What will the growth of the Mongolian mining industry mean for the country's nomadic herders? Photo: Thatcher Cook for Mercy Corps

Mongolia could soon be home to the largest copper mine in the world.

After years of negotiations, Western mining companies Rio Tinto and Ivanhoe are close to reaching an agreement with the Mongolian parliament to develop significantly the Oyu Tolgoi mine. Mineweb reports that the untapped deposit contains 78 billion pounds of copper and 45 million ounces of gold. If all goes to plan, the massive investment would double the size of Mongolia's economy and create thousands of jobs, according to NPR.

The economic crisis has hit Mongolia harder than most countries in East Asia. One in four people are out of work, NPR reports. The country’s nomadic herders – 40 percent of the population – are struggling after the price of cashmere dramatically declined earlier this year (see Manasi Sharma’s Downturn in the Gobi). Now, some are hailing Oyu Tolgoi as an immediate economic fix.

But there are several obvious challenges. First, Mongolia is highly corrupt. It is ranked 102 out of 180 countries in the latest Transparency International index, an annual rating of perceived levels of corruption (defined as the abuse of public office for private gain). Additionally, the editorial in Mineweb suggests that Russia and China may have inordinate influence over Mongolia’s mining industry. Given these two factors, how much will the average Mongolian gain?

Lastly, there are the social implications of this investment to consider. For many nomadic herders, shifting to industrial mining jobs is far from ideal, but there isn’t much else to turn to. People are desperate now that raw cashmere and other materials do not provide a reliable way to feed and clothe families. "They are losing their land, their animals, and even their culture," reported NPR’s Louisa Lim, "for a few specks of gold."

The G-20 is meeting this week in Pittsburgh, Pennsylvania. Chaired by President Barack Obama, the purpose of the summit is to, “review the progress made since the Washington and London Summits and discuss further actions to assure a sound and sustainable recovery from the global financial and economic crisis.” I’ve heard of the G-8, but the G-20? I began to wonder about this alphanumeric soup of organizations. Who are they and what are they concerned with? The following scorecard should help interested followers of this subject keep track of the major players.

The G-6: Organized in 1975 by the finance ministers of Germany and France who were frustrated with the formality and structure of larger international meetings, the G-6 and subsequent evolutions of this body are strictly informal bodies that meet to discuss economic issues of mutual interest. After the creation of the G-8, the term G-6 is now used to refer to the six most populous members of the European Union. The member countries are: the United States, United Kingdom, France, Germany, Italy, Japan

The G-7: Formed in 1976, this is an informal forum for the finance members of seven big industrial economies to discuss economic issues and seek agreement. Member countries include: Canada, France, Germany, Italy, Japan, United Kingdom, United States. Now also includes the European Union.

The G-8: An evolution of the G-7, membership grew to include Russia. The European Union is a limited member; it cannot host a meeting or hold the presidency of the body. Members are: Canada, France, Germany, Italy, Japan, United Kingdom, United States, Russia. European Union (limited member)

The G-8 plus Five: Recognizing the growing influence of other countries, the original group sometimes broadens their meetings by including the Outreach Five. As with all meetings, other countries are sometimes invited to attend. Members: Canada, France, Germany, Italy, Japan, United Kingdom, United States, Russia. European Union (limited member) Plus: Brazil, China, India, Mexico, South Africa.

The G-20: According to their website, “[t]he G-20 was created as a response both to the financial crises of the late 1990s and a growing recognition that key emerging-market countries were not adequately included in the core of global economic discussion and governance.” Where the earlier groups (G-6 through G-8) were organized around the industrialized countries of the world, the G-20 begins to bring emerging economies into the dialog. Their first meeting was in Berlin, Germany. The Managing Director of the International Monetary Fund (IMF) and the President of the World Bank, plus the chairs of the International Monetary and Financial Committee and Development Committee of the IMF and World Bank, also participate in G-20 meetings on an ex-officio basis.

