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Craig Wright’s team of economists at the Royal Bank of Canada just put out their latest forecast of the behaviour of central bank governors here and in the U.S. Their forecast? Both central banks will be aggressively lowering rates to fight economic uncertainty.

In the U.S., RBC had earlier forecasted a cut of 50 basis points over the next three meetings of the U.S. Federal Reserve Board. RBC now predicts that the Fed will take the overnight rate down to 75 basis points over the next three meetings,  from 4.50% to 3.75%

In Canada, the easing won’t be as sharp, RBC says, but rates will drop 50 basis points on the two fixed action dates in January and March. That would take the overnight rate here down to 4.0 %.

Here’s an excerpt from the forecast:

While an increasingly large drag from the trade sector and moderating inflation pressures are likely to see the Bank shift into rate cut mode, the strength in the domestic economy in the third quarter is likely to delay any downward adjustments to rates by the Bank until early 2008.

The combination of slower US growth, the elevated Canadian dollar, volatility in Canadian financial markets and moderating inflation rates will likely see the Bank cut the overnight rate in 25 basis point increments at both the January and March fixed action dates. The near-term risk to our view is that the Bank moves sooner than we forecast and cuts the overnight rate at the December 4 rate setting. However, our expectation that this week’s report on third quarter growth will show that domestic demand grew at a robust 4.5% annualized pace, combined with the very firm tone in the labour market data in recent months, means we lean towards the Bank holding the policy rate at 4.5% at its next meeting.  

Going into 2008, we expect the Bank to lower the overnight rate to offset the sizable increase in the restraint coming from the trade sector on the pace of economic growth. In the third quarter, net exports are expected to trim the quarterly growth rate by about 3 percentage points and our modeling of the trade sector, based on the current level of the currency and weakening in US demand, points to another substantial drag in the fourth quarter. With some slowing in domestic demand growth, the pace of GDP is expected to slow further in the final quarter of 2007. This, along with moderating core inflation, will likely lead the Bank to an easier policy stance.

Today in Dar es Salaam, Tanzania, Prime Minister Harper (left, a little overwhelmed by the fervour and size of the crowd that greeted him) announced that Canada would contribute $105–million over five years to a new fund of $500–million aimed at improving the health of impoverished women and children in Africa and Asia. The program is called the Initiative to Save a Million Lives.

The Conservatives, in their campaign platform for the 2006 election, committed to doubling Canada’s budget for what is called the International Assistance Envelope or IEA by 2010 compared to 2001 levels. That sounds good but, by some other benchmarks, it’s less impressive.

The key measure used by Canada and the Organization for Economic Cooperation and Development (OECD) for aid compairs official development assistance (ODA) to Gross National Income (GNI), a measure of a country’s wealth.

In June 2005, all parties in the House of Commons — including the Conservatives under then Opposition Leader Stephen Harper voted government “…to honour the Millennium Development Goals and to commit immediately, through a plan, to increase Cana da’s aid budget by 12 to 15% annually to achieve an aid level of 0.5% of Canada’s Gross National Income by 2010 and 0.7% of Canada’s GNP by 2015.”

The key target, for this discussion, is the 2010 number: 0.5 per cent.

So where are we now?

According to the OECD, Canada’s ODA/GNI index in 2006 — the most recent year for which data is available — was 0.30. In other words, for every $100 of gross national income, the federal government spent 30 cents on international aid.

Among the 22 OECD countries, this put Canada in 15^th spot. Sweden was tops with an index number of 1.03 ($1.03 spent on aid for every $100 of GNI) and Greece was at the bottom at 0.16. The U.S. was second worst at 0.16 while the UK was was 7^th at 0.52 and France was 10th at 0.47.

So where are we going? The Conservatives,  in that campaign platform, committed to moving towards the OECD average although there is no timeline in the Conservative campaign platform. The OECD average in 2006 was 0.46 or 46 cents spent on aid for every $100 of GNI. Canada’s aid levels, then, was well back — or 17 per cent behind — the OECD average.

No one knows where the OECD average will be in 2010 but even by doubling international aid, as the Conservatives have promised, our ODA/GNI is likely to drop, according to Finance Department documents I obtained through an Access to Information request. Here’s a paragraph from that document which was written by Finance officials in March, 2006:

Budget 2006 re-affirmed Canada's commitment to double the international assistance envelope (IAE) by 2010 from its 2001 level. This will bring the IAE to over $5–billion by 2010-11. However, despite these annual increases, Canada's ODA/GNl ratio is expected to dip over the next few years, from the 0.35% recorded by the OECD in 2005 (remember in 2006, it had already dipped, says the OECD to 0.30 – Akin) to approximately 0.29% by 2010 (rough estimate only).

