Hammond faces Brexit grilling

Britain's Chancellor of the Exchequer Philip Hammond.
Updated 22 July 2016

Hammond faces Brexit grilling

LONDON: Britain's new Finance Minister Philip Hammond will this week face calls from anxious peers around the world to explain how his country can pull off a smooth exit from the European Union and minimize the damage to the fragile global economy.
A month after the Brexit shock hammered markets and added to the prospect of more stimulus from major central banks, Hammond will attend a July 23-24 meeting of finance chiefs from the Group of 20 leading economies in the Chinese city of Chengdu.
There, the former foreign minister is likely to come under pressure to provide clarity on Britain's strategy for leaving the EU and negotiating a new trade deal. The process is likely to take years and could put fresh strains on Europe's economy, which has barely recovered from the euro zone debt crisis.
US Treasury Secretary Jack Lew visited Britain twice last week, as the country changed prime ministers as well as finance ministers, to say a deal that tightly bound Britain and the EU was "in the best interests of Europe, of the United States and the global economy."
A Canadian Finance Ministry official said Brexit and its implications for public support for international trade would dominate the G20 gathering.
The shock "Leave" victory in Britain's June 23 EU membership referendum has underscored the deep dissatisfaction among many voters in rich countries with the globalized economy.
That is something that the anti-free trade US Republican candidate Donald Trump hopes will boost his chances in November's presidential election.
It also adds to the challenge for the G20 finance ministers and central bank governors to steer the world economy out of a slow-growth rut that has lasted since the financial crisis.
Hammond said on Tuesday the Bank of England would take the first steps to help steer the economy through its Brexit shock, and possible budget measures would not come until later this year.

FORCES OF DIVISION
The International Monetary Fund said on Tuesday it had been planning to raise its forecasts for global growth until Brexit threw "a spanner in the works" and prompted the Fund to trim its forecasts. It said the outlook would be a lot worse if Britain failed to strike a friendly deal with the EU.
"Brexit is symptomatic of a broader threat to the global economy," Lena Komileva, managing director of G+ Economics, a consultancy. "The forces of division are threatening the forces of cohesion and that makes coordinating growth policies harder."
George Magnus, a senior economic adviser to UBS, said Hammond — who supported Britain staying in the EU — would be pressed to provide some of the missing detail behind new Prime Minster Theresa May's promise that "Brexit means Brexit."
"There will be a strong interest on the part of the Europeans and with varying degrees the US, China and India and other important countries, who will want an idea of the dynamic implications that Brexit might have for the EU itself," he said.
However, with even the start date for Britain's exit process unclear, Hammond will probably be unable to provide much detail to his peers, Magnus said.
Although he is little known to many other finance ministers, Hammond is no stranger to international gatherings, having served as Britain's defense and transport minister as well as its foreign minister for the last two years.
He has suggested that Britain, which now faces the risk of a recession, will take more time to fix its public finances than under his predecessor George Osborne, whose focus on bringing down the budget deficit brought him into conflict with the IMF in 2013.
That change in stance is likely to be applauded by the United States, which has long urged other G20 members to do more to boost growth by increasing public spending. However, Hammond has limited room because Britain's budget deficit of 4 percent of economic output is one of the highest among rich economies.
Before attending the G20 meeting in Chengdu on Saturday and Sunday, Hammond is due to meet Chinese government officials in Beijing on Friday. Osborne prioritized Chinese investment, and Hammond is likely to stress that Britain is "open for business."


Taps and reservoirs run dry as Moroccan drought hits farmers

Updated 22 October 2020

Taps and reservoirs run dry as Moroccan drought hits farmers

  • The problems caused by increasingly erratic rainfall and the depletion of groundwater are growing every year in Morocco

RABAT: Two years of drought have drained reservoirs in southern Morocco, threatening crops the region relies on and leading to nightly cuts in tap water for an area that is home to a million people.

In a country that relies on farming for two jobs in five and 14 percent of its gross domestic product (GDP), the problems caused by increasingly erratic rainfall and the depletion of groundwater are growing every year.

In the rich citrus plantations of El-Guerdan, stretching eastward from the southern city of Agadir, more than half of farmers rely on two dams in the mountains of Aoulouz, 126 km away, to irrigate their trees.

However, that water has been diverted to the tourist hub of Agadir, where mains water has been cut to residential areas every night since Oct. 3 to ensure taps in households did not run entirely dry.

“The priority should go to drinking water,” Agriculture Minister Aziz Akhannouch said in parliament last week.

In El-Guerdan, Youssef Jebha’s crop of clementine oranges has been compromised by reduced water supply, he said, which affects both the quality of fruit and the size of the harvest.

“The available ground water is barely enough to keep the trees alive,” said Jebha, who is head of a regional farmers’ association.

“Saving Agadir should not be at the expense of El-Guerdan farmers,” he added, speaking by phone.

‘We hope for rain’

El-Guerdan is not alone in facing drought. Morocco’s harvest of cereals this year was less than half that of 2019, meaning hundreds of millions of dollars of extra import costs.

Despite lower production, Moroccan exports of fresh produce have risen this year by 8 percent. 

Critics of the government’s agricultural policy say such sales are tantamount to exporting water itself, given the crops use up so many resources.

A report by Morocco’s social and environmental council, an official advisory body, warned that four-fifths of the country’s water resources could vanish over the next 25 years.

It also warned of the risks to social peace due to water scarcity. In 2017, 23 people were arrested after protests over water shortages in the southeastern city of Zagora.

In January the government said it would spend $12 billion on boosting water supply over the next seven years by building new dams and desalination plants.

One $480 million plant, with a daily capacity of 400,000 cubic meters, is expected to start pumping in March, with the water divided between residential areas and farms.

Until then, “We hope for rain,” the agriculture minister said in parliament.

In El-Guerdan, the farmers are digging for water. A new well costs $20,000-30,000. However, “there is no guarantee water can be found due to the depletion of ground reserves,” said Ahmed Bounaama, another farmer.