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Organized crime in the fisheries sector threatens a sustainable ocean economy – Nature.com

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To reach a sustainable ocean economy requires balancing the use of the ocean space and its resources with the long-term carrying capacity of the ocean’s ecosystems23. In line with the three-pillared concept of sustainable development under the Rio process, a sustainable ocean economy should be based on the sustainable use of the ocean from an economic, social and environmental perspective24. Agenda 2030 (adopted at the UN Sustainable Development Summit on 25 September 2015) extends the three dimensions of sustainability to five areas of critical importance (namely, people, prosperity, peace, partnership and planet), which should inform synergized interagency policy interventions that will enable the achievement of the Sustainable Development Goals (SDGs).

Organized crime in the fisheries sector has the potential to severely undermine the efforts of the member states to achieve a range of SDGs, including ‘zero hunger’ (SDG2), ‘decent work and economic growth’ (SDG8), ‘responsible consumption and production’ (SDG12) and ‘life below water’ (SDG14). SDG16 (peace, justice and strong institutions) is a core enabler of the other SDGs25, and the targets of SDG16 have particular resonance in the context of addressing manifestations of organized crime in fisheries25. This is especially important for vulnerable coastal communities with few alternative livelihood options, which renders them susceptible to recruitment by organized criminal networks.

In the sections below, we introduce the most common serious offences that may comprise manifestations of organized crime in the fisheries sector. Illustrative examples are included to highlight how the effects of these crimes may impede the pursuit of a sustainable ocean economy. The cited examples underscore how the various types of crimes interact and how these crimes, when they converge in the real world—particularly in vulnerable communities—may give rise to a range of complex adverse impacts.

Fraud

A large amount of documentation is produced along the fisheries value chain, which generates considerable potential for fraud (that is, the deliberate misrepresentation or concealing of facts for undue benefit)17. For example, in the Viking case, false vessel registration documents were submitted at port, comprising text that had clearly been cut and pasted from Google translate and using ordinary word-processing software19. Fishing vessel identity fraud occurs when a vessel’s identity is changed by, for example, not flying the correct flag at port or by physically hiding a vessel’s name to render it anonymous19. This is associated with ‘flag hopping’, a pattern of re-registering a vessel with new flag states to confound investigations into its illegal operations, as occurred with the Viking19.

Fraudulent practices harm the reputation of both the legitimate fishing industry and the flag state in question. Furthermore, fraudulent fishing licences deprive coastal states of revenue from the legitimate allocation of fishing rights.

On the basis of fraudulent landing certificates, Trinidad and Tobago is cited as the world’s sixth largest shark fin exporter to Hong Kong26; the fins, in fact, are landed by foreign fishing vessels and merely transit Trinidad and Tobago ports (Republic of Trinidad and Tobago Fisheries Division, personal communication), contributing to the global international illegal trade of shark fins27. In 2014, Trinidad and Tobago was also cited by the Convention for the Conservation of Antarctic Marine Living Resources (CCAMLR) as trading in Patagonian toothfish, which is in conflict with the region’s fisheries management agreement; however, it was discovered that the trade documents attached to the toothfish exports to Canada that cited Trinidad and Tobago as the port of origin were fraudulent. Fraudulent practices can also give rise to food hygiene risks. At landing, for example, false customs and health documentation can disguise the origin of the catch or the flag of the vessel to avoid paying import tariffs or complying with food hygiene regulations17.

In some instances, fish and fish products are fraudulently labelled to avoid paying higher customs duty on high-value species, enabling tax crime28,29 and thereby depriving coastal states of a further stream of economic revenue.

Tax crime and money laundering

The fisheries sector lends itself to tax crime given the ease with which criminals can change a vessel’s country of origin and identity and use fictitious companies as registered vessel owners; this facilitates channelling profits to shell companies in tax havens to avoid paying tax where the profit was generated19. Tax havens (secrecy jurisdictions) are jurisdictions that lack transparency around the beneficial ownership of bank accounts and companies, making it particularly difficult to identify and prove tax crimes.

