How bad news can do good

Carsten Terp blogs about fear and hope in secret meetings with workers in Vietnam following a feature by the Danish Consumer Council on how Nike turned a blind eye to abuses to factory workers:

'By telling the stories behind the products, consumer organisations can give oppressed workers in third world countries a voice of their own. And yes, we can change the world…

"You must expect this call to be traced by the authorities."

The loud music in the café makes it hard to hear the voice on the phone. “You need to go out and buy a new telephone,” the voice says: “If you keep using this one they might track you down.”

We are in Vietnam to interview workers at factories producing shoes for the world’s biggest sportswear company, Nike. Vietnam is the new Thailand and China in one - a paradise for tourists and a cheap factory for Western companies. Yet the country is led by one of the world’s most repressive regimes. We want to know if basic human and workers rights are respected here. We know for a fact that press freedom isn’t. Getting caught means getting kicked out of the country.

However, this is nothing compared to the consequences our local associates face. They will be arrested by the police, interrogated and maybe convicted to several years of prison for charges of crimes against the state.

One of our local contacts got a taste of this when she was arrested after a mass demonstration for the rights of rural people. When she finally escaped the police’s searchlights she joined an underground organization fighting for the rights of Vietnamese workers.

Our local interpreter is a well-educated guy who’s constantly looking for new opportunities. He’s not scared, he says. He believes he can sweet-talk anybody, including the police. Even so he gets anxious when we take pictures outside a factory which produces shoes for Nike.

Later he tells me that he saw a car with people he believed was factory management. He was afraid they might call the police.

We don’t want to jeopardize the safety of our local associates. So we go and buy a new phone with a Vietnamese SIM-card. For the rest of our stay we only use this phone.

Both locals are Southerners. People in the South of Vietnam fought against the Communists in the Vietnam War. Many of them still believe in the ideas of democracy and personal freedom. Some take advantage of the fact that the authorities can’t control the internet – although they try. Both our local team members use foreign websites to blog about the conditions and lives of ordinary people in Vietnam.

Our presence in the country, however, is good news to them. They know that we are a weapon of mass communication. Through us they can reach millions of European consumers.
Their dedication inspires us a lot. We spend hours discussing how to make the biggest possible impact and how to raise awareness among consumers about Nike’s responsibilities.
We also discuss how to keep our local crew safe. We decide that we don’t want to risk being caught carrying incriminating information.

Thus, before leaving we email our articles and erase the files from the computer. We put important papers in an envelope and send it to Denmark. The rest are dumped in different garbage bins in a shopping mall. The last thing we do is to erase all phone numbers and text messages from the Vietnamese mobile phone. Then we get of it.

Still we don’t feel completely safe. When our plane is in the air we suddenly look at each other and sigh with relief: We got out unnoticed.

Now all that’s left is to hope that our efforts can actually make a change for the people taking the real chances.'

Find out more about the work of the Committee to Protect Vietnamese Workers and read the Real Deal on the production of running shoes, a joint study by 11 consumer organisations.

Caribbean bridges: the recipe for a better future

CI’s Antonino Serra Cambaceres writes from Jolly Harbour, Antigua and Barbuda, where the 7th Caribbean Consumer Conference reflected the need for enhanced networking and cooperation:

‘If something must be confirmed at the end of the 7th Caribbean Consumer Conference that was recently held in Antigua and Barbuda, it is that the consumer movement in the Caribbean is alive...and kicking.

Gathered together under the motto: “The resilience of the consumer movement amidst the food, energy and financial crises – building partnerships for cooperation”, consumer advocates and government officials used the three-day discussion forum to try and find a firm footing within their own realities and the map of the current world crises.

With Grenada, the only absentee, representatives of consumer agencies and associations of all Caricom states discussed how the various crises are affecting consumer welfare. It was argued that under the revised treaty of Chaguaramas – the cornerstone of the Caribbean Community – consumer protection must be one of the main issues that governments must enforce adequately and that all bilateral or regional agreements within the Caricom must assess how consumer rights can be effectively included in any political or trade negotiations.

