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Tainting IMF’s Georgieva: U.S. Campaign to Tighten the Grip on Bretton Woods Institutions

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In an unprecedented development, the then-Chief Executive of World Bank, and now International Monetary Fund (IMF) Managing Director Kristalina Georgieva was accused on September 16, 2021 (alongside her advisor Simeon Djankov) of applying pressure on her staff to boost China’s position in the bank’s “Doing Business 2018” publication, based on an independent investigation conducted by WilmerHale.

The Substance of the Accusations

According to the mentioned law firm, it was hired by the lender’s International Bank for Reconstruction and Development on January 20, 2021 to review the internal circumstances that allegedly led to the data irregularities due to Georgieva’s ill judgment concerning Beijing.

As the WilmerHale report suggests, Chinese officials repeatedly voiced their discontent over the 2017 Doing Business report, claiming that it failed to adequately reflect the scope of Beijing’s reforms in addressing Jim Yong Kim, the then-President of World Bank, and other top executives at the bank.

When it became apparent that the 2018 draft report would suggest that China dropped in ranking, the bank’s staff began discussing options to improve Beijing’s position, including through adding data from Taiwan and Hong Kong into the mainland’s rating, says the report.

Georgieva, who is reported to be overseeing the issue since October 18, 2017, rejected any incorporation of Hong Kong data into the “Doing Business 2018” report for political reasons—yet, as WilmerHale’s findings argue, she asked “Mr. Djankov” to manage the final publication and work along the way to “identify changes to China’s data that would raise the country’s score.”

In the process of putting the 2018 edition together, the people involved concluded that adjusting China’s “legal rights indicator” was an “ideal vehicle” due to a variety of different opinions related to the effect of Chinese law, as the WilmerHale report claims. This apparently helped China keep its prior position in the bank’s ranking and gave “Mr. Djankov” green light to authorize publication.

Apart from vaguely stating that some staff on the Djankov’s team said that working under his supervision could be “emotionally harrowing,” the report accused both Mr. Djankovic and Ms. Georgieva of pressuring their staff “to make specific changes to China’s data points in an effort to increase its ranking.”

The findings also point to the fact that the final weeks before the “Doing Business 2018” was released at the end of October 2017saw the World Bank’s team, “presumably at the direction of” then-President Jim Kim, being under “both direct and indirect” pressure “to change the report’s methodology in an effort to boost China’s score.” This came to happen precisely at the same time when Mr. Kim and Ms. Georgieva were engaged in delicate negotiations with the Asian country, the U.S. and other members to raise the bank’s capital.

In the end, Beijing accepted a smaller shareholding in the bank than it sought as well as higher rates on bank loans that it received as part of a plan to defuse opposition from the Trump administration. According to the World Bank’s announcement made in 2018, a $13 billion paid-in capital increase boosted China’s shareholding stake to 6.01% from 4.68% but also brought lending reforms that will raise borrowing costs for higher-middle-income countries, including the Middle Kingdom.

The Road to Washington’s Wrath is Paved with Good Intentions

It is not a secret that the nature of the work conducted by top rank officials at the World Bank frequently requires geopolitical calculation and sensitivity. The same is true for Jim Yong Kim, nominated by President Barack Obama in 2012. Kim was dedicated to building bridges between the bank and the Asian Infrastructure Investment Bank (AIIB) established by China and the Asian country itself. Balancing between the two biggest economies in the world is a welcomed must amid a changing global economic architecture, not anything abnormal at all.

When it comes to the former Vice-President of the European Commission, although the alleged actions were conducted while Ms. Georgieva was working for the World Bank, they have been referred to the ethics committee’s board of directors at her new job with IMF. Hence, the WilmerHale report comes nearly two years after becoming the first head of the IMF from an emerging market and shortly before the most extraordinary global economic crisis in the Fund’s 76-year history, triggered by the COVID-19 virus.

Moreover, during these testing times, Ms. Georgieva has been overseeing the expansion in the reserve assets of 190 member countries, with $650 billion allocated to tackle the pandemic.

