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The Only Way to Stop Global Warming

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The Only Way to Stop Global Warming
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One way exists to stop global warming, but the mutual feedback cycles that are now accelerating global warming might already have achieved enough speed of increasing temperature so as to prevent even that one way from working, and therefore the planet might already be doomed. Since the only way to stop global warming hasn’t yet even been proposed (much less tried), I shall now publicly propose it here, in accord with the adage “Better late than never.”

The way to stop global warming (if it still can be stopped) is to ban purchases of stocks and of bonds — i.e., of all forms of investment securities (corporate shares and even loans being made to the corporation — of enterprises that extract from the ground (land or else underwater) fossil fuels: coal, oil, and/or gas.

For examples: in 2017, the world’s largest fossil-fuels extractors were, in order: 1. Saudi Aramco (Saudi Arabia billionaires); 2. Chevron (U.S. billionaires); 3. Gazprom (Russia billionaires); 4. ExxonMobil (U.S. billionaires); 5. National Iranian Oil Co. (Iran billionaires); 6. BP (UK billionaires); 7. Shell (Netherlands billionaires); 8. Coal India (India billionaires); 9. PEMEX (Mexico billionaires); 10. Petroleos de Venezuela (Venezuela billionaires); 11. PetroChina/CNPC (China billionaires); and 12. Peabody Energy (U.S. billionaires). (NOTE: U.S. billionaires, allied with Saudi, UK, Netherlands, and India, billionaires, are trying to absorb, into their team, Russia, Iran, Mexico, Venezuela, and China, each of which latter nations had actually nationalized their fossil fuels, so that those nations’ Government, instead of any billionaires, would own those assets, in the name of all of the given nation’s residents. Though Russia ended its side of the Cold War in 1991, the U.S.-and-allied side of the Cold War secretly continued, and continues, today. Consequently, the U.S.-led team failed to achieve total conquest of the Russia-led team, and is now increasingly trying to do that: achieve total global hegemony, so that the entire world will be controlled only by U.S.-and-allied billionaires. This explains a lot of today’s international relations.)  All fossil-fuels extractors compete ferociously, as producers of a basic global commodity, but the proposal that is being made here will affect all of them and all countries, even if it is done by only one country.

Why Investing in Fossil-Fuel Extractors Must Be Outlawed

It needs to be outlawed (in some major country, perhaps even just one) in order to save our planet. Here’s how and why doing that in even just a single country might save the planet (this is a bit long and complicated, but avoiding global catastrophe is worth the trouble, so, you might find it worth your while to read this):

These companies exist in order to discover, extract, refine, and market, fossil fuels, in order for these fuels to be burned — but those activities are killing this planet. Buying stock in, and lending money to, these firms doesn’t purchase their products, but it does incentivize all phases of these firms’ operations, including the discovery of yet more fields of oil, gas, and coal, to add yet more to their existing fossil-fuel reserves, all of which are discovered in order to be burned. Unless these companies’ stock-values are driven down to near zero and also no investor will be lending to them, all such operations will continue, and the Earth will therefore surely die from the resulting over-accumulation of global-warming gases, and increasing build-up of heat (the “greenhouse-effect”), from that burning.

To purchase stock in a fossil-fuel extractor — such as ExxonMobil or BP — or to buy their bonds or otherwise lend to them, is to invest in or fund that corporation’s employment of fossil-fuel explorers to discover new sources of oil, gas, or coal, to drill, and ultimately burn. Such newly discovered reserves are excess inventories that must never be burnt if this planet is to avoid becoming uninhabitable. But these firms nonetheless continue to employ people to find additional new places to drill, above and beyond the ones that they already own — which existing inventories are already so enormous as to vastly exceed what can be burnt without destroying the Earth many times over. To buy the stock in such corporations (or else lend to them) is consequently to fund the killing of our planet. It’s to fund an enormous crime, and should be treated as such. To invest in these companies should be treated as a massive crime. 

