Counting the cost on aljazeera your look at the world of business and economics this week corrupt. Banking and political have destroyed lebanons economy people cant get access to their Bank Accounts billions have been moved out of the country. President trump wants to install his own man at the bank oversee latin americas recovery from the pandemic but some nations are opposed to the move. And the case of the gas power plant that wasnt built but the company was awarded billions of dollars nigeria goes to court to reverse that decision. Lebanon is bankrupt its been brought to its knees by the powerful Banking Industry and its ties to the political elite sometimes those times have been indistinguishable over 2 decades money flowed from citizens to enrich bankers and as the currency crisis unfolded they extinguished any hopes of a recovery by blocking reforms and restricting access to money ordinary citizens cant get hold of their money and are limited to taking out just 200. 00 every 2 weeks and despite the controls in place to make sure money doesnt leave the country 6000000000. 00 has been smuggled out astonishingly its estimated some 29600000000. 00 could see part of the country this year while the International Monetary fund is in talks to offer a 10000000000. 00 bailout economists believe the Banking Sector may need 96000000000. 00 to recapitalize that would mean wiping out the shareholders of local only guts and surprisingly theyre not interested in that and holding up any agreement while much of the blame has been put on the central bank which is sitting on 40000000000. 00 of losses the Central Banks policy of maintaining a currency linked to the dollar convinced many that the country was a stable place to invest as money was sucked in the bank lending out to the government to pay for imports and interest on debts it was good for the banks who bought up the debt the interest on those loans help them to pay 22000000000. 00 in dividends to shareholders by 2019 half of the governments fiscal revenues went to pay the interest on debts. So you can see the conflict of interest why would you as a politician and Bank Shareholder oppose increase Government Spending well lets bring in some expert analysis joining me now from beirut via skype is mohammed. Mohammed is a Research Fellow at the beirut based Carnegie Middle East Center mohammed so how did the conflict of interest between the banks and the politicians 1st unfold how did it start. Done for the during the 1990 s. After the law of the men. And the consultation or system in which you have different sects leadership leaders sharing power after that we we had a Banking Sector which was divided along the same fault line on the same confessional lines and so the the Business Leaders and also the politicians became partners in the government started taking more and more. Loans to fund their we construction of the country based on the promise dot you know one lebanon signs and agreement Peace Agreement with israel the International Community would wipe off our debt and pay it off. By have to some. And you know by by being very well positioned with a with a good infrastructure that the country could actually you know face. The increased competition brought in by an agreement a Peace Agreement with israel that was the promise under which these massive reconstruction projects were undertaken and also weve seen an increase yes so where was the regulator in all of this what was the central bank doing all this was going on. And it it was entangled with the Banking Sector i mean the regulators not really a regulator its a partner of the Banking Sector i mean now were seeing the extent of the dealings between the Central Bank Governor. Since the 1990 s. The leading financial regulator and the lebanese banks you know weve seen them in the what we call in lebanon and set him a leader which is you know the financial. Swaps the swaps that happened between the banks and the central bank in which they made billions of dollars of profit and its that 2nd and you know how some of that money was being transferred 1. 00 way or the other and approach i mean we just so an investigative. Piece which shows the extent of the dealings between for instance one bank bank audi and the Central Banks governor so the there were there were in bed just pacifically as much as the politicians were in bed with the Banking Sector having people in each you know boards of boards of directors etc you know the same thing was happening with the Central Bank Governor and the banks there were dealings there were he was the protector of the Banking Sector and some people analysts economists have even accused the central bank of running a ponzi scheme briefly whats your take on that. I think the Banking Sector turned into it massive marketing machine i mean it employed thousands of people you can see them looking like sales people like you know p. R. P. R. Network which extended to. You know the live anees disport our Africa Central America etc you know reaching out to any lebanese exparte abroad and asking them to bring their money and i mean you would be surprised to learn what kind of you know what to what extent they went. To get some of that money they went there had representatives across across the world there were meeting lebanese expats offering them all kinds of interest packages and attracting all of that money to give it directly to the Libyan Government to spend it recklessly without any plan of how that money would be paid yes it is a ponzi scheme it has all the signs of 1. 