Obama – inevitable lame duck

Tweet on election night:

It took a few months but the Guardian is finally on it today:

Obama lame duck

It is not a comparison that many people thought would ever get much traction.

But, assailed this week by multiple scandals and at the mercy of a furious press, President Obama has endured a legion of pundits wondering if he is the 21st-century Richard Nixon – and whether his second term is already a lame-duck disaster.

The worst corporate scandal you never heard of

Like many people, I have grown blasé about the successive waves of corporate scandal that have broken since the financial meltdown of 2008, but Fortune’s account of the crimes of Indian generic drug maker, Ranbaxy, is quite astonishing.

Ranbaxy boasts that it “is a research based international pharmaceutical company serving customers in over 150 countries… providing high quality, affordable medicines trusted by healthcare professionals and patients across geographies.” Its business is conducted with the “highest standards of professional integrity and ethical behavior,” it says.

What a joke.

According to Fortune, Ranbaxy deliberately and systematically faked quality tests in order to gets its products licensed across the world. Here’s what a new Ranbaxy employee, Dinesh Thakur, found when he investigated his employer’s fraudulent behaviour:

The company manipulated almost every aspect of its manufacturing process to quickly produce impressive-looking data that would bolster its bottom line. “This was not something that was concealed,” Thakur says. It was “common knowledge among senior managers of the company, heads of research and development, people responsible for formulation to the clinical people.”

Lying to regulators and backdating and forgery were commonplace, he says. The company even forged its own standard operating procedures, which FDA inspectors rely on to assess whether a company is following its own policies. Thakur’s team was told of one instance in which company officials forged and backdated a standard operating procedure related to how patient data are stored, then aged the document in a “steam room” overnight to fool regulators.

Company scientists told Thakur’s staff that they were directed to substitute cheaper, lower-quality ingredients in place of better ingredients, to manipulate test parameters to accommodate higher impurities, and even to substitute brand-name drugs in lieu of their own generics in bioequivalence tests to produce better results.

Thakur reported his findings to the company’s bosses, who took no action. Another executive – Kathy Spreen – found that Ranbaxy was submitting patented drugs – the ones it was copying – for testing, not its own. She too reported her concerns:

In a conference call with a dozen company executives, one brushed aside her fears about the quality of the AIDS medicine Ranbaxy was supplying for Africa. “Who cares?” he said, according to Spreen. “It’s just blacks dying.”

Both ended up resigning.

In recent years, USA regulators have made some attempts to pursue Ranbaxy and while no individual has yet been prosecuted (how can that be?), the company recently agreed to pay a huge fine ($500m or so), with Thakur receiving in excess of $48m as a whistle-blower. Ranbaxy is still in business, however, and is strengthening its position in drugs markets around the world.

Why hasn’t this been a bigger story? The BBC gave it a couple of hundred words. I think the Guardian may have briefly carried the wire story but, if so, it’s now gone from its website. The FT managed a blog post which focused mainly on whether the settlement would be good for the company’s share price. In the grand scheme of things, that’s diddly-squat.

Two reasons for the radio silence, I think. The current media narrative focuses heavily on the myriad of sins of Western companies – if this had been GlaxoSmithKline, you can be sure it would have dominated the front pages. There’s much less interest in how lax regulation elsewhere in the world is corrupting globalisation.

Second, many – me included – are heavily invested in generic drugs as a vital weapon in the battle to improve health standards in the poorest countries. In 2004, the Guardian carried an interview with Dr Brian Tempest, a Brit who was then Ranbaxy’s CEO (and who Fortune puts at the heart of the company’s reckless cover-up). For the generics industry, AIDS drugs were a route to respectability, with Ranbaxy swiftly becoming an aid industry favourite.

“We don’t make a lot of money out of selling our Aids treatments cheaply. I tell all the analysts that this is really out of social responsibility because we are based in the developing world and have all its issues on our doorstep.”

We can’t be sure that Tempest knew his company’s drugs were dirty when he gave the Guardian that quote, but later that year, Fortune reports that he attended a meeting of its scientific committee and heard that “the company had simply not tested the drugs and had invented all the data” for entire markets, including Brazil, Kenya, Ethiopia, Uganda, Egypt,  and Thailand.