The only people who will suffer from outlawing the purchase of stock in, and lending to, fossil-fuel extractors, are individuals who are already invested in those corporations. Since we’ve already got vastly excessive known reserves of fossil fuels, discovering yet more such reserves is nothing else than the biggest imaginable crime against all future-existing people, who can’t defend themselves against these activities that are being done today. Only our government, today, can possibly protect future people, and it will be to blame if it fails to do so. The single most effective way it can do this, its supreme obligation, is to criminalize the purchase of stock in fossil-fuels extractors, and to bar loans to them. Here’s why (and please follow this closely now):

The IMF says that “To limit the increase in global temperature to 2 degrees Celsius — the more conservative of the goals agreed to by governments at the 2015 climate change talks in Paris — more than two-thirds of current known reserves, let alone those yet to be discovered (see Table 1), must remain in the ground (IEA 2012).” Obviously, then, what the oil and gas and coal companies are doing by continuing exploration is utterly idiotic from an economic standpoint — it’s adding yet more to what already are called “unburnable reserves.” Thus, waiting yet longer for a technological breakthrough, such as fossil-fuels corporations have always promised will happen but nobody has ever actually delivered (and such as is exemplified here), is doomed, because if and when such a real breakthrough would occur, we’d already be too late, and the uncontrollably spiralling and accelerating feedback-loops would already be out of control even if they weren’t uncontrollable back then. We’d simply be racing, then, to catch up with — and to get ahead of — an even faster rise in global temperatures than existed at that previous time. Things get exponentialy worse with each and every year of delay. Consequently, something sudden, sharp, and decisive, must happen immediately, and it can happen only by a fundamental change becoming instituted in our laws, not in our technology. The solution, if  it comes, will come from government, and not even possibly come from industry (technological breakthroughs). For governments to instead wait, and to hope for a “technological breakthrough,” is simply for our planet to die. It’s to doom this planet. It’s to abandon the government’s obligation to the future (its supreme obligation). The reason why is that what’s difficult to achieve now (preventing the murder of our planet), will soon be impossible to achieve.

On 13 November 2019, the International Energy Agency reported that “the momentum behind clean energy is insufficient to offset the effects of an expanding global economy and growing population,” and “The world urgently needs to put a laser-like focus on bringing down global emissions. This calls for a grand coalition encompassing governments, investors, companies and everyone else who is committed to tackling climate change.” Obviously, we are all heading the world straight to catastrophe. Drastic action is needed, and it must happen now — not in some indefinite future. But the IEA was wrong to endorse “calls for a grand coalition encompassing governments, investors, companies and everyone else,” which is the gradual approach, which is doomed to fail. And it also requires agreement, which might not come, and compromises, which might make the result ineffective. 

I have reached out to Carbon Tracker, the organization that encourages investors to disinvest from fossil fuels. Their leader, Mark Campanale, declined my request for them to endorse my proposal. He endorses instead “a new fossil fuel non-proliferation treaty supported by movements calling to leave fossil fuels in the ground.” When I responded that it’s vastly more difficult, for states (individual governments) to mutually pass, into their respective nation’s laws, a treaty amongst themselves (since it requires unanimity amongst all of them instituting into each one of their legal systems exactly that same law), than it is for any state ON ITS OWN to institute a law (such as I propose), he still wasn’t interested. I asked him why he wasn’t. He said “I’ve chosen a different strategy for my organization.” I answered: “All that I am seeking from you is an ENDORSEMENT. I am not asking you to change your ‘strategy’ (even if you really ought to ADD this new strategy to your existing one).” He replied simply by terminating communication with me and saying, without explanation, “We don’t always agree.”

Here is that “treaty supported by movements calling to leave fossil fuels in the ground”. As you can see there, it was posted in 2012, and as of now (nine years later) it has been signed by 8 individuals, no nations (and not even by any organizations). Mark Campanale isn’t among these 8.

