Green Building – More Than Just a Trend

In the MENA countries, some concerns about sustainability started to be heard of, back in the 1970s. it was in fact more of a follow-on trend than anything else.

European consultants however started ringing the bell about the 4 factors that lie behind the lack of progress but that have to be addressed at the earliest.  These are:

  • Lack of adequate legislation to enforce change towards incorporating sustainability
  • Absence of any discernible incentive towards sustainability
  • Unbalanced subsidies on energy, water, etc. leading to wastage
  • Limited awareness of environmental issues.

Nevertheless some legislation that was sporadically taken in certain countries, apart from not being regionally coordinated, did not also confront the real issues and for lack of not taking account fully the reality as it stands on the ground was across the board fairly ineffective.

The truth is that people slowly come to realise that we are having a devastating impact on the planet that we live on. In less than 2,000 years, human kind has led to the extinction to more species from the face of the earth than its entire existence. Considering that this is just a tiny bit of the overall time for which our planet exists, this is something that raises a lot of concerns. It’s obvious that people start to take initiatives through different LEED programs, sustainable development and through prioritising investments in different green initiatives. One of the most impactful fields is the construction. With this in mind, some things need to be pointed out.

 

Green Building – The Things to Consider

 

The truth is that green building, especially in Europe, has become something far more than just a simple development trend. And, of course, this is quite logical. It has paved the way for an approach which entails building homes and commercial constructions tailored to the demands of their time – not just to the demands of the occupants. And this is something that has to be particularly appreciated. The advantages are multiple.

Water Conservation

It’s worth mentioning that it’s estimated that the lack of fresh drinking water is going to be one of the tremendous burdens for future generations, should we keep wasting it with the temps we are right now. Recycling rainwater, for example, can preserve potable water and yield tremendous amounts of water savings which is definitely to be considered.

Emission Reduction

Fossil fuel emissions contribute to development and furthering of the biggest environmental burden of our times – global warming. Harmful emissions directly impact the quality of the breathable air and bring in a lot of different threats to human’s health such as lung cancer and other respiratory issues.

Storm water Management

This is also something that you might want to account for. Green building as defined in the majority of the LEED Programs can help manage storm water runoff. The latter can cause waterway erosion as well as flooding. The most troublesome thing, however, is that it could introduce potentially dangerous pollutants to water sources, hence incentivising potential diseases outbreaks.

In any case, Europe is definitely riding the wave when it comes to sustainable development, and you can easily observe this in a range of national and multinational projects. What is more, the Union is leading active policies, and it is actively funding initiatives in this particular regard through a range of different grants targeting both individuals and corporations. This is something particularly important. However, the same needs to be employed throughout the rest of the world as well. We can observe companies pioneering the field of sustainable development, and the examples here become more and more. This is definitely something particularly important, and it needs to be taken into proper consideration when it comes to it.

Where is the Market’s Invisible Hand gone?

An article in French by Ramdane Mohand Achour and published on March 25th, 2017 by LibreAlgerie is proposed. It is about Algeria in the course of the persistently decline of its hydrocarbon exports related revenues is currently undergoing soul searching questioning of what is best for making its economy work. Many are wondering where is the market’s invisible hand gone? Like many countries, Algeria that is struggling with falling revenue from lower oil prices is presently looking for ways to upgrade its energy systems to fully support current and future requirements of its economic growth.

Where is the Market’s Invisible Hand gone?

Proponents of liberalism argue that the market naturally produced a self-regulating mechanism that corrects imbalances born out of the multitude of society shaping special interests. This mechanism, called “the invisible hand of the market”, would satisfy the public interest. The law of supply and demand would naturally harmonize economic situation marked by the selfish will of each individual. In this scheme, the State doesn’t have to intervene if it is to guarantee the exercise of free and undistorted competition intended to benefit at all.

The current state of the oil international market turns wrong this angelic vision of a self-regulated inclusive market. Left to itself, the market has experienced a bullish cycle during ten years (1999 – 2008). The price of the barrel thus reached 140 dollars in June 2008 before tumbling within the 2008 crisis, but he soon to rise in 2009 again to be slightly above 120 dollars in April 2011. In 2014, it exceeded even the 110 dollars.

Such a situation was undoubtedly beneficial to the producing countries and companies in the sector as well as those rich countries whose States taxed petroleum products so as to keep their economy afloat. It was not the same for the non-producers, and all poor and middle-income countries who were struggling to feed themselves because of their limited financial resources. The market did not benefit to all, far from it.

The second disadvantage of this situation of relatively expensive oil lay in the fact that it boosted search for more hydrocarbon and production and allowed shale oils to make a big splash, in a full sense of the word, on the world market. With a production of 11 million barrels a day, the United States will see their rate of dependence on foreign oil drop to 30% in 2016 down from 60 percent in 2005.

Such a dynamic did fail to cause a state of overproduction; the purpose of the market is not, contrary to the image that its promoters sell us, to satisfy human needs, but rather to garner, first and above all for not only, profits, but for maximum profits.

Proponents of the “the invisible hand of the market” were right about one thing: in an economy obedient to the laws of the market, the engine of the “economic agents” is selfishness, the individual profit, at the expense of the lives of the producers (workers), consumer and research of nature which we see what mess it is today.

Overproduction intervening in a situation of de facto global stagnation, in the first place, the downturn in the economy of emerging countries (China, Brazil…) dropped slowly but inexorably the price of the barrel. Out of $110, it fell to $35 in February 2016. Decided to reduce the share of the North American Shale oil producers, Saudi Arabia will trigger a price war which played a vital role in this descent into hell.

