UNCDF: COP27 Pledges Biodiversity Finance to Boost Climate-Change Resilience

Forests, coral reefs and populations most at-risk come into focus at 2022 summit in Egypt.

"From the beginning, this conference has been driven by two overriding themes: justice and ambition.”

These were the words of UN Secretary General Antonio Guterres at the close of the COP27 conference in Sharm el-Sheik, Egypt. “Justice,” he continued, “for those on the frontlines, who did so little to cause the crisis — including the victims of the recent floods in Pakistan that inundated one-third of the country. Ambition to keep the 1.5-degree limit alive and pull humanity back from the climate cliff. This COP has taken an important step towards justice.”

Conference parties agreed to the establishment of a loss and damage facility to provide finance for developing countries. Critical to this point is the fact that developing countries in general, and least developed countries (LDCs) in particular, are the world’s lowest greenhouse gas-emitters — and the places most likely to suffer the impacts of climate change.

The breakthrough agreement on loss and damage reflects an essential, if overlooked, fact: climate solutions require finance solutions. For every climate-adaptive infrastructure project, every clean-energy technology brought to scale, every pro-conservation small business that is capitalised, a finance solution is now in place.

"There will be a greater focus on supporting nature-based climate solutions and promoting green economies."

The next step is to identify financing solutions to catalyse the necessary capital to support effective action. The UN Capital Development Fund (UNCDF) — the UN’s flagship catalytic finance entity for the world’s 46 least-developed countries — has developed a suite of solutions to deliver clean energy and biodiversity finance at scale.

Local Climate Adaptation

With scarce resources and overreliance on climate-sensitive activities and sectors, such as rain-fed agriculture, LDCs are disproportionally affected by climate change. Local governments are often responsible for managing climate-sensitive sectors that are critically important for successful adaptation. That includes land use, water management, natural resource management, and infrastructure.

The UNCDF designed the Local Climate Adaptive Living Facility (LoCAL) in 2011 to promote resilient communities and economies. It provides a standard, internationally recognised, country-based mechanism to channel climate finance to local government authorities in LDCs. This contributes to the achievement and implementation of Paris Agreement commitments.

There will be a greater focus on supporting nature-based climate solutions and promoting green economies. By 2025, LoCAL will be expanded to at least double the financing volume via direct access to international funding.

A new standard, ISO 14093 — issued by the International Standard Organisation — was launched at COP27. It is based on LoCAL and offers an internationally recognised, country-based mechanism to increase local governments’ access to climate finance. The ISO cements LoCAL’s standardised approach to achieve results at a local level.

Insurance and Initiatives

Climate-related disasters are the number one cause of population displacement over the past decade. More than 20 million people are forced to leave their homes each year. Pacific Small Island Developing States (PSIDS) comprise seven of the 10 countries and regions facing the highest risk of internal displacement. The increased frequency and severity of regional weather events have disrupted economic and social progress and hampered development. Despite high exposure to natural hazards, most residents do not have insurance protection.

The Pacific Insurance and Climate Adaptation Programme (PICAP) aims to improve the financial preparedness and resilience of the region. This will be achieved via market-based insurance products. Under PICAP, the UNCDF has helped to introduce two new parametric micro-insurance products to the Fiji market. Both products offer combined insurance cover against heavy wind and rainfall, and are designed to offer immediate financial support after extreme weather events.

The UNCDF acts as the convenor for the Climate Insurance Linked Resilient Infrastructure Financing (CILRIF), which is a long-term “known price” insurance solution that incentivises municipalities to invest in resilient infrastructure. The CILRIF aims to provide access to affordable, 10- to 20-year climate insurance with pre-arranged premiums (contingent upon the cities’ commitment to invest in climate resiliency).

If a city implements the prescribed adaptation measures, the insurance premium will decrease to reflect the managed risk. Access to insurance coverage is also expected to reduce the cities’ financing cost and provide lower-cost development capital.

The CILRIF will operate a climate-risk insurance facility, and an infrastructure finance facility. Participating cities will have access to long-term climate insurance and reduced financing costs informed by their resilience investments. Insurance premiums will reduce commensurate with the increase in resilience.

Clean Energy Access

The UNCDF will support energy transition agenda that emphasises decentralised renewable and clean-energy projects and products. Net-zero emissions energy solutions that expand energy access and add value are key elements. The UNCDF promotes access to finance across energy value chains, from customer to enterprise, to larger investments. It helps to fill the SME energy-financing gap via its financial instruments.

The UNCDF increasingly supports solar energy and improved-cooking business models to increase their bankability and reach excluded populations. By 2025, the organisation aims to support investments that allow six million people in at least 10 countries to access and benefit from clean energy. Its investments will also contribute to wider energy-market development, with a focus on productive use and local economic resilience.

At the 2022 COP, the OPEC Fund for International Development (in partnership with the UNCDF) and Sustainable Energy for All (SEforALL) launched a Climate Finance and Energy Innovation Hub. The hub will identify solutions for partner countries, addressing gaps in green finance and private sector investments. It will promote innovative business models and financing instruments to source, unlock, de-risk and scale-up private sector investments in energy access.

The aim is to foster new financing partnerships and mechanisms, including an Energy Access and Transition Trust Fund. Designed as a global end-to-end policy and finance platform, the hub will harness financial innovation to ensure maximum leverage. Each dollar of sovereign finance should attract, in the medium term, $4 of green and sustainable capital.

Biodiversity and Nature

Coral reefs, which support an estimated one billion people, are among the Earth’s most endangered ecosystems. More than half the reefs have disappeared as a result of climate change and human pressure.

With an aim to deploy $625m over the next decade, the Global Fund for Coral Reeds is the first blended-finance instrument developed to close the coral reef funding gap and establish the first UN fund dedicated to Sustainable Development Goal 14 (Life Below Water).

The US Agency for International Development (USAID) announced at COP27 a commitment of up to $15m to scale reef-positive finance in the Egyptian Red Sea, in partnership with the GFCR. This was announced as part of a wider regional approach led by the UN Development Programme, aiming to unlock at least $50m in blended finance.

The Central African Forest Initiative (CAFI) is a UN Multi-Partner Trust Fund (MPTF) and policy dialogue platform supported by seven European countries, the Republic of Korea, and the European Union. It will pursue a low-emission development pathway to economic growth and poverty reduction while protecting forests and natural resources.

The CAFI combines investment and high-level policy dialogue to help partner countries to implement the 2015 Paris Agreement on climate change, fight poverty, and sustainably develop.

At COP27, the CAFI and the Dutch investment fund &Green announced a commitment of at least $120m to the Congo Basin Pledge. It is one of the few regions to absorb more carbon than it emits. The forest, the world’s second-largest, absorbs nearly 1.5 billion tonnes of CO2 from the atmosphere each year — four percent of global emissions. The Congo Basin Pledge, launched at last year’s COP26 in Glasgow, is an ambitious five-year (2021-2025) commitment to protect the Central African rainforest.

The funding from the CAFI and &Green will be invested over 2023-2028, and aims to make a long-term impact in the region by increasing local food production, agro-industrial development, and social inclusion without endangering the Congo Basin.

COP27 has settled the debate on the need for financing solutions to combat the climate crisis. But that debate has yielded a conversation around what solutions are needed for the areas at the greatest threat from climate change. The UNCDF stands ready to deliver a suite of solutions that will ensure no one is left behind.


Death to Debt! The People and Organisations Saying ‘No to Owe’ — and Picking Up the Tab for Us

Consumer and family debt are millstones that can — sometimes — be removed...

[caption id="attachment_24776" align="alignright" width="300"] Louis Hyman[/caption]

Debt is a modern reality for countries, companies and households, but — according to historian Louis Hyman — consumer debt is a relatively new phenomenon.

Hyman links it to the advent of the automobile and intermediary finance companies. “For the first time, money from the core of capitalism, the consumer banks, was invested, albeit indirectly, in consumer debt,” he writes.

“What began with automobiles spread to vacuum cleaners, furniture, radios, and nearly every kind of durable good desired in the great boom of the 1920s. Lending was still limited to finance companies, which were limited to repossess-able, durable goods, but for the first time, American personal debt had become a good investment.”

Fast-forward a century or so and the world’s debt obligations have ballooned out of control. As of August 2022, the US topped the charts for the highest household debt — a staggering $16.5tn. China and Japan take second and third places on the list, with respective figures of $10.9tn and $2.6tn. EU households owe a combined $7.1tn; the UK’s figure sits at about $2.4tn. These figures include home mortgages, student loans, credit cards and medical debt. But hope is on the horizon.

Community-led Debt Relief

In the UK, Dan Edelstyn and Hilary Powell are blurring the lines between art, economics, and activism. The duo literally and figuratively blew up £1.2m in local predatory high-interest payday-loan debt in a 2019 movie project Bank Job. Filmmaker Edelstyn and artist Powell were inspired by the exploits of the Rolling Jubilee Fund and Debt Collective, which, over the past decade, has raised around $700,000 to abolish $32m in student, medical, and probation debt.

Debt Collective believes that access to things like education and healthcare must be available for free, as they are in most wealthy countries. The decentralised organisation strives to make this dream a reality by uniting debtors to use their collective debts as leverage.

Hyman’s historical research outlines how the wealth inequality gap began to widen in the 1970s, as more capital concentrated in the top one percent of the population. “Whereas in the post-war period, the one percent paid the 99 percent in wages, after 1970 the one percent increasingly just lent the 99 percent money. Mortgage-backed securities and then other forms of asset-backed securities channelled capital from the top to the borrowers at the bottom. The shift was rapid. In 1990, one percent of US credit card balances were securitised, but by 1996, 45 percent were securitised.”