Carbon Tracker is secretive of the identities, and size of donations, of its donors, but its website does make clear that it’s a UK organization that has designed itself so as to be as beneficial for tax-write-offs to U.S. billionaire donors as possible, and “Our UK organisation has an Equivalency Determination (‘ED’) which allows it to be recognised by the IRS as a 501(c)3 US Public Charity.  We have held the ED since February 2016 and is maintained annually by NGO Source on behalf of our major US donors.” In short: it’s part of the U.S.-led team of billionaires. Perhaps this organization’s actual function is that (since the nations that have nationalized their fossil fuels haven’t yet been able to be taken over as outright colonies or vassal-states controlled by the U.S.-led group) the residents inside those outside countries will be paying the price (in reduced Government-services, etc.) from a gradual transition to a ‘reduced carbon’ world. (Everybody but those billionaires will be paying the price.) This mythical aim, of a ‘reduced-carbon’ ‘transition’, would then be a veiled means of gradually impoverishing the residents in those nations, until, ultimately, those people there will support a coup, which will place U.S.-and-allied billionaires in charge of their Government (such as happened in Ukraine in 2014). This appears to be their policy regarding Venezuela, Iran, and several other countries. If it is additionally influencing the ‘transition to a low-carbon economy’, then it’s actually blocking the needed change in this case (which isn’t, at all, change that’s of the gradual type, but is, instead, necessarily decisive, and sudden, if it is to happen at all). However, Carbon Tracker is hardly unique in being controlled by U.S.-and-allied billionaires, and there are, also, many other ways to employ the gradual approach — an approach which is doomed to fail on this matter. A few other of these delaying-tactics will also be discussed here.

Some environmental organizations recommend instead improving labelling laws and informing consumers on how they can cut their energy-usages (such as here), but even if that works, such changes, in consumers’ behaviors, are no more effective against climate-change than would be their using buckets to lower the ocean-level in order to prevent it from overflowing and flooding the land. What’s actually needed is a huge jolt to the system itself, immediately. Only systemic thinking can solve such a problem.

Making such a change — outlawing the purchase of stock in, and prohibiting loans to, fossil-fuel extractors — would impact enormously the stock-prices of all fossil fuels corporations throughout the world, even if it’s done only in this country. It would quickly force all of the fossil-fuel extractors to eliminate their exploration teams and to increase their dividend payouts, just in order to be able to be “the last man standing” when they do all go out of business — which then would occur fairly soon. Also: it would cause non-fossil-energy stock-prices to soar, and this influx of cash into renewable-energy investing would cause their R&D also to soar, which would increasingly reduce costs of the energy they supply. It would transform the world, fairly quickly, and very systematically. And all of this would happen without taxpayers needing to pay tens or hundreds of trillions of dollars, or for governments to sign onto any new treaties. And if additional nations copy that first one, then the crash in market-values of all fossil-fuels corporations will be even faster, and even steeper.

As regards existing bonds and other debt-obligations from fossil-fuels extractors, each such corporation would need to establish its own policies regarding whether or not, and if so then how, to honor those obligations, since there would no longer be a market for them. Ending the market would not be equivalent to ending the obligations. The law would nullify the obligations, but the corporation’s opting to fulfill those obligations wouldn’t be illegal — it would merely be optional.

This would be a taking from individuals who have been investing in what the overwhelming majority of experts on global warming say are investments in a massive crime against future generations, and we are now in an emergency situation, which is more than merely a national emergency, a global one, so that such governmental action would not be merely advisable but urgently necessary and 100% in accord with the public welfare and also in accord with improving distributive justice.