If the drop in prices could theoretically help poor and middle-income countries producers, it on the other hand hit with full force the producing countries, primarily those of OPEC. For the first time in its history, the rich Saudi Arabia could no more balance its budget and had to resort to austerity. Its involvement in Yemen who turned into a quagmire for Riyadh, financial support of ‘takfirist’ groups in Syria and Iraq and a fierce will to challenge Iran contributed to accentuate its financial crisis. In this sequence of fall in the price of oil, as in the previous bullish sequence, no sign of self-regulation by the market. The invisible hand had other things to look after.

Last November and to everybody’s surprise, the 14 member countries of OPEC, under the impetus of Algeria but due to the will of Saudi Arabia, decided to reduce their production to the tune of 1.2 million barrels a day. Eleven countries non-members of the cartel, including Russia, committed as well to reduce their 560000 barrels per day. In the month of December, stocks of the OECD countries dropped to 1.2 MBD.

 

Number of non-conventional oil producers will be forced to close their wells that became no more profitable below a price floor of around $50 a barrel. The agreement of the producing countries, OPEC and non-OPEC, which was not an action of “the invisible hand of the market”, but of the conscious and active action of 25 States, will result in stopping the fall in prices on the world market and could even allow the beginnings of a rebound in prices which will pass from between 45-50 dollars to 50-55 dollars.

Number of non-conventional oil producers will be forced to close their wells that were most profitable below a price floor of turning around 50 dollars per barrel. The agreement of the producing countries, OPEC and non-OPEC, which was not the action of “the invisible hand of the market”, but the conscious and active in 25 States, will result will stop the fall in prices on the world market and will allow even the beginnings of a rebound in prices which will pass a fork understood between 45-50 dollars to 50-55 dollars.

There is however, that this new ‘virtuous cycle’ for producing countries is not shared by the importing poor and middle-income countries. It also translates into a revival of the production of Shales. In the United States, the number of wells increased each week. Mid-March 2017, it stood at 617 and the U.S. production has reached the historical peak of 9.1 MBD that recalls the production rate of the 1970s. Stocks of oil and oil products are at the highest historical level at 2 billion barrels. The commercial reserves of the country reached 528,4 million barrels with an increase of 8.2 million barrels, the largest weekly increase since 19821.

This new overproduction mechanically caused a new fall in the price of oil, which threatens the stability of many countries. We think first of countries such as the Venezuela struck by an economic and social crisis. But it does not spare the rich monarchies of the Gulf as well. Thus, below a certain price, producers of Shale disappear from the market while exporters suffer a severe income crisis whereas if prices were back on the rise, Shale producers will return to the market. But in the absence of a significant global economic recovery, they contribute quickly to only flooding the market.

The bullish and bearish cycles seem to alternate way more and faster, impeding the process of renewal of the facilities and the discovery of new deposits that require significant investment that the big oil companies do not realize by altruism, but through their search for profits.

One could therefore ascertain that the market does not regulate anything and that without the intervention of the State that plays a major role but not always effective, the market being not self-regulated, would verge onto anarchy causing economic, social, and humanitarian crises as the deterioration of the environment.

The reality of the international oil market confirms that the role of “the invisible hand of the market” is just a myth. The Liberals, who are constantly putting their realism and their pragmatism forward but who do not have enough teeth against their opponents, in ideology, swim themselves in full ideology. Behind a friendly speech sold according to the lastest in marketing theories, formidable doctrinaires could be hiding.

Source : Libre-Algérie

 

Return to protectionism, in this day and age, is it feasible ?

by | Jan 19, 2017 |

Return to protectionism, in this day and age, is it feasible ?

Let’s ponder October 1929 and October 2008

For the Chinese president, Xi Jinping, who during the World Economic Forum in Davos, paradoxically seeming to be defending Free Trade, threw at the new American president, Donald Trump on January 17th, 2017 that no one would emerge as the winner of a trade war, or as he put it, a Return to protectionism, in this day and age, is it feasible ?

“It doesn’t help to blame globalization. Any attempt to stop trade in capital, technology, and products between countries is impossible and contrary to history. We must remain committed to the development of free trade and investment (transnational), and say no to protectionism. We got to ‘rebalance’ globalization, and make it stronger, more inclusive and more sustainable”. In this context it is useful to recall the fundamentals of the crisis of 1929 and 2008.

The 1929 Crisis.

The 1929 crash is caused by a speculative bubble, whose genesis dates back to 1927. It was a new system of credit purchase of shares based on investors buying securities with 10% coverage that started it all. It was ‘Black Thursday’ October 24th, 1929 that the famous crisis broke out in the United States.

le krach boursier de Wall street plongeant l’économie américaine et l’économie mondiale, dans la tourmente et ce malgré l’apparente santé de l’économie américaine dont les bases de sa croissance étaient pourtant faibles.

The stock crash of Wall Street plunged the American and the global economy in turmoil, and this despite the apparent health of the U.S. economy of which bases of its growth, were however weak.

October 2008

There are many similarities between the crisis of October 1929 and October 2008. Economic boom prior to the crisis, rising debt and divorce between the real and financial impact on the real economy with the fall of technology stocks.

But in contrast with 1929, it is the interconnection of economies with stronger global regulation where the developed countries economies being in deflation (low inflation, unemployment, negative growth) and not stagflation (inflation and unemployment decline) that characterised 2008.

As evidenced by the socialization of losses of some banks, the rapid response of the central banks of the US Fed., the European Central Bank, the Bank of England, Japanese, Russian, and even Chinese and Indian banks in coordination so as to break the vicious circle in the lack of confidence and the blocked interbank lending that is the lifeblood of the functioning of the global economy.