Consumers International (CI) was present at the conference. We delivered a presentation about consumers and the financial crisis and emphasised that consumers must not be blamed for the crisis, and that regulation must be a tool that govenments should use to to drive markets to more secure paths, now that we know that Adam Smith’s “invisible hands” of markets are nothing but invisible. This presentation, alongside with Philip McClauren’s – past president of the Caribbean Consumer Council (CCC) – led to many serious discussions which all came to the same conclusion that more networking and more common work is the key for the coming times.

CI’s second presentation focused on the future of the consumer movement in this part of the world. While we encouraged the idea and the urgent need for more coordinated work between the Caribbean nations, we also launched the new Caribbean project funded by the Interamerican Development Bank (IDB) that will be implemented in the next three years in Jamaica, Barbados and Trinidad & Tobago.

This presented the ideal opportunity to introduce Candice Rowena Ramessar, the newly appointed project coordinator. Candice did a solid presentation of the main project aims and objectives, as well as activities. Side meetings presented a window of time with our partners in this project, as well as with the CCC, and we started to find ways for the wider participation of other countries, as well as the means of interaction we will be likely to develop.

In the end, the idea of bridges that link countries and then within these countries organisations, gained momentum. The general feeling amongst the conference participants was that all efforts can be boosted if the work is performed in teams, and that this is the best recipe for facing the hard times that will remain for a while in this shocked world of ours.’

Empowering municipalities in Azerbaijan - Part two

CI’s Rosa Vercoe writes about the European Commission (EC)-funded project, Empowering municipalities to better serve their constituents in relation to social and environmental rights that have started in Azerbaijan.

Part two
'My second trip to Azerbaijan at the beginning of March 2009 was a real eye opener in terms of exploring the daily lives of ordinary people living in the Mugan area of the country - the region where our project is focussing its main activities.

The contrast between the capital of Baku and the little villages in the Mugan area was shocking. Baku, especially its centre, is an amazing cosmopolitan city combining a diverse cultural and historical heritage in terms of architecture with state of the art modern buildings made of marble and granite.

It was pretty obvious that moneyed people in Baku are not short of choices if they want to buy world famous designer stuff or flashy cars. In the city centre of Baku you can see boutiques of the same level as that of Knightsbridge in London.

But what sort of choices do the ordinary people of Mugan have?

Well, that is a big question and our project is addressing some of these issues. Let’s look at just a few of them.

The project stretches over five sub-regions, with the following distances from the country’s capital:

• Salyan - 130 km

• Sabirabad- 170 km

• Saatli - 185 km

• Neftchala - 180 km

• Haciqabul - 120 km

These sub-regions have a population of 483 514 in total. Surprisingly despite having an abundance of gas supplies in the country, this particular region suffer from a Cinderella effect – it is semi-steppe (the soil is high in salt, there are no forests and no local sources of potable water), where agricultural production is only possible with good irrigation systems in place. Potentially fertile soil is turning into a salted steppe terrain, without the necessary maintenance and development of the irrigation channels already in place.

There are no gas and water pipelines in this area… and in order to provide themselves with the potable water, people have to store water from a local river Kura in huge tankers, wait until it settles, and then boil it to make it drinkable.

As for gas, they have to buy regular supplies of gas in cisterns, which cost a lot for an ordinary family with children.

Getting supplies of potable water and gas for heating and cooking is a daily struggle for people living in the villages. Not only that… the electric grid equipment in the villages is out of date and electric power supplies is an on-off issue.

The state of the roads, or putting it bluntly- absence of the proper roads and local infrastructure, is another issue. Getting out and about requires having a strong enough car, petrol (of course!) and physical stamina. In the rainy seasons the roads are fully submerged in mud.

While looking at these villages, it makes you question that if the country has seven oil and gas pipelines that are able to move the country’s hydrocarbons in any direction in and out, why not install one mini-satellite pipeline to this particular area of Mugan to make local people’s lives more comfortable rather than the daily struggles they face? The daily struggle for access to potable water, energy, telecommunications, roads infrastructure, well-maintained schools and medical facilities…

The story about problems experienced by ordinary citizens, consumers in Mugan, can be so much longer. We want to ensure that our project will start bringing some positive changes into daily lives of Mugan people, that it will help to empower local municipalities with knowledge, expertise and technical support.

