The Year Which Went By
2009 ushered in a new President of America. With him, new hopes were born that the world will not be the same mess again that George W Bush and his administration had made of it during the preceding eight years. It was as if it was not only America that was voting for its President in 2008 but the whole world together with it to bring about a salutary change. There was a widespread worldwide desire to see a turnaround of the situation, with America re-emerging as a genuine world leader, which it had ceased to be.
People all over the world were not wrong to place so many hopes and expectations in the only leading nation of the world which dares to show up so much transparency in the running of its affairs and remains so open to criticism both from inside and outside. A huge sigh of relief swept across the whole world with the coming on stage of Barack Obama in replacement of George Bush.
Have things taken a turn for the better? Let’s put it this way: they have not aggravated at the same pace as they were doing before. The legacy of wars in Iraq and Afghanistan is still here; in fact, terrorism has emerged from its undercover, having almost engulfed Pakistan sometime this year. Thousands of innocent people have perished in various countries in and around the Middle East, victims of terrorist bombs and other explosives. They continue to be killed every day in the name of establishing a single order that wants to impose its own brand of social management and show the world, at the same time, the mettle it is made of.
The Middle East has remained the source and origin of continuing international tension, with a newly sworn-in right-of-centre Israeli government proving obstinate and adamant on its vindications and totally unaccommodating to compromise, seemingly flouting the serious admonitions of the new American administration. Neither in Iraq nor in Afghanistan nor in the Palestinian territory is there any lasting sign of appeasement; if extremism were to take firm root due to the pursuit of bad policies by all these protagonists, despite all the good intention he has, Barrack Obama may find himself embarked in a fruitless world war embracing an ever growing number of nations despite his not having started it all. If so, the world will land into a particularly destabilising era resulting in the loss of the usual certainties associated with the operation of the market system. Countries which have opened up to the world, just like Mauritius, will have to face a lot of risk in their day-to-day well-being if the escalation were to take firm roots.
Admittedly, the legacy of a potentially enduring war is not the only major problem the new American administration and the world have to tackle. The world also has to deal with the economic crisis that had been building up since years, reaching a climax in 2007. This one was bequeathed by the frenetic excesses of the Western financial system in hot pursuit of quick and easy and preferably large gains, with the ensuing unfolding of the economic crisis which started raising questions about the survival of the capitalist model based on unfettered free markets. Barack Obama was handed over this poisoned chalice and he has been carrying it with utmost precaution lest it spells his own downfall. A single major systemic mistake, such as it happened with the signing off of Lehman Brothers under the Bush administration, will be enough to accelerate the psychological downslide, bringing the world economy onto the brink of collapse once again. Any such event would turn out to be catastrophic for export-dependent economies such as ours and for international trade generally.
As if these were not problems enough to tackle at one go. For a long time now, there have been ongoing discussions under the aegis of the UN about the thorny issue of climate deterioration. The matter has assumed high importance not only because the planet is overheating but also because of the urgent threat posed by intensification of industrial production to the global ecosystem. The result: increasing desertification and drought in some places; in others, floods, landslides and accelerated melting of ice-caps; all of which are associated with rising global temperatures and heavy pollution. This situation literally means that, unless checked in time, the climatic catastrophe will unfold further. In that case, many will have no means of survival, particularly the poorest in the less developed countries, whilst others will even see their countries submerged under the oceans. These real concerns with tangible consequences were made to appear as if they were serious and irreversible enough for the much awaited UN conference on climate change, which ended in Copenhagen on Friday last, to get to firm commitments from key individual governments.
The actual outcome of this conference was a major disappointment; no binding agreement was signed up amongst the 193 countries present; no international agency was set up to monitor implementation by individual nations of whatever face-saving recommendations were finally made; no decision was firmly taken to limit global temperature rise by less than 2% with reference to what it was at the start of the Industrial Revolution, i.e., circa 1750. It was a missed opportunity again; only a face-saving voluntary agreement was managed after an unending litany of repetitive discourses by heads of various governments. America and China jointly downplayed the issue while Brazil, South Africa and Europe, which have posed as champions of the cause in the past, decided not to press their point in order to secure a real deal. Private economic interests managed thus to overwhelm concerns about how to arrest pollution and greenhouse gas emissions, holding the major governments of the world hostage to private pursuits of profit maximization. The resulting natural catastrophes from the continuing debasement of the environment will impact on global food and other supplies in future. Food and other commodity prices will rise and scarcity multiply; there is no need to state that it is the most vulnerable countries, import-dependents like ourselves, who will pay the biggest price due to this situation.
These matters show that Mauritius is neither the navel of the earth, nor can we insulate ourselves altogether from what is going on at the global level. Seen against this broader perspective, the matters that have been our main preoccupations this year remain much beside what they should actually have been in this world of global turmoil. What are the subjects that have claimed national focus this year?