Books like David Graeber’s The 5,000 years of Debt and Andrew Ross’s Creditocracy expand on the topic. “The whole literature around it was quite altering, in terms of how you look at the world, and how you look at the relationships between people in our society,” remembers Edelstyn. “It opened my mind to a whole different way of analysing social relations and economic relations.”

The more Edelstyn and Powell researched, the more they noticed how interlinked money creation is with debt, banking regulations, and changes to the banking system.

“Enough was enough. I felt this notion of ‘creditocracy’ was self-evident and something had to be done,” said Edelstyn. “We realised that banking was right at the core of the problem of creating all of this debt, and we also realised that we needed to make money quite quickly.”

Powell wondered: “If banks can create their own money at the click of a button, why can’t we? Rather than using it to profit though, our idea was to use it to help those most affected by the fall-out of our unequal debt-based economy.”

The husband-and-wife activists found an old co-op bank building to rent, dubbed their new enterprise the Hoe Street Central Bank (HSCB) and began to print fine-art bank notes depicting local heroes like the founders of a food bank and homeless kitchen, and the head of a primary school. They sold the screen-printed art currency at the face value of the notes — one, five, 10, 20, 50, 100 and 1,000 — and split the proceeds, supporting local organisations and buying payday-loan debt. They raised £40,000, half of which went back into the community; the other half went towards the purchase of high-interest debt.

Unpaid debts are often sold on the secondary debt market for a fraction of what’s owed. An FCA-licensed debt-buyer, such as a collection agency, can acquire £1,000 of personal debt for under £100 — and then chase the debtor for their full bill plus accrued interest. Threatening letters and persistent phone calls are common tactics.

Edelstyn and Powell spent £20,000 to acquire £1.2m in geo-targeted payday debt. In March 2019, they sent out 411 letters to debtors with long overdue accounts, not to request repayment but to invite them to watch the artists-activists blow up that debt. They stuffed the account paperwork in a “debt-in-transit” van and detonated it near London’s Canary Wharf.

HSCB notes are no longer available, but the bank is still selling bonds to amplify the reverberations of its “bank heist”. The bond certificates were created by local artisans working with traditional methods of screen printing, letterpress, foil block, and company stamp. Bondholders of £50 or more also receive a commemorative coin made from fragments of the van explosion.

Other organisations have taken a similar — although not as explosive — path to debt-forgiveness.

Medical Debt Relief

RIP Medical Debt, a 501 (tax-exempt) charity based in New York, was founded in 2014 by former debt-collection executives. Since its launch, the organisation has abolished over $8.5bn in medical debt. The ongoing campaign promises that for every $100 donated, $10,000 in medical debt can be relieved.

A portion of the debt-forgiveness by RIP Medical Debt — some $147m — was achieved with the support of Sharon McMahon’s “Governerds” community.

McMahon, a former high school government and law teacher, became an Instagram sensation during the 2020 US presidential election. She began posting stories to provide people with fact-based explanations and non-partisan news during the political turmoil. Several of her posts went viral and now she has over a million followers, many of whom have mobilised under her call for collective action.

Apart from the medical debt forgiveness, McMahon and the Governerds have raised $623,000 to support Ukrainian war-relief via on-the-ground organisations such as World Central Kitchen and CARE. In 2021, McMahon launched a teacher grant programme and raised over $560,000. When she reopened the programme in 2022, the community raised $1.2m — most within the first weekend.

“I am hopeful that we can be the change we wish to see,” she said, “that every small action has an infinite number of ripples; that, incrementally, and slowly, and through this grassroots effort, we can affect significant change in the world. I am very encouraged by seeing what is coming out of my community, and what can happen when we work together instead of working against each other.”

The US Consumer Financial Protection Bureau (CFPB) explains how medical debt negatively impacts millions of Americans. Around two-thirds of bankruptcies in the US involve medical debt. Around 20 percent of US households are burdened by medical debt, which represents over half of the unpaid bills on credit reports.

“When it comes to medical bills, Americans are often caught in a doom-loop between their medical provider and insurance company,” said CFPB director Rohit Chopra. “Our credit reporting system is too often used as a tool to coerce and extort patients into paying medical bills they may not even owe.”

Mistakes are common as medical debt passes through the credit-reporting infrastructure, and patients often have difficulty getting errors corrected or resolved. The situation has been exacerbated by the pandemic and the costs incurred to cover Covid testing, treatment and hospitalisation.

Past-due medical debt affects households unevenly in the US. It’s more prevalent among black (28 percent) and Hispanic (22 percent) citizens than the white (17 percent) or Asian communities (10 percent). It’s also more common in the south-east and mid-west US, where only nine to 20 percent of the population is covered by Medicaid and the Children’s Health Insurance Programme.

CFPB research suggests that medical debt weakens underwriting accuracy. Despite being less predictive of future repayment than traditional obligations, it can lead to lower credit scores. A poor credit rating can make it harder to rent an apartment, get a loan, or take out a mortgage. It can even be an impediment to employment.

Public pressure has led the three biggest credit reporting agencies in the US — Equifax, Experian and TransUnion — to implement changes that will remove around 70 percent of medical collection debt from Americans' credit reports. Once paid, medical debt will no longer be included in reports; previously, medical collection debt lingered on a person’s credit report for seven years.

People will have 12 (rather than six) months to clear medical bills before any unpaid collection debt appears on reports. Finally, no agencies will include medical debt of less than $500 on a credit report. According to the CFPB, the majority of medical debt falls under that threshold.

These changes have resulted in the removal of an estimated $60bn in medical debt from US consumers’ credit reports.

“That will give patients more time to sort out these bills with their insurance company — which is often a time-consuming and frustrating process,” said Ted Rossman, a senior industry analyst at Bankrate.

“Medical debt is often the most depressing and stressful kind, because you or a loved one just endured a health-scare — only to face huge bills you can’t afford,” said Howard Dvorkin, CPA, chairman of Debt.com. “You’re already fragile, either physically or emotionally, and often both. Pile medical debt on top of that, and it can crush anyone’s resolve.”

According to the Kaiser Family Foundation, a non-profit focusing on health policy analysis and journalism, 53 percent of Americans with $10,000 or more in medical debt fear that they’ll never be able to pay it off.

Student Loan Relief

Chegg.org research found that a third of Americans felt unable to clear study-related debt, and a College Board study found that the average cost of a four-year degree from a public or private institution has doubled over the past three decades. Outstanding student loan debt in the US totalled $1.76tn in the fourth quarter of 2022, compared to $481bn at the start of 2006. That makes student loan debt almost equal to the size of the economies of Brazil or Australia.

But relief is coming, if US president Joe Biden has anything to say about it. “The burden is so heavy that even if you graduate,” he said, “you may not have access to the middle-class life that the college degree once provided.”

The Biden administration introduced a plan to provide up to $20,000 in debt relief for individuals earning less than $125,000 a year, or households earning less than $250,000. When the programme opened last year, it was inundated with millions of applications.

Relief efforts were halted by legal challenges, and ultimately blocked by two federal courts.

Other changes to the income-driven repayment plan for federal student loans could “reduce monthly payments for millions of borrowers, expand the loan periods that can count towards eventual loan-forgiveness, and shorten the loan-forgiveness term for some undergraduate borrowers with low initial balances”.

Conservatives are challenging the authority of the executive branch to enact such sweeping changes. The fate of the student loan relief package now rests with the Supreme Court, which is expected to deliver a verdict by June 2023.

Critics of debt-forgiveness programmes complain that it’s a patchwork solution for a systemic problem. But for anyone lucky enough to receive it, it must feel like a new lease on life.


Women’s Brain Project: Campaign Raises Awareness of Migraine on Women's Careers

Migraine is the leading reason for lost work days for people under 50 — and women are three times more likely than men to suffer from the disorder.

The neurological condition comes with a barrage of debilitating symptoms including pain, dizziness, nausea, vomiting, and sensory disturbances.

The Women’s Brain Project (WBP) is an international non-profit organisation based in Switzerland, studying sex and gender determinants of brain- and mental health. It puts forward the need for a policy framework for the workforce, adapting school and workplace legislation to give migraine sufferers, and girls and women in particular, equal opportunities.

Anna Dé, WBP policy and advocacy lead, spoke about the organisation’s global awareness campaign, Not All In Her Head. The campaign seeks a shift in the way migraine is handled, and focuses on the disproportionate impact it has on women. The WBP has the partial support of global women’s healthcare company Organon Belgium BV for the campaign.

In a worldwide survey, in which 75 percent of the participants were women, 70 percent reported a negative impact on their working lives. More than half of migraine sufferers struggle to concentrate at work — and a third are forced to take sick leave. An average of 4.6 working days are being missed each month, it was reported. Absenteeism and reduced productivity while working are significant issues, says Anna Dé. Many of those canvassed in the survey reported that their colleagues did not understand the condition.

The launch of Not All In Her Head marks an important step in the fight for greater awareness. Women suffer from longer migraine duration than men and have a higher recurrence rate. Too often it is dismissed as “just a bad headache”.

“After suffering from a traumatic brain injury, I experienced terrible migraines for years,” says Chéri Ballinger, US Ambassador at WBP. “My migraines were very hormonal, and so debilitating. Yet, I was just kind of written-off most of the time — and I feel like that's the case for many other women.” There needs to be more gender- and precision research, the entrepreneur and film producer strongly believes. The physiological burden of migraine is “challenging enough without stigma in the workplace”.

“The fact that so many women are affected by migraine ... needs to be more widely recognised,” adds neuroscientist and neuroimmunologist Dr Maria Teresa Ferretti, co-founder and Chief Scientific Officer of WBP. “Migraine hits mostly women in their prime working years (and) addressing it is a must.”

