text:
Lack of Investment in Infrastructure
Putting Brake on Growth
Economic development is being blocked
by a $25 billion backlog of infrastructure investment to upgrade
water, energy and land transport, the Committee for Economic
Development of Australia says. The committee, a business think
tank, blames federal and state governments for stripping money
from the public investment required to meet future development.
The committee says much of the nation's infrastructure is
at a crossroads after two decades of underinvestment. It points
to a mismatch between public and private sector capability,
saying the gulf in infrastructure needs has widened despite
Australia's world-class management skills and technical expertise.
"Even with large increases in tax revenues and aggressive
'dividend stripping' of government trading enterprises, the
infrastructure investment required to meet Australia's present
and future needs has not materialised," it said. "Simultaneously,
large capital resources are accumulating in the private sector,
particularly in superannuation and managed funds, which could
be increasingly tapped for infrastructure investment."
The committee said private investment
in new energy infrastructure had significant potential, but
governments continued to delay or avoid investment in new
capacity, particularly in those states that had retained public
ownership. Supply of significant new works through public-private
partnerships seemed unlikely, other than for toll roads. The
committee also blamed the long and costly bureaucratic processes
afflicting infrastructure planning, saying public administration
working alone "seems no longer up to the job". The
fall in public infrastructure investment was highlighted by
the steady drop in government capital spending, now down to
3.6 per cent of gross domestic product, about half the level
of 30 years ago. It said government spending policies and
"vexatious Commonwealth-state financial relations, and
political considerations" presented "an apparently
insurmountable obstacle to overcoming the backlog in Australia's
The Federal Opposition yesterday said
the report was an indictment of the Government's neglect,
following so quickly an International Money Fund report which
cited the constraints that were hitting export performance.
The shadow treasurer, Wayne Swan, raised the possibility of
Labor looking to the British Government's model of greater
private investment in traditionally public enterprises, including
building schools, hospitals and public housing. He said Labor
would consider private-public schemes as part of dealing with
the urgent need to remove infrastructure bottlenecks that
were "now seen to be a real handbrake on growth".
The Business Council of Australia endorsed the committee's
report and called for state and federal governments to unite
in a more constructive way. The council's chief executive,
Katie Lahey, said getting the right signals for private investment
could only be done "by removing the myriad of obstacles
and barriers to investment and planning that exist because
of the lack of overall co-ordination between the Commonwealth
and the states".
From Sydney Morning Herald (subscription),
Australia, by Mark Metherell, 15 April 2005
Public Private Partnership Law Deals
Submitted - First French PPP Concluded
French Public Private Partnership (PPP)
project - research institute within the CHNO (Centre Hospitalier
National d'Optalmologie) des Quinze-Vingts eye hospital in
Paris considered as the first PPP in France. Linklaters has
advised the "Caisse des depots et consignations",
the "Caisse nationale des caisses d'epargne" and
ICADE for the project involving the design, financing and
creation of a clinical and biomedical research institute on
the site of the Centre Hospitalier National d'Ophtalmologie
(CHNO) des Quinze-Vingts (Central Eye Hospital) in Paris.
Established in the 13th century (by Saint -Louis), the CHNO
is one of the oldest and most prestigious eye hospitals in
the world. The Institut de la Vision is a partnership between
the CHNO, the Universite Pierre et Marie Curie, INSERM and
the Fondation Adolphe de Rothschild. The total cost of the
30-year project is estimated at EUR 30 million. The deal is
about to be signed, with construction due to start this month,
and completion expected in just over 19 months time.
The transaction has been reported in
the French press as the first PPP project since the French
government launched its recent PPP policy. In allowing public/private
partnerships, the government aims to speed up the completion
of complex public building constructions in France. It is
also the first important healthcare sector PPP outside the
"Plan Hopital 2007" to be awarded. Paul Lignieres,
head of public law - PPP department, Linklaters in Paris,
said: "We are proud to have taken part in such a pioneering
project which will open the way to similar partnerships between
public and private sectors in France. Considering the long-standing
public tradition of our country, this is indeed a big step
forward". The Linklaters team included Paul Lignieres
(public law/PPP), Bertrand Andriani (projects), Simon Ratledge,
Ruxandra Lazar and Nicolas Panayotopoulos.
From Lawfuel (press release), New Zealand,
15 April 2005
Voters Rail Against
Public Services
London - "Would you wipe somebody's
backside for five pounds an hour," nurse Marion Brown
asked Prime Minister Tony Blair on live TV. Great-grandmother
Valeria Halsworth told him she yanked out seven of her own
teeth because she couldn't find a dentist. "It would
be nice for somebody to take them out properly for me,"
she said. Voters feel passionately about the state of their
public services. Health, education, crime and the country's
much lamented transport links are key battlegrounds in next
month's election. The railways have long been the butt of
media scorn, as leaves on the tracks, snow on the lines or
too much sunshine bring parts of the network to a virtual
halt. "Overcrowded, late, cancelled. You name it, it's
happened," said salesman Dale Chatfield, 49, after commuting
in to a gritty London station. "The new carriages are
like cattle trucks." In a recent heatwave, Londoners
crammed into aged train carriages in conditions deemed unfit
for transporting cows. Temperatures on the world's oldest
subterranean rail network in the capital topped 40 degrees
Many voters cannot fathom why Britain
compares so poorly. "French trains are fantastic. When
you look to Europe, we don't fare too well," said Marco
Nadini, 23, a recruitment consultant who calls the service
from his southwest town to London "awful," adding
"the trains are disgusting". Aware the public services
can swing votes, Blair's Labour party and the Conservatives
are engaged in an all-out war over their promises to make
things better. The cherished National Health Service (NHS)
is on the front line. Health topped voters' priorities in
a recent MORI poll. Education was third after race/asylum
and crime was fourth.
Blair - expected to win a third term
on May 5 - argues that Labour has made progress, bemoaning
a legacy of under-investment in the public services after
18 years of Conservative rule. But the Conservatives say the
world's fourth-richest country deserves better than hospitals
riddled with a killer superbug, schools beset by truancy or
cities plagued by violent crime. They accuse Blair of wasting
billions of pounds of taxpayers' money over the past eight
years without results. Many voters agree cash has been squandered,
polls show. "My poor doctor is grossly overworked --
he showed me his list of patients," said Alex Starkey,
81, emerging from an ugly tower block at a sprawling London
hospital. "He's completely demoralised and is thinking
of packing it in." Campaigning on a message of cleaner
hospitals, the Conservatives have homed in on a rise in the
MRSA superbug. Party leader Michael Howard says his mother-in-law
died three years ago of a hospital-acquired infection.
Public Scepticism - Labour
has invested heavily in the public services. There are more
nurses, doctors, teachers and policeman than in 1997 when
Blair came to power and hospital waiting times are down, government
figures show. But scepticism over statistics feed into a public
mood that services overall have not got better or not fast
enough. "People who've had a good experience think that
they're lucky and don't think the public services have generally
improved," said Nick Pearce, director of the centre-left
think tank, the Institute for Public Policy Research. That
perception gap could prove Labour's biggest enemy, although
any Conservative attack on Labour's performance on the public
services is blunted by its own poor track record.
Former prime minister Margaret Thatcher
advocated reduced spending on public services and privatisation
of state-run industries. The 1996 privatisation of the railways
was widely deemed a failure. Howard means more of the same,
Labour charges, calling its health policies elitist and a
first step to scrapping the NHS. In contrast, it was Labour
in 1945 that put in place the provision of welfare services
by the state and founded the NHS. But critics slam Blair's
target-driven NHS and education reforms and accuse the government
of fiddling the figures. The Conservatives unashamedly propose
spending less of the nation's wealth on the public services
than Labour. While the percentage difference is tiny, Labour
has seized on a Conservative plan to save 35 billion pounds
in government waste to claim the party will slash spending
on key services.
From Reuters.uk, UK, by Katherine Baldwin,
19 April 2005
A Cautionary Tale - Are Unsolicited
Proposals Worth The Effort?
Last February, Ontario released Building
a Better Tomorrow, billed as "A Discussion Paper on Infrastructure
Financing and Procurement'. The Paper makes clear that the
Government needs help from the private sector in tackling
some of the Province's infrastructure challenges, which are
many. The Paper welcomes the feedback, the creativity and
the capital that the private sector can contribute to the
development of the Province's economy. It also parallels a
mounting interest across Canada in public-private partnerships.
Last February, Ontario released Building a Better Tomorrow,
billed as "A Discussion Paper on Infrastructure Financing
and Procurement'. The Paper makes clear that the Government
needs help from the private sector in tackling some of the
Province's infrastructure challenges, which are many. The
Paper welcomes the feedback, the creativity and the capital
that the private sector can contribute to the development
of the Province's economy. It also parallels a mounting interest
across Canada in public-private partnerships.
There is a growing rapprochement between
the public and private sectors. Now then is a good time to
revisit the place of private sector proposals to provide goods
and services, submitted to the public sector on an unsolicited
basis. This article looks at why the public sector in Canada
appears to remain aloof to an idea which, on its face at least,
offers the possibility of forging new relationships, as well
as the potential for achieving a more efficient and cost-effective
means of delivering services to Canadians. It also examines
some internal public sector dynamics that private sector companies
should take into account when planning to make a proposal
to a public a sector entity that is subject to the trade agreements.
familiar comment heard from those who oppose the use of unsolicited
proposals is that Canada's major trade agreements - the North
American Free Trade Agreement (NAFTA), the World Trade Organization
(WTO) Agreement on Procurement, and the Agreement on Internal
Trade (AIT) - allow for competitive bidding only. It's not
that the trade agreements explicitly forbid the use of unsolicited
proposals. Rather, it's that unsolicited proposals do not
fit neatly into the language that lays down competitive bidding
as the preferred method of procuring goods and services. For
example, Article 501 of the AIT provides that the purpose
of the procurement chapter of the Agreement is to "establish
a framework that will ensure equal access to procurement for
all Canadian suppliers in order to contribute to a reduction
in purchasing costs and the development of a strong economy
in the context of transparency and efficiency."
Detractors argue that a public sector
entity that receives and evaluates an unsolicited proposal
is in breach of the principle set out in Article 501 on the
basis that "if it isn't expressly authorized, it's illegal"
- a weak argument, in light of the fact that the AIT includes
explicit exceptions to the principle of competitive bidding.
In fact, it could be argued, under the right circumstances,
that an unsolicited proposal amounts to one of the stipulated
exceptions. As weak as the detractors' argument is, those
who support the acceptance of unsolicited proposals have taken
to heart the old adage that a flow of words is no proof of
wisdom, and have made little if any effort to try to explain
how the trade agreements allow the practice. Some justification
is called for, at least from those who have put in place the
infrastructure to facilitate unsolicited proposals.
MERITS OF UNSOLICITED PROPOSALS - Quite
apart from the legal status of unsolicited proposals under
the trade agreements, a view offered in defense of unsolicited
proposals is that they promote a thoughtful, non-traditional,
value-added approach to the management of government operations
and service delivery. According to this view, unsolicited
proposals are designed to encourage proponents to submit ideas
that are "unique, innovative, and valuable". This
view assumes that the private sector is capable of much energy
and creativity, which should be tapped in the interest of
the broader public good. Not everyone, however, shares this
view. Others hold that the private sector is rarely if ever
able to submit ideas that are truly 'unique', that can only
be shared with the public sector through an unsolicited proposal.
This view may be overly cynical, to the point where it loses
all credibility. It assumes that only the public sector is
capable of creativity (a reversal of the old clich� idealizing
the boundless genius of the free enterprise system).
These commentators are not afraid to
go the extra length. They say that unsolicited proposals are
not likely to provide any substantive advantage in the quality
of the proposals over those submitted through the more conventional,
competitive bidding framework. And to the extent that an idea
is truly innovative, they add, it should be channeled through
the competitive bidding process. The final blow is their claim
that the quality of innovation may in fact be inferior, because
proponents may be tempted to use unsolicited proposals as
an easy opportunity to market their offerings, without offering
value or innovation.
- Aside from the legalities and the merits, it is not possible
to overstate the importance of having in place a robust infrastructure
for processing unsolicited proposals (such as a guideline
or other similar procedure or directive). Not having this
infrastructure makes it difficult if not impossible for any
public sector entity receiving an unsolicited proposal to
make sure that the proposal - and the process followed to
evaluate it - is credible, defensible, and is perceived that
way by the public. It leads to a clear disincentive to accept
unsolicited proposals. It is not surprising then that the
public sector often greets unsolicited proposals with fear,
sometimes even with scorn.
Closely related is the risk that the
public sector entity may end up at the centre of a storm of
controversy. As one experienced critic put it, the acceptance
for consideration of unsolicited proposals in the public sector
has a tendency to lead to abuse, and even collusion between
the proponent and the public sector participants who are responsible
to shepherd the proposal through the maze of government. Whether
this is true most of the time or in a small number of cases
only is anyone's guess. Still, everyone's anxiety level would
drop several notches if a well defined procedure were in place.
Where a policy decision is made to
accept unsolicited proposals, for a start there should be
a well articulated rationale. What is the public sector trying
to achieve? What broader public policy purpose is being served?
Such a rationale should be supported by a solid, well documented
procedure that provides guidance to would-be proponents, and
assists in defending any challenge launched against a contract
award. A well developed procedure would also help to ensure
that the public sector entity had the vision and the tools
to show that the decision to go ahead with an unsolicited
proposal served the best interest of the public.
- Notwithstanding the debate
swirling around unsolicited proposals, the fact is that the
public sector is beginning to recognize the value of working
closely with the private sector. For example, more and more
public sector entities are putting in place strategies where
they are moving from traditional purchasing where suppliers
are treated as providers of commodities and where only price
matters, to strategic partners where common business goals
and objectives are developed, and where the risks and rewards
are shared. There is a growing recognition that treating suppliers
as just vendors increases costs and reduces efficiencies.
Increasingly the procurement process is put within a wholistic
context that includes the entire lifecycle of the goods and
services being procured, which in turn helps generate cost
savings and the solutions that are so much needed to tackle
the challenges of modern government. While the private sector
typically welcomes the more collegial approach, it often lacks
the kind of nuanced understanding of the public sector environment
that is needed to do well. This is also true where private
sector organizations themselves take the lead in seeking a
closer and more synergistic relationship with the public sector.
Private sector organizations are often
puzzled by the lukewarm response their ideas receive when
they propose to the public sector. They generally assume that
if a proposal has merits, it will be picked up by the target
department or ministry, and the wheels almost immediately
put in motion to implement the project. As was noted above,
the absence of an infrastructure for handling the process
pretty much guarantees that the wheels - if they ever began
to turn - will come grinding to a halt. Another major factor
is simply the workings of government itself. Public sector
priorities and capital plans are typically set years ahead
of their intended implementation. If the subject matter of
a proposal is not already recognized in the target department's
agenda, it is improbable that the proposal will be received
with any level of interest. Civil servants have enough challenges
on their individual and collective plates and too few resources
to go around. Taking on another project that has yet to receive
the imprimatur of the appropriate internal authority is not
going to be attractive - not to mention that taking up the
mantle could be seen to be infringing the tendering laws.
Obviously what works for the private
sector does not necessarily work for the public sector. Rather
than spending time and effort pushing through a proposal that
no one asked for, it is better to take a strategic view of
what can be achieved, recognizing that the strategic view
also tends to be the longer view. It is best to work to socialize
the good idea and have it put on the target department's agenda.
This may take years, but once the public sector entity has
'bought in', the road ahead will be much smoother. However,
where a good idea makes it on someone's agenda, there is always
the possibility that the target department could decide to
compete the idea or proposal received - a risk that a private
sector proponent has to be prepared to live with. There is
also the related risk that proprietary information may be
shared. A private sector proponent will normally try to protect
the propriety information through a non-disclosure agreement.
But it isn't always possible to get public sector entities
to agree to bind themselves that way. There can be very good
reasons for that.
CONCLUDING REMARKS - In
principle, the potential value to the public of unsolicited
proposals is significant. But unless the related procedural
issues are addressed, there isn't likely to be much appetite
for unsolicited proposals in the public sector. Procedure
is integral to the success of the concept. It requires articulating
a centralized process that is designed to ensure the transparency
of both the evaluative criteria and the decision-making structure,
a necessary step to protecting the integrity of the decisions
made by public sector decision makers. Without the appropriate
infrastructure, it is often better to take a strategic approach
and to work with the particular public sector entity to help
shape the agenda of the future. This demands something other
than a purely transactional focus. Among other things, it
calls for a nuanced understanding of the workings of the machinery
of government at many levels, and a commitment to stay the
course for the long haul.
From Mondaq News Alerts, World, by Denis
Chamberland, 11 April 2005
Public Private Partnerships
(P3s): an International Disaster
"New Deal for Cities" poised
to spread faulty financing mechanism as new report exposes
100 "flawed, failed, abandoned" P3s in Canada, Australia
& the UK - Ottawa - A new report exposes 100 examples
of flawed, failed or abandoned infrastructure projects using
the controversial "public private partnership" (P3)
privatization model in Canada, Australia and the UK, undermining
the overblown claims of P3 backers. The report, produced by
health coalitions and national unions, comes as governments
at all levels persist with plans to privatize hospitals, roads
and schools under P3s, controversial long-term deals with
private finance and service corporations. "All governments
have a moral and fiscal responsibility to stop encouraging
this fatally flawed financing model," said CUPE National
President Paul Moist. "The federal government in particular
must show leadership by making sure that the 'New Deal for
Cities' boosts public investment, not
privatization through P3s."
The report, Flawed, Failed, Abandoned:
100 P3s, Canadian & International Evidence, documents
dubious P3 projects in the health, municipal and education
sectors, providing examples in provinces across Canada, as
well as in Australia, England, Scotland and Wales. It details
a litany of cost overruns,legal disputes, bankruptcies, environmental
disasters, and shoddy construction. Many P3s have been abandoned
outright as the steep terms required by the for-profit companies
become clear. Moist noted that P3s will only drain resources
away from public services. "Continuing with P3 privatization
in health, municipal and other sectors will only weaken public
services and redirect scarce resources to multinational companies,
eager for taxpayer-guaranteed profits," said Moist. The
report, written by Natalie Mehra of the Ontario Health Coalition,
was produced with support from the BC Health Coalition, the
Canadian Health Coalition, the Council of Canadians, the Canadian
Union of Public Employees, the Friends of Medicare/Alberta,
and the National Union of Public and General Employees.
From CNW Telbec (Communiques de presse),
Canada, 7 April 2005
The U. S. Free Trade
Agreement with Central America and the Dominican Republic:
How Everyone Benefits
Brett D. Schaefer: This year is going
to be tremendously important for America's trade agenda. The
Bush Administration and Congress have made great progress
in concluding free trade agreements with Australia, Chile,
Morocco, and Singapore. These trade agreements bring real
economic benefits to producers and consumers in the United
States and our trade partners. Our event today focuses on
what we think will be a pivotal issue in deciding the future
direction of America's free trade agenda: the free trade agreement
with the Dominican Republic and Central America (DR-CAFTA).
The proposed free trade agreement would liberalize trade between
the United States, the Dominican Republic, Costa Rica, El
Salvador, Guatemala, Honduras, and Nicaragua.
DR-CAFTA promises to provide significant
economic benefits for all the nations involved. It would promote
freedom and stability in a region of critical importance to
the United States. It offers a framework for increasing economic
growth that will bolster political stability and enhance hemispheric
stability and security at the crossroads of North and South
America. Moreover, the agreement would help spur growth in
job creation in the region, which would help mitigate illegal
migration to the United States. We are delighted to have our
distinguished panel of ambassadors and our moderator, John
Murphy, who know the subject of the Free Trade Agreement with
the Dominican Republic and Central America inside and out.
John G. Murphy: It's a real pleasure
to be here today at The Heritage Foundation. You do a fantastic
job leading the public policy debate in this country. I think
that this forum and the excellent level of interest that we're
seeing here today is an indication of your ability to move
that agenda. To open this program, let me make a few brief
remarks about the free trade agreement we call DR-CAFTA from
the perspective of the U.S. business community. First, I'd
like to disabuse all the listeners here today of the notion,
which is all too common, that this is a small trade agreement.
On the contrary, this is the largest free trade agreement
the United States has negotiated in the past decade. In terms
of the trade flows it will liberalize and turbocharge, we
see that today these six countries are purchasing more than
$15 billion in U.S. exports, which puts this market on par
with France and Italy, two G-7 countries. The business community
has rallied strongly behind this agreement. The U.S. Chamber
of Commerce, the Business Roundtable, the Emergency Committee
for American Trade, the Council of the Americas, the National
Association of Manufacturers, and the National Foreign Trade
Council are all hard at work making the case for DR-CAFTA's
approval as soon as possible. Just in the last weeks, we've
seen letters to the Congress signed by, in one instance, more
than 50 agricultural commodity associations strongly endorsing
the agreement. Dozens of high-tech groups have come out in
support, and recently about a dozen Central America-based
environmental non-governmental organizations have endorsed
the agreement, which they see as good for the environment
as well.
You can read all of our arguments on
the Business Coalition for U.S.-Central America Trade's Web
site, USCAFTA.org.
We'll hear today from the ambassadors that there are many
excellent reasons to support the agreement, but let me give
you three from the perspective of the business community:
new exports, higher incomes for workers, and more jobs here
in the United States. The U.S. Chamber of Commerce today is
releasing a series of state-by-state economic impact studies
that found substantial economic gains for workers and the
economy in this country. Employing a widely used input/output
economic model developed by the U.S. Department of Commerce,
we've generated data on how DR-CAFTA would affect the states
of California, Florida, New Jersey, New York, North Carolina,
and Texas. We also have data from a Louisiana study that uses
the same methodology. We've made a few very conservative assumptions
based on how previous free trade agreements have stimulated
commerce. The U.S.-Chile Free Trade Agreement, for instance,
has generated a surge in exports to Chile in its first year
of implementation of 30 percent. For our studies, we have
projected export growth at about half that pace: 17 percent.
Even with these assumptions, we found
that in the first year, DR-CAFTA would generate over $3 billion
in new sales across all industries just in the seven states.
It would boost payrolls by $685 million and would generate
20,000 jobs in year one in the seven states. Projecting out
over nine years, DR-CAFTA would boost sales by over $17 billion
in the six states for which we have data. The agreement would
also raise worker earnings by $3.5 billion and create more
than 100,000 jobs in the six states. Some say that 20,000
new jobs in the first year is not that much, given that the
U.S. labor force is about 140 million people. But how often
does public policy have such an overwhelmingly positive impact
on the broader economy? To aid us in broadening the perspective,
we have five ambassadors who are not just ambassadors for
their countries and for their region jointly, but also for
this free trade agreement.
To start off, I'd like to direct a
question to Ambassador Tomas Duenas, who represents Costa
Rica here in Washington: What are the economic impacts here?
We know that trade has flourished between the United States
and these countries under the Caribbean Basin Initiative (CBI),
which was created in 1984. Trade surpassed $30 billion last
year. If trade is already blooming, what is in the agreement
for these six countries, and what does it mean for the economic
development of the countries that you represent?
His Excellency Tomas Duenas: To put
the DR-CAFTA in economic perspective, DR-CAFTA is much more
than trade. More than 50 percent of the region's imports come
from the United States, and more than 50 percent of our exports
go to this market. In addition, 65 percent of the foreign
direct investment in our region is American capital, 65 percent
of the tourists that come to our countries are from the United
States, and many of us have come to school here, so there
is already a very strong bond between the Central American
and Dominican Republic region and the United States. There
is also, as John mentioned, a two-way trade of some $32 billion,
which is only behind Mexico and Brazil as trading partners.
So as small as we are as countries, as a region, we are an
important business partner of the United States, and we provide
a series of goods and services that provide this economy with
the productivity that has been quite apparent in the last
year. To put it in another perspective, we are more important
as business partners to the United States than Italy or France
or India or even Russia. We sell and we provide this market
with fruits, melons and bananas, flowers, coffee, the tilapia
fish that you buy, and medical devices--very sophisticated
medical devices are made in Central America to send to the
U.S. market, as well as computer chips. Trade has been growing
for a period of years.
What this is about is market access.
We already have market access through the CBI, and what the
DR-CAFTA provides is a means for that two-way trade to become
better in the legal sense. But market access is not totally
the essence of the DR-CAFTA. This is a very interesting scheme
by which market access is granted to our countries in exchange
for institutional reform that is going to be the backbone
of the DR-CAFTA effort. Sometimes it seems that we see trade
agreements only in the perspective of market access or trade.
In the commitments that our countries have made together in
an agreement with the United States, market access is very
important, but institutional reform is the principal backbone.
This agreement will provide extra access to our products as
well as new opportunities for U.S. goods and services in our
markets, which at some points has not been there, so the U.S.
economy today, which is built around services, will have a
new opportunity to expand. I'm talking about telecommunications,
financial services, insurance, and, of course, the tourism
industry. It also provides rules, and the rules are very important--rules
of transparency, the enhancement of investment climate, intellectual
property, consumer rights, e-commerce, government procurement,
etc., as well as a firm commitment to provide labor and environmental
best practices as we have been negotiating with and have committed
to with international institutions.
Finally, what DR-CAFTA will provide
is certainty. It will enhance, as I have said, the rule of
law; it will enhance the climate to invest; it will enhance
institutional reform; it will enhance the rights of consumers,
the rights of people in general, the right to compete. This
is a development tool, and probably one of the most important
ones that has come to our region. So I hope that you will
realize that this is, once again, much more than trade. This
is a development issue, and we certainly are committed to
it, and we hope that DR-CAFTA will be a reality very, very
John G. Murphy: Next, we'd like to
move the discussion to the topic of foreign policy, and I'll
direct this question to Ambassador Stadthagen of Nicaragua.
I think many people in this room, and possibly even the protestor
out in front of the building, remember the last time that
Central America was high on the agenda here in Washington.
It was the 1980s, when there were wars raging in El Salvador
and Nicaragua and implications for all of the countries here.
A great deal has changed since then. In fact, few regions
of the world have changed as much as Central A. But
how do you see this agreement as a foreign policy tool and
a way for the United States to make a difference in Central
America and the Dominican Republic?
His Excellency Salvador Stadt-hagen:
Twenty years ago, we would have talked about the domino theory.
We had a Marxist-Leninist government in Nicaragua, and the
Cold War was a reality in Central America. Twenty years ago,
we would have been discussing about the MiGs from Russia that
were coming to Nicaragua, about Sandinistas finishing what
was then the largest airport runway in Central America, still
out there in the jungles of Punta Huete. That's a reality,
a historical fact. Also a historical fact is the amount of
tanks, too heavy and totally impractical for the jungles of
Central America, that the Sandinistas had and the $12 billion
in debt that the Sandinistas left when they left power in
1990. Those are historical realities. Was El Salvador going
to be next? Was Guatemala going to follow and Honduras, which
also had a guerrilla warfare going on there supported by Cuba
and the Sandinistas?
But, thanks in no small part to the
leadership of President Ronald Reagan and some conservatives
here in Washington who helped us in the struggle for freedom
and democracy, we were able to turn back the leftist tide,
and now you see the progress we've had in the last 15 years.
We have consolidated democracy in every Central American country.
We have reformist governments committed to democratization
and the rule of law, no civil wars. The military are back
in their barracks, and we've had sustained periods of economic
growth. Yet our gains are not consolidated. There are still
forces of disorder and instability that are hostile toward
democracy in the region. That is precisely one of the reasons
why we insist that DR-CAFTA is more than a trade agreement.
It is the foundation of a partnership, a lasting partnership
with the United States, which will give us the means to develop
the region, the economy, to lock in the political and economic
gains we have made, and to consolidate our democratic institutions
and the security of the region. Without DR-CAFTA, we run the
risk of exacerbating the current problems faced by our region--problems
that, taken collectively, may pose a threat so serious that
they go beyond the limited resources and possibilities available
to our governments.
We have pervasive poverty throughout
the region, with huge unemployment rates, an exploding young
population, and a lack of opportunities for many job seekers.
Narco-trafficking and gang-related activities are on the rise.
Right now, about 50 percent of the narco-trafficking going
on from Colombia, from the south to the north, goes through
the Central American region, through our territory or territorial
waters. This scourge of organized crime enslaves our citizens
and threatens national and regional security. On the immigration
side, today, one out of five Central Americans lives here
in the United States--one out of five. Therefore, our human
links with the U.S. are something that will never go away.
We would rather not have our people leaving their country
of origin and coming into the U.S. seeking better opportunities;
but, unfortunately, that is not the situation, and we are
now exporting people. This situation is causing us grave social
and economic problems, let alone the serious brain drain we
are suffering; we are losing a large percentage of our young
and ambitious future leaders. They say migrants are probably
the most innovative and hardworking of people. We need to
generate employment. We need around 100,000 new jobs every
year just to accommodate the young people coming into the
labor market -100,000 new jobs in Nicaragua alone every year--but
with the current economic situation, it is difficult to achieve
such a target. As a consequence, conditions for civil and
political unrest are beginning to flourish.
The possibility of leftist movements
returning to power is also a reality. In Nicaragua, we are
seeing the upsurge of the Sandinistas, and there is a possibility
that they may come back to power in 2006. Unfortunately, it
would appear that their policies and their ideal of democracy
have not changed much since 1980s. If you saw the letter that
Daniel Ortega sent to Fidel Castro on the occasion of the
46th anniversary of the Cuban revolution, you will see what
I mean. In this letter, Ortega asserts that Cuba has developed
a social, political, and economic model that is truly democratic
when compared to those failed representative democracies imposed
by the oligarchic capitals and the Yankee Empire. My friends,
we all need DR-CAFTA. The democratic cause in Central America,
the Caribbean, and the United States makes it impossible for
all of us to see the region going backwards. DR-CAFTA represents
a mutual commitment of all of its parties to free trade, open
markets, and democratic institutions. Those are the enemies
of poverty. Those are the antidotes to poverty, corruption,
crime, and insurgency. We believe that DR-CAFTA can unleash
the pent-up ingenuity and initiative of our peoples as a chance
to compete and trade, and we will start new businesses, produce
new goods, and create new opportunities at home. Moreover,
we can diminish new threats to the region and the consolidated
gains for which so many of us have fought so long and hard.
Thank you very much for your interest in DR-CAFTA, in Nicaragua,
and in Central America.
John G. Murphy: Next, we'll turn to
some of the sensitive issues in the agreement. I'd like to
direct this question on labor standards in the environment
to Ambassador Rene Leon of El Salvador. Critics contend that
there is a kind of race to the bottom underway here and that
this free trade agreement will actually accelerate it. The
ambassadors have long experience talking about the provisions
in this agreement, and it was interesting to me to see, when
they met with the editorial board of The New York Times, a
few days later the "gray lady" came out and admitted
that the labor standards are quite excellent. So I'll turn
it over to Ambassador Leon to share some comments on labor
and the environment and the agreement.
His Excellency Rene Leon: With respect
to the claim that DR-CAFTA will be a race to the bottom with
respect to worker conditions in our countries, it is revealing
that the same claim had been made when the United States signed
free trade agreements with countries that do have higher working
standards than the United States. Australia has a greater
minimum salary and, some argue, even better working conditions
than the United States, and exactly the same type of argument
was used to portray the free trade agreement between the United
States and Australia. So that is not, I would say, a real
portrait of how workers will benefit with DR-CAFTA when this
kind of argument is put on the table. The reality is that
DR-CAFTA will imply more economic opportunities, more opportunities
for economic growth in our region, more social equality in
our societies, more civil society participation, more social
cohesion in our economies, and more ways to protect the environment
and to protect our worker rights in our countries. I would
like to spend just a few minutes talking about the cost of
First, there is a myth that the Central
American countries do not comply with the international labor
standards, and that's completely false. There has been an
investigation and assessment of all our legislation and constitutions,
our labor costs, our labor laws with respect to how they compare
to international standards; and the outcome of that investigation
by the International Labor Organization is that, largely,
the legislation of the Central American countries complies
with international labor standards and international workers'
rights. This is not a claim that is made by us; it is a claim
that is made by the ILO experts. They have identified some
areas, some gaps, some issues with respect to implementation,
with respect to compliance, with respect to enforcements of
the law where the Central Americans have to work. And in order
to address that issue, with the collaboration of the Inter-American
Development Bank, we're working currently in strengthening,
in building on whatever we have done to improve the labor
legislation in our countries and to strengthen labor enforcement
and labor implementation in our countries.
Second, it is very important to recognize
that the labor chapter of DR-CAFTA provides enough assurances
that workers' rights will be not only respected, but also
enforced when the agreement is implemented. If you read the
labor chapter and make an objective analysis of the obligations
and the labor provisions of DR-CAFTA, you will find even stronger
provision than other free trade agreements that have been
passed and ratified by the U.S. Congress. It is important
to acknowledge that, even as the agreement provides provisions,
if we don't observe those provisions, we will be subject to
sanctions that can, at the end, become trade sanctions against
our countries. So the labor chapter in DR-CAFTA guarantees
that the labor legislation of our countries will be enforced.
