jair Bolsonaro for his “growing political interference with anti-corruption institutions.” The right-wing leader was elected in 2018 after campaigning for anti-graft measures, but his tenure has seen numerous “setbacks” in anti-corruption and legal frameworks.

What is the Corruption Perceptions Index? The CPI ranking is a global index that measures perceived public-sector corruption in 180 countries. The scores are generated based on surveys with experts and business executives. Countries are given a score between zero and 100, with zero indicating a highly corrupt public sector and 100 indicating a “very clean” one.

DW’s Mirjam Benecke contributed to this report.

rs/sms (dpa, AP, AFP)

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Trump reignites trade battle with Europe over digital tax

US President Donald Trump vowed on Wednesday to make good on threats to impose high tariffs on European cars if the bloc doesn’t agree to a long-delayed trade deal with Washington.

“They are more difficult to do business with than China,” Trump told reporters at the World Economic Forum (WEF) in Davos.

The US leader said that the tariffs, which would hit Germany’s car industry especially hard, could amount to 25%.

“Ultimately it will be very easy because if we can’t make a deal, we’ll have to put 25% tariffs on their cars,” Trump told Fox Business News in Davos.

German Ambassador to the US Emily Haber said the EU would respond to additional US tariffs with targeted retaliatory measures.

Trump: ‘I wanted to wait’

European Commission President Ursula von der Leyen, who met with Trump for the first time on Tuesday, said that Brussels was working to secure a deal to avoid car tariffs.

Von der Leyen told news agency DPA that the bloc hopes to have a deal “in the next few weeks.” She did not, however, mention how comprehensive the deal would be.

Trump has set his sights on the EU after striking a Phase 1 trade deal with China in January, after years of a trade war that destabilized the world economy.

“I wanted to wait till I finished China, to be honest with you. I always like to be very transparent. I wanted to wait ’til I finished China. I didn’t want to go with China and Europe at the same time,” Trump told Fox Business News.

Read more: Social entrepreneurs meet at World Economic Forum in Davos

Digital tax in crosshairs

Trump’s comments also came on the heels of similar threats from US Treasury Secretary Steven Mnuchin, who said the tariffs could come if European countries don’t back off from their digital tax plans.

“If people want to arbitrarily put taxes on our digital companies we will consider putting taxes arbitrarily on car companies,” Mnuchin told a WEF panel.

Under pressure from Washington, France said on Wednesday it was putting its plans for a digital tax on hold. The Trump administration previously threatened to put duties of up to 100% on French goods like handbags and wine.

The UK defended its digital tax plans, which would target US tech giants such as Google, Amazon, and Facebook, saying they are “proportionate” and “temporary.”

“We plan to go ahead with our digital services tax in April,” said the UK’s finance minister Sajid Javid.

Trade relations between the European Union and the United States deteriorated shortly after Trump took office three years ago.

A tentative truce was formed in July 2017 after Washington and Brussels agreed to pursue a trade deal, but negotiations have stalled since then over issues including farming.

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SARS remembered — how a deadly respiratory virus hit Asian economies

Asian economies were still struggling to recover from the region’s 1997 financial crisis and the bursting of the dotcom bubble when SARS first struck in November 2002. The death of a farmer in Guangdong, China, from a mystery flu-like virus would be the catalyst for the third major economic event to strike the region, as the type of pneumonia he was carrying — later named Severe Acute Respiratory Syndrome (SARS) —  quickly became an pandemic.

In the blink of an eye, people started falling ill across several major Chinese cities, including Shanghai and Beijing. Within a few weeks, the virus had moved across borders, initially to Vietnam, Hong Kong, Taiwan and Singapore and then much further afield. Dozens of deaths were reported.

Read more: China mystery virus death toll rises

Asian cities became ghost towns

Suddenly, many normally bustling Asian cities were eerily quiet. Business districts and shopping malls emptied and tourism and corporate travel were postponed on a large scale in favor of teleconferencing. 

Airports and ports used thermal imaging to screen travelers. People who had come into contact with suspected SARS cases were quarantined and those who reported flu-like symptoms were advised to stay home. Those that did venture out wore face masks, and taxis could only attract passengers if they drove with their windows open. 

Hong Kong University professor YC Richard Wong co-authored a paper on the economic impact of SARS on the Chinese territory. He described how the financial hub had just begun to see signs of economic recovery when the virus struck.

“The outbreak of SARS hit Hong Kong at a very bad time,” he wrote. “Domestic demand collapsed before it had an opportunity to recover. Local consumption and the export of services related to tourism and air travel were severely affected.”

Read more: Chinese pork prices high ahead of New Year’s celebrations

Tourism decimated

China saw foreign tourism revenue fall as much as 60% in 2003, while Hong Kong saw the number of visitors drop by 60% at the height of the crisis. Singapore and South Korea witnessed 40% falls, and Thailand and Malaysia saw drops of more than a third. 

