I know. The origins of this recession dubbed, “The Global Financial Crisis” has been very difficult to explain in a coherent manner, in which everyone can understand. Check out this video it explains in very certain terms what it all means. Enjoy.
I know. The origins of this recession dubbed, “The Global Financial Crisis” has been very difficult to explain in a coherent manner, in which everyone can understand. Check out this video it explains in very certain terms what it all means. Enjoy.
The chain of accountability – from voter to MP, from MP to PM and cabinet ministers, from cabinet to line ministers, from line ministers to the heads of their employees has broken down. Donald Savoie argues in his book Court Government and the Collapse of Accountability in Canada and the United Kingdom, that both Canada and the UK now operate under court government rather than cabinet government. By court government, he means that effective power now rests with their respective prime ministers and a small group of carefully selected courtiers. For things that matter to prime ministers and their courts, the decision-making process shifts from formal to informal, involving only a handful of actors. He states that the relationship among Parliament, the prime minister, ministers and public servants is in need of repair, and we are ill served by pretending that all is well.[i] It is important that steps are taking to address these issues through a call for new accountability requirements that correspond with court government as well as the new relationships between politicians and civil servants, and civil servants and citizens. If steps are not taken then according to former British Prime Minister John Major ‘the timbers which support parliamentary government are weakening and diseased and are in danger of collapse.’[ii]
Peter Docherty states that one’s quest for elected office begins at the level where political candidates must seek the blessing of the constituency association.[iii]Political parties have in the past reserved. Many newly elected MPs who arrive in Ottawa have no idea what role they will play in the House of Commons. They may not appreciate that the role of government is to govern in the peoples’ interests and that of the Commons is subject political power to certain controls, to provide legitimacy to government action and activities, and to hold government to account. The governing party in the House of Commons has a different relation between MPs and the Prime Minister and Cabinet from that of an opposition MP. When a government has a majority of seats in the House of Commons it has all its hands on the levers of power and can decide on what direction they want take the country. The difference is that some government MPs have access to power, while others only have to levers of influence one man’s short political career helps explain how those connections fail. David Emerson, a respected former forestry executive and top B.C. bureaucrat, was recalled as one of Paul Martin’s most competent ministers. Almost forgotten now is his corrosive effect on public trust. In 2006, Emerson ran for re-election in the suburban B.C. riding of Vancouver-Kingsway and was easily re-elected as a Liberal. Weeks after promising to be Stephen Harper’s “worst nightmare,” Emerson crossed the floor and was named to the Conservative cabinet in the trade portfolio he had long wanted and was well-suited for.[iv] His rationale was simple. There’s no point in being in the capital if there’s no real possibility of influencing the nation’s course. He felt that being in opposition would not allow him to influence policy in a way that he did in the Martin government. Many Canadians, feel that most politicians ‘lose touch’ with their constituents soon after they are elected and have no real link to their representative.[v] The average voter feels that their MP answers to their party leader and party whip and not to their constituents, which has discredited the House of Commons in the eyes of many voters. One such survey of Canadians for the Trudeau Foundation revealed that ‘trust in government has plummeted’ and ‘cynicism towards politicians has increased’ the survey also revealed that political engagement in Canada, already low, is ‘declining’ further.
The links between Parliament, the Prime Minister, ministers and public servants are in serious need of repair. People should no longer accept the current shape of court government, by which a political leader with the help of a few select advisers shape the instruments of power at will. The people at the apex of power are able to bring about change and are reluctant because they enjoy incredible amount of power they have. Senator Lowell Murray who was a senior member of the Mulroney government, states that ‘anyone interested in democracy and in public policy in Canada cannot be helped but be concerned about the steep decline of confidence in public institutions, notably Parliament, and in political parties, candidates and representative that has been captured by survey after survey.’[vi] The role of the prime minister needs to be clearly defined, as well as that of cabinet. The public services must be given administrative space in order to manage government operations effectively. We also have to recognize that the prime minister and cabinet must always have the authority to override public servants in all matters not covered by statutes.
It is a widely held view that the expansion in the size and power of central agencies during the late 1960s and early 1970s reduced the power of both the ministers and senior officials of operating departments. The control and influence exercised by central agencies in the coordination of A shift from formal decision-making processes in cabinet and in the civil service, to informal processes involving only a handful of key actors. The government of Canada now makes policy by announcement rather than by a policy process. As Savoie says, “They are half in the political world and half in the public service, sandwiched between the neutral civil service and the partisan political ministers.”[vii]
Accountability in essence should be a problem at first blush; after all we live in a nation that adheres to the tenant of responsible government with a Westminster structure of government. The opposition and, to a lesser degree, government backbench MPs have all of the necessary tools in keeping the government accountable.[viii] The problem of accountability has grown in this era of the modern parliament. Part of the blame can be pointed at MPs themselves, who have abandoned for publicity and grandstanding. A larger share of the blame rests with the high levels of turnover in the House of Commons that robs it of some its most effective members. Some of the blame rests with the Prime Minster and the decisions he/she makes in selecting cabinet ministers. A strong working Parliament has three important responsibilities and functions, provide the means for controlling the unrestrained power of the bureaucracy, generates the necessary political leadership, and holds officials and politicians accountable for the actions.[ix] A strong Parliament is also needed to attract talented political leadership since, according to Weber, a powerless Parliament makes ‘a political career uninviting.’
Court governments undermine both the traditionally bureaucratic model and the basic principles that have guided the development of our Westminster-Whitehall parliamentary system. Nonetheless, Canada still clings to accountability requirements better suited to the past bureaucratic models. Savoie argues this by calling for new accountability requirements that correspond with court government as well as new relationships between politicians and civil servants – civil servants and citizens. The view is that the bargain has broken down and long standing conventions have eroded. Withthat Ministers are refusing to accept accountability, and are in turn blaming the bureaucracy. Like any number of important concepts, accountability is not easy to define in an operational way. This point is illustrated by the following example a royal commission that focused on the issue: “Accountability, like electricity, is difficult to define, but possess qualities that make its presence in a system immediately detectable… [It] relies on a system of connecting links—a two-way circuit involving a flow of information that is relevant and timely, not only for managers but for those who must scrutinize the decisions and deeds of managers….” In simple terms, accountability is that quality of a system that obliges the participants to pay attention to their respective assigned and accepted responsibilities, to understand that it does matter.[x]
Deputy minsters play a pivotal role in the decision-making process that an effective means of understanding the place of public service in Canadian political system is to view the system for their perspectives The belief is that a deputy minister is the most senior figure in a department, but developments have suggested that interactions between deputy ministers and the prime minister’s most senior advisers in the central agency are assuming greater significance. As Savoie states, “Deputy Ministers are now as much part of the centre of government as they are the administrative heads of their departments.”[xi] The Royal Commission on Financial Management and Accountability also noted that “deputy heads are not regularly held accountable in a systematic or coherent way for program management and departmental administration” and recommended that deputy minister “be liable to be held to account directly concerned with administrative performance, the Public Accounts Committee.”[xii] The major adjustment suggested in relation to public administration is that deputy ministers be held more directly responsible to the House of Commons for the administration of their affairs. Currently, senior public servants must look to the prime minister’s court rather than to their ministers to get things done. Paul Tellier, former Clerk of the Privy Council Office, observed that “a deputy minister has to be able to put his foot down and say, I don’t think the government should do that.” It was much easier for a deputy minister to speak the truth to his or her minister when institutions mattered and formal processes applied than it is under court government.[xiii]
In 1985, a special House of Commons committee looking into parliamentary reform observed that the operation of individual ministerial responsibility reform observed that the operation of individual ministerial responsibility ‘undermines the potential for genuine accountability on the part of the person that ought to be accountable – the senior officer of the department.’[xiv] Savoie states that parliamentarians, it seems, have turned over much of their accountability responsibilities to officers of Parliament and to the media. Officers of Parliament have somehow projected the belief that they are able to provide objective evidence about almost any public policy and administrative matter. They are independent of government and now also increasingly of Parliament: thus, their claim to be the source of objectivity. For the most part, they are answerable to themselves alone. John Reid, a former information commissioner lamented in public that, when it comes to their own accountability, MPs are all but ignored them. They have an oversight function, but always from a narrow perspective, and no one is charged with providing a broad overarching perspective. The result is that those in government have several independent voices constantly looking over their shoulders from different and at times conflicting perspectives.[xv]
Considering the relative lack of success that parliamentarians have met when trying to perform their accountability duties, it is hardly surprising that there have been calls for reform of Parliament have arisen from both the opposition and government side of the House.[xvi] Parliamentarians have also been too quick to question or blame the usual merits of traditional accountability when looking for the answers to the problems that our parliamentary system currently faces. Possible ‘remedies’ in improving the chain of parliamentary accountability is that through looking at the response to some of the criticism from the public, members of parliament have turned to looking at new and different ways of providing accountability for their actions, both individually and collectively as a parliament. Some of the more interesting and controversial proposals in the era of new accountability since 1993 have included challenging party discipline, elimination of opposition critic roles, recall of members while in office and reform of the committee system.[xvii] In 1993, the Reform Party of Canada under Preston Manning emerged on the federal scene, many members of its caucus had long been making overtures to a bring about a different style of accountability. They were able to do this through accountability of private members for representing constituency demands. This new accountability suggests that all members must first and foremost be accountable to their constituents for their day-to-day activities in the House.[xviii] This can be done by meeting the wishes of a majority of their constituents, even if it means ignoring party discipline and their leader.