While the U.S. is the largest shareholder in the Washington-based IMF and World Bank, which means it enjoys veto powers over major decisions, the country is in the process of analyzing the “serious finding” in the WilmerHale report. As the Treasury Department’s spokeswoman Alexandra La Manna told Reuters, it is no secret that many GOP lawmakers have opposed expanding support for the mentioned institutions.

Notably, three members of the House Financial Service Committee, U.S. Representative Andy Barr (KY-06), U.S. Representative French Hill (Ar-02) and U.S. Representative Anthony Gonzalez (OH-16) sent a letter, dated September 22, 2021, to U.S. Treasury Secretary Janet Yellen to review and report to Congress about WilmerHale’s findings within 30 days.

The U.S. politicians are especially interested in obtaining information concerning “Director Georgieva’s interactions with Chinese representatives at the Fund during her deliberations and decision-making process leading up to the August 2, 2021 announcement by the IMF Board of Governors to approve a $650 billion general allocation of Special Drawing Rights (SDRs), which included an estimated $42 billion to the People’s Republic of China.”

What is especially interesting is the fact that although lawyers at WilmerHale made it clear that their “review should not be read to imply that there was any inappropriate conduct on behalf of any Chinese or other government officials,” the GOP signatories of the letter to Ms. Yellen outlined concerns with how “the Chinese Communist Party, in pursuing its self-interest, undermines and infiltrates multilateral institutions such as the Fund, the World Health Organization, and the United Nations.”

Moreover, they also asserted that “China feels entitled to a greater say in how these international organizations operate,” while, in their view, “its lack of commitment to multilateral values demonstrates why it must not be allowed to.”

The attempts to assassinate the IMF chief’s character went beyond political circles, as one of the most influential financial magazines also felt the need to weigh into the witch hunt against Ms. Georgieva.

“The head of the IMF must hold the ring while two of its biggest shareholders, America and China, confront each other in a new era of geopolitical rivalry,” The Economist editorial warned. “The next time the IMF tries to referee a currency dispute, or helps reschedule the debt of a country that has borrowed from China, the fund’s critics are sure to cite this investigation to undermine the institution’s credibility. That is why Ms. Georgieva, an esteemed servant of several international institutions, should resign,” the editorial concluded.

Kristalina Georgieva’s fate seems to be already sealed. Before the IMF and World Bank annual meetings to be held between October 11 and 17, U.S. Treasury Secretary Janet Yellen reportedly declined to answer phone calls from Ms. Georgieva, declaring her to be a persona non grata.

In Defense of Reason

Along with these concerted attempts to tarnish the good name of the IMF’s Bulgarian female managing director, some voices profoundly disagree with the accusations against her.

Shanta Devarajan, who was involved in overseeing the World Bank’s “Doing Business” report in 2017, called WilmerHale’s findings concerning the accusations of applying “undue pressure” by Ms. Georgieva on her staff being “beyond credulity.”

Devarajan, who currently serves as professor of development policy at Georgetown University, sent a series of tweets where he argued he never felt any pressure to change Beijing’s scores, rather accusing WilmerHale lawyers of using only half of his statements from an hours-long interview.

Georgieva’s “direction was to verify the China numbers, making sure that China received credit for the reforms they undertook, without compromising the integrity of Doing Business. The Bank’s lawyers left out the latter phrase,” he said, adding that a rush to judgment on Georgieva’s prior role as World Bank CEO “is misguided.”

“The changes to China’s score were either correcting coding errors or judgment calls on questions where judgment was required,” explained Devarajan, who was a senior director in the World Bank’s Development Economics group until 2019.

The former World Bank chief economist and Nobel laureate Joseph Stiglitz also called the WilmerHale investigation to be “a hatchet job”, denying that he’d heard of any complaints from the Doing Business staff related to feeling pressure from Ms. Georgieva in 2017.

“The fingerprints aren’t there. The report does not accurately reflect what happened,” concluded Stiglitz, who also questioned why it failed to mention the current president David Malpass when data irregularities involving Saudi Arabia’s rating occurred under his leadership.