Five new municipal offices have already been set up and equipped with computers, printers and new furniture thanks to the EU assistance as part of our project. People whom I met and spoke to during the trip to the villages are truly enthusiastic about changing conditions, they are eager to support the project.

The local authorities have also expressed their support. If our project is able to bring some cardinal positive changes to the local municipalities’ functioning in two years’ time, which would result in improving living conditions of the people in Mugan that would give us a great sense of achievement.'

Part one again just in case you've missed it.

Why consumer protection must spur the financial recovery - Part two

In a two-part blog feature ahead of a major UN summit on the global economy, CI’s Senior Policy Advisor, Robin Simpson examines why consumer protection must spur the financial recovery.

In part one he looked at why a lack of consumer protection precipitated the financial crisis. Now in part two he goes on to show how consumer rights must be at the heart of the recovery.

Part two…
Consumers have been blamed for the crisis because of irresponsible borrowing. They are now blamed for the lack of recovery as a result of their lack of spending. We are told that they need better financial education to cope with the financial market place. But it is clear from the quotes in part one that regulators and even financial service providers themselves did not know what was being sold. The customers of Bernard Madoff and Societe Generale were rich and influential. But they were swindled.

Of course basic consumer protection and consumer education must be intensified. But let us not kid ourselves that these are at the root of the crisis. As John Kay indicated, there needs to be safeguards so that consumers deposits are not used to finance speculative bubbles of the kind that resulted in housing price bubbles in rich countries like the UK, US, Ireland and Spain. The failure was systemic and the regulators were asleep at the wheel.

Or perhaps one should say they were driving the wrong vehicle. Paul Krugman, the Nobel Prize-winning economist, criticises the regulatory system not just for deregulation, (although he does consider as mistaken the repeal of the American Glass-Steagall Act which separated retail from investment banking). The problem rather was that regulation did not keep up with the evolution of banking structures, and the crisis was set in train by the new ‘shadow banking’ system, “institutions that were never regulated in the first place”. The ‘shadow banks’ ended up surpassing the regulated conventional banks. In this sense the new European emphasis on ‘macro-regulation’ could be step in that direction.

The degradation of consumer protection that has run through the crisis did not just consist of the micro-failures of ‘conventional’ consumer protection, but also the macro-failure of economic management.

Consumers are paying three times over for this as:

• borrowers and pensioners,

• taxpayers, and

• potential consumers of other services now being starved of resources because of the scale of public debt.

We have to consider this big picture in laying the basis of the global consumer movement’s position on the crisis, and our recommendations for a viable recovery plan.

CI has been making ongoing contributions to high-level discussions at the UN’s Stiglitz Committee and the OECD. We are building consensus with our membership across the world, and will be taking our latest position paper to the UN Conference on the World Financial Crisis in June.’

For more on CI’s work in this area, visit www.consumersinternational.org/financialcrisis

Empowering municipalities in Azerbaijan - Part one

CI’s Rosa Vercoe writes about the European Commission (EC)-funded project, Empowering municipalities to better serve their constituents in relation to social and environmental rights that have started in Azerbaijan.

[Pictured here on the left in a school with an oven heating system]

Part one
'Let’s start the story with the fact that I love Azerbaijan and its people. Whenever I land at Baku airport I feel as if I am back home again. Every time I visit this country for the project, I am met and greeted at the airport by our member organisation director, a very courteous and charismatic person with a great sense of humour and creative way of thinking, whose favourite expression is ‘No problem, it will be done’”. His name is Eyub Husseynov and CI has been working with Eyub and his team on EC project implementation since 2006.