Perhaps it is time for Randeep Ramesh, the Guardian’s social affairs editor, who talked to Tempest in 2004, to follow up on his story. After all:

  1. Ranbaxy’s drugs continue to be consumed by British patients – in just twelve months, the NHS saved £350m by using a generic cholesterol-reducing drug it buys from the Indian firm. Last year, it was forced to admit that it had shipped batches of the drug contaminated by fragments of glass.
  2. The British regulator seems to have taken barely any action against Ranbaxy when compared to its American counterpart. Parliament has also ignored the scandal, although ministers have met regularly with Ranbaxy both in the UK and in India.
  3. The American investigation tells us nothing about the standard of drugs sent to Africa and other developing countries, including those funded by the British taxpayer. In 2011, for example, DFID lauded Ranbaxy for its “leadership and foresight” in driving down the price of anti-AIDS drugs for the poor. Can we be sure the generic drugs it is now buying are safe?
  4. We also don’t know whether this is a one-off or other generic manufacturers have indulged in similar behaviour. The pattern in banking and other industries, however, suggests that if one company can evade regulation, then others will also have been up to the same tricks. That’s extremely worrying, given that the generic drug industry is expected to be worth $169bn in 2014.
  5. It would be good to hear more about Tempest – dubbed the ‘benign buccaneer’ in the Guardian profile. He was with Ranbaxy until 2008 and now holds a string of non-executive directorships. He is still involved with Ranbaxy’s founding family, serving on the board of Fortis Healthcare, which is chaired by Malvinder Mohan Singh, one of India’s richest men, who sold out his Ranbaxy shareholding to a Japanese drug-maker as scandal engulfed the company. He also chairs the advisory board of Lancaster University Management School. Tempest was too busy to speak to Fortune’s reporter.

Maybe the Fortune story is overblown. I hope it is. But eight Food and Drug Administration inspectors went to look at Ranbaxy factories in India. All of them came back saying they would never, ever, take a Ranbaxy drug.

What is a progressive foreign policy anyway?

Labour left office three years ago this month and may return to it just two years from now. That’s not a very long time in which to formulate a distinctive foreign policy for government, nor to game out responses to the massive shifts in the global strategic context in which the next Prime Minister will be operating.

To lend a hand, Labour think tank/ pressure group Progress have commissioned a series on progressive dilemmas in foreign policy, addressing the 12 big questions where the tensions between different left-of-centre first principles are most acute. Whatever your politics, we hope seeing how that debate plays out inside what could be the next governing party of Britain will be of interest.

How to Start Development’s Gutenberg Revolution


As a schoolboy I was troubled to learn about medieval Europe where a narrow elite maintained unaccountable power by controlling access to information; and I delighted in the heroic story of how Johanes Gutenberg’s humble printing press began a revolution that brought an end to the unchecked control of knowledge and power by a few. I loved stories of the fearless folk who refused to accept, even under torture, that information was best kept hidden, and cheered the fall of the men who thought that ordinary people were best left ignorant.

Then I ended up as a development worker, asking governments how much they were spending on health, education and hunger. And alongside the late, incomplete, and plain wrong answers that followed, I felt I could hear faintly the all-powerful medieval cardinals of my school history classes laughing at me.

We sometimes talk of how people in power “fail” to put out timely and accurate information. But just as failed states are often terribly lucrative for those in charge of the failing, so too a cynic might ask what incentives there are for elites to fix “information failures” which prevent citizens from seeing what they’re doing.

We need another Gutenberg Revolution – not just the technology of online whizzes (Printers 2.0) but the kind of free-thinking insubordination that made the renaissance and reformation possible. To exhalt the humble, we’re going to have to humble the exhalted.

That’s why charities are so focused on getting the G8 to deliver on transparency in land investments and in taxation – because knowledge is power, because stealing is harder in broad daylight. The G8 would, no doubt, prefer if we only asked them to beneficent. But we’re insisting, most of all, that they are transparent, and end their role in providing shadowy corners for shady characters to hide their dodgy deals.