Jeffrey Sachs, who is director of the Center for Sustainable Development at Columbia University, did not mince his words in his recent article in Financial Times, saying with conviction that “The heated attack against IMF managing director Kristalina Georgieva is not really about the alleged sanctity of World Bank data or about the quality of her management.”

According to Sachs, “It is about the role of China in a Washington-based multilateral institution.” Besides, the world’s famous economist added that the reason for this state of affairs is the fact that “many in the US Congress want Georgieva out because she is not a sworn enemy of Beijing.”

Interestingly, while China’s ranking stayed the same in 2018 as the prior year’s at No. 78, after Ms. Georgieva departed from the World Bank, Beijing was ranked 31st in 2020 and 25th in the unreleased 2021 report, which was now cancelled—all of this under the leadership of Republican David Malpass.

When it comes to Ms. Georgieva, she disagreed “fundamentally with the findings and interpretations” of the WilmerHale report.

“Let me be clear: the conclusions are wrong. I did not pressure anyone to alter any reports. There was absolutely no quid pro quo related to funding for the World Bank of any kind,” the IMF chief wrote in a statement.

Ms. Georgieva also highlighted her effort to prevent Hong Kong data from being added to the “Doing Business 2018” report as a sign of her commitment to preserving the integrity of World Bank data.

As of today, the “Doing Business” report’s publishing is cancelled, which could result in making some investors life more complicated when it comes to assessing where to put their money, as Reuters reports.

The report was the World Bank’s leading publication, which ranked countries based on their regulatory and legal environments, ease of business start-ups, financing, infrastructure and other business climate measures. Due to this fact, it was closely monitored by governments around the world looking to attract more FDI in accordance with their place in the ranking.

“Going forward, we will be working on a new approach to assessing the business and investment climate,” the World Bank informed.

The Bretton Woods Institutions’ Original Sin and BRICS

While colonialism seems to be the thing of the past, the sad reality is that inequality between the Global North and the Global South persists. This is happening due to power imbalances inscribed in the world economy and maintained by the developed countries, which claim to have the right and responsibility to set the rules of international trade and finance for the rest of the world.

To serve “their own economic interests, quite often at the expense of everyone else,” to quote economic anthropologist Jason Hickel, the Global North uses the IMF and the World Bank for this purpose.

By tradition under an unwritten transatlantic agreement, Europe has to select the managing directors of the IMF while the U.S. chooses presidents of the World Bank. Kristalina Georgieva is the second woman to have run the IMF, following the current European Central Bank President Christine Lagarde.

In the BRICS Sanya Declaration issued in April 2011, the members declared that “the voice of emerging and developing countries in international affairs should be enhanced.” Unfortunately, a month later, when Western countries backtracked on their 2009 promise to “appoint the heads and senior leadership of the international financial institutions through an open, transparent and merit-based selection process” by deciding to replace Dominique Strauss-Kahn with the then France’s Finance Minister Lagarde, the emerging economies accepted the fact that Europe will remain to pick the IMF’s Managing Director.

By doing this, Europe decided to discriminate against more than 90% of the world’s population once again. This reduced the legitimacy of the institution, as there was no hope that Legard would step down before 2016 to make place for a non-European person.

The very same scenario repeated in 2012 when Roberto Zoellick announced he would step down as World Bank President. “We will take a position together with the BRICS, making a common choice,” Brazil’s Minister of Finance Guido Mantega declared, giving a glimmer of hope that Ngozi Okonjo-Iweala from Nigeria would win broad support among the Global South countries. Sadly, the U.S. candidate, Jim Yong Kim, got this job with the not insignificant help of the Russian government.

In this way, we are faced with an incredibly undemocratic situation where the U.S., G7 and the EU control the veto process in the IMF and the World Bank to the detriment of the majority of the world’s population. In other words, “For every vote that the average person in the Global North has, the average person in the Global South has only one-eighth of a vote (and the average South Asian has only one-20th of a vote),” as Hickel argues in his Al Jazeera article published on November 26, 2020, titled Apartheid in the World Bank and the IMF.

Bearing in mind that both the IMF and the World Bank were founded back in 1944, “these institutions were designed with colonial principles in mind, and they remain largely colonial in character to this day,” the scholar concludes.