I would like to point out that the Central American governments,
with the help of the IDB and the Dominican Republic, have
been working to strengthen our institutional capacity to implement
our workers' legislation. We have been working in the area
of freedom of association and collective bargaining, trying
to examine our own constitutions and our own labor codes in
order to find where there is room for improvement through
regulations or procedures to ensure this basic right, and
there will be recommendations coming up from the Vice Minister
of Trade and Labor, presented to the Minister of Labor, on
how we can proceed and further ensure the freedom of association
and collective bargaining.
We have also been discussing budget
reinforcement and strengthening of personnel in our labor
ministries and labor courts in Central America in order to
ensure not only that we have institutional capacity to apply
our legislation, but also that the labor ministries have the
personnel and the resources to enforce this legislation in
such areas as labor compliance, child labor, and discrimination
in the workplace. All of these issues have been addressed
besides the provisions of DR-CAFTA and in recognition of the
fact that our governments will have to go an extra mile in
order to comply with our own legislation. I think that, at
the end, the fair comparison will be how workers' rights and
how labor laws will be 10 years down the road in Central America
with DR-CAFTA and without DR-CAFTA. That's the real scenario
that we have to think of. We believe that DR-CAFTA is propelling
imposition of this transformation already in the Central American
countries, independently of whether DR-CAFTA is passed by
the U.S. Congress or not.
We embark on this process because we
so often forget that there is life after DR-CAFTA. There is
the Doha Round; there is the Free Trade Area of the Americas
(FTAA); there are other bilateral negotiations and other trade
agendas; there are countries that are implementing with other
regions of the world, including the European Union. So we
have to prepare our countries for this globalization, and
DR-CAFTA is propelling this transformation in Central America.
I will end by saying that, of the countries that are represented
here, we're the only country that has ratified DR-CAFTA, including
the United States, of course. I think that it is very important
to recognize what the people are expecting from DR-CAFTA.
In El Salvador and the rest of the Central American countries,
more than 75 percent of the population support DR-CAFTA, and
that reality speaks louder than words. I think that people
are expecting from DR-CAFTA better living conditions, more
economic opportunities, and more social equity. So we have
an obligation, not just to the international fundamental workers'
rights, or to the ILO or to the U.S. Congress or to our governments
ourselves, but to our own people who have supported us to
approve DR-CAFTA.
John G. Murphy: Next, one of the key
industrial sectors affected by the agreement is textiles and
apparel, which accounts for several hundred thousand jobs
in the six countries of Central America and the Dominican
Republic, and in the United States where it's equally critical.
About a third of U.S. exports to the region come from textile
manufacturers here in this country. Ambassador Espinal from
the Dominican Republic, the man who put the "DR"
in DR-CAFTA, what can you tell us about what this agreement
will mean for the textile and apparel sector?
His Excellency Flavio Dario Espinal:The
Dominican Republic was not part of the original negotiation
of the DR-CAFTA agreement; we joined later, and I would just
like to tell you what we bring to the table. The Dominican
Republic is the third largest market for U.S. products in
Latin America and the Caribbean, just behind Mexico and Brazil.
In 2003, U.S. exports to the Dominican Republic were 73 percent
higher than to Argentina, 48 percent higher than to Venezuela,
and 55 percent higher than to Chile, with which the U.S. has
a free trade agreement. U.S. exports to the Dominican Republic
are higher than those to Turkey, Egypt, Indonesia, and the
Russian Federation; and when we mention, for instance, Morocco
and Jordan--countries with which the U.S. has a free trade
agreement--exports to the Dominican Republic are 900 percent
higher than to Morocco and 750 percent higher than to Jordan.
Putting together all Central American countries and the Dominican
Republic, we are going to be the second largest U.S. trading
partner in Latin American, next to Mexico.
The Dominican Republic, alone, is already
the third largest market in the region; therefore, we bring
to this FTA an important market for the U.S., which is obviously
of mutual interest because the U.S. is the most important
trading partner for the Dominican Republic and for the Central
American countries. Going back to the question about textiles,
I've been asked a very important question concerning one particular
industry that is vital for Central America and the Dominican
Republic over the last, let's say, 20 years, and the question
revolves around whether DR-CAFTA will harm the U.S. textile
First, in order to answer that question,
we have to place it into context. As we all know, the signing
and possible ratification of DR-CAFTA is taking place at a
moment when new rules of international trade regarding textiles
have come into effect as a result of the ending of the quota
system under the Multi-Fiber Agreement of 1973, which allowed
developed markets to put quotas on the imports of a number
of products from developing markets. What is more likely going
to happen with the end of the quota system is that low-cost
suppliers from regions like Asia, mainly China, will benefit
from the elimination of these quotas, which took effect on
January 1, 2005. As you all know, previous to this date, since
the beginning of the 1980s, DR-CAFTA countries had preferential
access to the U.S. market under the Caribbean Basin Initiative.
This access expanded further under the Caribbean Basin Trade
Partnership Act of 2000, the so-called CBTPA. In that context,
90 percent of U.S. apparel imports from the Dominican Republic
and Central American countries have U.S. content, compared
to only 0.26 percent U.S. content on imports from China. DR-CAFTA
countries purchase $2.3 billion a year in U.S.-made yarn and
fabric, compared to $250 million by Chinese manufacturers.
There is a tremendous difference between what we buy from
U.S. industry and what the Chinese buy.
A study sponsored by the U.S. Agency
for International Development in the Dominican Republic shows
that the elimination of quotas will have an immediate impact
on U.S. apparel imports from the Dominican Republic of 31
percent, which in absolute terms represents $662 million.
For the sake of argument, if we apply a 31 percent decrease
on U.S. textile imports to the rest of the DR-CAFTA countries,
the impact will be of enormous proportions. It is logic: Without
an FTA, we're not going to be buying as much as we used to
buy. Therefore, with the end of the textile quota, the DR-CAFTA
is vital for the survival of both the U.S. and the Central
American and the Dominican Republic textile industry. And
why is that? Because it will provide manufacturers an incentive
to stay in the region where they are more likely to buy U.S.
textiles rather than moving their production to Asia in a
search for cheaper inputs.
Second, a competitive Central America
and Dominican Republic apparel industry is absolutely critical
to U.S. fiber, yarn, and fabric producers, taking into account
that these six countries represent the second largest markets
for these products: second only to Mexico, which has had a
free trade agreement with the U.S. for over a decade. If DR-CAFTA
is not approved, manufacturers will have very little incentive
to stay around, knowing that the preferential benefits enjoyed
by our countries under the CBTPA will end in 2008, leaving
them with no access to the U.S. market, duty-free, as they
do now.
In conclusion, this preferential scheme
that has been in place since the beginning of the 1980s and
was expanded in the 1990s is coming to an end in just three
years time, eliminating the duty-free access to the U.S. market
that the textile industries in our countries currently have.
In consequence, access provided under a free trade agreement
not only will give permanence to preferences acquired under
the CBTPA, but also will increase confidence in the region
and on the part of both investors and buyers, which will be
very positive for trade relations between the U.S. and the
DR-CAFTA countries. In short, the fundamental argument is
one of common sense. Given that trade rules concerning textiles
have dramatically changed with the end of the quota system,
we have to respond to the new circumstances by adopting a
free trade agreement as the only way to guarantee the survival
of the textile and apparel industry in the U.S., Central America,
and the Dominican Republic.
John G. Murphy: To conclude this portion,
we have a man who is last but not least in a topic that is
last but not least--agriculture and Ambassador Castillo of
Guatemala. Agriculture is a sensitive sector in a number of
these countries, but it's also an area where some of the greatest
promise of this agreement is on display here. Ambassador,
how do you see agricultural sectors for the different countries
faring under this agreement?
His Excellency Guillermo Castillo:
This is a very sensitive issue in all the countries, and that
includes the U.S. I am going to talk a little bit about one
of the most sensitive agriculture issues, which is sugar.
Basically, 20 years ago, we were in the middle of a war in
Central America. We had a military regime in some countries,
and we had war in several countries. Nowadays, we have disagreements
in all the countries. We have democratically elected governments
in all the countries. We are trying to solve our differences
through dialogue, and we are trying to find our path for development
in the region. In the ministries of economy, we made that
commitment in the early 1990s. We started to open our markets,
and we lowered our tariffs for most of our imports from an
average of 23 percent to an average of around 5 percent. What
happens when you open a protected market? Some companies went
down; some other companies were bought off; but a lot of companies
found a way out. They found a way to increase their sales,
their imports; and more than that, they were not looking only
at Guatemala or at each one of the markets; they were looking
at the world as their market.
When we were negotiating this free
trade agreement, there was one thing that we put up front
in the negotiation, and that was no exclusions. It didn't
work completely, but agriculture was the main issue that we
were discussing on the exclusion side. So let me say a few
things about agriculture to bring the issue into perspective.
Yes, we are opening our markets. Some of the products still
have some protection, but they are going to be fully open
to the world market and to the U.S. market, and we are talking
about great opportunities for corn producers here in the U.S.,
for soybean producers, as well as meats, pork, poultry, and
other type of goods. What did we get in return? Well, we have
an open market here in the U.S. for lots of products too,
and we have better standards for sanitary and phytosanitary
measures that apply to other cultures. So it's just like looking
at this glass: Is it half full or half empty? I'd like to
say it's half full. Let me tell you a few things that I would
add to this agreement. When I go back to my country and I
see the effect of the disagreement, for example, on the corn
producers, most of the corn producers take over 23 percent
of our land, and most of them live in poverty. Why is that?
Because they are not using the right seeds. They are not using
the right technical ways of cropping corn. What is the alternative?
DR-CAFTA brings opportunities, but
DR-CAFTA is not the solution. The solution is DR-CAFTA plus
our work, internal policies to make it happen in the right
way, and that is going to bring prosperity to a lot of companies.
Let me give you a few examples. I was visiting Cuatro Pinos
-"four pines," which comes from these four cities
surrounding this crop--and they have over 500 Guatemalans
as members of this organization. They moved out of corn. They're
planting broccoli, snow peas, tomatoes, anything, and they
are exporting those goods to the U.S. and to the European
markets. I went to visit their facilities: beautiful building.
You were looking at all these natives with all their native
dresses: beautiful dresses. You could see that they were leading
a better life than the average people in their communities.
Why was that? Because they found a way out of poverty. They
found a way to fish: They were not given fishes; they found
their own way to fish. And when you were looking at this community,
you saw men working the fields with these plantations, the
women working in the packaging area, and the women were giving
the family a second source of income working in the same field.
The literacy rate within this community -the average for natives
in Guatemala is around 40 percent; the average in this community
was 5 percent. They had an educational support within the
group, and medical support, dentistry, everything. So I said,
"Why cannot we replicate this model throughout our countries?"
Not all of them start to produce broccoli. They had lots and
lots of opportunities out there in regard to their sectors.
We have the market open. Now let's make it a success.
Now, going to the issue of sugar: I
was telling you that one of the first things we said about
this agreement is that nothing was meant to be excluded, but
sugar is excluded, and it was excluded by the U.S. Why do
I make this claim with all the things that you see in the
media nowadays? One, the quota the U.S. is giving the Central
American countries, in a period of 15 years, will amount to
about 1 percent of the U.S. production and very little, a
very small quota, for all six countries. But it doesn't stop
there. Tariffs are not going down, so we have the same level
of protection they do today. More than that--and this is something
that anyone would love to have -if by any chance sugar imports
affect the industry in the U.S., imports are going to be stopped,
and the U.S. government is going to pay our producers for
their exports that they are not making to the U.S. markets,
so that's as protected as it can be. At the end of the day,
we all are looking to open our markets, strengthen our societies,
and strengthen our institutions. And when you ask our people
about agricultural products, yes, we will love to sell our
products at five times the price and, as consumers, buy the
other people's products at one-fifth the price. That's reality.
We are going to open our markets. Yes, there is going to be
more competition in the market, but we know how to live with
that. A lot of companies found ways to live with it, and now
they are better.
One last comment: With this tradition,
the companies that are exporting goods have higher standards
in their manufacturing and labor conditions, and they have
better standards throughout their companies for quality of
the products, packaging, everything. We want more to look
like that. DR-CAFTA is going to give us the opportunity. We
have been working internally to make those opportunities realities.
Don't take away opportunity. His Excellency Tomas Duenas is
Ambassador to the United States from Costa Rica; His Excellency
Salvador Stadthagen is Ambassador to the United States from
Nicaragua; His Excellency Rene Leon is Ambassador to the United
States from El Salvador; His Excellency Flavio Dario Espinal
is Ambassador to the United States from the Dominican Republic;
and His Excellency Guillermo Castillo is Ambassador to the
United States from Guatemala. Brett D. Schaefer is Jay Kingham
Fellow in International Regulatory Affairs in the Center for
International Trade and Economics at The Heritage Foundation;
John G. Murphy is Vice President, Western Hemisphere Affairs,
U.S. Chamber of Commerce. Stephen Johnson, Senior Policy Analyst
for Latin America in the Douglas and Sarah Allison Center
for Foreign Policy Studies, a division of the Kathryn and
Shelby Cullom Davis Institute for International Studies, at
The Heritage Foundation, served as co-host for this program.
From Heritage.org, DC, 18 April 2005
Nepad Calls for Stop to Reliance
on Foreign Aid
The Nepad Council yesterday asked the
international community to stop offering aid to Africa, saying
it was no solution to the continent's poverty. Instead, the
council said, the developed world should support increased
investment by their firms in Africa. The president of the
council, Dr Birahim Seck, said massive flow of aid to Africa
over the 50 years had not make any impact on the poverty situation
on the continent. He urged African leaders to come up with
workable strategies that can attract investment in key sectors
such as information and communications technology (ICT). "For
the past 50 years, Africa has been dependent on aid and grants
from international donors with only marginal change as far
as development is concerned," Seck said. "There
is more poverty now, there are more diseases and the level
of literacy is still low." He said the council would
soon convene a Presidential Business Forum that will bring
together at least 10 heads of state, 10 chief executive officers
(CEOs) of the world's leading ICT companies and 20 CEOs from
Africa's top ICT companies to chart the way forward.
The meeting will be held between May
17 and 21 on the sidelines of the inaugural ICT Africa Fair
that will take place at KICC, Nairobi. Seck is a critic of
Africa's reliance on aid andrecently caused a stir at the
European Union headquarters in Brussels when he told delegates
at the European Programme on Investment (Proinvest) conference
that Africa did not need their support. I told them that the
best help and service they could provide to the continent
is to encourage their company and business leaders to invest
in Africa," he said.
Speaking at the International Press
Centre, in Nairobi, Seck said his message to the EU, IMF and
World Bank was that the sure way of reducing poverty in Africa
was employment creation through investment. "When African
people have jobs, they can feed their families, they can afford
quality health care for their children as well good education,"
he said. Seck urged African governments to team up with the
private sector in order to promote the growth of ICT in the
region. In Europe, North America and Asia, he said, ICT had
become a major component of the global economy and positioned
their firms for leadership in the global business. Africa,
Seck said, has not yet succeeded even in laying the foundation
for a strong and competitive ICT sector. "The existing
gap between Europe, North America and Asia on one hand and
Africa on the other can only be narrowed through the involvement
of private sector and promotion of public/private partnerships."
He said the Nairobi fair would address the ICT gaps on the
continent with the aim of finding solutions.
From East African Standard, Kenya, by Elizabeth
Mwai and Waweru Mugo, 12 April 2005
Why Western Aid Donors Won't Crack
Down on Corruption
Britain is haunted by memories of the
exodus of Ugandan Asians in the Amin era. Some 30,000 Kenyan
Asians have British passports and London wants them to stay
put. Anyone who believes that western aid donors are committed
to cracking down on corruption should take a look at an aid
meeting that took place in Nairobi last week. The story begins
in London in early February, when the man who represented
the hopes of Kenyans for a graft-free society went into self-imposed
exile. John Githongo had resigned from the toughest and most
dangerous job in Kenyan politics - permanent secretary in
charge of governance and ethics. It seemed a watershed in
his country's sad record of 40 years of post-independence
corruption, and an unprecedented opportunity for a decisive
crackdown by the foreign donors who have invested billions
of dollars into Kenya for a negligible return. Numerous efforts
by donors to persuade or coerce past governments to end their
venal ways had been made over nearly four decades. None worked.
This time, it seemed, it would be very
different. Githongo, the former head of Transparency International
Kenya, had spent two years in a job that placed him at the
very heart of the beast. For the first time, the donors would
have the chance to tap the insights of an insider, an informed
and detached witness, with an unblemished reputation for probity.
Surely the donors now had the country's corrupt elite by the
throat? But as the weeks went by and nothing happened, it
became clear that the opportunity was not to be seized. According
to well-placed diplomatic and other sources, two months after
Githongo resigned, the British Foreign Office has not made
a single effort - apart from an initial exchange and a social
lunch with a Whitehall Kenya expert - to engage with Githongo.
This failure is not an accident or oversight: it is the product
of realpolitik. UK foreign policy may be informed by its ambassadors
around the world, but strategy is devised in London. Kenyans
should not be misled by the splendid "vomit" speeches delivered
in Nairobi by Sir Edward Clay, the courageous and feisty British
High Commissioner to Kenya. The reality is that the men and
women at the Foreign Office and at the UK aid agency, DFID,
are the ones who make Kenya policy. And while those officials
are ready to help Mr Githongo in many ways, they will not
encourage or assist in the exposure of the contents of his
metaphorical briefcase.
If you doubt this, look at Nairobi,
where the aid agencies have just been meeting, taking part
in a consultative group meeting. This traditional dance of
the donors has its moves as carefully choreographed as an
old-fashioned quadrille. A speech of outrage about corruption
from the donors is met by a persuasive response from the government,
rebukes are balanced by cautious praise, and pre-arranged
manoeuvres take place on a stage full of verbal props and
rhetorical flourishes. They huff and they puff about the impact
of corruption on the good work they claim to do. No fewer
than 25 UN organisations were represented last week, and UNDP
resident representative Paul Andre de la Porte extolled his
agency as Kenya's "lean but effective development partner".
But the UN impact on Kenya has little
to do with its programmes and everything to do with its huge
presence in Nairobi. The Financial Times once calculated that
in 1998 the combined direct and indirect benefits of the UN
agencies to Kenya amounted to more than $350m, or 19 per cent
of exports, second only to tea as a source of foreign exchange,
and equivalent to 3 per cent of GNP. In theory, that level
of investment should give the UN huge leverage over Kenyan
government actions. In fact, it makes the international community
jumpy and neurotic at the thought of doing - or saying - anything
that might disturb a mutually-convenient arrangement. But
the UNDP is a lightweight compared to the really big boys
- the International Monetary Fund and the World Bank. Their
eve-of-conference pirouettes sent a clear message: whatever
John Githongo may think about his government's anti-corruption
efforts, Kenya will not be cut adrift. "The [pre-conference]
talks have been very constructive � We do need to see action
in a number of areas, but I think that the government is willing
to act," said IMF resident representative Jurgen Reitmaier.
So why do the donors duck away from
this unique opportunity to tackle graft? The truth is, they
do not have the stomach for a fight. They do not believe it
is ultimately in their interests to have a showdown with the
barons of corruption. They do not want to upset what they
see as a regional "island of stability" from which UN and
other international relief agencies, including hundreds of
foreign NGOs, operate. Weighing in the balance are the military
agreements Kenya has signed with the US and the UK, which
have assumed particular importance since Bush launched his
War on Terror.
And finally, Britain does not want
to do anything that might jeopardize its multi-million dollar
investments in Kenya and, in particular, it is haunted by
memories of the exodus of Ugandan Asians in the Amin era.
Some 30,000 Kenyan Asians have British passports and London
wants them to stay put. So, far from cutting aid, Britain's
DFID is set to increase it, from �30m in 2003-04 to �50m in
2005-06. Ask about the problems presented by corruption, and
there's a carefully rehearsed response. "It is possible to
deliver benefits directly to poor Kenyans without releasing
resources to be misused elsewhere," says the local DFID head.
But if these policies actually worked, how can we explain
the growing pauperisation of Kenya? In 1990, 48 per cent of
the population was living below the poverty line. By 2001
that figure had risen to 56 per cent, and economists are confident
the level is even higher today. Every social indicator, whether
life expectancy or access to basic services, is pointing in
the direction of decline. As the international aid agencies
sound off in Nairobi, we can be sure of one thing. The donors'
ritual will follow its usual pattern - and nobody is about
to ask John Githongo to join in the dance.
From Times Online, UK, by Michael Holman,
19 April 2005
NPRC And Anti-Corruption
The recent intensification of the war
against corruption by President Obasanjo has provoked different
reactions from different Nigerians. What is not in doubt,
however, is that Nigerians want the mess cleaned up. The point
of divergence seems to be how different people perceive the
war against graft. Some doubt the motive. Others point to
a seeming selectiveness. A few are convinced that what we
are witnessing is a stage-managed show not billed to last.
Put all of these together, you arrive at the point that I
have been making, that not every Nigerian has bought into
the war on corruption. They still think that it is Obasanjo's
personal headache. And the President has, expectedly, shown
some irritation about this kind of attitude towards his effort.
Therefore, my point has been that corruption, being an entrenched
establishment that has been with us for several years, needs
to be overthrown, not just attacked; and to overthrow it,
the people of Nigeria must be enlisted as soldiers; and the
war must be fought on all fronts, by every Nigerian, at the
same time. I expect a war where it should be possible for
Nigerians to strip corrupt people naked and drag them through
the streets! In other words a mass revolt against corruption.
Critics of the current effort should
endeavour to look at the existing laws. They will find that
with such laws, the war cannot be won. Corruption thrives
under the cover of "secret" and "confidential"
files. Our system of government is essentially a secret cult
known only to the inner operators. It is so bad that some
Deputy Governors do not know much of what their bosses are
up to. Information get to them on a need-to-know basis. You
can then imagine the position of the Commissioners. And if
it is that bad with the Deputy Governors and Commissioners,
then you can see that those below do not know much of what
goes on above them. And in that situation, subordinate officials
indulge themselves with whatever trickles down to them, because
the secrecy above them does not build the confidence in them
that there is transparency. In other words, only a culture
of open society can make the war on corruption winnable.
Secondly, we must remember that people
who take bribe do not issue receipts! They do not accept cheques.
So to trace their iniquitous activities is difficult. Even
more daunting is how much the thin line between what is unacceptable
and what is acceptable in public office has been eroded. There
is even the more intriguing aspect of our culture, which blurs
the true identity of corruption. Would a Westerner understand
a Nigerian Big man who on leaving a public official, "dashes"
his messenger fifty naira? How does one react to the groveling
gateman who gives you a military salute sharper than that
of a Major, and dashes to open your car door for you, gives
you another salute as he closes the car door, and throws in
a hundred "bye sir" into the theatrics? How does
the policeman who, reeking of alcohol, reminds you that "oga
your boys dey here o" or announces to you that his life
"don better as I see you so" regard his abject lack
of dignity? Pray, what is "dash" as in our culture,
and what is corruption?
All of these, point to some of the
difficulties, which the President sometimes tries to surmount,
even if by violating some principles, in order to sustain
the war on graft. It therefore seems to me that we need an
urgent redefinition of our code of conduct in public office.
Many of our laws relating to behaviour in public office have
to be looked at again and beefed up. I have looked at the
ICPC law. With luck, the ICPC may convict two corrupt people
in eight years of Obasanjo. The law leans too much towards
inactivity and that is why the ICPC has been redundant. Most
of the action has been from the EFCC. The challenge before
the National Political Reforms Conference is to seize this
opportunity to look at all the laws relating to corruption
and abuse of power and strengthen them for effectiveness.
The Conference must draw up clear, stringent and unambiguous
code of conduct for public officers and their relations.
But more important is that the activities
of government should be open to public scrutiny. The law on
declaration of assets by public officers remains a joke if
the declaration is not for public consumption. The authors
of that law were more concerned with protecting people in
public office than protecting public interest. Once people
get into public office, they invariably loose some of their
privacy. Those who do not want to be put to public scrutiny
have a choice not to get into public office. Nigeria is not
lacking in people. The public is always teased by government
to provide information if they have them. You cannot give
what you do not have, including information. We 've got to
do better than that. Nigerians must be able to know what a
man presiding over their commonwealth had for breakfast, to
know when the man has eaten what belongs to the public.
The controversy surrounding the immunity
clause is that the authors were more concerned with the protection
of their kind at the expense of the public. Such a law derives
its nature from the philosophy of the military looters who
enacted the law. How could anybody ever contemplate such a
law if he wasn't a looter? Any nation that operates such law
simply ordains corruption. However, throwing the immunity
clause out of the window wholesale is to go to the other extreme.
The solution is to limit immunity to civil litigations. But
we must not stop there. If a serving President, Vice President
or Governor commits criminal acts, what will be the procedures
to bring him to justice? All of that must be spelt out now
so that we will never be in doubt as to what to do in any
future Dariyegate. We must also prevent those who have run
foul of the law, as it presently exists, from escaping justice
at the end of their tenure.
The Access to Information Bill, although
it has made some progress in the National Assembly, deserves
a second look by the NPRC now before a feeble law is passed.
The Bill does not seek to empower only the media as people
erroneously think. It seeks to empower Nigerians to protect
their commonwealth. When the American Founding Fathers designed
a nation with unfettered press, they did not intend at all
to empower the publishers and the journalists. Rather they
saw an open and transparent society as necessary for the democracy
they were establishing. Had they thought that a gagged press
would serve the interest of their democracy, they would have
opted for it. Often I imagine public offices where the walls
are made of glass, where nobody hides behind a thick wall
and where microphones pick up and rebroadcast every conversation
and I imagine how wonderful it would be for transparency in
public office!
The NPRC should design laws that protect
the public sphere, not the individuals. The place to begin
to check corruption really is with our electoral laws. If
we can institutionalize the sanctity of the peoples ballot
and the inviolability of the people's choice, then we would
have gone a long way fighting corruption. Our electoral system
must serve as an effective quality control in the production
of our leadership. But for as long as miscreants can sneak
into public office, for so long would we have corruption multiply
instead of reducing. The Federal Government also has an additional
burden on its hand if it must make progress in the anti-corruption
war. It is a moral responsibility. The Federal Government
must show its aversion to corruption by avoiding the promotion
of decadence.
It must be deliberate in its choice
of who it honours so as not to honour thieves at the expense
of upright people. It must scrutinize the people Federal Universities
award honouary degrees, while the Governors do the same for
State Universities. The Governors and Local Government chairmen
should also be interested in those the traditional rulers
give chieftaincy titles. We cannot be fighting corruption
and at the same time elevating knaves of yesterday as role
AllAfrica.com, Africa, by Pini Jason of
Vanguard, Lagos, 19 April 2005
Obasanjo's Aide Seeks
Adoption of Public Accountability Forum
Presidential Special Adviser on Inter-Party
Affairs, Chief Rochas Okorocha has suggested the adoption
of a public accountability forum whereby public officers would
publicly account for their stewardship to the electorate as
a way of checking corruption. He said in a chat in Jos last
weekend that such a forum would afford the electorate to ask
questions on how public funds are expended and to express
their satisfaction or dissatisfaction with the manner they
are spent. According to him, "Fighting corruption must
involve the public who have the right to know where public
funds are being expended. It is the right of every Nigerian
to demand to know how public funds are spent. By publicly
giving account of whatever monies entrusted in their care,
public servants would be wary of spending such funds in the
wrong places. We should create a forum whereby accountability
should be the focal point."
"Owelle Okorocha argued that such fora will serve as
a check on public servants when they know they will have to
publicly account for any public fund in their custody adding
that public opinion would achieve more results in the war
against corruption than even laws. He reaffirmed the commitment
of President Olusegun Obasanjo to the war against corruption
pointing out that the vigour with which he (Obasanjo) was
pursuing the war will send the right signals to the international
community and encourage investors to com to the country. He
therefore urged Nigerians to join the president in the anti-corruption
crusade and not leave the fight to him alone. He believed
that the N55 million bribe-for-budget scandal in the National
Assembly would have taught all concerned the appropriate lessons
especially on the issue of seeing taking money as a form of
lobbying rather than a form of corruption.
From AllAfrica.com, Africa, by Taye Obateru
of Vanguard, Lagos, 19 April 2005
Government Failures
'Revolve Around Grand Corruption'
Kenya's former Permanent Secretary
for Governance and Ethics has said in Germany that grand corruption
has caused the failure by many African countries to achieve
their economic objectives. "Corruption -in particular
grand corruption and looting of the kind that has tangible
economic implications- is at the epicentre of the failure
by many African countries to achieve the economic objectives
so finely articulated in their development plans," John
Githongo said on Tuesday, April 12, 2005, during a ceremony
in which he received the 2004 German Africa Award for his
anti-corruption efforts. Githongo, who was the President's
advisor on graft matters, resigned on February 7, 2005, while
on an official trip to England. He has not gone back to Kenya
Githongo, in a speech published by The Standard, said grand
corruption and looting cannot take place without the skilled
facilitation of Western professionals. "We must recognise
that the grand corruption and looting that holds African economies
back cannot take place without the skilled facilitation of
professionals here in the West . . .who are integral to the
architecture of the complicated transactions via which the
most serious cases of corruption are perpetrated," said
From AllAfrica.com, Africa, by Catholic
Information Service for Africa, Nairobi, 15 April 2005
Diplomats Say They
Are Unsure Corruption War is Being Fought
Key diplomatic missions yesterday expressed
skepticism over the commitment and the pace of President Kibaki's
Government in fighting corruption. US Ambassador William Bellamy
said Kenya seemed unable to move away from talking and into
implementing measures that it had agreed with donors. Bellamy
said in an interview that the although some crucial anti-graft
Bills had been passed into law, Parliament was being too slow
in formulating laws that would speed up the fight against
corruption. "Generally," he said, "the government
is making slow progress especially in passing legislation
that will enable Kenya attract investments." Bellamy
named the privatisation Bill and Public Procurement and Disposable
Bill as some of the bills that should have already been passed
into law. Though the US government-which has co-opted Kenya
in its fight against terrorism-has been a major supporter
of the Narc Government, it recently seemed to waver in its
confidence and recently froze Sh200 million it had pledged
to fund the Kenya Anti-Corruption Authority. Other donors
like Germany took the cue and cut funding. "We want to
see a full and strong political commitment from the government
in the fight against corruption," Bellamy said. "It
is not up to the donors to investigate and (initiate) prosecution
because the Government has all the machineries in place."
He spoke moments before the donor consultative meeting began
behind closed doors. Journalists were asked to leave.
Outgoing Word Bank Country Director
Makhtar Diop said future financial assistance would depend
on the Government's commitment to implement the economic recovery
plan and the fight against corruption. "We wish to emphasse
that the level of our support will ultimately depend on the
Government's success in implementing the Investment Programme
and Economic Recovery Strategy, and especially, in tackling
corruption," he said. Diop, who was instrumental in shifting
the consultative meeting from Paris to Nairobi, said donors
were committed to supporting the Government. He is co-chairing
the two-day event with Finance Minister David Mwiraria. He
urged the Government to end perennial wrangling in the ruling
coalition. "We wish to emphasise that creating solid,
independent, and efficient institutions is not an end by itself,"
said Diop. "In this area of governance the various institutions
will be judged not only on the process, but also on their
outcome." The Leader of the Official Opposition Uhuru
Kenyatta, however, said the Government risked losing the war
against graft. "Talking about corruption is one thing
but taking a firm and decisive action is another," he
said. He said the President must crack the whip and sack Cabinet
ministers involved in corrupt deals.
From AllAfrica.com, Africa, by Tom Mogusu
and Benson Kathuri of The East African Standard, Nairobi,
12 April 2005
Government's New Anti-Corruption
Strategy Won't Bite Thieving Elite
President Yoweri Museveni on April
6th launched the new National Strategy to Fight Corruption
and Build Ethics and Integrity in public office 2004- 2007.
This is second government strategy, after the first one, which
covered the period 2001-2004. The strategy, which was drawn
up by the Directorate of Ethics and Integrity, is a framework
on which anticorruption actors are to carry out their mandates
up to the end of 2007, says Minister of State for Ethics and
Integrity Tim Lwanga. However, only days after the launch,
the strategy whose overall aim is to "minimize levels
of corruption and increase and increase transparency and integrity
in public office, has come under criticism.
Many legislators, pro anti-government
alike questioned its effectiveness, and therefore government's
commitment. This is a sort of government anticorruption blueprint,
but does it address the real political problems on which corruption
breeds? Will it make any difference or is it a waste of time?