For development to succeed in ending extreme poverty and extreme inequality, transparency will be needed not only from the governments of rich countries but from the governments of developing countries too. That’s why it’s such important news to see the launch today of Government Spending Watch which monitors spending in 52 low income countries, an NGO initiative that provides the most up-to-date and comprehensive data we’ve ever had. It reveals, for example, that fewer than a quarter of countries are spending what is needed to deliver education for all or to meet targets on water and sanitation; that declining aid is leading to rising borrowing and increasing debt burdens; and that the global rhetoric on investing in social protection and gender equality is backed by very little actual money. But most importantly, it helps puts power in the hands of citizens to know what their governments are spending, and to hold them to account. There’s a lot of money in keeping people ignorant. Which is why we need to know.


Britain’s dirty secret – the island havens that make life hell for the world’s poor


The G8 agenda on tax is getting increasingly radical, and much of the credit on that must go to to the UK Government hosts. Issues that were off the table months ago are now up not just for discussion but for decision. The agenda has moved beyond tax evasion to the kind of tax avoidance that has been able up to now to squeak through as legal. The UK is serious, not just in its public statements, but, representatives of other governments have confirmed to me, in the private intergovernmental discussions too. As one official from a European country told me, “We couldn’t believe it when the UK put tax on the agenda. For years, whenever we tried to put even a sentence on tax into communiques, the British got out their red pen. And now it is they who are leading the call for action. So thanks to them, to you NGOs … and to Starbucks.”

But a contradiction lies at the heart of the UK’s action on tax dodging, one that could both hold back progress in itself and undermine the UK’s ability to get others to act. The UK is a haven for havens. Whilst the government talks of “tough negotiations” with the Lichtensteins of the world, it has power, through the Crown, to stop some of the most egregious havens and yet is holding back. The claims that these British treasure islands are independent sovereign states over whom the UK has no power is a fiction that collapses under a few minutes of scrutiny. The Kilbrandon Commission confirmed in 1973 that “The United Kingdom parliament has the power to legislate for the islands.” In 2009, the UK suspended the government of the Turks and Caicos Islands to deal with a corruption crisis. The notionally independent decisions of some of the islands to make some concessions last week were all announced on a single day by a UK Treasury press notice. When you read about “British Virgin Islands”, “British Overseas Territories” and “Crown Dependencies”, the clue is in the name. If UK tax havens fail to adequately tackle the secrecy and other practices that facilitate tax dodging it is ultimately because the UK allows it.

The impact of tax dodging on poverty is massive. Tax dodging deprives poor countries of the revenues they need to tackle poverty and to stand on their own two feet. As Jeff Sachs notes today, “The IF campaign makes a basic point: poverty can be fought, and austerity overcome, IF taxes are properly paid by those who owe them.”  Zambia would have 46% more money to invest in schools, health clinics, child nutrition and agricultural development if it could prevent tax dodging by multinationals. In a world where 2 million kids die before the age of five from malnutrition, tax dodging is literally fatal.

So why is the UK protecting its tax havens? It’s hard to know. I’ve heard, informally, from well-meaning people, arguments like “the money would just be moved elsewhere” and “it’s the only business they know”. Yet these are, sadly, no different in logic to the arguments made by drug dealers’ mums about their errant sons. I’ve heard “we can’t force them to behave”, which is flat out wrong. And “it’s OK, we’ve sorted it,” which is to mistake some minimal progress with a proper solution. Whatever the reason, it must be a very challenging cognitive dissonance, to lead an international negotiation to eradicate something which – unhappily, uneasily – you ultimately let your own people get away with. Especially when the mantra of the G8 is “Getting our own house in order.” And the dirty secret isn’t even secret any more. It’s a huge hulking big elephant in the room.


The African Exodus: A View from the Ground


Sunday’s El País carried a surprising article detailing the increase in immigration from Africa to Spain in the past two years.