The Reform Party also introduced in another one of their plans to alter the concept of accountability, through the right of voters to recall their MPs. This method of accountability is especially popular in the state of California, when it recalled former Democrat Governor Gray Davis in 2003. If enough citizens sign a recall petition then a new election would be held in that riding. The sitting member would be free to contest that election, assuming that they got their party’s nomination, but would run knowing that at least half the voters wanted them out of office.[xix] This proposal would a go a long way in changing the accountability connection from an executive-legislative relationship to a legislator-voter coupling[xx]
This piece was short-listed for publication in York University’s Undergraduate Political Science Journal in 2010
Will the United States be able to maintain its global hegemonic power as a result of the Global Financial Crisis? The world economy has experienced the most severe economic downturn since the Great Depression. This recession has often been referred to as the Global Financial Crisis, this crisis precipitated as a result of a liquidity shortfall in the American banking sector. This forced many governments around the world to rescue many of its largest financial institutions in the case of the United States this meant it had to bailout CitiBank, while in the United Kingdom the British government stepped in to save Northern Rock. This crisis has also resulted in many businesses failing, significant declines in consumer wealth, governments running large deficits, and a significant decline in economic activity and growth. The chaos of the global financial crisis has given credibility to those who have criticised the Washington Consensus and its emphasis on deregulation of markets and the state as means to achieving great economic prosperity.[i] It will be difficult for the United States to continue its dominance in the international arena in less it begins to restructure its leadership to accommodate the rise of emerging economies, such as China, India and Brazil. It has been argued by some that the financial crisis is likely to diminish the status of the United States as the world’s only superpower. On the practical level, the US is already stretched militarily, in Afghanistan and Iraq, and is now stretched financially. On the philosophical level however, it will be harder for it to argue in favour of its free market ideas, if its own markets have collapsed. American hegemonic power though not under direct threat is facing pressures to incorporate rising powers. Therefore, this paper will argue that the United States continued dominance in the 21st century will depend on how it is willing to incorporate rising states in the new global financial framework.
Origins of the Global Financial Crisis:
The Global Financial Crisis began in the United States during the summer of 2007. There were a series of vital factors that lead to the near simultaneous collapse of the banking industry, financial market, housing system, and other related markets. Though the causes are still greatly argued, this event undoubtedly radiated out into the global market almost immediately. The United States traditionally plays an enormously influential part in global stock trading and financial industries, meaning that the collapse had devastating effects not only within the US but also in many or most of the countries around the world. The immediate cause of the crisis was the bursting of the US housing bubble the mass default of subprime mortgages started in the institutions that held subprime mortgages backed securities collapsed. Between 2004 and 2006 US interest rates gradual rose from 1 percent to 5.3 percent which trigged a slowdown in the US housing market.[ii] This slowdown put homeowners in a precarious position in that it exposed the fact that many of them could barely afford their mortgage payments when interest rates were low and many of them began defaulting on their payments. The effects of these defaults exposed the whole financial system as many of these toxic mortgages were pooled together and sold off to banks and investors.
Paola Subacchi states that the US economy underwent a sharp recession which generated a crisis. He states that the crisis exacerbated the economic weaknesses which were ignored over the last decade because of foreign investor’s willingness to invest in the United States.[iii] On the other side, investors were creating more and more complex financial instruments in order to increase profits. No longer were they satisfied with conventional financial instruments. Instead, they created complex mathematical models upon which they created complex financial instruments like derivatives. Many people who traded them didn’t actually understand how these complex instruments worked. As such, they couldn’t take the appropriate actions when things went wrong nor could they anticipate one. In October 2008, the Troubled Asset Relief Program (TARP) provided capital injections to stressed financial institutions and bolstered financial markets. Guarantees were offered on selected bank assets and liabilities and expanded on deposits.[iv] While this bailout was being initiated the US Federal Reserve was lowering interest rates to record lows and unambiguously communicated the intention of keeping monetary policy loose until clear signs of economic recovery emerged.
There was a certain degree of irresponsibility that made people do things that they knew shouldn’t be done. Their attitude was that they would no longer be around when the problem emerged. They created dangerous financial instruments, but when the problem came to the surface they would no longer be involved. They had reaped their rewards and moved towards something else. So who cared if things went wrong? These kinds of attitudes opened the way to much irresponsible behaviour in the financial markets. Given the bubble conditions in its subprime mortgage market and its growing deficits, the United States proved to be more vulnerable than it had been a decade earlier when its market was flourishing.[v]
Is American Hegemonic Power in Decline?
Political philosopher John Gray, professor at the London School of Economics, has stated that there is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably. He argues that the era of American global leadership, reaching back to the Second World War, is over. The American free-market creed has self-destructed while countries that retained overall control of markets have been vindicated. From Gray perspective the global financial crisis will see the US falter in the same way the Soviet Union did when the Berlin Wall came down.[vi] The era of American dominance is over in a sense as extensive in its implications as the fall of the Soviet Union, an entire model of government and the economy has collapsed. With the US federal budgetary in such a dire situation it has become critically dependent on continuing large inflows of foreign capital, Gray continues to argue that it will be the countries that spurned the American model of capitalism that will shape America’s economic future.[vii]
Robert Kagan, who has argued for what he calls American global leadership, has stated that those who proclaim that the United States is in decline often imagine a past in which the world danced to an Olympian America’s tune. He believes that this assertion is an illusion.[viii] To avoid such a scenario from occurring, the United States and other western democracies will need to take a more enlightened and generous view of their interests than they did even during the Cold War. The United States, as the strongest democracy, should not oppose but welcome a world of pooled and diminished national sovereignty. At the same time, the economies of Asia in particular China need to rediscover that progress toward this more perfect liberal order which depends not only on law and popular will but also on powerful nations that can support and defend it. Robin Niblett states that we should wait a bit before coming to a judgment and that structurally the United States is still remains strong.[ix]
One of the most important characteristics of the international system in the second half of the 20th century was the emergence of a US-led order built around the institutional and multilateral structures created after World War II. Fareed Zakaria has argued that America was the most powerful country in the world when it proposed the creation of an international organization, the League of Nations, to manage international relations after the First World War. It was the dominant power at the end of the Second World War, when it founded the United Nations, created the Bretton Woods system of international economic cooperation, and launched most of the world’s key international organizations.[x] The American postwar commitment to a multilateral system of economic rules and institutions can be understood in this way. As the world’s dominant state, the United States has championed GATT and the Bretton Woods institutions as ways of locking other countries into an open world economy that would ensure massive economic gains for itself. President Barack Obama wrote in his 2007 Foreign Affairs article, ‘to see American power in terminal decline is to ignore America’s great promise and historic purpose in the world’.[xi] Therefore, it is negligent to assume that America is in a historic decline; rather what is need from the United States is for it to restructure its global leadership by incorporating rising powers.
A Look at the Rising Stars, is there a challenge?
Paulo Saboochi has noted that the crisis has highlighted the need for rules in the global economy. With the emergence of new powers there has been this notion that the United States should automatically take the lead in writing those rules simply because of the sheer size of its economy and the dominance of the dollar in international trade and investment. Instead, the crisis clearly poses the question of how the balance of power and leadership in international economic affairs will be shaped in future years. Stewart Patrick has argued that over the next ten years and beyond, the United States will have to accommodate new powers in reformed structures of global governance while safeguarding the Western liberal order it helped create and defend.[xii] The world is entering a challenging time and it requires that global visions will compete, norms will shift, and yesterday’s rule takers will become tomorrow’s rule makers. The United States will have to make practical and logical changes if it is to adapt to the changing global order. U.S. officials need to recalibrate their aspirations for multilateral cooperation and examine the long standing assumptions of the United States’ role in the world.
A major strategic challenge for the United States in the coming decades will be integrating emerging powers around international institutions. To hold the postwar order together, the United States will have to become a more consistent exemplar of multilateral cooperation. Ikenberry has argued that the time is ripe for an “institutional bargain” by ceding influence within multilateral frameworks while it remains dominant, the United States might lock in support from the rising powers for an international order based on the Western model. Stewart also mentions that to hold the postwar order together, the United States will have to become a more consistent exemplar of multilateral cooperation.[xiii] The rising states such as India, China and Brazil have attained a large degree of economic, military and political power of the past decade, but they are in a position now in which they have to contribute in manner in which there status will be recognized by the United States.
Does China pose a threat to American Hegemonic Power?
There are those who write that China has the potential to challenge the United States current global position. It has been argued that the emergence of China should prompt the United States to remember that it is in a position of leadership in the Western global order and that as a result it can force China to make vital choices with regards to its rise. The United States must reinforce the rules and institution if wants to continue to maintain its leadership in the international community. Ikenberry continues to argue that the United States should remember that its leadership position of the Western order allows it to shape the environment in which China will make critical strategic choices.[xiv] To maintain its leadership position the United States must work to strengthen the rules and institutions that underpin the current world order. China seeks to gain nothing by distributing this order; the United States must give greater incentive for integration as Ikenberry has mentioned. The global economic crisis has indeed changed the logic behind the conduct of international relations. Gideon Rachman states that the rise of China is increasingly associated with the job losses for ordinary Americans and a challenge to American power.[xv] Ikenberry would disagree with that statement because he believes that China’s rise can be turning the coming power shift into a peaceful change which will be dictated on the United States own terms.
The United States therefore is in a position as a result of the Global Financial Crisis to reinvent itself. Ikenberry has already mentioned that the United States must reinvest in the Western Order. This restructuring will be centred on an order that encourages engagement, integration and restraint. The United States must continue to present itself as the primary supporter of the global international system. Stewart states that the Obama Administration seeks strategic reassurance about China’s intentions in East Asia that is, indications from Beijing that it will not imperil the security of its neighbours or challenge existing U.S. alliances as it increases its global role. Although China has economic incentives not to rock the boat in the near term, the United States’ and China’s long-term objectives may be less compatible.[xvi]
Chinese foreign exchange reserves have surpassed the $2 trillion mark and China is the single largest investor in US Treasury securities, with holdings quoted at more than $800 billion in late 2009.[xvii] While there is much debate over the sustainability of this savings imbalance, it is one of the reasons why the US–Chinese relationship is arguably the most important in global economic affairs today. China’s economic success has been achieved around its integration within the global economy.
