Ubanisation - 5 Concerns.

For centuries, the move towards urban settlements has been driven by the logic of progress. The move to cities and towns is associated with higher productivity gains, access to civic amenities and overall social security and profit making. This however, does not mean that cities develop in a pre-destined fashion. For a growing number of modern cities, the intersection between technology, globalisation and policy create forces that shape them. These forces can be strong or weak depending on the governance structures in place and the focus on urban development, planning and infrastructure and services.

Urbanisation in the context of developing countries with large populations such as India is a key area of study and is often not given due recognition or attention. The failure by successive governments to ensure basic infrastructure and support systems in the urban agglomerations in this country; has been well documented and need not be repeated here. With the global population reaching 7 billion just last week, and developing countries being the primary drivers of that population growth the role that cities play in a country’s socio economic transformation is significant. At the same time the rapid influx of people is causing very visible strains on already fragile ecosystems that exist in urban areas.

This pace of movement to cities in India is unprecedented, and is on a scale, that outside of China has not been witnessed by any other part of the world. In India, about 30% of the population lives in cities, and this number is estimated to grow considerably over the next two decades. What is also often termed to be a demographic dividend – with an estimated 180 million job seekers to enter the workforce over the next two decades, could potentially turn into a mismanagement nightmare. Despite the fact that urbanization is not a new phenomenon for policymakers to grapple with, India has not been able to engage coherently with the reality of its urban future.

In order to highlight the challenges and solutions to the problems that are at hand, both in India and in other countries that try to ensure sustainable socio-economic growth I will address five key concerns here. These themes cover a broad spectrum of urbanisation issues that delve into the very core of the overarching human security narrative that will define the development and growth trajectories for developing countries over the next few decades.

The first concern – urban governance and participation, deals with the response mechanisms in place to address the challenges of urbanisation in developed countries. While highlighting the challenges and imperatives for governance, the focus on innovation – both within governance structures and outside should be constant. This should include assessing the role of civil society and the private sector as part of inclusive governance mechanisms.

The second concern is energy consumption and urban emissions - the imperatives for developing alternate patterns for energy use, and appropriate response mechanisms. With climate change and resource scarcity being the central drivers of diversification away from traditional sources of energy and existing energy use patterns,  the questions that emerge are how alternative energy options are going to be created, facilitated and maintained, while ensuring equitable distribution and usage.

Urban design is the third concern, and is perhaps the most consistently ignored theme in the context of urban planning and development in India.  The concept of efficient allocation of space simply does not exist in many of the urban agglomerations here, whereas it is an essential prerequisite while considering the sheer number of people that are living and migrating to these centres. While the efficient distribution and allocation of living space in maintaining a harmonious and stable support system in the form of infrastructure and services is a challenge in itself, addressing equity concerns and ensuring that areas and communities within cities are not marginalized is an important prerogative especially in developing countries.

An equitable, sustainable city cannot be talked about sensibly without considering urban transport and mobility – the fourth concern. Increasing populations in cities and towns, require access and mobility to realize any productivity gains that arise from living in urban areas. With the proliferation of roads and highways, and an existing pre-dominant focus on urban transport by road, governments especially in large cities in developing countries are confronted with complex challenges of improving mobility while ensuring low carbon growth and overall sustainability. Integrated transport models, and innovative technological solutions are necessary for sustaining the phenomenal pressures on urban spaces, resources and environments.

The final concern is urban exclusion – the perceived “rights” to cities and towns. In essence this last concern is distinctly visible in all of the other concerns discussed here. Exploring inclusive policy options and governance mechanisms, to ensure a democratic allocation of public infrastructure, services and support mechanisms is crucial in this regard.

Urban centres in India are veritable microcosms of the entire country – with a diverse mix of communities, cultures and income classes ranging from the marginalized classes to the expanding middle class which is the primary driver of consumption and economic growth. The way that the various sections of society interact with each other, and perceive each other’s spaces and priorities, would be an essential ingredient in India’s growth story and I am sure this would be mirrored across other developing nations across the world. Therefore the creation, facilitation and management of different areas and sections of society are immediate areas of concern and policymakers will need to recognize this through proactive governance and a renewed focus on overall urban development.

As civilizations expand, and average lifespan increases, the threats to human security also increase and diversify. While cities in the developing world are projected to become key drivers of global economic growth going forward, the transformation potential cannot be realised without sustained efforts by all stakeholders involved – governments, private sector, civil society and even at the level of the individual (where responsibility is rarely taken in countries like India).We are all part of the urban ecosystem, and the solutions to the myriad problems that confront us, will eventually be found only when we realise our inherent potential to contribute and respond to the best of our capacities. Responding to the challenges of urbanisation is a shared concern and a collective responsibility.

BRICS and eurozone crisis November 2, 2011 Samir Saran, Vivan Sharan

http://indrus.in/articles/2011/11/02/brics_and_eurozone_crisis_13192.html

With their growing financial and diplomatic clout, the BRICS countries should enhance their coordination to leverage the eurozone crisis to deepen global financial integration.

The rise of the BRICS nations as new epicentres of economic activity in the rapidly evolving world order has been simultaneously accompanied by a steady decline in the relative economic strength of many of the member countries of the eurozone.

The single currency union has become essentially a two-faced beast. A North–South divide in economic fortunes is clearly visible within Europe (and the irony of this is probably lost on most Europeans). It is time for the leaders of this grouping to recognise the fact that the major rebalancing and recalibrating actions that are urgently needed within the economic and monetary union must also address the concerns of external creditor nations such as those within the BRICS grouping.