The only way possible in order to avoid getting into the uncontrollable feedback-cycles (feedback-loops) that would set this planet racing toward becoming another Mars is to quickly bring a virtual end to the burning of fossil fuels. That can happen only  if fossil fuels become uneconomic. But common methods proposed for doing that, such as by imposing carbon taxes, would hit consumers directly (by adding a tax to what they buy), and thereby turn consumers into advocates for the fossil-fuel industries (advocates on the fossil-fuels-companies’ side, favoring elimination of that tax upon their products). In this key respect, such proposals are counterproductive, because they dis-incentivize the public to support opposition to fossil-fuel extraction. Such proposals are therefore politically unacceptable, especially in a democracy, where consumers have powerful political voice at the ballot-box. Any carbon tax would also anger the consuming public against environmentalists. Turning consumers into friends of the fossil-fuels extractors would be bad. What I am proposing is not like that, at all. Investors are a much smaller number of voters than are consumers. Everyone is a consumer, but only a relatively tiny number of people are specifically fossil-fuel investors. To terminate the freedom those investors have to sell their stock, by making illegal for anyone to buy  that stock, is the most practicable way to prevent global burnout (if it still can be prevented). This needs to be done right now.

How was slavery ended in the United States? It became illegal for anyone to own slaves — and the way that this was done is that it became illegal for anyone to buy a slave. The same needs to be done now in order to (possibly) avoid runaway global heat-up.

Once it’s done, those firms will go out of business. (First, these firms will increase their dividend-payouts to their stockholders while they lay off their explorers, but then they’ll cut their other costs, and then they’ll fold. But the objective isn’t that; it’s to make their products uneconomic to produce, market, and sell; and this will do that, even before all of those firms have become eliminated.) All of today’s existing economies-of-scale in the fossil-fuels-producing-and-marketing industries will then be gone, and will become replaced by new economies-of-scale that will rise sharply in non-carbon energy, as R&D there will be soaring, while the fossil-fuels producers fade out and fade away. 

This is the only realistically possible way to avoid global burnout. It must be done. And even some top executives in fossil-fuels extractors harbor personal hopes that it will be done. For example:

Shell CEO Says Governments, Not Firms, Are Failing on Climate Change

On Monday, 14 October 2019, Reuters headlined “Exclusive: No choice but to invest in oil, Shell CEO says” and reported:

Ben van Beurden expressed concern that some investors could ditch Shell, acknowledging that shares in the company were trading at a discount partly due to “societal risk”.

“I am afraid of that, to be honest,” he said.

“But I don’t think they will flee for the justified concern of stranded assets … (It is) the continued pressure on our sector, in some cases to the point of demonisation, that scares asset managers.”

“It is not at a scale that the alarm bells are ringing, but it is an unhealthy trend.”

Van Beurden put the onus for achieving a transformation to low-carbon economies on governments.

He didn’t suggest any specific policies which governments should take, but he did say “that not enough progress had been made to reach the Paris climate goal of limiting global warming to ‘well below’ 2 degrees Celsius above pre-industrial levels by the end of the century.” Furthermore:

Delaying implementation of the right climate policies could result in “knee-jerk” political responses that might be very disruptive to society, he said. “Let the air out of the balloon as soon as you can before the balloon actually bursts,” van Beurden said.

He is, in a sense, trapped, as the head of one of the world’s largest fossil-fuel extractors. He doesn’t want to be “demonised,” but he is professionally answering to — and obligated to serve — investors who are still profiting from destroying the world. Though he acknowledges that consumers cannot initiate the necessary policy-change, and that investors aren’t yet; and though he doesn’t want government to do anything which “might be very disruptive to society,” he does want governments to “Let the air out of the balloon as soon as you can before the balloon actually bursts,” and he’s therefore contemplating — and is even advising — that governments must do the job now, and not wait around any longer to take the necessary decisive action. 

Here’s what that type of governmental action would be (and unlike the Paris Climate Agreement, it doesn’t require an international consensus — which doesn’t actually exist among the nations), and therefore I am asking readers here to give me an endorsement of it, so that I can publicly move forward with pushing for it. Please send the endorsement to the.eric.zuesse@gmail.com, with “ENDORSEMENT” in the Subject line; “Investing in fossil-fuel extractors must be outlawed” as the message; and indicate any appropriate identifiers of yourself that are especially relevant to the matter (so as to impress your Senators, etc.). In addition, after that, push, on your own, by urging your Senators and Representative to draft a law to ban purchases of investments in fossil-fuels extractors.