Reshaping American Global Leadership around multilateral institutions
Robin Niblett has stated that the United States must craft its unique power and capacity to continue to influence others. This means that the United States must be willing to strengthen its multilateral cooperation. The US must be open to strengthening its alliances with its allies, strengthening its institutions and building new partnerships.[xviii] The United States may not be able to bring about solutions to international issues on its own with the changing structure of power dynamics in the 21st century as has been able to in the past. Niblett has argued that it will remain the world’s most powerful nation, without which international problems will be impossible to solve and many of the world’s most intractable conflicts will persist.[xix] Currently, the Obama Administration has the opportunity to help America make the transition to a form of global leadership that focuses with full intensity upon those situations where US power and influence can have greatest effect, while being less interventionist where US power has declined and more inclusive in those broad policy areas where the reality of interdependence demands more cooperative international solutions. Hilary Clinton has argued that world issues have become more complex and intertwined. Clinton explicitly states that with the emergence of new actors its influence is growing stronger and more influential. The Obama Administration is building a new global architecture of alliances, institutions and regional organizations whose main purpose it will be to solve global problems in a dynamic way to combat encountering challenges.[xx]
Rising states have been seeking to have greater weight in global governance, but they do not necessarily seek more global governance. Their views on the International Monetary Fund’s reform agenda are a case in point. Many Western countries in the G-20 want the IMF to assume a more overt surveillance role and to monitor the macroeconomic policies of the member states, the status of their regulatory efforts, and the risks these states pose in terms of spawning international financial crises. China, India, and Brazil, in contrast, oppose a larger role for the IMF; they want larger voting shares at the organization without any additional infringement on their prerogatives.[xxi] With the emergence of global financial crisis there has been some degree of change that has occurred. The G-20 has become the primary venue in which to discuss global economic issues and has become a venue in which countries can coordinate their economic activities, the first major adaptation in multilateral cooperation to reflect dramatic shifts in global power. The G-20 created the Financial Stability Board in April 2009 to strengthen international standards for global finance.[xxii] The resources of the IMF have expanded. And the members of both the IMF and the World Bank have agreed to adjust those organizations’s voting weights and quotas by several percentage points in favour of emerging-market economies. But the overall impact of these reforms is modest at best. Subbacchi rightly mentions that claims that American economic hegemony is over are therefore premature, as are predictions of China’s imminent rise. When US leadership was closely linked to the creation and extension of international institutions that at once limited and legitimized American power, the post-crisis economic order will be shaped by international institutions where national interests will be tamed and economic policies will be coordinated.[xxiii]
United States global leadership will center on its ability to strategically link to the creation and extension of international institutions that at once limited and legitimized American power, the post-crisis economic order will be shaped by international institutions where national interests will be tamed and economic policies will be coordinated. Anthony Hurrell has mentioned that emergence of globalization has brought about great networks where states can communicate and exchange ideas; this in his view has created an increasing in demand for the use of international institutions.[xxiv] The United States has since been able to exercise its power through the use of international institutions. Hilary Clinton argues that the United States has been working with its international partners to strengthen international institutions which provide incentives for greater co-operation on areas of mutual interest. To do this, Clinton says that the Obama Administration has started to “modernize regional and global organization, including the United Nations, which can mobilize common efforts and enforce the rights and responsibilities of all nations.”[xxv] Also, if the United States is to exercise its global leadership in the 21st century it must also elevate the G20 as the primer international body which can focus on international coordination on economic issues. If the Global Economic Crisis has taught us anything it is that international institutions are needed to deal with the increasing and complex issues that face our ever globalized world. The United States as the leading economic power can promote its interests and lead the way in integrating in the global economy. Therefore, it is important for the United States to take an approach of the international world order. Ikenberry suggests that it must establish institutions and fortify rules that will safeguard its interests regardless of where the hierarchy it is or how its power will be distributed in the future.
To conclude, it is important to mention that the world economy has experienced the most severe economic downturn since the Great Depression. This recession has often been referred to as the Global Financial Crisis, this crisis precipitated as a result of a liquidity shortfall in the American banking sector. This forced many governments around the world to rescue many of its largest financial institutions. This crisis has also resulted in many businesses failing, significant declines in consumer wealth, governments running large deficits, and a significant decline in economic activity and growth. The chaos of the global financial crisis has given credibility to those who have criticised the Washington Consensus and its emphasis on deregulation of markets and the state as means to achieving great economic prosperity. It will be difficult for the United States to continue its dominance in the international arena in less it begins to restructure its leadership to accommodate the rise of emerging economies, such as China, India and Brazil. It has been argued that the financial crisis is likely to diminish the status of the United States as the world’s only superpower. American hegemonic power though not under direct threat is facing pressures to incorporate rising powers. Therefore, this paper has attempted to argue that the United States continued dominance in the 21st century will depend on how it is willingness to incorporate rising states within the new global financial framework. The United States will face significant challenges in maintaining its global leadership position but it is premature to write off its resilience.
The decline in turnout in a number of advanced Western democracies has led to significant attention being devoted to trends in political participation. For some, the changing nature of participation patterns signals fundamental changes in civil society that portend badly for the future of democratic states (Putnam 2000). This has been of concern to many who follow voter turnout. Canadian turnout has seen a steady and sharp decline- from 75 percent in 1988 to just under 65 percent in the three elections since 2000- has since seen Canada join the traditionally low-turnout United States, Japan, and Switzerland at the bottom. The key factor in the steady decline in voter turnout is a result of abstention among young people. As people grow older they are more inclined to vote, the current decline largely reflects a generational phenomenon, since, if we compare by age groups, the largest-indeed the only significant-decline since the latter 1980s has been among the under 30 (Gidengil et al, 2003). While voter turnout has long been a subject of study by scholars interested in more general issues of political participation, the reasons for the recent steep decline are not yet well understood. The issue of voter turnout is taking on greater importance in public discussion in Canada, both because of the magnitude of the recent declines and the way in which they are being interpreted. Many have argued that there is link between the declining participation in elections to a more fundamental problem with modern democracy (Pammett and LeDuc, 2003). It can be argued that there has been a decline in voter turnout in Canada . To prove this it is important to explore the factors and forces that have contributed to the decline in voter turnout and also look at proposed reforms for enhancing participation in elections.
The fact that voter turnout in Canada has dropped so precipitously in the last few elections is another reason why and emphasis on participation is warranted. Since the 1988 federal election, voter turnout over the postwar period typically averaged around 75 percent and this figure is still lower than other western democracies, Canadian turnout did not fall back noticeably upwards or downwards (Howe, Johnston, Blais, 2005). Recently, however there has been an alarming new trend that has emerged over past three federal elections. Participation record on the number of votes cast as a percentage of registered voters dropped from 69.6 percent in the 1993 Federal Election underwent another decline to 67.7 percent in the 1997 federal election and then plummeted to 61.2 percent for the 2000 election (Howe, Johnston, Blais, 2005). That percentage has declined even further in the 2008 election when voter turnout as the lowest in Canadian election history, as 59.1% of the electorate cast a ballot. The last figure was subject to of much discussion, not only because it confirmed the negative trend since 1988, but also because it established a new record for the worst turnout ever recorded in federal election, eclipsing the record low of 63 percent in 1896. The decline in voter turnout has prompted a fair amount of soul-searching as to its meaning for the nature and legitimacy of Canadian democracy (Blais, 2000).
There have been many causes and possible consequences of the continuing decline in voter turnout in Canada. Elections Canada distributed a survey that sampled a number of Canadians who were voters and non-voters. The surveys were suppose to explore the variety of reasons why people where not voting. According to the respondents it is apparent that the bulk of Canadians believe young people are not voting because they feel distanced from the operations of the political system, or because they lack information about it.
Voter turnout is an indication of the health of our democracy and satisfaction with the political process. Declining voter turnout is seen by some as part of a “democratic deficit.” In a representative democracy, people elect their representatives and delegate to them decision-making powers. The higher the voter turnout, the more legitimacy the government and representatives have because they received a mandate from a larger part of the population. “Observers increasingly link declining participation in elections to some of the more fundamental problems of modern democracy. In this view, declining public participation in a nation’s most fundamental democratic exercise may be part of a larger “democratic deficit” and may have serious implications for the health of its democratic political system (Pammett and LeDuc, 2003).
Another significant point mentioned are the Sociological Factors; according to the report Lost in Translation: (Mis) Understanding Youth Engagement, research indicates that a post-secondary education is directly correlated with higher levels of youth and political participation. The report also mentions that voter decline among youth is concentrated at those who were born after the 1970s that either have or do not have a secondary or post-secondary education. Another factor that is mentioned is those who are of lower-income groups which includes Aboriginal youth, new Canadians and other ethno-cultural youth. They summarize by stating that “combined, education and income help to explain much variation in engagement among young Canadians.” They also mention that the rising education level among youth does not necessarily guarantee higher levels of civic participation. So they cite that in order to increase participation in the political process by cultivating an interest in politics and adapting language and media to appeal to youth.
Socio-economic inequalities have also played a significant role in the decline in voter turnout in Canada. The costs associated with voting are modest, but they may be enough of an obstacle to deter some people from voting if they are trying to make a social assistance cheque stretch throughout the month. Therefore, it can be argued that people living at the edge of poverty may simply have less time and energy to engage in politics. These same people may also fell that the political system fails to meet their needs and concerns. Poorer Canadians may be affected by the problems with the permanent voters list. This can be because of the fact that they live in either rental accommodation or government housing. Tenants are less likely than homeowners to be correctly registered in the constituency where they live because they are more prone to constant address changes (Gidengil, 2004). According Gidengil with the recent changes in voter registration the onus has been placed on the tenant to get their name added to the list, which requires both time and information.
The lack of political knowledge has also contributed to the decline in voter turnout, particularly amongst young people. Practical considerations also suggest that emphasizing political knowledge is the sounder strategy: it seems a less daunting task to teach teenagers something about politics than to cajole them into caring about a subject they find categorically boring. Blais found that “members of the youngest generation are more poorly informed than those of older generations. This is the case whether we look at general knowledge about politics or campaign-specific knowledge” (Blais, 2000). Paul Howe agrees with Blais assessment “In effect, two trends have joined together to help produce a sharp decline in turnout among those born in the 1960s and 1970s. First, they know less about politics. And second, their impoverished knowledge is more likely to affect whether or not they vote” (Howe, 2003). In this context, Henry Milner finds the level of “civic literacy” – that is, the knowledge to be effective citizens – to be relatively low in Canada, compared to other Western democracies, despite our high levels of educational attainment. Common sense would suggest that an injection of knowledge could be especially effective at an early age – adolescence, say – when interests are still relatively fluid and malleable (Milner, 2007).