All economic and reliable financial system is based on trust. With repeated bankruptcies, interbank credit source of the expansion of the global economy has tended to dry out especially at the investment banks that have experienced an unparalleled expansion in the contemporary period.

However, unlike a universal bank, a Merchant Bank has not the possibility, in case of difficult market conditions, to rely on deposits of individuals to raise money for the short term, although they continue to issue short-term debt to finance their business.

However, more financial institutions from which investment banking sourced finance do refuse in times of crisis to lend for lack of confidence in the ability of repayment of these banks. Generally the essence of the crisis of both 1929 as of 2008 are a distortion of the Foundation of capitalism as describing by the founders of political economy based on the enterprising creators of wealth, Karl Marx did not write about Socialism but the Capital.

This crisis is therefore related to the increasing financialisation in disconnection with the real economy and not in symbiosis of any economic and social dynamics forgetting that labour is certainly a price but also creator of value and growth through consumption. Indeed, with this increasing financialisation, we have two types of shares ownership.

The direct holding (those who own directly) and the indirect holding (those who own through an intermediary such as management, life insurance companies, pension funds, etc.). The new fact is changing fast and important type of shares held by households. The direct holding of shares becomes a minority whereas the indirect holding grew strong.

It is the pension funds that control Wall Street whilst managing more than one third of the market capitalization of the USA today. These malfunctions have been materialised with the mortgage crisis of the Subprime in August 2007; a crisis that has spread across the global stock markets with great losses which I summarize in five steps:

  1. The banks made mortgages available to insolvent households or with few guarantees, at high interest rates;
  2. Dissemination of bad debt in the market: to evacuate the risks, banks “securitised” their debts, meaning that they cut their debt in financial products to resell them on the market. Globalisation did the rest, by disseminating these risky securities in the portfolios of investors from all over the world. Hedge funds have been big buyers of Subprimes, often on credit to boost their yields (up to 30% per year), and played the leverage effect, hedge funds borrow up to 90% of the sums required;
  3. Reversal of the U.S. real estate market: towards the end of 2005, U.S. interest rates began to rise while the financial market has faltered. Thousands of households have been unable to honour their payments causing losses for banks and investors who bought bonds saw their value collapse:
  4. Confidence crisis: the banks found themselves in a situation where as in a poker game, they know what they have on their balance sheet, but not what is in that of others because these bad mortgages were bought everywhere in the world and we don’t know what is the distribution of risk where a serious crisis of confidence and since July 2007, this situation causes the exchanges to fall and paralyzes the interbank market; banks are paying more or very little fearing that their counterparts are in a red line;
  5. Intervention of central banks: facing the paralysis in the market, the Central Banks intervened massively in early August 2007 by injecting hundreds of billions of Dollars and Euros in cash.

November 15th, 2008 : G20 crisis meeting in Washington, USA.

Elle s’est articulée autour de  cinq objectifs dont  le renforcement du système de régulation qui ne saurait signifier protectionnisme. Premièrement de dégager une réponse commune à la crise financière-deuxièmement ouvrir les pistes d’une réforme en profondeur du système financier international -troisièmement prendre de nouvelles initiatives pour parer à d’éventuelles faillites bancaires et imposer aux banques de nouvelles normes comptables -quatrièmement des règles plus strictes sur les agences de notation, la titrisation et les parachutes dorés

This meeting focused on five objectives, including the strengthening of the system of regulation which does not mean protectionism.

  • First to identify a common response to the financial crisis;
  • Second to open tracks for a reform of the international financial system;
  • Third to take new initiatives to counter possible bank failures and impose on the banks of new accounting standards;
  • Fourth to adopt stricter rules on credit rating agencies, securitisation and the Golden parachutes;
  • Finally, in fifth to increase public spending through coordinated budget deficits, but for the benefit of energy savings for the building and infrastructure development and clean auto technology, questioning the European stability pact (3% of GDP and spending on / GDP less than 60%.)

But it is clear that in this month of January 2017, the global economy is still characterized by turbulence with protectionist options but in a framework of unbridled internal liberalization wanting back in vogue Adam Smith’s invisible hand of the market, which is likely to repeat the scenario of the 1929.  However, the strategic goal is to rethink the current global economic system that promotes bipolarisation North / South, poverty detrimental to the future of humanity, which is also accelerated by the most questionable governance on behalf of most of the leaders of the South.

In short, the return to global protectionism is a chimera and realism will prevail in the end.

In the meantime, let us meditate the crisis of October 1929 and that of October 2008. The large deficit of the American balance of payments, which will be accentuated with the new spending program announced by the new president (with the risk of a loss in value of the Dollar), is currently offset by the large flows of capital from outside the US. . Let us for the sake for humanity, put aside all nationalism, chauvinism that are source of tensions, hatred and war and meditate this quote that is sometimes attributed to French president Charles de Gaulle, under the title “Patriotism is loving his country, Nationalism, is hate of others’” and sometimes to Romain Garyn in his book “European Education” published in 1945 under the title “Patriotism is the love of one’s kin Nationalism is hatred of others”.    ademmebtoul@gmail.com

Algeria’s accession to the World Trade Organisation

by | Jan 18, 2017 |

Algeria’s accession to the World Trade Organisation

Algeria’s accession to the World Trade Organisation (WTO) in the face of domestic and international constraints

Per the official Algerian Customs statistics, in 2016, China is the leading provider of Algeria, with a market share of close to 18% and US$8.396 billion.  France comes second with $4.744 billion and a share of 10%, followed by Italy with $4.642 billion and 9.93%. Spain and Germany are respectively in the 4thand 5th position in this ranking, with $3.595 and $3.009 billion.  In the top 10, there are also Turkey (7th), Brazil (9th) and South Korea (10th).

