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Economy

Je Suis(se) HSBC! – The austerity odd or ad?

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While the wealthy evade billions in taxes, ordinary citizens continue to bear the burden of budget cuts. Meanwhile, those who resist are punished for it. Is our austerity world an upside-down normalcy and reality? Je Suis(se) HSBC!! Isn’t it odd, or it’s just another (unintentional) ad?

“What is rewarded above is punished below … Profits are privatized, losses are socialized.”
Ultimately, major scandals like HSBC’s Swiss tax evasion scheme are merely flash points offering us a clearer view of the hidden dynamics at work in the world economy. Credits: telegraph.co.uk
This week it was revealed that HSBC — Europe’s biggest bank — has been actively running and propagating a massive tax evasion scheme through its Swiss subsidiary, allowing some of its wealthiest international clients to hide over $120bn in undeclared assets in 30.000 secret Swiss bank accounts. Leading British regulators, MPs and government officials were aware of the malpractices and the names of potential tax evaders (including movie stars, drug lords and heads of state), but never pressed criminal charges.

Instead, the UK — like the rest of Europe — ushered in an age of austerity. Where the billions of the rich escaped to Switzerland and the Caymans, the benefits of the poor were cut “to balance the budget.” Last year, David Cameron pledged to slash “wasteful” public spending for another decade, as it “comes out of the pockets of the same taxpayers whose living standards we want to see improve.” The irony of the Prime Minister speaking from a golden throne was hardly lost on anyone. Welcome to the topsy-turvy reality of austerity politics.
As for HSBC, of course the diligent observer will not have been very surprised by the news of the bank’s umpteenth mega-scandal. Already back in 2012, financial journalist Matt Taibbi made it clear that HSBC had been engaged in “more or less the worst behavior that any bank can possibly be guilty of.” So far, the bank has managed to avoid prosecution despite laundering billions of dollars for some of the most notorious Mexican drug cartels as well as a Saudi bank linked to Al Qaeda, and systematically rigging interbank interest rates and reaping lavish profits in the infamous LIBOR scandal.

The decision of US and UK regulators to reach deferred prosecution agreements with HSBC and not to press criminal charges in these scandals signals the double standards at the heart of our contemporary justice systems. In the US, where more than half of the prison population is doing time for minor drug offenses, the white collar criminals who aid and abet the violent traffickers of these same drugs get off with a slap on the wrist. As Taibbi puts it, “for the crimes [HSBC] committed, getting away with just [a fine] — and it’s not even their money, it’s the shareholders’ money — it literally is a get out of jail free card.”

Yet it is very important not to let the criminal behavior of a single bank distract us from the bigger picture. HSBC is but one notoriously scandalous player in a financial system that is dominated by some of the most criminal organizations of our times. Focusing our wrath on individual acts of misbehavior risks missing a deeper dimension. While it is the illegal practices that mostly hit the headlines and cause indignation, the real theft still occurs within the bounds of the law — in the everyday transactions and ordinary financial operations at the heart of these banks’ business models.

In this sense, the greatest scandal of our times is systemic in nature and rests upon the wholesale transformation of the world economy over the past four decades. With the onset of financialization in the 1970s, the international banking system began to act like Galeano’s magnifying glass: grossly amplifying pre-existing inequalities and inverting reality in the process. In the first instance, the system sucks up billions in interest and tax money from below. Starting with the bankruptcy of New York City in 1975 and the Mexican debt crisis of 1982, austerity became the key mechanism whereby the banks effected a historically unprecedented redistribution of resources from the bottom to the top.
At the other end, the magnifying glass created the preconditions under which the world’s wealthiest businesspeople, Third World dictators and white-collar criminals could further increase their accumulated capital — obtained through decades’ worth in pillage and plunder of state resources and common property — and stuff it in offshore bank accounts and foreign assets, where this immense stolen wealth largely escapes taxation, regulation and criminal investigation.

The financial privileges obtained through this process, which has been referred to by David Harvey as “accumulation by disposition”, stand in direct relation to the fiscal deprivation at the bottom. Ultimately, major scandals like HSBC’s Swiss tax evasion scheme are merely flash points offering us a clearer view of the hidden dynamics at work in the world economy: what is taken from one side shows up at the other. In a word, there is no such thing as austerity; there is only an outrageously skewed redistribution of resources. In this upside-down world of financial capitalism, money doesn’t trickle down — it steadily flows upwards.