The reasons for declining turnout among young people are many. Low levels of political interest and knowledge, a declining sense that voting is a civic duty, certain administrative difficulties, and limited contact with political parties and candidates are the most frequently identified factors. Clearly, these factors cannot all be addressed in the same manner. For example, political knowledge might be addressed directly by information and education campaigns, both between and during elections. It is also clear that no single actor can respond to every one of these factors. Election administrators, political parties and candidates, educators, civil society organizations – and young people themselves – all have an important role to play.
People may be voting less because political parties are not engaging them during the election campaign. U.S. scholars have shown that mobilization by political parties and candidates is an important element of “get-out-the-vote” strategies. In Canada, political party contact has also been found to be significantly related to turnout. According to Blais “everything else being equal, the likelihood of voting increased by five percentage points when someone had been contacted by a political party. Furthermore, … only 30% of those born after 1970 said they had been contacted, compared with 43% of those born in the 1960s and 50% of those born earlier” (Blais, 2000). In the United Kingdom their Electoral Commission identified a lack of canvassing by political parties as a likely reason for dissatisfaction and a lower voter turnout among first-time voters in the 2001 British general election that saw Tony Blair win a second majority government.
Political parties themselves are also being encouraged to take responsibility for finding ways to educate young voters. During election campaigns they put tremendous effort into educating the public about political issues and their stances on those issues. Now that federal political parties receive vote-related tax dollars to finance those efforts, Rudyard Griffiths and Greg Lyle argue the parties must bear some responsibility for reaching out to politically interest young Canadians, encouraging them to exercise their political franchise.
Now that some of the factors behind the decline in voter turnout has been explained we must look at the proposed reforms for enhancing participation in elections and increasing voter turnout. Some experts place much of the low voter turnout blame on Canada’s electoral system. Canada employs the single member plurality (SMP) system, commonly known as First Past the Post (FPTP). In a SMP electoral system, a single individual represents a specific district. Instead of obtaining a majority of votes, the winner only needs to receive more votes than any other candidate. SMP tends to produce stable majority governments. However, they usual tend to over reward larger parties with strong regional based support, while at the same time smaller parties do not have their support centered in a specific geographic region and are therefore underrepresented. In the 2006 Federal Election the Bloc Quebecois a separatist party that only runs candidates in the province of Quebec won approximately 16 percent of the seats in the House of Commons despite only receiving 10 percent of the popular vote. The New Democratic Party (NDP) on the other hand received approximately 9 percent of the seats in House of Commons, despite receiving approximately 18 percent of the popular vote. Proponents of electoral reform advocate that by switching to an electoral system that uses some form of Proportional Representation (PR) parties like the NDP who received 18 percent of the popular vote they in 2006 will then have 18 percent of the seats in House of Commons allocated to them. This will then produce a fairer result for all parties and will also help voter fell that there vote matters. In Canada, three provinces Ontario, British Columbia and Prince Edward Island have had referendum on electoral reform by proposing some form of PR; although all these referendums have failed there is optimism that someday electoral reform will be achieved in Canada.
Education plays can play an important role in helping to increase voter turnout. Currently not enough is being done in our schools to educate our young people about politics. In Ontario a new civics curriculum was introduced in high schools as of 2000, all grade 10 students must take ‘Civics’ as part of the requirements which is needed to order to graduate from high school. Investigating these matters and disseminating the results so that other provinces might learn from the Ontario experience would be a concrete step to help address the problem of declining electoral participation among young Canadians. Another way in which to increase civic literacy has been highlighted by the fact of newspaper reading. Newspapers are an important source of political information, but younger people are less inclined to pick one up and read it (Howe, 2003). According to an Elections Canada survey conducted in 2000, reported that levels of political knowledge in different age groups as a function of people’s attention to the federal election campaign on television. Political knowledge, as above, is measured on a 0 to 100 scale. For those under age 30, the impact of television viewing is quite dramatic: a 33-point difference in political knowledge separates those in the low attention category from those in the high attention group. The effect of television viewing is also considerable in the adjacent category, the 30 to 39 year-olds, but diminishes considerably in the older age groups. Young people’s political knowledge should then be focused towards television and the internet because by watching some form of political programming. It can be further incorporated in the civics curriculum that is already in place in Ontario and expanded across the rest of the country. The fact that knowledge strongly influences electoral participation in younger people means that efforts to raise their levels of political knowledge could have a very sizable impact on turnout levels.
Lowering the eligibility age to 16 years of age has been often mentioned by scholars and policy analysts alike as another way to reverse the decline in voter turnout. For over a decade the issue has surfaced several times without leading to any changes in the rules. The Royal Commission on Electoral Reform and Party Financing, otherwise known as the Lortie Commission studied this question and commissioned a specific research. There members at the conclusion of the report ultimately decided against reducing the age of eligibility to 16. Former Liberal Member of Parliament for Peterborough Peter Adams introduced a Private Members Bill in 2003 proposing that the voting age be lowered to 16 and he stated that “At 16, teens are considered mature enough to drive, marry and work –so why not vote?” It is logical to think that a greater interest in politics or a sense that one is more affected by government decisions would make one more receptive to the proposal to give 16-year-olds the vote. It is important that we remain open to the idea of lowering the age of eligibility to 16 because is argued that giving 16- and 17-year-olds the right to vote will provide political parties with an incentive to make politics more interesting, and to speak and write in language that young people understand. In order to engage the youth, politicians must appeal to them and give them reasons on why it is important that they participate and if lowering the voting age will do that then it must be seriously considered.
These are some of the factors and forces that have contributed to the decline in voter turnout in Canada. There has also been proposed reforms for enhancing participation in elections. There has also been considerable amounts of research vested in understanding why more and more Canadians seem to be voting less and less. There has been a variety of factors that have been identified as contributing to the decline in voter turnout. Low levels of political interest and knowledge, a declining sense that voting is a civic duty, certain administrative difficulties, and limited contact with political parties and candidates are the most frequently identified factors. Clearly, these factors cannot all be addressed in the same manner. Political knowledge might be addressed directly by information and education campaigns, both between and during elections. It is also clear that no single actor can respond to every one of these factors. Election administrators, political parties and candidates, educators, civil society organizations and young people themselves all have an important role to play. The issue of voter turnout is taking on greater importance in public discourse in Canada, both because of the magnitude of the recent declines and the way in which they are being interpreted. Many have argued that there is link between the declining participation in elections to a more fundamental problem with modern democracy. Steps need to be taken in order to reverse this disturbing decline in voter turnout.
Published By: Edil Ayan- Writer and Psychology Student at the University of Toronto.
There is a window in a city somewhere along the Gulf of Aden, in an empty room rough with walls washed white that glare in the sun. It has a green door and yellow trimmings that run on all four sides, just below the roof that turns out slightly. It squats a few hundred meters away from the pebbly beach foreigners once claimed as their own, a stretch of land now forsaken that hugs the coastline. Every day, as the dawn breaks against the deep blue sea, it watches solemnly as tiny limbed creatures move about.
The days seep into one another–days of mosquitoes and tea and sleep. It watches idly giving its salaams, as the city stirs with adhaans that ring from each neighborhood, a symphony of melodies sung sweet with devotion by men wrapped in white. The streets are bare at this time of day. The fishermen rise with the sun to fill their homemade nets, their chests tight with the hope of a sea full of jumping fish. The women head to the suq carrying baskets on their heads, gracefully, in groups of colourful birds that walk together, their hips swaying, tongues chattering. Anjeera is called loxo here, or malawax, made early in the day to extinguish the hunger in bellies that lay restless in sleep from the night before.
This is a proud land, where even the insects demand respect, buzzing in droves that bully one into distraction. Many a nomad wanders in from the badiya, walking close to his camel with his macawiis wrapped tight around his middle. Owner-less cats and dogs roam the streets, dusty roads too hot to touch that warn of calluses and pulsating blisters.
Time has held it hostage, where once it was fawned over in many kitabs by authors known by ibns, nicknamed from antiquity as avalitae. A few miles away is Djibouti, forever small and adamantly French, raped by men who claim civilization starts with wine and cheese. To the west lies Dir Dawa and Jig Jigga, Somali sounding syllables in the heart of the Habesh and Hargeisa a few miles south, locked in silent combat with its older sister, crippled and ravaged, a shadow of her former beauty.
The seasons are slight here. The yellow heat slowly gives way to dry winters that scrape away at the skin. The summers are suffocating, the humidity leaving a thick film of precipitation on every available surface, a glean of sweat on all who dare make a home of such a place, near the window in the city by the sea.
Many brilliant Young Liberals, such as Max Naylor, Robert Cerjanec, Sushil Tailor and others have provided their post-mortem account as to what happened on that dark May 2nd night. As I watched the results come in I had a mixed bag of emotions. I was sad, angry and frustrated. I couldn’t help but feel disappointed for all the great MPs we lost across the country, from Siobhan Cody in Newfoundland, Mark Holland and Martha Hall Findlay in Ontario and Ujjal Dosanjh in British Columbia. Overall, it was a difficult night to be Liberal, but as I sat in my living room pondering as to what the next steps should be I knew one thing was certain that my commitment to the Liberal Party of Canada would never waver. Liberals have shaped much of what we know as modern day Canada. If there’s one thing we should learn from this election, it is that our ability to understand fast-moving events and foresee where they are going is far more limited than we tend to believe.