00 and it is one so mounted in terms of outside help are we inching then towards a bailout from the i. M. F. And what seems to be the hold up. Yes i mean now now the Political Class will undergo some serious reforms and it will go to the gym but the package will know in no way the numbers that the lebanese Political Class would need to help the bank exactly go back to its previous. Order this this is this is not nor this is this is not possible anymore and many are now pointing out that a some sort of a haircut is needed well thats a director who are saddened and direct one like the one we witnessing now in which you cant really take your deposits you would take them and liberties pounds at a discounted price given the inflation and given the appreciation of the living accounts so so this is this is this is this is now the you know the status quo people depositors will lose much of their money and lebanon will get a small package from the i. M. F. The old order in which high Government Spending was used for political reasons will no longer be ok so there we are at the office and lets lets quickly talk about one other route because lebanon has gold reserves estimated to be in excess of Something Like 16000000000 dollars could that perhaps provide a financial lifeline. I doubt it would provide a financial lifeline given that lebanons external debt is nearly 30000000000. 00. You know if if this is a lifeline it would be used either to pay some of our external left or to be brought here to also be paid for depositors to depositors as depositors money and i think you know all of the rules have been discussed by this Political Class and theres only one seeking external help and also doing a hard haircut and change an Economic System and turn and everyone now is talking about more productivity shifting away from our Government Spending etc so all in all all of these options are on the table they just need to do them and i think this is an existential crisis for the current political order monod let me get a final thought from you in terms of the body politic are there hopes perhaps that a new Political Class can step forward step up to the plate and run the country this will be really really really slow process given how the confessional system works given the regional competition theres also some external help them funding provided to the political clout so you know whether from here on or whether from the of region cetera i think this will be a slow process but it will happen given that weve shifted from an economic order which allows these politicians to sustain themselves for many years into a new put into a new economic order which will see a different private sector that will have its own implications on the Political Class mohamed ali thank you very much for your thoughts here on counting the cost thank you. Thank you very much. Now the battle to decide who will control the washington based into American Development bank has split latin america and become a bitter issue the reason is the white house has decision to field an american candidate to run latin americas principal Development Bank listen human explains from santiago. Its called the id be the interim American Development bank a kind of distant cousin of the i. M. F. When it was founded in 1959 former u. S. President dwight d. Eisenhower promised it would always be led by a latin american and it always has. But now just as latin america is projected to suffer the worst Economic Impact from the pandemic of any region in the world the white house has fielding a candidate to lead the regions most Important Development institution and the battle is on and it is a surprise it breaks a tradition. And written rule so this is what it cost these reaction in latin america we in chile former finest and Foreign Ministers you know signed a letter you know very respectfully i may say this very spectrally saying that we are asking for the election to be postponed to have a time to discuss the letter again a possible candidate himself is neutral loans the president done trump has picked hardline advisor mao diesel clabbered cardone as his choice to control the id be one reason for the sudden interest according to u. S. Government sources is to counter a growing chinese influence in latin america. Countries like argentina mexico and chile argue that there are far more qualified professionals in the region than plavix kind of whos not an economist but a lawyer with a political agenda for a long list of former and current latin american leaders are in fact demanding the election be possible and into after the us election but many countries are under pressure from washington so the fact that the u. S. Should try to impose their candidate on the rest of the hemisphere does not seem to me to be a good president well what do you think that the person that they are trying to impose to quote you is an unqualified i dont think is unqualified but if you are a citizen believes i am somehow inclined to think you would not be a strong candidate to lead be id be. For decades the bank has played a key role in a region that has little access to International Capital markets it finances infrastructure and social Development Projects which will now be more vital than ever the u. S. Candidate argues the United States wants to play a bigger role in the region and that its time to break with tradition and modernize the idea be if the way of modernizing the idea be is to run the id be a lengthy United States government is being run today. Where highly advanced wealthy country is experiencing some of the highest rates of contagion in the world i hope thats not the future fate of. Backroom negotiations are intensifying until now the bank has been led by a latin american who listened to broad consensus amongst peer is earning the id be widespread respect this time around the u. S. Candidate may indeed win but if so that broad consensus will be shattered you see in human aljazeera santiago. Now imagine being awarded 6600000000. 