The G-20 is made up of the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, United States, European Central Bank

The G-33: The name for a group of developing countries that coordinates on trade and economic issues. It was created in order to help group countries which were all facing similar problems and give a unified voice to countries that were traditionally excluded from discussions among the industrialized countries. Members: Antigua & Barbuda, Barbados, Belize, Benin, Botswana, China, Côte d’Ivoire, Cuba, Democratic Republic of the Congo, Dominican Republic, El Salvador, Grenada, Guyana, Guatemala, Haiti, Honduras, India, Indonesia, Jamaica, Kenya, Laos, Mauritius, Madagascar, Mongolia, Mozambique, Nicaragua, Nigeria, Pakistan, Panama, Peru, Philippines, St Kitts & Nevis, St Lucia, St Vincent & the Grenadines, Senegal, South Korea, Sri Lanka, Suriname, Tanzania, Trinidad & Tobago, Turkey, Uganda, Zambia and Zimbabwe.

There are other groups variously labeled as G-8, G-20, G-33, and even N-11 (countries which Goldman Sachs considered in 2005 to have a high potential of becoming the world’s largest economies this century: Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey and Vietnam).

One of the best, reliable, sources of information about these groups and their members may be found on the websites of the World Trade Organization and the previously mentioned G-20.

You can Track the ongoing discussions of the Pittsburgh G-20 Summit here. But be prepared for slow page loading. It is a very busy website.

Thomas Benke (center) works with Sichuan Research Institute of Environmental Protection chemists and OFSSA staff to set-up the Gas Chromatograph. Photo: Courtesy of Thomas Benke.

Four years ago, a petrochemical plant on the border of China and Russia spilled 100 metric tons of the toxic chemicals into a tributary of the Amur River. The river is the main drinking supply for a town in Russia named Khabarovsk, and it put hundreds of thousands of lives at risk.

Naturally, Khabarovsk turned to Moscow for help. But they also contacted a group of friends in Portland — including my dad.

My dad, Thomas Benke, has been involved in the Portland-Khabarovsk Sister-City Association, or PKSCA, for many years. And his actions after the toxic spill showed me that sister-city associations can be a means for not only cultural exchange but also serious global cooperation.

PKSCA implements a wide reach of humanitarian programs in Khabarovsk that include solid-waste management, emergency services, educational exchanges, hospitals, orphanages, and village schools. And it, along with Oregon Fujian Sister State Association (OFSSA), has responded to disasters such as chemical spills and earthquakes. My dad has volunteered for both. One of his main motivators has been to help preserve the environment. (He holds degrees in chemical engineering and environmental law.)

There is an undeniable synergy between a clean environment and economic development. The old idea that there must be some trade-off between economic development and environmental protection in developing economies is gradually being replaced by the realization that the foundation of economic development — a healthy workforce — thrives on clean air, clean water and an unpolluted landscape.

My father explained to me that soon after the spill in Khabarovsk, he traveled there to deliver and introduce a Gas Chromatograph, a device for testing drinking water in disaster areas. The device was purchased by the City of Portland. In May 2007, PKSCA followed up by inviting two chemists from the Vodokanal (Khabarovsk Water Bureau) to work with the Portland Water Bureau and the Oregon Department of Environmental Quality. Most importantly, PKSCA set up a training session at SRI Instruments in Los Angeles — the company that built the Gas Chromatograph. SRI Instruments' contribution was substantial — they built a specialized device that could detect the contaminants in the Amur River and provided free repair for the device.

Not only did PKSCA quickly respond to the water crisis in Khabarovsk, but by providing further training sessions in the United States, they also sustained and fostered a stronger more informative relationship between Portland and Khabarovsk officials, as well as sister-city board members.

On May 12, 2008, an 7.9 magnitude earthquake struck China’s Sichuan Province, killing tens of thousands of people and displacing nearly five million. Immediately, Fujian Province requested assistance from its Sister State, Oregon, for whatever aid they could provide. Below, Thomas described the international and OFSSA response to the crisis.

The world responded with cash and supplies. The people of Oregon donated cash generously through several local and international non-profit organizations. The Oregon-Fujian Sister State Association, because of its unique relationship with Fujian Province, resolved to do more — to donate emergency response tools that would leverage Sichuan Province’s capacity to respond.

The pre-existing relationship of trust between the two jurisdictions allowed Fujian province to request help from Oregon. The Sister-Province relationship made all the difference — we were able to overcome the cultural issues of pride and face that might have otherwise required Fujian province to decline aid. It's all about overcoming the formidable cultural barriers, and I think that that's the key.

It's the difference between your neighbor, somebody in your community coming in and offering help as opposed to a stranger from someplace you know nothing about.