For those, who say that the Liberal Party will fizzle away into oblivion should think again. How can an institution that has been a positive political force since Confederation suddenly disappear? The Liberal party will, after this Conservative storm passes, stand up, dust itself off and start committing to a real and genuine rebuilding of the greatest political institution in the Western world. Liberals must discuss the challenges that face Canada and craft policies that address these challenges. To ensure that we succeed in the 21st century I believe it will be important to address how Canada will continue to prosper and stay competitive in this ever changing global marketplace. What structural challenges must government address to ensure that we have a sustainable economy? How can we ensure that Canada remains a positive voice for all that is good, both at home and abroad? To address these challenges it requires Liberals to bold and thorough when it comes to seriously addressing the structural problems that face Canada. It will be important to leave no stone unturned in this challenging time.
Many issues come to mind in this challenging time like the environment, for example. I believe that it will be important to purpose solutions that will make a lasting difference. In this context, it should be important to seriously take the position of advocating for carbon tax. To those, who say that it is another way for the state to interfere in our lives, I say think again. Every economist will tell you that this will give polluters a financial incentive to reduce their Greenhouse gas emissions. Carbon taxes provide price certainty on emissions, while a cap provides quantity certainty on emissions. Carbon taxes offer a cost-effective means of reducing greenhouse gas emissions. From an economic perspective, they help to address the problem of emitters of greenhouse gases not facing the full costs of their actions. Liberals can argue that this is fiscally responsible, because it that will increase economic efficiency by reducing the output of undesirable greenhouse gases. Liberals can also argue that this is socially compassionate in that it will provide families public health benefits because it will reduce harmful emissions, particularly those associated with burning coal. This is one example that will show Canadians, we get it when it comes to the environment. We can show that by acting we can be both fiscally responsible and socially compassionate. If Liberals are bold, we will win.
Canada has never been a nation of the extreme left or the extreme right. We as Liberals must fight to provide solutions for Canadians instead of engaging in constant partisan squabbles which serves no immediate purpose for the Canadians we are attempting to represent. We as Liberals must push ahead to create effective and efficient solutions in service of Canadians. We must show Canadians that we will stick to the principles of the maximizing their choices, this must be done through making government working for its citizens as a opposed to the other way around. We must realize that change will not happen overnight. We must commit ourselves to crafting a vision Canadians need, desire, and deserve. We can only do that by getting people excited, active, and aware of the need for change and for progressive values that I know most Canadians can easily associate themselves with. In order to ensure that we recapture the Canadian imagination the Liberal Party must understand that it will be absolutely vital to commit to growing our grassroots organization.
We must also realize that Canada and the world will never be perfect. That does not mean that we as individuals within society should not try to make things better for our fellow citizens and strive to be the best we can. We as Liberals must realize that government can be a force for good, while at the same time realizing that it is not the answer to all of the errs of society. The Liberal Party must adapt to the changing world which is becoming more interconnected and interdependent. We must craft policies that can relate to our changing world, it must also address the serious long-term structural challenges that Canada will undoubtedly face from soaring health care costs, an aging population and what seems to be a structural budgetary deficit. Throughout history when Canada has confronted challenges and obstacles, the Liberal Party has always been able to tackle them by provide meaningful and lasting change for Canadians.
British Deputy Prime Minister Nick Clegg provides the right description on what it means to be a Liberal. “For the left, an obsession with the state. For the right, a worship of the market. But as liberals, we place our faith in people. People with power and opportunity in their hands. Our opponents try to divide us with their outdated labels of left and right. But we are not on the left and we are not on the right. We have our own label: Liberal.” That is what the Liberal Party must do, we have to create our own label, and we have to rediscover who we once were and where we want Canada to be at the end of the 21st century
It was late in the evening on Sunday May 1st, when the world learned of September 11 mastermind Osama bin Laden’s death. Bin Laden was shot and killed by a U.S special operations force during a raid in Abbottabad, Pakistan about 50 kilometres north of the capital Islamabad after a brief 30 minute firefight. There was massive celebration in the United States and across the globe. Some might mark this event as one of the greatest moments of Barack Obama’s presidency and may finally put to rest constant rumblings within the Republican Party establishment that his Administration is soft on national security. There are already discussions as to what this will mean for his re-election chances in 2012. Obama’s approval rating over the course of the past year have averaged anywhere in mid to upper 40s, according to many of the most recent national polls. Many political pundits are expecting that there will be an immediate bounce as a result of this latest development.
In his address to the nation and the world Obama said, “The world is safer; it is a better place because of the death of Osama bin Laden. We are reminded that, as a nation, there’s nothing we can’t do when we put our shoulders to the wheel, when we work together, when we remember the sense of unity that defines us as Americans.”
During his 2008 Presidential Campaign, Obama uttered five words: “He will kill Bin Laden”, he made the pledge to reassure Americans that after eight years of foreign policy drift and misdirection, he would bring the focus back to the War on Terror and finally capturing Bin Laden. Based on this pledge it is safe to say that Obama has lived up to his obligations.
In a recent reflective article Ross Douthat offers a hopeful but grounded analysis of what this means for the United States:
“This is a triumph for the United States of America, for our soldiers and intelligence operatives, and for the president as well. But it is not quite the triumph that it would have seemed if bin Laden had been captured a decade ago, because those 10 years have taught us that we didn’t need to fear him and his rabble as much as we did, temporarily but intensely, in the weeks when ground zero still smoked.
They’ve taught us, instead, that whatever blunders we make (and we have made many), however many advantages we squander (and there has been much squandering), and whatever quagmires we find ourselves lured into, our civilization is not fundamentally threatened by the utopian fantasy politics embodied by groups like Al Qaeda, or the mix of thugs, fools and pseudo intellectuals who rally around their banner.
They can strike us, they can wound us, they can kill us. They can goad us into tactical errors and strategic blunders. But they are not, and never will be, an existential threat.”
With the 2012 Election informally beginning it will be harder for prospective Republican Presidential Candidates to make the argument that President Obama is a weak and indecisive leader, incapable of handling rapidly evolving events around the world which has suddenly became more complicated. This will definitely boost Obama’s job approval ratings which come during a period in where a number of Republicans are deciding whether to throw their hats into the presidential race, and offered fresh evidence that he might be less vulnerable than his opponents thought he might be.
Obama was initially warned against seeking higher office because his name looked and sounded like Bin Laden’s. His campaign assertions that he would unilaterally act against “high value terrorist targets” in Pakistan were met with charges of being naive from rivals, including Secretary State Hilary Clinton. Obama’s advisers declined to discuss the political ramifications of the Bin Laden killing. White House officials have said that they are remember very clearly the lessons of 1992, when the approval ratings of President George H.W. Bush rocketed after the Gulf War.
As President Obama gears up his 2012 re-election bid, he can take assurance in his ability to highlight a significant foreign policy achievement: He personally signed off on a mission to capture the world’s most wanted terrorist, and it was successful. You can be sure that President Obama will be certain to remind voters about that milestone at every opportunity knowing that it’s bound to stay in the public mind than the last several months’ worth of hand-wringing among candidates and pundits over this administration’s approach to Libya and the tumultuous war in Afghanistan.
It is also important to note that many of President Obama’s likely Republican rivals in 2012 have lambasted him in recent weeks as a president with a weak foreign-policy dossier. They have repeatedly accused Obama of weakness and dithering in foreign policy matters. Many of those same critics have universally praised for his decisive action on the file, in much the same way as Democrats rallied around Mr Bush after 9/11.
Mike Murphy, a senior Republican strategist, tweeted that “Politics are great for Obama”, echoing the widespread assessment that the president’s chances of re-election had received a significant boost.
Unfortunately for Obama Americans, have short memories and the 2012 election is more than 18 months away. After the 1991 Gulf War, President George H. W. Bush’s approval ratings were as high as the sky could see, but 18 months later he was trounced from office by Bill Clinton. The 2012 election will probably be decided on the state of the economy, just as it was in 1992. So, while President Obama has every reason to be satisfied with his success on the foreign policy front, he must hope that he can translate this success to improving the state of the economy.
Somaliland celebrates its 20th anniversary of independence this year. This is a momentous and joyous occasion for our people. This is an important milestone; we have been able to accomplish many goals with little or no assistance from the international community and this something that we must be proud of. However, it is important to note that while we have accomplished many goals we have also endured much heartache and encountered many challenges on our road to independence. The Somali National Movement with their exemplary efforts fought persistently and without hesitation for our freedom. From their base of operation in Ethiopia they launched a counter offensive operation against the Siyad Barre regime. After a lengthy war we were able to claim victory by liberating all the towns and villages across Somaliland. Many innocent men, women and children lost their lives on this road to freedom, but now twenty years on and we know that their sacrifices have not been in vain. We continue to honour their memory by focusing on laying the vital foundations necessary for our eventual path to international recognition and continued prosperity. As we reflect on the past twenty years it is important to look ahead and figure out what goals we must set for ourselves for the next twenty years. That is why we were compelled to write this article, we believe that Somaliland’s best years lay ahead and we believe that we must focus on developing strong institutions that will see us succeed in the decades ahead.
Crafting A Coherent National Security Policy
Somaliland is about to celebrate its 20th anniversary this coming May and although this fledgling Republic has achieved many remarkable things, the likes of which no state in Africa has done before, yet ironically it still has not managed to completely secure its eastern border. A state is defined by three characteristics, a recognized border, a stable and permanent population, and a government that exercises complete jurisdiction within its defined territory. It has become quite evident that our sovereign Republic has successfully fulfilled the first two requirements but it has failed to accomplish the third prerequisite to complete statehood. Today, there are six regions that compromise Somaliland, Maroodi Jeex, Toghdeer, Saxil, Awdal, Sool and Sanaag. Four of these regions are completely secure while the eastern regions of Sool and Sanaag minus the capital city of Las Anod, are still ruled by tribal fiefdoms.