Susanne Fiedler, Chief Commercial Officer at Organon, says her company is committed to helping women and girls achieve their full potential through better health. “By demonstrating that migraine is both a gender equity and economic issue, we hope to break the silence and improve migraine education, care and treatment.”

The Not All in her Head campaign encourages policymakers, patients, healthcare professionals, employers and the general public to adopt a multi-stakeholder approach to improve migraine management with better awareness, early diagnosis, and gender-specific research.


Film Review - Blonde: Is Marilyn Biopic a Bombshell ... or a Bust?

“Monroe is more than a sex symbol in new film”, one headlined review of Blonde declares. That must be why actress Ana de Armas spends half of the movie wearing no clothes.

[caption id="attachment_24816" align="aligncenter" width="900"] Ana De Armas at the Blonde Premiere[/caption]

Director Andrew Dominik is so passionate about teaching us that Marilyn Monroe was more than a pin-up girl that whether she is having a mental breakdown, being physically abused or raped, it is imperative we are able to see her breasts at all times.

Sometimes it feels as if she doesn’t even exist outside of the sphere of sex. It’s unclear whether Dominik believes we should be disgusted or titillated by these scenes. It is entirely possible to effectively depict sexual violence and abuse without graphic detail, or letting the camera linger too long.

In Blonde, the victimisation of Monroe is relentless to the point it becomes almost unaffecting. Dominik thinks she was dehumanised by Hollywood — but he never attempts to humanise her. More than just a victim of circumstance, she becomes an animatronic doll with no agency or personality.

It makes sense, then, that Dominik has said the film is not about Monroe’s life, but her slow march towards death. It’s perhaps meant to parallel the narrative of his 2007 film The Assassination of Jesse James by the Coward Robert Ford. What separates them is that Blonde makes no real attempt to understand its subject. Whether it is laziness, misogyny or disdain, the result is a poorly executed idea that smacks of torture porn.

Even if you choose to dismiss this as woke hysteria, Blonde is superficial and boring. Dominik has a unique visual style that borders on the quaint, despite upsetting subject matter. The Assassination of Jesse James is a striking feat of cinema. In Blonde, Dominik suffers the fate of many directors who achieve enough commercial success to surround themselves with yes-men. His reliance on unique visual effects is more garish than interesting, and I doubt in the way he intended. The viewer is caught wondering whether the crew was constrained by the sort of software teenagers used for taking Facebook selfies circa 2010.

Even the elements I thought I would enjoy, such as a soundtrack by Nick Cave and Warren Ellis, feel derivative and out-of-place. If the film had been made by a student, it might indicate promise; coming from an acclaimed director, it is a disappointment.

Blonde is the work of an artist who does not trust his audience. Dominik believes the people who don’t like his art are simply too stupid to understand. He’s so worried we won’t “get it” that all subtlety is lost over three hours of having the nail hammered into our heads. President John F Kennedy is depicted watching fireworks on TV as he orgasms, a photograph of Clark Gable becomes animated and talks to a young Marilyn, later she stargazes on a beach and remarks “look at them up there shining so brightly and yet each one is so very much alone”.

"Blonde is the work of an artist who does not trust his audience. Dominik believes the people who don’t like his art are simply too stupid to understand."

The idea that Marilyn Monroe was a helpless victim of the Hollywood cabal has been overdone, and Dominik offers nothing new here. The biggest failure of Blonde is in believing its theory is a radical one. His source material is equally rote, but at least attempts to portray Marilyn Monroe as a human being, someone who had happy memories, a serious interest in literature and dedication to her craft. Although Joyce Carol Oates’ 2000 novel of the same name would eventually be nominated for a Pulitzer Prize, it was not without its detractors.

Internet misinformation is recycled every time there is renewed interest in Marilyn’s life. In a book review after the publication of Blonde in 2000, a New York Times article confidently informs us that Monroe had 12 abortions, and that these may have been the cause of her difficulty to conceive later in life. It is a remarkable assertion which offers no definitive source, and there is no historical evidence this had any basis in fact. To make a judgment on whether Monroe terminated any of her pregnancies is pointless. It serves to play into anti-choice debate. Oates and Dominik heavily rely on such imagery that the claim that Blonde is a feminist film is hard to swallow.

From the depiction of abortion as a forced, painful, traumatising medical procedure cumulates in the use of an animated foetus that asks Monroe: “You won’t hurt me this time, will you?”. The message is so damaging that even Planned Parenthood released a statement condemning it.

Despite some questionable choices, Oates clearly has a lot of interest in Monroe — something Dominik seems to lack. In one interview, he labels cinematic work a “whole lot of movies that nobody really watches”. Talking about what inspired her to write Blonde, Oates said: “I felt an immediate sense of something like recognition; this young, hopefully smiling girl, so very American, reminded me powerfully of girls of my childhood, some of them from broken homes.” There’s something to be said for her othering of girls from broken homes, but compared to the low bar of Dominik’s misogyny, Oates comes across as sympathetic.

When it comes to Marilyn Monroe, sympathy is not enough. She did have friends, and one of them, photographer Sam Shaw, once said: “Everybody knows about her insecurities, but not everybody knows what fun she was, that she never complained about the ordinary things of life, that she never had a bad word to say about anyone, and that she had a wonderful, spontaneous sense of humour.”

Watching Blonde, I couldn’t help thinking about Truman Capote’s essay about Monroe, entitled A Beautiful Child. Published a decade after her death, it tried to capture the bubbly side of her. She swears like a sailor. She describes the Queen of England using words that I shan’t repeat, and they would never make it to print. Remarking on the tabloid journalists who ran gossip columns about her, she asks Capote “What did I ever do to those hags?”. I wonder how this woman with a dirty mouth and dry sense of humour has been replaced by one seemingly made of glass. A fragile Ana De Armas, bare-chested, constantly quivering, forever on the precipice of tears.

What Dominik fails to understand in Blonde is that there is no slow march towards death. People’s lives are not neat stories. Even those suffering from mental illness can have happy days, and that tragic drug overdose could truly have been an accident.
The problem with Blonde is it does exactly what it accuses everyone else of doing. It has been described as a “cultural artefact of the #MeToo era” — but it denigrates the women who paved the way for the movement. Monroe was one of those women.

By Kitty Wenham


Otaviano Canuto: Going Around the Bend? Assessing the Phillips Curve May Be of Help

Unemployment and wage rates are theoretically linked, and may hold a key to our immediate economic future.

Current global stagflation may evolve to become a soft landing, a sharp downturn, or a deep recession. It will all depend on how fast inflation responds to economic deceleration.

That involves guessing the shift in major economies’ Phillips Curves. The economic model, named after William Phillips, hypothesises a link between reductions in unemployment and increased wage rates.

Some areas of financial intermediation — such as the sudden disappearance of liquidity — have recently developed increased vulnerability. Significant shocks could cause the Phillips Curve to exhibit higher unemployment and under-utilisation of capacity — even as inflation rates decline.

Global inflation has triggered the simultaneous tightening of monetary and fiscal policies. Economic growth projections for 2023 have been revised downward. Inflation rates will come down only gradually, given the price stickiness of their core components. The world faces a situation of stagflation — a combination of significant inflation and low or negative GDP growth.

The evolution of the situation will depend on how fast inflation drops in response to economic deceleration. This can be assessed by the Phillips Curve shifts in major economies, reflecting the cross-border spill-over of country-specific policy choices. Any abrupt deterioration in financial conditions may cause Phillips Curve movement.

[caption id="attachment_24826" align="aligncenter" width="708"] Figure 1 (1/2): Change in central bank policy rates since Dec 31 2021 (G20, except Argentina (+37%pts), % points). Source: Wolf (2022).[/caption]

A global recession — global GDP rising more slowly than population growth — is a strong possibility. The combination of economic slowdown and inflation will vary in different countries, but it will be a common feature.

Here we compare the underpinnings of the inflation/unemployment trade-off in the 1970s and ‘80s and the current storm provoked by the pandemic and the war in Ukraine.

Recent challenges arise from the appreciation of the US dollar relative to other currencies, particularly those of other major economies. This may reinforce the contractionary pressures on the global economy. In emerging-market and developing countries (EMDEs), although exchange-rate depreciation has not been as intense as in non-US advanced economies, vulnerabilities associated with dollar-denominated liabilities could intensify problems.

Recent interest rate rises have been widespread. The left side of Figure 1 depicts basic interest rate hikes since 2021, while its right shows market estimates of rate hikes.

[caption id="attachment_24825" align="aligncenter" width="341"] Figure 1 (2/2): Global Monetary Policy Tightening.
Note: Bp - basis points. Source: J.P. Morgan Global Economics.[/caption]

On September 21, 2022, the Fed raised the target for the federal funds rate by 75 basis points, bringing it into the 3-to-3.25 percent range. The Fed maintains that further rate hikes are appropriate. It notes that while national spending and production have declined, the increase in employment has been robust. Individual projections by the members of the Fed’s Open Market Committee (FOMC) have changed from those issued in June. The September median federal-funds interest rate projections pointed to a rate of 4.4 percent by year’s end.

Rates are expected to rise in early 2023, with a projected peak of 4.6 percent. Fed chairman Jerome Powell said rates must remain restrictive enough to keep the US economy running below its potential to reduce inflation.

This appeared in downward revisions to forecasts for real GDP growth: 0.2 percent year-on-year in Q4 2022, followed by 1.2 percent and 1.7 percent in 2023 and 2024. Growth over the next two years will be below the estimated potential level of 1.8 percent. The Fed believes inflation will not reach its target until 2025.

The Fed has also revised its forecast for the unemployment rate, predicting a rise from 3.7 percent now to 4.4 percent by the end of 2023. Historically, a rise of this magnitude over one year has always been followed by a recession.