If China is the big beneficiary of the explosion of the Algerian import bill, the deficit in trade between the two countries is huge between 2007 and 2016 all while official reviews were still focusing on Europe. Indeed, customers of Algeria are Italy with $4.779 billion and a market share of 16.55% of exports of the country. Spain comes second with $3.562 billion, followed by the United States ($3.227 billion) and France ($3.192 billion). Tunisia is 12th with $610 million, Morocco 13th with $589, Singapore 14th with $542 million and India 15th with $511 million closes this ranking.  For the 2016 official figures, exports declined to $28.88 against $34,66 billion in 2015, or a drop of 16.7%, non-oil exports fell to $2.063 billion in 2016 against $2.582 billion in 2015 (-20,1%).

Imports have also declined but at a lower rate to $46.72 billion in 2016 from $51.7 billion in 2015, down 9.62% giving a deficit in the balance of trade of about $18 billion, amount to which services and legal capital transfers are to be added; the balance of payments is the unique reference with between 2014 and 2016 as key partners of Algeria the countries of the European Union.  Also, as pointed out in my contributions and notably in my conference at the invitation of the European Parliament, and after some concern of the international community over the possible abandonment of the Agreement, Algerian officials were clear.  There is no question of breaking the Association Agreement which binds it to Europe.  Europe however, should consider Algeria not only from the point of view of a market.

Now with regards to the WTO, and according to the Algerian Press Service (APS), the Uruguayan Gustavo Miguel Vanerio Balbela has been appointed as of January 14, 2017, new Chairman of the Working Group for the accession of Algeria to the WTO in replacement of Alberto D’Alotto of Argentina, as per the last WTO newsletter.  Mr. Balbela was immediately invited from the Algerian Trade Minister, to visit Algiers and discuss the next steps of the Working Group, which had not met since March 2014.

We must remember that for more than 15 years, dozens of meetings took place and commissions created for Algeria’s accession to the WTO. All of the Algerian major economic players such as workers’ unions, employers’ federations, government representatives, and many experts were conveyed but so far in vain.

Algeria has since 1987 an observant status within the WTO organization and has been negotiating for more than 20 years thus achieving a world record. Looking at developing countries, such as heavyweight of Africa, Nigeria and South Africa, or small countries like Chad, Niger, Togo, Angola, Benin, Gabon, Ivory Coast, Ghana, countries of the Maghreb, Morocco and Tunisia, the majority of the Arab oil countries of which the latest being Saudi Arabia not to mention the majority of the countries of South America including Brazil, Venezuela, Chile, Bolivia, Peru, Mexico, Cuba, in Asia with India, Indonesia, Malaysia, Viet Nam, South Korea, and China, the latter having joined the WTO in 2001, without forgetting Turkey and Russia which joined the WTO in December 15, 2011.

With the WTO agreements, which are part of a global space concern only the economic component, are broadly outlined by the agreement linking Algeria since September 1, 2005 to Europe, as anchored in the Barcelona process, which is part of a regional space but do include political and cultural components.  These agreements have strategic implications for both economy and society: prohibition of the use of the “duality of prices” for natural resources; general elimination of quantitative restrictions on import and export trade; quality and health standards; environmental protection in the use of oil energy, environmental agreements conceived, outside the WTO but lately incorporated to the WTO when felt to be hampering the development of trade; measures concerning the freedom of movement of capital.  Intellectual property protection is an essential condition in order to fight against piracy and therefore the integration of the dominant informal sphere in Algeria which controls 40% of the money supply and more than 65% of the basic necessities.  In General, Algeria’s accession to the WTO would require opening of its borders and the increased specialization as prompted by globalization.  Indeed, both association to the European Union and that of accession to the WTO are based on the development of trade by putting in place the conditions for the gradual liberalisation of trade in goods, services and capital.  It then will be followed by Algeria proceeding with the dismantling of customs duties and taxes for industrial and manufactured products over a period of transition.

All State monopolies must be progressively adjusted in a way that there is no discrimination regarding the conditions of supply and marketing goods between nationals of the Member States. These agreements should turn the Algerian industries from the status of protected industries to industries completely open to international competition with the total removal of tariff and non-tariff obstacles. If Algeria’s WTO entry may have little impact on the oil market, already inserted in a global or regional logic (gas), it is different for all oil products that will be subject to international competition.

Thus, the duality of prices – measure by which a Government could keep domestic prices at levels lower than those determined by the international market forces and the export restrictions – can no longer be valid in a context of trade liberalization. One of the stumbling blocks in the negotiations, in addition to the importance of the informal sphere, is the duality of the gas price for units for export, which would distort international competition. In case of accession, oil products, mainly fuels, will no longer benefit from crude prices lower than the international price upstream. The Agreement emphasizes the opening to competition of the market for energy services as far as it concerns all activities, from exploration to the provision of the product to the consumer through the production and transport.