When my dad first explained sister city associations right after the toxic spill four years ago, I thought he was obsessed with his involvement in both organizations. Now about to graduate from college, I plan to follow his lead and hope to work internationally for an NGO.

Could Africa be the world's next breadbasket?

Elizabeth Chiles Shelburne of The Atlantic seems to think it's a real possibility if African farmers adopted more modern farming technology and used better-quality seeds and fertilizers. And the payoff for agricultural investment would make a huge difference for poor African countries.

Agricultural investment in Africa — and in a few other high-potential places such as Ukraine and Russia — may be the world’s best bet for keeping food plentiful and cheap. This investment could bring other benefits too; the World Bank estimates that agricultural development is twice as effective at reducing poverty as other sources of growth. In Asia, as cereal yields rose, poverty rates plummeted. Investment in Africa’s agriculture — by donors, farmers, and African governments — may allow the continent to feed the world and save itself.

Tourists snap photos of St. Basil's Cathedral in Moscow, Russia. Photo: Fenst (flickr)

A major objective of Global Envision is to explore the relationships between market economies and poverty alleviation. I founded Global Envision because of my own experiences in developing countries where I saw economic development working to create wealth and benefit the people in both Latvia and Poland. These countries had previously been behind the iron curtain and part of the communist world. I have a strong belief that the failure of communism as an economic strategy is testimony to the superiority of a market oriented approach. Consequently, it was with great anticipation that I set out on a trip to visit Russia two weeks ago. I wanted to see what Russia looks and feels like today. What I learned was different from what I expected.

Starting in late July 2009, my wife and I embarked on our first visit to Russia. We were to spend four days in St. Petersburg, five days on the waterways towards Moscow, and three more in Moscow. All of it was on a ship which gave us a single base for the experience. We saw not only the two major cities of Russia but some smaller cities and a couple of villages.

This will not be a travel log, but rather a summary of what I learned about the economic and social changes that have taken place in Russia over the last twenty years. This is based on what I observed and what I heard from the several guides and lecturers that spent the two weeks with us.

It seems that the majority of people in Russia today favor what they had before to what they have today. While a recent poll indicated that 77 percent of Russians acknowledge that the freedom that they have today is a great improvement and to be cherished, they focus more on the lack of a significant safety net. They point to the great disparity between the rich and the poor and the fact that the poor were taken better care of in the past. Until we heard this expressed many times we would not have anticipated it, because what we saw in the streets, particularly in St. Petersburg and Moscow, appears to indicate significant prosperity. There are lots of products on the store shelves, both necessities and very extravagant things. BMW, Lexus, Tiffany and other luxury brands, are prevalent in Moscow. There is a fair amount of new construction of homes, businesses and offices. There appeared to be a great disparity between what we were being told and what we observed. Is a more market based economy helping the Russian people to prosper or is it hurting them?

The answer appears to be that it has benefited a small group immensely but not done much for the majority. Why hasn’t the movement towards a market economy been more generally effective? How they got from where they were twenty or so years ago with virtually no private ownership and an economy run by the government, to one where private ownership prevails was very poorly navigated. They distributed vouchers, worth 10,000 Rubles to the citizens, which they could use however they chose. But there was no education about what the options might be. One of our lecturers, who seemed to be a rational man, said that he ended up selling his voucher to a man for a single U.S. dollar. In the end, the vouchers ended up in the hands of a limited number of folks, who, along with the managers of the state owned businesses, and others in places of power in the bureaucracy, created an oligarchy that controls the government and the economy to this day.

Theoretically, they have a market economy and some small businesses can be started up. But bureaucracy and corruption are so prevalent that I don’t think that people have the sense that they can really participate in the economy. The few in power make it so difficult for others to become entrepreneurs that it isn’t even something that they think about. Opportunities are so limited that they are forgotten.

What they do see and seem to focus on is the impact of all this on the poor, especially older people. There is not much of a social safety net, and those who would have been taken care of under the prior system are struggling under the present one.

Another factor that seems to have a significant impact on why the majority favors the old system over the new one is the disintegration of the Soviet Union. When the cold war was going on the Soviet Union was clearly one of the two super powers in the world. When that all fell apart, starting with the declarations of independence by the Ukraine and Belarus, the position of Russia in the world is not nearly as important. Russians are a proud people and this loss of respect is deeply felt. While this major change in their world is not directly related to the change in their economic system it does seem to impact the majority’s preference for the old over the new.