According to Lwanga, the strategy details a four-year plan
being implemented and it a very crucial tool needed in the
war against corruption. "We are in a war fighting corruption
and we must have a plan. W are going to sit down and come
up with what is necessary to win the war," he says. But
the real problems, which have been pointed out again and again
are not addressed by the strategy, according to former IGG
Augustine Ruzindana. What has now become sort of a 'theme
song' in the corruption debate; the lack of political will
is nowhere near mention in the strategy. "Whatever strategy
they come up with, this government does not have the capacity
to fight corruption. There is simply no political will at
all levels of government from the center to the lower councils.
They can have a strategy, but it will not be useful,"
he says.
The anti corruption blue print touches
on the political environment as one of the factors that will
affect its implementation. "Political commitment on the
part of government and all parliamentary and local government
institutions to take on issues of corruption and accountability
in a consistent and vigorous manner is central to the success
of the strategy," it says. But a look at recent events
suggests that such a statement is actually blunt, and the
strategy therefore fails to address the problem. In the ongoing
prosecution in which Emma Kato is accused of causing loss
to government in the junk helicopter saga is puzzling because
the DPP chose to leave out some people whom the Ssebutinde
probe recommended for prosecution. Government has also not
caused prosecution of other individuals implicated by various
judicial probes. There is also another question that has been
asked over and over: can government talk of political will
given the cabinet recommendations to the constitutional review
commission regarding the institution of the IGG? Although
Cabinet later dropped some, the fact that cabinet could recommend
such measures says volumes about government's apathy. Also,
although the strategy calls for strengthening of the institutional
framework, it does not call for any action concerning the
row over the Leadership Code, in which some crucial sections
were nullified during the Mutale petition.
The Constitutional Court ruled that
the IGG could not recommend to the President sacking of some
officials because it would interfere with Presidential Prerogative.
Jotham Tumwesigye, the IGG at that time, questioned government's
commitment to support the institution of the IGG. Lwanga acknowledges
that there were some loopholes in the code, a reason the AG
chose not to appeal. "You appeal when you feel the judgment
is wrong. In this case, the judges were right. The legislators
made mistakes in the code. But we are making constitutional
amendments and they will take care of the loopholes,"
he says. What the strategy therefore refers to as a mere "perception
that there is inadequate political commitment in support of
anti corruption efforts" turns out to be not just a perception
but reality. This is what the strategy refers to as "the
ambiguity in high level political commitment [which] is associated
with an inability or unwillingness to penalize high profile
corruption." But the strategy is spot on, noting that
such ambiguity "increases public cynicism, and increases
perceptions that grand corruption can be committed with impunity.
The strategy must seek to increase
political support and commitment for the anti corruption agenda."
Such passing statements have led critics to point out that
this is just another of government's rhetoric. Do these reports
reflect a genuine desire on the part of government to fight
corruption, or they are merely seeking to portray a populist
stance? "On the surface, whatever strategies, government
wants to show its commitment. But is has been undermining
institutions that are supposed to fight corruption at the
top, the ministries and local governments," Ruzindana
says. However, Lwanga says that such a criticism is unfounded.
"This strategy has strategic goals and objectives. We
are basically fighting poverty by eradicating corruption.
How can you say that such a grand plan is a populist stance?"
he says. More telling is the fact that the previous 2001-2004
strategy was never fully implemented and the same problem
will happen. "We need al lot of money but we shall use
what we have within our means but we will complete our mission,"
the minister says. The strategy addresses a few issues, but
still to the big fish and the political elite, the strategy
could turn out to be a big let off. Yet, this is where Uganda's
problem with corruption is.
From AllAfrica.com, Africa, by Victor Karamagi
of The Monitor, Kampala, 20 April 2005
Sweden Wants NTGL Tackle
Corruption to Encourage Donors
The Swedish Government is calling on
the National Transitional Government of Liberia (NTGL) to
take proper action in addressing issues and allegations of
corruption in the use of the country's resources. Sweden Counselor
to Liberia, Irena Schoulgin, made the statement Tuesday at
a signing ceremony between the Swedish Government and the
United Nations Development Programme (UNDP). At the occasion,
the Swedish Government donated 25 million Swedish Kroner,
the equivalence of US$3.5 million to the UNDP/DDRR Trust Fund.
The Swedish Counselor said, tackling the issues of accountability
and transparency will demonstrate to the Liberian society
and the international community that Liberia's Transitional
Institutions are sharing the commitment of reconstructing
post-war Liberia.
Madam Schoulgin stressed that the rehabilitation
and reintegration of former combatants is one of the important
components of rebuilding Liberia. It is not an easy or fast
route ahead but together with Liberians and other partners
in the international community, it is the hope of the Swedish
Government that we can assist in the efforts made to stay
on track towards a peaceful, democratic and prosperous Liberia,"
the Swedish diplomat added. She said further, Sweden is currently
supporting community development, health, education and the
judiciary via UN Agencies and International and National NGOs
as a way of contributing to the speedy recovery of war-torn
The 25Million Swedish Kroner is intended to speed up the RR
component of the DDRR program already on-going in the country.
The latest donation brings the Swedish
Government contribution to the UNDP/DDRR Trust Fund to a total
of about USD $7 million. Sweden is the second largest donor
to the UNDP/DDRR Trust Fund. Also speaking at the ceremony,
the Executive Director of NCDDRR, Dr. Moses C. T. Jarbo said
the donation which brings to four the number of donations
made by the Swedish Government, signifies not only the love
that Sweden has for Liberia, but it demonstrates a clear manifestation
of Sweden's concern for world peace and stability in the West
African sub-region. Dr. Jarbo thanked the Swedish Government
on behalf of the NTGL for the level of contributions it has
made to the achievement of peace in Liberia.
From AllAfrica.com, Africa, by L. Alaska
Bryant of the News, Monrovia, 13 April 2005
Donors Grill Kenya
Government on Corruption, Reforms
Nairobi - Kenya on Monday faced a tough
job of convincing sceptical donors to give more aid, after
many said they would make no new pledges until the government
tackled corruption and accelerated economic reforms. The relationship
between Kenya's major donors and the government is at its
lowest ebb since President Mwai Kibaki took office in 2002.
It was against this backdrop that donors and Kenya on Monday
began a two-day meeting, led by the World Bank, to decide
if the east African country will receive more aid. Donors
said the government did not start with its best foot forward,
after Kibaki kept the assembled dignitaries waiting for more
than an hour and stumbled over a speech they characterised
as uninspired and repetitive of old promises still undelivered.
Kibaki apologised for his tardiness and blamed it on a cold.
Donors have been angered by a resurgence
of rampant corruption among top government officials, and
also by the slow pace of crucial reforms such as privatisation,
banking and streamlining the civil service. "Uneven progress
in implementing the key reforms ... particularly concrete
actions to eradicate corruption, is affecting the confidence
of stakeholders in the government," said Makhtar Diop,
the World Bank's country director for Kenya. The failure of
Kibaki's government to tackle crime and improve roads as promised
during elections has also strained relations with donors and
ordinary Kenyans. Many donors, who had pledged more than $4
billion at the last consultative meeting in 2003, said they
would not give more aid until they were convinced their funds
were being properly used and not being wasted by corruption.
don't expect a lot of new pledges to come out of this meeting,
but I expect a reassurance by the donor community that we
are committed to assist Kenya and we do not intend to cut
back on promises we made in the past," Frederic Renard,
Belgium's ambassador to Kenya, told Reuters. Key donors like
the European Union, the United States, Germany and Canada
have said they will not commit new funds at the meeting but
would be keen to hear how the government planned to address
their concerns. "We all want to be positive. It really
depends on what we see and what we hear from the government.
So we have an open mind," U.S. ambassador to Kenya William
Bellamy said. "My hope is that we will come out of this
meeting with a much stronger sense of the way forward."
The EU representative to Kenya, Derek Fee, said the EU would
not release 120 million euros in budgetary support it is withholding
until the government enacts procurement laws that will reduce
chances of corruption. But he added that the EU would release
more than 100 million euros in project support for agriculture
and road construction. Kibaki said he hoped the meeting would
help to improve relations with donors and promised their funds
would be put to proper use. "I want to assure you that
the assistance you give we shall use it in the most effective
way and for the purpose for which it is intended," he
told donors.
From Reuters AlertNet, UK, by David Mageria,
11 April 2005
Government Spends Sh1.2b
on War Against Corruption
The Government has spent Sh1.2 billion
in the fight corruption, the Justice and Constitutional Affairs
ministry has said. In a status report released to donor agencies
yesterday, the ministry cited prosecution of 14 former heads
of parastatals as one of the milestones realised in the war
against corruption. "Cases being prosecuted included
those of directors of Euro Bank, NHIF, NSSF, Postal Corporation
of Kenya, Kenya Post Office Savings Bank, and the Pyrethrum
Board of Kenya," the statement said. Also in court are
former officials of the Kenya Sugar Authority, Kenyatta National
Hospital, Kenya Tourist Development Authority, National Aids
Control Council (NACC) and the Kenya Pipeline Company.
Release of the report cames a week
before a high-level donor consultative meeting fixed for April
11 and 12 at Nairobi's Safari Park Hotel. It was therefore
seen as an attempt to defuse tension between the Government
and the donor community. Since the beginning of the year,
a section of the donors led by the British High Commissioner
Sir Edward Clay have renewed their criticism of the Government
over the manner in which it has dealt with cases of corruption
involving senior public officers.
Last week, Finance minister David Mwiraria
said that the donors, who had pledged Sh300 billion in support
of the Economic Recovery Strategy, were looking forward to
detailed defence of its record during the meeting. Yesterday,
the Justice and Constitutional Affairs ministry headed by
Kiraitu Murungi maintained that Government's record on corruption
was solid. He however conceded that some senior personalities
in government were frustrating the efforts because their involvement
in past corruption. "While a common understanding of
the need to fight corruption was generally assumed, there
were and still are many in the coalition government who stood
and stand to lose from an effective campaign against corruption,"
the statement said. "Many corrupt individuals have found
political comfort and support among such people." The
ministry maintained that it was closing in on those involved
in the theft and banking of Sh80 billion public funds in foreign
banks. "Legal experts have been identified for this purpose
and are initially targeting the identified $1billion for freezing,"
the statement said. The statement said that further asset
search and recovery, both local and international, would be
undertaken by Justice Ringera-led Kenya Anti-Corruption Commission.
From East African Standard, Kenya, by Benson
Kathuri, 4 April 2005
Obasanjo: It's Now
Zero Tolerance for Corruption
Warns ministers to 'get caught, be
fired and tried'- President Olusegun Oba-sanjo yesterday declared
what amounted to a 'red alert' to his ministers and other
top government officials on the administration's battle against
corruption as he said he has "zero tolerance" for
the scourge. Speaking at the launching and handing over of
helicopters and special motorcycles to the Nigeria Police
in Abuja, Obasanjo said, "I have a zero tolerance for
corruption and I will not accept corrupt practices any longer."
According to the President, "henceforth any minister
or government official caught engaging in corrupt practices
would not only be dismissed from office but would be made
to face the full wrath of the law at the court." He also
used the ocasion to warn members of the Police High Command
to be at alert in fishing out those he described as the bad
eggs within the force.
The President said the on-going crusade
against corruption is total as no one would be spared if caught.
He urged the Police High Command to flush out all those that
are corrupt. "The war against corruption is total and
we are not going to spare anybody no matter how highly placed,"
he said. He expressed dismay and disappointment at the unsatisfactory
reports reaching him on the police force and vowed to go the
extra length to restore diginity and sanity in the Force.
On the launching and handover of the special motorcycles and
helicopters to the police,Obasanjo said the equiptment were
acquired to enhance the operational efficiency of the Police
Force. Obasanjo stated that the helicopters would be deployed
in search and rescue mission while the motorcycles would assist
the police to penetrate pathways and other difficiult terrain.
In the last one-month when the President
has pursued the anti-corruption battle with vigour, two ministers,
- that of Education and Housing, Prof. Fabian Osuji and Mrs.
Mobolaji Osomo, have been fired while Senate President Adolphus
Wabara has been forced to resign. Osuji and Wabara were indicted
in the N55 million bribe-for-budget scandal while Osomo was
removed for not following due process in the sale of Federal
Government houses in Ikoyi, Lagos. Also, the former Inspector
General of Police, Mr. Tafa Balogun, was last Monday arraigned
in a Federal High Court, Abuja on a 70-count charge of money
laundering and stealing. Speaking at the occasion, the Minister
of Police Affairs, Chief Broadrick Bozimo, advised that the
maintenance of the equipment should be given priority. He
said that plans are under way to embark on regular foreign
training of policemen in order to enhance their operational
performances. Earlier, the occassion was nearly marred by
an accidental discharge of bullets from the rifle of one of
the policemen on guard duties. A lady hawker at the Eagle
Square Venue of the launching was nearly killed. Eye witness
account said the lady whose name was not immediately known
was badly wounded and was immediatley rushed to the hospital
for medical care. The scene of the shooting was immediately
cordoned off by stern looking policemen on the order of senior
police officers. Over 1,000 specialised motor-cycles and two
helicopters were handed over to the police at the ceremony.
From AllAfrica.com, Africa, by Chuks Okocha
of This day, Lagos, 8 April 2005
'Anti-Corruption War,
A Political Revolution'
Vision For Nigeria (VFN), a US-based
non-govermental organisation, has described as a political
revolution, the on-going anti-corruption war by President
Olusegun Obasanjo, saying such revolutions had existed in
all advanced democracies of the world, prelude to their successes.
Chairman of the group, Chief Elvis Ndubueze, said the recent
development in the country, which culminated in the sack of
the Housing Minister, Mrs. Mobolaji Osomo, her education counterpart,
Professor Fabian Osuji, resignation of Senate President, Adolphus
Wabara and the appearance in court of the former Inspector-General
of Police, Tafa Balogun, were twists commendable in the polity.
"All the things happening in Nigeria now are political
revolution, and they have happened in all the countries that
aim at success. For the first time, this is happening in Nigeria,
I think we should call a spade a spade. People should look
at what is happening with discerning mind and come up with
constructive argument.
"Each time we talk here, we talk
about US, London, France, Singapore and all the advanced countries
as if they never went through similar experiences. People
in those countries fought corruption openly and that is why
they can stand up to be counted. That is why everybody who
is honourable will support Obasanjo's crusade," he said.
Ndubueze said the elites must have to drop their cynical disposition
towards everything, before they can be able to see the beauty
in the on-going revolution. "Obasanjo is thorough and
genuine with what he is doing and whoever is against this
will incur the wrath of God," he said.
"The democratic groups in the
world today are supporting Obasanjo. So, the elites should
help build the country for the betterment of all. The world
is in support of what's happening in Nigeria today and whoever
is against the cleansing in Nigeria will not find favour in
the sight of God", he stated. He therefore called on
all well-meaning Nigerians to rally round the President with
a view to ensuring he succeeds in the on-going revolution.
He said many may not appreciate what is presently going on,
but that the dividends of the present sacrifice would soon
come to maifestation.
From AllAfrica.com, Africa, by Olawale Olaleye
of This Day, Latos, 7 April 2005
Tukur Hails Obasanjo's
Anti-Corruption War
Chairman of NEPAD Business
Gruop, Dr. Bamanga Tukur, has praised the courage of President
Olusegun Obasanjo in his on-going anti-coruption crusade,
saying the presidential initiative deserves the support of
all Nigerians. Commenting on the promptness with which the
President reacted to the N55 million bribe-for-budget scandal
that rocked the National Assembly last week and the Ikoyi
houses sale scandal, Tukur said the President has taken the
bull by the horn, adding that "the crusade now started
should not be stopped untill sanity is restored into the polity."
Saying there should be no sacred cow in the on-going crusade,
Tukur who is also the Executive President of African Business
Roundtable advised that whoever is caught should be made to
account for it. While also saluting the courage of Economic
and Financial Crimes Commission (EFCC), Alhaji Nuhu Ribadu,
NEPAD chief said the commission should be strenghtend. He
said the anti-coruption crusade has rekindled hope that Nigeria
can be great again, adding that "Nigerians can now walk
tall around the world as a result of this initiative."
Tukur prayed God to give President Obasanjo the strenght and
wisdom to carry through this crusade. He however condemned
what he called "misguided moves" by some National
Assembly members to initiate impeachement move against Obasanjo.
From AllAfrica.com, Africa, by This Day,
Lagos, 5 April 2005
UN says Corruption in Cambodia Hinders
A U.N. human rights expert says rampant
corruption in Cambodia is hindering the country's progress
toward democracy and economic development. In a report submitted
to the U.N. Human Rights Commission in Geneva, the expert
says problems of impunity have become systemic to the detriment
of the society. U.N. human-rights expert Peter Leuprecht says
his last visit to Cambodia in November left him more pessimistic
than ever about the future of the country. He says the government
of Prime Minister Hun Sen seems to be increasingly autocratic
and is concentrating power behind what he calls a shaky facade
of democracy. Mr. Leuprecht calls impunity a "gangrene"
that undermines the fabric of Cambodian society. He says the
necessary mechanisms for accountability are not in place.
"The judiciary is very weak," he said. "There
is no separation of powers in Cambodia, and the rule of law,
also in this respect, is elusive. Now, among many other things,
impunity fosters corruption, which is endemic in Cambodia.
It is everywhere, at all levels."
Mr. Leuprecht is very critical of Cambodia's
system of forestry and land concessions. He says granting
concessions often involves large kickbacks. He says the system
has led to human-rights violations, while neither the people
nor the state has benefited from the concessions. The human-rights
expert says the companies, often foreign, are only interested
in timber and this has led to the rapid destruction of forests,
with far-reaching ecological consequences. Mr. Leuprecht says
he is concerned about restrictions on freedom of assembly
and association. He says he has documented a system of intimidation
and threats. "I think if somebody denounced cases of
corruption by high-placed people, probably he or she would
run into trouble," he said. "There is still, and,
regrettably, a very high degree of violence, also connected
with impunity. You know, these contract-style killings. Quite
a lot of these have happened. There have been quite severe
measures, quite brutal measures against people, who protest
peacefully, for example, against the concession system."
Mr. Leuprecht says there is hope that
trials of people accused of mass murder under the Khmer Rouge
will begin toward the end of this year, or early next year.
He calls this one of the few positive developments he has
seen in the country. Although he does not view the tribunal
as ideal, he says it could have a good effect on the administration
of justice in Cambodia. He says the head of Cambodia's Human
Rights Committee, who has read his report, has commented that
the information contained within is not based on facts.
From Voice of America, by Lisa Schlein,
Geneva, 18 April 2005
China, Thailand Boost
Corruption Crackdown
Manila - China and Thailand on Tuesday
joined the anti-corruption group of the Asian Development
Bank and the Organization for Economic Cooperation and Development.
The Manila-based ADB and the OECD of Paris welcomed China
and Thailand as the 24th and 25th member of the anti-corruption
initiative. Launched in 1999, the group focuses on promoting
anti-corruption policies both at the national and regional
levels. The two countries' decision to join "is important
proof of China's and Thailand's highest political commitment
to fight corruption and a major step forward for the (Asia)
region's efforts in this regard," said Jak Jabes, the
ADB's director for governance and regional cooperation division.
From Washington Times, DC, 19 April 2005
PM Vows to Fight Corruption,
HCM City - The draft laws to fight
corruption and economic waste, which are expected to be submitted
to the National Assembly this year, will allow the people
to take a more active role in the fight against these malpractices,
said Khai at a meeting with voters in HCM City on Tuesday.
At the meeting with 400 voters in District 12 and Hoc Mon
District, citizens told the PM that they are most concerned
about the shortcomings of planning and urban management, traffic
accidents, increasing social vices, administrative hassles
and slow administrative reform. District 12 voters were concerned
that compensation for road construction projects like the
Trans-Asia Highway has been inadequate and has taken too long.
They also complained that 90 percent
of the roads in the district are made of dirt and in bad condition,
which affects their daily lives. Meanwhile, Hoc Mon District
voters said that rural planning and development lack sufficient
attention. Factories and residential buildings built on farmland
have negatively affected the agricultural livelihoods of many
people. The PM admitted that even though significant administrative
reforms have been made over the past few years, many people
still experience administrative hassles when dealing with
land-use or home-ownership rights. This problem has diminished
the people's faith in reforms, the PM said. Prime Minister
Khai also asked the local government to be more determined
in dealing with those who violate the law.
From Viet Nam News, Vietnam, 14 April 2005
Teachers to Adopt New
Code of Ethics
Victorian teachers will be asked to
adhere to a new code of ethics covering values such as integrity,
honesty and respect. The draft code has been developed by
the Victorian Institute of Teaching in consultation with teachers
around the state. The state's 98,000 registered teachers will
get a copy of the draft code this week - the formal code is
due in July. The institute's chairwoman, Susan Halliday, says
it provides teachers with a benchmark of what is expected.
"It's important to understand that I suppose for a long
period of time teachers have worked particularly well without
a code, but I think it's also important to note that we do
need one set of standards that everybody has access to and
can adhere to," she said. "For some people it may
be a confirmation of what they were thinking mEay have changed
over more recent times, for others it will appear just like
commonsense, something you know that they will read and they'll
go 'oh I would have assumed this automatically'."
From ABC Regional Online, Australia, 19
April 2005
Government Pushes for
Administrative Reforms
New Delhi - In a significant
move aimed at improving governance, the government on Friday
annou-nced in principle the setting up of a second administrative
reforms commission (ARC). The Union cabinet, chaired by PM
Manmohan Singh, decided to constitute a group of ministers
to finalise the terms of reference of the body that will be
set up to prepare a blueprint for revamping the public administration
system acr-oss the country. The cabinet also decided to fill
up the backlog of jobs reserved for the scheduled castes and
scheduled tribes and regularly monitor the progress made in
those reserved for the other backward classes (OBCs). A committee
- headed by the cabinet secretary - will be set up to strengthen
the process of filling up of the backlog of vacancies of members
of the SCs and STs. The meeting also decided that the backlog
of vacancies of OBCs should be monitored strictly and reports
regarding SCs, STs and OBCs should be periodically submitted
to the cabinet, I&B minister and cabinet spoke-sman S
Jaipal Reddy told reporters.
In another significant decision, the
cabinet gave news and current affairs TV networks the "last"
extension of six months to raise the equity base of Indian
partners to 51% as required by the policy on uplinking. "The
policy requires the news channels to adhere to a cap of 26%
of FDI and the Indian entity to have not less than 51%,"
Reddy said after the meeting. He said the cabinet "gave
its last extension of six months from now (till September
2005) to show that the structural equity conforms to this
"There will be no further extensions,"
Reddy said. He said the firms operating such channels were
earlier required to conform to the revised guidelines by March
2004, that is, to restructure their equity to conform to these
guidelines. The decision for extension of the deadline will
give time to the ministry to finalise the proposal to review
the uplinking guidelines, Reddy said. The administrative reforms
commission, meanwhile, would go into the entire gamut of issues
relating to public administration and submit its report to
the government within one year of its constitution. Reddy
said the panel, with four members and a member secretary,
would be created as a commission of inquiry with its chairman
enjoying cabinet rank. In keeping with the changed dynamics
of governance, as compared to what they were four decades
ago, the new body would grapple with new issues like citizen-centric
administration, promoting e-governance and crisis management.
From India Infoline.com, India, 14 April
China Committed to
International Cooperation against Corruption
Bangkok: China has always
been committed to international cooperation in fighting against
corruption and is ready to push forward the efforts, Justice
Minister Zhang Fusen said Saturday at a United Nations conference
here. "Chinese law enforcement authorities have long
put the priorityon anti-corruption and achieved remarkable
results in recent years," said Zhang in a speech to the
11th United Nations Crime Prevention and Criminal Justice
Congress held in Bangkok. In a bid to further crack down on
corruption and other forms ofcrime, the Chinese government
also reached for international cooperation in related fields,
said Zhang.
China has ratified the UN Convention
against Transnational Organized Crime and signed the UN Convention
against Corruption, signed 71 bilateral justice cooperation
instruments with 47 countries, had agreements on extradition
with 23 countries and been a member of more than 20 international
justice cooperation conventions, according to Zhang. "We
also called on UN member states to speed up their adoption
and implementation of the anti-corruption convention and the
convention against transnational organized crime," he
The Chinese government is ready to
use the two instruments as basis for international cooperation
in fields of extradition, seeking and returning embezzled
assets and cross-border sample collection, he said. On the
domestic level, the legislature authorities are working to
draft a law against money laundering, according to Zhang.
How to fight against corruption, transnational organized crime,economic
and financial crime and terrorism through international cooperation
are major topics being discussed at the UN crime prevention
congress, which is being held in Bangkok from April 18 to
From Xinhua, China, 23 April 2005
Bosnia Opposition Urges Anti-corruption
Opposition forces are furious that
ruling parties and the international community's Lord Paddy
Ashdown have united to quash a law enabling courts to seize
illegally obtained assets. Bosnian opposition parties are
angry that the internationally appointed authority in the
country has refused to support what they say is a crucial
law aimed at cutting down corruption, tax evasion and money
laundering. They say the lack of legal provisions enabling
courts to seize illegally acquired property and other assets
is costing the state millions of euro in lost money. Although
they presented a draft law on the seizure of illegally obtained
assets almost 18 months ago, the ruling nationalist parties
have refused to adopt it and the office of the High Representative
(OHR) under Paddy Ashdown, has also held aloof.
The scale of the problem is not seriously
disputed. Studies by international and legal experts over
several years have shown that huge amounts of money are lost
to the government every year through money laundering, embezzlement,
tax evasion and the illegal acquisition of property and other
assets. Only this year, studies pointed to the extent to which
organized and economic crime structures are damaging the country's
coffers. They pointed out that while Bosnia has received huge
financial donations over the past decade, including more than
US$5 billion in aid from 1995 to 2000, little of this investment
is visible on the country's shabby streets, or in the life-styles
of the poverty stricken population. The OHR has also admitted
that several billion convertible marks (KM), the Bosnian currency,
earmarked for social spending had ended up in private hands
in the past few years.
Losing billions to corruption - In
Bosnia's reconstruction sector alone, about 74 million KM
are embezzled every year, according to Transparency International,
a respected anti-corruption watchdog. The Customs and Fiscal
Assistance Office, CAFAO, says another 1.2 billion KM, which
is more than the annual budget of the Federation - Bosnia's
larger entity - is lost to the government each year through
scams such as fake companies, or companies registered in the
name of dead people. This corruption has more than purely
economic consequences. An efficient fight against organized
crime and corruption is one of 16 conditions set by the European
Commission if Bosnia is to get a green light for a Stabilization
and Association Agreement (SAA), a key stage on the road to
EU membership. The establishment of a special legal department
for tackling organized and economic crime and corruption marked
a first step by the courts to bring the criminals to justice.
But this initiative has proved insufficient. While the department
has launched many court cases, only a few people have been
sentenced. Additionally, those who were convicted and sentenced
have usually retained ownership of their illegally acquired
assets through legal loopholes.
Legislation lacking - Legal
experts say the courts have been unable to remedy this basic
deficiency because they lack a specific law that would entitle
them to requisition such assets. "We sorely need a law that
would allow the seizure of illegally acquired assets," Transparency
International's spokesperson, Srdjan Blagovcanin, told IWPR.
"It could be a very efficient way to combat organized crime
and other acts of crime." The existing regulations in Bosnia
on the issue are either ignored, unexplored or are not used
efficiently. For example, the country is a signatory to the
Council of Europe convention on money laundering, obliging
the authorities to seek out and confiscate property acquired
through crime. But the obligation is rarely implemented. Similarly,
the new Bosnian criminal code states, "No one can retain illegally
acquired property." But, in the two years since that law has
been in place, only 500'000 KM of such assets have been seized
in a handful of cases. Lawyers say the existing regulations
are not sufficient and that the lack of a precise law on the
matter is a hindrance. "If we had the legal possibilities
to act, we could seize �5 million of assets in real estate
and cash from just one man now under investigation," a source
close to the Bosnian judiciary told IWPR. The source added,
"We know that this man can't prove the origin of his property
but it's hard for us to prove this under the current regulations."
Targeting assets - Several
European countries possess special guidelines or laws designed
to ensure that illegally acquired assets do not remain in
the hands of the people who have been found guilty of committing
crimes. With this in mind, opposition parties in the Bosnian
state parliament put forward draft legislation based on an
existing law in Ireland, which would have set up a special
agency to receive assets acquired through criminal activities.
If the owner was found unable to establish a legal title to
the property, the law would permit the agency to retain control
and assess its value. It would then decide how to use the
money or property and whether to sell it. The Socialist Democratic
Party (SDP), the Alliance of Independent Social Democrats
(SNSD), and the National Croat Initiative (NHI), presented
the draft law to the Bosnian parliament in late 2003. "We
wanted to secure a tool that would help the fight against
one of the greatest evils facing [Bosnia] today - crime and
corruption," Jozo Krizanovic, head of the SDP group in the
Bosnian assembly, told IWPR. "Before we proposed the law and
the forming of the agency, we reviewed one of the annual reports
on the work of the state prosecutor, which said the prosecution
had processed some 30 acts of crime and seized just over 50'000
KM under the [current] rules. We noted that even when a crime
was dealt with and the perpetrators sentenced, their property
remained in their hands. It is in the interest of citizens
for those assets not to remain in the hands of the people
who acquired it in an illegal manner."
Reform gets nowhere - The
proposed reform has got nowhere, though. It was rejected twice
by deputies of the governing nationalist parties, namely,
the Party of Democratic Action (SDA), the Serbian Democratic
Party (SDS), and the Croatian Democratic Union (HDZ). "The
reaction in parliament from the ruling parties was very negative
even before they looked at the law," Krizanovic said. They
said this law was not needed because there were other laws
that enabled the same thing. Some said it recalled the "dark
days of the previous [communist] system". The SDA's Mirsad
Ceman, chair of the Constitutional Legal Commission of the
Bosnian Parliamentary Assembly House of Representatives, said
the failure to adopt the proposed law was "not a catastrophe".
Cerman rejected the need to adopt this or any similar law,
insisting that the existing laws afforded ample possibilities
for the courts to combat crime and corruption. Even when reminded
that the state prosecutor himself this year told parliament
of the need to adopt such a law, Cerman remained adamant.
The state prosecutor, he said, had "voiced a political, not
an expert, stand". "Obviously, the people who made the proposal
think they are the image of honesty while all the others are
the image of thievery. I say that there are thieves�among
both," he went on.
Opposition seeks OHR support - After
the ruling parties refused to budge, the opposition sought
support from the OHR. Their initial hopes were high. The previous
High Representative, Wolfgang Petritsch, prior to leaving,
had drafted a document entitled Work and Justice, which concluded
that the authorities "have to draft and adopt a law which
orders the seizure of assets acquired through acts of crime".
But the current High Representative, Paddy Ashdown, has refused
to take the same stand. Sources close to the OHR say this
is partly because the OHR prefers to have its own legal team
drafting laws, which it then imposes. However, a second reason
may be that most of the existing laws, which the prosecution
complains about, have been imposed or drafted by people that
the OHR itself engaged. When the OHR did voice an opinion
on the draft law, it demanded major changes and amendments.
For example, the OHR wanted changes to the part of the law
that stated that it would be enough for the state to keep
illegally obtained assets if the owner could not prove their
legality, rather than requiring the state prosecutor to prove
their criminal origin. When the initiators of the law declined
to change this section of the wording, the OHR refused to
give its support, saying that adoption of a law like this
would be "premature". This decision by the OHR went effectively
in favor of the ruling parties and their refusal to adopt
the law or give it another hearing. To Cerman, a leading opponent,
the arguments that many European countries have such laws
and agencies is no reason for Bosnia to follow suit. "Nothing
can convince me that we need this law," he said. "All of this
is aimed at creating political tension."
From ISN, Switzerland, by Nidzara Ahmetasevic
in Sarajevo for IWPR, 18 April 2005
Transparency International's
Leader on Corruption in Romania
In Short: The view prevailing in the
EU institutions is that combatting corruption remains a key
issue for EU candidate Romania. Miklos Marschall, executive
director of Transparency International, believes that Bucharest's
latest initiatives on this front appear serious but that the
EU also needs to set up clearer anti-corruption policies and
Brief News: In an interview with EurActiv
Romania, Marschall said that the new Romanian government has
a relatively limited window of opportunity to convince the
public that it means what it says. "They should demonstrate
that a new era with new rules has started," said Marschall.
Furthermore, he recommended that Bucharest take the related
warnings from Strasbourg and Brussels very seriously, noting
that "window-dressings" by various "anti-corruption
crusaders" serve only to undermine the credibility of
the anti-corruption campaigns. In Marschall's opinion, the
fact that Romania has the worst score in Transparency International's
Corruption Perception Index among the recent EU accession
countries can be explained by the existence of a "stronger
consensus" within the political elites of the other countries
about the necessary reform agenda.
