Global warming brings investment opportunities for investors

IIPM Mumbai Campus

Opportunities Global Warming: Bright side of warming

There is a growing tussle going on – especially in the US on whether global warming is actually a fact or a myth – and how adversely it can affect an economy. A host of cynics in the US have discarded warming as sham propaganda by scientists, political leaders with their own vested interests, activist groups and other recipients of funds to leverage on this supposed hoax! The critics comment that the proposed regulations to control warming can slow down a country’s economic growth – terribly so, especially if it is a developing country which needs to grow fast and catch up with the developed ones. However, on a closer look, it seems that global warming, despite criticism, offers new avenues of lucrative investment options. Renewable energy is an example. Solar energy for instance, is a high growth investment option; which is growing globally at 33 per cent annually. In 2009, in spite of downward trend in most economies, a total of 80GW of renewable energy and 32 GW of solar energy was set up worldwide; while total investment (in clean energy) was $162 billion. China leads the table surpassing United States as the leading investor in renewable energy with a production of 37 GW. The private investors are increasingly participating in this venture; especially in Oceania and Asia with an investment of $40.8 billion overtaking US with $32.3 billion in 2009.

Insurance industry too is set to gain from the global warming dynamics. The clean energy products are increasingly being covered by insurance companies and leading the pack is Munich Re – the world’s largest insurer who covers products like wind farms and solar panels – giving guarantees for their performance, failing which, compensation is provided to the investor! Another insurance firm called Travelers is covering green cars in 41 states in US at discount of 10%; while Allianz has published a testimony where they have described in detail the contribution of Insurance firms to mitigate the ills of global warming.

Even banks and funding institutes who lend money to finance projects are now falling on to carbon credits as a new means of investment. The Chinese government recently has shown keen interest in trading carbon credits and has raised a fund of $100 million for that. Dealings in carbon credits are happening in thick across the world; a notable example is Lanxass, a German company, which has put in $9.67 million in an Indian fuel company to access post-2012 credits; while a French company has amassed €60 million for gaining carbon credits after 2012. Even Al Gore, who is seen as a stooge of global warming advocates and is often accused by corporations and media of spreading lies in favour of climate change, is a partner in two funding companies specifically trading carbon credits. Interestingly, championing for climate change has earned him $100 million through the hedge fund companies!

In agriculture too, GM crops are being produced that are touted as ‘environment ready’ by big firms like Monsanto, which mint big money. If we really needed to dig holes and fill them up to get the world out of recession, global warming is showing new options!

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Countries pump in monetary assistance for political objectives

IIPM BBA MBA Institute: Student Notice Board

Business of global aid

The World Bank acknowledges that “during the Cold War years, aid was politically motivated.” Surprisingly, in spite of being the world's second largest economy, China gets more than $2.5 billion a year as foreign aid. What is more surprising is that even as recently as 2007-08, a more needy nation like Ethiopia got merely $1.6 billion, while Iraq got $9.462 billion and Afghanistan $3.475 billion.

Aid is clearly used for political favour. Most of the time, developmental aid is given to countries for ally formation and buying votes in forums like the UN Security Council. As per a paper by Kuziemko and Werker, US foreign aid increases when countries serve on the UNSC. Ten temporary members of the UNSC were more likely to receive IMF assistance [than others]. Being frontrunners in such moves, America’s primary purpose of economic assistance has always been to promote US policy objectives. According to Hans Joachim Morgenthau (leading international politics expert), “The transfer of money and services from one government to another performs the function of a price paid for political services rendered or to be rendered.”

With so much developmental and humanitarian aid coming in from various nations, rampant duplication of work is reducing the effectiveness and efficiency of the whole concept. According to a UN investigation report, around 50 per cent of the UN World Food Programme in Somalia has been stolen. A large pie out of $2.5 billion relief fund for Haiti was siphoned off by locals as well as UN officials. As per Gerbert van der Aa, a historian and noted journalist, out of the total money that Netherlands donates as humanitarian aid, only 33 per cent is effectively used while another 33 per cent simply fails to reach [the beneficiary]; and there is no clear evidence whether the remaining 33 per cent is used effectively or not.

Until the US invasion of Iraq and Afghanistan in 2001, Israel and Egypt were the leading recipients of US aid (more than 30 per cent) but after invasion, things got reversed. Among the top 15 recipients of US foreign aid, only four (Afghanistan, Ethiopia, Sudan and Uganda) are among the 'least developed' while none of the world’s poorest countries make it to the list. Strom Thacker of Boston University opines that IMF loans “more often to countries that move toward the US position in UN General Assembly roll-call votes.” According to UNFAO Director-General Jacques Diouf, “Food aid is mostly donated on condition that it should be purchased and processed in and shipped from donor countries, even if adequate supplies are available in the region where it is needed.” Aid is generally disbursed for lobbying, domestic interest or international diplomacy. Foreign aid rarely promotes economic development. Instead, it reduces the urge to adopt innovative technologies to address problems. Rather than pumping aid, the West should relax trade barriers and restrictions, and encourage imports from the developing countries. But that’s a boring premise we’ve been chaffing since ages..

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Taliban was not only willing to hand over Bin Laden to the US but also warned the latter of an impending terrorist attack

IIPM BBA MBA Institute: Student Notice Board

Documents suggest that in the years leading to 9/11

The US administration documents acquired through the Freedom of Information Act (FOIA) and released by Washington based National Security Archive shed some additional light on talks with the Taliban preceding the terrorist attacks of September 11, 2001. It also underlines the constant Taliban offer to hand over Osama bin Laden; and the activity of Pakistan before and after the attacks.