It was a disappointment to me to learn that the potential for a free market to benefit their country and all of their people does not appear to be seen by most people in Russia today. As is true for all countries, what the situation is today is not fixed. It is obvious to me that Russia is still in a period of major flux and it could move towards more favorable opportunities for their people in the future. However, from all that I have learned, I am not very optimistic.

Vologda, Russia. Photo: Borches (flickr)

One small Russian town is taking an untraditional approach to helping residents cope with the economic crisis: They're practically giving away lumber, according to a recent story in the Wall Street Journal.

In Vologda, the local government can't afford to keep up with the demand for unemployment benefits and have capped monthly unemployment checks at $160. To help keep a lid on social unrest among the unemployed and give infrastructure a boost, the governor announced a program that allows local residents to chop down trees from area forests at an absurdly discounted price. Under the program, the citizens of Vologda can purchase enough wood to build a house for under $7, but they're entitled to cut down and purchase up to 200 cubic meters of wood, which they can then sell — that's enough to load up multiple semi-trucks.

But there's a catch. First you have to trudge through the forest and chop down the trees, then you have to build a house with it. If your resume doesn't happen to include being a logger, architect, and carpenter this could be quite difficult and dangerous.

Tajik women take on the bulk of responsibility while husbands and sons have left the country for migrant work. Photo: Thatcher Cook for Mercy Corps

Tajikistan has the highest remittance rate in the world — a recent World Bank report says that around half of the Central Asian country's money comes from workers abroad. But a weakened economy in Russia, where 98 percent of Tajik remittance income originates, has drastically slowed cash flow back to Tajikistan and its seven million inhabitants.

EurasiaNet reports that between September and November of last year, remittances from migrants dropped more than 50 percent. That decrease alone accounts for a 20 percent drop in the Tajik GDP.

Nearly one million Tajik men work abroad. These workers face growing tensions as local workers fight to keep their own jobs, feeling threatened by the guest workers who poured into Russia and Kazakhstan during better economic times in those countries. The New York Times says that during the migrant boom, the portion of Tajiks living below the poverty line dropped by one-third, to around 50 percent.

At home, Tajik women are left to manage the fields and young boys are the primary wage earners. Remittances help keep Tajik families out of extreme poverty, reports EurasiaNet's Rob Cavese, but because most transactions are cash-based and few Tajiks have bank accounts, the concern is that most funds from abroad are used for immediate consumption and not for investment.

With so many in Tajikistan relying on outside wages, Cavese writes, there is little incentive for the government to initiate a restructuring of domestic wages.

“The Tajik economy is not sustainable without migration,” Dilip Ratha, a senior economist at the World Bank, told The New York Times. “It is not diversified. People are the most important resource they have.”

Dubai's Construction Skyline at Night. Photo: twocentsworth (flickr)

The financial crisis is crimping construction in the Middle East and other places that had been experiencing a building boom, Der Spiegel reports.

Developers in Dubai — once synonymous with high profit margins and high-concept architecture — have delayed lavish developments, including a chain of palm-tree-shaped islands and a $600-million Trump hotel and tower.

The slowdown has affected the migrant workers who make up the core of Dubai's workforce, 43 percent of whom call India home. The Times of India reported that thousands of laid-off construction workers have applied for visa cancellations.

Der Spiegel says developers elsewhere in the Middle East, namely Qatar, Bahrain, Kuwait and Saudi Arabia, are scaling back as oil prices fall.

And in Moscow, developers halted construction on what was to be Europe's tallest skyscraper. The Russian economy is "a house of cards that is built on Western loans and which is now collapsing," German architect Peter Schweger told Der Spiegel.

Venezuelan President Hugo Chávez supported many social programs under "Socialism for the 21st Century" with oil revenue. Photo: Nueva Perspectiva (flickr)

Last week oil prices dipped under $70 a barrel for the first time in over a year. While the lower price may have Americans at the gas pump celebrating, it’s bad news for the leaders of oil-rich countries that made long term plans based on the high price of oil.

Venezuela, Iran and Russia went on a spending spree when oil hit $100 per barrel and then planned upcoming government budgets on the peak price.

The high price of oil allowed these countries to thumb their nose at the West with little risk of a response. Venezuela advanced its socialist agenda both at home and in the region. Iran ignored U.S. nuclear related sanctions, and Russia reasserted itself by invading Georgia.