The environment is a prime area of cooperation, the aim being the preservation of the ecological balance, requiring to implement more and more stringent quality standards; Algeria would be committing to gradually implement the various recommendations of the charters on energy and the environment.  Being in a situation of mono-exporter does not warrant any acceptance; the main OPEC already being WTO member countries. So much more than Doha agreements, a transition period to avoid the wild tariff dismantling that could adversely affect the Algerian infant Industries would be necessary. Indeed, it has made clear that the main resolutions of the fourth Ministerial Conference, held in Doha in November 2001, examined the problems facing developing countries to implement the current WTO agreements, i.e. the agreements of the Uruguay Round of negotiations. The decision on implementation has focused on the following: exception in respect of the balance of payments and clarification of the less stringent conditions set out in the GATT.

This is applicable to developing countries if they restrict their imports to protect their balance of payments. Then a commitment in terms of access to markets, longer periods are granted to developing countries to enable them to adapt to new SPS in other countries. Then technical assistance to those countries least developed and review of technical assistance, including the transfer of technology to least developed countries would be provided. The terms of a special provision concerning developing countries, which recognizes that developed countries must take specifically into account the situation of developing countries when considering to apply anti-dumping measures; the extension of the deadline for developing countries to implement the agreement; development of a method to determine which developing countries fulfil the criterion according to which their GNP per capita must be less than $1.000 so they can grant subsidies contingent upon export.

New rules allowing developing countries to provide grants under programs that aim “legitimate development objectives”, but without giving rise to a countervailing action; and finally, the review of the provisions on investigations countervailing.

Not wanting to unnecessarily dwell on the notion of license according to the rules of the WTO to avoid sterile debates, I would in this context, like to request an answer as to what came about that decision of the Council of Ministers dated December 30, 2014 and thereafter the law passed for the return import licenses in Algeria?

The answer will be that these licenses should fit in the context of respect for all international commitments of Algeria.  The information I gathered however from the Algerian Government, provide the following details :

The freedom of trade and industry is the foundation of economic and trade policy of the Government of Algeria, consecrated by all the provisions of Algerian law.

In this context, this legislation as provided by several countries with open economy in Europe and elsewhere, the possibility of using in specific and predefined cases, a certain transition period, in order to upgrade their productive apparatuses, to import or export licenses neutral in application and administered in a fair and equitable way, so as to handle exceptions to this freedom to trade and this in accordance with the rules of the WTO.

It is in this context that the law that was passed, should first reaffirm the freedom of import and export of products, without prejudice to the rules relating to public morality, security and public order, the protection of the health of the people, as well as to the preservation of the environment and the historical and cultural heritage.

The reasons for implementation of licenses of import or export of which, those with the only objective to limit the trade of certain exhaustible natural resources, the guarantee for the national availability of locally produced raw material processing industry, the supply of the market in products on which would be felt a shortage, as well as backup outside the country financial equilibria.

It is in this framework that the Government introduced a 03-04 amendment of July 19, 2003 to the general rules applicable to operations of import and export of goods, the amendments aimed to upgrade the legislation in accordance with the rules of an open economy. In contrast to the restrictive licensing regime previously applied to imports, these licenses are defined as administrative procedures in the rules of the WTO and are aimed to ensure better quality and product safety as well as secure human, animal and plant health.

Reference to the WTO rules, texts of which clearly state that import licences are administrative procedures requiring, as a condition to the importation of goods, the presentation to the administrative body of a request that is separate from the documents required for customs purposes; the Government states that this kind of license does not mean restriction or distortion of imports.

Control undertaken by the administration is concerned only by those aspects of quality and compliance and not by the commercial aspects, to ensure fairness in commercial transactions, including between the community of traders themselves or between the retailer and the consumer whereas the former regime had for purpose the distribution in the amount of foreign currency to importers.

Also, it has never been said that Algeria would not adhere to the WTO as adopted by the successive governments since 1995, but that accession cannot be at the expense of the interests of Algeria’s which would be seeking to benefit from the Doha agreements that provide for a transitional period for countries such as Algeria.

Also, Algeria, per our sources, whilst safeguarding its interests as any country, intends to comply with international agreements, notably that agreement of association with Europe, the negotiations with the WTO, which it is not to call into question, is no issue to discredit the image of Algeria at the international level, unlike certain tendentious statements.

From my point of view the debate is elsewhere and is about how, with the fall in the prices of hydrocarbons, to deepen all structural reforms for a strategy leading out of the rentier type economy and how can we put aside any tensions between Europe and Algeria relating to the association agreement.

Agreement signed in full sovereignty by the Government and with fundamental implications. Certainly, the concerns being legitimate because tariff cuts are a shortfall ranging between $1.5 and $2 billion annually for Algeria.

Invoking the situation of a mono-exporter would not help, for there will not be any specificity for Algeria alone and per our information from the EU, no renegotiations of the basic clauses with Europe from 2020 onwards.  An extension of time limits for certain products per the terms of the agreement.  Similarly, there will not be any specificity also for accession to the WTO.

Membership or not to the WTO would greatly depend on internal political forces rapport and especially a real desire for clarification of the future path of the controlled liberalisation of the Algerian economy not only for its efficiency that should be coupled with a deep social justice through a better and equitable spread of the national income and therefore put up an effective fight against corruption.

This is not a question about legislation but rather of social practice referring to the urgency of a renewed governance model. All these constraints imposed by both the association and accession to WTO agreements, could not they secure the Algerian economy into the world economy and act as an important pull factor in economic development and social progress?

Legal instability and the lack of visibility in the socio-economic policy, the dominance of the informal sphere and a financial system that is totally disconnected from the international financial system tend to worsen the growing pessimism about a political opening in fact real economic and political reforms which explains the successive downgrades between 2007/2014 of many international organizations.

Is it that the new Algerian economic policy must better articulate the market forces and the action of the State as a regulator in its role of macroeconomic management and macro social within a space balanced and solidarity, the challenge being the massive arrival on the job market of millions of young people within the next two decades.