Ever since an informal meeting of the foreign ministers of Brazil, Russia, India, and China at the Brazilian mission to the United Nations in New York, which took place on September 20, 2006, the growing discontent about the distribution of power in the IMF and the World Bank became the main unifying factor of the group whose emergence “can be understood as a continuation of the decolonisation process,” as Jyrki Käkönen declares in his academic article Global change: BRICS and the pluralist world order, published in Third World Thematics in 2019.

It was the economic crisis of 2008 that allowed the BRIC nations to openly state their dissatisfaction when in the São Paulo communiqué, jointly issued by Finance Ministers, they made it clear that “reform of the International Monetary Fund and of the World Bank Group should move forward and be guided towards more equitable voice and participation balance between advanced and developing countries.”

A similar request was made in 2009 in Horsham, where the BRICs called it “imperative” that successive heads of the IMF and the World Bank be selected through “open merit-based” processes, irrespective of nationality or regional considerations.

The grouping’s struggle to reform the IMF culminated in 2010 when the Board of Governors approved quota reform—including a quota shift by more than 6% in favor of large emerging economies. The IMF hailed these steps as “historic” to point out that they represented “a major realignment in the ranking of quota shares that better reflects global economic realities and a strengthening in the Fund’s legitimacy and effectiveness.”

We Must Not Harbor Any Illusions

Despite the significant win of the BRICs regarding quota reforms, the U.S. waited five years to agree on reforms that were endorsed by almost all the members of the IMF.

The damage done by the prolonged reluctance to push the reforms through the U.S. Congress has significantly impacted the county’s image and credibility. As George Osborne, the then the British Chancellor of the Exchequer, concluded at that time, it was a “tragedy that an agreement reached across all the members of the IMF was being blocked by the US Congress.”

Regardless of its multilateral commitments, the U.S. delay resulted in keeping the rest of the world hostage to the whims of its Congress, which has limited any prospect of further reforms, especially important for the smaller economies.

2010 were supposed to be part of a more significant change. Still, the zero-sum nature of this sensitive development and the increased competition between the U.S. and China reflected in the recent attacks on the IMF’s Kristalina Georgieva bode ill for the future as far as Washington’s constructive role within the organization is concerned.

With the formation of China’s Asia Infrastructure Investment Bank (AIIB) and BRICS’ New Development Bank, which recently admitted the United Arab Emirates, Uruguay and Bangladesh as members in its first expansion push, leaders in the large emerging economies would be well-advised to have no illusions about the U.S. role in the Bretton Woods Institutions and its rather apparent intentions.

The IMF and World Bank are becoming too rigid, and they do not seem to be fit for purpose in the 21st century. That is why the acceleration of the delegitimation process has to gain new momentum and more attention put on the non-Bretton Woods institutions in due course.

From our partner RIAC

London-based foreign affairs analyst and commentator, who is the founder of AK Consultancy and editorial board member at the peer-reviewed Central European Journal of International and Security Studies (CEJISS) in Prague.

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Economy

Gender-based violence in Bangladesh: Economic Implications

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Violence against women is one of the most heinous crimes perpetrated in today’s   world. However, despite the gravity of the violence perpetrated against women, it is still the pervading reality in the world. Bangladesh is also afflicted with this malaise of violence against women which is manifested in the deluge of news across the media about the violence against women in various  form .While Bangladesh has made commendable strides in the economic front, the  perennial subjugation of the women who account  for virtually half of its population remains a hurdle. Against this backdrop, this article investigates the economic toll incurred to the economy owing to the entrenched culture of systemic violence in our country.

Women constitute nearly half of the population of Bangladesh. As such, their innate potentials have considerable bearing on the socio-economic progress of the country. Admittedly, advancement of a country in socio-cultural indicators presupposes the simultaneous improvement of  women from the subjugated position culturally attributed to them. It is impossible  to envisage a prosperous thriving economy without the contribution and participation of the women equally. Therefore, the lack of women’s participation commensurate with their capabilities   hinders the development of the country.