From Euractiv, Belgium, 14 April 2005
Research and Markets
Has Announced the Addition of Ethics and Corporate Social
Responsibility in Retail Financial Services to Their Offering
Ethics and Corporate Social Responsibility
in Retail Financial Services sets out to provide a comprehensive
review of the increasing importance of ethical issues in financial
services. Today financial services companies find themselves
exposed to ever greater public scrutiny as successive scandals
have severely damaged the sector's image. Reputation is everything
in financial services and companies have been forced to realise
that without sound ethical values and active policies on corporate
social responsibility (CSR) and sustainable growth they will
be vulnerable to customer and investor criticism.
This report shows how financial services
companies can reduce their reputational risk by developing
a genuinely ethical profile in the marketplace, which underpins
their brand, increases customer retention and locks in shareholder
value. The report gives special attention to ethical marketing
and describes how a company can avoid mistakes like mis-selling
and deceptive advertising. It looks at how financial services
companies can structure their CSR programme, how to develop
an ethical approach to product design and how to organise
themselves so that they minimise reputational risk. Using
case studies to illustrate why ethical mishaps take place,
the report also looks at best practice in companies with a
developed sense of corporate citizenship. Details are given
about the new regulatory background and how a raft of EC financial
legislation is about to transform the whole ethical and compliance
background of the industry. Attention is given to how ethics
in financial services relates to internal control and how
companies can uphold their values through independent ethical
committees. The strategic implications of the new ethical
awareness are discussed in detail including the implications
for boards and senior management, transparency and disclosure,
risk management, diversification and acquisitions and liability
Regulators have decided to get tough
on financial services companies who are now exposed to considerable
regulatory risk. Financial companies also realise that as
much as 90% of their shareholder value is tied up in their
reputation and that they need to act to reduce regulatory
risk. Directors and senior management are at greater risk
of being sued today and the many headline cases have scared
industry leaders into taking action to protect themselves
and their companies. Companies are also being measured and
rated for their ethical and CSR status and sometimes companies
are being "blacklisted" by investors if they don't
measure up to the highest standards. Thus there is an urgent
need to protect shareholder value by demonstrating the company
has an ethical stance. No other publication has pulled together
all the ethical issues, which
affect financial services.
Why do you need this report? -
Safeguard yourself from 'blacklisting' by investors; - Protect
shareholder value by demonstrating your company has a sound;
ethical stance - Learn from your peers through case studies
that illustrate how best; practice is achieved and why ethical
- mishaps take place; - Protect your image and boost your
brand; - Ensure you are aware of ALL of the ethical issues
that affect financial.
Who should read this report? Senior
Executives working within retail banks, insurance companies
and the investment community at the following levels: CEO,
Chairman and Director, Heads of Internal Audit, Heads of Marketing,
Ethics Officers, CSR Officers, Heads of Business Units, Compliance
Officers, PR Officers, Head of Legal Department, Operational
Risk Managers
Topics covered in the report include:
- The Ethical Dimension to Selling Financial Services; - Case
Studies; - Ethical Selling; - CSR and Sustainability Programmes;
- Communicating Best Practice Ethics; - Design of Financial
Products; - Reputational Risk in Financial Services
- Strategic Implications of the New Ethical Awareness.
From PR Newswire (press release), 15 April
Romania, Bulgaria Sign
EU Entry Pact
Bulgarians celebrated
on the streets of the capital Monday - Romania and Bulgaria
signed an accession treaty with the European Union Monday,
paving the way to join the bloc in January 2007 in what they
hailed as an "historic" step for their ex-communist
nations. Flanked by a huge blue screen trumpeting "welcome,"
the two countries' leaders signed the accord at a ceremony
on the sidelines of a meeting of EU foreign ministers in Luxembourg,
which holds the bloc's rotating presidency. Both of the Balkan
states, which were slow in starting reforms after the 1989
collapse of communism in the region, were left out of last
year's EU enlargement from 15 to 25 countries, including eight
ex-communist states. With a combined population of some 30
million, they would be the poorest countries in the bloc if
they were to join tomorrow, with a pro capita GDP of less
than 30 percent of the EU average.
Luxembourg Prime Minister Jean-Claude
Juncker, whose country currently holds the EU presidency,
lauded the Bulgarian and Romanian people's qualities. "Let
us welcome the people of Bulgaria and Romania, these courageous
people, these noble people, into the heart of our family,"
said Luxembourg Prime Minister Jean-Claude Juncker. "Their
courage and their ability to get things done have never failed
to impress us," he added.
Reforms still necessary - EU commission
chief Jose Manuel Barroso underlined the need for continued
efforts even as he welcomed Romania and Bulgaria into "the
European family" at Monday's ceremony. But rest assured
that we will also be working with you to overcome any difficulties
as you make your final push between now and January 2007,"
he said. The two Balkan states joining the EU is contingent
upon them carrying out reforms to fight corruption, strengthen
border controls, beef up their justice and administration,
and improve rules on state aid to industry. If they fail to
fulfill the EU's requirements for entry, their membership
could be delayed until 2008, according to the 860-page treaty
signed Monday.
From Deutsche Welle, Germany, 25 April
The Dubai Ethics Resource Center
Teams Up with Five Local Colleges and Universities to Launch
the 'Future Leader Program'
The Dubai Ethics Resource Center (DERC)
and five colleges and universities have launched a joint program
to foster personal responsibility and ethical leadership in
college students. In a press conference held at the Chamber
of Commerce and Industry, senior administrators from the Dubai
Men's College, the Dubai Women's College, the Dubai University
College, the Wollongong University in Dubai and Zayed University
joined DERC officials in announcing the Future Leader Program,
a multi-pronged educational and teaching skill development
program that will empower students to identify and confront
ethical challenges in the work environment, assist them in
the development of ethical leadership attributes and strengthen
the capacity of faculty members to design and deliver business
ethics curricula. A memorandum of understanding governing
the terms of the multilateral collaboration was signed in
a public ceremony prior to the press conference.
Ms. Amna Al Jallaf, a member of the
Dubai Chamber of Commerce and Industry (DCCI) Board who sits
on the Executive Committee of DERC said that the Future Leader
Program 'provides a vehicle for business and academia to contribute
to the ethical development of the next generation of business
leaders'. She explained that 'leaders from DCCI affiliated
Business Groups participated in the identification of key
ethical challenges that new graduates are likely to face in
the work place, which will be used by faculty-led working
groups in developing the program content'.
A major component of the program is
the joint development of an online ethics resource center
that will be accessible by students and faculty at participating
institutions and can be made available to other colleges and
universities in the UAE and the region. A Higher Colleges
of Technology supplied online teaching and object-learning
platform will be used to create ethics simulations, case studies
and other reference material. Director of Dubai Women's College,
Dr Howard Reed, says the platform will provide interactive
learning opportunities for students about the ethical implications
of the decisions they would make in business. "The online
simulations have been carefully scripted to include situations
familiar to students and business people in Dubai. Examples
include conflict of interest and discrimination in the workplace.
Dubai Women's College welcomes the collaboration with the
Dubai Ethics Resource Centre and other tertiary institutions
to produce these innovative tools to support independent learning.
The program is jointly supported by
the DCCI, the Higher Colleges of Technology and Shell Exploration
and Production International. Hussain Al Mahmoudi, External
Affairs Manager at Shell explained: "this is yet a further
demonstration of Shell commitment to the development of the
UAE. We believe such a program is an excellent initiative
which aims at training the future leaders on business Ethics.
We would like to congratulate the DERC on moving and successfully
implementing this program. The program tailors well with Shell's
own internal programmes on adhering to its General Business
Principles. Shell has been a founding member of the Executive
Committee of DERC and has shown support throughout the establishment
A series of university seminars on
business ethics were conducted throughout February and March
of this year as a prelude to launching the program. Added
Alex Zalami, DERC Executive Director: 'a writing group composed
of faculty members from participating colleges and universities
is scheduled to complete the first on-line ethics simulation
in June and plans to develop additional material to launch
the online resource center by the fall semester. In parallel,
a group of faculty members from the various academic institutions
are currently enrolled in an on-line train-the-trainer workshop
to develop their skills in teaching business ethics. This
summer, DERC will host a group of student interns who will
complete the summer internship program with a week residency
at leading local and regional businesses for on-site familiarization
with best practices in business ethics and corporate governance'.
From AME Info, United Arab Emirates, 18
April 2005
Palestinian President
Tackles Corruption
Gaza - Palestinian President Mahmoud
Abbas removed three of the late Yasser Arafat's top commanders
in attempts to control widespread corruption. This initiative
follows US and Israeli urges to make changes to security forces.
Hundreds of their men are leaving under a retirement plan
announced earlier this month, under which officers have to
retire at the age of 60. The Palestinian security apparatus
has long been seen as weak and inefficient in reining in militants
and maintaining law and order.
The reform is an attempt at streamlining
nine security branches, which have been in competition with
each other in the past. In carrying out his reforms, Abbas
has to be careful not to alienate influential figures in the
Fatah movement, which have played prominent roles in leading
the security forces in the past. Abbas, also known as Abu
Mazen, was named as chairman of the Palestine Liberation Organization
(PLO) after Yasser Arafat died in November 2004. He won convincingly
in the election for president of the Palestinian Authority
in January 2005. The 69-year-old was the nominated candidate
of the main Palestinian political faction Fatah, and the clear
front-runner throughout the campaign. He was also the man
favored by the international community and Israel to succeed
From All Headlines News, by Danielle M.
George, 23 April 2005
Battle Over Ethics Reform Continues
On Capitol Hill
A new proposal which would require
businesses and other groups to disclose how much money they
spend on lobbyists to push legislation was debated in a Tennessee
House subcommittee Tuesday. Representative Frank Buck's legislation
would address the amount of money spent by outside interests
to lobby state lawmakers. Buck said he is getting more confident
legislation aimed at regulating lobbyists can become law.
"I feel better today in all candor with you than I have in
a long time, because I thought a vote earlier without public
rage and anger I don't think we'd be where we are. I think
we're getting better not worse," Buck said. Separate ethics
legislation aimed at allegations surrounding Senator John
Ford of Memphis also went before a House and Senate conference
committee Tuesday. That proposal would ban lawmakers from
taking so-called "consulting money" to influence state contracts.
The conference committee's job will be to iron out the differences
between Senate and House versions of the bill.
From WTVF, TN, 19 April 2005
Bush Administration
Fails to Support Update of Code of Ethics for International
Trade in Foods
WHO Recommended Nutrition, Food-Safety
Updates - Consumer groups are chiding the Bush Administration
for failing to support efforts by the World Health Organization
(WHO) to update a 20-year-old Code of Ethics for International
Trade in Foods. According to the International Association
of Consumer Food Organizations (IACFO), that Code needs to
be updated to include guidance on marketing junk food to kids
and related nutrition issues. This week in Paris revisions
to the Code were being considered by a committee of the Codex
Alimentarius Commission (Codex) sponsored by the United Nations
Food and Agriculture Organization. The WHO called on the committee
to revise the Code to address marketing practices that affect
nutrition and diet-related disease. The U.S. failed, though,
to support the WHO recommendation.
"This 20-year-old Code of ethics
needs to reflect current concerns about nutrition and diet-related
disease, particularly the growing epidemic of childhood obesity
worldwide," said Bruce Silverglade, director of legal
affairs for the Center for Science in the Public Interest,
who attended the meeting on behalf of IACFO. "The Bush
Administration talks a lot about the obesity crisis, but fails
to speak up when it counts," he said. The U.S.-based
Food Products Association opposed revising the Code. The Code
sets baseline standards that countries can apply to the marketing
of food products. While not mandatory, most countries follow
regulatory policies that are consistent with the Code. While
European countries attending the Codex meeting generally supported
revising the Code, some Latin American countries opposed such
efforts, expressing fears that revisions could create new
trade barriers. The U.S. government remained silent on the
point. The Codex Secretariat stated it would be "awkward"
to proceed in the absence of greater enthusiasm, and despite
support from the chair of the Codex committee, the matter
was dropped.
From Center for Science in the Public Interest
(press release), D.C., 15 April 2005
Congress to Seek Shorter
Leash for Global Lenders
The U.S. Congress is moving to demand
tougher transparency and accountability measures from the
five leading multilateral development banks that lend billions
of dollars to developing nations. U.S. Senate Foreign Relations
Committee Chairman Richard Lugar says those demands will come
as part of legislation authorising renewed funding for the
banks, whose work affects hundreds of millions of people around
the world. The five Multilateral Development Banks (MDBs)
are the African Development Bank, the Asian Development Bank,
the European Bank for Reconstruction and Development, the
Inter-American Development Bank, and the World Bank. Corruption
has become a global issue as developing countries, watchdog
groups and some economists complain that multilateral development
banks (MDBs) are mishandling vast sums intended to alleviate
poverty, yet taxpayers in the borrowing countries still have
to repay the banks.
In the last fiscal year, the MDBs financed
projects worth more than 35 billion dollars in the areas of
public administration, transportation, health and education,
among others. In exchange, the MDBs push borrowing countries
to lift economic barriers and foster a worry-free environment
for the operations of multinational corporations based in
industrialised nations. The United States, the world's largest
economy, contributes more than one billion dollars a year
to the banks, with a majority of that money going to the World
Bank's International Development Association, which lends
to the very poorest countries at subsidised rates. Since 1960,
the United States has provided more than 42 billion dollars
in direct contributions to the MDBs. Congress has the authority
to determine how much and under what conditions funding will
be allocated to the banks. Lugar said his committee, at the
request of the George W. Bush administration, is working to
ensure that U.S. contributions are managed well and "that
the mission of the MDBs is not undercut by corruption."
Lugar was speaking on Thursday in the fourth hearing devoted
to reviewing U.S. policy toward the MDBs.
The U.S. Congress says it is looking
for ways to help anti-fraud efforts at those public lenders.
As part of this effort, Lugar said he sent letters of inquiry
on individual projects and policies to the various banks,
while his aides have visited overseas projects and interviewed
bank employees, non-governmental organisation representatives,
academics and government officials. Other legislative bodies
have conducted similar investigations. The British parliament
has undertaken its own inquiry, while the Italian Senate issued
an order last September requesting an investigation. "Corruption
impedes development efforts in many ways," Lugar said.
"Bribes can influence important bank decisions on projects
and contractors. Misuse of funds can inflate project costs,
deny needed assistance to the poor, and cause projects to
fail." There have been numerous complaints about corruption
inside the MDBs, and during earlier hearings, several speakers
called for urgent reforms. Among the recommendations were
changing the incentives at the MDBs so that staff would feel
less pressure to approve loans, and focus more actively on
supervision and auditing of their lending.
There were also calls for more transparency
in MDB operations and a requirement that borrowers improve
transparency within their governments. Among the measures
that may be requested by Congress is for the MDBs to harmonise
anti-corruption policies and compile shared "blacklists"
of corrupt companies and individuals. As it now stands, a
company that is barred from working with the World Bank can
still enter into contracts with the other MDBs. The European
Bank for Reconstruction and Development, which operates in
27 countries that were once part of the Soviet bloc, has never
banned a firm or an individual despite rampant corruption
in the region. At Thursday's hearing there were also calls
for external audits of managerial and financial controls like
those described in the so-called Sarbanes-Oxley legislation,
named after two U.S. senators, for all publicly held companies
in the United States. "The challenge of preventing waste,
fraud, and corruption at the MDBs must be tackled with vigour,"
said Lugar.
Because of their enormous influence
on the world and their constant demands for better governance
from borrowing nations, many critics have said it was ironic
that the MDBs themselves have yet to practice what they preach.
"It is imperative that the policies and practices of
the banks themselves reflect the values of transparency and
respect for human rights that they expect from the rest of
the world," said Tom Devine, legal director of the Washington-based
Government Accountability Project (GAP). "That is because
these practices can have life and death consequences,"
he added. Devine, whose organisation works to protect whistleblowers,
charged at the hearing that witnesses to misconduct and abuse
at the banks are afraid to come forward. "Our evidence
demonstrates that their fears are well-founded.
The banks routinely victimise the messenger
rather than hold accountable those who defraud donor countries
and recipient countries alike," he said. Previously,
the United States has passed bills requiring that the country
use its voice and vote to implement transparency reforms and
to prevent the targeting of whistleblowers. But U.S. Executive
Director to the Asian Development Bank (ADB) Paul W. Speltz
said at the hearing that the ADB has made "significant
progress". He said the bank is opening its operations
to outside scrutiny, strengthening its anti-corruption capability,
and promoting good governance in borrowing countries. He said
that in 2004, the Manila-based ADB established a new inspection
mechanism to address the concerns of persons affected by ADB
projects and that the 2005 ADB budget included a 12 percent
increase in funding for it.
Both the ADB and the European Bank
for Reconstruction and Development said that an increasing
number of projects include strict anti-corruption safeguards,
including a transport project in Nepal, the Sri Lanka tsunami
rehabilitation project, and the Bangladesh independent anti-corruption
commission project. The World Bank, the largest of the MDBs,
also says it already has multiple layers of oversight mechanisms,
including audits, an inspection panel that reviews complaints
about Bank projects, and the institution's governing board,
among others. But Devine charged that a great deal of rhetoric
has been coming out of the institutions, with no substantial
changes on the ground. He urged stepped up involvement by
the U.S. Congress. "While there is no doubt that some
light has been shone on corrupt practices, the banks are too
eager to direct that light on client countries," Devine
said. "Their anti-corruption claims are more rhetorical
than real."
From AllAfrica.com, Africa, by Emad Mekay
(Washington) of Inter Press Service, Johannesburg, 22 April
Ethics Commission Sees
Significant Rise in Complaints
In the last five fiscal years, complaints
filed with the state Ethics Commission have increased 20 percent,
according to the commission's 2004 annual report. Most of
the complaints were made by private citizens and concerned
municipal officials. But officials say the boosted numbers
don't necessarily mean there's been an increase in corruption.
In 2004, 78 percent of the ethics complaints dealt with municipal
employees. Complaints against state employees accounted for
18 percent, and county employees and private entities split
the remaining 4 percent. In the same year, 67 percent of complaints
were filed by private citizens, 21 percent from anonymous
sources, 9 percent were generated by the commission staff,
media and state review, 2 percent were reported by the alleged
offender and one percent by other law enforcement agencies.
Commission spokeswoman Carol Carson said 40 percent of the
complaints heard in her office come from 11 percent of the
state's cities and towns. Among the towns that generated the
most complaints were Abington, Stoughton, Rockland, Plymouth
Bridgewater and Kingston. But Carson cautioned against interpreting
a high number of complaints as an indicator of poor municipal
Of the 1005 complaints the commission
reviewed in 2004, 42.5 percent either fell outside the commission's
authority or were "clearly frivolous," according
to the 2004 report. Another 22 percent merited only a private
education letter for the alleged offender. Five percent were
consolidated with existing cases and just 9 percent were assigned
to one of the commission's four attorney-investigator teams
for review. In all, 31 complaints ended in formal hearings
or disposition agreements in 2004, generating $41,000 in fines
and forfeitures.
Executive Director Peter Sturges said
the overall trend in local government is toward closer compliance
with conflict-of-interest law. "Today, Massachusetts
public employees do a pretty good job. There will always be
people who make mistakes or try to get away with something.
Those people you read about, but they are actually a pretty
small number. "At the municipal level, there is a lot
of scrutiny of public employees. Most public employees try
to do the right thing." A spokesman with the state attorney
general's office said statistics on the prosecution of municipal
corruption aren't kept at the state level.
From Brockton Enterprise, MA, by Tim Grace,
23 April 2005
Better Protection for Small Nations
The Bank of Thailand governor yesterday
called on the international community to protect smaller countries
from economic crime and exploitation by bigger nations to
ensure a just and fair society for all. Speaking at the 11th
UN Congress on Crime Prevention and Criminal Justice, M.R.
Pridiyathorn Devakula discussed the exploitation of consumers
when products, deemed hazardous to public health in larger
countries, were relocated for production and sale in less
developed nations. He said tobaccos, cigarettes and medicines
were clear samples. Authorities from any two nations could
agree on whether such dubious practices constituted economic
crime. But it was clear smaller countries were exploited by
bigger ones with more economic clout and higher levels of
technological advancement, he said.
M.R. Pridiyathorn also hoped an internationally
neutral body such as the United Nations would look at the
economic exploitation of smaller nations and impose the appropriate
measures to prevent it since he did not foresee any elected
leader, whose rise to office would have been supported by
influential business sectors, making any such move. He said
economic crimes did not receive much attention since their
non-violent nature meant they did not generally have a direct
and immediate impact on people's lives and property. However,
such crimes were more difficult to solve because the authorities
often had to fight interference from influential figures allied
with the perpetrators.
"If the perpetrators are members of the government, swift
and decisive action taken against them will make society confident
in the government's policy on this issue and thus encourage
law enforcement officers to fearlessly do the right thing,"
he said. Strong political will and the full commitment of
the government was needed since economic and financial crimes
were vicious, destructive enemies of the country, M.R. Pridiyathorn
said. Crimes such as stock price manipulation, insider trading
and tax evasion generated feelings of unfairness in society,
he said, adding that this was especially true if white-collar
perpetrators had a lot of influence or were close friends
with politicians.
Meanwhile, all the participants agreed
that financial crime, despite its non-violent nature, affected
the global economy, the country's credibility and provided
financial support to transnational organised crime, terrorism
and corruption. To prevent and tackle the problems, authorities
in these countries needed to exchange information, technology
and technical training at the bilateral and multilateral levels.
Cooperation in fighting crime also needed to be strengthened.
The secretary-general of the Anti-Money Laundering Office,
Pol Maj-Gen Preeraphan Prempooti, said Canada had proposed
a measure to suppress ``identity theft'' and Thailand planned
to add this offence to the existing eight types of economic
crime. The proposal was submitted to the cabinet two months
ago and is now being considered.
From Voice of America, by bhanravee Tansubhapol,
18 April 2005
United Nations Crime
Conference to Focus on Responses to Threats Old and New
With hundreds of policy-makers gathered
in Bangkok, Thailand, to devise ways to combat graft, United
Nations Secretary-General Kofi Annan today urged an international
meeting on criminal justice to stand firmly against organized
crime and corruption by pushing for adoption and full implementation
of core international treaties and protocols aimed at fighting
those scourges.
In a message to the Eleventh UN Congress
on Crime Prevention and Criminal Justice, meeting through
25 April, Mr. Annan described organized crime as one of the
major threats to international peace and security in the new
century, and renewed his plea for States to ratify and implement
the UN convention against that scourge, as well as the treaty
against corruption. He also called for support for the 13
universal counter-terrorism instruments, and mutual cooperation
in strengthening domestic systems of criminal justice and
rule of law. Promoting the rule of law must also include robust
capacity-building mechanisms to help post-conflict societies,
where organized crime and links to large-scale corruption
hampered reconstruction, he said in his message, which was
read out by the Congress' Secretary-General, Antonio Mario
Costa, head of the UN Office of Drugs and Crime (UNODC). For
that reason, Mr. Annan added, he intended to create a dedicated
Rule of Law Assistance Unit, which would boost national efforts
to re-establish the rule of law emerging from instability
and war.
The eight-day gathering is expected
to draw Heads of State and ministers from more than 100 countries,
as well as 2,000 delegates from Member States and representatives
of various non-governmental organizations (NGOs) and criminal
justice professionals. The Congress will focus on transnational
organized crime, economic and financial graft, corruption
and terrorism. Its high-level segment will feature a special
treaty signing event to allow political leaders to ratify
relevant UN conventions. Ahead of the Congress, Mr. Costa
said that organized crime and the corruption it breeds posed
a threat of staggering proportions. The steady deterioration
of civil society, as well as ongoing conflict in many parts
of the world, offered criminals, terrorists and other predators
with opportunities to expand "what is fast becoming a
criminal super-state."
In his opening address today, Mr. Costa
urged greater political and financial support for the instruments
aimed at countering that phenomenon and invited the Congress
to second Mr. Annan's call for implementation of the core
anti-terrorism conventions. He also urged delegations to press
ahead with the Congress' outcome document - "The Bangkok
Declaration" - and to overcome differences about emerging
threats such as cyber-crime and money laundering. The Congress'
recommendations should leave no doubt about how to proceed,
Mr. Costa said, stressing that in any case, "The threats
are certainly there: if you fudge the answer I invite you
to give, you will have to live with the consequences. Give
yourselves the opportunity to invest in the two conventions
you have worked so hard to hammer out."
Agreeing that the meeting had come
at a "crucial moment" when new threats were emerging,
the Congress' President, Suwat Lipatpanlop, Thailand's Minister
of Justice, stressed the utmost importance of coming together
to build a new security consensus, based on a better global
regulatory framework, adequate compliance with that framework,
improved cooperation among States and international agencies,
and, above all, political willingness, commitment and determination
to take appropriate measures at national and local levels.
From UN News Centre, 18 April 2005
U.N. Seeks International
Response to Crime
Bangkok - The increasingly transnational
nature of organized crime and terrorism, the growing sophistication
of criminal groups in carrying out economic and financial
crimes, and the innovative uses to which both criminals and
law enforcement officials are putting the Internet, were among
the topics discussed at the weeklong Eleventh U.N. Congress
on Crime Prevention and Criminal Justice that ended Monday
in Bangkok. Judicial officials joined legal and law-enforcement
experts in proposing international strategies to cope with
crimes that defy national borders and turn huge segments of
humanity into potential victims.
In the Bangkok Declaration on Crime and Justice adopted Monday,
member states vowed to increase cooperation in extradition,
information sharing, mutual legal assistance and other areas,
especially related to money laundering, drug trafficking,
human trafficking and the financing of international terrorism.
Antonio Maria Costa, executive director of the U.N. Office
on Drugs and Crime, who was also secretary-general of the
conference, called the meeting a "milestone" in
that it acknowledged the international character of crime
and the need for an international response. He also praised
the declaration for its reference to "the importance
of addressing root causes that make people vulnerable to becoming
soldiers of death." "We are putting in place a global
legal framework," said Jean-Paul Laborde, chief of the
Terrorism Prevention Branch of the UNODC.
He said the political will exists to
fight terror, but many countries need assistance in strengthening
their criminal justice systems to enable them to apprehend
and prosecute perpetrators. Still, delegates were unable to
arrive at a precise definition of terrorism, and a comprehensive
convention on international terrorism remained only in draft
form. An unwillingness to finance the process was seen as
the reason the United States and other developed countries
resisted calls for new legal instruments. The final document
merely encouraged states to ratify existing conventions, and
called for "adequate voluntary contributions" from
donor states to help developing countries improve their capacity
to fight crime.
In a special session on corruption, many delegates were critical
of governments that tolerate official corruption, highlighting
its negative impact on economic and social development. A
delegate from South Africa criticized "African countries
whose wealth fills the vaults of banks in several world cities
while their citizens experience abject poverty," and
expressed concern that many countries had not ratified the
U.N. Convention against Corruption.
The need to address the fundamental
roots of corruption and criminal behavior was stressed in
an ancillary session conducted by the Interreligious and International
Federation for World Peace, alongside the main deliberations.
The group stressed the positive role of educational, religious
and civil society institutions as strategic partners in the
war against corruption and crime. Dr. Thomas Walsh, secretary-general
of the IIFWP, pointed out that faith-based groups had been
highly effective in such areas as character education and
prisoner rehabilitation. "Prevention of corruption requires
of individuals enlightened choices, choices that place the
interests of the larger good over self interest when faced
with a conflict of interest," Walsh said, adding that
"the capacity for ethical action and aversion to corruption
can be nurtured and developed as surely as physical health
can be nurtured and enhanced through daily effort." IIFWP
was founded by the Rev. Sun Myung Moon, who also started News
World Communications, the company that owns United Press International.
Emilia Bouzonde de Terzano, of the International Prisoners
Aid Association, agreed there is a strong need for grassroots
efforts in character education. De Terzano works with the
families of prisoners in Buenos Aires, and has attended every
U.N. Crime Congress since 1975, but feels that the situation
on the ground is growing worse. "The situation is really
deteriorating," she said. "Day by day there are
more and more delinquents."
Other non-governmental groups stressed the necessity of enlightened
law enforcement and judicial systems that can strike a balance
between security needs and human rights. Pedro David, vice
president of the International Association for Social Defense,
noted the need for restraint among police, military and intelligence
forces, as well as judicial systems, in their treatment of
suspects "to prevent states from turning into terrorist
states." "The cynical and irrational strategy of
terrorists leads to the faulty conclusion that all means are
acceptable to combat terror," Christian Kuhn, of the
International Commission of Catholic Prison Pastoral Care,
told one such meeting. "This plays into the hands of
terrorists and becomes a moral victory for them ... We have
to keep to our own ways of life and maintain our standards
of dignity. That makes us stronger and more resistant."
Casting a long shadow over the discussion was the perceived
disregard for prisoners' human rights in the U.S.-led global
war on terror. "It's very hard to talk about this with
Guantanamo in the background," a delegate from Spain
In another session on the new phenomenon of cyber crime, Taehoon
Lee of the Korean Institute of Criminology noted Internet-based
crimes raised such law enforcement problems as determining
jurisdiction and the search and seizure of electronic information.
Criminals are using the Internet for a range of purposes including
extortion, blackmail, and gaining information on potential
victims, but crime fighters are also using the Internet to
great effect, he pointed out. Hamish McCulloch, assistant
director of the Interpol General Secretariat, explained how
an online photo database of 3 million pictures assisted law
enforcement personnel in identifying the victims of pedophile
and child pornography rings.
Amanda Hubbard of the U.S. Department
of Justice gave an example of how police were able to locate
a kidnapper in a South American Internet caf�, tracking him
by his Web-based e-mail account through cooperation with U.S.
officials and an Internet service provider. The man was arrested
and his victim freed. In a final news briefing Monday, Executive
Secretary of the Congress Eduardo Vetere of the UNODC said
his department was "extremely satisfied" with the
results of the conference. Carlos Vasconcelos, a federal prosecutor
from Brazil, was less optimistic. "Such conferences are
not so productive," he said, "but at least they
get people talking. The world has no choice but to keep talking."
From World Peace Herald, DC,by Kathleen
Hwang of United Press International, 25 April 2005
USAID Works To Improve
Education from Morocco to Philippines
Agency's Kunder says spending on education
has skyrocketed recently. The U.S. Agency for International
Development (USAID) is working in 28 countries from Morocco
to the Philippines to improve the quality of education in
a region that accounts for 64 percent of the world's population
and two-thirds of its poor. USAID's assistant administrator
for Asia and the Near East, James Kunder, said in testimony
before the Senate Foreign Relations Committee April 19 that
improving education is vital to increasing economic opportunities
and reducing the conditions that spawn terrorism. "Understanding
and responding to the drivers of terrorism in all the countries
we work in requires a good knowledge of local conditions and
putting in place programs that are directly relevant to those
issues," Kunder said at a hearing titled "Combating
Terrorism through Education: the Near East and South Asian
"Education alone is not 'the answer' but it is absolutely
critical to success," he added.
The exponential rise in USAID spending
on education in 13 countries from $99.5 million in fiscal
year 2002 to nearly $274.5 million in fiscal year 2004, reflects
the importance that the U.S. government places on dealing
with the challenges from the region, Kunder said. The areas
he referred to are Afghanistan, Bangladesh, Egypt, India,
Iraq, Jordan, Lebanon, Morocco, Nepal, Pakistan, Sri Lanka,
West Bank/Gaza, and Yemen. Kunder said the education challenges
include lack of access to functioning schools, large numbers
of out-of-school youths, high rates of absenteeism, dropping
out and illiteracy, and low percentages of students who go
on to secondary school from primary school. The USAID official
said the United States is working to remediate the problem
on multiple fronts. It is seeking to provide educational opportunities
that will attract dropouts back to school and opening literacy
centers, especially for women, who account for two-thirds
of the illiterate in the Arab countries. He said the agency
also is offering training for teachers to help them impart
skills for critical thinking and democratic values. In addition,
it is distributing the popular American children's educational
television program Sesame Street in Egypt and Bangladesh,
which he said emphasizes "learning to be tolerant, practicing
good hygiene and getting a head start in school."
Kunder said USAID is working on strengthening
school management and expanding the use of information technology.
He described some of the partnerships between the public and
private sectors to prepare students for jobs "the 21st
century workforce demands." The programs are measurably
successful, judging by the USAID model programs that have
been adopted by the governments of the host countries, he
said. Following are the prepared
remarks of Kunder's testimony: TESTIMONY OF JAMES KUNDER,
COMMITTEE (April 19, 2005)
I welcome the opportunity to appear
before you today to discuss the work of the U.S. Agency for
International Development in Asia and the Near East on the
theme of "Combating Terrorism through Education: The
Near East and South Asian Experience." We appreciate
the importance of education as a force for peace and progress,
and welcome this opportunity to share the experiences of our
ongoing education programs in these two critical sub-regions.
USAID works in 28 countries in Asia and the Near East - from
Morocco to the Philippines and as far north as Mongolia. The
region is home to 64 percent of the world's population and
two-thirds of the world's poor. Across the region, there are
many religious and cultural traditions. Some of the countries
working to address terrorist threats have Muslim majorities.