Why is this the ONLY way? No other proposals can even possibly work: 

The “Bridge Fuels” Concept Is a Deceit

The concept of “bridge fuels,” such as methane as being a substitute for petroleum, is a propaganda device (another delaying-tactic) by the fossil-fuels industry and its agents, in order to slow the decline of those industries. For example, on 16 November 2019, Oil Price Dot Com headlined “Why Banning Fossil Fuel Investment Is A Huge Mistake”, and Cyril Widdershoven, a long-time writer for and consultant to fossil-fuel corporations, argued against an effort by the European Investment Bank to “put more pressure on all parties to phase out gas, oil and coal projects.” Widdershoven’s argument is that “experts seem to agree that the best way to target lower CO2 emissions in the EU is to substitute oil and coal power generation in Eastern Europe with natural gas.” He says, “Even in the most optimistic projections, renewable energy options, such as wind or solar, are not going to be able to counter the need for power generation capacity. If the EIB blocks a soft energy transition via natural gas, the Paris Agreement will almost certainly fail.” 

The unstated “experts” that Widdershoven cited are, like himself, hirees of the fossil-fuels industries. Furthermore, this go-slow approach is already recognized by the IMF and IEA to be doomed to fail at avoiding global burnout.

Furthermore — and this is perhaps the most important fact of all — government-support has largely been responsible for the success of fossil-fuel corporations (especially now for natural gas), and, if fully replaced by government-support going instead to non-fossil-fuel corporations, there will then be a skyrocketing increase in R&D in those non-fossil-fuel technologies, which skyrocketing R&D, there, is desperately needed, if any realistic hope is to exist, at all, of avoiding global burn-out. 

So, to each reader of this, I ask: If this is not what you propose, then what do you propose? Your endorsement is therefore requested. Please send the endorsement to the.eric.zuesse@gmail.com, with “ENDORSEMENT” in the Subject line; “Investing in fossil-fuel extractors must be outlawed” as the message; and indicate any appropriate identifiers of yourself. I shall then try, again, but this time with emails that will have all of those signatories, not merely myself, as the person who is requesting action (or at least requesting the person’s reasons for continued inaction). And keep on pushing for this, on your own, in any way you can.

Sincerely,

Eric Zuesse

P.S. In January, I had sent this (the above emailed letter) to (and never received any answer from any of) the:

Dear EU Climate Commissioners:

Re: He [Timmermans] said right wing countries like Canada, the USA and Brazil were preventing the EU from reiterating the Paris Agreement requirements in the COP conclusions.

What is needed is a method which (unlike international agreement on carbon-trading credits) won’t require agreement among nations, which are too corrupt to take the necessary collective action to avert catastrophe. Here’s the solution which could be implemented by, say, the EU, or even just by Germany, or just by India, or just by China, alone, if not by any of the far-right countries (such as U.S. and Brazil), which action, taken by any one of them, would create the necessary cascading-effect among all nations, that could transform the world and perhaps save the future (and please do follow closely the argument here, and click onto any link here wherever you might have any questions, because this is a truly new idea, and every part of it is fully documented here):

[That message was then followed by the letter that’s printed above it here, and no one responded to it.]

Author’s note: first posted at Strategic Culture

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A Labour Government Should not Frighten the Horses

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The UK general election is likely to mean changes, but Gulf citizens need not be too worried.

By James Drummond

If the tension was killing you, now you know. If it wasn’t, then be aware that a general election in the United Kingdom will be held on July 4 – less than six weeks away.

For the hapless Rishi Sunak, it looks like a case of “If it were done when ’tis done, then ’twere well it were done quickly.” Polls indicate that after 14 years of conservatism, real or imagined, voters are likely to elect a new Labour government.

What does this mean for us here in the Gulf?

