2 Harvard International Review Blog » 2007 » February

February 12, 2007

Portugal’s Legalization of Abortion: A National Decision?

Filed under: Health, Latin America, Religion — Nadira Lalji @ 11:20 pm

Following yesterday’s national referendum, abortion was legalized in Portugal, a country in which an estimated 90% of citizens affiliate themselves with the Catholic Church. The referendum was a close call, yielding only 40% of the nation’s vote; only a slim majority of voters (59.3%) voted “yes” in favour of abortion. Regardless of the low turnout for the referendum, which prevents the result from being legally binding, Prime Minister Jose Socrates, leader of the Socialist Party and a strong proponent of the pro-choice movement, declared that abortion will be legalised. Prime Minister Socrates’ heavy-handedness in backing the proposal has come up against strong opposition and intensified animosity between the Church and state.

To date, abortions in Portugal have only been permitted in situations of rape, mental or physical health threats to a mother, or severe foetal abnormality. Seeking illegal abortions can even result in a jail sentence of up to three years. Under new laws, however, women will be permitted to have an abortion until the 10th week of pregnancy. The immediate benefits of abortion provision cannot be overlooked. It is estimated that over 40,000 Portuguese women resort to clandestine abortion every year. Women travel to other EU countries or board Dutch floating clinics to terminate their pregnancies. Socrates, who was heavily influenced by data compiled by pro-choice groups, claims that 10,000 Portuguese women are hospitalized as a result of illegal or botched abortions, which are frequently carried out in unsanitary conditions by unprofessional aids.

Socrates’ reasserted his optimism for the nation’s progress towards modernization yesterday, adamant that “the people spoke with a clear voice.” Yet, opposition to his pro-choice platform from Partido Popular and the Catholic Church remains strong. Leader of Partido Popular, Jose Ribeiro e Castro, has even gone so far as to say that Portuguese society has been irreparably divided, “Socrates will be responsible for this sad chapter in Portugal’s history, for insisting on a political move that has split Portuguese society.” The close results from the election attest to the divisive nature of the referendum. Moreover, the Church has been outspoken in its dissatisfaction; Braganca Bishop Antonio Moreira Montes compared abortion to the hanging of Saddam Hussein: “Everyone was horrified by Saddam’s execution. Abortion is a variation of capital punishment.” Other Bishops insist those citizens who voted “yes” in the referendum face excommunication from the Church, a claim that would effectively excommunicate over 20% of Portugal’s population.

Unsurprisingly, tensions between the Church and government have heightened dramatically in the last few years; abortion has been a primary source of contention and motivation for both grassroots activists and seasoned politicians. Yesterday’s developments thereby mark a significant turning point in public opinion, which, as late as 1998 during the last abortion referendum, favoured the Church’s pro-life guiding principles.

On the brink of Portugal’s ascendancy to the rotating EU presidency, Socrates’ push for modernizing reforms may be considered an attempt to unite Portugal with the rest of Europe. However, the authoritarian regime of Salazar, which ended in 1974, isolated Portugal from the rest of Europe and reinforced its people’s strong conservative values, values that cannot be eradicated in a single referendum. The referendum raises pressing concerns. What is to be the future of Church-state relations in Portugal? Are there more liberal reforms to come? Portugal’s movement towards “modernization” will inevitably require the state to make significant concessions, those of domestic unity and relations with the Catholic Church. The question is can the current government afford to make such concessions and sever such deep-rooted ties on its path towards modernity?

February 10, 2007

Islamic Finance: The Way Ahead

Filed under: East Asia/Pacific, Economics, Middle East, Religion — Vikram Modi @ 4:16 pm

Islamic finance has witnessed unprecedented expansion over the last decade. Standard & Poor’s estimates that the market for Islamic financial products, which include retail banking services, mortgages, equity funds, fixed income, insurance, private equity, and derivatives, is worth $400 billion. Furthermore, the market is estimated to have grown 15 percent annually over the last three years, a rate that seems sustainable given Gulf investors’ accumulating reserves of petrodollars and Western banks’ search for high-growth markets.

However, Islamic finance is still playing catch-up to conventional finance in several areas, most notably in the development of capital markets. As the balance sheets of Islamic banks and insurance, or takaful, companies grew, they began to accumulate surplus reserves. According to the Islamic Capital Market Task Force, the lack of Shari’ah-compliant financial products meant that these surplus reserves often remained inactive.

Many of the innovations in the past three years have been aimed at addressing this lack of suitable investment opportunities. Islamic banks and the Islamic banking divisions of conventional banks have become increasingly more creative in the design of new financial products aimed at both Muslim and non-Muslim customers. Innovations in takaful, Islamic bonds (sukuks), derivatives, and equity funds have fulfilled the needs of investors by providing a range of investment opportunities, more liquidity in Islamic capital markets, and risk management tools. Moreover, innovation has significantly closed the competitive gap between conventional financial products and their Islamic analogues, placing Islamic finance at the forefront of the global financial services industry.