Tax crime covers a range of violations of tax and revenue rules that are criminalized in law. The loss of tax revenue through tax crimes in fisheries is estimated to be considerable, which severely undermines the development benefits of the sector and particularly adversely affects states in the Global South28. In Indonesia, an audit of 187 fishing companies by the Tax Directorate General in 2016 identified potential unpaid tax revenues of around IDR235 billion (more than US$16 million). The introduction of law enforcement and policy reform in Indonesia against fisheries crime has contributed to a marked increase in tax revenue from the fisheries sector (US$113 million in 2018)30 (along with an increase in fish stocks31,32).

Money laundering—the intentional concealing or disguising of the illicit origins of the proceeds of crime13—is a type of tax crime and may also be an indication of corruption. Organized criminal networks engage in money laundering in the fisheries sector to integrate the proceeds of crimes committed along the fisheries value chain, or the proceeds from illicit activities outside the sector33, into the legitimate economy28. Money laundering hampers investigations into organized crime in the fisheries sector and hinders prosecution, including asset recovery, forfeiture of the proceeds of the crime and restitution of illicit gains. In Russia, for instance, the ‘crab mafia’34 has been linked to money laundering (as well as illegal fishing and even assassinations of high-ranking public officials and competitors)35. Many offences committed by organized crime groups in fisheries are ‘predicate offences’ (that is, offences that are a component of a ‘primary’ crime) to money laundering. In Indonesia, fisheries crime is cited as a predicate offence under the Prevention and Eradication of Money Laundering (Anti Money Laundering) Law36.

Corruption

Although there is substantial anecdotal evidence of corruption in the fishing industry, and it is suspected to be an enabling factor of many other crimes in the sector, there is limited formal literature, and few decided cases, on the subject15. Corruption is the giving, soliciting or receiving of any undue advantage that is aimed at causing an official to act or refrain from acting37. This can include, for example, political figures or senior government officials using their positions to influence the allocation of fishing licences to companies in which they have a personal business interest (that is, the abuse of function)17,38,39. An illustrative case that is currently under investigation involves an Icelandic fishing company that allegedly used a bank of a neighbouring country and shell companies in the Pacific to channel bribes to obtain fishing licences in Namibia40.

Corruption may take the form of bribes paid to reduce penalties41, to ignore illegal harvesting of fish15,17 or to endorse landing data that are clearly false, as occurred in the rock lobster case. Bribery may extend throughout the criminal supply chain, as in a San Diego case in which it was alleged that a US company brought approximately US$17 million worth of sea cucumber from Mexico into the USA by illegally bribing officials along the entire supply chain17,42,43.

Corruption in the fisheries sector diverts the revenue that is due to states to the shadow economy and severely undermines advancement towards achieving SDG16, in particular the goal to substantially reduce corruption and bribery.

Drug trafficking

Fishing vessels are ideal modes of transport for the movement of drugs given their legitimate presence at sea, the lack of transparency around their movement, identity and ownership, and their ability to tranship and access small harbours. The use of fishing vessels to facilitate drug trafficking (the illicit trade of substances that are subject to drug prohibition laws44) is well documented, as fishing vessels can be used as mother ships from which smaller vessels traffic drugs, as support vessels for go-fast boats transiting trafficking routes (for example, in the Caribbean) or as smaller vessels that can traffic drugs directly to and from coastal landing sites and tranship the drugs to mother ships beyond coastal jurisdiction20, for example in the Gulf of Guinea41.

Fishing vessels may traffic drugs in conjunction with transporting other illicit goods as well as with the smuggling of migrants. In Trinidad and Tobago, for example, artisanal fishing vessels transport drugs and guns from Venezuela to Trinidad and Tobago as well as illegal migrants and, in Jamaica, fishing canoes transport marijuana to Haiti where it is traded for illegal weapons (the ‘drugs-for-guns’ trade) or cocaine45,46,47. In the Gulf of Guinea, in 2006, a fishing vessel—the MV Benjamin flying a Ghanaian flag—trafficked about 78 parcels (2,340 kg) of cocaine into Ghana labelled as shrimps48.

There is evidence of a close connection between poaching of some high-value species and drug trafficking networks in some parts of the world. In South Africa, for example, poached abalone is bartered with local gangs for the ingredients to manufacture the synthetic drug Mandrax as part of organized criminal networks that illegally export abalone to the East49,50. In Mexico, an intricate transnational poaching, drug trafficking and human trafficking network controls the supply chain of illegally harvested Totoaba bladders, which are exported to China51,52,53. In Colombia, organized drug trafficking in the fisheries sector interfaces with a range of inter-related offences including the trafficking of illegal arms, human trafficking, smuggling of fuel and other contraband, large-scale illegal fishing and wildlife trafficking, the response to which requires coordinated operations between the national police, navy and air forces54.