00 for not sticking a spade in the ground well on the receiving end of that ruling back in 2017 was nigeria that award to a British Virgin island registered company has ballooned to almost 10000000000. 00 when you add in all the interest well nigerias president will have to bihari accuse the company of attempting to cheat nigeria out of billions of dollars back in 2010 to irish businessmen agreed to set up a gas power plant but nigeria never built a pipeline to the plant where the Company Process and Industrial Development has denied any wrongdoing and nigerias challenge in the award in the British High Court right now the case has drawn a great deal of interest from advocacy groups that claim investors can extract billions even from failed investments so lets talk to a co are correct q. C. Head of macnair chambers he joins us via skype from london so why did this award go against nigeria i mean it seems unfair given that the Irish Company didnt even put a spade in the ground but they came to spent 40000000. 00 just on design. So far as this particular case is concerned from what i cant glean there are public documents including a judgment of the high court the claimants position is very simply this a contract was entered into in 2010 is just as youve just summarized it was breached by niger in 2012 and there was a protracted arbitration process which led to a finding of liability against nigeria that they breached the contract and then subsequently its being suggested that nigeria didnt do enough to contest the next phase which is the damages face leading to that substantial award that you just mentioned and i want to add that in my 30 years of experience in practice as a as a barrister i have acted for against nearly 60 states on commercial arbitration matters and such sums are not unusual there are substantial but im afraid but once again states of hundreds of millions of dollars are not uncommon under under the circumstances coop could the court set aside the award or even overturn it arbitration is a process thats been agreed to very often by states in commercial contracts and the assumption quite often the wrong assumption is that the state has undertaken effective Due Diligence legal review and Due Diligence commercial teach illusions of the Counter Party that seems not to be often the case however when it comes to the award of the arbitrators. The virtue perceived virtue of arbitration is that its not like a Court Process which awards thanks to a convention of 958. 00 are subject to very limited grounds of challenge when theyre taking to states for enforcement and the ground that i understand that nigeria is invoking before the english crooks is known as Public Policy theyre suggesting that the contract was tainted by fraud and corruption to establish that they would need fairly strong evidence for the English Court to conclude that that was in fact the case if they were able to establish that then the English Court would not countenance involvement and could could the company seek to perhaps seize assets in the United States how would that work for instance ordinarily once an hour to order has been issued there is a limited period of time for that award to be challenged in this case niger sought to challenge out of time and sought to deploy evidence that they contended wasnt available during the up to process however theres nothing to stop the beneficiary of the knowledge ward the claimant from seeking to enforce the award wherever nigeria has commercial assets so they could go against the physical assets property owned by the state of niger proceeds of sale of oil ships aircraft anything that they could lay their hands on which isnt encumbered. Theoretically of course that could include assets in the United States of america and indeed anywhere else so come on let me ask you i mean why do investors choose arbitration in london or new york and is that fair to developing nations. Ultimately as i mentioned to at the onset its open to est to try and negotiate a contract with the foreign investor and there are some states because of their Bargaining Power maybe because of their level of sophistication that insist that if theres going to be a dispute it must be for the local courts but generally commercial investors take the view rightly or wrongly that the the local courts are unlikely to find against the stage or elimination of the state that the process before the local courts may be lengthy uncertain arbitration has the virtue of d providing an award thats in forcible with very limited options available to the defendant and london new york of both being chosen because historically theyve been seen as having not just its stable Strong Financial centers but a good legal pool its easy to come and go from there and the courts certainly in england have for decades signalled their support for the arbitration process as opposed to adopting a position of intervention which unfortunately is seen to be the case in some jurisdictions which are therefore unlikely to attract arbitration and co are the surprising trend in trade negotiations for nations to agree to pay the full value of a contract to corporations if a deal go sour is that a fair practice do you think ultimately is for the state to determine what it is prepared to agree to and. The optimum position for a state is to take proper advice commercial advice legal advice and once theyve taken that advice to form of you as to whether the contract is sustainable the Foreign Investors position or having acted for lots of Foreign Investors i mean active estates