The six Gulf states are certainly exposed to Britain. The extent of GCC holdings in the UK is enormous, ranging from Qatari ownership of the Shard building in London, stakes in the Sainsburys supermarket chain and Barclays bank, to Sheikh Mohammed bin Rashid’s Godolphin stables in Suffolk.

Manchester City and Newcastle United football clubs are owned by Emirati and Saudi interests, respectively. Kuwait’s wealth is managed by the Kuwait Investment Office near St Pauls Cathedral.

Labour has been careful to detail very few policies (or hostages to fortune, as its strategists may see it), but last week, David Lammy, the likely new foreign secretary, outlined a further campaign against dirty money.

Britain is a “corruption services centre”, while London is a “hotbed of kleptocracy”, Mr Lammy said. He said that he wanted to reward whistleblowers and clamp down on “enablers” of financial crime.

Given the paucity of public announcements, Lammy’s speech is significant, because it implies that the incoming government is likely to act. Fighting financial crime is relatively uncontroversial and attracts cross-party support – although in the UK’s case with limited success.

British politicians have made similarly grandiose statements before. But after Russia’s invasion of Ukraine, London has moved particularly against Russian dirty money, and sanctioned individuals. It finally introduced an obligation mandating the disclosure of beneficial owners of property.

Overseas trusts are also now required to disclose their ultimate beneficial owners, and there is now greater transparency when registering entities at Companies House.

This seems to have had only limited effect, however. Last week Andrew Mitchell, the deputy foreign secretary, cited estimates that 40 percent of the world’s dirty money still passes through London.

Spotlight on Corruption, a non-governmental organisation, wrote in October last year that “major reform is needed to how lawyers and accountants, the property sector and company formation agents are regulated for money laundering.” Lammy may choose to take further action against these and other professionals.

Other so-called enablers include retired politicians, some of them in the House of Lords, who work as advisors to unsavoury actors. Labour could move to tighten disclosure, although several of its senior former members are likely to lobby against further transparency.

It is also possible that Labour will go further in taxing expatriates. In its limited public commitments, the party has promised to clamp down on “tax dodgers”.

Those with property in the UK already pay tax on rental income they receive, and worldwide assets are subject to Britain’s inheritance tax. Some Gulf Arab families with UK property have been caught by inheritance tax.

A government led by Sir Keir Starmer, the Labour leader, could go further, as the US does, in taxing worldwide income of its citizens, more than 200,000 of whom live in the UAE alone. The argument is that if you have the privilege of carrying the passport, you have an obligation to pay tax.

Another question surrounds nationalisation. Labour is committed to re-nationalising the railways for one, although the infrastructure is already under central government control.

But another target may – may – be England’s water supply network, which was privatised in 1989. Shareholders in various of the rump companies include the Qatar Investment Authority and Adia of the UAE.

The water companies have been the subject of a vociferous campaign, for allegedly paying their shareholders high dividends while neglecting maintenance and investment. It is possible that an incoming Labour government will nationalise the industry.

All that said, the primacy of the rule of law and respect for property rights remain strong in Britain.

Barratt, a mass housebuilder, reported earlier this week that London remains the top choice among world cities for UAE investors looking to buy overseas. The holdings of Gulf states and rights of Gulf citizens in the UK remain secure, even with a Labour government.

James Drummond is Editor-in-Chief of the AGBi

Courtesy: The AGBI.Com


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Kuwait’s Political Crisis Adds to Economic Uncertainty

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Kuwait’s latest standoff is deeply concerning for both the near and long term, writes Andrew Cunningham

The decision by Kuwaiti emir Sheikh Mishal Al-Ahmad to dissolve the country’s recently elected parliament just days before its inaugural session on May 14 presents overseas investors and Kuwaiti citizens with more uncertainty.

The situation raises concerns about the country’s economic prospects over both the short and long term.

Disputes and stand-offs between Kuwait’s emirs and its boisterous parliament are nothing new. Parliament has been dissolved, and the constitution suspended, numerous times over the past 40 years. The country has held four elections in the past four years.