[caption id="attachment_24824" align="aligncenter" width="743"] Figure 2: Euro-Area All-Industry PMI and Real GDP. Source: J.P. Morgan Global Economics.[/caption]

Two consecutive quarterly negative GDP numbers are enough to state that the US economy is already in recession (Canuto, 2022a). With a discrepancy between negative GDP and positive gross domestic income (GDI) numbers in the second quarter, the performance of the labour market did not point to strong deceleration.

There is a general rise in interest rates, as seen in Figure 1, with the exception of China, Japan, and Turkey. In the week of the Fed’s September meeting, central banks in Switzerland, Sweden, Norway, Denmark, Hong Kong (China), the UK, Indonesia, the Philippines, and South Africa all hiked rates, as the European Central Bank and the Bank of Canada had done the previous week. In Brazil, there was no increase, as a strong cycle of interest rate hikes had already occurred.

In July 2022, the European Central Bank (ECB) hiked interest rates for the first time in 11 years. In September, it agreed an increase of 75 basis points. After being at zero or in negative territory for more than a decade, the European Union now has a rate of 0.75 percent. The ECB’s interest rate should continue to rise. In the euro area, industrial production dropped in July 2022 (Figure 2), as a result of the energy price shock, while headline inflation projected for September was already close to 10 percent per year.

Higher inflation has prompted central banks around the world to push their restrictive buttons, with exceptions in China, Russia, Japan, and Turkey (Figure 1 (1/2)).

There is an intrinsic challenge to the globalised economy. Each central bank looks to its own country when deciding monetary policies. In such an interdependent economy, the repercussions go beyond borders. The probability of feedback from restrictive monetary policies is greater when there is response to a common inflationary problem.

[caption id="attachment_24823" align="aligncenter" width="791"] Figure 3: Real GDP Growth Projections for 2022 and 2023 (selected countries, year-over-year, percent). Source: OECD (2022).[/caption]

The combination of higher energy prices, US dollar appreciation relative to the euro, China’s growth deceleration, and risks of a second eurozone debt crisis as interest rates and risk premium on Italian bonds rise, means a probable recession in Europe. Taking into account the slowdown in America, a global recession is likely.

A September report by the World Bank (Guénette et al, 2022) noted that despite the global slowdown in growth, inflation in many countries has risen to the highest levels in decades. The global economy is experiencing a period of international synchronicity in the tightening of monetary and fiscal policies — like the one that preceded the 1982 global recession.

A key variable is the evolution of the inflation rate as it hovers around multi-decade highs in Europe and the US. With activity weakening, monetary policy commands strong credibility, and inflation expectations remain stable for Europe and the US. One concern is that high inflation itself raises the risk for second-round effects on wages.

It remains to be seen to what extent price feedback and the inflationary spiral will yield to fiscal and monetary tightening. The downward revision of global growth projections for 2022 and 2023 has been remarkable.

The September 2022 OECD Economic Outlook revised downward its GDP growth projections in 2022 and 2023 (Figure 3). Global growth is likely to slow in 2023 to an annual rate of 2.2 percent. with to the OECD forecasts from December 2021, before Russia’s invasion of Ukraine, global GDP is projected to be at least $2.8tn lower in 2023.

[caption id="attachment_24822" align="aligncenter" width="547"] Figure 4: The Phillips Curve. Source: Dritsaki and Dritsaki (2013).[/caption]

Whither the Phillips Curve?

Inflationary pressures increase as unemployment declines or the heating of economic activity starts to conflict with its capacity, and vice-versa.

Interest-rate decisions by central banks depend on the level of aggregate demand and the extent to which potential GDP will be under- or over-utilised. The Phillips Curve expresses the inflation-unemployment dilemma.

In principle, there is a level of interest rates at which demand pressures would not be excessive, or would be insufficient in relation to potential GDP. This is called the neutral interest rate: inflation and unemployment would tend to remain stable. There is a certain rate of unemployment at which inflation remains stable — the non-inflation accelerating rate of unemployment (NAIRU).

The relationship between unemployment and inflation does not necessarily remain stable. There are endogenous changes when an economy spends time above or below the neutral level.
In situations of overheating and rising inflation, vicious circles of inflationary feedback can arise. Expectations and behavioural feedback will only be reversed if the economy spends some time below its potential, during which the inertia of inflation will keep it going for some time.

This is illustrated by the shift of the initial short-run Phillips Curve toward a new short-run Phillips curve (Figure 4), after some time spent at point B rather than point A. Stability can then only be reached when the unemployment rate moves back to NAIRU (point C). Any return to point A will demand a period of unemployment rates above NAIRU, coupled with an unwinding of inflation expectations and of wage-price spirals.

Stagflation — significant inflation, high unemployment, and zero or low economic growth — observed in the US in the 1970s and 1980s corresponded to being in a zone to the right of point C. The Phillips Curve had shifted upwards, and inflation only declined after a period of high unemployment.

The following decades saw the period of “great moderation”, the period of low macro-economic volatility from the mid-1980s until the 2007-2008 financial crisis. The Phillips Curve had shifted down.

After the recession that followed the GFC, the shift seemed to have been confirmed. The US economy took a while to recover but expanded for more than a decade — at rates below historical averages, but corresponding to a period without recessions.

Inflation remained below the Federal Reserve’s two percent target, averaging 1.7 percent throughout the expansion. The looseness of monetary policy — including quantitative easing, or the Fed buying government bonds and mortgages — did not affect inflation (Canuto, 2022d).

Two main factors explain this flattening of the Phillips Curve: the anchoring of inflation expectations at low levels, and the possibilities opened by the globalised economy. Instead of upward pressures on the domestic prices of products that might be in short supply, imports could absorb demand. In the absence of generalised overheating, globalisation could function as a buffer against inflation.

[caption id="attachment_24821" align="aligncenter" width="707"] Figure 5: G20 Currencies Relative to the U.S. Dollar in 2022. Source: Wolf (2022).[/caption]

The rise in inflation from pandemic supply shocks and the invasion of Ukraine created the “perfect storm”. Accelerated inflation came to be recognised as something that is not automatically reversible. It reflects the size of fiscal and monetary stimulus in advanced economies, with the channelling of demand for goods creating bottlenecks in supply chains. In addition, the workforce has contracted, reducing employment levels.

The Phillips Curve has shifted again. Gita Gopinath, the IMF’s first deputy managing director, outlined this at the Federal Reserve’s Jackson Hole Economic Symposium in August. Less than a quarter of a percentage point of the rise in inflation can be attributed to unemployment falling below the NAIRU (Gopinah, 2022). In any case, there is now a simultaneous development internationally in the tightening of monetary and fiscal policies, making a global recession likely, as we have discussed.

And now? Where will the Phillips curve go? Will the relationship return to how it was before the pandemic?

According to the Institute of International Finance (Brooks et al, 2022), the effect of the pandemic as a source of shocks on supply chains seems to have ended, given the stage of normalisation of delivery times and the reduction of its upward pressure on inflation. On the supply side, there are still the impacts of the war in Ukraine on global inflation, especially in Europe.

Post-pandemic job supply will remain difficult to predict. There is also the risk that “relative deglobalisation” of value chains undermines the balancing of supply and demand via foreign trade, rather than domestic prices.

On the aggregate demand side, will the long-term low interest rates bring structural changes? Gopinath suggested that while demographics, income inequality, and a preference for safe assets will continue to keep rates low, higher post-pandemic debt and inflationary shocks accompanying the energy transition will work in the opposite direction.

The Philips Curve will keep moving. It is necessary to verify whether monetary adjustment programmes will be effective in keeping inflationary targets as anchors for expectations. This may affect which growth deceleration scenario prevails.

Dollar Appreciation Contractionary?

Dollar appreciation may reinforce the contractionary pressure on the global economy. In emerging market and developing countries (EMDEs), vulnerabilities associated with dollar-denominated liabilities may lead to intensified problems.

Take the US Dollar Index (DXY), a measure of the value of the dollar against six other currencies. On September 28, the DXY was at its highest level since May 2002. Compared to the beginning of 2022, the dollar was up 18 percent against the euro, and 26 percent against the Japanese yen and British pound. Figure 5 shows how 20 G20 currencies have so far in 2022 evolved.

A key additional driver of dollar appreciation has been the higher yield in real terms of US assets relative to others. Figure 6 shows the differential in real yields between America and the euro area, as measured by yields on five-year inflation-indexed government bonds paired with the euro-dollar depreciation. It reflects the more rapid interest rate moves in the US, followed by market expectations about the Fed’s anti-inflation drive.

[caption id="attachment_24820" align="aligncenter" width="900"] Figure 6: U.S. and Euro Area - Real Yields and Exchange Rates.
Source: Denyer, W. (2022). The Key Drivers for Currencies, Gavekal Research, September 28 (gavekal.com).[/caption]

According to W Denyer, a similar picture may be built for the comparison of risk-adjusted rates of return for other fixed-income assets. Further bouts of dollar appreciation might happen if the other central banks continue to lag in setting interest rates and/or the pace of adjustment by the Fed. One-off events, such as an intense depreciation of the British pound caused by a proposal for unfunded tax cuts, were partly reversed.

Some countries have tried direct interventions in exchange rates instead of — or as a complement to — lifting domestic interest rates. Japan has opted to sell US Treasury bond reserves to try to counteract the yen's exchange rate devaluation against the dollar. Switzerland is also said to be considering selling foreign currency to support the Swiss franc, as well as raising interest rates.

After the 2008-2009 global financial crisis there were “currency wars”, when countries accused each other of exporting their unemployment problems through significant reductions in domestic interest rates and currency devaluation. A reverse currency war may now be emerging. In the absence of some sort of new Plaza Accord, individual countries’ efforts to evade interest rate adjustments via direct interventions in exchange markets will have limited effect if the underlying factors leading to capital flows are not altered.