The result is a stable set of outcomes in which profits are perennially privatized and losses are systematically socialized. Those who question this state of affairs are told that “there is no alternative,” and those who actively resist — like the social movements and progressive governments in Latin America and Southern Europe — are ruthlessly punished for it. First the cops will beat ordinary citizens over the head when they protest, then investors will beat popular governments over the head when they do the same. Foreign capital is withdrawn, bond yields spike up, stock markets collapse. Where the bankers above are rewarded for criminal behavior, those who struggle for justice from below find themselves imprisoned within the narrowing perimeters of the permissible.

It should be clear by now that to this systemic injustice there can only ever be systemic answers. Of course regulators should actively pursue criminal charges against HSBC for its latest mega-scandal, but without powerful anti-systemic movements to carry demands for social justice forward, meaningful change remains unlikely. To turn the looking glass around and put the world back on its feet will require mass mobilization and political organization on a scale we have not been able to imagine so far. Now more than ever we need to take back to the streets and start developing a coherent transnational project to confront the criminal rule of global finance head on.

First published by the ROAR Magazine.

Economy

Turkey’s Turn to East could have Deadly Economic Affects

Shahriar Sheikhlar

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Turkey’s appetites to be the European since when it was an Empire of Ottomans is still being pushed back as far as edged it to the East. Turkish political ties with West countries come strategically while Communism threats against Turkey and Greece was confronted by Truman Doctrine (in 1947) which began a new era in US-Turkey relations. U.S military aids and accepting Turkey’s admission by NATO allies brought them closer but mostly served base on military and security supports which didn’t spread to political and economical reforms what was necessitous for accepting its application to EU.

After the World War II, Turkish political condition was involved in several coups and its stagnant economy was mostly affected by import and protectionism strategies. Turgut Ozal’s far reaching reformative program to shift Turkish economy toward export-led growth was the main first step which while followed by Turkish application to European Union and later entering the EU Custom Union, began improvements smoothly but not enough as much as required.

Meanwhile, Ozal’s reforms improved Turkish economy smoothly during 1987 to 2002. Thestate export was over tippled and reached to $36 billion and import was raised to $51.5 billion (about 2.5 times 1991).  By this duration, EU members become the main Turkish economical partner, their share in Turkish export was more than 56% and the imports to Turkey with EU origins was over 50% in 2002(1). Foreign Direct Investment in Turkey was increased smoothly and reached to $1,082 billion, about double of beginning of the period, where share of EU members were 42.05% ($455 million) (2). The improvements occurred but were poor to save Turkish economy. Continuity the crisis followed by 2001 financial crash resulted in a transition in parliament and government to a recent “Justice and Development Party(AKP)”. New lira unveiling, reforms regarding freedom of speech, Kurdish language rights, reducing political role of armies, banning death… were resulted in opening Turkey accession talk to EU which increased hopes in both sides of west countries and Turkey.

Accordingly,EU-Turkey economic relation was expended rapidly and total trading amount increased from $46 billion in 2002 to $62 billion in 2003 and $154 billion in 2011 where reached to $157 in 2014 (1) and later to $165 in 2018(3), about 4 times during 15 years. Also, Turkey received more than $193 billion FDI during 2002 to 2017 while it was just $15 billion for 1973 to 2002, means around 13 timed in a half of period of time where the EU share in this investment is more than 45%, US share is about 9.3% and Japan’s is 2.00% while China’s share is just 1.26% and Russia’s is 6.1% (both are less than each of US, Netherland or U.K). The international companies registered in Turkey, also increased from 5,600 in 2002 to 58,400, about 11 times more (4).

So, the Turkish economic was grown amazingly and west countries’ share was essential but while Turkey’s application wouldn’t be finalized by EU members, Turkey turned to left, maybe to push EU members or it was a conceptually change in its ruling system from 2011 which accelerated from 2014, anyhow the results reacted soon, the Lira dropped rapidly (from 2.7 in 2016 to about 7 for one USD in 2018) and economic growth was slowed.

Despite the common commercial interests and partnership in NATO, the relations of Turkey with EU and US, experienced a lot of difficulties. Ruling the AKP after 2002 and its attempt for establishing the political and economical reforms, especially aligned to west values including human rights, minorities rights…, revived hopes for both sides especially in Turkey to join EU community finally but everything damaged and got back. Internal wars with PKK sparked, elected mayors in Kurdish provinces were suspended, HDP’s members and parliamentarians were arrested, the tensions with west countries was intensified after Turkish coup in 2016, Turkey’s unprecedented crackdown on participants and their allies in the coup as well as imposition of emergency rule encountered by Germany sanction and its limits on export guarantees to Turkey, Dutch journalists detained and deported, US NASA former scientist sentenced for 7 years (but freed after 2 years) (5), US pastor was detained which inevitably faced with Trump tariff war on Turkish steel and aluminium which affected the Turkish Lira fast to record a historical exchange rates and forced Turkey to solve the issue, as well as, Turkey threatened to enter the east of Euphrates River against Kurdish YPG / SDF forces who are backed by US forces. also, Turkey interferes in Libya and finalized the S400 contract with Russia and received them despite all US warnings. It canceled Istanbul mayor election (where AKP got a bigger loss in second round), frequently forced US for the “safety zone” in its borders with Syria and recently followed a plan for “illegal” drilling for oil and gas in waters close to Cyprus (as EU claimed) which seems would be confronted by EU more seriously than previous cases.