The Commonwealth Summit has ended here in Kampala, Uganda and this morning — its around 10 pm eastern on Nov. 25 or 6 am on Nov. 26 Kampala time as I write this — we head to Tanzania for a quick visit.

In Tanzania, Prime Minister Harper will meet with Tanzanian President Jakaya Mrisho Kikwete. The two men will tour a school in Dar Es Salaam and we are expecting an aid announcement. We will also visit with some Canadian High Commission officials.

That’s about it, though, for Tanzania. No chance to visit Mount Kiliminjaro or anything. We are in the country at about 10 am local time and out of the country at 6 pm local time.

Then it’s back to Canada on a flight that’s expected to take about 18 hours with another stop to refuel in Nice.

Yesterday, the leaders had a last meeting behind closed doors at the Munyonyo Conference Centre — a beautiful resort on the shores of Lake Victoria. The 48 leaders who attended this year’s summit each had their own suite in a new building at this resort constructed specifically for the conference. (middle right) This building was leaders-only, no staff were allowed to stay there. Prime Minister Harper’s staff, such as his assistant Ray Novak and director of communications Sandra Buckler, were put up in older building on the grounds, called the Speke Resort.

Needless to say, with all the leaders here, there was a heavy security presence although not as heavy and omnipresent, I should add, as I found the security setup for the Montebello Summit earlier this year or other international meetings of heads of state that I’ve attended at the G8 or at NATO in Brussels. While we were out at the conference centre, we stopped to chat with some of the police officers there, many of who had received brand new Honda or BMW patrol bikes.  The Toronto Star’s Richard Brennan (he’s wearing the shades and green ball cap)is a Harley Davidson owner. Both Brennan and the Uganda police officers are pretty proud of their bikes.

While the leaders were finishing up their meetings, I went for a quick walkabout of the the neighbourhood around our hotel. The hotel is just a block away from the Parliament of Uganda (top left). The tight security — spiked fences, guards with automatic weapons, and so on — always jumps out at someone whose office looks out over the relatively wide-open ‘security-lite’ space on Canada’s Parliament Hill.

 

 

Shortly after word broke of the Lake Victoria Climate Change Action Plan agreed to here at the Commonwealth Summit, Climate For Change — which has a long history of opposing the Conservative government’s environment plans — issued the following statement:

OTTAWA — Prime Minister Stephen helped move 53 Commonwealth nations backwards prior to vital upcoming Kyoto negotiations in Bali. 51 of the 53 countries attending the Commonwealth Conference, led by the United Kingdom, had intended the final Communiqué of the Kampala meeting to give momentum to the UN negotiations in Bali by calling for developed countries to accept binding targets after 2012. Unfortunately, because of Prime Minster Harper’s insistence, the Communiqué was significantly weakened and now only calls only for “long-term aspirational” targets.
 
“Harper is deliberately trying to sabotage the upcoming Kyoto meetings in Bali by killing any potential momentum that may have come out of this meeting,” said John Bennett, executive director, ClimateforChange.ca. “George Bush and the oil industry will be happy today.”
 
The Harper and Bush governments have consistently stated that they would only consider a global agreement on binding targets for greenhouse gases if it “included major polluters”, like China and India. According to sources, this theme was brought up again by Harper during closed-door deliberations at the Commonwealth Summit.
 
“It is unreasonable to expect a developing country, like India, to reduce it’s emissions at the same rate as a Canadian when the average Canadian emits 23 tonnes of greenhouse gases — 10 times more than the average Indian,” said Mr. Bennett. “It is unfair an alienates the very countries we are trying to encourage.”
 
Canada, as it did in the original Montreal Protocol negotiations, needs to acknowledge that a countries' level and nature of commitment must be differentiated according to their per capita emissions and wealth. This “differentiated responsibility” approach is indeed seen, 20 years later, as a major reason for the success of the Montreal Protocol.
 
But the Prime Minister isn’t interested in a successful Kyoto Protocol. The Prime Minister knows his logic is flawed but this is not about logic. It is a insincere public relations ploy written by the white house to protect U.S. and oil industry interests (including those operating in the Tar Sands).

Prime Minister Harper has once again embarrassed Canada on the world stage.