Some do not such as Nepal and Sri Lanka. Understanding and
responding to the drivers of terrorism in all the countries
we work in requires a good knowledge of local conditions and
putting in place programs that are directly relevant to those
issues. Our field missions give USAID a capacity to act effectively
to make appropriate education interventions. They do so within
a framework of complementary investments which support stability,
openness and economic opportunity. Education alone is not
"the answer" but it is absolutely critical to success.
I am proud that our many investments
have shown positive results in improving access, quality and
the responsiveness of national education systems. This statement
outlines some of the problems we face, some of the work we
have done and notes accomplishments. There is an array of
responses that can and do work. Oftentimes, in concert with
host countries, other donors and the private sector, good
ideas can be scaled up. In many settings, the resources are
not there for the kind of robust response that is required
to provide national level coverage. Given the current knowledge
deficit in the Near East and South Asia regions, education
is one of our highest priorities. USAID's program approach
supports the 9111 Commission Report recommendation that "the
US should reach out to young people and offer them knowledge
and hope."
The current education challenges in
the region are: the lack of access to functioning schools,
low quality and irrelevant curriculum, a large number of out-of-school
youths, high illiteracy rates, particularly for females, and
unemployed youth without the necessary skills to find gainful
employment. We have responded to these challenges by focusing
our programs on increasing equitable access to education opportunities,
improving the quality and relevance of education, improving
literacy and strengthening workforce skills. We are monitoring
the impact our programs - we have enrolled over 170,000 (56%
girls) accelerated learning students in Afghanistan and 69,214
students are enrolled in literacy courses in Pakistan. We
have printed and distributed 27 million textbooks in Afghanistan.
We have recognized the important role of information technology
in changing the way education is delivered and incorporated
in our programs. We are encouraging the use of public-private
partnerships and are collaborating closely with MEPI, Peace
Corps, and other agencies to leverage our impact and to avoid
Since 2001, USAID's education portfolio
in the Near East and South Asian region has dramatically expanded
from 1 to 13 programs. The budget for education in the following
13 countries rose from $99.5 million in FY 2002 to nearly
$274.5 million in FY 2004: Afghanistan, Bangladesh, Egypt,
India, Iraq, Jordan, Lebanon, Morocco, Nepal, Pakistan, Sri
Lanka, West Bank/Gaza, and Yemen. Four of the USAID Missions
housing these programs-- Afghanistan, Pakistan, Yemen and
Iraq - opened recently. We established them to handle priorities
arising out of U.S. foreign policy goals and ongoing development
challenges in the region. As noted in the 9/11 Commission
Report, the Muslim world has fallen behind the West politically
and economically for the past three centuries. Governments
find it challenging to meet the population's daily needs,
including education. This has created an environment where
young Muslims lack the tools and opportunities to effect change
in intolerant political regimes. This has also created an
environment where disaffected groups can be more easily turned
against elements of Western culture and institutions. Creating
an environment of opportunity, tolerance, and greater openness
to women and other marginalized groups must come from within
Muslim societies themselves. The U.S. can help support the
development of a more tolerant and open society by supporting
quality education opportunities.
In response to the weakness of many
national education systems, alternative schools have emerged,
such as madrassahs, a small proportion of which spawn extremism.
USAID, regional experts and researchers agree that providing
access to quality education for children and out-of-school
youth of vulnerable populations is one deterrent to radical
or fundamentalist ideology which may lead to support for or
participation in acts of terrorism. As stated in the National
Strategy for Combating Terrorism, education programs diminish
the underlying conditions that terrorists seek to exploit,
particularly in rural, isolated areas. Access to a quality
and relevant education provides children and youth with independent
and critical thinking skills, leadership and life skills,
and exposure to democratic values. Although the global commitment
to "Education for All" have led to increased enrollments
and general improvements in the quality of life, educational
quality, and increased learning opportunities in the Near
East and South Asia, many countries in the region continue
to struggle to meet the population's education needs.
Current Education Challenges - Current
education challenges in the regions include a lack of access
to functioning schools, a large number of out-of-school youth,
high absenteeism and drop out rates, low transition rates
from primary to secondary school, and high illiteracy rates.
High illiteracy rates, especially for women, are a critical
problem facing the region. Key countries such as Iraq, Yemen,
Afghanistan, Pakistan, Egypt and Morocco have 40-60% illiteracy
rates and illiterate populations larger than 10 million. In
the Arab states alone, women account for nearly two-thirds
of the illiterate population. Another critical gender concern
has to do with large numbers of disaffected youth, mainly
boys, who may come to form the primary social base for radical
Islamist movements. Without immediate alternatives, the current
breakdown of conventional institutions of family, schools
and community (compounded by increasing urbanization and bleak
employment prospects) will continue to foster youth alienation,
a sense of fatalism and lack of dignity. Unemployed and disenfranchised
youth form a restive pool of recruits for extremist groups.
Compounding this problem is the curriculum,
which is often outdated and irrelevant to socio-economic needs.
Poorly qualified and trained teachers and school administrators
are recurring problems. The lack of reliable systems to assess
and monitor education imposes another obstacle to solving
the problems. Finally, resources for education support fall
short of the need. The Asia and Near East region has experienced
a drastic demographic shift and now houses the largest generation
of youth ever -- 368 million young people (age 15-24) in the
19 countries where USAID has a presence. The youth bulge puts
enormous pressure on governments with limited capacity and
resources to provide education and employment opportunities.
The quality of education is low and too many students leave
school without the skills and knowledge needed to find gainful
The following section presents USAID's
strategy for helping the nations in the Near East and South
Asia overcome their education challenges. Driving this strategy
is the recognized need to help nations in the region open
access to information, create learning environments that encourage
critical thinking skills and democratic practices, and provide
education that will lead to gainful employment. Target populations
include girls, women and disenfranchised youth.
USAID's Education Strategy - To prevail
over these challenges, USAID's strategy for education programs
is to provide learners the opportunity to gain the general
skills and knowledge needed to function effectively in all
aspects of life. This is done through programs that focus
on: 1. Increasing equitable access to education opportunities:
Targeting groups that have been marginalized in the education
system, such as out-of-school youth, girls and disabled children,
and those who have been impacted by conflict or disaster is
of primary importance for ensuring equitable access to learning
opportunities and the continuation of skills development.
In post-conflict and post-disaster situations, transitioning
children and youth into learning environments as soon as possible
to normalize their lives is a priority. 2. Improving the quality
of education and providing more relevant education opportunities:
Improving the quality and relevance of education is a pivotal
goal in that it encourages children to attend and to stay
in school. It also offers the additional benefits of workforce
development. This is particularly important in countries that
lack relevant education materials, qualified teachers, and
accountability for student learning in the school system.
3. Improving literacy and strengthening workforce skills:
Education programs that improve literacy rates, develop curriculum,
human capacities and livelihood skills, and aim to link skill
development with employment opportunities; particularly in
areas with high youth unemployment are another priority for
the region.
Increasing Access to Quality Education:
Achieving Results - In order
to respond to the multifaceted educational challenges confronting
the region, USAID supports a variety of education programs
which include both formal and nonformal education efforts.
Support for improving the formal basic education system spanning
pre-primary to secondary school and which also encompasses
literacy and training programs, are the primary focus of USAID's
support. Increasingly, school-based efforts linked to employment,
and higher education and university programs are also critical
components of our overall approach to provide technical skills
and expand cultural understanding in the region. To increase
access to education opportunities, particularly for vulnerable
populations, USAID supports scholarship programs, non-formal
education activities, and school construction and rehabilitation.
For example, in Pakistan, more than 2,873 literacy centers
have opened and in a project co-funded by the Japanese, 130
schools are in the process of being rehabilitated to improve
school access for children in Federally Administered Tribal
Areas (FATA) and Frontier Regions (FR) which are remote and
border Afghanistan. In Iraq we have rehabilitated over 2,400
schools. In Yemen we are working with the government on school
construction and renovation, equipment and supplies for teachers
and children and teacher training in remote areas. These have
been promising strategies for attracting out-of-school youth
to classrooms.
In key post-conflict programs, there
is demonstrated success in school enrollments; for example,
over 170,000 students (56% girls) are enrolled in accelerated
learning classes in Afghanistan. These kinds of programs are
highly-visible and well-received as they flexibly address
immediate needs, and provide a full primary school cycle in
three years. They also target those who have been historically
neglected by the primary school system. In Pakistan and Yemen,
helping to provide improved schooling systems in the most
isolated communities and involving community members in the
rehabilitation and management of schools have been successful.
In Afghanistan, 10,000 students, largely out of school children
and youth, will be trained in sustainable literacy, numeracy
and life skills through the Afghan Literacy Initiative &
Community Empowerment Program. The programs often combine
literacy skills with relevant labor market needs.
Teacher training is one key area for
quality improvement. USAID education programs work with teachers
to provide both in-service and pre-service training that modernizes
teaching methods so that they impart critical thinking and
democratic values. Training often integrates content with
introducing more active learning and child-centered methods.
Over 15,000 teachers in Pakistan have received this type of
training, as well as 33,000 teachers in Iraq. We have also
printed and distributed 27 million primary and secondary textbooks
in Afghanistan, and 8.7 million revised math and science books
in Iraq. Finally, radio-based teacher training in Afghanistan
has been received positively by teachers in 17 provinces.
Integral to the success of an education programs is to make
quality improvements and increase the relevance of the educational
content to socio-economic realities. In Jordan USAID is enhancing
the curriculum for a new Management and Information Stream
track in secondary school to prepare youth for the workforce.
Preparing learners at an early age
for education is important. USAID support will enable innovative
"Sesame Street" series in Bangladesh and Egypt to
reach large audiences in quest of this goal. As many as 4
million pre-school age children will watch Sisimpur in Bangladesh,
which premiered on April 15. Alam Simsim reaches 86% of rural
Egyptian children and 45% of their mothers. Program themes
include learning to be tolerant, practicing good hygiene and
getting a head start in school. Furthermore, early childhood
development programs increase parent involvement in the child's
education and school involvement. In Jordan, underprivileged
families now have access to kindergartens, and in Pakistan
47,500 children and their parents have benefited from an early
childhood project in the FATA district.
Quality is also improved by strengthening
involvement of the local communities in their schools (ex.
training community school management committees) and making
parents and students more responsible for their education
(ex. developing school improvement plans). School management
is improved at the local level, and experiences in various
regions have influenced the way host country decision-makers
view solutions for the education issues. Such initiatives
are underway in Bangladesh, Pakistan, Egypt, Morocco, and
Yemen. Also, in Jordan, merging Information Technology and
curriculum reform has been successful. This program has also
brought private sector involvement into the area of curricula
reform so that it better provides students with an education
that links to market demands and needs.
As mentioned earlier, the growing population
of uneducated, unemployed youth is severely straining government
efforts in all countries to provide adequate education and
employment opportunities. USAID recognizes the importance
of linking access to quality education to the 21st century
workforce demands. In countries such as Pakistan, India, Jordan,
Egypt and Morocco, USAID is linking education to the real
needs of the job market, by giving students the adaptable
and portable skills needed to confront the changing workplace,
especially information and communication technology (ICT)
training. Jordan is developing e-Learning curriculum modules
and upgrading teachers' skills in support of teaching and
learning to improve the transition of graduates from school
to a work career.
USAID fosters cultural understanding,
openness, tolerance and critical thinking with education exchange
programs and scholarships. In Egypt, Jordan, and Lebanon,
providing scholarship support to students from disadvantaged
social and economic backgrounds to enroll in American education
institutions have been successful. By the mid-1990s, more
than 3,000 Jordanian students had won USAID scholarships to
study at U.S. universities and the American University in
Beirut. Many of them are leaders today. Five of Jordan's Cabinet
ministers in 1987 and three ministers in the 2002 Cabinet
had studied under these scholarships. Furthermore, in-country
post-secondary education programs support institutions to
meet international standards and educate young people and
academic professionals so that they can participate in the
global economy. We support linkages between American Universities
and universities. These range from university linkage partnerships,
such as the five US-Iraqi higher education partnerships currently
underway, to supporting the establishment of the American
University of Afghanistan, a private, independent university.
Finally, programs that model best practices
in education on a small scale in order to demonstrate the
positive effects of change has also proven successful. Pilot
programs mobilize support from the public and from within
the ranks of the local and national government officials who
are charged with administering and delivering education services.
Egypt's New School Program in Upper Egypt was a pilot that
proved effective in increasing girls' enrollment. The lessons
learnt are being used to "scale up" models of quality
primary education with an emphasis on girls and learner-centered
teaching methodologies. The models will be applied nationally
through the new USAID-supported Education Reform Program.
These positive experiences tend to galvanize support for broader
change and have the potential to impact the educational system
beyond the local environments in which the projects operate.
Measuring the Impact of Our Programs
- Despite the growing security
challenges, our education programs have brought about substantial
and measurable results. USAID measures program impact and
success in a variety of ways, commensurate with its diverse
portfolio. One validation of our success happens when we see
many of our "models" adopted and brought to scale
by host countries, relying on local, other donor and private
sector resources. Unfortunately, the capacity to do that across
the region is constrained. Our recent education initiative
has increased the US commitment to education but much more
needs to be done. At the project level, USAID measures the
impact of providing education and training opportunities to
out of school youth and vulnerable populations through student
enrollment. Access and equity measurements include the number
of students completing primary and secondary school, and increases
in the percentage of girls and women enrolled in USAID-funded
schools, literacy, and life skills classes. Using baseline
data as the starting point, gender disaggregated enrollment
numbers in USAID schools are tracked on a quarterly basis
by the implementing partners on the ground. USAID has enrolled
over 170,000 students (56% girls) in our accelerated learning
program in Afghanistan.
Many of our programs are aimed at non-formal
education programs aimed at improving literacy, especially
for women, and training opportunities for out-of-school youth.
USAID gauges enrollment increases and differentiates between
students participating in programs as opposed to completing
the required courses. In Pakistan, 69,214 students are enrolled
in USAID funded literacy courses and 17,850 have graduated
from USAID's literacy centers. This process enables us to
gauge not only enrollment increases and completion rates,
but also dropout and repetition rates. Different measures
are used to gauge non-traditional programs; success in measuring
educational television programs is gauged by viewership: a
2003 study in Egypt concluded that Sesame Street (Alam Simsim)
reaches 86% of rural Egyptian children under 8 years of age
and 45% of their mothers. In Bangladesh, where Sisimpur aired
on April 155 viewership will be regularly monitored and reported.
In response to the poor quality of
educational facilities and the need to provide quality alternatives
to radical madrassahs, USAID tracks numbers of schools constructed
and rehabilitated, and nature of the effort. This process
differentiates between USAID's work in building stand-alone
schools as opposed to rehabilitating a single classroom in
any given school. In Egypt, for example, since 1975, USAID
has tracked the construction of more than 2,000 new schools
and 4,000 classrooms; in Pakistan's Federally Administered
Tribal Area (FATA), USAID will be tracking new school construction,
the surveys and designs for 112 of which have been completed.
In addition to infrastructure, USAID also provides students
with textbooks and learning materials to increase retention
and enrollment. USAID tracks both the production and dissemination
of materials to ensure that numbers of textbooks delivered
are commensurate with numbers printed; in Afghanistan we have
thus far printed and distributed 27 million textbooks.
USAID's teacher training and curriculum
development programs are aimed at promoting tolerance, building
democratic values and fostering critical thinking in students
and teachers. Measurements of educational quality include
indicators of teacher quality, system efficiency, and learner
achievements. Learner achievement can be measured by the number
of basic education students who acquire critical thinking
and problem-solving skills by administering pre- and post-achievement
tests. In Pakistan, teaching methodologies improved by 97%
(based on classroom observation by experts), and student attendance
is 10% higher, on average, in participating schools. Monitoring
data suggest that teachers are using materials effectively
95% of the time. USAID tracks enrollment and successful completion
of teachers in training classes in both in-service and pre-service
programs. In innovative teacher training programs, such as
the radio-based teacher training program for Afghanistan primary
school teachers, teacher training is tracked by numbers of
teachers enrolled in the class; currently 10,000 primary school
teachers have enrolled for this radio based teacher training.
USAID measures and tracks progress in this area through enrollment
and completion numbers and qualitative assessments that include
interviews, questionnaires, and classroom observation. In
Morocco indicators such as percent of target beneficiaries
employed post intervention, percent of graduates with portable
and adaptable skills, and replication of school-to-work modules
in areas beyond the immediate target are used to monitor learning
Finally, another indicator of impact
is the adoption by Ministries of Education of USAID supported
efforts for countrywide expansion. This has happened in Jordan
with early childhood education programs, and in Egypt with
modeling quality schools including using learner centered
teaching. By supporting public participation in education
through NGO development and community-elected trustee boards,
USAID's education programs encourage democratic activities.
To measure the impact of these programs, USAID tracks community
satisfaction with the performance of USAID-supported community-based
organizations and the number of decisions made and implemented
at the community level. By improving the quality of education,
and making it more accessible and relevant to the workforce,
USAID's education interventions improve the employability
of youth, lay an important foundation of support for economic
growth and development of democratic institutions, and ensure
a more equitable distribution of education.
Adjusting Education Programs - USAID
has adjusted its education strategies to create a healthier
learning environment for children, youth and adults in the
Near East and South Asia on the basis of feedback from the
most successful programs in the region. USAID recognizes that
Information Technology (IT) is one way to change the way that
students learn and teachers teach. There are now more efforts
to link IT to schools and curriculum. Internet access is limited
in the Arabic speaking world, resulting in a knowledge gap
that negatively impacts both economic and political development,
making Arab populations less competitive in the world economy.
By providing future leaders and adults with increased access
to the Internet, these students are exposed to many more ideas
and increases cultural understanding. Teachers can use IT
in the classroom to encourage critical thought and democratic
values. Technology also helps to reach larger audiences, as
in the radio-based training for teachers in Afghanistan and
Sesame Street episodes in Egypt and Bangladesh.
ANE has also learned that public-private
partnerships are important to support education programs.
USAID/ANE has committed $10 million to a regional Education
and Employment Alliance which involves Egypt, Morocco, Pakistan,
India, Indonesia and Philippines to increase private sector
participation in education. Activities mainly include working
with local and multinational organization to provide resources
to upgrade schools and provide technology inputs for schools.
These activities aim to give children and youth a higher quality
basic education and an education that leads to livelihood
skills and gainful employment. As of January 2005, outreach
activities continue with multinational companies, including
Cisco, GE, Intel, Lucent, Microsoft, Nokia, Pearson, Unocal,
and First Data Western Union. USAID has also been more directly
working with host governments to make comprehensive reforms
to education systems. Holistic changes have a broader impact
in that they reach all levels from the students and parents,
to administrators at the local and national levels. This systemic
approach for improving education with Ministries of Education
will lead to long-term improvements that can be sustained.
Finally, USAID continues to refine
programs to reach the most vulnerable populations. Those who
have been marginalized from the education systems are primary
targets for our programs. In the Near East and South Asia
regions, illiterate adults, out-of-school youth, and marginalized
children are the most vulnerable to the messages of terrorists.
For this reason, USAID works closely with the State Department
on the Broader Middle East and North Africa initiative.
Collaborating with MEPI - Under
the Middle East Partnership Initiative (MEPI), managed by
the State Department, USAID administers a variety of activities
across the MEPI pillar areas of economic reform, political
reform, education reform, and women's empowerment. The MEPI
education pillar supports education systems that enable all
people, especially girls, to acquire the knowledge and skills
necessary to compete in today's economy and improve the quality
of their lives and that of their families. MEPI and USAID
have similar education goals: Access, Quality, and Skills
Development which makes coordination between USAID and MEPI
programs both essential, and synergistic. USAID has collaborated
with MEPI in a variety of projects to jointly fund programs
to establish U.S.-Middle East university partnerships to strengthen
programs in such areas as education, business/economics, journalism,
and information and communications technology.
In FY 2003, USAID/Egypt completed the
integration of the MEPI strategy into a new program design
that was launched in 2004 to support the Egypt's Governments'
education reform initiatives. USAID also began implementing
its first MEPI book project by distributing supplementary
reading materials to 3000 classrooms in Alexandria. In Jordan,
MEPI is funding e-Learning modules for the English as a Second
Language and Civics for the Jordan Education Initiative and
the USAID mission monitors and manages some or this entire
program in country. In Morocco, MEPI's literacy initiatives
complement current USAID efforts to improve the quality of
schools. The literacy program consists of two parts: a ten-month
basic literacy training program for 2000 women that also includes
health and nutrition literacy; and a six-month "post"
literacy training program for a selected number of participants
(approximately 80), that teaches simple business skills as
a basis for income generation activities. The program also
includes assistance and coaching for the creation and initial
management of small businesses. In Yemen, USAID works closely
with MEPI and the Public Diplomacy Office of the U.S. Embassy
to design and implement an in Internet communication and collaborative
learning network for 20 high schools through Yemen with each
other and with schools in the U.S. With the development of
a new education strategy, the USAID education team ensured
that its new strategy aligned with MEPI pillars. Additionally,
the education team participates in strategy and planning meetings
and provides technical comments and assistance for the review
of MEPI education proposals.
USAID is also working with the MEPI
office to support key tenets of the G8 partnership with countries
of the Broader Middle East and North Africa (BMENA). Several
initiatives have developed under this partnership, one of
which is on improving literacy in the region. USAID is providing
policy and programmatic direction for this BMENA literacy
initiative and coordinating its efforts directly with MEPI
and the US Department of Education. In
conclusion, I would like to reassure the Committee that education
will continue to be a high priority in the region. While our
current education approach responds to the overall goal of
moderating radical intolerance and anti-Western ideologies,
we also recognize that education needs to be complemented
by a multi-sectoral strategy that fosters sociopolitical stability
and economic growth. To build upon our current successes and
take our existing programs to scale, we have launched a public-private
partnership initiative focusing on creating training opportunities
for youth employment in the workforce. While we will continue
to monitor developments to ensure that we are ahead of the
curve in addressing emerging issues, we will not rest on the
laurels of our successes - it is far too important to the
well being of our nation.
From All American Patriots (press release),
Sweden, 20 April 2005
UN Forum Ends With
Agreement On Measures To Provide Clean Water, Basic Sanitation
And Housing
The key United Nations forum considering
ways to integrate the three dimensions of sustainable development
- economic growth, social development and environmental protection
- wrapped up its 2005 session with agreement on set of practical
policy options intended to boost global efforts to provide
clean water, basic sanitation and decent housing.
The thirteenth "http://www.un.org/News/Press/docs/2005/envdev848.doc.htm"
session of the Commission on Sustainable Development ("http://www.un.org/esa/sustdev/csd/csd13/csd13.htm"
CSD) reached agreement early Saturday morning on a slate of
policy measures aimed at speeding up implementation of water,
sanitation and human settlements goals, ending its high-level
segment and first-ever policy session, and opened its next
one, which will focus on energy. Under the terms of the outcome
document, which will be submitted to the UN Economic and Social
Council ("http://www.un.org/docs/ecosoc/" ECOSOC)
for review at its annual session in July, the Commission emphasized
the need for a substantial increase in resources from all
sources if developing countries were to achieve the internationally
agreed development targets.
The text recognizes that Governments
have the primary role in promoting improved access to safe
drinking water, basic sanitation and adequate shelter, through
improved governance at all levels and appropriate enabling
environments and regulatory frameworks, with the active involvement
of all stakeholders. At the same time, efforts by Governments
to achieve the agreed goals and targets should be supported
by the international community through a conducive international
policy environment, including good global governance, a universal,
rule-based, open, non-discriminatory and equitable multilateral
trading system; mobilization and transfer of financial resources;
debt relief, including debt cancellation, where appropriate;
public-public and public-private partnerships; technical cooperation
and capacity-building; and technology transfers.
The Commission's first policy session
following the 2002 Johannesburg World Summit on Sustainable
Development ("http://www.johannesburgsummit.org/"
WSSD) refocused international attention on the "http://www.un.org/millennium/declaration/ares552e.htm"
UN Millennium Declaration, which contains two development
targets that relate directly to water and human settlements
- namely to halve by 2015 the proportion of people unable
to reach or afford safe drinking water, and, by 2020, to have
significantly improved the lives of at least 100 million slum
From Scoop.co.nz (press release), New Zealand,
26 April 2005
Team to Monitor Civil Servants Performance
The Government has set up an eleven-person
team to monitor the performance of civil servants who will
be put on contracts starting July 1. A Minister of State in
the Office of the President, Mr William ole Ntimama named
the team that is expected to weed out non-performers. The
Performance Contracting Steering Committee shall, among other
things "co-ordinate the process of performance contracting
in the public service," said the Minister in a Kenya
Gazette notice dated April 8. The committee comprises senior
civil servants and will be chaired by the head of the Directorate
of Personnel Management, Mr Simon Njau.
Other members are the Permanent Secretary
in the Ministry of Finance, Mr Joseph Kinyua, the PS in the
Ministry of Planning, Mr David Nalo and Investment Secretary
Esther Koimet, among others. Also in the team are the secretary
of the Public Sector Reform and Development, Ms Joyce Nyamweya-Nyakeya,
Solicitor-General Wanjuki Muchemi, and the chairman of State
Corporations Advisory Committee, Mr David Namu. Others are
the secretary of State Corporations Advisory Committee, Richard
wa Mwenje, the Inspector-General (corporations), the secretary
of the Public Service Commission (PSC), and the PS in the
Ministry of Local Government, Mr Zakary Ogongo. A secretariat
will be set up in the Office of the President at Harambee
The Government has pushed on with the
programme that is expected to affect nearly 200,000 workers
despite strong opposition from the civil servants. Teachers
are, however, excluded. Only last week, President Kibaki said
the retention of Civil Servants in public offices would largely
depend on their performance and service delivery to the public.
"The performance contracts will enable us to identify
those officers who cannot maintain the required standards
and to weed them out," said Kibaki.
From AllAfrica.com, Africa, by Eliud Miring'
uh of The East African Standard, Nairobi, 12 April 2005
Civil Servants Deserve Better Treatment
- Chief
Accra - Nana Kwabena Angu II, the Apintohene
of Wassa West District of the Western Region, on Saturday
called on the government to recognize the role of civil and
public servants in national development. He urged the government
to desist from the "piecemeal approach" towards
improving the service conditions of civil servants and ensure
that it tackled civil servants problems in a "realistic"
manner. The Apintohene stated this in a commendation letter
to Prof Daniel Mireku-Gyimah on his appointment as the Vice
Chancellor of University of Mines at Tarkwa. ''Governments
have, over the years, focused on the private sector, which
it describes as the engine of growth, to the neglect of the
civil and public services." Nana Angu II argued that
the civil and public service ''serves as wheel power to propel
the engine to its preferred destination.'' He said it's most
regrettable for officers in the ministries to use old typewriters
and other equipments that have been discarded years ago. ''Poor
or lack of logistics, bad working environment, unmotivated
staffs, poor remunerations and deprivation of basic working
tools have been the lot of the civil and public services.''
Nana Angu called for systematic upgrading of skills of officers,
provision of logistics and other equipment to ensure that
the civil and public servants deliver.
From GhanaWeb, Ghana, 9 April 2005
Will Civil Servants
President Kibaki yesterday laid it
on the table when he asked public officers to shape up or
ship out. Launching the contract-based performance scheme
for civil servants in Nairobi, the Head of State raised a
raft of issues regarding civil service's operations that tug
at people's hearts. Civil service as we know it today operates
through a bureaucracy that is exceedingly irritating, and
it has, among its officers, some of the most lethargic workers
in Kenya, who are averse to change. Unlike in the early years
of independence when civil service was defined by excellent
performance and efficient service delivery, what we currently
have is an outfit marked by arrogance, sloth and sleaze.
And examples are not difficult to come by. The business of
applying for a national identity card, a birth certificate
or searching for a company name can be a nightmare. In the
minds of the public, these and many other services never come
easy - one has to bribe to get them. This is not the kind
of civil service that can be relied on to spearhead economic
recovery, promote the rule of law and lead the fight against
Often in the past, Cabinet ministers,
including Prof Peter Anyang' Nyong'o, have complained that
part of the problem afflicting the current administration
is that it inherited wholesale a civil service from the previous
administration. That civil service
had been politicised to the extent that appointments were
never made on merit and good performance was never rewarded.
Many people are currently occupying positions they never deserved.
Making a difference with that kind of outfit is certainly
a difficult task. This is why President Kibaki's concern is
germane and more importantly, his warning that non-performers
will be shamed and shown the doors. Experience from the past,
however, shows that giving directives is one thing and realising
them is another. Changing the civil service requires transforming
the mindsets of the workers and inculcating a radically different
work culture. The challenge for this administration is how
it will use the performance benchmarks to punish or reward
public servants.
From AllAfrica.com, Africa, by The Nation,
Nairobi, 8 April 2005
Civil Servants Condemn
Proposed Mass Retrenchment
Association of Senior
Civil Servants of Nigeria has condemned the proposed mass
retrenchment in the federal civil service. The association
has also advised Lagos State government not to emulate such
step, saying it could be an impediment to speedy economic
development. In his paper at a one-day seminar organised by
its Lagos branch, secretary general of the association, Mr.
Solomon Onaighinon noted that government should come up with
ideas that will improve the productivity of its workforce.
He said Lagos State should come up with a comprehensive training
programme that could widen the scope of knowledge of civil
servants in order to increase their productivity. "We
expect Lagos State government to mount its own seminar for
the state civil servants where both management and staff can
interact and come up with solutions to the issue of increased
productivity. "It is not enough for management to rely
on hardline disciplinary measures as a way of relating with
staff since the civil service is not a military service,"
Mr. Onaighinon stressed.
From AllAfrica.com, Africa, by Daily Champion,
Lagos, 1 April 2005
Labour Takes Civil
Service Reform to Confab
Seeks new economic and political orientation
- Two major things which organised labour app-ears to be much
interested in at the going political conference are restructuring
of the economy and development of a new character for the
political parties. To labour representatives, the achievement
of these, will restore sanity into the socio-political system.
Nigeria Labour Congress delegate, S.O.Z. Ejiofor, who unveiled
this, said the economic crisis plaguing the country, has its
root in the character of the military regimes that ruled the
country from 1987 to 1999. He therefore sought for a new orientation
in the political and economic spheres to break away from the
past. The starting point, according to Ejiofor, is to redefine
the economic objectives, and adopt strategic factors for achieving
them. The new economic reform, he stated, must have provisions
for sustained and expanded employment creation.
Ejiofor, who is also the General Secretary,
Amalgamated Recreational and Civil Service Technical Union,
canvassed for a return to the real tradition of civil service,
where employees are assured of job security. Similarly, he
sought for employment protection in the private sector, where
retrenchment is gradually peaking. "Today, over 70,000
Federal civil service employees out of 168,000 are imminently
threatened with premature retirement (retrenchment). This
is real. Retrenchment is avoidable, it is wasteful and it
is economically, socially and political indefensible. This
conference should please, please, intervene now." Ejiofor
noted in his intervention at the confab. He focused on economy,
public service physical of pensioners, human rights, culture
and sports, decay in social and physical, infrastructure,
railways and the polity. Conscious development of an indigenous
entrepreneurial class, according to Ejiofor, especially in
the real sector, as opposed to the business class in the "bazaar
sector" and the diversification of the economy should
form part of the reform objectives.
Weak State and Multinational Enterprises:
Labour said the first strategy to ensure the realisation of
these new economic objectives, is the transform the Nigerian
state to a genuinely democratic state, at all levels, making
it development oriented, transparent and accountable. "The
concept that the Nigerian state should not be directly involved
in the economy is not realisable at the present stage of the
country's development. Also the advocacy that the Nigerian
state should concentrate on regulatory functions undermines
existing realities. A weak state cannot regulate multi-national
enterprises. More so in situation were corruption is endemic."
Even with this, Ejiofor still believe
that for Nigeria to succeed, it must promote and internalise
an appropriate industrial culture. He said that the absence
of appropriate industrial culture substantially inhibits industrialisation
and accounts for the malfunctioning of most public agencies
and indigenous enterprises. Neo-feudal and the debased primordial
cultures and practices are obstacles to the development of
industrial culture, notes Ejiofor. Like the economy, labour
said the transformation of political parties to institutions
driven by ideas and issues and anchored on definable ideological
ideals are necessary if an envisaged new Nigeria must emerge.
Only well focused and ideas driven parties that can midwife
good governance that is consistently committed to the well
being of the citizenry. Ejiofor said that such can only be
a product of an economy in which growth, translate to balanced
Public Service - Labour
is pushing for a re-enactment of an efficient and highly functional
public service, devoid of the trauma employees are facing
currently either as a result of insecurity of tenure of employment
or under utilisation. He argued that a public service population
in federal sector including armed focus and police, 36 states
and 768 local government of about 2,267,492 cannot be said
to be over bloated in a country of over 120 million people.