While Turkey expands its relations with Russia and China rapidly, it leaved West values and its challenges with the West countries are expanded by the same rate. Turning Turkey to the East is not just politically, it’s also grown to the ruling and economic systems. Turkish government denied democratic results and suspend mayors or cancel the election (as done in Kurdish provinces and Istanbul), also tried to affect on Central bank and change the interest rate which appeared in TRY exchange rate. Then, the Turkish economy will be the first victim of the turn to East, not only because it was established due to Turkey – West relations, but also because affects of eastern decision gwhich could destroy it within just years and led Turkey to public uprising, now it’s up to AKP’s strategy regarding foreign relations and internal policies, if it remain united with no split by some powerful leaders. 

Sources:

1- POLICY DEPARTMENT, EU Parliament, (2016), “Bringing EU-Turkey trade and investment relations up to date?”, Page 21

2- POLICY DEPARTMENT, EU Parliament, (2016), “Bringing EU-Turkey trade and investment relations up to date?”, Page 23

3- TURKEY AND THE EU, Ministry of Trade, Republic of Turkey (September 5, 2018)

4- Investment office, Presidency of Republic of Turkey, FDI in Turkey

5- DW news

6- Euronews (August 17, 2019).

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Economy

Internship tips from an intern who became an owner and CEO

MD Staff

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Photo courtesy of Tim Pannell / The Forbes Collection.

Internships can be a valuable opportunity to start your full-time working career, and change your life.

Fatih Ozmen went from intern to owner and CEO of multi-billion-dollar aerospace and national security leader, Sierra Nevada Corporation (SNC).

Starting at SNC as an intern almost 40 years ago when it was a tiny and struggling engineering company, Ozmen and his wife, Eren (now the company’s chairwoman and president), had the chance to acquire the company a few years later. Today, SNC is an agile, cutting-edge disruptor in government contracting with a workforce of 4,000 that supports and protects explorers and heroes. Ozmen has been SNC’s CEO and owner for a quarter century.

Of his journey from intern to CEO and owner, Ozmen said, “I credit a lot of good luck and some good choices, starting with how I approached my internship.” Here are his three tips to help you get the most from yours:

1. Look for companies with missions and values that inspire you.

“As a student or intern you can feel independent, like you’re holding your future in your hands. A lot of business people will tell you to consider an internship a transaction to meet your needs. I would encourage you to turn that focus outward.

“Ultimately, once your basic needs are met, it’s the deeper rewards that keep us going. Things like the feeling of being part of a team and making a real impact. I’d encourage young people first to identify companies or teams that are addressing challenges that really interest you. Read the bios of the people you’d work with or for. Do their stories, and the company’s story, inspire you? Are people there working in their individual interest or in the interest of the team, and the overarching mission?

“It’s more rewarding when you see a whole group within the company working toward a larger goal. Let me give you an example. On a number of occasions, people have come up to Eren and me to tell us how we saved their lives in the battlefield. There was one time our holiday party was crashed by people who wanted to meet the SNC people who built our technology that jams cell signals and prevents IEDs from exploding, protecting our servicemen and women. These people thanked us and cried, and we cried with them. They shared heartfelt stories about how our technologies enabled loved ones to come home safely. This is priceless.”

2. Always look for an opportunity to understand the core need, to look beyond the “what” and truly understand the “why.”

“As a young engineer, working to enhance jet landing systems so they work in all conditions, including rain, was the biggest privilege for me.

“One of my first experiences early on was being on an aircraft carrier at 2 a.m. Standing next to F-18s and working among sailors day and night was fascinating and inspiring. I was sleeping right below the deck and hearing the roar of the aircraft engines, and tires skidding upon landing. They operate 24 hours a day.

“It was invaluable to see firsthand the problems pilots were facing and the environments sailors had to work within. It was eye-opening to see that while we are often comfortable in our homes and warm beds, servicemen and women are deployed months at a time away from their families working within dangerous conditions with poor visibility. Imagine being an F-18 pilot, finding the ship — a postage stamp-sized object off in the distance — and landing on it. That would be difficult to do in even ideal weather and visibility conditions.