Prime Minister Stephen Harper was a great admirer of former British Prime Minister Tony Blair, not so much for his particularly political philosophy, but for the way Blair, like Harper, managed to bring disparate elements of a political party together and lead it out of the political wilderness and into power. The two men had a good relationship.

But now there is a new man at 10 Downing Street — Gordon Brown. And just yesterday, Gordon Brown’s men were running around the Commonwealth Summit telling anyone who would care to listen that Canada was the lone stick-in-the-mud when it came to getting anything done to prevent global warming. Brown and Harper have run into each other before —  Brown, of course, was Tony Blair’s long-serving Finance Minister — but this is the first time the two have met this way prime minister-to-prime minister. Journalists were allowed intot the meeting at the beginning to snap a picture of the two men and as soon as one of us tried to ask a question, we were quickly hustled out. My sources in the PMO tell me that soon after the journalists left, all the advisors and officials did, too. The two men were alone for the better part of the 45–minute meeting.

So: The account we have of this meeting would presumably come from Harper himself who told his staff what happened who then wrote up this note so that I could pass it along to readers of this blog:

Reflecting the strong agenda of issues of common concern, Prime Minister Harper and Prime Minister Brown had a substantive and cordial bilateral meeting.

In addition to reaffirming the depth, breadth and quality of the bilateral relationship, exemplified by extensive trade and investment linkages and science and technology partnerships, the leaders discussed a number of items on the international agenda.

Leaders discussed Afghanistan where Canada and the UK share the objective of supporting the government of Afghanistan, in collaboration with other international partners, re-establish democracy, a strong judicial system and respect for human rights, and promote internal reconciliation in Afghanistan.

Climate change was discussed, with both leaders agreeing on the need to build momentum towards a substantive outcome of the December UN meeting on climate change, which will be held in Indonesia. Prime Minister Harper repeated his conviction that climate change is a global problem requiring a global solution which, in order to be effective in reducing green house gas emissions, will necessarily include all major emitters.

Prime Minister Stephen Harper had a one-on-one meeting today with India’s Prime Minister, Manmohan Singh.  The big news: Prime Minister Singh accepted an invitation from Harper to come and visit Canada. Reporters were allowed into the meeting only long enough to take a photo of the two men at the beginning so we must rely on this account of the meeting, provided to us by Harper’s communications staff:

Reflecting the diverse nature of Canada-India relations, Prime Minister Harper and Prime Minister Singh had a warm discussion of a broad range of issues. Both leaders expressed pleasure at the opportunity to meet and Prime Minister Harper extended an invitation to the Indian Prime Minister to visit Canada, which the latter said he would be delighted to accept given his personal links to Canada, including a university scholarship in his name.

Leaders reaffirmed the strong trade and investment relationship India and Canada enjoy, recognising that there is unrealised potential, and discussed the opportunities in a relationship which has developed from close links forged immediately after Independence

Prime Minister Harper recognized India’s extensive involvement in development and reconstruction in Afghanistan as a complement to Canada’s extensive involvement. Prime Minister Singh underscored their long term commitment to bringing about transformational change in Afghanistan. Prime Minister Harper encouraged India to play an active and constructive role on Burma and Prime Minister Singh confirmed that India is joined with the international community in promoting democratic change in Burma, engagement with leaders, notably Aung San Suu Kyi.

Prime Minister Harper offered Prime Minister Singh congratulations on Indian High Commissioner Sharma’s confirmation as Commonwealth Secretary-General, succeeding New Zealand’s Don McKinnon.

India's Kamalesh Sharma was just named the new Secretary General of the Commonwealth, replacing New Zealand's Don McKinnon. McKinnon is wrapping up and eight-year term.
Sharma becomes the fifth Secretary General of the organization. The first one, incidentally, was Canada's Arnold Smith, who held office from 1965 to 1975.
Sharma takes over from McKinnon on April 1, 2008 and his term will run until March 31, 2012.
“It's a tough job I'm taking over but I do so with confidence and enthusiasm,” Sharma said. “The Commonwealth is a great global good.”
Sharma's last posting was India's High Commissioner to the United Kingdom.
 

The Commonwealth Summit got underway this morning with an elaborate colourful ceremony of song and dance and then leaders got down to discussing the issues of the day. Reporters were not allowed in to either of these events so, in the meantime, we went to cover a visit by Secretary of State Helena Guergis and Edmonton MP Rahim Jaffer to a the Kawempe slum here in Kampala.

This is a tremendously poor area – with makeshift homes with no running water and no indoor plumbing — with a population of 332,000, roughly the size of metropolitan Windsor, Ont. The people we saw there were mostly children (left) who were very friendly abd curious about us and all of our gear and women. We saw only a handful of men over 20.