The influx of drugs through sea routes, often in conjunction with illicit arms, appears to have a range of negative effects on the coastal communities through which they transit, including a rise in the levels of local violence and associated increased security costs for local businesses (for example, in Trinidad and Tobago55), weakened social cohesion and sense of security (for example, in the Yucatán Peninsula (Mexico), associated with the illegal sea cucumber fishery)42 and increased gang-related activity, for example, in Jamaica47,56,57,58. In South Africa, research indicates that remote coastal communities, such as Buffeljagsbaai, are under siege by organized criminal gangs that illegally harvest abalone on their doorsteps50,59, with women in the woman-lead households becoming accomplices to organized poaching operations with the result that they are subject to criminal prosecution59. Given the central role of communities in the supply chain of organized criminal networks, a community-based approach to complement a law enforcement response is arguably valuable and the community, similarly, has a potential preventative role59,60,61,62.

Crime in the labour market

Forced labour—that is, work or services exacted from a person under the threat of a penalty and for which the person did not offer himself or herself voluntarily63—is increasingly highlighted as pervasive in the fisheries sector globally. It is often a consequence of human trafficking64 or ‘trafficking in persons’ (that is, the procuring of and trading in human beings for the purposes of exploitation)13. The problem is documented in a growing body of literature65,66 and is increasingly exposed in the media. For example, in 2017, employees of a Scottish family-owned company operating a fleet of scallop dredgers were arrested in southern England after nine individuals who had been trafficked were found on one of their vessels67. In the port of Puntarenas, Costa Rica, police rescued 36 Asian individuals who had been subjected to labour exploitation on two fishing boats in 2014, arresting four individuals who were charged with human trafficking offences68. In the fishing industry, indicators of forced labour include deception, physical and sexual violence, intimidation, retention of identity documents, withholding of wages, debt bondage and abusive working conditions64. Recruitment agencies play a central part in facilitating human trafficking for forced labour66. In 2016, a foreign network operating out of north Norway in the Barents Sea crab fisheries was identified as making use of forced labour69,70; allegedly a Seychelles recruitment agency, together with Norwegian port agents, facilitated the smuggling of migrant fishers from Indonesia to Norway.

Criminal networks in fisheries use forced labour to cut costs and boost profits71. In addition to the implications for human rights, this results in unfair competition with legal operators, which, in turn, can influence legitimate fishing companies to breach domestic crewing regulations in an attempt to remain competitive, such as in the Norwegian snow-crab sector69,70,72 and in Russia73.

Fisheries offences

Illegal fishing—fishing in violation of fisheries laws and measures—may also be a criminal offence if it is criminalized under the law of the relevant jurisdiction. Some jurisdictions have severe criminal penalties for fisheries offences, such as Norway, in which grave offences attract a prison sentence of up to six years plus asset forfeiture. Illegal fishing is criminalized in many jurisdictions around the world, including Ghana, Indonesia and South Africa74,75. In practice, regardless of whether or not illegal fishing has been criminalized in a jurisdiction, illegal, unreported and unregulated (IUU) fishing is a strong risk indicator of fisheries crime76,77.

The adverse effects of large-scale overfishing are well documented78. This includes the severe negative impacts on the state of commercially exploitable fish stocks: 2009 data estimated that 18% of the global catch, valued at US$10–23.5 billion, between 2000 and 2003 was lost to illegal or unreported fishing79. The latest figures of the UN Food and Agriculture Organization (2015 data) estimate that 59.9% of the world’s commercial fish stocks are now fully fished and a third of the global fish stocks are overexploited80. As fish stocks decline, the resource becomes more valuable, attracting increasing involvement of transnational organized crime syndicates20. Successful prosecution of organized networks can have positive effects on the targeted stocks, as illustrated by the rock lobster case, which resulted in the marked recovery of the targeted species (south coast rock lobster)81.