After much introspection and procrastination, the European leaders managed to pass a controversial but necessary deal on Greek debt. The deal, which calls for a “voluntary” cut on a nominal 50 percent of private sector investments of over 450 financial firms to reduce total debt burden in the economy by 100 billion euros, is a desperate attempt by policymakers to stymie the relentless bouts of selling pressures on Greek debt.  Although given the circumstances, it was extremely important for the eurozone to signal some form of cohesive multi-stakeholder action to the financial markets, the deal is built upon ambiguous foundations.

The private sector has voluntarily decided to take these ‘haircuts’ and at the same time banks have agreed to increase capital reserves to 9% to shield against an imminent market collapse in Greece. This translates into tremendous pressures on banking institutions, without much positive effect on the bond markets, with Greek bonds still yielding unprecedented rates of interest. It is clear that the projected reduction of Greek debt to GDP ratio from 160% now to 120% in 2020 is not impressing bond traders.

The European leaders have announced that they seek to increase the size of the European Financial Stability Fund (EFSF) from its current capacity of 440 billion euros to over a trillion euros.  It is not clear how they intend to do this, and whether a trillion euros (approx.) is the amount they consider to be sufficient to counter the effects of possible contagious sovereign debt defaults and banking crises in member countries. While these leaders attempt to keep kicking the can down the road with respect to how they manage the myriad financial crises that are evolving in southern Europe, it has become increasingly clear that the problem is too big to be handled without outside help.

The Chief Financial Officer of the EFSF recently told a Brazilian newspaper that his colleagues are “pleased” to see BRICS countries starting to invest in the EFSF. The composition of the investments into the EFSF is not public, and therefore there is no real way of knowing how much each of the BRICS nations have contributed to the fund so far. The EFSF was originally set up to raise money for the Portuguese and Irish bailout packages through the disbursal of loans. Although the Fund has nearly risk-free credit ratings by all the major rating agencies (AAA by Standards and Poor’s and Fitch, and Aaa by Moody’s), it can be argued that investing in Greece’s sovereign debt is a far riskier proposition for creditors to the Fund.

Many of the BRICS nations are already heavily invested in the euro. The central banks of China and India hold approximately 25% and 20% in eurozone bonds respectively and are therefore not likely to spend much more of their international reserves buying into a now suspect currency. However, much like Brazil, which is allegedly considering investing into euro debt via its Sovereign Wealth Fund (which allows greater risk taking) rather than purchasing debt through its international reserves, the economies of China, India and Russia could soon follow suit.

Given the volumes of trade between the euro zone members and each of the aforementioned nations (China surpassed the U.S as E.U’s largest trade partner in July) along with hefty direct investment flowing both ways, it is certainly not in the interest of any of the stakeholders – to let the euro collapse. The involvement of countries like China, with immense amounts of liquidity, does not fail to inspire market confidence as was seen last year in July, when China announced that it would purchase a billion euros in Spanish debt. The bond auction was oversubscribed and lead to a turnaround in market confidence in Spanish debt even though China only committed 400 million euros.

Keeping in mind their leveraged bargaining position in current circumstances, the BRICS nations should coordinate their positions and assert themselves while negotiating investments in eurozone debt. Although the BRICS nations have a diverse set of agendas and priorities, it is not hard to see a future where there is greater coordination within the nations in the grouping, especially between geographical neighbours Russia, China and India, in order to deepen global financial integration and reverse the Western narratives that have dominated the larger economic realm for the past century.

At the Sanya BRICS summit in April, the leaders put on record that the “international financial crisis has exposed the inadequacies and deficiencies of the existing monetary and financial system” and that the BRICS nations support “the reform and improvement” of this system. In order to support the troubled European economies, the BRICS countries need to devise a formal set of pre-conditions for granting bilateral loans and investing in various bailout funds. Perhaps these could be centred on some basic premises such as further trade liberalization, increased access to intellectual property and perhaps they can even be self-righteous enough to demand more friendly immigration laws.

The Europeans will no doubt be faced with some hard choices. They have to be careful to juggle two contradictory imperatives – that of enlarging existing regulatory capacities in order to strengthen and deepen European fiscal, monetary and political integration, while at the same time accepting the inevitable growing interdependence with external nations.

If the evolving debt crisis in the eurozone is viewed through a deterministic prism, it becomes immediately apparent that panaceas such as debt write downs only offer short term relief to the markets as long as structural imbalances persist. In light of this, the Europeans will be hard pressed to look for a multipronged approach to dealing with the existing problems of their southern peripheral nations.

The glory days of Western credit and forced fiscal reforms in Asia and other ‘south’ countries are far behind us, with hegemonic Bretton Woods era relics such as the International Monetary Fund struggling to find its ‘traditional’ relevance within the new political and economic realities. Although it is in no way certain that the balance of power will completely shift towards the emerging or recently emerged nations such as those in the BRICS, as they are grappling with internal problems of their own, one can be relatively certain that the growing degrees of independence – both from Western policies and from Western demand --  will provide the perfect platform for increasing economic leverage through investments in equity and debt as well as direct investments. Europe has few options left but to align economic expectations with those of the BRICS. The question that still looms large is whether there is enough political unity and substance in the grouping (BRICS and other emerging nations) to make the right kind of bargains.