The workers movement would therefore want the delegates to
the confab to agree that retrenching public servants is not
a defined and cost effective policy at this stage of national
Similarly Ejiofor pointed out the agonies
the public sector workers go through on retirement. He said
that the life of public sector pensioners characterised by
misery and neglect, is not a product of budgetary constrains.
He rather situate it within the contests of a clear absence
of recognition of their past services and rights of pensioners
to dignified old age. "If there is the will, there exist
practical solutions to the lingering problems of non-payment
of pensioners as and when due.
Decay in social infrastructure - Labour
exonerates workers in the decay of state owned infrastructures,especially
in the energy and educational sectors. To the movement, said
Ejiofor, the present malfunctioning of NEPA and decay in the
educational infrastructures and in other sectors are by products
of failed states, in particular from 1987. The decay is as
a result of the inability of the Nigerian Nation to appreciate
the role of teachers and lecturers in socio-economic development
of the country. This class of workers, Ejiofor stated has
been economically and social disabled over the years. "Dialectically
failed states are not expected to leave a legacy of efficient
and functional social and physical infrastructures."
On railway, Ejiofor suggested a new
nationwide railway network to provide catalyst for economic
development and national integration. He said, this could
be achieved if there exist the appropriate political will
within five to ten years. The labour activist blamed the current
crises in sports administration and coordination to the absence
of National Sports Commission. He requested for the restoration
of NSC and implementation of Dr Samuel Ogbemudia committee
reports on sports and culture.
The Polity First - Ejiofor
said that the character of political parties largely determines
the way and manner political powers are acquired and the nature
of governance. The current political crisis in the country,
from labour perspective, is anchored on absence of parties
driven by issues, and identifiable ideological content, noting
that they are mere machines for election purpose and advancing
personal interest. This labour asserted, explains while it
has been difficult for the existing parties to either midwife
good governance or defend democracy. "Nigerian political
parties therefore must undergo far-reaching transformation
to ensure that there leadership and membership have shared
ideological interests; they provide credible enough uphold
the principles of party supremacy; they evolve organisational
strength to mobilise its members and the populace in defense
of democracy."
The submission of labour is clear.
According to Ejiofor, the critical and frank expressions on
various subjects by confab delegates, were exercises which
political parties, if well focus, ought to have engaged in
to enable them formulate appropriate policies and programmes
for governance. "That they have not done so, but rather
concentrate on self serving issues and manipulation of electoral
process, largely account for the problems, of governance in
the on going civilian dispensation. Put the polity right,
other things will follow including the economy" labour
From AllAfrica.com, Africa, by Chris Nwachuku
of This Day, Lagos, 1 April 2005
Leave Politics, Buturo
Warns Civil Servants
Civil servants must stay away from
partisan politics, state minister for information Nsaba Buturo
said yesterday. He said the act was punishable by either imprisonment
for a year or a fine of sh200,000 or both. "Public servants
should remember that they are not permitted by law to be members
of, campaign for or hold office in political parties,"
Buturo told the weekly Cabinet press briefing, which witnessed
the first live broadcast on UTV. Education and sports minister
Geraldine Namirembe Bitamazire addressed the press on the
recasting of government sponsorship at public universities.
Buturo said live broadcasts of the briefing were to enable
the public to get first hand information. The signal is beamed
on the UTV satellite and is received in Africa, Europe and
the Middle East. Buturo said government officials acting under
the pretext of supporting the NRM were abusing the democratic
rights restored by the Movement government. He said the Governm-ent
would blacklist road construction firms that do shoddy work.
"The Government has decided to
act tough on people who get contracts and do shoddy work.
People who do this work are criminals who do not deserve to
get resources collected from the public," said Buturo.
He said solutions to problems in Kampala would be addressed
after Parliament considers the Government's proposal to bring
the city under the central government. He denied allegations
that the arrest of two opposition MPs including Forum for
Democratic Change strongman Reag-an Okumu, was political.
From AllAfrica.com, Africa by Jude Etyang
of New Vision, Kampala, 22 April 2005
World Bank Votes N72bn
for Civil Service Reforms
In line with Federal Government's on-going
reform programme, World Bank has set aside an initial N72
billion for use as pay-off for the estimated 80 per cent of
the nation's workforce to be laid off in the next two weeks.
The sum of N300 billion was estimated by Federal Government
as the total cost for the list of severance and resettlement
of staff to be affected by the retrenchment exercise under
the reform programme. THISDAY checks revealed that a committee
chaired by the Head of Service of the Federation, Alhaji Mohammed
Yayale, has already concluded compilation of the affected
workers in the nation's civil service.
Workers to benefit from World Bank
severance package are to receive their gratuity, one year
pension to be paid enbloc, ten per cent total emolument as
voluntary incentive and reparation allowance. For instance,
in the Ministry of Information, over 2,500 staff have been
pencilled down for the exercise including the permanent secretary
who is said to have attained the statutory age of 60 years.
THISDAY gathered that only two directors might remain in the
ministry after the exercise. Some of the criteria for the
downsizing exercise include attainment of 60 years or 35 years
in service. Others include those who have remained on one
grade level for eight years, workers who failed promotion
examinations three times as well as those whose academic qualifications
are deficient in addition to "those who could not be
skilled over the years." "All officers S.75 (equivalent
of junior secondary school certificate) and those with First
School Leaving Certificate (FSLC) are also to go," said
the source. Also, those recruited without proper authorisation
including those whose schedule of duties were contracted out
or monetised are to be affected in the exercise.
Meanwhile, This day also gathered that
the long awaited 50 London cabs meant for the Federal Capital
Territory (FCT) might arrive Abuja in a month's time while
they might commence operation in two months time. In addition,
Peugeot Nigeria will supply 200 units. In a change of policy,
the FCT administration has decided that the first option for
the cabs would be government drivers who were laid off recently
through the downsizing exercise. The decision was reached
as a way of empowering those laid off to live good economic
private life after years in the civil service. Among incentives
being considered by the FCT is a micro-credit system whereby
the beneficiaries would be aided financially to acquire the
cars and pay back with little interest.
From AllAfrica.com, Africa, by Andy Edugo
and Kingsley Nwezeh of This Day, Lagos, 19 April 2005
Civil Servants to Attend Mandatory
Courses Every Year
Putrajaya - The 850,000 civil servants
in the country will have to attend mandatory courses every
year to enhance their efficiency and competency. The courses,
to equip the civil servants with the right attitude, skills
and knowledge, are also meant to inculcate the lifelong learning
culture among government employees. For this purpose, government
ministries and departments are now required to set aside at
least 1% of their yearly allocation for the annual training.
Every ministry secretary-general or department head must also
make sure that staff at all levels attend the courses for
at least seven days annually. These are among the measures
implemented under a new human resources training policy announced
by Public Services Department director-general Tan Sri Jamaluddin
Ahmad Damanhuri last week.
"Considering the importance of human resources development
in the public sector, the policy calls for every civil servant
to equip himself with the right attitude, skills and knowledge
via a planned programme based on the upgrading of competency
and lifelong learning," he said in a circular announcing the
The policy is to ensure "value-added
services" from civil servants, to help them advance in their
career, increase productivity and improve work quality. The
policy, said Jamaluddin, would also call for a public sector
training committee to be set up at the central level. This
committee will be chaired by him; and a human resources development
panel, by the ministry's secretary-general or department heads.
It will review the policy from time to time, consider the
need to set up or expand public training institutes, and oversee
the quality of its programmes. Jamaluddin said the policy
would set the training structure - pre-placement, basic, middle,
advanced and transitional - for all government staff at five
different stages of their career. "Training at pre-placement
level is given to all newly-appointed staff, while basic-level
training is for civil servants who have served up to three
years. "The mid-career training programme will involve enhancing
the competency of personnel who have served between three
and 10 years, while advanced level training will be for those
with 10 years of service. "Training at the transitional level
is for those who will retire in two years," he said. Jamaluddin
said the PSD would oversee courses such as pre-service training,
short programmes for advanced management staff, local and
foreign courses of more than three months, and those sponsored
by foreign bodies.
"All ministry secretary-generals and
heads of departments will be given the power to decide on
the planning and identification of training needs in their
respective agencies, decide on the courses and the candidates,
and ensure that all money spent for the purpose is in order.
"They must also make sure that candidates submit a report
of their courses upon completion, and that all participation
is noted in the employee's service record," he said. The policy
also states that candidates who have returned from training
overseas can only be considered for other courses at least
a year after their return. Participation in courses overseas
for periods of three to four days is not encouraged.
Cuepacs president Nordin Abdul Hamid said the policy was part
of the Government's bid to improve the Assessment of Efficiency
Level test (PTK), which had become a controversy of sorts
among civil servants. "The Government has informed us of this
move in one of its roadshows explaining the PTK to civil servants.
It is part of the Government's efforts to enhance competency.
"Previously, training differed from one department to another,
depending on need," he said.
From Malaysia Star, Malaysia, by Sim Leoi
Leoi, 10 April 2005
180,000 Workers to Get 5-Day Workweek
Employees of public organizations will
enjoy a five-day workweek from July. The government has decided
to allow employees of public organizations to join the shortened
40-hour workweek system. Around 180,000 workers such as assistants,
job counselors, street cleaners and nutritionists at schools
and public organizations along with 910,000 public workers
will benefit from the system. The government began to implement
the reduced workweek system gradually from last year, which
non-government workplaces with 1,000 or more employees adopted
first in July 2004. The government put off the implementation
of the system for public officials by one year to July this
year. Instead, public officials were given Saturday off every
other week from last July. Workplaces with 300 to 999 employees
are scheduled to join the five-day workweek on July 1. The
number of workers benefiting from the system from this year
reached 697,678 at 1,390 companies.
From Korea Times, South Korea by Moon Gwang-lip,
12 April 2005
Three-phase Pay Hike
for Bangladesh Civil Servants in the Offing
Dhaka - Prime Minister
Khaleda Zia's government has announced plans to implement
the new pay scale for public servants in three phases from
next month. Finance and Planning Minister M Saifur Rahman
was quoted by various national dailies as saying that the
first phase, which would include arrears from January 2005,
would start in May. "People are eagerly awaiting the
new pay scale. So, we will go for its implementation from
next month. And the government staff and pensioners in a single
chunk will get the total amount in arrears from January, the
month the new pay scale comes into effect," Rahman was
quoted by the Daily Star , as saying. A recent meeting between
the Bangladesh Government and the International Monetary Fund
(IMF) mission covered issues including the new pay structure,
monetary expansion, exchange rate and export-import programme,
Saifur said. He termed the discussions satisfactory except
for a few differences.
From Keralanext, India, 9 April 2005
Don't Accept Any Gifts,
Civil Servants Told
Putrajaya: Civil servants are not allowed
to accept any gifts from the public, Chief Secretary to the
Government Tan Sri Samsudin Osman said. He said the acceptance
of gifts by civil servants could later lead to rampant corrupt
practice within the civil service. "At first, it may be members
of public who present gifts to us. "But if the practice is
not stopped, it can in turn lead to certain civil servants
asking for gifts in exchange for certain services to the public.
"Thus, they should stop accepting gifts," he said at the launch
of the inter-departmental nasyid competition held in conjunction
with Maal Hijrah here yesterday. Under the Public Officers
(Conduct and Discipline) Regulations, 1993, an officer is
not allowed to give any present to, or receive any present
from, any party if such present is connected either directly
or indirectly with his official duties. If the circumstances
make it difficult for an officer to refuse a present or token
of value, the present may be formally accepted, but the officer
must submit a written report to his department head containing
a full description and estimated value of the present and
the circumstances under which it was received. Upon receipt
of the report, the department head must either permit the
officer to retain the present or return the present himself
to the giver. Samsudin also advised civil servants to stay
away from other practices that could lead to corruption.
"The Government will continue its efforts
to eradicate graft in the public sector through programmes
and activities outlined under the National Integrity Plan,"
he said. He also told the civil servants to be courteous to
the public and cultivate the value of giving their "best possible
service." Cuepacs president Nordin Abdul Hamid, when contacted,
said that while civil servants were reminded not to accept
gifts, the public also should not tempt them. "The public
knows that we are supposed to carry out our duties at no cost
to them, so they shouldn't offer us anything in return for
our service. "After all, we are paid to carry out our duties,"
he said. Nordin said if anyone truly wanted to reward a particular
civil servant for his excellent service, he should inform
the department head and go through the proper channels. "We
don't want the public to have a bad perception of civil servants.
We, too, must live up to the standards of our stake-holders
and the community," he said. "The fact that a reminder is
being issued by the Chief Secretary to the Government means
that something must be happening. "All civil servants must
take note of this and make sure that they carry out their
responsibilities in an ethical way," he said.
From Malaysia Star, Malaysia, 7 April 2005
Public Service Slow
to Share
About 95 per cent of public
sector agencies have investigated shared services, but few
are doing it properly, according to an Accenture report. Government
agencies are focused on the cost-cutting benefits of shared
services practices rather than using the framework to become
more client-centred, outcome-oriented and accountable, it
says. A report by Accenture defines true shared services as
the consolidation of administrative or support functions,
such as HR, finance, IT and procurement, from several departments
or agencies into a "single, standalone organisational
entity whose only mission is to provide services as efficiently
and effectively as possible". Jack Percy, Accenture managing
partner for government in Australia and Southeast Asia says
many governments had centralised services instead of creating
a shared services model. "A lot of people say they are
doing shared services, but really they are centralising,"
he says. Having a governance framework, documented scope of
services and service level agreements in place differentiates
the two models, Percy says.
Mark Howard, Accenture's
global program director for government finance and performance
management (F&PM), says only a small number of government
agencies have these three things in place. One-quarter
of organisations that have implemented shared services have
no performance targets of any kind in place, the report says.
It found 66 per cent of respondents use shared services or
are in the process of implementing it for some functions.
The global survey found Australian and Canadian governments
were the most active in shared services. It is the area most
readily understood to benefit from shared services and in
which the framework has been adopted, Howard says. "With
IT, most of the features are already there for shared services,
such as the concept of reporting service levels," he
says. Percy says: "The main difference for IT organisations
in governments is not being accustomed to a governance model."
At the state level, in particular NSW,
Queensland and Western Australia, are furthest along the shared
services path, compared to the federal Government. He says
the government's unsuccessful outsourcing program had "left
a bad taste" and had hampered moves towards shared services.
But he says, with some structural changes, such as the creation
of the Department of Human Services, a cluster of agencies
might look at establishing shared services across an organisation.
"Also if budgetary pressures continue to increase management
may look at shared services," Howard says. Howard believes
governments will move to a true shared services model within
the next five to 10 years.
From Australian IT, Australia, by Kelly
Mills, 11 April 2005
Strengthening Human
Resource Management
The manual system of maintaining personnel
files of the civil servants may soon be history. The Royal
Civil Service Commission has developed a new computer software
known as the Zhiyog system which will maintain computerised
bio-data of all employees of the Bhutanese civil service.
Information such as the date of recruitment and selection,
promotion time, transfers, sanction increments, leave records,
gratuity, pay fixation and training will be maintained in
the Zhiyog system. The government agencies based in Thimphu
will install the Zhiyog system into their computers from April
14. Installation for the other 19 dzongkhags will be done
from May 3rd to 22.
On April 9, 21 participants including
Human Resource officers (HROs), Data managers and IT staff
from the health ministry and nine dzongkhags attended a three
day training on the use of Zhiyog system at the Royal institute
of Management in Thimphu. "As you all are aware without timely
and accurate information we cannot have an efficient and effective
Human Resource Management," said the head of management and
information service division (MISD) of Royal Civil Service
Commission, Monira. "This system will not only give the accurate
information of the civil servants in the dzongkhags but also
facilitate monitoring and evaluation of the performance of
civil servants on a regular basis," she added. The RCSC has
trained 110 people from dzongkhags, ministries and agencies
on how to use the Zhiyog system. The Zhiyog system was developed
by the RCSC in 2001 with the financial assistance from DANIDA
and the United Nations Development programme (UNDP). "With
the new Zhiyog system the personal files of a civil servant
should be available with correct and up to date information,"
said Lobzang Tenzin, the Human Resource Officer (HRO) of Mongar
From Kuensel, Buhutan's National Newspaper,
Bhutan, 15 April 2005
PM Asks Civil Servants
To Be Sensitive to Winds of Change
New Delhi - Focussing on the need to
reorient the civil services, Prime Minister Manmohan Singh
today asked IAS probationers to be "sensitive" to
the winds of change and take bold decisions to help build
India of our dreams. Addressing IAS probationers, he said
an important responsibility of the civil services was to ensure
that citizens do not fear arbitrary governments. Asking the
upcoming bureaucrats to be "sensitive to the winds of
change," he said they should be "flexible to assume
that you do not have the monopoly of the system all the time".
Terming it as a challenge for all, Singh said "our system
needs to develop appraisal skills which reward creativity
of those who take the initiative and not those who do nothing".
India, he said, needed people who have the capacity and courage
to take "bold decisions". "Our system must
recognise the difference between honest mistakes made while
discharging duties and willful attempt to misuse public office.
This is a challenge for all of us," he said.
Emphasising the importance of maintaining
communal harmony, he said what happened in Gujarat has caused
a scar on the body politic. "Such things should never
happen in future". He stressed that the system of governance
must address the primary task of developing the economic and
social potential to enable the country get rid of poverty,
ignorance and disease in the shortest possible time. The Prime
Minister also highlighted the need to ensure that government
expenditure was wisely incurred and spending processes did
not give rise to corruption. Noting that they represented
the most elite services in the country, Singh said "our
country needs top class civil servants. "You are thus
nation builders in the truest sense of the term. Make good
use of the opportunities you have and keep the values in mind
while working so that we can build the India of our dreams,"
he said.
From Hindu, India, 19 April 2005
Civil Servants in Joint Pay Plea
Civil servants threatened to strike
over pensions in March. Two unions representing more than
350,000 civil servants are to submit a joint pay claim for
the first time. More than 200 departments and agencies negotiate
deals separately at present but the Public and Commercial
Services union and Prospect say this is unfair. They also
want a �13,500 minimum wage for all of their workers - from
office clerks to health and safety inspectors. They are due
to hand their submission to the Treasury and Downing Street
at 1230 BST. The unions believe having more than 200 separate
sets of negotiations is "grossly inefficient and unfair".
The current system results in workers in different departments
doing the same jobs for different wages, they claim. And the
unions are also concerned over the growing pay disparity between
women and men. They say the gender gap has grown by 3% over
the past year - with women being paid overall 25% less than
men. The BBC's labour affairs correspondent, Stephen Cape,
says the unions will seek talks with all major political parties.
The move comes just weeks after more than one million civil
servants threatened to walk out over government plans to raise
the pension age from 60 to 65. That strike was prevented after
the government agreed a last-minute compromise.
From BBC News, UK, 7 April 2005
Ministers and Senior
Public Servants in Line for Pay Rise
Government ministers and
top public servants are in line for an early pay rise following
the announcement yesterday of a new review of higher remuneration
in the public sector, writes Chris Dooley, Industry and Employment
Correspondent. The review, the first of its kind since the
Buckley report was completed in September 2000, will examine
whether pay rates at the top of the public sector have kept
pace with executive salaries in private companies. The Government
has invited it to issue interim recommendations by June this
year if it is satisfied that "serious anomalies or inequities
exist". This means that those covered by the review could
be set to receive significant pay increases by the summer.
Ministers, judges, civil servants from assistant secretary-level
upwards and hospital consultants are among those covered by
the terms of reference. Top local authority and health service
executives, the commissioner ranks in the Garda Siochana,
senior members of the Defence Forces and the chief executive
officers of non-commercial State-sponsored bodies are also
The new review, to be chaired by C&C
Group chairman Tony O'Brien, is not due to issue a final report
until 2007. Some of those covered by the Buckley report in
2000, including the Taoiseach and Chief Justice, were given
pay rises of more than 20 per cent. News of the latest review
coincided with an announcement by the Government yesterday
that the minimum wage is to increase by 65 cent to �7.65 an
hour. In a statement last night, the Department of Finance
said the interim report was being sought because by 2007 it
will have been seven years since completion of the Buckley
report. TDs received a 19 per cent increase under the 2000
Buckley review, but they are now included in the benchmarking
process that sets pay rates for the public service at large.
As a result they will not be covered by the new review. The
benchmarking process is also due to be completed in 2007.
Other major beneficiaries of the Buckley
report in 2000 included the Tanaiste, whose salary was increased
by more than 20 per cent to 120,000 Pounds (�152,400) and
Cabinet ministers, who got a similar percentage increase to
110,000 Pounds (�139,700). The salaries of the Taoiseach and
Chief Justice were both increased to 140,000 Pounds (�177,800).
Impact, the State's biggest public-sector union with 54,000
members, said the review was overdue. The union's general
secretary, Peter McLoone, said the pay review was fair to
staff and the taxpayer. "It ensures that we continue
to recruit and retain our share of the brightest and best
in the public service, where they do an incredibly important
and difficult job under intense public scrutiny."
From Irish Times, Ireland, 12 April 2005
Labour Would Speed
Up Public Service Reform
Labour's election manifesto does not
set out a new direction for the party's third term. Instead,
it continues - and in many ways accelerates - the modernisation
of health and education services that has been set in train
in recent years. As he bids for a third and final term in
office, Mr Blair's central message yesterday was that he wants
to make the public service reforms of recent years "irreversible".
However, the manifesto projects this ambition in language
that seeks to unite, rather than divide, the "modernisers"
and "consolidators" in Labour's ranks. For those
who crave greater diversity in public services - such as the
introduction of market mechanisms to improve state education
and health - the manifesto has one clear message: there will
be no limits to what could be achieved in the next four years.
In the NHS, existing plans are set
to see the private sector provide almost �2bn a year's worth
of diagnostics and treatment to NHS patients, while the market
for primary care services is also being opened up. The manifesto
makes clear this trend is to be continued: "Whenever
NHS patients need new capacity for their healthcare, we will
ensure that it is provided from whatever source." It
emphasises that the voluntary sector could play a bigger role
in provision of such services, saying the sector should be
considered "on equal terms". But while this is good
news for those on Labour's "modernising" wing, there
is nothing here to upset those who worried that reform may
go against more traditional Labour principles.
The manifesto, for example, sets no
minimum target for the level of private sector procurement
to be achieved in the NHS. And it emphasises the principle
that the NHS should be free at the point of use. "The
language is new Labour," says one senior Labour strategist.
"But not unremittingly so, to the point where it might
cause internal disputes." But while the manifesto sets
out a clear agenda on some micro issues facing Labour in a
third term, it is vague on many macro ones. For example, it
suggests the promotion of "new" independent and
voluntary providers for employment programmes, particularly
in its drive to reduce the numbers on incapacity benefit.
It also says that both the independent and voluntary sectors
will be offered "greater opportunities" to deliver
offender services. But on pensions - arguably the biggest
domestic challenge facing a third-term Labour government -
the document is lightweight. Labour says it will "forge
a national consensus" on reform, after a report later
this year by the independent Pensions Commission.
The manifesto appeared to rule out
one of the most radical reforms to the state pension system,
saying that the government had already "begun to lay
the foundations for the pension system of tomorrow" by
introducing the state second pension. That seems to imply
that the second tier of state pension provision will remain
in any revamped system. On three other big issues that would
dominate a third Labour term - the future of local government
finance, nuclear power, and road pricing - the manifesto says
nothing new on priorities. Gordon Brown yesterday endorsed
the reform drive with a warmth and enthusiasm that was marked.
He talked about creating an "empowering, not a dependency
creating, welfare state"; one that was "not monolithic,
top down or impersonal but personal to all". But the
idea that Mr Blair has won a victory over the chancellor is
exaggerated. Allies of both the prime minister and chancellor
said last night that there was no dispute in writing thedocument.
Mr Blair's allies said they had controlled
some of their more dramatic language. "Sometimes in the
past we raised choice to the point that it seemed an end not
a means," said one. "We have reined back a bit from
that." Mr Brown's allies, meanwhile, said while he saw
the manifesto draft late in the day, he had no complaints,
and he had always accepted the need to have diverse providers
of NHS services. Mr Brown has always resented the suggestion
that he is opposed to reform of the public sector. His complaint
has been that some of Mr Blair's allies sought to get greater
definition for their reform drive by portraying the chancellor
as anti-modernisation. In the chancellor's view, what has
happened in the past few weeks is that those people in Mr
Blair's circle seeking co-operation with him have seen off
those seeking to get greater definition through antagonism.
This is the backdrop to the powerful display of unity between
the prime minister and chancellor that was at the heart of
the manifesto launch, and is set to dominate this campaign.
From BBC News, UK, by James Blitz, 14 April
Public Service Job
Cuts Planned
Details have emerged of
the Scottish Executive's plan to shed about 800 jobs as part
of the �745m efficiency drive launched last year. Most of
them will be in NHS support services, largely because of the
introduction of more computers. Posts will also go in the
fire service, Scottish Natural Heritage, Caledonian MacBrayne
and the Forestry Commission. The changes will be implemented
over 2007-8 when 1,051 posts will go and 265 new positions
will be created.
Offered redeployment - The plans were
revealed in technical notes published during the Easter holidays.
An executive spokeswoman said the losses would be achieved
through redeployment and natural wastage. She stressed that
so far only one redundancy - at Caledonian MacBrayne - had
been identified. All other staff would be offered redeployment.
The executive confirmed the proposals would lead to the axing
of 604 jobs in the NHS and 65 posts through reform of EU Common
Agricultural Policy. The technical notes suggest 45 jobs could
go at the Crown Office and Procurator Fiscal Service, while
36 may be shed at Scottish Natural Heritage. Reforms to fire
service control rooms could also lead to the loss of 128 jobs
over a two-year period.
The Scottish Environment Protection
Agency (Sepa) may lose 25 jobs, while 20 may be cut in the
Forestry Commission, 14 in the Scottish Public Pensions Agency
and up to 25 at VisitScotland. Sepa denied that it had plans
to make any staff redundant. Chief executive Campbell Gemmell
said: "Sepa's workload continues to expand and our staffing
increases accordingly to ensure that we can fulfil our responsibilities.
"Sepa is committed to meeting the objectives of the Scottish
Executive's Efficient Government initiative. "By changing
what we do and how we do it, we aim to produce savings that
are important for providing the public and regulated operators
with value for money."
From BBC News, UK, 14 April 2005
Unions Want Action
on Civil Service Gender Pay Gap
The gender pay gap in the civil service
has grown to 25%, union leaders revealed today as they lodged
a wage claim on behalf of 500,000 workers in Government departments
and agencies. The difference in pay between men and women
had increased by 3% over the past year, described by unions
as "alarming." The Public and Commercial Services
union (PCS) and Prospect said they wanted a move towards a
new minimum wage of 13,500 Pounds compared with the current
lowest paid job of �10,800.
The unions said there should be one
national pay deal to replace the 200 different sets of civil
service pay negotiations. Mark Serwotka, general secretary
of the PCS said: "The government and the political parties
say they want to do things more efficiently, yet millions
of pounds of taxpayer's money is wasted each year in the grossly
inefficient charade of over 200 different sets of civil service
pay negotiations. "Added to this you have the Treasury effectively
deciding government department's pay through capping pay rises.
"It is alarming that the gender pay gap in the civil service
has increased over the last year to 25%. The government recognises
the need for greater pay coherence, but with pay inequality
getting worse and people increasingly receiving below the
cost of living increases it is time for real progress on achieving
pay coherence, by agreeing a plan of action."
Paul Noon, general secretary of Prospect
said: "Government has rightly stressed its professional skills
agenda but these will be empty words without positive action
to improve its own pay rates for specialists. "There is already
a shortage of key skills in science and engineering and the
closure of university physics and chemistry departments shows
this is set to get worse. "Many long serving staff are being
forced to accept increases below the rate of inflation at
a time when earnings across the economy are rising by 4.5%.
"This short-termism dismays professionals and makes a nonsense
of the Chancellor's claim that science is the engine of growth
for the British economy." Copies of the pay claim were delivered
to the Treasury and to 10 Downing Street today.
From Scotsman, UK, by Alan Jones, 7 April
Overcoming Resistance
to Remote Working in the Civil Service
Thousands of civil servants are destined
for remote working if the chancellor of the exchequer's intended
cuts to public sector jobs are to be fulfilled. But the idea
of packing workers off to set up at home is proving less than
popular with government mandarins. A poll of 85 public sector
bodies - including 54 central government organisations - by
London consultancy Governetz and home offices firm Henley
Offices, has found that the take-up of home working varies
widely, with some reporting as much as 13% and others just
1%. This is despite the fact that encouraging more flexible
and home working and making better use of conferencing technology
are being seen by government as essential parts of the cost-cutting
agenda. It's not because of a lack of demand, it appears.
Some organisations reported being unable to cope with the
sheer numbers of employees who wanted to take up remote working
options. While flexible working arrangements were normally
formally defined, the majority of employees worked "only occasionally"
from home. Another issue was a lack of central co-ordination
of flexible working projects.
The Governetz findings echo a survey by the Office of Central
Government published in February 2004 that found the adoption
of flexible working practices in central government since
2000 had been much slower than anticipated. The main barriers
to change were managers and employees fearing a loss of control,
particularly of the work environment, and bosses not knowing
how to manage workers based at home, it concluded. The infrastructure
for the various different forms of flexible and home working
is, by and large, in place, argued Governetz chief executive
David Werran. The difficulty is a management and HR one -
shifting entrenched perceptions, fear of the unknown, managing
and mplementing change and educating managers and staff so
that all sides can buy into the process. "The 39 departments
that make up Whitehall are slow and cumbersome, sometimes
the smaller agencies will move much more quickly. In theory
it is all there. Now it is up to the enthusiasm of the individual
managers," Werran said.
"A lot of people find it very hard to work from home, they
feel they are losing out by being at home. So you need a reasonably
senior manager to deal with it." Civil service unions are
all behind flexible working as a concept, but also express
concern that sometimes the process is not being as well managed
or implemented as it could be. "Where there is reluctance
it is perhaps because it is not being sold to the staff in
the right way," said Alex Flynn of the Public and Commercial
Services Union. It is vital, therefore, that organisations
provide the right support, whether financial - such as paying
for a phone line, IT connections, extra insurance and so on
- or managerial, so as to ensure workers do not feel isolated
or left off the career ladder, he added.
From PersonnelToday.com, UK, 4 April 2005
Bureaucrats See Civil
Service As A Business - Putin
Moscow - President Vladimir Putin said
he wants to see improvements in the efficiency of the state
administration. "Our bureaucrats are still largely a
secluded and deliberately haughty caste, which regards civil
service as a kind of business," Putin said in his Monday
state of the nation address. "Party and corporate bureaucrats
are no better than civil servants in this respect," he
said. "Our number one task is to raise the efficiency
of the state administration, ensure bureaucrats' strict compliance
with the law, and give civil services of high quality to the
people," he said. "The unscrupulous part of our
bureaucracy, both federal and local, has learned to take advantage
of stability, of the favorable atmosphere and the possibility
of growth instead of working for the public's benefit,"
he said.
From Interfax, Russia, 25 April 2005
University to Train Civil Servants
Just because the future is known only
to God, that does not preclude searching for it. Toward this
end, and in line with the Dutch saying "Learn to look beyond
your nose," Yemen held its second successful "Future Search"
workshop last week. The venue on this occasion was Taiz, where
Sana'a University held a distance workshop under the theme
"Toward Modernizing the Civil Service." The workshop was sponsored
through Sana'a University under a multi-million euro package
of support from the Netherlands Programme for Strengthening
Institutional Capacity in Education and Training (NPT).This
programme currently funds some 12.6 million euros for full-circle
institutional capacity development at six public universities
around the country. This workshop launches a program which
will oversee development of training leading to an Executive
Master's Degree in Public Administration, geared exclusively
toward Yemen civil servants at the mid-to-high levels of the
The project envisions extensive cooperation
and coordination between the Ministry of Civil Service and
Insurance, the National Institutes for Administrative Sciences
and Sana'a University's Department of Political Science through
its Public Administration Unit. The "Future Search" framework
has proved successful in the past where it was utilized by
the Higher Education Project. It's been used toward development
of strategy for a Master Plan to install IT capacity, including
administrative systems for Yemen's public universities and
three community colleges. On this occasion, Dr. Yahya Motaher
of Sana'a University, Project Coordinator for the MPA project,
along with his Dutch counterpart, Dr. Sander Dankelman of
the Dutch Institute of Public Administration (ROI) organized
the program to include maximum participation of a wide range
of specialists and stakeholders to help in the development
plan. To help, organizers called in a renowned expert Dr.
Han Rakels, a specialist in the Future Search framework to
facilitate the discussions. In addition, two senior specialists
from the ROI, Marc van den Muyzenberg and Angela Kwok, along
with two professors from the University of Leiden, Prof. Frank
de Zwart and Prof. Frits van der Meer complemented the participation.