Large-scale illegal fishing can cause severe economic loss to coastal states: the combined annual economic losses due to illegal fishing to Mauritania, Senegal, The Gambia, Guinea Bissau, Guinea and Sierra Leone, for example, are estimated at US$2.3 billion48,82. A recent global study83 estimates that between 7.7 and 14.0 million metric tons of unreported fish catches are potentially traded illicitly each year, suggesting that gross revenues of between US$8.9 and US$17.2 billion are annually redirected out of the legitimate market through illicit trade. Asia, Africa and South America account for approximately 85% of total catch losses to likely illicit trade globally. Africa is estimated to experience between US$7.6 and US$13.9 billion and US$1.8 and US$3.3 billion in losses annually in economic and income impacts, respectively, owing to the redirection of catches from legitimate to illicit seafood trade83.

In fishing communities with few alternative livelihood options, low-level poaching may change into, or co-exist alongside, organized criminal activity. In South Africa, this is evident in the context of abalone and west coast rock lobster fishing, where the boundaries between ‘protest poaching’, opportunistic poaching and facilitation of, or involvement in, organized criminal activity are porous and often overlap59. The overexploitation of west coast rock lobster84, for example, has led to thousands of subsistence fishers being unable to secure sufficient quotas with the result that some have turned to illegal alternative-income-generating activities85.

The UN Special Rapporteur on the Right to Food86 has underscored the importance of curtailing illegal fishing to prevent further adverse effects on food security. Fisheries provide an estimated 17% of animal protein consumed worldwide, with the highest per capita consumption in developing small-island states80. In the West African region of the Gulf of Guinea, where around 40% of the population resides in coastal areas, fish is the predominant (and sometimes, only) source of animal protein consumed in coastal communities87. In Jamaica, where large-scale overfishing has left most reef fish stocks overexploited88, the country is almost entirely dependent on imported fish for domestic consumption.

The marine environment and associated ecosystems may also be negatively affected by organized crime in fisheries: piracy and armed robbery at sea in the Gulf of Guinea pose threats to the marine environment because of the risk of oil or chemical spills caused by the use of destructive weapons to attack vessels and the transfer of the targeted vessel’s cargo89. In Nigeria, some local fishers struggling to sustain their livelihoods engage in illegal fishing in the vicinity of oil pipeline installations, which risks causing oil leaks and marine pollution90. In Mexico, fishers adversely affected by the poorly regulated governmental conservation measures in the Gulf of California have turned to totoaba poaching because of the lack of legitimate alternative livelihoods52. The use of gill nets in this illegal activity has brought the vaquita porpoise (caught as bycatch) to the brink of extinction and resulted in severe damage to the large marine ecosystem of the Upper Gulf of California51,91. Illegal dynamite (‘blast’) fishing, associated with explosives trafficking, off the Tanzanian coast is highly destructive to the affected marine habitat, including coral reefs, and fish stocks, and has broad food security ramifications92,93.

Smuggling

The fishing industry provides ideal cover for smuggling of otherwise legal goods from one jurisdiction to another in violation of the law (often to avoid customs duties). In Ecuador, for example, artisanal fishers smuggle subsidized Ecuadorian fuel to the neighbouring coast of Colombia, where it is sold at considerable profit94 and Trinidad and Tobago fishing vessels have been implicated in the illegal trade of fuel. Ghana is reportedly at risk of losing about GHS1.5 billion (US$300 million) to the smuggling of fuel, which is trafficked by fishing vessels and canoes95. Fuel is often smuggled alongside illicit goods, such as drugs, illegal weapons and illegally harvested fish, as well as people94.

The use of fishing vessels to smuggle migrants (that is, to facilitate or assist migrants to enter a country illegally for financial or material benefit13) is alleged to be prevalent, but is less well documented formally. The public media reports that artisanal fishing vessels are the mode of transport to traffic migrant women from South America to Trinidad and Tobago, where some are forced into prostitution and others are transported to the USA96. There are also indications that fishing vessels are linked to migrant smuggling in the Mediterranean Sea20,97,98,99, Australia100 and Thailand101.

