China and the United Nations backed calls for Ethiopia to resume talks over its plans to begin filling a giant hydropower dam that are opposed by Egypt.
Ethiopia wants to start supplying the Grand Ethiopian Renaissance Dam when the next rainy season begins in July. Egypt insists on having a say in how quickly it’s filled, because it will affect the flow of the Nile River, the nation’s main source of fresh water. The U.S. and the European Union have both urged the countries to resolve the issue peacefully.
“Regarding the GERD issue, we hope the differences between the two nations could be resolved through dialogue and peaceful negotiations,” Zhang Gaohui, chief of political affairs at the Chinese Embassy in Ethiopia’s capital, Addis Ababa, said in an emailed response to questions.
U.S. and World Bank-backed efforts to mediate the dispute between Ethiopia and Egypt broke down in February, when Ethiopia withdrew from the talks. Earlier this month, Egypt accused Ethiopia of having “a policy of unilateralism”, according to a letter to the Security Council obtained by Bloomberg. In its response, Ethiopia has said it doesn’t have any legal obligations to seek Egypt’s approval to fill the dam.
The increased pressure for talks comes as Prime Minister Abiy Ahmed is distracted by negotiations with creditors about debt waivers. Ethiopia is expected to sign a moratorium with the Paris Club in the coming days, to free up capital the country needs to deal with the coronavirus pandemic.
Sudan has also been party to the discussions about the dam. The Blue Nile that originates in Ethiopia and is one of the main tributaries of the Nile, passes through Sudan en route to Egypt. The Sudanese government is working to restart tripartite talks, it said on Wednesday.
Ethiopian Water Minister Seleshi Bekele said on Twitter that Prime Minister Abiy Ahmed received a letter from European Commission President Ursula von der Leyen and European Council President Charles Michel, offering their support in talks between the three nations. The UN urged them to “peacefully resolve” their differences.
“The secretary-general encourages progress towards an amicable agreement,” the spokesperson for UN head Antonio Guterres said in a statement Tuesday.
Ethiopia remains resolute that a so-called declaration of principles agreement signed by Egypt, Ethiopia and Sudan in 2015 allows it to proceed with damming the GERD.
“Ethiopia doesn’t need permission of any downstream country to utilize its legitimate share of water,” Seleshi said in a briefing to African diplomats earlier this week. “The first stage of the first filling starts this July.”
The GERD is set to be Africa’s biggest hydropower dam once it’s completed, generating about 6,000 megawatts of electricity. Ethiopia plans to export electricity to neighboring states to help ease an acute foreign-exchange shortage.
The Supreme Court of Zambia has just delivered a fundamental and remarkable Judgement. It has fined Mopani Copper Mines $13 million!
This is a case in which the Zambia Revenue Authority (ZRA) has been battling with Mopani Copper Mines and its Swiss parent company Glencore since 2009. Glencore PLC is a British multinational commodity trading and mining company with its headquarters based in Baar, Switzerland.
The background is that the ZRA conducted an Audit of Mopani Copper Mines for the period 2006 – 2009, which revealed that the transactions between the company and its Swiss parent multinational, Glencore International AG (GIAG) violated the Arm’s Length Standards (ALS).
An arm’s length transaction refers to a business deal or transaction in which a buyer and seller act independently without one party influencing the other.
Chief Justice Ireen Mambilima sitting with Justice Nigel Mutuna and Justice Mumba Malila ruled that any tax authority would find serious misgivings on the lack of arm’s length on the revealed transactions between Mopani and Glencore.
The Court found Mopani liable of abusing transfer pricing and used it as a mechanism to avoid paying full taxes due to ZRA.
The core part of domestic revenue mobilization for any country is taxation of its citizens and the private sector. For Zambia, its mineral resources present an unparalleled economic opportunity to increase domestic revenue through effective taxation of the mining sector.