Somaliland is a free and democratic state which has demonstrated that it has risen above the tribalism and anarchy that has engulfed Somalia for the last twenty years. However, it has become very apparent that the government has failed to address the security situation in the eastern regions particularly Buhoodle which is overrun by the Sool Sanaag and Cayn (SSC) militia. The SSC is a terrorist organization that uses fear and intimidation to recruit members into its ranks. The objective of this illegal organization, according to its mission statement is, to unite the northern tribes particularly the Harti Darood clans into a single unified entity which will then break free from the Isaaq dominated Somaliland and begin to unite the former Somalia from its base in the town Buhoodle. The state of Somaliland will not tolerate the unwarranted aggression of clan affiliated movements within its territory. This tribal oriented and malicious type of thinking is what brought the Republic of Somalia to its untimely demise. The SSC must realize that Somaliland’s existence is based on recognized colonial borders which the majority of African nations use today to define their respective territories. It must also acknowledge that Somaliland is a free and democratic state which exercises equality amongst the clans that inhabit its territory and that all are equal under the constitution and that no clan has superiority over another within the free republic. The irony is that, the so-called injustice that the SSC claims it is liberating its people from, is the same mechanism it is using to recruit the local populace, tribal affiliation.
Now the question is how will Somaliland secure its eastern frontier while at the same time ensuring that insurgencies like the SSC do not crop up again? We believe that there is a three step solution to securing our eastern border. First we must successfully manage the financial resources of the state over the next three years so that we can acquire a surplus in our national coffers. When that is complete, the second step requires that the state carry out a massive construction program to keep the eastern cities on par with the other cities of Somaliland. We will increase the loyalty of the citizens on the eastern frontier. What this means essentially is that, the money the state successfully saves over the next three years must be used to fund extensive construction projects in the eastern cities and villages that make up the provinces of Sool and Sanaag. This will create a more positive attitude towards the central government in Hargeisa. The third part, which is solidifying support, requires that the eastern cities feel protected and secure from external threats while these large scale construction projects are going on. This last step will require a massive investment be put into the armed forces of Somaliland. The army must be reorganized in a way that allows it to deter any force or if need be, invade any territory that threatens the existence of the state.
According to the Ministry of Finance, the Somaliland Army has received an increase of 100% to each soldier’s salary and it continues to receive the lion’s share of overall government spending. The position of the government is that our frontline soldiers deserve every investment they receive. However, with all these investments it’s important to note that our military is over-stretched and its approximate fighting power remains a national secret but there have been estimates ranging from 30,000 to 60,000 which means the best way for the government to reduce unemployment is to create new military academies that will arm and train our new and young recruits so that they can be incorporated into the national army. The officers that will supervise and maintain these new academies must come from the plethora of well-trained SNM veterans, who currently remain jobless in the largest cities of Somaliland. These new academies will allow the republic to create a fresh batch of soldiers to guard the eastern border while at the same time creating jobs for our veterans. We must give our young men and women the opportunity to secure their nation from those who wish to destroy it from within and abroad. This crucial three step formula, if adopted, will allow us to double the strength of our military within a short period of time so that the burden of guarding the eastern border will be lessened and distributed equally amongst the national army.
Overall, it will create an unwavering sense of loyalty from the eastern cities towards the government because after the years of neglect that they have felt will have finally come to an abrupt end and once the much needed construction programs commence, which will consist of wells, schools, road rehabilitation etc. The local populace will feel that they are finally part of Somaliland and its bright future, therefore the increase of military presence on our eastern frontier will not be seen as an invading Isaaq force but as a harbinger of peace and security. Therefore, any future organization that will wish to imitate the SSC or support its ideals will find itself lacking any real tools to recruit for its tribal based agenda. The local population in this region will begin to see the benefits of being part of Somaliland and the benefits it brings. We must instil values in the local population, values that will create more productive citizens amongst society. Being a responsible citizen includes, the reporting of any suspicious activities that they may view as counterproductive to their development, directly to the authorities. Violence begets only more violence; nothing gets accomplished through the barrel of a gun.
Organizations like the SSC have always been known to exploit the uneducated and oppressed people of a certain region in order to achieve its objective of destabilization. When a group of people feel that they have been ignored by the ruling class, the ruling authority of the time should take every possible measure so that the concerns of these people are taken into account. Somaliland is a nation of all tribes and this is an undeniable fact that can only be visible if the proper steps are taken to ensure that the eastern cities remain content and secure. Somaliland must continue to secure the eastern towns through peaceful dialogue but if the local population continues to resist all peaceful negotiations, the armed forces of Somaliland must be ready to secure all rebellious towns by any means necessary. The acquisition of all towns within Somaliland is an imperative national security goal which should be completed as soon as possible.
Somaliland’s Foreign Policy Goals
For the past twenty years Somaliland has painstakingly sought recognition from the outside world and for twenty years the world has denied it its god given right for self-determination. The people of Somaliland have been through countless hardships, from an attempted genocide to seeing its capital cities of Hargeisa and Burco razed to the ground by aerial bombardment. It seems that the people of Somaliland forgot that in their most desperate time of need, not a single nation lent a helping hand, in fact it was the contrary, many nations were supplying the Siad Barre regime in carrying out these vicious attacks against them. Through the mercy of Allah and the bravery of our SNM soldiers, we were able to defeat one of the largest armies in Africa at the time, without any international assistance.
So the question remains, if we did not need the world then, why do we need the world now in order to become successful? Many say that without recognition we cannot develop as a nation, this is a mindset that is in nature pessimistic and downright offensive to the mercy giving lord, Almighty Allah. Recognition does not ensure economic success or increased development. Africa boasts many of the richest nations in terms of natural resources but none of these countries have managed to become economically successful or even peaceful but yet they are all recognized by the United Nations. Now we do not want anyone to misconstrue our point, we are arguing that recognition should not be the ultimate foreign policy goal, but what we are arguing is that, actively seeking recognition from states that have barely demonstrated any type of governing sense is not in our long-term interest. Somalilanders must realize that our recognition is not a matter of if but when. Somaliland’s international recognition is inevitable but it will only come when the world figures out it needs it. The people of Somaliland should realize that they are an intelligent and innovative people and that by using our limited fiscal resources we have become a financial success story. With the help of Allah, Somaliland can develop into a strong modern state without the assistance of the international community. At the end of the day, the greatest resource a nation has is its people.
Through hard work and due diligence and with proper fiscal prudency we believe we will be able to achieve many of the economic goals we have set for ourselves. The longer we continue to wait for recognition, the more complacent we will become as a nation. We must stop relying on the goodwill of nations and start realizing that the world revolves around self interest; no one offers a helping hand unless they have reason to do so. Somaliland should realize that Allah has recognized it and that there is no higher recognition available than the one given from the heavenly court. Somaliland’s foreign policy goals for the next twenty years should be focused on securing greater business partnerships and establishing as many economic trade links as possible, while at the same time adopting a mindset that propels our people towards self-sufficiency. No nation can be completely self-sufficient but Somaliland has demonstrated that without recognition, (which is the greatest economic sanction), a nation can not only survive but it can thrive and remain peaceful. Somaliland’s foreign policy goals should be based on self-interest, any deal that does not benefit the nation greatly should be considered of no interest to the development goals of the republic. Somaliland should demonstrate pride and confidence and should no longer allow itself to be known as a second rate nation. People only treat you according to how they perceive you, if Somaliland exhibits weakness and indecisiveness, nations will then begin to treat it with contempt and pity. If our political leaders show honour and virtue when dealing with global leaders, the world will begin to see a strong and innovative state emerge before its very eyes.
The Somaliland Economy an Overview
As Somaliland recovered from the ashes of civil war all our internal state institutions were left in shatters our faltering social and economic infrastructure and massive internal and external migration were evident. All the while our traditional spirit of entrepreneurship remained strong, and the private sector in Somaliland has been resilient and robust. Throughout the course of the past twenty years our private sector has managed to grow impressively, particularly in the areas of trade, commerce, transport, remittance services and telecommunications. The primary sectors of the Somaliland economy, notably in livestock, agriculture and fisheries, are also gaining new economic momentum. The backbone of Somaliland’s economy is livestock. It is estimated that roughly 60% of the population depends either directly or indirectly on livestock and livestock products for their daily livelihood. Agriculture provides subsistence for about 20% of the country’s population. Remittances from relatives and friends also play a major role in the economy of our country.
Aggregate trade data shows that Somaliland’s imports had almost doubled, reaching a historic US $200 million in 2004, exports almost tripled to about $266 million US during that same time. Somaliland’s economic activity and prosperity is being driven primarily by the vast Diaspora that resides primarily in North America and Europe. Based on these estimates there are currently one in eight Somalilanders who currently lives abroad. They represent roughly 80% of our country’s skilled manpower and remit close to $1 billion to their relatives annually. Without these remittances, our country’s private sector would be in a state of disarray and dysfunction. We already face significant challenges accessing credit and other financial services. These remittances also dwarf any international aid the country receives as overseas development assistance. It is estimated that nearly three-quarters of the population live on less than $2 a day. Remittances, at roughly four times that number, clearly show that the major inflow of aid comes from Somalilanders themselves. Most of the recipients of this form of assistance live in urban areas which constitute about 40 percent of the income of urban households. Less than 10 percent of these transactions are destined for rural villages. According to a recent UN study, individual transfers are primarily in small amounts averaging $132/month, sent regularly to cover basic family needs. In fact, household consumption, including expenditure on education and health, accounts for between half and two-thirds of remittance spending. However, studies in Somaliland show that remittances are increasingly being used to fund new organizations and development projects, and such transactions usually involve larger sums. Whether invested or consumed, remittances have important macroeconomic impact in generating positive multiplier effects, while stimulating the various sectors of our economy.
