From Volume 7, Issue 20 of EIR Online, Published May 13, 2008

Global Economic News

Mandelson Attacks 'Protectionism Rhetoric' in U.S. Primaries

May 8 (EIRNS)—In another indication of what the British Fabians fear from a Hillary Clinton Presidency, EU Trade Commissioner Peter Mandelson attacked the "protectionist stance" of U.S. candidates, in an interview with BBC's "Hardtalk" program today. He refused to name names, but asked reporters to draw their own conclusions. The Financial Times goes into Clinton's and Barack Obama's calls for trade tariffs against China, and then singles out Clinton's attack on NAFTA and her call for a "time-out." The paper notes that this interview "marked a sharp increase in his criticism of the Democrats."

"It is irresponsible to be pretending to people you can erect new protection, new tariff barriers around your economy in this 21st century global age and still succeed in sustaining people's living standards and jobs," Mandelson complained, and warned that this would "lead us into a vicious spiral of beggar-thy-neighbour policies," which would take us "decades back in terms of trade growth." Tut, tut.

UN Chief Praises 'Grass-Root Solutions' to Food Crisis

May 5 (EIRNS)—UN Secretary General Ban Ki-moon on May 5 praised "home-grown, grass-roots solutions—precisely the kind of solutions that Africa needs" to the international food crisis that threatens the 6-plus billion people whose interests he is supposed to represent. The conditions created by the global imposition of free trade, Ban referred to as "grass-root problems."

Writing in the Washington Times, Ban made no mention of causes of the crisis. But he did offer this: "We can deal with this crisis. We have the resources. We know what to do. We should consider this not only a problem, but an opportunity. It is a huge chance to address the root problems of the world's poorest people, 70% of whom live as small farmers."

In one contorted glance in the general direction of reality, Ban wrote, "It might be tempting to let the markets work their magic. If prices go up, the thinking goes, supply will. But we live in the real world, not the world of economic theory."

FAO Director Calls for 'Massive' Food Projects for Haiti

May 6 (EIRNS)—After a 24-hour visit to Haiti on May 6, UN Food and Agriculture Organization (FAO) director Jacques Diouf stated that he intended to meet with President Leonel Fernández of the Dominican Republic to discuss launching a program of "massive production" of basic food crops on the border the two nations share. Such projects are intended to combat food scarcity and poverty in Haiti.

Diouf went to Haiti, which was wracked by violent food riots a few weeks ago, to evaluate the food security situation in the impoverished nation, and assess the effectiveness of FAO programs in areas where extensive flooding had done significant damage to agriculture. He met with President René Preval, legislators, and representatives of local NGOs.

Fernández has just announced his intention to create a National Food Security Council, and to revitalize the agriculture sector, to guarantee adequate food supplies.

Chinese Crack Down on Illegal Grain Exports

May 5 (EIRNS)—Chinese customs officials are cracking down on illegal grain exports by traders trying to take advantage of high international prices, Xinhua reported. Amounts are relatively small, but grain prices are a vital issue in China. Domestic grain prices have been kept under control, only going up 5.7% in January and 6% in February. So far this year, China exported 350,000 tons of rice, and imported 138,588 tons. China has not banned exports, but ended export tax rebates for grain at the end of 2007, and instead imposed a 5.25% provisional export tariff on grain and other foods. Also in January, the Ministry of Commerce announced that grain exporters would be given export quotas before signing new foreign export contracts this year.

China has reserves of some 250 million tons, about half of national annual grain consumption. Some amount of soybeans has to be imported, but China is more than self-sufficient in wheat, rice, and corn. Currently, prices are far below international averages. The State Administration of Grain is now collecting national grain purchase, sales and inventories statistics once every ten days to check on the situation.

Mexican Lawmakers Demands Food Security Policy

May 4 (EIRNS)—Mexican legislators and other officials are demanding that President Felipe Calderón inform them of the size of the country's grain reserves, and what measures he is taking to guarantee that the population can be fed, in the face of the worsening global food crisis.

On May 2, Calderón announced a program to grant a monthly subsidy of 245 pesos to 279,000 of the country's poorest families, to ensure they can purchase food. But this is woefully inadequate, said Heladio Ramírez López, president of the Senate Rural Development Committee, and a former leader of the National Peasants Confederation (CNC).

Ramírez documented the fact that Mexico today is not producing enough to feed its people. Rural areas are depopulated, cities are growing with an ever-increasing population, food consumption is greater, yet Mexico isn't even producing basic food crops. And on top of that is the biofuels "fever."

Jaime Jezaki, president of the National Agricultural Council, warns that Mexico is already in a grave food crisis, and that the cattle-growing sector is extremely vulnerable, because between 18-20 million tons of grains for fodder must be imported. "We're not self-sufficient, ... we have to import food as well," he added. One-third of what Mexico consumes in yellow corn is imported, along with 95% of soy consumption, 70% of rice consumption, 65% of wheat used for bread, and 30% of sorghum for cattle, along with seeds and fertilizer.

More City of London Hysteria over the Food Crisis

May 4 (EIRNS)—Lyndon LaRouche commented today that, "We are coming to a point of crisis globally, in which you have a reality shock hitting.... And the enemy is trying to hope they can drown out the reality shock. The reality shock is food."

Exemplary of British imperial hysteria is an op-ed in the Sunday Telegraph by Liam Halligan, chief economist at Prosperity Capital Management, a diatribe against the EU's Common Agriculture Policy (CAP), and the possibility that its original protectionist principles might be adopted elsewhere.

"It is immoral to suggest the CAP is a solution to the food crisis," Halligan scolds. The CAP isn't just a bad idea, but one that's "so self-serving—and dangerous—that political leaders everywhere should publicly rip it to pieces." Both French Agriculture Minister Michel Barnier, as well as President Nicolas Sarkozy, "should hang their heads in shame." Halligan warns that now the French government will be proposing that the CAP "should be adopted by the rest of the world."

Halligan, who manages hedge funds, argues that it's the "bloated subsidies" of the EU, and other developed countries, which have "held back the growth of agricultural capacity across the developing world." They have "delayed the cultivation of, and investment in, vast swathes of potentially fertile land, across Africa, Asia and Latin America."

Current high commodity prices are the perfect opportunity to "wean Western farmers off production subsidies and tariff protection," Halligan claims. "The CAP is immoral, short-sighted and must end."

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