Guergis and Jaffer first visited the Little Stars school, a school of 400 students between 6 and 12 were they mostly learn about sanitation and the importance of sexual abstinence to prevent the spread of HIV and AIDs (bottom). The children, in fact, sang a song about washing hands for us. The African Medical and Research Foundation (AMREF), a Nairobi-based organization with a strong presence in Canada, provides some funding to the water and sanitation projects that help the school and the community it serves. The Canadian International Development Agency, the federal government department, provides some funding to AMREF.

Jaffer, who is engaged to Guergis (right, Guergis in red, Jaffer to her left), was born in Uganda but came to Canada when he was one-year-old after his family fled during Idi Amin’s reign. Jaffer told the schoolchildren how pleased he was that his country, Canada, was able to provide some help to his birth country. Jaffer still has some uncles who live in Kampala and visited some of them while he was here.

Guergis took some questions about Canada’s commitment to African aid. The Conservatives, in the last budget, committed to doubling Canada’s overall international assistance budget by 2010 compared to the 2001 level of $2.4–billion.

That commitment, though, sounds less impressive when looked at as a percentage of the country’s wealth. With government coffers overflowing with windfall revenues from high commodity prices, aid critics say we ought to be able to afford to do more. In 2005, the ratio of Official Development Assistance (ODA) to Gross National Income (GNI) was 0.35 per cent. You’ll remember Bono and others were trying to exhort Canada to raise that to 0.7 per cent. But even though the aid budget will double by 2010, the ODA/GNI ratio will actually drop to less than 0.29 per cent.

Whether it is Montebello for the Three Amigos summit, Brussels for a NATO heads of state meeting, or, this week, Kampala for the Commonwealth Heads of Government, a large multinational meeting can be a big headache for the local population. Roads and facilities here are shut down for security purposes creating tremendous traffic tie-ups and long delays.

To try and alleviate some of the downtown congestion in Kampala, the Ugandan government declared a two-day national holiday today and Friday.

Canadian Press’ Alex Panetta, who is among the journalists travelling with the PM this week in Uganda, picked up on a fun story that made the front page of a Kampala paper. A local governor ordered sex trade workers to stay away from the Commonwealth hotels and, even though prostitution is illegal in Uganda, the government set up what were dubbed ‘love zones’ in another part of the city.

The paper quoted one “girl of the night” who complained that it was unfair. She told the paper that “these are the politicians we elected — and sometime serve at night” and they ought to have let them participate in the economic windfall of the Commonwealth.

One woman said she hoped to make enough money during the few days of the summit to be able to start up her own business.

 

The Canadian Forces Polaris carrying the Prime Minister, his aides, and reporters to the Commonwealth Summit left Nice, France after refueling just before 7 a.m. local time and we landed at Entebbe, Uganda around 4 pm local time. (left)We’d left the first snowfall of the year 18 hours earlier in Ottawa and walked into bright sunshine and 27 C weather in Entebbe. Entebbe, of course, was the scene of the famous raid by Israeli forces to rescue Jewish hostages in 1976. You can still see bullet holes on the flight tower at the airport (bottom right).

Most of us slept from Nice to  Entebbe, the PM included, I assume. We don’t know, of course, what the PM was up to at the front of the plane in the spartan cabin, once jokingly nicknamed the ‘Taj Mahal’ by Prime Minister Chretien. Harper did not come back to talk to reporters nor did we expect him to.

In fact, the only time we saw Harper at all this day was when he got off the plane and got into a car to take him to the Kampala resort that all the leaders are staying in.

The rest of us piled in a bus and headed to our hotel in Kampala, a 40–minute drive north of Entebbe.

Uganda is a verdant, hilly country. It is a poor country but not, as Canadian Press reporter Alex Panetta told us on the bus ride in, as poor as many other African countries. Alex has travelled to other African countries with other prime ministers and, in his view, Uganda looked relatively wealthy so far as sub-Saharan nations go.

The hotel we are in is called the Imperial. We are its first customers. The carpet, PMO advance staff told us, had literally been installed in our rooms that day. The hotel is new but not yet completely built. Only one elevator bank is working; the place has an odour of curing cement; some exterior and interior walls have not yet been finished and, perhaps most disconcertingly for someone who has been up in transit for 36 hours, there are no mattresses on the beds — only box springs. Oh well, at this point, I’m just happy to be sleeping in a bed.