For those who might not know much about Azerbaijan some information:

Some statistics first:

• Total population - 8,730.000

• In the capital Baku there is about 2 million people

• Urban population - 51,8%

Azerbaijan is the largest of the three countries in the South Caucasus, followed by Georgia and then Armenia, and is a predominantly Muslim country. Thanks to its key strategic position in the Caucasus and sharing borders with the countries like Russia, Iran, Turkey, Armenia and Georgia, Azerbaijan is able to put its weight in foreign relations. Abundance of oil and gas resources, setting up the Baku-Tbilisi-Ceyhan pipeline and gas pipeline to Turkey bypassing Russia is also an important factor in making the country a really strong player on the regional and international geopolitical scene. Azerbaijan has also benefited a lot from foreign investors with the BP as the country’s biggest investor.

The country is a member of the European Neighbourhood Programme (ENP) and is engaged in a range of the agreements with the European Union (EU) in terms of the economic, cultural and educational cooperation.

Evidence of the EU presence and a substantial financial assistance to the country for its further development, and socio-economic and legal approximation to the EU, was quite obvious during the EC kick-off meeting in January in Baku, which I was lucky to attend.

The conference signalled the launch of the 12 new EU projects run under two thematic programmes, ‘Non-State Actors and Local Authorities in Development’ (3 projects) and ‘’European Instrument for Democracy and Human Rights’’ (9 projects).

Our project Empowering municipalities to better serve their constituents in relation to social and environmental rights is aiming to build capacity of the local municipalities in Mugan area, to make local citizens, consumers make aware of their responsibilities and rights as consumers as well as the municipalities’ responsibilities and rights.

The current problem is such that even the municipalities themselves are struggling to understand what their rights and responsibilities are, how can they work for the benefits of the population they are supposed to serve, what their terms of reference are, what they can and cannot do within the existing legislative framework of the country.

The project is accommodating a comparative research paper on the municipalities’ legislation with the objective of compiling some constructive recommendations on its improvement for the consumers’ benefits and a fair clear-cut balance of a decision-making authority between the local municipalities and executives.

One of the Project’s highlights was a study tour of the ICU team to Turkey with the purpose of sharing a good experience in running municipalities in a more advanced neighbouring country.

The Project envisages conducting a series of workshops and trainings on mediation and consumer rights, municipalities’ rights and responsibilities, fundraising and financial management training for the municipalities. The Project has also a component on consumer education provided by means of several publications on the subject, workshops and setting up Young Consumer Clubs as part of the extracurricular activities for the schools in the villages of Mugan. This is supposed to help the consumers to realise their rights as consumers within the existing legal framework. It is necessary to mention that part of the problem is that people do not have a sufficient access to the information.'

To be continued… more about the project in part two.

Why consumer protection must spur the financial recovery - Part one

In a two-part blog feature ahead of a major UN summit on the global economy, CI’s Senior Policy Advisor, Robin Simpson examines why consumer protection must spur the financial recovery.

Here in part one he looks at why a lack of consumer protection precipitated the financial crisis. In part two he goes on to show how consumer rights must be at the heart of the recovery.

Part one…
‘Banks took the opportunity to use the cheap funds provided by their retail depositors to speculate in global capital markets.’

‘”Perhaps there were a dozen people in the bank who really understood all this before (the collapse) – I doubt it was more”, one senior Citibank manager recalled bitterly.’

‘If experts are unable to understand the fee structure, what chance is there for ordinary consumers?’

‘Who said that?
Ralph Nader?
Karl Marx?
Wrong.

The first comes from John Kay, past occupant of a chair at the London Business School; the second from Gillian Tett, award-winning journalist from the Financial Times and the third from European consumer affairs commissioner Meglena Kuneva.

Given such grave criticisms from such eminent sources it is astounding that banks have received guarantees and bail outs that dwarf the kind of sums that we have been told for years are unavailable for far more needy causes.

For example, the Public Services International Research Unit calculates that for only 5% of the guarantees given to the banks by December 2008, three quarters of the urban population in developing countries could have been connected to water and sewerage. For years CI and its members have campaigned on such basic services and debated the rights and wrongs of whether revenue to pay for such vital services should come from taxation or from consumers’ own pockets.

Yet last year vastly greater sums were made available within a matter of weeks to cover the banks failures.