But because they assumed the price of oil would stay high, they might soon be on receiving end of such gestures. The Washington Post reports that:

According to independent estimates, [Iran and Venezuela] need an average oil price of up to $95 a barrel to fund the populist subsidies and social programs they have launched in recent years — not to mention billions of dollars in arms purchases from Russia. Venezuela has been furiously importing food to fill empty shop shelves, while Iran heavily subsidizes domestic fuel.

Venezuelan President Hugo Chávez has gone on the record as unworried about the falling oil prices citing Venezuela's $40 billion in foreign currency reserves. However, Ricardo Hausmann, a Venezuelan economist who teaches at Harvard, doesn't share Chavez's confidence. “We’re in the same situation of people who have lost a limb but can still feel it. I don’t know how long it will take for Chávez to realize he’s lost a limb."

In response Iran and Venezuela pressured OPEC to cut production by 2 million barrels a day. OPEC members initially took a wait-and-see approach, wary of intensifying a global economic crisis or further decreasing global oil demand, before agreeing to cut production by 1.5 million barrels a day in an attempt to drive up prices.

But skeptics question whether significant production cuts won't simply decrease demand for oil — or whether it will influence the price at all. If OPEC can't drive prices back up to their historic highs, Venezuela, Iran and Russia may face a tough reality as they come off their own oil high.

It’s too soon to tell exactly how the U.S. financial crisis will impact the rest of the world, but, according to a report in The New York Times, the U.S. has just lost some free-market street cred.

In extending a last-minute $85 billion lifeline to American International Group (AIG), the troubled insurer, Washington has not only turned away from decades of rhetoric about the virtues of the free market and the dangers of government intervention, but it has also probably undercut future American efforts to promote such policies abroad.”

The shock waves from the U.S.'s financial woes are already being felt around the globe, with Russia suffering from “one of the worst market falls” since 1998 and Asian stocks hitting a three-year low.

The world's poorest countries will especially feel the pain of the crisis. This week, United Nations Secretary-General Ban Ki-moon said he feared that the crisis could seriously hurt poverty-fighting efforts in developing countries. These efforts depend heavily on rich donor countries and if these countries’ capacity for funding development efforts shrinks, many will suffer. Resuming the collapsed world trade talks, Ban said, is even more important in the wake of the financial turmoil.

As of Friday, the U.S. government's nearly unprecedented bailout has stabilized the market, prompting worldwide stock rebounds, but causing skepticism that the action is only a temporary fix.

If worldwide confidence in the free market drops as The New York Times article suggests, could it hinder future world trade talks — and development efforts — to an even greater extent?

In the foreground stands the television news correspondent. He is describing the bombings and devastation being wreaked by Russian troops in a defiant Georgia. Crossing behind him unnoticed is a small group of people clearly fleeing the devastation with possibly everything they own on their backs or in the makeshift bags they are carrying. Where they are going is a mystery.

A known but little-noted result of the conflict in Georgia — and others around the world — is the displacement of people who have absolutely no control of the events going on around them. In Georgia alone, tens of thousands of refugees from the secessionist territories of Abkhazia and South Ossetia have been waiting for more than ten years for a chance to return home. According to the Internal Displacement Monitoring Centre, as many as 247,000 people are displaced in Georgia as of February 2007. The current situation promises only to worsen an already terrible circumstance.

Indeed, according to a 2007 study published by the IDMC, the number of refugees created as a result of armed conflicts and violence in more than 50 countries is well over 26 million. In nearby Iraq, for example, nearly 3 million people were displaced by rising inter-community violence between February 2006 and March 2008, according to the UN. “If a similar percentage of the U.S. population were displaced," writes the Brookings Institute's Elizabeth Ferris in The Looming Crisis: Displacement and Security in Iraq,
"this would represent over 50 million Americans — the equivalent in displacement of those uprooted by 50 Hurricane Katrinas.”

Add these folks to the already staggering number of poor and poverty stricken people throughout the world — a World Bank report states that 2.8 billion of the world’s more than 6 billion people live on less than $2 a day and 1.2 billion on less than $1 a day — and one begins to get a sense of the enormous challenges facing the world’s decision makers.

(Editor's note: Mercy Corps is one of several organizations helping displaced people in Georgia.)

Photo: wili_hybrid (flickr)

Contrary to opinions such as Senator Frank Murkowski's, the Arctic is not just “snow and ice.”