Despite the tremendous wealth inherent in this sector, Zambia has been struggling to obtain significant financial benefits through taxes from the sector.
This is due to various factors including the volatile mining tax regime policies but also the increasing tax-avoidance schemes perpetrated by mine houses that might appear legal but are aggressively aimed at reducing the amount of tax payable.
Multinationals increasingly abuse transfer pricing as a mechanism to avoid paying tax. Developing economies are now increasingly aware of these schemes especially the abuse of transfer pricing. African governments are now establishing robust legislative and administrative frameworks to deal with transfer pricing issues.
For Zambia, curbing the abuse of transfer pricing, is a development financing issue, because without adequate tax revenues, our ability to mobilise domestic resources for development is heavily hampered.
The sensitive challenge for Zambia has been to balance the need to protect its tax base while not seen to be discouraging or hampering foreign direct investment in the mining sector.
Zambia has joined many African countries that have begun to put in place, legal rules on the taxation of cross border transactions and the latest Supreme Court Judgement will go a long way in enhancing these measures.
It should be noted that this “arm’s length principle” as emphasised by the Supreme Court of Zambia is at the core of most global standards on controlling transfer pricing perpetrated by multinationals.
AFRICA LOSES $50 BILLION A YEAR IN ILLICIT FINANCIAL FLOWS.
Over the last 50 years, Africa is estimated to have lost in excess of $1 trillion in illicit financial flows (Kar and Cartwright-Smith 2010; Kar and Leblanc 2013).
This amount excludes capital flight. Capital flight is a large-scale exodus of financial assets and capital from a nation due to events such as political or economic instability, currency devaluation or the imposition of capital CONTROLS. This process could entirely be legal or licit.
To resolve the crisis of illicit financial flows and outflows from Africa, the African Union and the United Nations Economic Commission for Africa tasked the fourth Joint African Union Commission and United Nations Economic Commission for Africa (AUC/ECA) Conference of African Ministers of Finance, Planning and Economic Development held in 2011to handle the matter.
The Conference established a High Level Panel on Illicit Financial Flows from Africa. Illicit financial flows (IFFs) is defined as money that is illegally earned, transferred or
utilize. These funds typically originate from three sources: commercial tax evasion, trade mis-invoicing and the abuse of transfer pricing.
Other origins of illicit financial flows include criminal
activities such as the drug trade, human trafficking, illegal arms dealing, and smuggling of contraband, illegal wildlife trade and bribery and theft by corrupt government officials.
The Panel headed by South Africa’s former president, Thabo Mbeki, established that Africa loses over $50 billion a year through tax avoidance and fraud schemes largely perpetrated by multinational corporations operating in Africa.
It became clear that Africa was a net-creditor to the rest of the world, despite the regular inflow of official development
assistance. The continent continues to suffer from a crisis of insufficient resources for development, largely caused by illicit financial flows.
The Report of the High Level Panel on Illicit Financial Flows from Africa recommended that Africa must implement measures to radically reduce illicit capital outflows from Africa.
The Panel recognised that the goals of ending poverty in Africa, the goal to achieve Sustainable Development Goals (SDGs) aimed at reducing inequality within and among nations, and the hope to give practical effect to the fundamental objective of the right of all to development, was attainable if African governments and its partners curbed the illicit financial outflows.
About The Author: Amb. Emmanuel Mwamba is Zambia’s Permanent Representative to the African Union and to the United Nations Economic Commission for Africa (ECA).
If the World Health Organization (WHO) wants to maintain its legitimacy on the world stage, it must now answer some tough questions about the extent it has kowtowed to China during the coronavirus pandemic.
It now has a chance to do so, after its members agreed to adopt a resolution for an inquiry into the global handling of the pandemic at a virtual meeting of its annual World Health Assembly on May 19. But there are still many other questions that need to be answered before it can restore its credibility.