Although Spain is in the midst of a debilitating economic crisis, with an unemployment rate of over 27%, the number of would-be migrants crossing the Strait of Gibraltar from Morocco in the first quarter of 2013 has quadrupled compared with the corresponding period in 2012. Alarmingly, the proportion using inflatable rubber dinghies – the kind your kids play on at the beach – has risen from 15% to 90% in the past year. These dinghies are designed to be used by two people, but in the Strait they are often intercepted with up to ten on board (Spain’s coastguard has yet to hear of one that has completed the fourteen kilometre journey – the lucky ones are rescued before they sink). In Morocco, the market in these vessels is thriving – a 2-3 metre boat that can be had for €300 in the Spanish beach resorts will set you back over €600 in Tangiers.

This continued flow of migrants from Africa to Europe gives the lie to the “Africa Rising” story peddled by some Western media outlets of late. Although GDP is growing in many parts of the continent, most Africans see nothing of this. The millions who have migrated from villages to cities in search of a better life too often end up with nothing to do, and in their desperation are forced to look further afield, to Europe, for a way out of poverty (as the chief prosecutor in the Spanish port town of Algeciras noted, ‘many people would love to have our crisis’).

While researching my new book, The Ringtone and the Drum: Travels in the World’s Poorest Countries, which as well as analysing the great social upheavals the developing world is going through as it modernises is an attempt to give voice to the people experiencing these changes on the ground, I observed this frustration at first hand. The population of Bissau, the capital of the tiny West African nation of Guinea-Bissau which was the first stop on my trip, has quadrupled in the past thirty years. Whole villages in the interior have emptied out as the land has become too crowded to farm and the lure of modernity entices people to the cities. My wife Ebru and I spent a few weeks in one of Bissau’s poorest districts, where, as the excerpt below shows, urbanisation’s losers face a constant dilemma over whether they too should undertake the perilous journey to the West:

Since there is no power and the heat quickly rots anything perishable, Bissau’s residents must lay in a new supply of food each day. Every morning, therefore, we walk down the paved but potholed road that leads from our bairro to Bissau’s main market at Bandim. The market is a labyrinth, its narrow dark lanes winding between rickety wooden stalls whose tin roofs jut out threateningly at throat height. A press of brightly-dressed shoppers haggles noisily over tomatoes, onions, smoked fish and meat. The vendors know their customers – you can buy individual eggs, teabags, cigarettes, sugar lumps and chilli peppers; bread sellers will cut a baguette in half if that is all you can afford; potatoes are divided into groups of three, tomatoes into pyramids of four; matches are sold in bundles of ten, along with a piece of the striking surface torn from the box. In the days leading up to Christmas and New Year, which all Guineans celebrate regardless of their religious persuasion, the market is crowded and chaotic, but after the turn of the year, when all the money has been spent, it is empty and silent.

Only the alcohol sellers do a year-round trade. On a half-mile stretch of the paved road there are thirteen bars or liquor stores. They sell cheap Portuguese red wine, bottled lager, palm wine and cana, a strong rum made with cashew apples. Bissau has a drink problem. Its inhabitants’ love of alcohol is well-known throughout West Africa. Back in Senegal, a fellow passenger on one of our bush taxi rides had warned us that Guineans ‘like to drink and party but they don’t like to work.’ Later in our trip, on hearing we had spent time here, Sierra Leoneans would talk in awed tones of Guineans’ capacity for alcohol consumption. The liquor stores near our bairro are busy at all hours of the day and night. Christians and animists quaff openly, Muslims more discreetly.  Continue reading

A Balkan success for EU soft power?

Serbian leaders will make another attempt this week to convince Serbs in northern Kosovo to accept last month’s deal between Belgrade and Pristina to normalise relations between Serbia and its former province.

The April 19th agreement was  hailed in the much of the western media as a great success for the EU’s soft power and its oft-criticised Foreign Policy chief, Catherine Ashton. Veteran Balkan watchers, like Misha Glenny and Tim Judah have both penned pieces lauding the potentially historic deal that took several rounds of tortuous negotiations mediated by Baroness Ashton.

The EU can be forgiven for celebrating a rare success given the unremitting gloom that has enveloped the European project as it struggles to find a way out of economic slump and the financial crisis threatening the Euro.