the Foreign Investors position is understandable ive been invited i have spent money however much it may be i have a commercial expectation legitime legitimate expectation that the states undermined and therefore im entitle to pursue a claim to finality and seek an award i have to say that in addition to arbitration there is a framework which provide protection to investors through what are known as bilateral investment treaties state to state and some states have now started to denounce those treaties particularly in south america as well as renegotiate them because theyre taking the view that these are one sided co are just a final brief thought to you i mean people will look at other cases which have been dragged through the courts for example vulture funds in argentina there is a perception that investors arent willing to take big losses and theres always a get out clause that sees them walking off with huge payments. Even if there were such perception and even if it was well founded i come back to the main point that i raised at the outset investors are entering into jurisdictions all entering into contracts and its incumbent upon states to ensure that their interests are properly protected so they take proper legal advice they undertake Due Diligence often that doesnt happen know the reasons why we can speculate but if theres a problem. That may well be one of the major areas that states need to address cooperation great to get your thoughts thank you very much indeed for talking to counting the cost thank you thank you. Now argentina is ramping up the defense of its Maritime Territory to prevent Illegal Fishing by foreign boats countries across latin america are concerned about chinese ships entering their waters and depleting stocks to reasonable reports from going as iras. Argentinas coast guards is called a chinese fishing ship towards a poorly by the. Its an operation by air and sea to control attempts by foreign vessels to fish illegally in argentine waters if you want the starvation starvation International Ships are allowed to fish outside the economic exclusive zone but in recent years theres been a sharp increase in attempts to cross what is known as the mild 200. 00 argentine waters begin about the former going to our sea platform is one of the richest in the world so far this year we have captured 2 ships already we have a protocol so the captain can act according to international law. Using readers and other types of communication argentina contract ships violating its exclusive zone this type of vessels are the ones that are used to patrol argentinas exclusive so if a ship is found to be fishing illegally in those waters then that ship can be captured and the owners have to pay a fine this vessel for example has been involved in several operations and it has the ships that it has captured in the past it has their name the date and the country belong to most of them belong to china and then spain. Even though there are Many Companies from Different Countries involved in Illegal Fishing china has become a main concern with an overseas fleet of over 16000 ships they pose a major threat to developing countries just recently 300 ships were located outside the galapagos thailand such fishing is not illegal because it takes place in International Waters but it can cause damage in one of the richest and biodiverse regions in the world. International. Pressure just like china but most nice. I do not want a conflict with china leaving developing countries to defend their resources in whatever way they can. And that is our show for this week but remember you can get in touch with us via twitter use the hash tag a j c t c when you do all you can drop us an email counting the cost at aljazeera dot net is our address. But theres more for you online at aljazeera dot com slash c. T. C. That will take you straight to our page which has individual reports links and entire episodes for you to catch up on. Thats it for this edition of counting the cost im Darren Jordan from the whole team here thanks for joining us the news on aljazeera is next. Consciously rose here to report on the people often ignored but who must be hurt how many other channels can you say will take the time and put extensive thought into reporting from under reported areas of course we cover major global offense but our passion lives in making sure that youre hearing the stories from people in places like palestine libya yemen the sahara region and so many others we go to them you make the effort we care we stay. Frank assessments what are you seeing in yemen. Theres a new poll. Like the green suv its an informed opinion which is ethiopia on the verge of a breakdown many calls over the old will mean a region are actually under a de facto state of emergency and critical debate of that is a proxy because not the recent big interest of the libyan people indepth analysis of the days global headlines inside story on aljazeera. They come in home and in search of work to provide a better life for the families theyve left behind. But though their labor is vital to release Food Industry they risk exploitation by corporations and organized crime. Trapped in a system with little hope of escape people empower investigates easily seeks links on aljazeera. Striking factory workers in bello whos heckled president Alexander Lukashenko as he rejects the possibility of an election rerun. The main Opposition Leader is calling on Security Forces to switch sides saying shes ready to help lead the transition and delegates. About this and this is al jazeera live from doha also coming up to a gas and stun grenades fired at demonstrators in sudan
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