Security threats at sea

Various offences that occur at sea present a threat to peace and security; this can include offences falling within the ambit of organized crime in fisheries. ‘Fisheries conflicts’—which may arise from a combination of factors, including illegal fishing (along with climate change and food security concerns)—are recognized as a potential threat to maritime security and livelihoods and there is a growing body of literature on the topic90,102,103,104. In the Gulf of Guinea, numerous organized criminal activities at sea threaten peace and security, including piracy and armed robbery, kidnapping for ransom, fuel and gas robbery and smuggling, drugs and arms trafficking and illegal fishing2. This adversely affects the economic bases of the region’s states through, for example, increased insurance premiums for cargo vessels, which hinders the movement of goods and services and results in lost income for businesses and governments and an increase in the price of goods and services105,106. In Nigeria, for example, piracy and armed robbery at sea is associated with a diminished contribution from the domestic fishing sector to the gross domestic product (GDP) as fewer licensed fee-paying vessels are willing to go to sea90,107. Furthermore, coastal fishers who fear putting out to sea in Nigeria due to violent attacks from illegal fishing vessels have been recruited by organized criminal networks engaging in armed robbery at sea and oil smuggling, and fishmongers—who are predominantly women—have in some instances turned to prostitution to make ends meet90,108.

A recent Security Council Resolution expressed concern over the links between international terrorism and organized crime, including transnational organized crime at sea109. The Security Council has further highlighted the complex relationship between large-scale illegal fishing and the international crime of piracy (as defined in the UN International Law of the Sea)110, in Somali waters in the Indian Ocean111,112,113; a similar link has been argued in the case of Southeast Asia114.

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Canadians to get say on how to grow Blue ocean economy – SaltWire Network

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Canadians will be asked their opinions as the federal government begins crafting its strategy to develop a blue economy.

Fisheries and Oceans Minister Bernadette Jordan says the online consultation process will begin in the new year to open up the discussion to provinces, territories, Indigenous peoples and others. More details on the process will come soon, she said.

That was just one of the details revealed Thursday, Dec. 3,  in a virtual panel discussion hosted by the Ocean Frontier Institute (OFI), following up on the announcement of the previous day of Canada’s commitment with 13 other nations to sustainably manage 100 per cent of its oceans.

The OFI-hosted virtual panel discussion — Charting a Course for a Sustainable Blue Economy — focused on Canada’s opportunities for sustainable growth of the “blue” economy.

Panelists included OFI’s CEO and science director Dr. Anya Waite, OFI’s strategic engagement officer Catherine Blewett and Karin Kemper, global director for environment, natural resources and blue economy global practice with the World Bank, as well as Jordan.

244,000 miles worth of management


WHAT’S A BLUE ECONOMY?

The blue economy is described as an economy driven by sustainable, ocean resources and accounts for about $31.65 billion annually in GDP. It is the source of almost 300,000 Canadian jobs with direct, indirect and induced benefits in sectors as diverse as fisheries and aquaculture, marine transportation, ocean energy and technology, recreation and tourism.

WHAT IS PROBLUE?

This is a multi-donor trust fund that “supports the sustainable and integrated development of marine and coastal resources in healthy oceans.” PROBLUE has four pillars: fisheries and aquaculture, marine pollution, oceanic sectors, and seascape management. To date, PROBLUE has received pledges of approximately US$110 million from Canada, Norway, Sweden, Denmark, Iceland, France and Germany.


There are many challenges ahead for those who aim to grow the blue economy. One is just the sheer expanse of the seas on planet earth.

Waite noted if the world’s ocean were measured as a country, it would be the seventh largest in the world.

And among the world’s nations, Canada governs a massive marine environment — three oceans and a coastline of about 244,000 kilometres.

Those marine areas are crucial, not just to national economies, but to the global environment.

The Labrador Sea, for instance, on Canada’s East Coast, is referred to as “the Earth’s lungs.”

The seawater in that space absorbs carbon and heat; it’s a natural filter that helps regulate global climate.

“The Labrador Sea is a bigger carbon sink than the Amazon rain forest,” said Waite. “The ocean is our climate.”

Protecting the ocean environment will be a significant task.

The ocean economy

Fishing boats at Petit Etang, Cape Breton. According to the World Bank, one in 10 people in the world depend on the fishing industry for their livelihood. - SaltWire File Photo
Fishing boats at Petit Etang, Cape Breton. According to the World Bank, one in 10 people in the world depend on the fishing industry for their livelihood. – SaltWire File Photo

Finding balance between environmental protection and economic needs will be another.

Globally, said World Bank director Kemper, one in 10 livelihoods are dependent on fisheries, with women making up about half of the fish harvesting/processing workforce.

She said as Canada and the other nations move towards sustainable management, there may be some short-term tradeoffs, but “in the long term we have to focus on sustainability.”