According to the chief architect of
the project, Drs. Han Blom, the program envisions becoming
linked to a merit-based system for the Civil Service. As an
indication of the importance placed on these discussions by
the Ministry of Higher Education and Scientific Research and
the Ministry of Civil Service and Insurance, the Yemen government
also sent very high level participation in the four-day workshop.
The participants included all the deputy ministers of the
Civil Service Ministry, senior officials and select technocrats
from across the public sector and education leaders from Sana'a
University and NIAS, among others. The Minister of Civil Service,
Mr. Hamoud Al-Soofi, opened the workshop emphasizing the crucial
need to develop focused training linked to "the defined needs"
of Yemen's civil administration. He also stressed the need
to ensure effective coordination between his ministry, NIAS
and Sana'a University, and pledged full support for the effort.
From Yemen Times, Yemen, by Aziz A. Alhadi
for the Yemen Times, 3 April 2005
Panel to Examine Appointment
of Senior Civil Servants
A public commission will
examine which senior civil service positions should be defined
as "positions of trust" which do not require a tender,
as opposed to those that will remain professional appointments,
Justice Minister Tzipi Livni announced Monday. Livni said
that her decision was made after reaching a compromise between
Likud MKs Gideon Sa'ar and Gilad Ardan who that authored the
bill, and its opponents in the Labor Party. The panel, half
of whose members are academics in the field of political science,
will make decisions regarding the nature of each top positions
that the original bill sought to turn into 'political' appointments.
A preliminary reading of the new bill is expected take place
at the next Knesset session.
The Ministerial Legislative Committee passed the Political
Appointments Bill last month with the support of most Likud
ministers. Under the bill, many positions would turn into
"positions of trust", which would not require the
holding of public tenders. Such a law would allow ministers
to bring in an increased number of private appointees. Among
the positions of trust included in the bill are Finance Ministry
Accountant General, Finance Ministry Wages Director, Interior
Ministry's Population Registry Chief, the head of the National
Security Council and others.
From Ha'aretz, Israel, by Yuval Yoaz, 18
April 2005
Ministers Face Ban
on Interfering in Political Appointments
Attorney General Menachem
Mazuz and Civil Service Commissioner Shmuel Hollander are
set to ban ministers and members of their bureaus from interfering
in professional appointments in their ministries. Mazuz and
Hollander decided Tuesday to accept recommendations to impose
a "blanket ban on involvement on the part of the political
echelon in a ministry in a professional appointment, be it
senior or junior." Mazuz and Hollander found that political
appointments have been made in numerous government ministries.
The officials found that the appointments were made against
standard operating procedures, often due to political alignments
or promises to members of party central committees. The two
emphasize that a minister and members of the minister's bureau
may not get involved in ministerial staff appointments. Mazuz
and Hollander decided to accept the recommendations presented
in a report by a special joint committee of the Justice Ministry
and Civil Service Commission.
The panel was established following
a State Comptroller's report last August that raised suspicions
of criminal offenses in appointments Tzachi Hanegbi made as
environment minister. Police are still investigating the suspicions
against Hanegbi, who stepped down as public security minister
following the revelations. Hanegbi now serves as a minister
without portfolio. The panel has also proposed limiting the
opportunities to make temporary appointments as such posts
are often filled with political cronies. The committee also
proposed setting up a special unit in the Civil Service Commission
to ensure that appointments are made according to correct
procedures. Mazuz and Hollander found that the political echelons
attempt to influence ministerial appointments in order to
ensure long-term political influence, as well as to ensure
jobs for close associates.
From Ha'aretz, Israel, by Yuval Yoaz, 26
April 2005
Bush Ends Civil Service Protections
Hundreds of thousands of federal workers
made a deal when they signed up with Uncle Sam. They would
do good work, even rewarding, satisfying work. It wouldn't
make them rich, but they would get stability, the federal
holidays, transit subsidies, Cadillac health care, the flextime
allowing every other Friday off, regular raises and a fat
pension. Until now. President Bush and his Texas comrades
have succeeded in doing what no one else could in 120 years
of civil service. They have ended the deal. New personnel
regulations at the Department of Homeland Security and the
Department of Defense will dramatically change the way 860,000
workers there are paid, promoted, demoted and disciplined.
The plan is to spread the changes throughout all federal government.
No more automatic raises. No more pass-fail evaluations. No
more Job for Life.
It will take effect in 2009 ... While
the pay-for-performance changes won't take effect until 2009,
workers are getting anxious. They don't know what their life
will look like. And knowing what life would look like, after
all, was always the point. "In the beginning, it was
good," says Joyce Raeford, who got into government work
nearly 20 years ago, working in the day-care center on the
Army base where her husband was stationed. Now a widow in
her late 50s, Raeford is making about $19 an hour as a lead
education aide at one of the child development centers at
Fort Belvoir in Virginia. She works 8 to 5, Monday through
Friday. The work is fine, and she is still proud of teaching
"my babies." But? "Change is scary," says
Raeford. "Coming to work one day, and not having a job
for sure, that you could be gone with a wave of the hand?"
She shakes her head. " It seems unthinkable to many that
the government, a model, progressive, benevolent employer,
could come to resemble the private sector, with its layoffs
and loss of loyalty to long-term employees.
In the spring of 1973, Colleen Kelley
was getting ready to graduate from Drexel University with
an accounting degree. She was figuring she'd join one of the
big public accounting firms or go into private industry. "And
the IRS came to campus," she recalls. "I really
would not have thought to look at the federal government.
But they talked about their training program on tax law and
the career opportunities, and the salary grade in the GS system.
They showed us the promotion opportunities, and the health
insurance and the retirement." She became a revenue agent,
auditing corporate tax returns. She went to graduate school
at night. She specialized in making sure that companies with
foreign subsidiaries had not improperly shifted their income
offshore, where it would be taxed at a lower rate. "I
really liked what I was doing," she says, and though
she would hear the siren call of higher salaries and bonuses,
caution always prevailed. "When I weighed that against
the system I knew and understood, and that if I did what I
was supposed to do, if I excelled, well, I valued" more
the deal with the government.
Kelley did eventually go outside, but
not to one of the big accounting firms. She is now president
of the National Treasury Employees Union, which represents
more than 150,000 employees in 30 governmental agencies, and
is one of the leaders of an effort to ask the courts to stop
implementation of the new personnel rules. She hears her members'
worries every day. "They signed up for the long haul,"
says Kelley. "So many of them have 10 or 15 years [to
go until retirement], and there is no question it was their
intent to have a career and retire from the federal government,
from a work environment that had rules that provided balance
and fairness. And now there are a lot of questions about the
future." Although there are 15 GS levels (with 10 steps
within each one), there are really only two categories of
workers: professionals and support staff. What they share
is a preference for an orderly life. The federal system, with
its rigid personnel rules, can breed a culture where workers
prefer being told what to do, rather than taking individual
... Planning started in 2001 - In the
aftermath of Sept. 11, 2001, President Bush argued that the
old work rules and regulations hampered government's ability
to respond quickly to crises. He easily won congressional
approval to change the system. In January 2003, the bipartisan
National Commission on the Public Service, chaired by Paul
Volcker, called for the abolishment of the general schedule.
The new rules will replace the half-century-old GS schedule
with a pay-for-performance system, as recommended in 2003
by a bipartisan commission on public service, and will also
limit the unions' ability to intervene on behalf of their
members. "We think those flexibilities make it possible
for agencies to better focus on results and to hold the people
and managers accountable," Clay Johnson, deputy director
for management at the Office for Management and Budget, said
at a briefing to unveil the new rules.
From The News Journal, DE, by Ann Gerhart
of The Washington Post, 10 April 2005
First International
Compliance Awards Honors Those Dedicated to Advancing the
Compliance Profession
Last night, the International Corporate
Compliance Professionals Awards Dinner, held at Sheraton New
Orleans, recognized individuals and organizations that have
made considerable contributions to the compliance profession.
The inception of the Awards Dinner, held by the Society of
Corporate Compliance and Ethics (SCCE), Health Care Compliance
Association (HCCA), Healthcare Compliance Certification Board
(HCCB), and Open Compliance and Ethics Group (OCEG), happens
in conjunction with the rapidly growing and changing role
of the compliance profession. The compliance officer position
can be found in almost every industry, in public and private
companies, and in nonprofit organizations. Compliance professionals
develop and oversee corporate compliance programs to ensure
that their organizations comply with regulations.
Award Recipients - nternational
Compliance Professionals Award recipients are leaders in the
compliance field, showcasing professional integrity and strengthening
the industry. Award recipients include: -
Australian Compliance Institute, whose mission is to lead
organizations in the development of integrity and trust and
to add value to members through the promotion of more effective
and efficient compliance in Australia. -
United States Sentencing Commission for the role that it has
played in the development of the foundational elements in
every U.S. compliance program. -
E. I. Du Pont de Nemours and Company, Inc. and their Chief
Compliance Counsel Marjorie Doyle, for the innovative approach
the company uses to effectively train employees and to communicate
their global compliance message; and to honor the work of
Marjorie Doyle in promoting the compliance profession. -
Joseph Murphy, Esquire, for his many contributions to the
compliance profession and for his assistance in developing
the HCCA Code of Ethics. - Quinnipiac
University and Assistant Professor of Management Angela S.
Mattie, J.D., M.P.H, for their contributions to the compliance
profession. Quinnipiac University's Health Care Compliance
Certificate Program provides qualified students with a sound
academic foundation and the skills required to function as
health care compliance professionals. -
Lynn Brewer, Founding Chairman of The Integrity Institute,
Inc., for her role in promoting organizational integrity and
developing methods that measure integrity in communications,
compensation, compliance, corporate citizenship, culture,
earnings, governance, leadership, risk and stakeholder perceptions.
"Compliance and ethics are the
foundation of our civil society. This award recognizes that
the principles of compliance and ethics transcend time and
national boundaries," said Mike Lotzof, CEO, Australian
Compliance Institute (ACI), who accepted the Award on behalf
of ACI. U.S. Sentencing Commissioner
Michael Horowitz, said, "I am proud to accept this award
on behalf of the Commission and the Commission staff."
"We are so proud to have
the opportunity to acknowledge the important work being done
in compliance," said Al Josephs, 2004/2005 President
of HCCA. "As the profession
is growing in importance and stature, it's fitting to honor
those who are paving the way and setting a good example,"
said Odell Guyton, 2005/2006 HCCA President and SCCE Co-Chair.
From mysan.de (Pressemitteilung), Germany,
20 April 2005
United Nations Weighs Ethics Unit
to Protect Whistle-blowers
United Nations - The United Nations
is considering creating a high-level ethics office to encourage
employees to come forward with allegations of misconduct or
mismanagement against their bosses, officials said on Friday.
The idea is part of a plan promised by Secretary-General Kofi
Annan 10 months ago to strengthen protections for whistle-blowers
after a survey found U.N. staffers believed little was being
done to root out unethical behavior and that workers who exposed
wrongdoing risked reprisals. A proposed new whistle-blower
policy was drawn up and distributed to staff for comment as
part of a broad U.N. reform initiative launched following
a steady drumbeat of wrongdoing accusations against top U.N.
officials in recent months. Many of those have been linked
to the $67 billion oil-for-food program for Iraq, which was
shut down in 2003 and is the target of numerous investigations.
Among them, Annan was himself faulted by outside investigators
for conducting a perfunctory inquiry into a possible conflict
of interest in the award of an oil-for-food contract to a
firm that employed his son.
The new ethics unit would provide staff
a layer of protection over and above that of the Office of
Internal Oversight Services, the U.N. internal watchdog unit
now responsible for whistle-blower protection. That unit has
itself come under fire in recent months for management misconduct
including allegations of favoritism in hiring, sexual harassment
and misuse of oil-for-food program administrative funds. The
main U.N. bureaucracy has nearly 15,000 employees worldwide
and a $1.8 billion annual budget. That does not include $4
billion for peacekeeping forces and 20,000 staffers who work
in U.N. programs and funds.
The whistle-blower proposal would create
an ethics unit in Annan's executive office to hear reports
of reprisals or threats against staff reporting mismanagement
or wrongdoing and to discipline those found responsible. The
unit would report annually to the U.N. General Assembly on
all the cases it handled and the actions it took. A new whistle-blower
review panel would watch over the ethics unit and suggest
improvements. "All staff members can make whistle-blower
reports in good faith without fear of retaliation," according
to the proposed new policy. "Anyone who engages in reprisals
against those who make whistle-blower reports or cooperate
in whistle-blower cases will be subject to charges of misconduct."
From Reuters India, India, by Irwin Arieff,
8 April 2005
E-governance to Improve Performance
in Pakistan - Leghari
Karachi - Federal Minister for IT and
Telecom Awais Ahmed Khan Leghari has said the government will
outsource its IT and e-governance requirements worth $50 to
100 million to private sector in next 18 months. He was addressing
a seminar on "Enhancing productivity for the textile
sector through use of IT", organised by IT solution providers
Arwen Technology Ltd (ATL) here on Saturday. He said the government
was working on a major plan to adopt e-governance in its departments
to improve their working and would outsource huge amount of
IT work to private sector in near future to attract more IT
solution provider companies in the country.
He said leading international IT solution
providers like Microsoft and IBM could team up for these projects
and must register with the government. "There is a certain
criteria and local companies can go for collaboration with
foreign companies if they feel short of resources and expertise,"
he added. He further said the government was also expecting
other leading world players to participate in this task. He
informed that the first meeting of National E-government Council
(NEGC) would be held under the chairmanship of Prime Minister
Shaukat Aziz on April 23 at Islamabad to give approval to
a five-year plan of e-governance. He said that all the government
departments would be given targets to implement e-governance.
"The government will also urge
private sector, especially the textile sector, to take up
IT solutions to enhance their productivity, improve efficiency,
cut cost by plugging leakages and satisfy their buyers,"
Leghari maintained. He said that the government is working
to create a much better tax-incentive environment to gear
up the growth of IT sector and attract leading companies in
Pakistan. "We have recommended a tax cut of 5 per cent
for IT solution providers in the forthcoming budget,"
he added. The minister was optimistic that the IT sector will
grow much more rapidly in next two years.
Commenting on the training of manpower
in IT sector, the minister said that the government would
use its research and development fund worth Rs2 billion for
human resource training in textile sector. Appreciating the
entry of Arwen Technology Ltd (ATL) in textile sector, the
minister said that the company was doing a job for the government,
adding, "textile sector must use this technology to upgrade
its product quality, standards and processes to world level."
Earlier, Chief Executive Officer ATL Atiq Rehman said that
his company provided total solution to the textile industry
for increasing productivity, efficiency, cost reduction while
the return is much higher.
From Pakistan Times, Pakistan, 18 April
West Bengal District First in Rural
West Bengal is all set to implement
the country's first rural e-governance pilot project in a
southern district of the state. The project to be launched
in Bardhaman will bring every village council there under
its network. The project is being launched by West Bengal
State Wide Area Network (WBSWAN), which was started in August
2001 for providing a computer networking backbone carrying
voice, video and data over Internet across the state to facilitate
e-governance. "An administrative approval of Rs.40.96
million ($935,000) for this pilot project has been received
from the government's Department of Information Technology
(DIT)," West Bengal IT principal secretary G.D. Gautama
told IANS Saturday. "This amount would be released as
grants-in-aid to Webel Technology Limited (WTL), the state-designated
State Wide Area Network implementing agency," he said.
The pilot project, once implemented, would connect six subdivisions
to district headquarters, subdivisional headquarters to 31
blocks and the blocks to 277 gram panchayats through a Public
Telephone Network (PSTN) dial up connection. According to
Gautama, Bardhaman is an ideal choice for the project because
it offers a large industrial, agricultural and mining base
and has the highest population density of 985 people per square
km, enabling a wide cross section of people to access the
services. "The district headquarters at Bardhaman in
south Bengal is being provided connectivity by WBSWAN from
the centre at Kolkata," he said.
"This is for the first time in
the country where all the gram panchayats of a district are
being brought under the network," Gautama said. The Indian
Institute of Technology, Kharagpur, is assisting WTL on the
project. Meanwhile, the state's State Wide Area Network (SWAN)
expansion plan also received a central grant of over Rs.660
million. "DIT has conveyed administrative approval of
Rs.669.3 million through WTL for the entire SWAN project in
the state," Gautama said. "The readily available
secured government network would attract the attention of
business houses to the districts while the infrastructure
would support value-added services through Community Information
Centres (CIC)," he said. The WBSWAN was launched in 2001
to provide connectivity of data, voice and video communication
facilities to all 18 West Bengal districts. It was extended
to eight commercially important subdivisions in 2003. West
Bengal is now firmly entrenched on the IT expansion map of
India with its capital city Kolkata emerging as one of the
fastest growing IT hubs for MNCs.
From Newz.in, India, 23 April 2005
Website Self-Service Can Save Taxpayers
�1.2 Billion
Local authorities could achieve government
targets and save �1.2billion of taxpayers money by 2007, if
their websites were able to answer routine questions from
the public automatically online. This is the view of Transversal,
whose eCustomer Service solutions are being used to answer
millions of questions on public sector websites including
The British Army and The Metropolitan Police. 829,000 recruitment
questions were answered automatically online using eService
for just one of Transversal's public sector customers in 2004
- an annual saving of �7 million compared to answering questions
by email, or nearly �14 million if resolved by phone, according
to Transversal. The amount of phone calls to public sector
departments and call centres has risen sharply, from 67 million
in 2000 to 95 million in 2003 . Yet despite the billions already
spent on eGovernment, too many local authority web sites are
still unable to provide basic answers online, frustrating
citizens searching for information and unnecessarily increasing
public service costs. This view is backed by the Society of
Information Technology Management (SOCITM) , which represents
public sector ICT managers. Following research and usability
testing of 468 council websites SOCITM stated that a significant
slice of the annual 2.5 per cent efficiency gain could come
from transferring face-to-face and phone contact to self-service
via the web. Local government has been set this efficiency
target by the Treasury and is equivalent to �1.2 billion over
three years.
SOCITM's research found that only 10
per cent of councils had A-Z content lists of sufficient standard
and only 13 per cent had internal search engines that picked
up common terms such as public transport, council tax, committee
meetings and Freedom of Information. By handling large numbers
of routine questions, self-service applications can significantly
cut down on phone calls and emails that need to be handled
by public sector staff and call centres. The private sector
experience of self-service is that organisations can reduce
contact volumes by more than 60%. SOCITM's findings mirror
a study carried out by Transversal in 2004, which found that
nearly three quarters (73 per cent) of citizens hadn't noticed
the impact of investment made in e-Government and that 50
per cent of respondents were unhappy with current levels of
customer service. "E-Government offers councils an unprecedented
opportunity to reduce costs while actually improving services
to citizens," commented Davin Yap, CEO, Transversal.
"While local government is moving in the right direction
there seems to be a gulf between what is offered and what
citizens actually want - clear, easy to access and jargon
free information. Failure to provide this will drive people
to expensive channels such as contact centres and council
offices - negating the �1.2 billion efficiency gains promised."
From Managing Information, UK, 15 April
We Will Harness Power
of IT and Continue E-gov Work, Says Blair
Prime minister promises continued investment
in local government IT - Days before Tony Blair went to Buckingham
Palace to ask the Queen to dissolve parliament, the government
launched a new strategy to transform the delivery of public
service around IT. The announcement must have been music to
the ears of public sector IT managers. Just a week earlier,
Chris Guest, president of council IT managers association
Socitm, voiced his fears that local authority IT spending
could dry up as the 2005 e-government deadline passed and
as budgets were squeezed as a result of the government's efficiency
review. Richard Steel, head of IT at Newham Council in East
London, was typical of many local authority IT directors when
he insisted that Westminster and Whitehall should not give
the impression that the job of e-government is already done.
As if answering this call, Blair said in the introduction
to Connecting the UK: the Digital Strategy, 'While we can
rightly celebrate progress, we cannot, and should not, think
the job is done. We must harness the power of IT to modernise
public services so they are as personalised, efficient and
responsive as the most successful companies.' With this came
the promise that the Cabinet Office E-Government Unit and
the new council of government chief information officers would
create a 'vision of public service delivery transformed by
modern technology and a strategy for achieving that vision'.
Blair said, 'The challenge for government
is to ensure that we seize the opportunities offered by the
widespread availability of high-speed networks and the growing
acceptance of electronic services in people's daily lives.
'Some services enabled by modern technologies have had a profound
impact that was not foreseen: the budget airline industry
is now a social phenomenon reaching almost all parts of society,
but would not have been possible without the internet. People
will adopt new technologies when the value proposition to
them as individuals and families is strong enough. 'We must
be open and quick to seize the opportunities that present
themselves. Rising to this challenge will be an important
task for the e-government unit as it draws up a strategy for
the use of ICT in transforming public service.'
But there is a difference between putting
commercial and government services online. Retailers and airlines,
for instance, want to attract the affluent customers, who
are already likely to have access to the internet at work
or at home. For government services the opposite is true:
key client groups for social services, for example, are the
least likely to have web access. For this reason, the document
looked at ways of overcoming the 'digital divide,' encouraging
the leasing of laptops to family homes through schools and
making it easier for businesses to sell old PCs to all employees,
not just those that already use IT on a regular basis. While
vision is one thing, local e-government minister Phil Hope
offered some practical measures that could ensure IT spending
is the beneficiary, rather than the victim, of spending cuts
under the efficiency drive that all parties in the general
election are promising. Hope said the local authority spending
watchdog, the Audit Commission, would in future perform a
comprehensive performance assessment on councils that gives
weight to effective use of IT to improve efficiency. 'Not
only delivery and corporate management and leadership [will
be examined], there will be criteria for use of resources,
including IT. They will have to identify how they use IT,'
he said. Jos Creese, head of IT service at Hampshire County
Council, welcomed the pledges. Having IT feature in the auditing
of efficiency gains would help prevent financial departments
from sidelining IT or even cutting IT budgets, he said, but
warned, that delivering IT-enabled efficiency gains would
be hard.
From ComputerWeekly.com, UK, by Lindsay
Global Alliance to
Hold IT 'security day' in London
The first UK fruit of
an alliance of three major international IT security organisations
formed earlier this year will be a "security day"
in London on 10 May. The US-based groups represent three areas
of IT security. The Information Systems Security Association
(ISSA) covers IT security professionals, the Information Systems
Audit and Control Association (Isaca) rep- resents IT auditors,
and Asis International has its roots in physical security.
The first UK joint meeting of the organisations on 10 May
will cover e-crime, BS7799 and ISO 17799 standards, e-government
security and e-governance. The international boards of the
three organisations took the first steps towards forming their
alliance last February, spurred by the increase in and growing
complexity of risks to business from hacking, viruses and
other IT-related threats.
The alliance aims to: - Develop risk
models that better qualify and quantify enterprise-wide security
risks and the potential impact on business; - Raise management
awareness of existing and emerging risks; - Promote a common
security management voice to legislators and government agencies;
- Work together to define the qualification, certification
and training requirements for security roles, including chief
information security officer. Informal talks between the UK
boards of the organisations have already started, said Louis
Gamon, regional director of ISSA EMEA. He added that formal
talks to move the alliance forward through joint events and
information sharing will be held on 1 June. More information
from www.issa-uk.org.
From ComputerWeekly.com, UK, 20 April 2005
E-government for Everyone
Now that our capacity for e-government
is about to make a huge leap forward, the government has been
reminded that e-government is about improving public access
to online services, rather than excluding those who don't
have the necessary internet know-how. The construction of
Ireland's e-government infrastructure is about to reach an
important milestone next month as the Public Services Broker
(PSB) goes into operation. The PSB is a computer infrastructure
project, which will allow government departments to interact
both with one another and with the public. The PSB will allow
government departments to link up their disparate computer
systems, giving citizens an integrated and efficient point
of access to government services. Seamus O'Farrell of Reach.ie,
the agency charged with delivery of the PSB, says that the
system won't transform government overnight, but will introduce
some key improvements to Ireland's e-government capacity.
From the date of its launch, the system
will include a single process for the identification and authentication
of members of the public and will also include a single payment
mechanism for transactions. Citizens will no longer need to
prove their identity each time they deal with a government
office, such as the Department of Agriculture, passport office
or the local authority's motor tax office. The launch of the
PSB should help to shore up Ireland's eroded standing as a
world leader in e-government. Last month Cap Gemini, in a
report commissioned by the European Commission, placed Ireland
fourth in the EU in terms of the sophistication of its online
e-government offerings. In 2003 Ireland was placed joint second
with Denmark and back in 2001 Ireland was ranked number one.
Evidence of Ireland's relative decline
has also been shown in other studies; Accenture's sixth annual
e-government survey, which was released earlier this month,
shows that Ireland is ranked in joint eleventh place internationally,
along with Belgium and Japan. This means that Ireland held
the place it enjoyed in 2003, but has slipped one place since
2002. But Accenture partner Ian Slattery says that our fall
in the rankings needs to be placed into context, since the
criteria of the survey has changed since last year and that
it's difficult to compare the surveys. This year's survey,
for example, examined e-government in a broader sense than
previous studies, which looked at the range and quality of
e-government services. In terms of the quantity and quality
of e-government projects, Ireland has plenty to crow about.
The Revenue Online Service (ROS) processed the tax returns
of 157,000 self-employed people at Halloween last year, accounting
for 53 percent of the total number of people who filed. Elsewhere,
the Department of Social and Family Affairs recently won the
Innovation through Technology Award from Inside Government
magazine for its Integrating and eEnabling Services project.
This service makes it possible to register a child's birth,
assign a Personal Public Service Number (PPSN) and set up
child benefit payments in a single procedure.
Shay Fitzmaurice, the managing editor
of the Public Sector Times, says that the standard of e-government
projects has risen hugely in recent years, as demonstrated
by the entries to his publication's e-government awards. He
points to the Land Registry Office as an example of the transformative
powers of e-government. It used to take years for land transfer
transactions to be completed, but with 80 percent of its business
transferred online, the Land Registry now completes 3,300
business transactions per day via its website. But that's
not where Ireland's e-government challenges lie. Accenture's
Slattery points out that Ireland stumbled on the third strand
of the e-government survey, which looked at e-government in
terms of its ability to provide good customer service. In
order to score highly in this area, governments must do more
than simply put their services online. Although 50 percent
of the population of Ireland are regular internet users, only
60 percent of those have ever visited a government website.
Coercing people who lack ICT skills into an automated system
is not good e-government practice, according to Slattery.
In order for e-government to be accepted and successful, it
needs to work with people on their own terms. In this context,
e-government would mean that people could make a phone call
to a civil servant, who would have all of their information
to hand, using a PC that's connected to the PSB. People should
also be able to have face-to-face meetings with civil servants
when they feel that it is necessary.
"I'd be concerned if Ireland was
slipping down the rankings and there was no plan to improve,
but there is a programme in place," said Slattery. The
fact that the PSB is designed to facilitate phone and face-to-face
contact is one good omen for the customer service aspect of
e-government, as is the fact that the government plans to
provide integrated contact centres to the public. In the long
term however, e-government will mean that the public will
increasingly interact with the government through a computer
network. To this end the government has been introducing initiatives
that will encourage people to go online, such as free computers
in public libraries and publicly funded computer training
for the elderly. Such initiatives will certainly make e-government
a more realistic prospect for everyone.
From ElectricNews.net, Irelandm by Ciaran
Buckley, 22 April 2005
Europe Setting the
Pace in E-business - We're All Switched On
Europe is creating a thriving e-business
environment by driving broadband growth and investing in public
and private Internet initiatives, according to a new report.
The Economist Intelligence Unit (EIU) released its sixth annual
ranking of the "e-readiness" of 65 countries, rating
them on factors such as Internet access, mobile penetration,
innovation and investment. Seven of the countries in the top
ten are in Europe, with Denmark ranked number one thanks to
its high rate of connectivity and solid technical infrastructure,
the EIU said. Other European front-runners were Sweden at
number three, followed by Switzerland, and the UK. Finland
tied with Hong Kong in sixth place, and they were followed
by the Netherlands and Norway.
Strong e-government initiatives and
broadband development helped boost the European contenders,
according to Denis McCauley, director of global technology
research at the EIU. Switzerland moved up from its tenth-place
spot in 2004 thanks to Internet growth and a strong education
base, McCauley said. The EIU revised its criteria for the
rankings this year, adding more weight to broadband penetration
and average years of schooling, thus improving Switzerland's
score, McCauley said. The U.S. took number two, advancing
from its sixth-place position last year, because of broadband
and mobile connectivity progress, McCauley said. The nation
also continued to score high in the areas of entrepreneurship
and e-business services, he said. Hong Kong led the Asia-Pacific
contenders at number six, followed by Singapore at 11 and
South Korea at 18. The development of e-business services
and a positive legal and policy environment helped boost Hong
Kong, the EIU said. While South Korea remains the most developed
broadband market in the world, factors such as Internet security
counted against it, the researcher said. China and India,
well known for their IT growth, came in near the bottom of
the chart, EIU said. China stood at 54 in the rankings while
India came in at 49.
Looking ahead, McCauley predicted that
new EU members Estonia and Slovenia, currently at numbers
26 and 27 respectively, would continue to make gains based
on the amount of public and private funding going into their
Internet development. He also predicted that South Korea would
make a quick comeback in non-technical areas like policy and
education. The EIU e-readiness report reviews over 100 criteria
in categories such as supporting e-services, legal and policy
environments and technical infrastructure.
From Techworld.com, UK, by Scarlet Puritt
of IDG news Service, 20 April 2005
Italian Models Appreciated
Abroad - MIT-RGS Agreement
Rome - The Italian e-Government model
is appreciated abroad. Three are always more developing countries'
Public Administrations which want to use the digital technologies
developed by the Italian government, revealed Innovation and
Technology Minister Lucio Stanca at 'Euromed ICT', the conference
for European Mediterranean countries on IT, promoted by the
European Commission in Dundalk (Ireland). Minister Stanca
said that "more countries are joining the 16, of which
Italy is advancing the e-Government Initiative for Development
realized by the Technical Unit of the ministries by partnership
such as UN, the World Bank, the InterAmerican Development
Bank and the Development Gateway Foundation of Washington.
The new international fronts opened thanks to the agreements
started with the State Accounting Department and the collaboration
with the Territorial Agency of the Economy Ministry. With
these international initiatives Italy united the efforts which
were previously run individually by several international
The world is increasingly adopting
the 'good governance' way, i.e. that of democracy, and as
a consequence new Information and Communication Technologies
(ICT) are being used. General State Accountat Vittorio Grilli
and Chief of the Innovation and Technology Department of Cabinet
Mario Pelosi, signed an agreement which made the collaboration
between Accountancy and the Ministry for Innovation and Technology
within the e-Government Technical Unit for Development projects
official. The structure involved Accountancy as partner in
e-Accounting projects not only as the Italian institutional
referrer on these issues but also for the prior experience
in cooperation projects, as in Lithuania.
Currently the collaboration between
Stanca's ministry and the Accountancy is being realized with
projects in Nigeria, Jordan and Albania. In Nigeria the contribution
to Accountancy was fundamental for the start of the project
and favoured the construction of a bilateral relationship
with the Nigerian counterpart: the Office of the Accountant
General of the Federation (OAGF). The project, just started,
will last six months and has a pilot phase scheduled: the
data will be collected by posts located in the 5 ministries,
to then be sent and consolidated in the OAGF headquarters.
The action was financed by the grant program of the Italian
government and the Development Gateway Foundation for a value
of 400,000 USD. The Technical Unit was implemented also to
favour economic support of the World Bank to Nigeria to guarantee
the progression of e-Accounting and e-Statistics projects,
currently being accomplished in the same country in collaboration
with ISTAT.
The General Accountancy experts gave
their support to the Technical e-Government Unit for Development
of Minister Stanca in the preliminary definition of the e-Accounting
project in Jordan. The official start was in Amman under the
signatures of Jordanian Finance Minister Mohammad Abu Hammour,
Minister Stanca and UNDP-UN Representative Christine McNab.
The project is accomplished in collaboration with UNDP via
a trust fund of 488,000 USD, opened by the Italian government
and will be concluded by December 2005. In Albania the General
Accountancy experts with those of the Technical e-Government
Unit for Development took part in the definition of the specifications
regarding the upgrading of the Albanian Public Accountancy
System towards more modern European and international standards.
Soon the Albanian electronic accountancy project will enter
its operative phase. The Italian Foreign Affairs Ministry
invested 930,000 USD in the UNDP trust fund for this. The
Territorial Agency was selected by the Mozambican Government
as technical consultant for the electronic cadastre project
(e-Land Registry and Land Information Management System) realized
by the Technical e-Government Unit for Development of Stanca's
ministry. The project, sponsored by the grant program set
From Agenzia Giornalistica Italia, Italy,
11 April 2005
E-government on Agenda
of Most European Cities
E-government is now a
permanent agenda item of local councils in European cities,
a survey compiled by Deloitte and the Eurocities Knowledge
Society Forum reveals. Some 80pc of participating cities have
developed an e-government policy, including the delivery of
services electronically.