Hong Kong hotel occupancy rates fell from around 79% in early March to just 18% in May and the number of airline passengers carried to and from its international airport fell by more than three quarters during the pandemic.

Thousands of regional flights were canceled due to a lack of demand — Taiwanese airlines alone grounded nearly 800 flights, or 23% of their normal schedule, at the peak of the outbreak. The territory’s public transport network saw daily ridership drop by half during the same period.

A mobile clinic van in Beijing (picture-alliance/dpa/Reynolds)

At the height of the SARS outbreak, China set up mobile fever clinics to screen local residents for the virus

Across Asia, hotels, restaurants, cinemas and other entertainment venues struggled to attract enough trade to remain in business, and major events, including music concerts and conventions, were called off.

Economists have estimated that SARS was responsible for a 1-2% dent in China’s economic growth, and 0.5% across Southeast Asia in 2013. One report for the Center for International Development said SARS caused a $25 billion (€22.5 billion) loss to China’s economy alone. Another by researchers at Australia’s Griffith University put the global impact at anywhere between $30 and $100 billion.

Read more: China: Bungee-jumping pig stunt by theme park causes outrage

Knock-on effects felt

The economic burden in SARS’ ground zero — the Chinese city of Guangzhou — was estimated to be RMB 11 billion ($1.6 billion, €1.44 billion). The knock-on effect was also felt by China’s manufacturing sector as shipments from Guangdong province to Hong Kong fell by a third.

SARS exacerbated an already weak labor market, with many retail, food and beverage and tourism-related firms across Asia laying off staff. Taiwanese firms introduced a system of job sharing while Singapore’s government offset some of the impact with a relief package worth S$230 million ($170 million, €153 million).

SARS was made worse by a huge Chinese cover-up. Health authorities initially failed to alert the World Health Organization to several other cases in Guangdong, which could have prevented the virus’ spread and reduced widespread public alarm described by Griffith University researchers.

“Due to a lack of trustworthy official information [in China], folk tales about the epidemic situation spread… all kinds of rumors exacerbated the spread of social panic [and] … an escalation of panic buying of drugs,” they wrote in a report comparing China’s handling of SARS with a later outbreak of H7N9 avian flu.

Read more: China job market worries mount as economy slows to 3-decade low

During the nine-month outbreak, more than 8,000 cases of SARS were confirmed and 775 people died — 648 of them in China and Hong Kong. Then, as quickly as it emerged, the pandemic, which had spread to a dozen countries was over.

Most Asian economies bounced back — consumer demand and tourism quickly returned. China, however, faced international pressure to improve its transparency, preparedness and response to outbreaks of infectious diseases. The world’s most populous nation has since been praised for its speedy response to outbreaks of avian flu.

History rhymes

Even so, almost 20 years after SARS, the country faces a similar health emergency, after 444 cases of a new coronavirus emerged in the city of Wuhan. The respiratory virus has already killed 17 people, spread to other Chinese cities, at least four other Asian territories and to the United States.

Chinese health authorities face an uphill battle to contain the new virus, as it has taken hold during the largest annual human migration as hundreds of millions of people return home for the Lunar New Year.

“The poor management of the SARS outbreak clearly is a specter the government fears, and the next weeks will show how much learning in governance and crisis response mechanisms has happened since the SARS outbreak,” China expert Nis Grünberg from the Mercator Institute for China Studies in Berlin told DW.

“With [Chinese President] Xi Jinping coming out yesterday [Monday] calling upon all officials to tackle the issue as a national crisis, it could be that the necessary political will and resources are freed in order to limit the spread,” he added.

Rajiv Biswas, Asia Pacific Chief Economist at IHS Markit said in a research note that the “economic consequences” of the new coronavirus “could be extremely concerning for the Asia-Pacific region.”

He noted that since SARS, international tourism by Chinese nationals has boomed, so the risks of the virus spreading globally “have become even more severe.”

As with SARS, he thinks retail, food and beverage, conference, sporting events — including this summer’s Tokyo Olympics, tourism and commercial aviation could potentially be worst affected by any wider pandemic.

Source: Deutsche Welle: DW.com – Business
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Dieselgate scandal costs Daimler additional €1.5 billion

The consequences of the “Dieselgate” scandal cost Daimler up to €1.5 billion ($1.66 billion) last year, the German carmaker announced on Wednesday.

The Stuttgart-based maker of Mercedes-Benz said in a statement that it expects its earnings before interest and taxes (EBIT) to amount to €5.6 billion for 2019.

That figure does not include the “anticipated additional expenses for ongoing governmental and court proceedings and measures relating to Mercedes-Benz diesel vehicles,” the company said.

Daimler estimated that the additional costs for covering legal disputes and massive car recalls would cost the company between €1.1 billion to €1.5 billion.