Bridging the gap between conventional and Islamic finance is clearly dependent upon innovation. Islamic banks have nearly caught up to Europe and the United States in equity funds and insurance, while innovation in sukuks is at the forefront of product development for both conventional and Islamic banks. One of the few areas in which Islamic banks lag significantly is derivatives, although there are signs that the more traditional views on derivatives are being reexamined.

The development of capital markets must accompany product innovation. While individual Islamic products may mimic conventional ones, a wide range of products provides investors with more choice, greater liquidity, and more effective ways to allocate risk. Demand for sukuks was driven in part by a lack of Shari’ah-compliant products in which takaful companies could invest their portfolios. The plethora of sukuks, meanwhile, has led to greater interest in Islamic derivatives so that investors can more easily quantify the various types of risk and adjust them accordingly. Without comprehensive capital markets, however, Islamic finance will continue to lag behind conventional finance. As an immediate solution, countries in the Gulf and Southeast Asia have created the Liquidity Management Center, based in Bahrain, to assist in the creation of an Islamic interbank money market to provide extra liquidity.

Regulatory agencies must develop standard accounting practice and Shari’ah interpretations. Malaysian banks, for example, tend to be more flexible in their interpretations of the Shari’ah, which has hindered Malaysian products’ acceptance in the more conservative Gulf states. Not only are different interpretations of the Shari’ah confusing to investors, but they also inhibit commoditization of Islamic financial products, a necessary step in the building of Islamic capital markets. The creation of the Islamic Financial Services Board, underwritten by the Islamic Development Bank and the International Monetary Fund, has helped facilitate more cooperation between regulatory agencies in the Gulf and Southeast Asia. Indonesia, taking note of Malaysia’s success in Islamic finance, is revising regulations to support the issuance of both sovereign and corporate sukuks.

Finally, Islamic financial products must be competitive investments in themselves. Islamic banks can no longer rely solely on the religious fervor of their clients as a stimulant for demand. Especially as European and American investors show more interest in Islamic products, banks must structure instruments so that they offer equivalent or better investment returns than their conventional rivals.

February 7, 2007

A New Hope for a New Kyoto

Filed under: Environment, International Institutions — Killian Clarke @ 5:41 pm

Almost one week ago, the United Nations dealt a decisive blow to the dying remnants of what was once a robust group of global warming skeptics. On Friday, February 2 the UN Intergovernmental Panel on Climate Change, which consists of hundreds of the world’s top environmental scientists, released a report claiming that it was 90 percent certain that human activity had contributed to the rapid increases in global warming over the last century. The language of the report was unnervingly urgent: do something now, or else.

In the days following the report, responses from around the world dominated the headlines of the world’s newspapers. China was quick to condemn the lack of action on the part of developed countries. Brazilian President, Luiz Inacio Lula da Silva, echoed this sentiment, saying that Western nations were in no position to lecture Brazil about their deforestation problems. And in Europe, the European Commission proposed a sweeping measure that would limit carbon dioxide emissions in automobiles.

The desire to take action has also manifested itself within the United Nations. International actors have begun to pressure Secretary General Ban Ki-Moon to call an emergency summit on global warming to address the pressing issue. The real question is, would such a summit do any good? Or would the result be simply a rehashed and recycled version of the already existing, and largely ineffective, Kyoto Protocol?

Bu the change in international attitudes regarding global warming certainly lead one to hope that such an outcome would not be the case. Indeed, initial responses to such a summit have been positive, even from some of the world’s worst polluters: Japan, Germany, China, and India. In my opinion, such a change in attitude is crucial for creating an atmosphere in which real and enforceable promises can be made.

Evidence of this can be found not in the manner in which Kyoto was developed, but in Kyoto’s predecessor: the Montreal Protocol. There has, of course, been endless analysis as to why Montreal succeeded where Kyoto failed—but in the end it all comes down to attitude. The Montreal Protocol was implemented to limit CFC emissions that were leading to the creation of a gaping hole in the ozone layer. While there was certainly strong opposition from certain countries and private actors to the treaty, there were two elements to the formation of the Montreal Protocol that were conspicuously absent from Kyoto—conclusive and undeniable evidence that CFCs were leading directly to ozone depletion, and a strong atmosphere of cooperation and willingness to take on the problem among the summit’s participants.

But now, following this most recent development, there has been a fundamental change in the terms of debate. Indeed the report may have created both of the necessary conditions for decisive action to be taken: it has rendered the connection between carbon dioxide emissions and global warming almost uncontestable, and it has created an atmosphere that may allow swift, decisive, and comprehensive action. Even the United States, a country that releases 25 percent of the world’s carbon dioxide into the atmosphere and which has also vehemently condemned the Kyoto Protocol and refused to sign it, may be forced to comply.

The months ahead will either confirm or deny this suspicion. But I suspect that it may not be long until the world finally decides it is ready to confront global warming head-on.