The question that arises then is the possibility of change in growth to achieve a double objective, today apparently contradictory: on the one hand, create the necessary jobs, on the other hand, improve international competitiveness while distributing more revenue, including through the productivity of factors.

The current productive structure makes growth volatile and subject to external shocks, the financial resources, the importance of foreign reserves is not synonymous with development. The external position of Algeria remains dominated by the weakness inherent to its specialization in hydrocarbons, (weak production and non-hydrocarbon exports less than 4% of the total so marginal and within these 4% semi-finished ferrous and semi-ferrous representing more than 60%), having no control over its own external accounts, which depend only on the price oil/gas and the exchange rate of the Dollar, GDP per capita moving chaotically.

Having a natural wealth that is ephemeral, Algeria must at the same time preserve this resource for future generations and gradually find different revenue sources. It follows that the levels of growth necessary to result in a significant improvement in the situation, estimated at 8 / 9% per year until 2017/2020/2025, seem difficult to achieve in the short term.  In the meantime, its association agreement of free trade with the European Union (EU), Algeria incurred a shortfall in customs duties that was valued for year 2016, at $1.27 billion and in 2015 at $1.09 billion.

To benefit from the positive effects of the agreement with Europe to a possible WTO membership, would require us to undertake first some cleaning in the Algerian economy and that they are obstacles to the comprehensive reform of the result of displacement of the segments to be able to which explains the dieback of the productive fabric that any operational analysis will have to connect the advanced or the brake reforms by analysing the different social forces, public policy strategies located fluttered between two conflicting social forces, rentier logic supported by proponents of importation (of the monopolists and not shopkeepers, actually only 100 controlling more than 80% of the total) and unfortunately dominant informal sphere, and minority entrepreneurial logic.

This explains, Algeria is in this interminable transition since 1986, not a market economy, nor an economy administered, explaining the difficulties of regulations, the progress of reforms being inversely proportional over the oil and the value of the Dollar, the reforms since 1986 being blocked or timidly with inconsistency when the price rises.

In summary, Algeria’s accession to the World Trade Organization is irreversible if it wants to avoid its marginalization, benefitting from both the Doha agreements and from the success stories of Russia and Saudi Arabia whose economies mainly dependent on hydrocarbons.  The security aspect having been improved, Algeria must create favourable conditions for the development by raising the environmental constraints to enhance the vitality of local and international enterprise as sole source of permanent wealth creation, and its foundation on promoting knowledge and the adaptation of its economic strategy to the fourth economic revolution that is looming between 2020 and 2030.

Read more on the WTO website.

Human Capital as the most valuable Resource

 

It has been said that Human Capital as the most valuable Resource that any organisation be it in the  political, economical and / or social domains would require for purposes of progress, growth and development  generally. These organisations to succeed and eventually prosper, or perhaps simply stand their grounds, do need leadership of one type or another.  There is plenty of literature on this very topic but the following essay of McKinsey would not pass unnoticed.   In our series on leadership, refer to Leadership Priorities in Year 2017, we did not cover this aspect of the business of tracking, selecting and ultimately contracting in quality personnel.  This is possibly the most perilous but also the most rewarding operation of selection of an employee, an expert and / or a president of a country.  Excerpts of the McKinsey’s Finding Hidden Leaders are reproduced here.

Finding hidden leaders

By Kevin Lane, Alexia Larmaraud, and Emily Yueh

 

Persistent challenges

The first explanation is size: in large organizations, it’s easy for hidden talent to stay hidden or be drowned out by the noise of complex organizational processes. They could be in a business unit far from the corporate center or in a backroom job away from the action. They might be quiet and reluctant to push themselves forward, eclipsed by more forceful personalities. Yet they may perform exceptionally well in their jobs, collaborate effectively with colleagues, have extensive networks across the organization, or carry informal influence among their peers. In short, they are showing signs of leadership potential, but it remains untapped because they are shielded from senior managers.

Another reason why promising future leaders go unnoticed is bias in the selection process. As Sylvia Ann Hewlett, Carolyn Buck Luce, and Cornel West have shown, bias can be consciously or unconsciously based on race, ethnicity, or gender, or on age, when older employees are seen as past their prime. A language “deficit,” or even a strong accent, has been known to cause people in global organizations to be penalized, as has a failure to fit conventional cultural norms. Sometimes it might be merely a one-off bad experience on a project that taints a high-potential employee’s reputation. Or it could happen to someone who steps off the conventional path for personal reasons—for example, to have a child or care for an ill family member. Managers in most organizations, notwithstanding efforts to encourage diversity and inclusion, still tend to recognize, reward, and promote people who look and behave like them and who have followed similar paths, while neglecting others whose leadership potential may be equally impressive.

Finally, there is the problem of the narrow top-down lens that senior leaders often use when looking for leadership talent. Underlying this is the mistaken assumption that only those at the top of the organization know what great leadership looks like, or a narrow focus on leadership contexts specific to the organization and the particular role. This can crowd out other perspectives, such as what individuals have achieved outside the company or what people lower down in the organization see as examples of effective leadership. A narrow lens can also interact in subtle ways with bias, as was the case for the executive at a large technology company who found it difficult to understand why a female manager wasn’t seizing more opportunities to “demo” the company’s products at major events as he and other senior leaders had done during their rise up the ranks.