One of the obstacles women confront in their journey of transforming into human capital is perhaps the retrograde views that society harbor about the traditional gender role of the women which fetter their contribution to the economy and society by bestowing them only  the  circumscribed role of  looking after the domestic affairs and rearing and educating child. The pastoral as well as urban culture   perpetuate these traditional gender roles and deny women a free rein over their fate. Whenever  women   disavow the preordained and predictable roles  provided by the society, they  have  to face mounting pressure from society so as to conform to the prevailing norms .Failing to  conform to the  regressive gender role will spell grave consequences for the women .When the society fails to cower the woman with the threats that are at its disposal ,it resort to the egregious path of violence. While   violence against women is one of the most reprehensible crime one can ever commit, it however is normalized through a power dynamics that  reinforces the overbearing male role and relegate women to the subjugation. Therefore, the culture of violence against women isn’t anomalous rather is embedded in the prevailing  patriarchal power dynamics which deem chastising women for their  rebellious attitude is solicited and  invoke often contrived and distorted religious edicts in order to legitimize their deplorable crime. Moreover, the culture of violence against women which has been  aptly termed as a epidemic by the United Nations  is rooted in the prevailing socio-economic  structure of the country that  systematically condone the browbeating of women into submission to patriarchal  norms and wield violent measures when the woman stubbornly gainsay their patriarchal hegemony.

While the social, cultural and health toll of the violence perpetrated against women is undoubtedly strenuous, the economic losses incurred by the violence and the opportunities nipped in the bud owing to violence against women also need to be taken into account in order to the adequately discern the deleterious ramifications of the violence against women .However, despite profound economic toll that are inflicted due to the violence against women, it is still unaddressed in the economic literature worldwide and discussion and cognizance about this momentous issue and its economic implications still scant.

As has been mentioned earlier, women constitute the lynchpin of the economy of Bangladesh which has been adequately manifested in the participation of women in Bangladesh’s much-heralded RMG sector and other productive sectors. However, this success of the economy   overshadows the plight and perils  this working class women confront in their bid to become economically productive. The violence against women is systemically entrenched in the country and women’s engagement in the economic activities are frowned upon by the society and culture .Therefore ,the this patriarchal fetter women behind the door of their  houses  and worst women are inflicted  physical and mental violence in event of questioning the dictates of the elders and the male custodians. Therefore , the fundamental impact of violence against women on the economy of the country related to the untapped opportunities due to the constrains imposed by the patriarchal society on women under the pretext of social, religious and cultural norm. This threat alone or normalization of the gender role of the women as a care-giver hinder women in taking part in the economy on a par with their male counterparts  .

Beside the lost  opportunities that can be tapped, the violence against women has numerous other implications on the economy. Firstly, the violence against women inevitably  results in the physical damage and mental trauma of the victim which has enduring toll on her. Therefore ,violence against women translate to toll on the health of the victim and therefore the cost incurred on the victim due to medical fees  as a result of the violence is also included in the economic cost of violence against women. Secondly, the violence against women also leads to diminished productivity of the victim due to the health hazards. Therefore, violence against women has implicit economic cost on the economy as a result of the lost productivity.

Thirdly,the cycle of the violence against women negatively sensitize women in not challenging the sacrosanct patriarchal norms and therefore women fit themselves with the prevailing adverse society and they themselves reproduce and reinforce these norms .Therefore, a vicious cycle set in which prevents women to actualize their potential and stymie them in their path of realizing their goal .This result a sense of apathy in women with regards to education and other means of social mobility and they deliberately avoid the economically productive activities that are deemed taboo by the prevailing social norms and cultural ethos.

Moreover, violence against women is an egregious form of crime perpetrated by a   patriarchal agent while the society has entrenched roles, norms and ethos that condone and encourage such outrageous violence .Moreover, a vicious cycle is at play in the gender based violence. The economic repercussions of the violence committed against women is considerable. Violence against women hinder the development  of the women commensurate with their inherent potential which nip the dreams of women in the bud. Besides, gender based violence also deter women in challenging the prevailing patriarchal norms and undertaking productive economic activities that are frowned by the patriarchal society and are deemed taboo. Moreover, a widespread sensitization in societal level as well as a drastic  overhaul of the patriarchal structure is necessary in order to avert the adverse socio-economic consequences of gender-based violence and extirpate the heinous root of this deplorable crime.