Besides hurting US multinational companies’ profits from abroad, and emerging markets’ dollar-denominated foreign liabilities, dollar appreciation may lead to inflationary shocks and tighten monetary policies. Feedback loops of restrictive policies may be sparked.

Where Phillips Curves have moved to will matter.

Near-Term Scenarios

Since the beginning of 2022, a rapid deterioration of growth prospects, rising inflation and tightening financing conditions have ignited a debate about the possibility of a contraction in global per-capita GDP.

Forecasts for global growth have fallen since the beginning of 2022. They don’t point yet to a global recession in 2022–2023, but Guénette and others call attention to earlier recessions.

Every global recession since 1970 was preceded by a weakening of global growth in the previous year. All previous global recessions coincided with sharp slowdowns or recessions in several major economies.

Despite the current slowdown, inflation has risen to multi-decade highs. To curb the risks from persistently high inflation, many countries are withdrawing monetary and fiscal support. The global economy is in one of the most internationally synchronous episodes of monetary and fiscal policy tightening of recent decades.

These policy actions are understood as necessary to contain inflationary pressures. But their mutually compounding effects could lead to greater impacts in terms of tightening financial conditions and growth slowdown. These policy conditions were not seen in the 1975 global recession, but they were before the one in 1982.

Guénette proposes three scenarios for 2022-2024. The first baseline scenario follows closely recent consensus forecasts of growth and inflation, as well as market expectations for policy interest rates. This is the soft-landing scenario, in which global growth is forecast to slow from 2.9 percent in 2022 to 2.4 percent in 2023, rising to three percent in 2024. The slowdown in 2023 would lead to growth in per-capita terms approaching that of the downturn episodes of 1998 and 2012. Global trade growth would reflect a broad-based weakening of demand in 2023, before accelerating in 2024.

Growth in advanced economies would slow from 2022 to 2023, before recovering somewhat in 2024. Growth in EMDEs would accelerate from 2022 to 2024 as global headwinds fade and post-pandemic recovery continues.

After peaking at 7.7 percent in 2022, global headline CPI inflation in the baseline scenario would remain high relative to the inflation target into 2023, at 4.6 percent. The projection for 2024, at 3.2 percent, is in line with a gradual approach to the target, about 2.5 percent at the global level in GDP-weighted terms (average 2 percent in the US).

Inflation in EMDEs is projected to decline from 9.4 percent in 2022 to 4.5 percent in 2024, above its aggregate target of 3.5 percent. The decline in core CPI inflation, which excludes the volatile energy component, would be more sluggish. Given this inflation outlook and the expected path of policy rates, short-term interest rates would remain negative, or near zero, in real terms throughout most of the projection horizon.

The degree of monetary policy tightening currently expected may not be enough to restore low inflation quickly enough.

The second scenario — sharp downturn — supposes an upward move in inflation, which would lead to additional synchronous monetary policy tightening by central banks.

Central banks in advanced economies and EMDEs could raise their benchmark policy rates by a cumulative 100 basis points above baseline assumptions until the end of 2023, deciding to sustain this differential through 2024. In this scenario, the global economy would still escape a recession in 2023 but would go through a sharp downturn without restoring low inflation by the end of the next year.

While headline inflation would continue its downward trajectory in 2024, it would do it at a slower pace. The decline in core inflation would be broadly unchanged relative to the baseline scenario, as the upward pressure from higher inflation expectations would counterbalance the muted impact of widening output gaps.

According to model-based projections of Guénette et al, the global economy would still escape a recession despite undergoing a global downturn (in per-capita terms) on par with that in 2001, and worse than those of 1998 and 2012. Advanced economies overall would not see a contraction of output in 2023, with growth of 0.5 percent. But the additional tightening of monetary policy would lead to technical recessions: two consecutive quarters of negative quarter-over-quarter growth in the United States and the euro area. Recovery of activity in this scenario would take place in 2024. The projected GDP growth rate of 2.7 percent would be 0.3 percent below the baseline-scenario rate.

In the third scenario — global recession — the additional increases in policy rates would trigger a sharp re-pricing of risk in global financial markets, resulting in a global recession in 2023.

Abrupt policy shifts in major economies might cause deep global financial stress, aggravating macro-economic vulnerabilities. The focus on inflation reduction would constrain the ability of central banks to provide relief to stressed financial markets, beyond some eventual targeted credit-easing to alleviate acute liquidity shortages in key funding markets. Fiscal policy is expected to face similar constraints, preventing governments from implementing large-scale support measures, particularly after the higher public debt left as a legacy of the pandemic.

The headwinds from the globally synchronous policy tightening would be compounded by a sharp deterioration of global financial conditions. Global GDP growth would decline by 1.9 percent in 2023 and one percent in 2024, compared to the figures of the baseline scenario. Those numbers are comparable to the 1982 recession, with growth slowing to 0.5 percent. Global GDP per capita would contract by 0.4 percent, in line with the 1991 recession, although milder than the 1982 episode when the population grew faster.

The evolution of global output would be within historical experience over the past five decades. Permanent output losses relative to pre-pandemic trends would be greater in this third scenario.

Globally, policymakers need to stand ready to manage the potential spill-overs from the globally synchronous withdrawal of growth-supporting policies.

Ultimately, policymakers must cope with the dilemmas put before them as depicted in Phillips Curves, whatever the configuration of parameters currently defining their shapes. Downward stickiness of inflation rates and the evolution of financial conditions (embedding various possible stress levels) will define the eventual scenario.

An important “known unknown” is whether worsening financial conditions will trigger a financial shock, regardless of Phillips Curves. Aggregate corporate and household measures of vulnerabilities do not show the levels of fragility seen in previous crisis moments. Many corporates have used pandemics responses, via liquidity abundance and low long-term interest rates, as a window of opportunity to extend the duration at low cost of their liabilities.

Some point to areas of financial intermediation that have developed a high vulnerability to shocks — such as sudden disappearance of liquidity — in the recent past. Chapter Three of the IMF’s October Global Financial Stability Report approaches how open-end funds, which offer daily redemptions while holding illiquid assets, have acquired a significant role. They are vulnerable to investor runs and asset fire sales that can be triggered by sudden liquidity shocks.

As large banks ceased to act as market makers since the global financial crisis, and voluntary and regulatory restrictions are replaced by non-banking financial institutions, sudden disappearance of liquidity has become more frequent and troublesome.

Central banks are currently doing “quantitative tightening” and any U-turn on provision of liquidity to markets may signal a weakening of their drive against inflation.

Housing markets are reeling from the elevation of mortgage rates. The long era of low interest rates has generated substantial overvaluation of assets relative to earnings. Private equity and venture capital funds have bloomed.

As interest rates have entered the on-going upward phase, negative surprises may come from various spots, and may aggravate the macro-economic downturn.

The Phillips Curve would then exhibit higher unemployment rates, or under-utilisation of capacity, even as inflation rates move down. i

First appeared at Policy Centre for the New South.

About the Author

Otaviano Canuto, based in Washington, D.C, is a senior fellow at the Policy Center for the New South, a nonresident senior fellow at Brookings Institution, a visiting public policy fellow at ILAS-Columbia, and principal of the Center for Macroeconomics and Development. He is a former vice-president and a former executive director at the World Bank, a former executive director at the International Monetary Fund and a former vice-president at the Inter-American Development Bank. He is also a former deputy minister for international affairs at Brazil’s Ministry of Finance and a former professor of economics at University of São Paulo and University of Campinas, Brazil. Otaviano has been a regular columnist for CFI.co for the past ten years.

Follow him on Twitter: @ocanuto


Lord Waverley: Central Asian Region Revealed in All its Glory, Mystery, and History

Lord Waverley negotiated Memoranda of Understanding with each of the five parliaments of Central Asia, and was the architect of the Aktau Declaration on Joint Actions. In this first segment of a two-part series, he presents a unique insight into the region...

One is acutely aware as to how much can be achieved by first-hand engagement in a region of crucial importance that is full of potential but had once been closed for access.

Sir Halford Mackinder, the British political geographer of early 20th Century, once profiled this part of Asia in his land-based theory of world power as “Heartland”, the strategic centre of the “World Island”, and that whoever controlled it controlled the world.

Part One: Kazakhstan and Uzbekistan

Long before the advent of oil and gas as a prize, mystery and a heightened realisation of its impending post-independence importance first drew me to Central Asia. The region has a mystical resonance in the imagination, whether through the writings of the orientalists or the biographers of the Great Game. The colonial withdrawal and Soviet takeover of the region led to a steady decline in what was once a tradition of scholarship and trade, as access to the region became restricted.

The dissolution of the Soviet Union and liberalisation in China and Mongolia removed barriers to access to central and inner Asia, but the strategic importance and the global business and academic community are only now beginning to understand Central Asia. I wish to elevate the profile of a region that has recently been substantially neglected in foreign policy terms, but which has become greatly relevant to the global political stage and regional stability.

[caption id="attachment_26164" align="aligncenter" width="900"] Kazakhstan: Astana[/caption]

The prospective importance can scarcely be overstated, with interests such as counter-terrorism, energy security, democratisation, and the rule of law essential.

Thanks to an innovative pipeline grid, a new golden triangle of trans-Caspian oil and gas resources is emerging that will transform the regional economic potential. Central Asian countries are characterised by predominantly moderate and secular governments which should be viewed as reliable partners and rational actors on key issues. They remain favourably inclined towards western countries and keen to partner with social, economic, and political cultures.