Disappointing harvests

Overcoming the obstacles of size, bias, and narrow lens is a management challenge of the first order. In our experience, the most common means of finding leaders in large organizations—what we call harvesting—is not up to the task. Harvesting assumes that the best, often with some help, will organically rise to prominence and can then be plucked and placed into leadership roles. There are many varieties of harvesting, but it essentially involves planting talented “seeds”—new hires—in the organization, giving them increasingly demanding tasks, providing training and support as they develop, allowing them opportunities to demonstrate their abilities, and choosing the best performers for the senior roles. Managers who do this best invest a large amount of time and energy in cultivation activities. There is a lot of value in this, and harvesting should remain a vital part of developing and selecting. But it does little to unearth hidden talent, because hidden talent, by its nature, includes individuals who for some reason are not on the standard advancement path and thus remain invisible to those relying on conventional processes.

How to spot your hidden leaders

Finding employees with the qualities to be tomorrow’s leaders requires more than harvesting talent and should include what we call “hunting,” “fishing,” and “trawling” (exhibit). These approaches are more proactive and involve, for example, turning over more stones than usual, encouraging leaders to identify themselves, and finding new ways to tap into the environments where people live and work.

Exhibit

human-capital-hunting-tracking-and

 

 

 

 

5 years to change how we Learn, Earn and Care

Saadia Zahidi in perhaps one of her most commendable contributions to the WEF, states here that times are a-changing and that it is up to us to adapt our systems of education, care, etc. so as to maximise our chances of a better future.  For that we have only 5 years to change how we learn, earn and care or even perhaps less than that. 

We may have less than 5 years to change how we learn, earn and care

January 4, 2016

Over the course of the last year, at World Economic Forum and elsewhere, I have asked participants two questions. First I ask for a show of hands on whether they feel confident about their current skills taking them through to the end of their careers – about one in five raise their hands. Then I ask if they feel confident about advising their children on their education to prepare for their own futures: none raises their hand. These are some of the most knowledgeable, leading figures in the world and yet they, like many of us, are uncertain about what the future of labour markets looks like.

This is not surprising.

Globalization and technology are accelerating both job creation and destruction. Some estimates have put the risk of automation as high as half of current jobs, while others forecast a considerably lower value of 9%. Still, all occupations will go through change: we found that on average one-third of the skillsets required to perform today’s jobs will be wholly new by 2020.

job-families-rise-and-decline

At the same time, education and training systems are not keeping pace with these shifts. Some studies suggest that 65% of children currently entering primary school will have jobs that do not yet exist and for which their education will fail to prepare them, exacerbating skills gaps and unemployment in the future. Even more urgent, underdeveloped adult training and skilling systems are unable to support learning for the currently active workforce of nearly 3 billion people.

In addition, outdated cultural norms and institutional inertia already create roadblocks for half of the world’s talent – and are getting worse in the new context. Despite women’s leap forward in education, their participation in the paid workforce remains low; and progress is stalling, with current forecasts for economic parity at 170 years.

The near-term outcomes of these dynamics, compounded through other demographic, geopolitical and economic factors, are profoundly challenging. They include skills gaps in the workforce that are difficult for employers and workers alike, unemployment and job displacement, particularly in blue-collar and services work, rising fear of further technological unemployment, insufficient supply of talent for many high-skill occupations, and loss of female talent and potential. Together these factors are exacerbating income inequality and creating a crisis of identity.

Yet, most of these dire predictions need not be foregone conclusions. If leaders act now, using this moment of transformation as an impetus for tackling long-overdue reform, they have the ability not only to stem the flow of negative trends but to accelerate positive ones and create an environment in which over 7 billion people on the planet can live up to their full potential.

Instead, in several advanced economies, we are seeing the political and social consequences of short-term, emotive – and sometimes disingenuous – thinking. For those who are losing out from the changes underway, fear is an understandable response. But turning away immigrants, trade or technology itself, and disengaging from the world, is a distraction, at best. At worst, will create even more negative consequences for those already losing out – and many more. It is up to courageous, responsible and responsive leaders and citizens to take the long view and set out on the path to more fundamental, relevant reforms, and an inspiring future.

How? By investing in human capital and preparing people for the new opportunities of the fourth industrial revolution. The World Economic Forum has worked with leaders, experts and practitioners to create a common vision and a shared change agenda focused on how we learn, earn and care.

  1. Transform education ecosystems. Most education systems are so far behind the mark on keeping up with the pace of change today and so disconnected from labour markets that nothing short of a fundamental overhaul will suffice in many economies. The eight key areas of action here are early childhood education, future-ready curricula, a professionalized teaching workforce, early exposure to the workplace, digital fluency, robust and respected technical and vocational education, openness to education innovation, and critically, a new deal on lifelong learning.
  2. Facilitate the transition to a new world of work. While there are deeply polarized views about how technology will impact employment, there is agreement that we are in a period of transition. Policy needs to catch up and facilitate this transition. We propose four areas of action: recognition of all work models and agile implementation of new regulations, updated social protection, adult learning and continuous re-skilling, and proactive employment services.
  3. Advance the care economy. Often undervalued and unregulated, care is one of the most fundamental needs among both young and old populations. It has a strong impact on education, and holds potential for job growth. We propose six areas of action: recognize and value care as a vital sector of the economy, professionalize the care workforce, rebalance paid and unpaid work responsibilities, expand high-quality care infrastructure, create new financial provisions to facilitate care, and use technology as a tool for balancing care and work.

how-is-care-valued

Image: World Economic Forum

To do any of this – and to make it pay off – it is critical that policy design includes agile multistakeholder governance, empowerment of the individual, objective measurement, universal access and long-term planning as fundamental tenets.