From Inuit tribes to the migratory caribou, the Arctic is full of life, especially during the summer. For energy-hungry nations, however, the Arctic is full of another element of interest: oil.

Beneath its melting icecaps lie the “world’s largest remaining untapped gas reserves and some of its largest undeveloped oil reserves,” says the WWF. In face of the current “oil shock,” the five nations that border the Arctic Ocean — Russia, Canada, Denmark, Norway and the U.S. — all want a slice of this lucrative “ice” spot.

Late last May, these five rival nations met in Greenland to resolve these competing claims. The convention reaffirmed rules laid out by the UN Law of the Sea Convention, which draws national boundaries based on geological features. The UN is expected to oversee decisions on Arctic control by 2020.

Climate change has a big role in increasing the appeal of the Arctic. Rising temperatures rapidly melt the Arctic ice, which increase drilling and shipping access during summer months. Eventually, this will even open up “a route through the Arctic Ocean linking the Atlantic and Pacific that would reduce the sea journey from New York to Singapore by thousands of miles,” says The Telegraph.

Absent from the meeting were environmental groups, who “said the closed-door meeting paved the way for a land grab by countries who have claims to the continental shelf at the pole,” according to The Guardian.

Environmentalists also object to the environmental dangers of drilling.

John Calder, the director of the U.S. National Oceanic and Atmospheric Administration’s (NOAA) Arctic Research Division, warns not only of the landscape destruction and negative impacts on the indigenous Arctic villages due to infrastructure development, but also the calamitous effects of oil accidents:

Oil spills are especially dangerous in the Arctic, because its cold and heavily season-dependent ecosystems take a long time to recover. Besides, it is very difficult to remove the damage from oil spills in remote and cold regions, especially in parts of the ocean where there is ice.

Photo: Antonis Shen (flickr)

If salaries are increasing, do people really care about democracy? Today's Economist takes an in depth look at what Putin has really done for the Russian economy.

When asked by a foreign journalist about the lack of political competition and dialog, Putin responded: “The salaries here are going up by 16 percent. There's the answer to your question.” According to this article, Putin cannot fairly claim to be the main cause of this economic success.

The rapid growth is not meeting Russia's full potential and simultaneously trapping them into a dangerous dependency on energy. The economic growth has also been accompanied by rampant corruption. Are you wondering which country equals Russia in corruption levels? Togo. Despite this fact, foreign capital and investment continues to rise at a pace that would be unheard of for that small African nation.

The share of oil and gas in Russia's GDP has increased, according to the Institute of Economic Analysis, from 12.7 percent in 1999 to 31.6 percent in 2007. Natural resources account for 80 percent of exports. Like a powerful drug, oil money has masked the pain caused to the Russian economy by the Kremlin. But the disease remains.

To appreciate the impact oil prices have on the economy, compare real GDP growth of about 7 percent with growth measured in international prices. In dollar terms, says Rory MacFarquhar of Goldman Sachs, Russia's economy has grown on average by 27 percent a year, the fastest of any big economy since 2000. The flow of petrodollars is fanning a massive consumption boom, making Russia the sixth-biggest market in Europe. Disposable incomes (and retail trade) have been growing twice as fast as GDP.

The problem, says Peter Aven, the head of Alfa Bank, is that Russia has failed to convert the oil stimulus into domestic production. Imports are growing much faster than manufacturing. The rapid real appreciation of the rouble is hurting Russia's producers, and many goods are of poor quality. This is why Algeria says it wants to return 15 military jets it purchased from Russia.

In a daily analysis from last week, Council on Foreign Relations senior fellow Benn Still suggested that the United States is “exporting inflation worldwide.” The latest action by the US Federal Reserve may have staved off inflationary disaster domestically but only to the detriment of other nations who peg their currency to the dollar.

Venezuela struggled with inflation rates over 20 percent in 2007 (Bloomberg). Argentina and Bolivia face similar concerns. Official data puts Russian inflation for 2007 at nearly 12 percent (Forbes). Several Gulf Arab states also find themselves with inflation over or near 10 percent. In China, rates near 7 percent registered in December 2007 represent the highest inflation in over a decade. China’s Prime Minister Wen Jiabao recently announced Beijing would freeze short-term energy prices in an attempt to curb consumer price increases (NYT).