Competition rules were overridden to allow vast mergers to go through to prop up financial markets, steps that are creating new monopolies. Unsurprisingly banks share prices are now rising.

When developing countries get loans from the World Bank or the International Monetary Fund (IMF), they have to meet strict conditions. Strict tender rules are often imposed. Where is the conditionality governing the banks? Such taxpayer bail outs, which may well result in the depression of other public budgets such as social security or development aid, can only be justified if the retail banks make strenuous efforts to extend financial services to the excluded consumers and investment capital in socially necessary infrastructure services like water, sanitation and electricity.

Bank rescue plans which separate out losses and hand them over to the taxpayer as a poisoned chalice, eg the US toxic asset plan ($300billion, yes billion not million), could be said to achieve the worst of all worlds. They burden the state with the worst performing financial services (socialising losses), while leaving the more sound banking assets in the hands of those who got us into this mess (keeping profits private). No wonder bank shares are rising!

Bernard Lietaer of the University of California argues for nationalising distressed banks in their entirety. Due to the capacity for leverage of their sound portfolios, he calculates conservatively that it is ten times more effective for governments to bolster the balance sheets of banks directly through buying bank shares than to buy toxic assets, which in any case are almost impossible to value. That process of valuation leads either to further rewards for incompetent banks in the event of over-valuation or negligible impact on banking finance in the event of under-valuation.

Majority ownership of banks could allow for conditionality for public policy goals. Interference? Yes absolutely, but the US banks have welcomed over $300billion worth of interference in toxic debts with open arms (and that is but a fraction of the total rescue). And we have political interference already. The US government put pressure on four rescued banks to accept only 29 cents on each dollar of Chrysler’s debt. The UK government put pressure on Lloyds to take over struggling HBOS. Political pressure is inevitable at such times and rightly so. Let us turn it to good effect. How about rescue for the German lander (provinces) responsible as they are for many public services, that are struggling as a result of holding toxic assets. What about debt forgiveness for public utilities in debt to commercial banks and facing the cost of rising environmental standards? What about the cancelled infrastructure investment programmes worldwide? These can return money to the taxpayer in due course while serving a higher moral purpose than boosting bank shares.

What about universal banking services? If interference is the order of the day let it be a programme, open to scrutiny.'

To be continued… keep an eye out for part two.

Accountability begins at home

CI’s Luke Upchurch writes about recent developments in NGO accountability:

‘As civil society organisations, accountability must be at the heart of everything we do. That was the overarching consensus of a high-level meeting of some of the world’s leading international non-governmental organisations (INGOs) in Barcelona earlier this month.

CI joined Amnesty, Oxfam, World Vision and others to discuss the further development of the INGO Charter – a shared initiative helping our organisations and others become more accountable to our members, stakeholders, donors and the public at large.

The INGO Charter represents seven years of collaborative work among INGOs and, as a signatory since 2006, CI is committed to enacting its principles of accountability, responsibility, and good governance. Transparency is a condition of being a Charter signatory, and we are reporting our progress – both good and bad - openly on the CI website.

These working practices are vital to the credibility of organisations like ours, who often call on governments and corporations to do the same. It is also incredibly important as a means of retaining and building upon the trust we have gained from civil society. Without this trust NGOs have no credibility.

Climate change and the financial crisis have put the need for accountability even further up the agenda for every type on organisation. Just as businesses and politicians need to show how they are making a difference and why they are not part of the problem, NGOs need to demonstrate clearly that they are responsible for their actions and truly represent the needs and wishes of their members and supporters.

The INGO Charter continues to develop, with new members looking to join and stronger reporting mechanisms soon to be implemented. This will only increase the legitimacy of the Charter’s and, in turn, the work of its signatories.

Whilst its current focus is on international organisations, the INGO Charter can also provide a framework for national bodies, including consumer organisations, to improve their own structures. Implementing the principles of the Charter can help civil society organisations practice the qualities they so often wish to see in others – transparency, accountability and responsibility. Such an undertaking will further enhance the well-earn position of trust enjoyed by non-governmental organisations.'