We should be acting now to help secure their futures by understanding the needs amid the powerful spheres of influence exerted by adjacent nations. It is incumbent upon us to listen intelligently, to welcome, and to benefit from these new voices at the table of nations. The need for a balanced foreign policy that accommodates this geopolitical approach cannot be overlooked. Afghanistan is a part of the Central Asian nexus and has natural regional affinities. Countries there understand the various ethnic cultures, and essential economic development will filter from the north.

The region possesses abundant agricultural, mineral and energy resources, with great potential for renewable energy, including hydropower and solar. It contains all the necessary ingredients for industrial growth and has a widely educated workforce. Scientific potential is enormous, bearing witness to considerable technological sophistication.

However, industries such as cotton monoculture require vision and assistance in the continued transition from a command economy to market mechanisms that create jobs, exports, and opportunities. It is predicted that these countries will experience strong future economic expansion with economic engines benefitting from oil and gas field production in the years ahead, and position the region for solid growth, development, and diversification. This will be fuelled by high global commodity prices and stronger domestic demand.

The hydrocarbons sector is the backbone of the larger economies, but structural challenges undermine the full development of the natural resources sector. The need for local technical skills and the limited financial capacity to develop the energy sector make the search for foreign investors a priority, while corruption remains a concern for some foreign investors. Regional interests should not fall into the trap of a single-commodity economy. There are real opportunities in the form of energy co-operation beyond hydrocarbons, and the potential for sustainable partnerships for outside interests is immense.

[caption id="attachment_26167" align="aligncenter" width="900"] Tashkent: Amir Temur Monument[/caption]

The priorities of advancing dialogue on European security through the Corfu process launched to take security dialogue forward with political, military, and economic dimensions, go together with a theme of promoting inter-ethnic and religious tolerance. The Shanghai Cooperation Organisation, comprising most of Central Asia, has achieved considerable results in developing international contacts, as well as in implementing initiatives to strengthen security and stability to combat terrorism, extremism, and separatism.

Management of the key pipelines that serve as a gateway for Central Asia are evolving into a dynamic Eurasian artery of economic growth and development. Transport corridors will link Central Asian countries with wider regional continental trade and transport networks, further strengthen the sovereignty of the regional states, and facilitate the opening of the political and economic systems.

For all these reasons and more, it is essential to push relationships forward on all fronts, and seek to balance the interests of the US and China in the multi-vector policies of the Central Asian states.

The fragile, nascent political systems should be encouraged towards the growth of democratic and anti-authoritarian regimes. This will succeed if a long-term view of reform is taken. Democracy is an evolutionary process and should be seen as a partner, not a preacher. The democratisation of state power and governance, ensuring freedom of choice and the development of electoral legislation, reforming the judicial and legal systems, and developing civil society — these are all areas in which there can be useful engagement in the spirit of partnership and co-operation.

This would strengthen the parallel-to-trade objectives in advocating the benefits of good governance, transparency and accountability, freedom of the press and human rights. Engagement is essential with the Central Asia states that have completed the transition stage of their independence. Thirty years on, it is a new game — and a positive one — in a region that is of priority strategic interest.

Kazakhstan

[caption id="attachment_26165" align="aligncenter" width="900"] Inauguration: President Kassym-Jomart Tokayev[/caption]

This new country is an old nation that has been shaped by a particularly dramatic set of circumstances. There have been successive waves of invasion, immigration and migration along the Great Silk Road, which gave birth to the mix of cultures and traditions which make the country what it is today. It is the ninth-largest country in the world, with an area of 2,724,900 square kilometres, and is the largest landlocked country in Europe and Asia.

The country is best known historically as a crossroads of people and cultures. Over the centuries, the Kazakh steppe saw some of the world’s greatest conquerors — Alexander the Great, Timur, and Genghis Khan — and was neighbour to the Safavid Empire of Persia, the Mughal Empire of India, and the many great Chinese dynasties while forming part of the Mongol, the Timurid, and Russian empires.

The Kazakh khanates emerged in the centuries following the fall of the Mongol Empire, as the people of Central Asia consolidated their land and created the outlines of the first Kazakh nation. The Kazakh Khanate, located roughly on the territory of present-day Kazakhstan, was founded by Sultans Kerey Khan and Zhanibek in 1465. It was the first sovereign state of the Kazakhs.

The formation of the independent Kazakh Khanate began when several tribes, under the rule of Sultans Kerey and Zhanibek, departed from the Khanate of Abilkhaiyr Khan. The sultans led their people toward Monğolistan, eventually settling in the area between rivers Chu and Talas in south-eastern modern Kazakhstan, and founded an independent state.

Between the 17th and 19th Centuries, the Kazakh people fought numerous wars against Chinese and Dzungar tribal confederations, as well as Russian expansion, but survived intact. Kazakhstan was fully incorporated into the Russian Empire in late 19th Century and became the second-largest republic of the Soviet Union of the 20th Century. On October 25, 1990, Kazakhstan declared itself a sovereign state, and on December 16, 1991, it proclaimed full independence.

Political Background

The Republic of Kazakhstan became a sovereign state in a new era in 1991. The country's independence was first acknowledged by the US, followed by China and the UK. At the dawn of its independence, Kazakhstan embarked on a series of reforms aimed at shifting the country’s economy from a centrally planned system to a modern free market model, and changing its one-party government to a multi-party democratic system.

Over the ensuing 31 years, Kazakhstan has established diplomatic relations with 186 countries and transformed itself into one of the dynamically developing economies of Eurasia, with a respected diplomatic voice on the world stage.

Today, Kazakhstan is entering a new stage of development. President Kassym-Jomart Tokayev launched a process of political transformation to build a just and fair nation. The primary aim is to make the justice central to state policy, to improve the welfare of the people and respond to their needs.

This country is gradually implementing large-scale domestic political and socio-economic reforms aimed at a more sustainable and diversified economy, a more equitable society, and a competitive and resilient political system. The Head of State’s initiative to limit the presidency to a single seven-year term, without the right to re-election, provides a solid foundation for a stable long-term policy course, and guarantees the permanence of the democratic reforms. This is an initiative without precedent, aimed at the long-term stabilisation of the political system, eliminating the risks of power monopolisation, and strengthening the basic principles of democracy.

The president has announced a new economic policy, the development of a real economy, a decrease in the government’s stake in the country’s GDP, a reset of the public administration system, and implementation of rule-of-law principles. The main objective is to ensure inclusive growth and wellbeing for all citizens. The most important principles of this policy are the promotion of entrepreneurship, competition, and the fair distribution of wealth.

Trade and Investment

Kazakhstan has a rich past — and great opportunities to become one of the world’s most competitive economies. Trade plays an important role, and the country is well-positioned to benefit from the growing markets of China, Europe, and Central Asia. Its history echoes the epic silk route of centuries past, and its present with two-way rail and road traffic between China and Europe.

Kazakhstan has built on its continued success and religious, social, and political harmony to become a magnet for large investors — and a locus of further innovation. Its private sector foreign direct investment (FDI) has amounted to over $400bn since independence, and has played a central role in the country’s rapid development. But long-term foreign investors’ interest can be sustained only by the willingness to create a welcoming, supportive, and engaging business environment.

Kazakhstan has worked hard to create such a climate, not only for its own business sector, but also for the increasing number of foreign investors. Social stability is key, as is the evolution of legal frameworks to bolster investor confidence.

A multi-level system of state support for investors has been established, including industry benefits and an investment environment of exemptions from taxes and customs duties, and land grants. A strategic investment agreement has been introduced to provide special conditions for investment projects worth more than $50m, including the stability of legislation for 25 years, the reimbursement of capital infrastructure costs, the possibility of extending preferences under the special economic zones, and other customised measures.

Amid a pandemic-induced slowdown of economic activity, the Kazakh government has taken concerted efforts to reassure domestic and foreign investors that all obligations and guarantees of the state will be fulfilled.

Kazakhstan possesses the world’s sixth-largest natural mineral reserves deposits, and ranks a global 10th for total mineral production (excluding oil and gas) with deposits of around 60 precious and non-ferrous metals. The government has designed incentives such on tax, customs preferences, provision of land plots and basic infrastructure to support investors.

A strong, world-class financial sector is being developed. The Astana International Financial Centre (AIFC), an independent court based on English law, has been created. It hosts more than 1,700 companies from 71 countries, providing an international common-law framework, an independent court and arbitration centre, tax benefits, and a special labour regime.

With the second-largest reserves in Eurasia, Kazakhstan is a reliable supplier of oil and gas, a vital ally in the current global energy crisis. The country accounts for 45 percent of the global uranium market output, and is a competitive and reliable long-term supplier of nuclear fuel for powerplants around the world.

Opportunities in green energy sector, with the fostering of economic development and the advancing of energy transition, is of crucial importance for Kazakhstan as it sets out to meet a goal of achieving carbon-neutrality by 2060.

The government of Kazakhstan continues to work to further improve the investment climate by ensuring rule-of-law, safeguards, and protection of intellectual property rights. Its key objective is to maintain stability and predictability for foreign investors.

Foreign Policy

Since gaining independence in 1991, Kazakhstan has consistently strengthened its position in the international arena as a peace-loving and open-minded nation — and a reliable partner in global and regional affairs.

The country views itself as a middle-ranking power with a multi-vector foreign policy that makes a significant contribution to the formation and implementation of the global and regional agenda in security, co-operation, and development.

In 1992, with the goal to promote peace and security in the entire Asian region, Kazakhstan initiated the Conference on Interaction and Confidence Building Measures in Asia (CICA). This pan-continental security forum implements confidence-building measures, and forges and enhances political dialogue and interaction to promote peace and stability in the 28 member states.

