Tag: economic crisis

Libya on the verge of total collapse

libyaviolenceA little under two years ago, Philip Hammond, the Defence Secretary, urged British businessmen to share in the reconstruction of Libya and exploit an anticipated boom in natural resources.

Yet now Libya has almost entirely stopped producing oil as the government has lost control of much of the country.

Mutineers have taken over oil ports on the Mediterranean and are seeking to sell crude oil on the black market.

As world attention focused on the coup in Egypt and the poison gas attack in Syria over the past two months, Libya has plunged into its worst political and economic crisis since the defeat of Gaddafi two years ago.

Government authority is disintegrating in all parts of the country putting in doubt claims by American, British and French politicians that Nato’s military action in Libya in 2011 was an outstanding example of a successful foreign military intervention which should be repeated in Syria.

Libya’s prized high-quality crude oil has plunged from 1.4 million barrels a day earlier this year to just 160,000 barrels a day.

Libyans are increasingly at the mercy of militias which act outside the law.

The international community has ignored the escalating violence. The foreign media, which once filled the hotels of Benghazi and Tripoli, have likewise paid little attention to the near collapse of the central government.

Foreigners have fled Benghazi since the American ambassador, Chris Stevens, was murdered in the US consulate by jihadi militiamen last September.

Anarchy has spread around the capital. The government called on the Supreme Security Committee, made up of former anti-Gaddafi militiamen nominally under the control of the interior ministry, to restore order.

Diplomats have come under attack in Tripoli with the EU ambassador’s convoy ambushed outside the Corinthia hotel on the waterfront. A bomb also wrecked the French embassy.

One of the many failings of the post-Gaddafi government is its inability to revive the moribund economy. Libya is wholly dependent on its oil and gas revenues and without these may not be able to pay its civil servants.

A member of the parliamentary energy committee, told Bloomberg that “the government is running on its reserves. If the situation doesn’t improve, it won’t be able to pay salaries by the end of the year”.

Oxfam: Inequality rises after Apartheid

The world’s 100 richest people earned a stunning total of $240 billion in 2012 – enough money to end extreme poverty worldwide four times over, Oxfam has revealed, adding that the global economic crisis is further enriching the super-rich.

“The richest 1 percent has increased its income by 60 percent in the last 20 years with the financial crisis accelerating rather than slowing the process,” while the income of the top 0.01 percent has seen even greater growth, a new Oxfam report said.

For example, the luxury goods market has seen double-digit growth every year since the crisis hit, the report stated. And while the world’s 100 richest people earned $240 billion last year, people in “extreme poverty” lived on less than $1.25 a day.

Oxfam is a leading international philanthropy organization. Its new report, ‘The Cost of Inequality: How Wealth and Income Extremes Hurt us All,’ argues that the extreme concentration of wealth actually hinders the world’s ability to reduce poverty.

The report was published before the World Economic Forum in Davos next week, and calls on world leaders to “end extreme wealth by 2025, and reverse the rapid increase in inequality seen in the majority of countries in the last 20 years.”

Oxfam’s report argues that extreme wealth is unethical, economically inefficient, politically corrosive, socially divisive and environmentally destructive.

The report proposes a new global deal to world leaders to curb extreme poverty to 1990s levels by:

– closing tax havens, yielding $189bn in additional tax revenues

– reversing regressive forms of taxation

– introducing a global minimum corporation tax rate

– boosting wages proportional to capital returns

– increasing investment in free public services

The problem is a global one, Oxfam said: “In the UK inequality is rapidly returning to levels not seen since the time of Charles Dickens. In China the top 10 percent now take home nearly 60 percent of the income. Chinese inequality levels are now similar to those in South Africa, which is now the most unequal country on Earth and significantly more [inequality] than at the end of apartheid.”

In the US, the richest 1 percent’s share of income has doubled since 1980 from 10 to 20 percent, according to the report. For the top 0.01 percent, their share of national income quadrupled, reaching levels never seen before.

“We can no longer pretend that the creation of wealth for a few will inevitably benefit the many – too often the reverse is true,” Executive Director of Oxfam International Jeremy Hobbs said.

Hobbs explained that concentration of wealth in the hands of the top few minimizes economic activity, making it harder for others to participate: “From tax havens to weak employment laws, the richest benefit from a global economic system which is rigged in their favor.”

The report highlights that even politics has become controlled by the super-wealthy, which leads to policies “benefitting the richest few and not the poor majority, even in democracies.”

“It is time our leaders reformed the system so that it works in the interests of the whole of humanity rather than a global elite,” the report said.

The four-day World Economic Forum will be held in Davos starting next Wednesday. World financial leaders will gather for an annual meeting that will focus on reviving the global economy, the eurozone crisis and the conflicts in Syria and Mali. – RT