Strengthening our Fiscal and Monetary Institutions
The civil war also led to the collapse of our commercial banking sector, which had previously been plagued by corruption and mismanagement from Somalia. Presently in Somaliland there are few formal financial institutions operating. In addition, past circulation of counterfeit currency has led to inflation and hyperinflation and an increasingly dollarized system within Somaliland’s economy. Somaliland’s central banking authority is in its infant stages of development and is evolving at a very rapid pace. There are several branches across the country that offer some form of commercial banking services, such as deposit accounts and trade finance. While their primary function as a central bank remains acting as the treasurer of their respective regional governments, the fact that they also offer commercial banking services creates an undesirable conflict of interest with their primary role as a central bank. Our financial sector development is dependent on a sound legal and regulatory framework and the ability of central banks to provide the necessary support and supervisory functions. Without a clear legal framework enforced by a functioning regulator, there is little scope for attracting private sector investors to establish banks and other financial institutions across Somaliland. The international community can work with Somaliland authorities to establish the necessary legal framework and build the capacity of our central banking structures by focusing on a set of core priority functions. Investors have expressed an interest in establishing formal banking operations in Somaliland, but have been constrained by the absence of a sound legal and regulatory framework, a strong property rights culture, enforceable collateral contracts, accessible credit information systems and related financial infrastructure. In this context, the Somaliland financial sector largely remains underdeveloped, informal and unsupervised, with limited access to credit and savings, and no protection for consumers and financial institutions. Apart from the limited banking services offered by the Central Bank, the main actors in Somaliland are the remittances companies, which have extensive networks of agents that service all towns and villages in Somaliland, as well as major cities in countries populated by the Diaspora. The limited functioning capacity of the Central Bank also constrains private sector development as it constitutes a serious risk factor to the investment climate for ordinary Somalilanders’ and businesses operating within our society. A significant demand for financial services from both individuals and small-medium businesses remains unsatisfied, even at basic levels.
The Bank of Somaliland currently operates under the Constitutive Law which aims at maintaining price and exchange rate stability, promoting credit and trade conditions which supports balanced economic growth and to support the economic and financial policies of the government where possible. Currently, the Bank of Somaliland is not in a position to perform its key central bank functions as outlined under the Constitutive Law. It has not yet developed the typical instruments necessary to conduct monetary policy. The money issued by the Bank of Somaliland is not used in a uniform manner within our country. It is only used to a very limited extent by Somalilanders as a means of exchange and its day-to-day functions are fulfilled by the US Dollar. The Bank of Somaliland is also involved in elementary treasury and government payment functions and at the same time offers rudimentary commercial banking activities, mainly offering national remittance services through its network of branches and savings and current accounts to a limited number of clients, especially government bodies. No legal framework has been established for commercial banks or Islamic banks, and no banking supervision function and regulatory know how has yet been developed within the Bank of Somaliland. The principal pillar of the current financial system in Somaliland is the remittance industry, which offers money exchange, remittance services, checking accounts as well as overdraft facilities for a small number of trusted customers.
Dahabshill Financial Services is the largest remittance company in Somaliland and it is estimated to handle more than half of all remittance transactions as well as the money supply for most international organizations operating in Somaliland. Although no statistics are available it is clear that the remittances companies by far handle the largest part of the money flows within Somaliland. There have been attempts by the Somaliland Parliament to introduce a new banking law that would strengthen its regulatory functions in support of a functioning commercial banking system. This is something that the remittance companies have been lobbying hard for in recent years. If this proposed banking law is passed it would allow these remittance companies to evolve their financial services within Somaliland. Furthermore, our country has also been locked out of international capital markets. Somaliland does not have any relations with international creditors, such as the International Monetary Fund and the World Bank. We believe that the government must create an environment where financial institutions can flourish and to ensure that it is vital that we assure the stability of our infant system. A banking system that is constantly in crisis does not serve the public interest well. Our central bank must adopt a monetary policy that keeps domestic inflation at manageable rates. High levels of Inflation make it difficult for businesses to maximize output because it increases the risk to borrowers and lenders, and making prices unreliable signals. Establishing targeted rates of inflation provide the necessary foundations for achieving real economic growth in the long-term.
It has been argued in a recent article by Abdullahi Duhod that there are four key elements in establishing an effective and functioning central bank. A central bank must be independent of political pressures, accountable to the public, transparent in its policy actions, and finally there needs to be clear communication with financial markets and the public. There is also an agreement that it is prudent to have policy decisions made by committee rather than by a single individual. It is very important as much of the Somaliland economy is integrated into the world economy via livestock exports and remittances. If the central bank is allowed to let the Somaliland Shilling fluctuate too much against the dollar than a vast percentage of Somalilanders would greatly suffer as they would be unable to predict that a remittance will support them for a time or that if they sell livestock they can be supported for a time since the price of livestock is determined at a dollar rate and not the Shilling. In our mind at least there has been a realization that it is essential to keep the Shilling relatively stable against the dollar which will ensure our successful macroeconomic stability.
Somaliland has an 850 km long coastline that is rich in fish resources. These vast resources are currently not properly exploited. The government in concert with the private sector must provide targeted investments to help establish the necessary coastal infrastructure and an overall campaign to raise public awareness in the coastal communities about the wealth within their reach. It will be the responsibility of these actors to work together to pursue this very integral component of our development goals. Somaliland is blessed with large mineral deposits that could be exploited on a commercial basis. Gemstones, coal deposits, and copper and gypsum are the main deposits. Although not officially published in any government document on the Somaliland economy, there are several identified oil fields on-shore and off-shore along the north-west coast of Somaliland. There are several wells that have been excavated over the past few years, foreign oil companies and coal companies have not been able to benefit from this because of the fact that we are not international recognized.
It is necessary that the current government focus on providing a coherent economic program that focuses on making targeted investments in generating jobs, services, investment opportunities and revenues, the Berbera corridor could serve as a regional model for development through expanded private sector activities. The removal of trade barriers will create and enable an environment for development oriented by cross-border trade with our regional neighbours and establishing a hospitable climate for business investment. This would greatly encourage and continue the growth that our private sector has experienced in recent years. The Berbera Corridor must be an important element of this creating fostering this climate.
Somaliland currently lacks the administrative capacity to collect taxes particularly inland taxes and there is not a well-established legal framework that governs tax collections such as income and corporate taxes. This is an area that has long been neglected by the previous government. The Silyano government faces a significant challenge in this regard and it is vital that they begin the task of creating a fair tax system which ensures that every citizen pays his/her fair share. The government must also establish the administrative capacity necessary to collect these taxes. Every dollar that is saved by trimming ministries and cutting expenses can be reinvested in the productive sector of our economy such as public services economic development and infrastructure. We want Somaliland to be a key player in the Horn of Africa and in order to do that we must start by attracting international investment for the our untapped natural resources and taking advantage of our significant and strategic geographic location. We must also commit to improving our living standards, while at the same time crafting an image that aims at transforming and restoring the image of the region by addressing the multidimensional poverty facing their people, tackling security concerns, and establishing regional trade links.
Developing Somaliland’s Governance Institutions
Somaliland has a decentralized governance model, in which districts are given the primary responsibility for service delivery. A recently published United Nations report on the Somaliland budget plan highlights that given the limited capacity for local revenue generation, a state transfer mechanism has been put in place to provide financing, but the fund transfers are still insufficient relative to the functional responsibilities at the district level, and the transfer system does not constitute a re‐distribution mechanism that would support poorer districts. Local government provision of social services is also constrained by extremely limited capacity and the lack of direct control of service.
The phenomenon of weak institutional structures are not new in many African countries, but the need to put in place effective strategies to address the weaknesses in Somaliland’s governance structures is more critical than ever. Somaliland, however, faces a particularly thorny development challenge due to its overall weaknesses, particularly in the areas of governance and economic institutions. For development to succeed in any context Somaliland needs take that view and stay engaged for the long process of development in governance, social services, job creations and income generation. There are no quick fixes to strengthen governance or build a country’s ability to improve the lives of its citizens.
Development and good governance reforms must be the first pillars of the state. It must put in place strategies that improves the governance structures but also enables us to succeed in the essential reconstruction and long-term development goals of Somaliland. The strategies outlined here identifies key issues related to governance and development in Somaliland and how to more effectively respond to the overarching challenges posed by our weak governance structure and build solid political foundation in Somaliland for the 21st century. It must be guided by the overarching principle that Somaliland needs to engage carefully and selectively. It recognizes the fact that there are areas where the international assistance will be able to make a difference, and it directs the focus to those strategic areas with the greatest impact.
Somaliland has been a leader in Africa when it comes to promoting democracy and strengthening the rule of law, as well as respect for internationally recognized human rights and fundamental freedoms. We must continue to improve the quality of our democratic institutions and processes, and managing the changing roles of the state and civil society must be the top priority in Somaliland. Immediate interventions are required for the reform and building the capacities of the core social and political institutions in Somaliland reform process. Somaliland must continue to enhance its local governing institutions. We must strengthen the capacities of governance in central government institutions and we must strengthening democratic participation amongst civil society groups. Overall, our institutions have different roles and responsibilities in the democratic governance process. Good governance principles must underpin national efforts to reduce poverty, sustain the environment and promote economic development. These governance institutions will play a significant role in shaping the democratic governance and influence the development process.
God Bless Somaliland
The damage done by doing so little
By: Andrew Coyne
Andrew Coyne argues that the Conservatives’ drive to stay in power imperils the state of politics itself
Most of our prime ministers have been scoundrels: the successful ones, almost exclusively. They say Arthur Meighen was quite a stand-up guy. Alexander Mackenzie, the same. Possibly John Turner or Kim Campbell or Joe Clark might have proved brave and principled leaders, given time. But that’s the thing: they weren’t given time, dispatched instead at the first opportunity by their more unscrupulous rivals. Whether of necessity or simply tradition, in Canadian politics, nice guys really do finish last.
So if the past five years seem a peculiarly ugly, depressing episode in our nation’s political history, it is not because Stephen Harper is unusually unencumbered by principle. Rather, it is the absence of compensating achievement that distinguishes his tenure—if by achievement you mean something more than simply holding onto power. Scoundrels our past prime ministers may have been, but scoundrels with a purpose. Harper’s record, by contrast, is rare in its combination of longevity and vapidity. Seldom has a government lasted so long that did so little.
Let us dispense at the outset with some of the more common critiques. It is not true, as the Liberals claim, that the Harper years have been marked by an unending decline in living standards and rising unemployment—or, to the extent either is true, that a massive worldwide recession could be laid at the feet of the government of Canada. To the contrary, the recession here has been notably less severe than in virtually any other developed country, which if you follow the Liberals’ logic should be accounted to the government’s credit.