Kazakhstan was once home to the Soviet Union’s Semipalatinsk testing site, where some 450 nuclear devices were tested between 1949 and 1989 — the equivalent of 20,000 Hiroshima bombs. After the collapse of the Soviet Union, Kazakhstan inherited the fourth-largest nuclear arsenal in the world, but closed Semipalatinsk and dismantled the nuclear arsenal 30 years ago. It has clearly indicated that CICA, as a responsible community of nations, can break new ground on national safety, helping economies to mature, creating jobs, and embracing partnerships for the future.

Convinced that spiritual and religious leaders play a significant role in fostering inter-ethnic and inter-religious harmony and respect, Kazakhstan convened (and has since hosted) seven high-level meetings of the triennial Congress of the Leaders of World and Traditional Religions since 2003. The most recent was held last September, with the participation of Pope Francis. The congress provides a platform for dialogue between religious and political leaders for the sake of peace.

Based on the reach and success of the country’s multi-vector foreign policy, Kazakhstan became the first Central Asian country elected to serve as a non-permanent member of the United Nations Security Council from 2017-2018. In 2021, it was elected a member of the United Nations Human Rights Council (2022-2024) of the UN General Assembly in New York. In 2015, Kazakhstan signed the Enhanced Partnership and Co-operation Agreement (EPCA) with the EU, which governs trade and economic relations. After ratification by all individual member states, the agreement entered into force on March 1, 2020.

Kazakhstan has been a staunch proponent of multilateralism, which it values for forging the international community’s collective vision and approach to solving global and regional problems based on multilateral consultations and agreements. The country has long been recognised the inextricable nexus between security and development at national, regional, and global levels — and it has called on the international community to develop integrated approaches to cross-border security, conflict resolution, and peace-building efforts in post-conflict countries.

Cultural and Tourism

Kazakhstan’s centuries-old history and multifaceted cultural heritage form essential parts of modern life in the country.

Horsemanship. The domestication of horses, and the development of equestrian culture, originated in the territory of modern Kazakhstan. Ancestors of the Kazakhs create protective armour for horse and rider, and invented riding aids such as stirrups.

Golden Man. In 1969, “Kazakhstan’s Tutankhamun” was discovered near the town of Issyk. The skilful craftsmanship of the golden warrior garment revealed a rich mythology, reflecting the power and aesthetics of the Steppe civilisation.

The Silk Road. The unique location of Kazakhstan in the heart of Eurasia has contributed to the emergence of transit corridors between various regions and civilisations. These routes were transformed into the Silk Road system, a transcontinental network of trade and cultural ties across the length and breadth of Greater Eurasia.

Apples and tulips. The foothills of the Tien Shan Mountain range are the historical homeland of apples and tulips. The “original” apple tree — the Sievers tree — originates from Kazakhstan, and around the world there are now more than 3,000 varieties of cultivated tulips, most of which are descendants of ancient Kazakh flowers.

Kazakhstan is home to over 27,000 ancient monuments, including the Golden Warrior, a Saka prince clad in gold armour, and five UNESCO World Heritage sites. Three are cultural sites — the Mausoleum of Khoja Ahmed Yasawi, Tamgaly, home to 5,000 ancient petroglyphs, and the Routes Network of Chang’an-Tianshan Silk Road Corridor — and two natural sites, the Saryarka plains (world-famous for birdwatching), and the Western Tien-Shan.

Ecological tourism now plays an integral part of adventure holidays, offering a wide variety of natural zones and climatic conditions. Tourists in Kazakhstan are able to fully experience all four seasons. There are tours in around Almaty and in east and south Kazakhstan, with welcoming climates and the presence of majestic mountain ranges and rivers. Local culture flourishes with Kazakhstan’s traditional drink of kumis — fermented mare’s milk, once believed to be a cure for everything from the common cold to tuberculosis — while Kazakhs living on the steppes drink shubat, fermented camel’s milk.

Kazakhstan is rich in natural attractions. In the vast expanses of the Great Steppe are national parks, nature- and game reserves, and 79 natural monuments — all of which occupy just nine percent of the republic’s total area.

Uzbekistan

[caption id="attachment_26166" align="aligncenter" width="900"] President: Shavkat Miromonovich Mirziyoyev[/caption]

Humans lived in what is now Uzbekistan as early as the Palaeolithic Period (or Old Stone Age), 55,000 to 70,000 years ago. The territory of present-day Uzbekistan stemmed from an advantageous location on the ancient Great Silk Road. It became a key international junction for trade and cultural exchange, and throughout history, the people of this area have maintained relations with many regions in South Asia, the Middle East, the Mediterranean, and Eastern Europe.

It was one of the epicentres of the Islamic Golden Age — a period of flourishing enlightenment, science, culture, and philosophy which predates the Western Renaissance. Many of the philosophers and scientists of the time were born where modern Uzbekistan lies today. Avicenna (Abu Ali Ibn Sina), for example, was the author of some of the most famous books on medicine, which for nearly 500 years were part of the curriculum in leading European universities.

Amir Timur, more commonly known as Tamerlane, ruler of the Timurid Empire stretching from China to Turkey with its capital in Samarkand, established ties across Europe, seeking friendly relations, and expanding trade. Records of his correspondence with leaders in France and Spain — at one stage, he appealed to Charles VI of France to send more traders to Asia — evidenced the importance he placed on economic ties. In 1402, King Henry IV of England despatched a letter (archived at the British Library) to Tamerlane, accepting Amir’s offer of free trade between England and Timur’s empire. He was a formidable general and an enlightened ruler, whose policies gave further rise to multiculturalism and free trade.

Political Background

Incorporated into Russia in late 19th century, Uzbekistan was part of the Soviet Union until 1991. From the first days of its independence, the goal was to become a developed, sustainable, democratic state. In a relatively short period, profound structural and institutional transformations were carried out that laid the foundations of a multi-structured economy, and principles for secular, pluralistic, and democratic governance. The Economist named Uzbekistan its Country of the Year for 2019.

A large-scale reform programme by the newly-elected President Shavkat Mirziyoyev was launched in 2017, creating a milestone in the nation’s development. Progressive democratisation, based on rule-of-law, human rights and freedoms, more government accountability and openness, and improving quality of life were at the forefront of state policy.

Government policy has become increasingly focused on long-term sustainable development and economic growth, as well as social wellbeing. New strategic priorities have been established in the spheres of public administration, economic liberalisation, social policy, and foreign relations. National development guidelines have been adopted on human rights, gender equality, schools, higher education, the transition to a green and digital economy, innovative agriculture, and environmental protection.

Forced labour and child labour have been eradicated, ending an international boycott of Uzbekistan’s cotton and textiles industries. In 2020, Uzbekistan was elected to the UN Human Rights Council. The country adopted a National Human Rights and Gender Equality Strategy including ratifying the UN Convention on the Rights of Persons with Disabilities.

Human-capital development has become a priority in a country where more than 60 percent of its 36 million people are under the age of 30 and the most populous in Central Asia. The introduction of the English language and Western education standards has becoming widespread, and is considered an effective tool to counter religious extremism, radicalisation, and predominately Muslim but secular ethnically diverse country.

Broad public support for Mirziyoyev’s reformist course ensured his re-election in 2021, and the adoption of a development strategy for deeper and wider modernisation — reforms that have become irreversible. A focus on human rights and dignity, a vibrant civil society, a welfare state, and sustainable, environmentally friendly and inclusive development have been put at the heart of the transformation.

The fight against corruption has become the highest priority of state policy, with a dedicated anti-corruption agency being created.

To consolidate these important values, a major constitutional reform was initiated. Citizens have taken an active role in shaping the new constitution in a nationwide discussion. Tens of thousands of proposals from citizens were considered by a Constitutional Commission, consisting of MPs, senators, and representatives of civil society. The president has proposed initiatives for future inclusion, including the abolition of the death penalty, the establishment of Miranda Rights, and Habeas Corpus principles.

Trade & Investment

From the first days of Uzbekistan’s independence in 1991, the country set the goal of economic transformation. In a relatively short time, structural and institutional transformations were carried out. A predominantly agrarian economy, with abundant natural and human resources, has been rapidly transformed into the most diversified Central Asian economy in a blossoming, emerging market.

The reform programme has opened the country, and dramatically accelerated the liberalising economy. The doors for foreign capital and advanced technologies are actively sought by providing in law additional guarantees and benefits to investors. Uzbekistan’s place in several international rankings, including the Index of Economic Freedom, the World Bank's Doing Business Index, the OECD Country Risk Rankings, and the World Open Data Rankings have all improved considerably.

The foreign exchange market has been liberalised. For the first time, Uzbek banks and enterprises received international ratings and entered world financial markets. International bonds in national currency were also issued. The country was admitted as a beneficiary in the EU’s GSP+ and the UK’s Enhanced GSP Scheme. The country is in the process of joining the World Trade Organisation.

Liberalisation and diversification of the economy have ensured Uzbekistan's continued inflow of investments, as well as positive economic growth, even during the pandemic. Despite Covid, Uzbekistan maintained positive economic growth for 2020 — a global rarity. The economy grew by 7.4 percent in 2021. The latest EBRD Regional Economic Prospects project GDP growth of 6.5 percent this year, and 7.0 percent in 2024 — with 4.9 percent and 5.4 percent the respective Central Asian averages.

In 2022, GDP reached $80bn with a record of $8bn in FDI. Over the past six years, Uzbekistan has increased investment inflows to more than 30 percent of GDP. This year, it hopes to attract about $30bn in investments — of which $25bn is private. The trade turnover of Uzbekistan in 2022 increased by 18.6 percent over 2021 — up to $50bn, doubling the figure from 2016. Exports reached $19bn (15.9 percent growth), another record.