Squabbling between the two sides is rooted in political disagreements and this most recent outbreak is no different.

A major factor behind the latest dissolution is believed to have been parliament’s objection to Sheikh Mishal’s choice of crown prince. Although the crown prince is nominated by the emir, the appointment has to be ratified by the parliament.

But these political, and sometimes personal, disputes have real consequences for Kuwait’s economy and financial system and, ultimately, for the long-term welfare of its citizens.

Kuwait is a prosperous country. If we take a snapshot today, we see it producing nearly 2.5 million barrels of oil per day (bpd), and there are plans under way to increase production capacity to 4 million bpd by 2035.

State foreign reserves are around $930 billion, according to National Bank of Kuwait, the country’s largest bank. With a population of a little over 4 million, its GDP per capita is one of the highest in the world.

Squabbling between the two sides is rooted in political disagreements and this most recent outbreak is no different.

A major factor behind the latest dissolution is believed to have been parliament’s objection to Sheikh Mishal’s choice of crown prince. Although the crown prince is nominated by the emir, the appointment has to be ratified by the parliament.

But these political, and sometimes personal, disputes have real consequences for Kuwait’s economy and financial system and, ultimately, for the long-term welfare of its citizens.

Kuwait is a prosperous country. If we take a snapshot today, we see it producing nearly 2.5 million barrels of oil per day (bpd), and there are plans under way to increase production capacity to 4 million bpd by 2035.

State foreign reserves are around $930 billion, according to National Bank of Kuwait, the country’s largest bank. With a population of a little over 4 million, its GDP per capita is one of the highest in the world.

In March this year, rating agency Fitch described Kuwait’s fiscal and external balance sheets as among the strongest of any of the governments it rates.

But when we look at long-term trends, the picture is more complex and less secure.

Kuwaiti government spending remains overwhelmingly dependent on oil and gas revenues. The government has made almost no progress, over many decades, in diversifying the economy away from oil, or in reducing the huge burden of government salaries and welfare payments.

Oil and gas revenues currently account for nearly 70 percent of total income and, according to IMF projections, will continue to do so for the rest of the decade.

These revenues have served the country well in the past, despite the volatility of oil prices, but such overwhelming dependence looks foolhardy when consumers worldwide are striving to reduce consumption of oil and gas and investors and energy firms have pivoted towards renewables.

Nearly all of the Kuwaiti government’s non-oil and gas revenue arises from overseas investments and from dividends from state-owned companies. Tax revenues account for less than 1 percent of total government income.

Looking beyond the fiscal imperative to diversify the economy is the need to provide employment opportunities for Kuwaiti citizens.

No less than 84 percent of the Kuwaiti workforce was employed by the government at the end of 2022. It is hardly surprising that nearly half of government expenditure is allocated to the salaries of public employees.

Pressure for social spending will increase in the years ahead. A World Bank report, published last year, showed that levels of obesity and Type 2 diabetes were higher in Kuwait than in any of the other GCC countries and nearly double the average in OECD countries.

Partly as a result of this, the World Bank estimated that Kuwait’s old age dependency ratio – the number of people over 65 years old in relation to those of working age – will be nearly double that of its neighbours by 2040.

Kuwait is also a country that is being significantly affected, even today, by climate change. Temperatures during the summer can exceed 50 degrees, making Kuwait one of the hottest places on earth.

These are difficult and complex challenges, both economic and social, but they are hardly unique to Kuwait. That they are, in some cases, more acute in Kuwait than elsewhere is due to decades’ long procrastination and political paralysis.

The government’s General Reserve Fund, which held most of its liquid assets, was entirely depleted in September 2020, according to Kuwait’s own ministry of finance. With AA ratings, the obvious solution was to borrow money – Kuwait’s debt-to-GDP ratio is less than 5 percent. Yet the parliament has still not passed a so-called ‘Liquidity Law‘ that would allow modest issuance of foreign currency debt.