And as countries begin the process of recovering from COVID, she said, some short-term solutions could aid the long-term goal of the sustainable oceans commitment.

“Governments might want to do large infrastructure projects to create employment – putting money into people’s pockets in the short term,” she said, “and that could lead to things like cement seawalls to prevent coastal erosion, planting mangroves to rebuild swamps or doing recovery work on reefs.”

There’s no dispute that there’s still much to learn about the ocean.

According to Jordan, the current Canadian government has done much work since 2015 to improve research and rebuild fish stocks.

For example, she said, funding was recently increased to expand knowledge of caplin, the fish that feeds other fish, in the Newfoundland and Labrador region.

“We are using the new funding to examine this data to determine how it can be used to establish reference points to advise resource managers,” she told SaltWire.

Since 2018 she noted, the federal government has completed rebuilding plans for six of 19 selected fish stocks.

More than fishing

Fisheries and Oceans Minister Bernadette Jordan - SaltWire File Photo
Fisheries and Oceans Minister Bernadette Jordan – SaltWire File Photo

The blue economy is not only the fishing industry.

“Our ocean industries account for nearly $32 billion annually in GDP and 300,000 jobs across fishing, aquaculture, energy, ocean technology, shipping, tourism and other industries.”

And the goal of ocean sustainability is a global one, with a challenge for progressive nations to help underdeveloped countries in sustainable ocean management.

That’s why Canada is also committing to help other nations craft their own sustainable oceans plans through the World Bank’s PROBLUE fund.

Thursday Jordan announced Canada will invest another $4 million to that fund, for a total commitment of $69 million, making this country the top donor to the fund so far.

You can watch the full panel discussion here:

[embedded content]


 Transforming the ocean economy; the principles

The following principles are outlined in the report “Transformation for a Sustainable Ocean Economy”, a vision document created by Canada and the 13 other nations that have committed to enacting sustainable management of 100 percent their oceans by 2025.

Alignment: Ocean protection and production must align with the UN Framework Convention on Climate Change and the Paris Agreement, the Convention on Biological Diversity, and the Polluter Pays Principle as set out in the Rio Declaration. Actions must be aligned across ocean-based and land-based activities and ecosystems.

Inclusiveness: Human rights, gender equality, community and Indigenous Peoples’ participation, through their free, prior and informed consent, must be respected and protected.

Knowledge: Ocean management must be informed by the best available science and knowledge, including indigenous and local knowledge, and aided by innovation and technology.

Legality: The UN Convention on the Law of the Sea is the legal basis for all ocean activities, and existing international ocean commitments must be implemented as a foundation for achieving a sustainable ocean economy.

Precaution: Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.

Protection: A healthy ocean underpins a sustainable ocean economy. A net gain approach must be applied to ocean uses in order to help sustain or restore the health of the ocean.

Resilience: The resilience of the ocean and ocean economy must be enhanced.

Solidarity: The need for access to finance, technology and capacity building for developing countries, especially Small Island Developing States and Least Developed Countries, must be recognised, taking into account their particular circumstances and vulnerabilities.

Sustainability: The production and harvesting of ocean resources must be sustainable and support resilient ecosystems and future productivity.

Click here for more about the Ocean Frontier Institute visit.

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Brazil's economy grew 7.7% in Q3, but slower than expected – 570 News

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RIO DE JANEIRO — Brazil’s economy grew 7.7% in the third quarter of the year from the previous three months, the national statistics institute reported on Thursday — the strongest quarterly result in a quarter century but less than expected following heavy stimulus spending.

It is the fastest quarterly growth since the series began in 1996 and confirmed the Brazilian economy’s exit from technical recession, characterized by two consecutive quarters of contraction. But activity hasn’t yet returned to the level seen prior to the coronavirus pandemic.

Brazil’s Economy Ministry had projected growth of 8.3% for the period, according to a bulletin relased on Nov. 17.

The expansion during July through September coincided with the payment of emergency assistance funds to more than 60 million people to mitigate the impact of the pandemic, and also with the reopening of activities in most states, where quarantine measures were relaxed.

“The data is disappointing due to the enormous fiscal stimulus that the government used for the economy to recover,” Emerson Marçal, head of the Center for Applied Macroeconomics of the Getulio Vargas Foundation in São Paulo, told The Associated Press by phone.