Those estimates come on top of the €1.6 billion that the company set aside for the scandal last year.

Operating profit plummets

The extra costs for covering the fallout of the emissions cheating scandal mean that the 2019 results would fall below earnings expectations.

The figure is a steep drop from the €11.1 billion operating profit it made in 2018.

News of Daimler’s preliminary figures hit the company’s stock on the blue-chip DAX index in Frankfurt on Wednesday morning, falling by 0.5% to €46.18 even as the DAX, overall, hit a record high.

Germany’s motor vehicle authority KBA ordered a recall on almost 1 million Daimler vehicles, although the company insists that none of the “motor control functions” are illegal.

In a bid to save €1.4 billion by 2022, Daimler’s board chairman Olla Källenius has been pursuing a cost-cutting program. The company plans to already cut 10,000 jobs as well as cap investment.

German car giants Volkswagen, Daimler and others have been accused of violating environmental regulations and manipulating software to make emissions from diesel vehicles lower in tests than they actually are on the road.

Dieselgate erupted in September 2015 when Europe’s biggest carmaker Volkswagen admitted to installing so-called “defeat devices” in 11 million vehicles worldwide that allowed them to cheat emissions testing.

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Young people are shaping the discussion in Davos

Suddenly he cries and my conversation with Joseph Okello is interrupted again and again because the memories overwhelm him. I am meeting the young man in Davos at the World Economic Forum (WEF). We are sitting in a plastic cube that has been placed on an ice rink. Okello is wearing a thick jacket that he received as a present. He can hardly believe that he is now in Switzerland. The contrast to his real life is just too great.

Joseph Okello lives in the Kakuma refugee camp in northern Kenya. It was set up in 1992 for youth and teenage refugees from South Sudan and today over 100,000 people live there. Residents may only leave the camp with a special permit. “There is a lot of hopelessness,” says Okello quietly, “we are a generation raised in the camp.”

Read more:Davos 2020: Trump rejects ‘prophets of doom’ at climate-focused WEF

His mother sent him to Kenya with an aunt after his father had beaten him half to death. The boy was 4-years-old at the time and remained alone in the camp. “It was really hard,” he says, and no longer knows exactly how he got through it. He worked, dragged stones, and always found support in the camp. His only possession was a pair of shorts that he wore throughout the whole year.

For a long time, Okello didn’t even know his family name and had no contact with his family at all. It was only many years later, when he was a teenager, that his identity was clarified. Then he received a message from his mother and could hardly believe it. “We stayed together for three weeks,” he says, his eyes shining. But just four months after this meeting, his mother died and Joseph Okello was alone again.

Read more:Davos medical tourism sparks alarm about corporate culture

The mountains above Davos (DW/M. Kasper-Claridge)

The World Economic Forum is underway until Wednesday in Davos, Switzerland

Meeting with the UN Commissioner for Refugees

Now he is here in Davos as part of the “Global Shapers.” This worldwide network of young people was initiated by the World Economic Forum and is being expanded. Hubs already exist in 155 countries in which young people can get involved locally. Three new ones have just been created —one in Armenia, Algeria and Colombia. Overall they include over 11,000 young people around the world, including Okello.

In Kakuma, he is involved in the Global Shaper hub with other refugees. They produce a newspaper, photos and films. Because of his special commitment, he was invited to Davos. His unresolved residency status was a problem, but the WEF finally managed to get a visa for him that allowed his entry into Switzerland.

Okello will meet the UN Commissioner for Refugees and sit on some discussion panels with business leaders and government officials. He wants to ask a lot of questions and he also wants answers, just like the other 52 Global Shapers participating at this year’s WEF.

Read more: Social entrepreneurs meet at World Economic Forum in Davos

Nita Shala (Jun Lin)

Nita Shala, from Albania, is one of the participants in the WEF’s “Global Shapers” network

Young people need role models

Nita Shala heads the hub in Tirana, Albania. The young lawyer studied in Oxford and other elite universities and was awarded a doctorate in Geneva.

In Tirana, she teaches at the university. “A lot of young people don’t have role models to look up to,” she emphasizes and tells of the frustration of many young people in Albania. Unemployment is high and many people want to leave the country. But Nita Shala doesn’t. She describes herself as a “returnee to the western Balkans.”

She wants to work on the further development of Albania, advises the attorney general in the fight against corruption and is involved with other young people on the ground. The “shapers” in Tirana have just ensured that regular eye tests for children are carried out in schools. So far 5,000 children have been examined, 800 of them needed glasses.

The project is to be expanded. “We have formed a partnership with the French company Essilor,” says Shala proudly. “They provide the glasses for free”. At the World Economic Forum, she wants to draw attention to the situation in the Balkans. “I still have a long way to go,” she says and is happy that she can represent the voice of youth in the Balkans in Davos.

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