“Our engineering task was straightforward: fix a strange flaw on the existing landing system that didn’t work as expected when it rained. We made it work and it’s amazing that 30 years later the Navy still uses the technology we created. Importantly, I was able to witness the challenge and solution, to work alongside the sailors and see it from the pilots’ perspective. This helped me to go beyond the what of our mission — a flaw in technology — to really understand the why — to save lives.”

3. Embrace newness and change as a journey, not an obstacle.

“When Eren and I first came to the U.S., we were young, didn’t speak much English and didn’t have money. But we did have goals and an unrelenting passion to chase our dreams. Was it easy? No. And I’d be lying if I said there weren’t days when it seemed impossible or challenges that we faced along the way seemed insurmountable. But this is our American dream. None of it would have been possible if we didn’t look beyond the uncertainty and challenges. It’s a great country that made it happen. I couldn’t do it anyplace else in the world.

”We live in a world where the American dream is in reach for everyone. Don’t take it for granted.”

With the power of dreams, innovation and inspiration, there is no limit to what you can accomplish once you get your start, Ozmen says. Learn more about internship opportunities at www.sncorp.com/careers/students/.

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Economy

Scaling up support for sustainable development: Mongolia on the rise

Armida Salsiah Alisjahbana

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Mongolia’s economic rebound in recent years reveals a country rising up to the challenges borne from adverse economic shocks. The country’s economic resilience comes as no surprise. Mongolia has responded well to near-term economic challenges and chartered its long-term path towards sustainable development despite its inherent constraints as a small and landlocked economy that is also highly dependent on natural resources. Mongolia prides itself as being one of the first countries to adopt the Sustainable Development Goals (SDGs), with Mongolia’s Sustainable Development Vision 2030 receiving parliament approval in 2016 just six months after the adoption of the SDGs globally.

In particular, Mongolia’s policy experiences in areas of economic diversification, good governance and regional cooperation were well-exemplified by the Action Program of the Government of Mongolia for 2016-2020. So, Mongolia has utilized these policy tools to carve for itself strategic positions to weigh in on issues significant to the country’s national development outcomes. For example, Mongolia leads the global agenda of the needs and challenges faced by landlocked developing countries (LLDCs). The presence of the International Think Tank for LLDCs in Ulaanbaatar further highlights the key role of Mongolia as a credible broker of the LLDCs development agenda.

Mongolia has been active in implementing intergovernmental initiatives facilitated by UN ESCAP including the distinct but interrelated intergovernmental agreements on the Asian Highway Network, the Trans-Asian Railway Network, and Dry Ports. We welcome the recent development on the entry into force of the Intergovernmental Agreement on International Road Transport along the Asian Highway Network among China, Mongolia and the Russian Federation, supporting trilateral economic cooperation.

Currently, Mongolia has substantively engaged on trade facilitation initiatives including the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific. There is great potential for Mongolia to strengthen its role in the related area of transport facilitation, given its position as a transit point between big economies like China and the Russian Federation. Also, we are pleased that Mongolia is soon to become the seventh member of the Asia-Pacific Trade Agreement, a preferential regional trade agreement, open to all developing member States in Asia and the Pacific.

Mongolia has also been a key driving force to advance cooperation for clean energy, especially towards a North-East Asia power interconnection, leveraging from the country’s abundant renewable (solar and wind) energy resources. Energy cooperation finds strong resonance in relation to climate action and air pollution, given the North-East Asia subregion emits over one-third of global greenhouse gases and faces heavy impacts of air pollution.

With inherent constraints due to its fragile economic structure and environmental condition, Mongolia constantly needs to find balance between providing prompt policy responses in the face of volatile and unpredictable external shocks in the short-run and pursuing structural changes to address long-term socioeconomic issues. Under these circumstances, pursuing an integrated approach becomes an imperative for Mongolia to advance its national socioeconomic agenda, regional connectivity agenda and global sustainable development agenda, bolstering Mongolia’s resilience towards adverse economic, social and environmental shocks. To this end, I welcome Mongolia’s emphasis on the “whole of government” plus a “whole of society” approach.

Through the years, we have seen how Mongolia continues to be a steadfast partner of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in promoting regional trade, connectivity and development across its various interrelated dimensions. Mongolia has also provided leadership in advancing regional cooperation agenda in the Asia-Pacific region by chairing the seventy-fifth session of UN ESCAP in May 2019.

Equipped with lessons learned from past development challenges and mindful of new directions and approaches to nurture future opportunities, Mongolia’s regional position and potential are on the rise. I am looking forward to partnering with Mongolia’s leadership to strengthen regional cooperation and achieve sustainable development by 2030 with the United Nations family.

Originally published in Montsame-Mongolia

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