The emergency payment, about $10 monthly in the third quarter, helped boost retail sales and contributed to the recovery of industrial production, Marçal said. The end of the aid, tentatively scheduled for December, and the possibility of new restrictions on activity due to the surge of coronavirus cases may further compromise the speed of recovery, he added.

Brazil has confirmed more than 6.4 million coronavirus infections, with 174,000 deaths. In recent weeks, infections have risen in big cities like Sao Paulo and Rio de Janeiro. President Jair Bolsonaro has consistently argued that the economic impact of lockdowns and other measures during the pandemic would be more damaging to Brazil than COVID-19 itself.

Brazilian banks estimate a 4.5% drop in Brazilian GDP for 2020, a smaller decline than is expected in the region’s other major economies. The International Monetary Fund projects a contraction of 8.1% for the Latin American and Caribbean region, with Brazil least affected by the crisis.

Marcelo Silva De Sousa, The Associated Press

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Feds' fall economic statement shortchanges climate – Corporate Knights Magazine

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Canadians are going to have to wait until the next Liberal budget to get a full sense of the government’s commitment to a green recovery, though Ottawa has unveiled some key parts of the plan this fall.

Finance Minister Chrystia Freeland made a down payment on clean-energy stimulus in her fall economic statement on November 30, but the $6.64-billion package of new measures over 10 years was far smaller than some clean-energy advocates had called for.

Corporate Knights calculates that the funding announced for a climate-focused recovery plan represents only 20% of the federal investment needed to meet the government’s own commitment to reduce greenhouse gas emissions.

In the government’s first major financial update since the COVID-19 pandemic shut down the economy last March, Freeland maintained a focus on support programs for individuals and businesses.

She promised a future budget with a more robust stimulus plan worth up to $100 billion over three years. It’s uncertain how much of that will be allocated to climate-change mitigation, given competition from other post-pandemic priorities such as a national daycare program to boost women’s participation in the workforce.

The federal green recovery plan, to date, falls well short of the commitments made by more ambitious national governments, including that promised by U.S. President-elect Joe Biden, who has pledged a US$2-trillion green recovery plan, subject to Congressional approval.

Numerous groups have urged the Liberal government to match the efforts of countries in Europe and East Asia that have announced major green stimulus plans, even as some of those nations remain in the grip of the pandemic.

As part of a green recovery plan endorsed by 50 business leaders, Corporate Knights proposed a 10-year, $108-billion program that would be front loaded to ensure that Canada can re-start the economy on a greener footing that it argues will be essential to tapping into global growth markets.

In a series of virtual roundtables hosted by Corporate Knights and the Embassy of Germany in Canada this fall, speakers pointed to opportunities in areas such as deep retrofits for buildings, the emerging hydrogen economy, and potential markets for non-combustible products from the oil sands that would trap carbon rather than emitting it into the atmosphere.

Corporate Knights publisher Toby Heaps described the Liberal plan as “meek,” saying, “I think the government’s response to the pandemic shows us what an emergency response looks like, and one cannot help but notice how different that looks from their response to the climate emergency.”

In a report this fall, another group, the Task Force for a Resilient Recovery, urged the federal government to adopt a five-year, $55.4-billion plan that would allocate $27.4 billion to deep retrofits of buildings.

As of the fall update, the Liberal government has allocated $12.6 billion over 10 years to climate-related action, including $6 billion already allocated to the Canada Infrastructure Bank. That figure will climb when Freeland unleashes her stimulus budget, likely next spring. The budget, she said in her speech, “will advance our progress on climate action and promote a clean economy.”

In the mini-budget released November 30, the minister allocated $6.64 billion in three key areas, though some of that money will be spent over 10 years: $2.6 billion over seven years for home retrofits; $150 million to install electric-vehicle charging stations; and $3.9 billion to plant two billion trees, preserve wetlands and boost sustainable agriculture.

The building-retrofit plan consists of $5,000 grants, which the government hopes will be used to improve the energy efficiency – and lower carbon emissions – of 700,000 homes. Freeland said the government will also fashion a plan for low-interest loans to support more expensive, deeper retrofits.

The grants alone will be insufficient to provide enough incentive for homeowners and landlords to make the deep retrofits needed to dramatically reduce greenhouse gas emissions from buildings, which account for 17% of the country’s total, said Ralph Torrie, co-author of a Corporate Knights white paper called Building Back Better with a Green Renovation Wave.