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Omicron Variant: Implications on Global Economy

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The prolonged battering of the Covid-19 has been considerably hitting the world economy. While vaccination and a receding in the cases of the cases in virus transmission has provided   brief respite to   the countries that are grappling with the recurring surge of the virus, the resurfacing of another virulent   mutation termed as  Omicron sounds ominous for the future of the world economy .Against this backdrop, this article projects the plausible economic ramifications of the new strand of the virus on the global economy.

The economic downward trajectory occasioned by the Covid-19 has been unprecedented in recent global history. While the economic depression of 2007-08 proved disastrous for the world economy, the toll   emanating from Covid-19 pandemic and consequent   economic stagnation has surpassed all the previous   economic plunge .In fact, some analysts have gone to the extent of   comparing the Covid-19 induced economic depression with the great depression of the 1920s.However, whether the far reaching repercussions of the Covid-19 on the global economy will be as momentous is still remains to be seen. Nevertheless, the   profound   economic jolt triggered by the Covid-19 pandemic is poised to reverberate across the world through shaping socio-economic and political events

The scar inflicted by a protracted economic recession owing to Covid-19 is apparent in the arduous path of economic rejuvenation in the western countries and eastern countries alike. Virtually every country is grappling with the toll that Covid-19 has incurred in the economy. The western countries are finding it   difficult to retrieve the losses that Covid-19 has precipitated. Although the swift vaccination of the western countries at the expense of the developing countries has provided a fleeting lull in their battle against Covid-19,it seem however the virus has resurfaced with increasing virulence in order to offset whatever gain these embattled countries managed to garner in their fight against Covid-19.

The skyrocketing and unprecedented inflation of the western countries coupled with a plummeted consumer confidence has meant a prolonged period of stagnation of their economies. However, in the wake of vaccination induced temporary respite in the viral cases, the economies rebounded strongly from the pits of economic recession. However, these hard-earned   gains will be reversed in the event of the advent of any new strand of the virus. Already, the delta variant which originated in India had triggered a spate of Covid-19 flare-ups in the United   States and United Kingdom. Against this backdrop, the Omicron variant is set to aggravate the   economic woes of the western countries and in turn the world.

While the western countries are reeling from economic stagnation, the developing and underdeveloped countries are confronting many abysmal realities due to their prevailing economic backwardness. Their economic plight has been lingering in want of adequate vaccination due to the apathetic stance of the western countries and global governance institutions .Therefore, while the western countries has rebounded from the Covid-19 induces economic predicaments, the difficulties confronted by the developing countries has continued unabated. While the influence of advanced countries and their less advanced counterparts in world-economy is inextricably tied, the callous attitude of the developed countries to the vaccination of countries in Asia and South Asia turn out to   be sheer lack of economic prudence.

While western countries are considered as the economic hub of the world, it is however the developing countries on which the vital supply chains of the world economy hinges on. Therefore, the tardy pace of vaccination in these countries is prejudicial to the global economic stability. The economic ramification of the slow pace of vaccination is twofold for the world economy. Firstly, the slow vaccination hinders the revival of the economic activities in the developing countries thereby obstructing the supply chain of the commodities .This supply chain crisis has ripple effect in the western economies. The recent predicament of inflation and attending macroeconomic woes in countries like the United States and United Kingdom is manifestation of the supply chain crisis plaguing the world economy. Due to the paucity of commodities and raw materials, the prices of necessary goods has escalated in the western countries which has plummeted consumer confidence and triggered a vicious cycle of stagflation in the economy that is reminiscent of the 1970s when a similar crisis in oil supply has  precipitated economic downturn in the western economies.

Secondly, the slow rate of vaccination also run the risk of allowing the virus to mutating to newer and much virulent variants and due to the unfettered communication as a result of globalization the emergence of any new variant doesn’t remain in the confines of any border rather proliferate like wildfire and precipitate global crisis. Therefore, the lack of vaccination or slack pace therefore has global repercussions. Therefore, it is judicious of the developed countries to concentrate efforts in contributing to the vaccination of the less developed countries which will yield good results for their economy.