They include concerns on the following subjects: which parties will form the next political coalition with which other party/ies; why has the MMM deliberately caused disaffection within the ranks of the MSM; how Ashock Jugnauth lost his seat in Parliament and what are the implications of the election of Pravind Jugnauth in the replacement election of No. 8 and how to interpret the MMM’s discomfiture in consequence; the alleged conspiracy that was hatched up to precipitate the departure of the then CEO of Air Mauritius; the wrangling match going on between the management and board of the Bank of Mauritius as well as in several other public sector institutions; the coming together of the MR, PMXD and the PMSD in a common platform with the blessings of a priest; the proposal to establish Creole as a medium of instruction in our schools; whether Mr Bérenger will be fielded as the MMM’s candidate for the post of PM in a future election; which redefinition of electoral boundaries best suits the conveniences of existing political parties, and whether Labour is the favourite to win at the next elections.
On a more positive note, there have been proposals to start the much needed overhaul of the education system. It was a debate well begun and we do not know when and how it will continue. After the latest episode leading to the restoration of the “rights” of the so-called ‘marchands ambulants’, one is left wondering as to how much commitment there really exists to take the country away from concentrating on past myths and legends and their glorification and how keen our leaders are to come face-to-face with the challenges of modernity.
But it is budget policies that have claimed attention the most. In terms of broader policy pursuits, the issue of how the tax burden was shared among the population formed part of the public debate in 2009. Corporate tax was reduced from 30% to 15% in the past four years. This means that it was considered that there was a case for reducing the tax paid by large companies, which churn out net profit in several billions of rupees each year. Besides, the tax on properties being converted by the large sugar estates into luxurious villas for sale to non-residents under the IRS scheme continued to be imposed at a nominal rate. The tax income thus foregone due to such tax concessions was easily compensated for by rapid growth in the amount of the VAT collected from the general public; tax exemption thresholds that were heretofore applicable to small planters’ production of sugar up to 60 tonnes of sugar were withdrawn; similarly, all interest earned by small savers from their financial savings started being taxed with no tax exemption threshold whatsoever, contrary to what prevailed in the past. Faced with depreciation of the currency and its consort, i.e., inflation, the public has gone defensive about inflation; it has been purchasing up to beat the inflation; in any event, with interest on financial savings reduced to one of the lowest historical levels allegedly to protect large companies from having to pay “too much” by way of interest on their borrowings, people have taken to accelerated consumption. The national saving rate has dipped to about 10%, another historical low.
A new wealth tax was introduced on residential property of local residents called the National Residential Property Tax. Thanks to this type of “reform” of the tax system, the government has claimed that it had been able to achieve what it called “additional fiscal space”, or, in a layman’s language, substantial increase in its tax revenues. The public contributed towards that while the Independent Power Producers, who secured a beautiful deal for their sale of electricity to the CEB since 1997, still have to thrash out whether they will concede some of the enormous advantages they have secured to themselves by writing up cast-iron contracts in their favour for a long time to come. It is not the MMM which will alienate the IPPs by putting in a strong word in favour of the electricity consumers who are having to bear the burden while equivocations with the MSPA/IPPs keep postponing price adjustment for electricity, if and when it will come. It will be neutralised perhaps by escalation of the price of oil on international markets so that no one will really be giving way.
On the other hand, on top of a first stimulus package created to provide funding to local enterprises and to carry out large public capital expenditures all at once, an additional stimulus package was voted with the same objective this year. This was meant to protect jobs in the event there had to be laying-off of workers due to the international economic crisis. Our well-managed textile enterprises did not have recourse to such funding from the government which means that, even if it was low key, they had managed to keep their export markets alive and were cost-efficient enough not to need external funding. Our hotels did not also have recourse to such funding. Most of the increase in jobs on the local market actually came from enterprises that did not require any funding from the stimulus package, notably, the BPO, construction and small enterprise sectors. After having profited extensively from significant previous depreciation of the rupee, export enterprises have begun lobbying again to get the rupee depreciated under threat that they would lay off thousands of workers. They could have gone to seek funding from the stimulus package instead; but why does one think they will refrain from passing on the inflation burden to the public by depreciating the currency instead if, by so doing, they can avoid borrowing under the package if they qualify at all?
One can go on with the list of our petty and partial concerns that have dominated the year. To what avail? It does not make sense in terms of public policy to protect the interests of some while discarding the others. We could have concentrated our attention to break new grounds instead of on such particular interests. It is sufficient to note that we do not have much to show by way of enduring progress, breaking away from the established pattern of the past. We have not solved for good the enduring traffic congestion problem. Crime is marching on despite a more affirmative police presence than in the past; the prisons are at their worst, with the risk that some of their guests would gladly re-invite themselves to stay within the higher luxury of their four walls.
Public institutions have been going awry and several of their top political appointees appear to have got it all mixed up. Perhaps the latter will find some time to set aside their preoccupations of this sort and give a little more attention to their true mission. We could perhaps extricate ourselves from all these unnecessary entanglements if we had operated outside the established mould and set our sights higher on global issues much more than we have been doing. For this, we need a public service which is not mediocre; we need to inculcate into the public the point that they should be able to look beyond their immediate personal interests; politicians should be capable of thinking for themselves on what the most competent public servants place as choice before them instead of allowing themselves to be led by the nose by self-interested public servants. We hope that 2010 and beyond will be the occasion for less ad hocism and a greater commitment to a more balanced national distribution so that the poorest are not left to fend for themselves by a heartless market system.