The parliament also held up the introduction of Value Added Tax (VAT), making Kuwait one of two of the six GCC countries not to fulfil a joint commitment to implement a minimum VAT of 5 percent.

Over the past four years, all three of the big international credit rating agencies have downgraded the government of Kuwait.

In their rating reports, all agencies cited a dysfunctional and slow-moving political environment that was reducing the country’s financial flexibility and delaying much needed economic and financial reform.

Politics matters.

It is unrealistic to think that after decades of enmity the ruling family and the parliament will soon form a harmonious working relationship.

But they do need to find some common ground that will enable them to start addressing fundamental economic and social issues while the country still has large financial reserves and strong credit ratings.

Time is running out.

Andrew Cunningham writes and consults on risk and governance in Middle East and sharia-compliant banking systems


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ICD and JSC Ziraat Bank Collaborate to Boost Uzbekistan’s Private Sector

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At the 3rd Tashkent Investment Forum, the Islamic Corporation for the Development of the Private Sector (ICD) and JSC Ziraat Bank Uzbekistan took a significant step forward in their partnership to empower small and medium-sized enterprises (SMEs) and foster economic growth in Uzbekistan. The forum, held in the capital city of Uzbekistan, brought together key stakeholders from the public and private sectors to discuss investment opportunities and economic development strategies for the region. The collaboration between the Islamic Corporation for the Development of the Private Sector (ICD) and JSC Ziraat Bank Uzbekistan is aimed at boosting the private sector in Uzbekistan.

During the forum, ICD and JSC Ziraat Bank Uzbekistan formalized an expression of intent to collaborate on various initiatives aimed at supporting SMEs. One of the key elements of this collaboration is the provision of a Line of Financing (LoF) facility by ICD to JSC Ziraat Bank Uzbekistan. This LoF facility will enable the bank to fund private sector projects as an agent of ICD, thereby providing SMEs with access to the necessary capital to initiate and grow their businesses.

The partnership between ICD and JSC Ziraat Bank Uzbekistan is expected to have a significant impact on the SME landscape in Uzbekistan. By equipping entrepreneurs with the resources they need to succeed, this collaboration will not only support the growth of individual businesses but also contribute to the overall economic development of the country. SMEs play a crucial role in driving economic growth, creating jobs, and fostering innovation, and this partnership will help strengthen the SME ecosystem in Uzbekistan.

JSC Ziraat Bank Uzbekistan, as a strategic partner for ICD, brings a wealth of experience and expertise to the table. As a prominent commercial bank with foreign capital, JSC Ziraat Bank Uzbekistan has a strong track record of supporting SMEs and promoting economic development. The bank’s partnership with ICD further underscores its commitment to advancing the private sector in Uzbekistan and its dedication to supporting the country’s economic growth.

ICD, for its part, is a leading multilateral development financial institution that focuses on supporting the economic development of its member countries through the provision of finance and advisory services to private sector enterprises. By partnering with JSC Ziraat Bank Uzbekistan, ICD is furthering its mission of promoting economic development and fostering entrepreneurship in Uzbekistan and across the Islamic world.

The LoF facility provided by ICD to JSC Ziraat Bank Uzbekistan is just one example of the many initiatives that the two entities are undertaking to support SMEs in Uzbekistan. In addition to providing financial support, the partnership between ICD and JSC Ziraat Bank Uzbekistan will also include capacity-building initiatives and technical assistance programs to help SMEs succeed in today’s competitive business environment.

Overall, the partnership between ICD and JSC Ziraat Bank Uzbekistan represents a significant step forward in supporting SMEs and fostering economic growth in Uzbekistan. By working together, these two institutions are helping to create a more vibrant and dynamic private sector in Uzbekistan, which will ultimately benefit the country’s economy and its people. The collaboration between the Islamic Corporation for the Development of the Private Sector (ICD) and JSC Ziraat Bank Uzbekistan is expected to have a far-reaching impact on the private sector in Uzbekistan.


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