We have studied China’s engagement with global health institutions such as the WHO, China’s compliance with global public health norms and how far it succeeds in creating and promoting its own norms around the world. Amid the global crisis caused by the coronavirus pandemic, which has infected nearly five million people and killed more than 320,000 in just a few short months, understanding the relationship between China, where the outbreak began, and the WHO is crucial to the future of global public health.
Uncritical of China
The WHO’s leadership has come under unprecedented scrutiny during the pandemic for giving the impression that it has been swayed by, and beholden to, China. In late January, in the early days of the outbreak, the WHO’s director general, Tedros Adhanom Ghebreyesus, heaped unqualified praise on China’s COVID-19 policy measures and the leadership of Xi Jinping. He commended the “seriousness” with which China was taking the outbreak, “the commitment from top leadership, and the transparency they have demonstrated”.
But non-transparency and censorship are pervasive in all levels of China’s system of government. Tedros had been warned by his aides of the potential repercussions of his effusive praise of China, but reportedly ignored them. It appears the WHO also took the initial information and data about the epidemic transmitted to it by China at face value.
In late March, Japan’s deputy prime minister, Taro Aso, quipped that the WHO should be renamed the “Chinese Health Organization”. The US president, Donald Trump, went further – criticising the WHO of being too “China-centric” in handling the pandemic and of an “alarming lack of independence” from China.
The WHO now needs to restore its global credibility. The call for an independent, comprehensive review of the COVID-19 pandemic quickly became a battlefield between China and Western countries, especially Australia and the US. What was eventually adopted on May 19 without objection was a compromise resolution, submitted by the European Union and endorsed by more than 100 other countries.
The resolution does not refer to China, but asks the WHO to work with the World Organisation for Animal Health and the Food and Agriculture Organization, now led by the Chinese scientist Qu Dongyu, to: “Identify the zoonotic source of the virus and the route of introduction to the human population, including the possible role of intermediate hosts.” The resolution also looks forward, pointing to potential intellectual property right issues surrounding a new vaccine.
Speaking at the World Health Assembly the day before the resolution was adopted, Xi framed China as a staunch supporter of multilateral global health governance and committed US$2 billion ($1.6 billion) to the international campaign to combat COVID-19. He promised that Chinese vaccines would be “global public goods”, directly confronting fears of a rise in vaccine nationalism in the West. But China’s moves were principally aimed at improving its tarnished reputation.
Tasks for the inquiry
With the resolution adopted, the battle will now centre on who should lead the inquiry. If this inquiry is to be genuinely independent, it must address unanswered questions about who was China’s “patient zero” and when and how they were infected.
A real test would be whether the WHO-led delegation could meet, independently of Chinese authorities, some of the key figures involved in managing the initial stages of the country’s COVID-19 outbreak. It would be enlightening for them to hear at firsthand from frontline doctors in Wuhan hospitals who treated the first batch of COVID-19 patients, such as the doctor Ai Fen. Others they may want to meet are the Wuhan Institute of Virology’s Shi Zhengli, known as China’s “bat woman” and the heads of the genomics laboratories which were reportedly asked to destroy the samples after testing.
Zhang Yongzhen of Fudan University in Shanghai would also be worth speaking to. Zhang has rarely appeared in Chinese official narratives, but his team concluded that the virus was of the coronavirus family, and their results were published in the journal Nature in early February. It later emerged that his laboratory had been ordered to close in early January, with no reason given.
Besides the inquiry into the origins of the virus, another key question is whether the WHO delayed declaring an international emergency after coming under pressure from China, a claim reported by Der Spiegel and Newsweek. According to Newsweek, citing a CIA report, the delay allowed China to hoard essential medical supplies and personal protective equipment from abroad.
Like other UN organisations, the WHO cannot enforce its decisions and policies without the support of its member states. Its success relies on whether it can persuade politicians and officials to comply with its decisions. Maintaining legitimacy is crucial if the WHO is to effectively tackle the future health crises that affect all of humanity.