Furthermore, the agreement is certainly the closest the region has come to a comprehensive settlement of the Kosovo dispute since the violent break-up of Yugoslavia ended with NATO expelling Serbian security  forces from the province in 1999, and it was reached through talks hosted in Brussels, not decided on the battlefield. But was it really a victory for soft power?

True, most Serbian politicians see positive reasons for their country to join the EU. To them it represents a route to prosperity, modernisation and the restoration of the country’s reputation, blackened as it was by the repression and violence that marked the rule of its former leader, Slobodan Milosevic.  So the hope in Belgrade is that the deal will clear the way for Brussels to name a date for the start of full membership talks early next month.

Catherine Ashton and her team appear to have displayed diplomatic skill, tenacity and a good deal of imagination in crafting mutually acceptable wording to the fifteen point agreement .

But it was not skilful diplomacy that persuaded Belgrade to retreat so far from the deal it would have wanted. Before Kosovo unilaterally declared independence five years ago, there was another round of talks between the two sides led by the UN mediator, Martti Ahtisaari. Belgrade rejected the deal on offer then because Mr Ahtisaari never made any attempt to persuade the Kosovo Albanians to remain part of Serbia, instead offering a plan that would give Serbs in an independent Kosovo considerable autonomy with some links with Serbia.  The deal Belgrade has now accepted may not be called the Ahtisaari Plan. but it looks very much like it.

The key to getting Serbia to give so much ground – literally – is the German stick behind the Brussels  diplomats. Berlin has taken an increasingly hard line with Belgrade over the past few years and made it clear to Serbia there would be no EU membership talks if it didn’t normalise relations with Kosovo. Also, it is not lost on Belgrade that there are still more than five thousand NATO-led troops in Kosovo and the German contingent is by the far the largest. Ostensibly, they are there to keep the peace and their presence ensures Serbia hasn’t been able to resort to force to prevent Kosovo’s secession, even if it had had the will to do so. But in 2011 and 2012, these troops were deployed to try to face down resistance by Serbs in north Kosovo to an ultimately failed attempt by Pristina to unilaterally impose its rule there – an action that sent a clear message to Belgrade.

This looks more like the exercise of smart, than purely soft, power; something that may surprise many observers of EU foreign policy. But, as the two sides prepare to start discussing implementation, it is by no means certain the deal will stick.

For starters, it is only an outline and there will be plenty of potential pratfalls when working out the details – as the wrangling over interpreting and implementing a previous limited agreement on joint administration of customs and disputes over details as apparently mundane as car number plates, shows.

Then there are the conflicting meanings the two sides attach to the deal. For Pristina it represents de facto – if not de jure – recognition of its independence by Belgrade, but Belgrade insists it is no such thing, preferring to characterise it as a practical agreement to ensure the interests of Serbs living in Kosovo.

But most importantly, there is the attitude of the Serb majority who live in northern Kosovo. Even during the period of UN rule in Kosovo  from 1999-2008, Pristina’s writ never ran in northern Mitrovica and the three municipalities abutting central Serbia, and there is no sign that is about to change. Since the deal was signed, local Serb leaders who, crucially, were not involved in the talks have refused to accept the agreement, and there have been large protests suggesting most of the Serb population back them and are not reconciled to accepting having to live in an independent Kosovo.

Even if Belgrade withdraws its financial and political support from the Serbs in the north, they may take a leaf out of their opponent’s playbook by boycotting Kosovo’s institutions and looking after their own education and health needs, much as the Albanians did under Milosevic in the 1990s.

None of this is to say that the deal won’t eventually take root and the western Balkans will find the long-term stability it has lacked since the Ottoman Empire went into decline two centuries ago. But, as even Francis Fukuyama now acknowledges, history doesn’t end, and there is no guarantee that this deal marks the final resolution of the struggle between Serbs and Albanians for control of Kosovo.

For now, Kosovo’s Albanians have got their independence and are set to extend their control over all the territory claimed by Pristina, not because they are more powerful than their Serbian rivals, but because they have the support of the United States and the EU’s most influential states; while Serbia’s refusal to recognise Pristina’s UDI has support from Russia and other BRICS.

And, as the global power balance shifts over time, there is no guarantee the new status quo is immutable.

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