The ubiquitous mechanism in battling Covid-19 remains one of containment that entails halting economic and other activities and insulating the countries from other countries through imposing border controls, curbs on air communication and other stringent measures echoing protectionist attitude. However, these measures are antithetical to the spirit of the globalization and global trade. While lockdowns and other protectionist measures yield temporary improvement in the Covid  cases, it is not viable in the longer term. Besides, lockdowns have deleterious ramifications on the economy and further aggravate economic rebounding of the developed countries and developing countries alike. Therefore, efforts should be aimed at preventing the Covid cases rather than grappling with the Covid with a knee-jerk policy of improvisation. .

Moreover,Covid-19 has already occasioned far-reaching economic fallout in the world economy. Indications abound regarding the fact that the world economy is verging on profound and prolonged recession. Against the backdrop of ominous predictions and slackening growth and painful inflation of the world economy, the prospects of the world economy due the advent of a new variant remain mired in obscurity. It can be concluded that the economic repercussions of yet another novel variant will be momentous and will offset hard-earned growth of the countries .Unlike previous precedent of haphazard policy and knee-jerk policy solutions, this time around the countries need to undertake challenge much prudently and should concentrate all of their efforts aiming at universal vaccination of all countries so as to prevent the resurfacing of similar virulent viral strands.

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A Good Transport System Supercharges the Economic Engine

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The infrastructure bill in the U.S. has been signed into law.  At the American Society of Civil Engineers (ASCE), they are celebrating the fruition of a couple of decades, at least, of hard work publicizing the decaying infrastructure and lobbying for a fix-it bill.  Countless delegations have visited the White House and met with staff to present their case.  And something for their efforts is better than nothing. 

They also started a grading system, giving an overall grade — currently C minus, a notch above the previous one.  The bill seeks improvement in roads, bridges and transit although it falls short of the ASCE estimates for what is needed.  For example, the bill contains $39 billion for transit (ASCE grade of D minus) but there is a backlog of $176 billion that is needed.  Given Republican opposition to spending and the compromises made to pass the bill, the administration got what they could — they can always fight for more later. 

This opposition against infrastructure spending is somewhat incomprehensible because it generates jobs and grows the economy.  Too much spending, too fast has inflationary potential but that is caused by too much money chasing too few goods, usually not when there is a tangible product — improved transit, roads and bridges in this case.  And then there are also other ways of checking inflation. 

This bill is a start but still a long way from having high speed cross-country electric trains as in other major industrialized countries.  These are the least polluting and especially less than airplanes which emit six times more CO2 per passenger mile. 

Why is the U.S. so lagging in high-speed rail when compared with Europe and Japan?  Distances are one reason given although these are a function of time.  No one would have thought of commuting 30 miles each way to work in the 19th century but it is not uncommon now for some to be quite willing to sit 45 minutes each way on a train for the pleasure of living in the greenery of suburbia. 

The bill also includes $110 billion for roads and bridges.  Unfortunately the backlog of repair has left 42.7 percent of roads in sub-standard condition costing motorists an estimated $130 billion per year in extra vehicle repair and maintenance.  Some $435 billion is now needed to repair existing roads plus $125 billion for bridges, $120 billion for system expansion and $105 billion for system enhancements like increasing safety — a necessary improvement given a changing environment such as an increase in bicycle traffic.  Allowing for round-off discrepancies, the total amounts to $786 billion (in the funding and future need section of reference).  Increases in severe weather events have also had their effect, causing damage to roadways and further burdening the repair budget.  

New technologies (in the innovation section of reference) like advanced pavement monitoring on key roads, using moisture and temperature sensors embedded in the roadway, now make it possible to assess pavements quickly without impacting road users.  This leads to earlier repair and in addition new materials increase the life cycle.  Much of this requires increased investment up front to take advantage of the new innovations. 

Above all one can never afford to forget that a good transport system acts like a supercharger for the economic engine.

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