The rapid pace of change means we need to act urgently. By some estimates the current window of opportunity for action is three-to-five years. This may sound daunting but there are a large variety of robust success stories to learn from and emulate. There are also substantial new commercial opportunities – such as adult education, care services, employment services – that make this space ripe for public-private collaboration.

It’s the harder path to follow, there’s no doubt about it. Transforming education ecosystems, creating a care economy and managing the transition to a new world of work require political will, innovative policy, new financing models and, most importantly, a new mind-set.

But this is also the only viable path if we want to get ahead of the transition underway and turn this moment of flux into an opportunity for revitalizing growth and realizing human potential in the age of the fourth industrial revolution.

The whitepaper on Realizing Human Potential in the Fourth Industrial Revolution: An Agenda for Leaders to Shape the Future of Education, Gender and Work can be found here.  Saadia Zahidi is Head of Education, Gender and Work and Member of the Executive Committee, World Economic Forum.

 

Real Leaders need to make Globalization work for all

 

As we head into 2017, and further to our previous contribution Leadership Priorities in Year 2017 we would like to give this opportunity to our readers to go through this article written by Rawan Al-Butairi, Financial analyst of Saudi Aramco and published on Monday 2 January 2017 on the WEF website.  The author questions leaderships attributes but within the specific Arab context of the MENA countries.  Experience tells us that practitioners love to see what is happening in their domain and for one reason or another do generalise it to all by asserting that Real leaders need to make globalization work for all .

The above image is of REUTERS/Victor Ruiz Garcia

 

What does leadership really mean? Two things

 

 

 

A young person could almost be forgiven for feeling despair and hopelessness today. Everywhere they look, there is escalating inequality and a lack of opportunity.

In certain regions and countries, the problem is more acute; from hyperinflation and a collapsed economy in Venezuela to an Arab Spring in Egypt which toppled a government but ultimately has yet to improve the lives of ordinary Egyptians. In fact, with a recently de-pegged currency and an IMF bailout, it will ostensibly get much worse there before it starts to get better.

At the time, many pundits argued that the 2011 Arab Spring was about people in the region demanding greater democracy and liberal freedom. However, I think this misses the heart of the problem. At that time, Egypt was still suffering from the aftermath of the 2008 financial crisis, with important industries such as tourism still far from recovery. Moreover, large increases in food and raw material prices caused a huge trade imbalance (Egypt- as well as Venezuala – is a significant net importer of food).

With the rising cost of food, an unsustainable trade imbalance leading to unaffordable domestic subsidy programs, an overly concentrated economic model susceptible to crippling exogenous shocks, and a growing population to “feed”, the situation mirrored the predictable fall of a neatly stacked set of domino chips. These countries simply ran out of room and ran out of time to modernize their economies to provide opportunities for their growing young population.

Leaders fell back on the status quo, too afraid, too self-interested, or too corrupt to make the difficult trade-off decisions to fix the numerous structural imbalances. These were tragic and epic failures.

In this context, what does responsible leadership mean? While it is tempting to provide the never incorrect “it depends” answer, I believe there are two universal and key themes.

First, globalization, like capitalism, must be effectively managed to be more inclusive. Globalization leads to a bigger overall pie, but responsible leaders must find ways to distribute that pie to more people. Conversely, protectionism and populism to me is just Neo-Luddism, a misguided and ultimately futile tilting against windmills which will only lead to a smaller pie for everyone.

With technological advancement and the oft-touted “knowledge economy” naturally favoring a small group of the highly skilled, government and the private sector can and must do more to even the playing field, including potentially higher minimum wage laws or progressive taxation to fund more targeted and effective social programs. These programs must be financially sustainable, free of corruption, and efficiently enacted.

At a community level, responsible leadership must encourage more volunteerism and gifting – of not just money, but time, knowledge, and mentoring those with less opportunity – and these individuals and institutions must personally lead by example. The leaders and workers of tomorrow need to understand the impact of globalization, both its benefits and its implications, so that workers are motivated to develop competitive skills in an increasingly global and interconnected economy. Inevitably, there will be groups who will be marginalized and unable or unwilling to adapt to this future, and the social programs will need to be creatively designed to reach and help these people.

Second, responsible leaders must have deep social capital, particularly “bridging social capital”. According to Robert Putnam, a political scientist and Harvard Kennedy School of Government professor, bridging social capital builds key networks between different social groups. It allows people from different socio-economic backgrounds, genders, ethnicities and cultures to share and exchange ideas and build consensus among groups with diverse interests.

Responsible leaders must develop empathy and solidarity with all people they serve, so that they will forge collective benefits that enlarge the pie for everyone. Again, volunteerism and community engagement are crucial. Unfortunately, with social media and an overabundance of choice, people are easily conditioned to only seek out interactions with people they “like” or to “friend” people of similar views or backgrounds. This is the exact opposite of the desired outcome, and can lead to irresponsible leaders with low social capital, and low empathy, who see the world as a fixed pie that must be divided up with the largest slice going to themselves and people like them. The future of the world, particularly the one that the young will inherit, must be defined by what we share, not our superficial differences.

So what, again, is a responsible leader?

In summary, a responsible leader to me is person who has abundant social capital, an intrinsic desire to maximize the economic pie to create opportunities for everyone, someone who is able to effectively manage globalization, and looks to build bridges instead of walls. He or she will enable hope to once again flourish within the sea of hopelessness, and turn despair into optimism.

About this article: Rawan Al-Butairi is a World Economic Forum Global Shaper. Her article is one of the short-listed entries in the 2016 Global Shaper essay competition on the theme of responsive and responsible leadership.