Neither is it true, as critics further left complain, that the Harper government has been pursuing a hard-right agenda, for which such apparent contradictions as massive, multi-year deficits have offered a smokescreen. Much of the evidence presented to that effect—a modest military buildup, a tilting back toward Israel—began under the Liberal government of Paul Martin. Much else—the crime bills, the corporate tax cuts, the purchase of expensive fighter jets—has had the support of the current Liberal party, though it pleases them just now to pretend otherwise.
The rest are largely symbolic baubles, neither significant nor particularly “right wing,” except to the hard left and, oddly, the hard right, each of whom has its own reasons to exaggerate their importance. We will not spend money to promote abortion in the Third World? You don’t say. Meanwhile, we remain the only country in the developed world with no abortion law of any kind, with the firm blessing of the Prime Minister. The gun registry is a similarly overblown example.
No, if there is anything that has been a constant of this Conservative government, literally from the day it took office, it has been not ideology and conviction, nor even ruthlessness and cunning, but aimlessness and confusion—at best, as in the Quebec “nation” resolution or the multiple about-faces on Afghanistan, tactical victories won at the expense of longer-term strategic objectives; at worst, as in the national anthem and long-form census debacles, sheer amateurism. And as long as we are dispensing with undeserved criticisms, let us also dispense with some of the government’s flimsier defences.
It is not correct, or not enough, to blame the Harper government’s evident lack of ambition or consistency on the difficulties of navigating a Parliament in which it holds only a minority of the seats. One need not even invoke here the example of Lester Pearson’s incomparably greater achievements in his own five years at the helm of a minority government, which after all had a more natural ally in the NDP. The current parliamentary lineup would certainly place limits on the government’s ability to implement its program: it does not explain why it has none. Any government in the same situation would find itself obliged to adopt an incrementalist, step-by-step approach. It would not, as the present government has done, pursue policies that were diametrically opposed to those on which it was elected, or to its own long-professed principles. That is, if it stood for anything other than, as the Prime Minister said the other day, “power for its own sake.”
Put this to Tory partisans, and they grow impatient. It is not that we have abandoned our principles to hold onto office, they will say, in a tone of wounded dignity. Not at all. It is merely that we have altered our convictions to stay in government. Different thing altogether. But you can only buy this the-Liberals-made-us-do-it defence if you have first absorbed its underlying premise: that it is a far, far better thing to remain in power, at whatever cost in principle, than it is to go down to defeat in defence of those principles. Which is as close a statement of “power for its own sake” as it is possible to make.
And this is the greatest damage done by five years of Harper government. It has not been a bad government, in the conventional sense. After all, as the government’s defenders will say, look at all the things it has not done. It has not lined its own pockets. It has not embroiled the country in a major constitutional crisis. It has not yet produced a billion-dollar boondoggle, at least as the auditor general might define it, which is to say a program so entirely out of control it does not even follow its own terms of reference. And of course, it has not done some of the dodgier things a Liberal government might have done, such as implement a national, government-funded daycare program (though it is still transferring over a billion dollars a year to the provinces to run their own).
More to its credit, the government can claim some successes of its own. If it did not invent the idea of cutting corporate tax rates, it has at least been steadfast in its pursuit. The tax-prepaid savings plans introduced in the 2007 budget were a useful innovation, as are the pooled individual pension plans, lately proposed in place of expanding the CPP. Tariffs on manufacturers’ inputs have been abolished, unilaterally, a first in any major advanced economy. And while free trade with Europe or a national securities regulator remain to be achieved, they at least show signs of vision.
The government’s approach to the recession is its most divided legacy. On the one hand, its handling of the immediate financial crisis, in collaboration with the Bank of Canada, was exemplary. The measures taken—insuring inter-bank lending, at a fee no one would wish to pay; taking long-term mortgage assets off the banks’ books in exchange for short-term treasury bills—did just enough to allay market concerns, without doing so much as to excite new ones. On the other hand, we now have another $150 billion in new debt on the public books: the price of the government’s desire to remain in power, after its political misjudgments in the winter of 2008.
The decision to plunge the country back into deficit, against decades of Reform and Conservative doctrine, was only the most glaring of the government’s many flip-flops, broken promises, and discarded convictions. By now these are a familiar litany: income trusts, Senate appointments, the Afghanistan cut-and-run, the Potash decision, the pandering to Quebec nationalism, the rampant pork-barrelling under the “stimulus” program, the rubbishing of its own fixed-term election law, and on and on. On some issues, such as how to reduce carbon emissions, the Conservatives have popped up to the left of the Liberals: where the Grits proposed the carbon tax favoured by most economists, the Tories boasted of their commitment to command-and-control regulations.
In place of ideology, we have been given partisanship of the most thuggish, obtuse kind, combining vicious attacks on their opponents with robotic repetition of the party line. And as the new dogma of pragma must be enforced as rigidly as any ideology, so the Conservative party, once the party of democratic reform, has given itself up to absolute control from the top—a culture of autocracy also visited upon senior bureaucrats, officers of Parliament, and in the matter of the Afghan documents, Parliament itself.
What has been damaged, if not destroyed, by this endless barrage of opportunistic behaviour is not only conservatism: it is politics itself. To be sure, the Tories have done their best to place off limits such bedrock conservative principles as cutting subsidies, privatization or deregulation. After all, if “even” the right-wing Tories would not go near these, they must surely be beyond the pale. But much worse is the resulting collapse of a politics of consequence.
There is no tension in Canadian politics, no shape or boundaries to it. Other governments, at other times and in other countries, have made decisions for political reasons, sometimes base ones. But they were constrained in this regard by other imperatives: the need to hold their cabinet together, or their caucus, or their base, or at any rate their dignity. There were consequences, in other words, and as such there were limits. But such is the insouciance, not to say eagerness, with which the Harper government has shrugged off its previous positions, and such is the leeway granted it by a Conservative party desperate for the spoils of undivided power, that all such reference points have vanished.
Five years after it took office, it is literally impossible to predict with any certainty what this government will do on any given issue. That, I suppose, is its record.
Source: The Globe and Mail
As global food inflation surges to ever greater heights, fears are mounting prices will be driven even higher by a commodity that’s not even edible: cotton.
The price of cotton is at highs not seen in more than 140 years, sparking concerns that farmers in many countries will switch their crops for the more lucrative commodity, and stop planting food staples such as corn, soybeans and sugar.
Food price increases
Many food stocks are already tight, and prices at record levels, because of poor weather conditions in countries such as Russia, Canada and Australia, coupled with demands for biofuel and the overall lack of investment in agriculture in many regions. Any big move by farmers will cut supplies even more and increase prices.
“I see more impact [on food prices] coming from cotton than from oil, frankly,” said Abdolreza Abbassian, an economist with the Food and Agriculture Organization of the United Nations. “When farmers have to plant, now they have this really valuable other commodity that is not food and it’s going to make them think. So cotton will be a part of the equation when it comes to what now increasingly is characterized as an acreage war among various crops, beans and corn included.”
The FAO said Thursday its monthly food price index, which tracks 55 commodities, including grains, dairy and meat, reached a record 231 in January. That was 3.5-per-cent higher than in December, and marked the seventh straight month the index has climbed. Rising food prices have been partly to blame for a wave of protests in North Africa in recent weeks.
Mr. Abbassian said it is unlikely the index will “correct itself to anything reasonable” for several months. He added that the FAO will pay close attention to decisions farmers make this spring about whether to plant cotton or food crops.
“Spring is going to be quite a decisive time,” he said. Cotton prices “make other commodities nothing in comparison.”
Cotton, though down Thursday, has been surging since last summer mainly because of strong demand from China, the world’s largest cotton consumer. Chinese imports have more than doubled in recent months and many Chinese farmers have held on to their cotton harvests hoping to get still higher prices. That hoarding could account for as much as 9 per cent of the world’s cotton supply, according to some estimates.
Other big cotton producers, such as India, have restricted exports. And, flooding in Pakistan and Australia has also cut supplies.
The price of cotton doubled last year and it is up 25 per cent this year on the Intercontinental Exchange Inc., or ICE. The price has been moving up so quickly, ICE is proposing new restrictions on large purchases.
There are some factors working against the price of cotton. High prices have forced many mills to switch to lower-cost alternatives, such as rayon, and cotton planting in Brazil and the United States is expected to increase this year. But those extra crops aren’t expected to have any impact for at least another year and cotton remains one of the world’s most popular fibres.
ecently reduced some
“If people don’t have enough to eat, they only have three options: they can revolt, they can migrate or they can die. We need a better action plan,” Josette Sheeran, executive director of the UN’s World Food Program told reporters in London Thursday. “We think that we are in an era where we have to be very serious about food supply.”
Several food companies have started increasing prices for their products to cope with the jump in commodity prices. On Thursday, John Bryant, chief executive officer of Kellogg Co., said prices for the company’s cereals will increase by up to 4 per cent this year. “We are looking at long-term commodity inflation,” Mr. Bryant told analysts during a conference call. “This is not a 2011 issue; this is going to continue for quite a few years.”
UP AND DOWN
With cotton prices pushing all-time highs, many farmers around the world will be tempted to cash in. Cotton futures climbed 90 per cent last year and are up 25 per cent so far in 2011 because of demand from China. Planting doesn’t start until spring but there are indications a lot more cotton will be grown. The Washington-based International Cotton Advisory Committee, an association of cotton-producing countries, estimates that global production will increase to 25.1 million tons this year, up from 21.8 million tons last year. Production is estimated to reach 27.3 million tons next year.
What will drop?
The most likely crops farmers would cut in favour of cotton are corn, soybeans and sugar, according to the FAO. But it’s a tough call. All three have been at multiyear highs lately, mainly because of poor weather in countries like Australia, Brazil and Pakistan. Corn is also in big demand by ethanol makers, who take roughly 40 per cent of the U.S. corn crop. But weather issues were particularly brutal last year and many analysts expect prices for these three crops to fall slightly this year with a return to more normal growing conditions. Many Canadian farmers have already been switching from wheat to canola, which typically follows the price of soybeans. Canola is expected to top wheat for the first time this year in terms of total farm acreage in Western Canada.