“At a time when the urgent need is to stimulate the business and logistical innovations for implementing mass, deep retrofits, we get instead $5,000 grants for households to go it alone,” Torrie said. “This will create lost opportunities by triggering halfway measures and upgrades that fall short of what is required for an effective emergency response to climate change.”

The fall economic statement is only part of the government’s plan, with other measures either recently announced or due to be released by the end of December.

Environment Minister Jonathan Wilkinson will soon be releasing an updated climate plan, while Natural Resources Minister Seamus O’Regan will release federal strategies on hydrogen and small modular reactors.

On the hydrogen market, the federal government lags several competitors who have already announced major strategies to be suppliers of “green” hydrogen, an emissions-free source that is derived from renewable power. Australia is fast-tracking a $36-billion hydrogen plan, while Germany and France are moving full steam ahead with plans to develop industrial uses for the clean-burning fuel.

Corporate Knights has proposed that Ottawa spend $1 billion on research and development efforts over the next five years and another $8 billion over the decade to deploy hydrogen technology across the Canadian economy.

Corporate Knights also recommended that the feds provide $1.4 billion in funding over five years to help the industry commercialize lightweight carbon-fibre production as part of a “bitumen beyond combustion” strategy, but the November 30 statement lacked any sign of a plan for shifting Canadian oil and gas economics.

How does Fall Economic Statement stack up against Corporate Knights’ Building Back Better Green Recovery Plan?

  Federal Contribution 2021-2030    
CK BBB FES BBB % shortfall
Building Back Better Homes 14656 2600 82
Building Back Better Workplaces 6000 2000 67
Greening the Grid 6700 2500 63
Building Back Better EV Uptake 11949 1650 86
Building Back Better Active Mobility 2000
Building Forest Natural Capital 16000 3791 76
Building Agriculture Natural Capital 6000 98 98
Natural Resources and EV Innovation 40500
Building Back Better Industry 4800
Sum for all programs (2021-30) 108605 12639 TBD

Sources: Fall Economic Statement 2020 

Building Back Better with a Bold Green Recovery Synthesis Report

Earlier this fall, the Build Back Better Together roundtable heard compelling evidence that economic recovery strategies that aim to return to business as usual will reignite the growth in greenhouse gas emissions, as happened after the 2008/09 recession.

If governments want to ensure that they can fund the green recovery to avert the worst impacts of the climate crisis, they’ll have to collaborate with private-sector financial institutions, another roundtable session heard.

While there is growing focus on the importance of harnessing capital markets to address climate change, government action remains critical, said Sean Kidney, CEO of the London-based Climate Bonds Initiative, an international non-governmental organization working to mobilize debt markets for climate solutions.

“It is not possible for private markets to do this. That is a total fallacy,” Kidney said. “This is not something that is going to be solved by the private market. This is something that is going to be solved by close collaboration between public and private markets.”

In her fall statement, Freeland announced support for a Sustainable Finance Action Council, which will begin work in the new year with the goal of “developing a well-functioning sustainable finance market in Canada.” Pension funds and other investors have been urging corporations in Canada to provide greater clarity around climate-change-related risks and opportunities, and experts are urging governments to show leadership.

However, Canada still lags some of its peers in terms of financial commitment to a green recovery that will fund the transition to a net-zero economy.

The government estimated that its $100-billion stimulus package would be equivalent to 3 to 4% per cent of gross domestic product, but it is unclear how that figure was calculated. Spread over three years, the spending would represent more like 2% of GDP, and only a portion of that will go to green projects.

Many of Canada’s trading peers, including Germany, France and the EU, have already earmarked 30% or more of post-pandemic stimulus for climate action.

In partnering with Corporate Knights on the Building Back Better Together virtual roundtable series this fall, German Ambassador Sabine Sparwasser said her government is committed to a strategy that focuses stimulus spending on building back better.

“We’re not going to get out of the current crisis just by giving people social benefits,” Sparwasser said during one session. “We need to invest in new technology in order to address the other crisis that is out there and is even bigger: climate change.”

Shawn McCarthy writes on sustainable finance and climate for Corporate Knights. He is also senior counsel for Sussex Strategy Group.
With the support of the Embassy of the Federal Republic of Germany in Canada.

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