As present-day US plan of action increasingly follows policies to conciliate or “flip” the Taliban, the document highlights Washington’s complete refusal to negotiate with Taliban immediately after 9/11. For example, on September 13, 2001, the then US Ambassador to Pakistan Wendy Chamberlin brusquely told President Pervez Musharraf that there was “absolutely no inclination in Washington to enter into a dialogue with the Taliban” and that the time for dialogue was “finished as of September 11.” However, Pakistan's approach was more holistic and did not correspond to the American knee-jerk reaction. The then ISI chief N Mahmoud Ahmed told the ambassador not to act in anger. The real victory, he said, would come in negotiations and that if the Taliban were eliminated, Afghanistan would “revert to warlordism.”

There are some interesting inputs on Osama as well. When asked about apprehending Laden, Mahmoud said it was “better for the Afghans to do it. We could avoid the fallout.” He in fact travelled to Afghanistan twice, on September 17, aboard an American plane, and again on September 24, 2001 to talk over the gravity of situation with Taliban leader Mullah Omar. However, the US was hell bent on action. Chamberlin categorically let Mahmoud known that while his meetings were all right, but they “could not delay military planning.”

Subsequent papers underscore the value of the bilateral bond to leaders in both Pakistan and the US. An interesting memo categorized seven demands handed over to Mahmoud by US Deputy Secretary of State Richard Armitage just 48 hours after the attack. President Musharraf sent a cable a day after accepting all the demands “unconditionally”. However, the documents also reveal fundamental disagreements and distrust vis-a-vis Taliban.

For example, an ISI official told visiting US Congressmen that “Pakistan will always support the Taliban”. This “policy cannot change”, he continued, because “it would prompt rebellion across the Northwest Frontier Provinces, the Federally Administered Tribal Areas, and indeed on both sides of the Pashtun-dominated Pak-Afghan border.”
It is now common knowledge that the US had been asking the Taliban to hand over Laden since 1999. These discussions stopped only a week before the 9/11 attack. However, the US was so adamant on its stand that Laden be tried by the Department of Justice— and not in a third country as Taliban suggested— that Taliban refused to hand him over. Officials described it as a missed opportunity. The former CIA station chief Milt Bearden said, “We never heard what they were trying to say. We had no common language. Ours was, ‘Give up bin Laden.’ They were saying, ‘Do something to help us give him up'.” Bearden added, “I have no doubts Taliban wanted to get rid of him. He was a pain in the neck but this never clickedwith us”. The US thought it was “unreasonable” on Taliban's part to ask for evidence indicting Laden.

Taliban, on its part, even cautioned the US that Laden was planning a big attack on American soil. In fact, former Taliban foreign minister Wakil Ahmad Muttawakil maintained that his repeated warnings, delivered because of apprehensions that the US would respond by waging war against Afghanistan, had been dismissed. US officials admitted to this fact but said that warnings were dismissed because they were “hearing a lot of that kind of stuff”.

Declining the Taliban's offer to have Laden handed over shows that the US rather followed the policy of regime change well before the 9/11 happened. India was considered to have joined Russia, the USA and Iran in a conjunct front against Taliban, which enclosed aid for Northern Alliance, including “information and logistic support” from Washington. Former Pakistani Foreign Secretary Niaz Naik claimed that he had been informed by senior US officials as early as in July 2001 that military action would be taken against the Taliban by the middle of October. Readies had already been coordinated with Tajikistan, Uzbekistan, and Russia. Naik also said that “it was doubtful that Washington would drop its plan even if Bin Laden were to be surrendered immediately by the Taliban.”

Pakistan was repeatedly asking the US “to maintain open channels to the Taliban.” ISI officials negated that their aid for the Taliban enclosed military assist. When interjected why Pakistan supports the Taliban, a senior ISI functionary said, “We don’t support but interact with the Taliban”. When asked further as to why Pakistan continued to give the Taliban international diplomatic support and to press the USG (United States Government) to engage with the Taliban, the Pakistanis reiterated that the Taliban were the effective rulers of about 90 per cent of Afghanistan, that they enjoyed significant popular support because they had ended the banditry and anarchy that once bedeviled the country, and that the instant success of the opium poppy production ban underscored “the reality and effectiveness of Taliban authority.” On the contrary, if it wasn’t for “external support” for the Northern Alliance, it “would collapse in a matter of days.”

The US war against Afghanistan began on October 7, and the Taliban again repeated offers to discuss handing over bin Laden. Taliban Deputy Prime Minister Haji Abdul Kabir declared, “If the Taliban is given evidence that Osama bin Laden is involved and the US stopped its bombing, we would be ready to hand him over to a third country”. President George W Bush spurned the offer as “non-negotiable”, adding, “There’s no need to discuss innocence or guilt. We know he’s guilty.” Refusing to furnish evidence of Laden’s guilt, Bush ingeminated the US ultimatum: “If they want us to stop our military operations, they’ve just got to meet my conditions. When I said no negotiations, I meant no negotiations.”

Then in the preceding months, Taliban went as far as to drop the demand for evidence and proposed to extradite Laden to a third country. Muttawakil apparently met with officials from the CIA and ISI to suggest the offer, which was once again turned down by Washington.

It was then that Taliban decided to abandon the idea of reconciliation. US jointly. Muttawakil famously said, “We don't want war but let the US also understand that we are a sovereign nation and not just another of its provinces.” The next day, Kabul was bombed for the first time.

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