GLOBAL SUBSIDIES INITIATIVE
Subsidy WatchIssue 16, September 2007
Commentary
News
The German Ministry of Finance announced last month that it was commissioning an evaluation of the federal government's tax subsidy programs. The evaluation will determine if there are rational goals for these programs, as well as their effectiveness and efficiency in achieving these intended goals.
The announcement coincided with the release of the biannual government report, which as in previous editions examines the trends in federal direct subsidies and tax expenditures.
The German government is set to phase out unprofitable coal mines by 2018, according to a plan agreed to by the government and unions in August.
The plan does not come cheaply; the federal and state governments will provide some 21.6 billion euros to help miners with the transition. The German mining industry employs some 33,000 people, and requires hefty subsidies to stay afloat.
The Egyptian government has announced that it intends to cut gas and electricity subsidies to some 40 companies in energy intensive industries over the next three years.
The Egyptian Ministry of Trade and Industry estimates that energy intensive industries receive some 75% of subsidies to gas and 61% of subsidies to electricity. As in other countries that subsidize energy, rising energy costs have taken a toll on Egypt's budget.
The military junta that has governed Myanmar (formerly Burma) for over four decades says it was forced last month to remove price subsidies to fuel because it could no longer afford the climbing costs.
The result has been a sudden doubling of diesel prices, and a fivefold increase in the price of compressed natural gas. Transportation and food costs have risen sharply in recent weeks , leading to protests. The protests are being spearheaded by the 88 Generation Student Group, the group that led the student pro-democracy protests which were brutally shut down by the junta in 1998.
The Syrian government has announced that it intends to phase out its massive fuel subsidies over the next five years, according to an interview conducted by the Reuters news agency with Abdallah al-Dardari, the Deputy Prime Minister for economic affairs.
Mr. Al-Dardari estimates that the total sum for subsidies in Syria's 2008 budget would reach USD$7 billion. For comparison, Syria's GDP is estimated to be USD$24.26 billion.
Studies
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United States Government report finds farm subsidies go to thousands of deceased farmers
The United States Government Accountability Office (GOA) has found that the U.S. Department of Agriculture (USDA) is paying millions of dollars in farms subsidies to thousands of deceased individuals.
The GOA report, issued in July, states that the USDA is not effectively reviewing farm subsidy recipients to ensure that they are eligible for payments. Of the 181 estates that the GOA reviewed, some 40% did not undergo an eligibility review between 1999 and 2005. Some of these estates received more than $500 000 in farm subsidies.
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Worldwatch Institute releases major biofuels report
The Washington-based Worldwatch Institute touts the benefits of the global boom in biofuels for the rural poor in a book released last month.
"Biofuels for Transport: Global Potential and Implications for Energy and Agriculture", says higher prices for agricultural commodities will benefit more of the world's poor than it harms.
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United Nations concludes that Central America’s biodiesel industry requires subsides
A study released last month by the United Nation's Economic Commission for Latin America (ECLA) found that subsidies will be required to establish large-scale production of biodiesel in Central America.
The study, entitle "Perspectives for Biodiesel in Central America" was conducted by biofuels specialist Waldyr Luiz Ribeiro Gallo, of Brazil.
Events
The World Trade Organization's Public Forum is intended to provide civil society, academics and the public at large with an opportunity to debate with WTO Members how the WTO can best contribute to the management of globalization. This year's forum, entitled "How Can the WTO Help Harness Globalization?", features two-days of presentations and discussions related to international trade and development.
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The U.S. Congress is in the process of enacting its new federal legislation in areas of agricultural and energy policy. In July, the House Agriculture Committee passed its version of the farm bill, while the Senate will tackle its version in September. Meanwhile, both Houses have passed quite different versions of the energy bill. These bills will also need a stamp of approval from the Executive Branch in the fall. Subsidy Watch has asked three experts to highlight what they consider the good and bad in these bills.