Ambitious goals have been set for 2030, including increasing GDP per capita by 60 percent, joining the ranks of upper-middle-income states, and placing $120bn into the economy — including $70bn in FDI. In 2022, a programme was introduced to ensure the "green" growth of Uzbekistan until 2030, which provides for a transition to a green economy by reducing greenhouse gas emissions, increasing the capacity of renewable energy sources (up to 15GW, and bringing the share of total volume of electricity production to more than 30 percent). There are also water-saving technologies being introduced, and expansion of green areas.

Foreign Policy

Uzbekistan has substantially changed the nature of its foreign policy. A once inward-looking country has become open, active, and responsible for regional affairs. It aims to build strong relationships with its immediate neighbours, and strengthen the long-term development, prosperity, and stability of the region.

President Mirziyoyev has initiated intensive political dialogue which has resulted in a radically improved reginal political atmosphere. Mistrust, suspicion, rivalry, and hidden hostilities have been replaced with goodwill, trust, and co-operation. Acute regional issues of the delimitation and demarcation of state borders, water-use, and transport have been resolved.

The process has received UN support. In 2018, a General Assembly resolution was adopted, entitled Strengthening Regional and International Co-operation to Ensure Peace, Stability, and Sustainable Development in the Central Asian Region. Relations are restored, the visa regime is being liberalised, new border-crossing posts are being opened, and cultural and humanitarian ties are becoming the norm. With greater connectivity and transparency, Uzbekistan’s foreign trade turnover with its neighbours has substantially increased. Over the past four years, the trade turnover between Uzbekistan with the region’s states has increased 2.6 times and exceeded $6.5bn.

Uzbekistan promotes regional security and stability and is a leading supporter of processes aimed at peaceful settlement in Afghanistan. It is actively participating in the reconstruction of the country. Due to challenges of the Aral Sea disaster, water shortages and food security, Uzbekistan is embracing efforts to control climate-change.

In addition to this strengthening of relations with other Central Asian countries, Uzbekistan pays attention to multifaceted and mutually beneficial co-operation with strategic partners and international organisations. The main goal is to address global and regional challenges — climate change, health, food, and security threats —with investments in advanced technologies, and the application of knowledge and expertise to boost the transition to innovation and a value-added economy.

Uzbekistan has striven to become one of the centres of world politics. The country hosted the summits of the Shanghai Cooperation Organisation and the Organisation of Turkic States in 2022, and dozens of high-level international conferences, where Tashkent has put forward several important initiatives. The EU-Central Asia Connectivity Conference, held in Samarkand in November 2022, focused on improving connectivity between Europe and Central Asia.

As a double-locked country, Uzbekistan promotes the diversification of transport routes to open access to world markets, participating in the processes of global integration and co-operation.

Tourism & Culture

The government has placed a priority on the development of tourism, now considered a major part of the national economy. Uzbekistan has a rich, diverse, and unique heritage, which straddles several periods of history. Uzbekistan is famous for its architectural monuments, natural landscapes, magnificent palaces and the ruins of past civilizations.

It was one of the main crossroads of trade and culture on the famous Great Silk Road. In the Middle Ages, it became a major Islamic civilization centre for culture, science, and enlightenment — which gave rise to the Western Renaissance.

Philosophers and scientists of the Islamic Golden Age thrived on the territory of current Uzbekistan. Among them were mathematician Muḥammad ibn MŪsā al-Khwārizmī — who gave us the terms algebra and algorithm — and the religious scholar Al Bukhari, the author of the second holiest source of inspiration and knowledge for Muslims after Quran.

More than any other country in Central Asia, Uzbekistan boasts a number of unique historical monuments — more than 8,000 ancient architectural and archaeological sites. The fabled cities Samarkand, Bukhara, Shakhrisabz and Khiva, all with world-class sites included in UNESCO’s Cultural Heritage List.

That list also includes less intangible cultural treasures, such as the Navruz holiday, the khorezm lazgi — considered one of the most ancient dances in the world — shoshmakom, a vocal and instrumental musical style, and bakhshi, a performance of epic poetry and stories.

Uzbekistan has a 30-day visa-free regime for citizens of 94 countries, with five days of visa-free transit for 53 countries and e-visa regime for 57. The country considers itself the most tourist-friendly country in the region, and prides itself on being ranked one of the five safest countries for solo travellers.

There is a boom in the tourism and infrastructure sectors. The government subsidises the construction of hotels, increasing year-to-year, with a plan for 64,000 rooms by 2025. The government is implementing an open-sky policy and encouraging foreign air carriers to fly to Uzbekistan.

Part two of Lord Waverley’s series will appear in our next issue: Kyrgyzstan, Tajikistan, Turkmenistan.

About the Author

Lord (JD) Waverley
House of Lords, UK Parliament
Crossbench Member

Co-chair

All Party Parliamentary group: Trade & Investment
All Party Parliamentary group: Future UK’s Freight & Logistics sector

Founder

www.GoGlobal.trade


Cybersecurity Heroes: Cometh the Hour, Cometh the Geek

This is the story of John Moran, who has channeled problem-solving, lifesaving and protection skills gained as a police officer, firefighter, EMT, and Homeland Security Task Force member into his role as technical leader for Tufin - The Security Policy Company.

[caption id="attachment_24831" align="alignright" width="300"] Moran as security.[/caption]

Police officer, firefighter, incident response veteran, and IT geek - spot the odd one out? Or do they all have a lot more in common than you might think…

When John Moran was young, he wasn’t hacking into NASA. Nope. He was dreaming of becoming a firefighter or a policeman. Jobs that keep people safe. So perhaps it’s no surprise that after a varied career in IT, public safety, computer forensics, and incident response, he was drawn to join Tufin - helping to create products and solutions that protect critical national infrastructure and key organizations.

Tufin? Nothing to do with fish or fins. Described as ‘the’ security policy company – Tufin is renowned for its ability to deliver better visibility, automation and easier compliance for large complex enterprises and critical national infrastructure and it serves vertical markets such as utilities, banks, insurance companies and telcos.

The Journey from Llaw Enforcement to Laptops

Moran has had a unique career path, but there was a natural flow. His passion for public safety began at high school - he worked first as a volunteer firefighter, then as an EMT. “After high school I wanted a career in law enforcement, so I began working as a full-time emergency dispatcher and part-time police officer to gain experience,” he explains. “While working nights as a dispatcher there were some manual processes that I thought we could improve, so I taught myself some simple Visual Basic and starting writing software. That really sparked my interest in IT and later earned me a job offer from the County’s IT department,” says Moran.

“My first exposure to computer forensics was during a computer networking class, and I immediately knew I needed to learn more. Computer forensics was the perfect mix of the investigative aspect of law enforcement I enjoyed and the deeply technical skills I had been developing. A BS in Computer Forensics and a few certifications later and I was fortunate enough to earn a spot with the Maine State Police Computer Crimes Unit,” says Moran.

Moran investigated a whole range of cases from child exploitation, to hacking, and homicide. “My programming and network experience gave me a unique skillset, which I was able to leverage working on cases with the US Secret Service and as a member of a US Homeland Security Human Trafficking Task Force,” he explains.

[caption id="attachment_24832" align="alignleft" width="300"] Technical Director, Business Development, Tufin: John Moran[/caption]

“It was the work I did with the Secret Service that sparked my interest in breach investigations and incident response. I decided I wanted to pursue incident response in the private sector, so I returned to school, earning an MSc in Information Assurance,” explains Moran.

Moran’s first role in the private sector was as an incident response analyst for a global consulting company. While the technical work was largely the same, this was his introduction to the business of security and incident response. “There is a part of me that is always asking ‘how can we do this better?’. Whenever I had an idea, the response was always the same: ‘talk to product management’. That’s what led me to go back to school one last time for an MBA and to pursue my next career in product management.”

Moran then went on to work as a Senior Product Manager for a Security Orchestration, Automation, and Response (SOAR) provider. It was there that he was first introduced to Tufin. “We created an integration between our SOAR solution and Tufin, and I could immediately see the incident response value”, says Moran. “The network visibility Tufin provides, the ability to perform network path analysis queries – this is data I wish I had when I was performing incident response consulting.” When a position opened at Tufin a little later, Moran jumped at the opportunity.

“Joining Tufin has given me an opportunity to evangelise our value to enterprise SecOps teams. Although many think of Tufin as a security policy management company, the level of visibility we have into the network gives us the ability to help assess and measure risk in unique ways. That is what really gets me excited about what we do at Tufin”, he says.

The Threat Landscape Today

Unlike decades ago, it’s less about bragging rights. “These days, it’s less about who can hack the ‘unhackable’ - there's much more of a financial motivation to hacking,” says Moran. “The biggest challenges today are protecting legacy infrastructure - where the focus is trying to replace what you can and securing what you can't replace. It's all about prioritising risk, and it's a continuous evolving process.”

What are the biggest threats are out there at the moment and what's currently exposed? “Critical national infrastructure is always a target, and within that there has been a noticeable spike in attacks on healthcare,” notes Moran. “Recently Gartner talks a lot about CTEM, continuous threat exposure management,” says Moran. “The question that CISOs tend to ask is, "What is the most likely to get me on the news?!" Tufin allows enterprises to combine vulnerability data with network data to see which vulnerabilities are contextually exposed to untrusted networks and thus pose the greatest potential risk. That's what is really important for a CISO - not that a risk exists, but that it's exposed,” he explains.

“Tufin is not focused on any one vertical. We have customers in finance, manufacturing, critical infrastructure, retail, government, healthcare, and many other industries. What our customers have in common are some of the most complex, hybrid, and geographically distributed networks in the world. Networks for which downtime or a security incident can result in millions of dollars in losses or even impacts to health and safety. Delivering accurate and reliable visibility, compliance, and automation for such critical networks is something that I, and everyone at Tufin, take tremendous pride in”, says Moran.

By Naomi Snelling