Jomo Kwame Sundaram’s Blog

After four years of Trump’s ‘America first’ isolationism, US President Joe Biden announced “America is back”. His White House has since tried to find allies against China and Russia. But it has not found many, especially in the Global South. His summit with Southeast Asian leaders was well attended, but promised little. Worse, his Summit of the Americas revealed fading US influence in its long-time backyard. Africa not aligned The latest U.S. Strategy Towards Sub-Saharan Africa (SSA) was expected to do better on the continent of Trump’s “shithole countries”. But it delivered little more than rhetoric. As with its Indo-Pacific Economic Framework for Prosperity, it is…

Half a century after the 1970s’ stagflation, economies are slowing, even contracting, as prices rise again. Thus, the World Bank warns, “Surging energy and food prices heighten the risk of a prolonged period of global stagflation reminiscent of the 1970s.” In March, Reuters reported, “With surging oil prices, concerns about the hawkishness of the Federal Reserve and fears of Russian aggression in Eastern Europe, the mood on Wall Street feels like a return to the 1970s”. Stagflation in the 1970s Worse, it seems few lessons have been learnt from the last stagflation episode. There is no agreed formal definition of stagflation, which…

The world economy is on the brink of outright recession, according to the International Monetary Fund (IMF). The Ukraine war and sanctions have scuttled recovery from the COVID-19 pandemic. Over 80 central banks have already raised interest rates so far this year. Except for the Bank of Japan governor, major central bankers have reacted to recent inflation by raising interest rates. Hence, stagflation is increasingly likely as rising interest rates slow the economy, but do not quell supply-side cost-push inflation. IMF U-turn unexplained The IMF chief economist recently advised, “Inflation at current levels represents a clear risk for current and future macroeconomic stability and…

Like so many others, Africans have long been misled. Alleged progress under imperialism has long been used to legitimize exploitation. Meanwhile, Western colonial powers have been replaced by neo-colonial governments and international institutions serving their interests. ‘Shithole’ pots of gold US President Donald Trump’s “shitholes”, mainly in Africa, were and often still are ‘pots of gold’ for Western interests. From 1445 to 1870, Africa was the major source of slave labour, especially for Europe’s ‘New World’ in the Americas. Walter Rodney’s How Europe Underdeveloped Africa noted “colonised Africans, like pre-colonial African chattel slaves, were pushed around into positions which suited European interests…

Long a means for powerful nations to influence developing countries, development finance has gained renewed significance in the new Cold War. Unlike during the US-Soviet Cold War, the rivalry now is between mixed market capitalist systems. Development aid rivalry After reneging repeatedly on development aid and climate finance promises, the G7 big rich nations dutifully lined up behind US President Biden’s Partnership for Global Infrastructure and Investment (PGII) at their 2022 Summit in Schloss Elmau, Germany. With a $200bn US commitment, the G7 promised to mobilize $600bn in public and private funds for infrastructure investments in developing countries to compete with China’s multitrillion…

Rich country governments claim the high moral ground on climate action. But many deny their far greater responsibility for both historic and contemporary greenhouse gas (GHG) emissions, once acknowledged by the Kyoto Protocol. Climate injustice Worse, responsibility has not been matched by commensurate efforts, especially by the largest rich economies in the G7, which dominates the G20. Its continued control of international economic resources and policy making blocks progress on climate justice. “That is the greatest injustice of climate change: that those who bear the least responsibility for climate change are the ones who will suffer the most”, says Mary Robinson,…

US-led sanctions are inadvertently undermining the dollar’s post-Second World War dominance. The growing number of countries threatened by US and allied actions is forcing victims and potential targets to respond pro-actively. SWIFT strengthened dollar The instant messaging system of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) informs users, both payers and payees, of payments made. Thus, it enables the smooth and rapid transfer of funds across borders. Created in 1973, and launched in 1977, SWIFT is headquartered in Belgium. It links 11,000 banks and financial institutions (BFIs) in more than 200 countries. The system sends over 40 million messages daily,…

Food crises, economic stagnation and price increases are worsening unevenly, almost everywhere, following the Ukraine war. Sanctions against Russia have especially hurt those relying on wheat and fertilizer imports. Unilateral sanctions illegal Unilateral sanctions – not approved by the UN Security Council – are illegal under international law. Besides contravening the UN Charter, unilateral sanctions inflict much human loss. Countless civilians – many far from target countries – are at risk, depriving them of much, even life itself. Sanctions, embargos and blockades – ‘sold’ as non-violent alternatives to waging war by military means – economically isolate and punish targeted countries,…

US and allied economic sanctions against Russia for its illegal invasion of Ukraine have not achieved their declared objectives. Instead, they are worsening economic stagnation and inflation worldwide. Worse, they are exacerbating hunger, especially in Africa. Sanctions cut both ways Unless approved by the UN Security Council (UNSC), sanctions are not authorized by international law. With Russia’s veto in the UNSC, unilateral sanctions by the US and its allies have surged following the Ukraine invasion. During 1950-2016, ‘comprehensive’ trade sanctions have cut bilateral trade between sanctioning countries and their victims by 77% on average. The US has imposed more sanctions regimes, and…

Central bank policies have often worsened economic crises instead of resolving them. By raising interest rates in response to inflation, they often exacerbate, rather than mitigate business cycles and inflation. Neither gods nor maestros US Federal Reserve Bank chair Jerome Powell has admitted: “Whether we can execute a soft landing or not, it may actually depend on factors that we don’t control.” He conceded, “What we can control is demand, we can’t really affect supply with our policies. And supply is a big part of the story here”. Hence, decisionmakers must consider more appropriate policy tools. Rejecting ‘one size fits…