The survey, which was unveiled at a
major Eurocities conference in Tallinn, Estonia, investigated
the status of e-citizenship and e-government within European
cities focusing on four key challenges: re-engineering of
local public administration; e-learning and inclusion; e-security
and e-democracy; and community building. A total of 102 European
cities from 23 European countries, including 18 cities in
new EU member states, participated in the survey. According
to the survey, cities recognise the need to focus on cost
reduction and efficiency, by analysing the real needs of citizens
and businesses and computerising simple and frequently used
services. The survey shows the demands of citizens and businesses
represent the most important drivers for improvement of electronic
services. The increasing focus of cities on the demands of
their citizens demonstrates that cities are adopting a more
'outside-in' approach to e-government, as opposed to focusing
on issues such as cost reduction and responding to legislative
requirements only.
In 2003, primary reasons for implementing
e-government were cost reduction and responding to legislation.
E-government now finds itself increasingly on the agenda of
local councils. Most cities have programmes, projects or taskforces
defined or in place, and some had even created specific senior
positions for e-government. The current focus of cities is
to meet demands of citizens and businesses, with 79pc of survey
participants citing this as their most important driver of
change. Respondents to the survey believe that e-government
could reduce external (user) costs by simplifying complicated
procedures, typically involving the business community, such
as licence and planning applications and tax reporting. Following
the satisfaction of the demands of citizens and businesses,
the streamlining of internal processes (61pc), the increase
of productivity (59pc), the improvement of performance (59pc)
and cost reduction (50pc) are seen as the most important drivers
of change. Outsourcing did not appear to be popular among
participants, despite some of their stated objectives. Cities
outsourcing e-services or considering outsourcing them were
mostly those respondents whose services were at an advanced
On the topic of re-engineering local
public administration, the survey showed that the implementation
of e-government was being driven by citizens' demands, internal
efficiency, effectiveness and productivity. The response to
citizens' demands is a positive shift. It indicates that cities
are adopting a more responsive 'outside-in' approach towards
e-government. Lifelong learning remained a political issue,
the survey found. In most respondent cities (70pc) this was
a topic on the political agenda with involvement from a wide
constituency of interested and motivated parties. Different
approaches have been adopted with a third of cities having
a written e-learning strategy, a large number of strategies
addressing specific target groups and having a dedicated organisation
and resource for e-learning. The initiatives to provide life-long
learning opportunities concentrated more on promoting e-learning
(67pc) than providing it in the homes (37pc) or to the community
Analysis of the e-security survey data
indicates certain security precautions are in place with 88pc
of participants deploying antivirus software and in excess
of 70pc using firewalls. More than 90pc of respondents were
in agreement with elected representatives being contactable
by email; citizens receiving electronic communications on
policy matters and elected representatives to modernise their
working practices. However, 57pc of participants didn't expect
online consultation to raise public expectations and could
lead to frustration. Some 43pc had no view on whether all
European citizens should be able to vote online and 53pc suggested
that elected representatives couldn't cope with the number
of emails they receive. Chris Newby, a Liverpool councilor
and chairman of the Eurocities Knowledge Society Forum, commented:
The [eCitizenship for All] survey is a clear example of the
unprecedented efforts that cities are undertaking to achieve
good governance within the context of public sector modernisation.
"The survey shows that e-citizenship is becoming a meaningful
agent of transformation embedded in the culture of the public
sector. Its potential goes far beyond early achievements."
From Siliconrepublic.com, Ireland, by John
Kennedy, 22 April 2005
Qatar Providing Top Class E-services
Doha - Qatar is now among the top select
group of countries that have developed a comprehensive infrastructure
for its e-services with the latest in cyber technologies being
implemented, Abdulamir Mryhij, ebusiness Practice Manager,
GBM-Qatar, said here recently. "In the e-services domain,
Qatar is definitely one of the top group of countries for
the number of e-services provided", Abdulamir said. He
was speaking at a news conference to announce GBM-Qatar sponsorship
of the upcoming e-government symposium to be held on April
"The symposium is aimed at creating
awareness on the services provided by government website (www.e.gov.qa)
to the public, businesses and visitors", said GBM-Qatar
General Manager, Thierry Louesse. "The focus will be
on how the website provides faster, more convenient, and less
costly services and transactions in a secure and private environment
using straightforward instructions in both Arabic and English",
he said. Thierry noted that GBM along with IBM and its business
partners have developed so far ten of the on-line governmental
services available. These include, Qatari employment, residence
permits, visit visas, driving licence renewals, vehicle registration,
Zakat contributions, electricity and water bill payments and
the recently launched birth certificate.
The portal is bringing Qatar's goal
significantly closer to be the regional leader in harnessing
the power of today's technology in the way it delivers services
to its constituents and provides support to its employees,
said Louesse. Abdulamir Mryhij, GBM-Qatar, e-business Practice
Manager explained that Qatar started with e-services, which
is needed to provide services online and Public Key Infrastructure
(PKI), which is needed for security while establishing its
infrastructure. Abdulamir said these are important elements
to get people engaged in using the e-services provided. However,
among the challenges that Qatar as any other country has to
face in establishing an e-services infrastructure, is to get
all government institutions to adopt the initiative at a faster
pace, he said.
From Peninsula On-line, Qatar, 8 April 2005
Lecture on 'E-government
to E-governance' Held at KOM
Muscat - Yahya bin Saud
bin Mansour Al Sulaimi, minister of education, inaugurated
a lecture titled 'e-government to e-governance' at Knowledge
Oasis Muscat yesterday. This lecture, the first in the 'MECIT
Series of Lectures on Digital Society', is organised by the
Middle East College of Information Technology (MECIT) and
was delivered by Prof. Matthias P. Finger, an internationally
well-known scholar in the area of e-governance. Most countries
are now trying to drastically reform the way their governments
function. The first stage of reform began in the 80s and was
largely in the context of transition to free market economies.
The second phase of the reform process, which began in the
1990s, was triggered by the Information and Communication
Technology (ICT). As of now, government reform has become
a global phenomenon, mostly enabled by ICT and known under
the buzzword e-governance.
The emergence of extra-governmental
centres of power and private actors engaging in policy formulation,
the increasing privatisation, and citizen-oriented government
services, are all signs of this change. However, the terms
'government' and 'governance' are often used interchangeably,
to the extent that many governments are merely engaged in
digitisation or automation of their processes. There was a
need to bring about conceptual clarity with regard to the
immense transformational potential of e-governance with a
multi-pronged approach whereby anything from an overall societal
preparedness to employing appropriate technology solutions
are addressed holistically. In the above background, the current
lecture is intended as an eye-opener to the decision makers
in governments regarding the ongoing global debate and consolidations
on the emerging dimensions of the concept of e-governance
as compared to a relatively static concept of e-government.
The objective of the lecture is to
confront the audience with the overall concept of state transformation
with a slight focus on the paradigm shift from government
to governance by offering an understanding of the possibilities
and limits of ICT in governance. MECIT, which is organising
the lectures, was set up in 2002 within Knowledge Oasis and
has about 1,200 students pursuing various degree programmes
in information technology. Recently, the college tied up with
the Interactive University, which is the consortium of Scottish
Universities and Scottish Enterprise to provide Scottish degree
programme in the Sultanate. MECIT tied up with Chair Management
of Network Industries (Chair-MIR) at the Swiss Federal Institute
of Technology, Susanne (known as EPFL), to conduct the lectures
on various concepts of digital society. Professor Mathias
is the head of the Chair-MIR, which runs an international
Masters Programme in e-governance and has many international
publications to his credit. He was also a visiting professor
in many global universities.
From Times of Oman, Oman, 18 April 2005
Stage Set for Switchover
to E-Governance
Riyadh - The Kingdom is
on course for switch over to e-governance, Telecommunications
and Information Technology Minister Muhammad Jameel Mulla
said yesterday. He was speaking at a press conference after
inaugurating GITEX Saudi Arabia 2005 at the Riyadh Exhibition
Center. The five-day exhibition attracted 500 companies from
15 countries; there were more than 5,000 visitors on the first
day with 80,000 being targeted. "We have a structured organization
for the implementation of e-government," the minister said,
adding that there was a special committee comprising the ministers
of finance and communications and information technology and
the governor of Communications and Information Technology
Commission (CITC) to supervise the implementation programs.
He pointed out that there were several subcommittees working
under the ministerial committee to streamline the programs
envisaged by the government. "We have already started a pilot
project between the ministries of finance and the communications
and information technology which will indicate teething troubles
and what could be done in the implementation programs in other
ministries." Although Voice Operated Internet Protocol (VoIP)
is illegal in the Kingdom, the minister indicated that the
government will make it legal in order to keep pace with technology.
Referring to IT parks, he said his ministry had been assisting
projects in Riyadh, Dammam and Jeddah.
Among IT players at the show were such
international vendors as Samsung, Epson, Acer, Toshiba and
Samsung as well as key IT firms including Jeraisy, Hoshan,
Modern Electronics and Jarir Bookstore. "The show provides
an ideal platform for exhibitors to launch the latest technology
and services into the largest market in the Middle East,"
said Muhammad Al-Hussaini, deputy general manager of the Riyadh
Exhibition Center. He added that the Kingdom is the region's
No. 1 market for sales of computers and IT applications. Annual
sales of computers, worth up to $800 million a year, projected
an average growth of about 15 percent in units during the
past two years. The Saudi market for application software
exceeded $600 million in 2003 and is growing 10 percent annually.
"The increased use of Internet in the Kingdom by both businesses
and consumers, the increased use of e-commerce, lower subscription
fees for Internet services and the introduction of computers
in thousands of Saudi schools are creating great opportunities
for hardware and software suppliers," Al-Hussaini said.
From Arab News, Saudi Arabia. by Mohammed
Rasooldeen, 24 April 2005
Virginia Launches Integrated E-Gov
Web Application
The Commonwealth of Virginia has launched
an e-government solution that allows local government users
to simultaneously query multiple state databases. It is projected
to significantly reduce case processing time, associated worker
costs and paper files for users while improving access, security
and citizen satisfaction. The new application, Human Services
Interface (HSI), was built by MITEM Corporation, a provider
of integration software solutions and business applications.
HSI, a Web-based query application, was initially created
for social workers in Virginia localities to verify citizen
eligibility for services. It is the first enterprise interoperability
solution to be hosted by the Virginia Information Technologies
Agency (VITA) under Virginia's "G2G Enterprise Services
Interface" (GESI) initiative, to provide a vehicle for
local governments to efficiently retrieve data from multiple
state systems.
A request for assistance to VITA from
the g2g-Virginia group, a consortium of human services and
IT professionals from thirty local governments, led to HSI's
development and implementation. "We project time savings
of 30 to 50 minutes per case reviewed through the use of this
significant new application," noted Branka Al-Hamdy,
IT Strategic Planning for Arlington County and chairperson
of g2g-va. "This will lead to annual state-wide savings
for local users of 500,000 -720,000 hours in case worker time,
or $15-19 million dollars per year, and $1-1.8 million in
annual paper and ink savings. Just as importantly, HSI allows
localities to reengineer processing, allowing for even greater
benefits, not just in saving of worker time, but also in better
customer service."
Previously, a citizen application for food stamps, unemployment,
or other services required a local social worker to verify
eligibility by checking and then compiling records from agencies
such as Department of Motor Vehicles, Virginia Employment
Commission, and Department of Social Services. Now, that same
local worker will make one online request. HSI formats the
query to comply with a variety of legacy systems and uses
extensive business logic to search appropriate data fields
across departments, producing a single integrated report and
reducing review time by up to 90 percent. HSI also makes it
easier to detect fraud or erroneous data. A search might reveal
two social security numbers related to a single person, prompting
an investigation. "Our goal at VITA is to make the Commonwealth
the model of information technology in government," said
Lem Stewart, CIO of the Commonwealth. "We continually
strive to improve service and savings benefits for our citizens
and customers. HSI helps us achieve that vision by improving
services to the citizens of Virginia and saving taxpayers
money." HSI is built on MITEM's integration engine, MitemView.
This platform integrates with legacy applications, middleware
technology, application serves, web services, and myriad vendor-specific
From Public CIO, CA, 12 April 2005
Citizens Not Using E-gov, Prefer
Despite having invested billions of
euros moving services and information resources online, governments
around the world are still struggling to meet citizens' growing
expectations for better customer service, according to the
results of a report from IT consulting firm Accenture.
The study was a leadership assessment
of the overall service maturity of 22 national governments
in North America, Europe and Asia based on the breadth and
depth of the e-government services they offer, as well as
leadership assessments along several key categories. The company
also surveyed 9,000 adults in the same 22 countries to uncover
their perceptions and customer experiences interacting with
their government online, in person or via phone. The study
found that while e-government offerings across the board are
well advanced, with an average service maturity breadth of
91 per cent, all countries have room for improvement to realise
the broader goal of leadership in customer service. In fact
the overall average customer service maturity score - which
measures four key aspects of service delivery, including how
well governments are delivering service across multiple channels
- was just 39 per cent. Only Canada has an overall customer
service maturity score of more than 50 per cent.
The citizen survey found that while
most citizens prefer a number of different methods of communicating
with governments, they continue to rely on more traditional,
offline channels. Despite the relative internet savvy and
familiarity with online government in some countries, the
telephone continues to be the predominant means citizens use
to communicate with government. Over the past 12 months, 57
per cent of respondents had used the telephone to interact
with government, as opposed to only 22 per cent who had used
the internet. Yet despite its popularity, the telephone is
consistently ranked as the least easy form of communication
across all countries surveyed.
All countries experienced a drop from
previous years' overall e-government maturity scores, which
measured the level to which a government has developed an
online presence. For the fifth consecutive year, Canada ranked
first out of the 22 countries surveyed in maturity, followed
by the United States, Denmark, Singapore and Australia. Countries
that fared worse this year tended to be those with an emphasis
on solely the e-government aspects of their service delivery
programmes. A look at e-government programmes across the globe
shows that continued incremental improvements in this area
are unlikely to yield significant boosts to maturity.
The study also found that while most
citizens are eager to embrace a new generation of services,
governments' are falling short on their ability to deliver
them. For example, a majority of citizens (55 per cent) believe
government is being effective when it acts as a single, seamless
entity that can remember all of the details of a citizen's
previous contact. However, an average of only 24 per cent
of citizens across all countries reported the government actually
being able to do so. In the United Kingdom, which scored highest
in this category, only 38 per cent said the government remembered
all details of a previous contact. Even in Canada, which ranked
number one in overall maturity ratings this year, 70 per cent
of the respondents claimed that the government had forgotten
at least some details of their previous transactions.
From DMeurope.com, Netherlands, by John
Tilak, 7 April 2005
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From DMeurope.com, Netherlands, by John
Tilak, 7 April 2005
United Nations E-governance
Panel Focuses on Spam, Web Governance
A United Nations-sponsored panel meeting
in Geneva examining internet-related issues has successfully
wrapped up its third session with a call for adequate measures
for protect existing web governance arrangements, as well
as fighting issues of key public concern, such as spam, network
security and cyber-crime. The Working Group on Internet Governance
(WGIG), which opened on Monday, looked at possible recommendations
for future action in the area of internet governance, and
discussed, among other thing, issues related to the administration
of internet names and addresses and the root server system.
Participants agreed that spam - unsolicited or 'junk' e-mail
- while not yet officially on the international agenda, must
be discussed as a matter of priority. The focus was on how
to deal with it and protect the internet, as well as on the
need for a multi-faceted approach, involving all interested
parties. Proposals put forward ranged from drafting model
legislation to more informal models of collaboration.
Continuing its preparations for the
second phase of the World Summit on the Information Society
(WSIS) later this year in Tunis, Tunisia, the 40-member Working
Group also addressed two other public policy areas - issues
relevant to the internet but which have a much wider impact,
and issues related to internet governance and development.
Working Group chairperson Nitin Desai opened the consultations
by pointing out that their main aim was to assess strengths,
weaknesses and opportunities. Based on this assessment, there
would be a need to look at the changes that may be required.
The Working Group should therefore clarify areas that governments
were expected to decide on in November at the Tunis Summit,
and discuss the roles of the various actors involved in governance
Yoshio Utsumi, secretary-general of
the International Telecommunication Union (ITU), in his capacity
as WSIS secretary-general, reiterated the main tasks that
the Working Group needed to address - to find a working definition
of internet governance, to identify public policy issues and
to define roles and responsibilities of all actors. Some participants
at the open consultations wanted Internet governance arrangements
to be rooted in the United Nations framework, which in their
view would give legitimacy to the system. Others stressed
the importance of private sector leadership, which they saw
as more suited to deal with the issue due to the nature of
the internet.
From DMasia.com, France, 21 April 2005
India, Nepad in Talks
Over Satellite Network
The Indian government has presented
an ambitious proposal to the New Partnership for Africa's
Development (Nepad) secretariat for a satellite-based tele-medicine
and tele-education network for Africa. In terms of the proposal,
presented by visiting Indian Deputy Foreign Minister Rao Inderjit
Singh to the Nepad secretariat earlier this month, the first
three years of the service will be free of charge. Indian
President Abdul Kalam first sketched out the satellite service
project at the opening of the Pan African Parliament in Midrand
last year. India has now asked Nepad to manage Africa's involvement
in the project and to propose Africans to help manage the
project. Nepad already has an initiative for tele-education
- the e-Schools initiative - which involves 15 countries including
SA, Cameroon, Ghana, Algeria, Kenya, Uganda and Mozambique.
But a year after plans for this were launched, a pilot project
has yet to be put in place.
The proposed Indian network will primarily
provide internet, tele- education, tele-medicine, videoconferencing
and voice-over internet protocol services. It will also support
government e-governance projects, as well as enter-tainment,
resource mapping and meteorological services. Such systems
have considerable potential to deliver education and heath
care to rural and resource-poor areas with the advantage of
offering large cost and time savings. Nearly four years after
its launch, Nepad is under growing political pressure to prove
that it can come up with tangible projects to improve people's
lives. The Indian proposal would see all 53 African countries
connected onto the network through satellite, fibre optic
and wireless links. The plan is to do this within a budget
of $50m for the installation, initial operation and maintenance
for a period of three years. African governments will have
to pay for the service after the setup period. India has asked
African countries to nominate a joint CE, to work alongside
the Indian CEO, as well as 10 of the 20 members of the team
to study the project in greater depth. A questionnaire, which
requests African governments to nominates hospitals, universities
and schools, has already been sent to the Nepad secretariat.
From AllAfrica.com, Africa , by Jonathan
Katzenellenbogen of Business Day, Johannesburg, 20 April 2005
IT Briefing: PolarLake
'e-Government Integration' Solution
Today's drive towards e-Government
is critical to meeting citizen and business expectations of
access to public sector information and services. To deliver
improved services, government and public sector agencies must
share information with each other, directly with the public
and with other business organisations. This brings with it
a requirement for more efficient ways of integrating systems
Traditional approaches to integration,
typically described as Enterprise Application Integration
(EAI), have proven expensive and slow to implement. By moving
to XML and Web Services (as mandated by e-GIF standards) organisations
can greatly reduce development and implementation costs and
respond more quickly to changing business requirements. The
size and scale of these benefits can be dramatic, with customers
reporting savings of between 25% and 75% on development times
as well as significant reductions in time-to-market and cost
of ownership.
PolarLake supports local government's
drive to meet Priority Outcomes, such as submitting a planning
application online or Booking sports and leisure facilities
over the web, and the integration challenge surrounding the
National Land and Property Gazetteer. PolarLake Interchange
is a standards-based software solution capable of handling
the complexity and changing integration requirements faced
by the UK public sector. It provides the flexibility required
to deal with multiple and dynamic message formats and business
processes, and is a product specifically built to address
the issues associated with XML and Web Services-based processing
and integration. PolarLake Interchange is a proven product
deployed in business critical UK government projects. Based
upon open standards, it addresses in a single consolidated
integrated solution:
(a) User access through portals, (b)
Integration of internal systems such as ERP and CRM, (c) Interchange
of information with outside agencies, such as the Government
Gateway and neighbouring local authorities. The
Critical Success Factors for e-Government
The business drivers relating to local authorities and the
e-Government initiative have been well documented. The "IT
Trends in Local Government 2003 Report", issued by SOCITM,
outlined six Critical Success Factors: - Funding; -Changing
the Culture; -Making Partnership Work; -Initiative Overload;
-Back and Front Office Integration; -Technical Issues.
PolarLake can positively influence
three of these Critical Success Factors: Funding - By "doing
more for less" PolarLake increases the value within the
available budget by reducing the cost of integration projects.
Back and Front Office Integration - "Linking 'back office'
to 'front office' is the key to the successful delivery of
e-Government... It is going to be difficult to achieve".
(IT Trends in Local Government Report, 2003).
PolarLake provides full integration capabilities, whilst enabling
the organisation to automate and manage business processes
spanning multiple technologies and departments. Technical
Issues - The shortage of skills and expertise in the use of
proprietary technologies is often at the root of the issues
associated with integration. As PolarLake is based entirely
on widely used standards, and not proprietary technology,
it reduces the dependence on these skills and associated risks.
PolarLake Interchange provides the
means to: -Drive down the cost of integration; -Deliver integration
projects more quickly; -Automate and manage the business processes
behind effective service delivery. This
is accomplished in large part due to its four key characteristics:
-Standards-based: including XML,
Web Services, BPEL, Java?; -Light Footprint: Flexible to change
and less costly to maintain and deliver follow-on projects;
-Ubiquitous: By utilising standards such as JMS and JDBC,
PolarLake Interchange is able to integrate into a broad range
of technologies and systems; -Incremental: Can be implemented
in "bite size chunks" (either in terms of discrete departments
or business processes such as providing a service or making
a payment) and scaled up over time to address the largest
integration problems.
PolarLake is involved in a number of
large-scale projects with Criminal Justice IT in the UK, and
is part of the nationwide reference architecture for integration
projects in this area. Also, the company has strong partnerships
with systems integrators such as Sun Microsystems� and Accenture.
Related links: To learn more about PolarLake's e-Government
Integration solutions visit our website.
From PublicTechnology.net, UK, 17 April
Jury Is Still Out On
Study finds that focus on online delivery
may not be the best way to serve the public. The way long-term
public IT projects are deployed by government departments
such as the Inland Revenue and the NHS should fundamentally
change, and not simply focus on public online services, according
to a major new survey by Accenture. The consulting giant found
that in response to pressures to deliver greater public-sector
value, better policy outcomes and more targeted and effective
citizen services, the 'time had come' for a 'major reinvention
of government service delivery'. While it said that e-government
was 'well advanced' in terms of the number of online services,
there was a long way to go before widespread public adoption.
Instead it should be part of a 'much broader service-delivery
agenda' to achieve its full potential. Despite investing billions
in external management and IT consultants to move services
such as taxation online, the UK public was found to prefer
the telephone to the internet, with only 17% receiving regular
online contact over the past year.
The Revenue's online-filing system
and the NHS National Programme for IT have been the government's
flagship public-facing technology projects over the past few
years. Marty Cole, group chief executive of Accenture's government
operating group, said: 'Governments cannot afford to invest
all their effort and resources in developing the online channel
alone to keep pace with citizens demands.' He said that the
entire government organisation must become focused on delivering
services to citizens in ways that are 'tailored to their needs
and circumstances' and should make use of different 'channels
of interaction'. For the first time the Accenture study went
beyond measuring the extent to which governments offer services
online, and investigated their success in delivering 'true
customer service' - the value they bring to their citizens
through multiple channels. The firm's sixth study found countries
such as Canada, the US and Denmark had made greater progress
in the ways government interacted with citizens, businesses
and each other.
From Accountancy Age, UK, by James Bennett,
Management Consultancy, 18 April 2005
E-government Shortfall
Despite massive investments, global
e-government initiatives are still hard-pressed to meet citizens'
growing expectations for better customer service, and government
officials believe they are approaching the saturation point
for online services. Yet such fears fail to recognize the
potential for incremental improvements, according to Accenture's
Group Chief Executive - Government Operating Group Martin
Accenture's 2005 "Leadership in
Customer Service: New Expectations, New Experiences,"
study surveyed 9000 adults in 22 countries to find all countries
experienced a drop from previous years' overall e-government
maturity scores, based solely on evaluations of countries'
e-government programs. Canada received top billing out of
the 22 countries surveyed in maturity for the fifth year in
a row, followed by the United States, Denmark, Singapore and
then Australia. But Accenture was at pains to point out that
leadership in this case shouldn't necessarily be taken to
mean superlative performance, and that in the bigger picture,
even the world leaders have clear room for improvement. "Those
countries that fared worse this year tended to be those with
an emphasis on solely the e-government aspects of their service
delivery programs. A look at e-government programs across
the globe shows that continued incremental improvements in
this area are unlikely to yield significant boosts to maturity.
To advance now, governments will need to focus on a much broader
vision," the report warns.
Governments average a doleful 39 percent
on measures of how well they are delivering services across
multiple channels, with only Canada scoring more than 50 percent.
Accenture says it expected this "less-than-stellar showing",
having put countries through a more rigorous scrutiny of their
practices beyond e-government than ever before. It also sees
this as a more accurate picture of the amount of improvement
countries need to make in terms of delivering service that
leads to outcomes that matter for their stakeholders. "That
leaves a lot of room for improvement," says Cole says,
pointing out that while most governments have put what they
can online, far fewer are actually redesigning how they deliver
services to meet the more sophisticated needs of customers.
This year Accenture decided to extend its survey beyond e-government,
attempting to measure each country's leadership in delivering
true customer services.
"This year's research shows that
governments cannot afford to invest all of their effort and
resources in developing the online channel alone to keep pace
with citizens demands," Cole says. "The entire government
organization must become focused on delivering services to
citizens that are tailored to their needs and circumstances,
and are coordinated across the various channels of interaction."
Accenture says while the overall maturity rankings suggest
no government has evolved to a full manifestation of leadership
in customer service, there are a number of new and ambitious
initiatives that will go a long way toward transforming customer
service in governments around the globe. "Some breakthrough
initiatives that will move governments in this direction already
have emerged. Starting with their service delivery strategies,
a number of countries this year are beginning to take a new
approach that should position them well for future leadership
in customer service."
The report cites the Australian Government's
Business Entry Point Transaction Manager, or BEP Transaction
Manager (www.business.gov.au) as an example of how some governments
have acted as a single entity to ensure the right information
is available to their customers at the right time. The report
describes BRP as "a striking example of citizen centered,
proactive, cross-governmental service." It notes that
by helping businesses find, manage and complete government
forms and transactions online without having to understand
how government organizations or individual agencies work,
the BEP Transaction Manager dramatically improves businesses'
ability to navigate the maze of government structure.
From CIO Magazine, Australia, by Sue Bushell,
April 18, 2005
Canada Again Leads
in E-government
For the fifth year running, market
researchers at Accenture have placed Canada at the top of
its list of customer service maturity. The survey, called
Leadership in Customer Service: New Expectations, New Experiences,
lists e-government service delivery in 22 countries. This
year, Canada is followed by the United States, Denmark, Singapore
and Australia.
The study, Accenture's sixth annual
report on government service delivery, differs from the previous
five by including leadership in delivering true customer service
- the value brought to citizens through multiple channels.
The study focused on two components. The first was a leadership
assessment of the overall service maturity of 22 national
governments in North America, Europe and Asia, and the second
was a survey of 9,000 adults in the same 22 countries to uncover
their perceptions and customer experiences interacting with
their government on-line. Accenture - a global management
consulting, technology services and outsourcing company -
noted that governments around the world have invested billions
of dollars moving services and information resources on-line,
but are still struggling to meet citizens' growing expectations
for better customer service. Accenture says it focused on
four aspects of service delivery: a citizen-centred perspective,
cohesive multi-channel services, fluid cross-government services,
and communications and education.
The study found that while e-government
offerings across the board are well advanced, with an average
service maturity breadth of 91 per cent, all countries have
room for improvement. The overall average customer service
maturity score - which measures four aspects of service delivery,
including how well governments are delivering service across
multiple channels - was just 39 per cent. Only Canada has
an overall customer service maturity score of more than 50
per cent. "Canada continues to set the bar in government
service delivery for the rest of the world," Accenture's
Alden Cuddihey said in a statement. But, he added, "despite
being a leader, there are still lessons to be learned from
the rest of the world, areas for advancement, and opportunities
to reach even more Canadians through e-government services.
While most citizens prefer a number
of different methods of communicating with governments, the
survey found that they continue to rely on more traditional,
off-line channels. Even though some countries are Internet-savvy
and familiar with on-line government, the telephone continues
to be the predominant means citizens use to communicate with
government agencies. Over the past 12 months, 57 per cent
of respondents had used the telephone to interact with government,
as opposed to only 22 per cent who had used the Internet.
But if the telephone is still the most popular medium, it
is ranked as the least easy form of communication across all
countries surveyed.
"This year's research shows that
governments cannot afford to invest all of their effort and
resources in developing the on-line channel alone to keep
pace with citizen demands," Accenture's Marty Cole said.
"The entire government organization must become focused
on delivering services to citizens that are tailored to their
needs and circumstances." In fact, all countries experienced
a drop from previous years' overall e-government maturity
scores, which measured the level to which a government has
developed an on-line presence and were solely based on the
Accenture researchers' evaluations of countries' e-government
programs. Countries that fared worse this year tended to be
those with an emphasis solely on the e-government aspects
of their service delivery programs. Governments that continued
incremental improvements in e-government proved unlikely to
yield significant boosts to maturity.
The study also stated that that while
most people are willing to embrace a new generation of services,
governments are failing to deliver them properly. For example,
a majority of citizens (55 per cent) believe government is
being effective when it acts as a single, seamless entity
that can remember all of the details of a citizen's previous
contact. However, an average of only 24 per cent of citizens
across all countries reported the government actually being
able to do so. For Canada, 70 per cent of the respondents
claimed that the government had forgotten at least some details
of their previous transactions. In Britain, only 38 per cent
said the government remembered all details of a previous contact.
That score was the highest in the survey.
To conduct the study, Accenture researchers
attempted to fulfill service needs that might typically be
provided by a national government in 22 countries. They assessed
Web sites of national government agencies to determine the
breadth of services, and the cohesiveness across multiple
channels, as well as the extent and sophistication of governments'
efforts at outreach and education. In total, the researchers
investigated 177 national government services across 12 major
service sectors. The 22 governments included Australia, Belgium,
Brazil, Canada, Denmark, Finland, France, Germany, Ireland,
Italy, Japan, Malaysia, Mexico, the Netherlands, Norway, Portugal,
Singapore, South Africa, Spain, Sweden, the United Kingdom
and the United States. The research was conducted in January.
From Globe and Mail, Canada, by Jack Kapica,
7 April 2005
US, Switzerland and
Slovakia the Biggest Gainers in Economist Intelligence Unit's
Sixth Annual E-Readiness Rankings
Key findings: -
Denmark retains the top spot among 65 countries, edging out
the resurgent United States; - Switzerland, Slovakia and the
US register the biggest gains in rank from 2004; - Hong Kong
assumes the lead among Asia-Pacific's digital tigers; - Heavier
model emphasis on broadband leads to major score increases
for top 20 countries; - Developing countries are held back
by an infrastructure deficit, but many are making progress.
For perhaps the first time since the technology bubble burst,
the global economy is beginning to feel comfortable in a digital
skin. Spending on information and communications technology
(ICT) is growing again with some buoyancy in developed markets.
In emerging markets, expansion of connectivity -- Individuals'
and organisations' access to voice and data communications
-- continues on a rapid ascent. Broadband Internet access,
meanwhile, is beginning to reach critical mass in several
countries and is becoming a catalyst for other improvements
in the digital economy. The 2005 edition of the Economist
Intelligence Unit's e-readiness rankings, produced in co-operation
with IBM's Institute for Business Value, reflects the increasing
importance of broadband to countries' digital development.
As a result, the world's most developed broadband markets
have registered significant score increases over 2004, although
only some have moved up in the rankings.
Since 2000, the Economist Intelligence
Unit has published an annual e-readiness ranking of the world's
largest economies. A country's "e-readiness" is
a measure of its e-business environment, a collection of factors
that indicate how amenable a market is to Internet-based opportunities.
Our ranking methodology has undergone significant modification
in 2005: many criteria have been reweighted to reflect their
increasing importance in determining e-readiness, such as
broadband access and mobile penetration. New metrics have
also been added, such as innovation and the penetration of
public-access wireless "hotspots."
The Economist Intelligence Unit developed
the criteria for the e-readiness rankings with the IBM Institute
for Business Value. "The e-readiness rankings are very
dynamic," says George Pohle, Global Leader, IBM Institute
for Business Value. "Leadership requires continued focus,
strategic planning and targeted investment, but that is only
the beginning. The hard work is in using the leadership to
complete a blend of public and private initiatives that yield
meaningful improvements for private citizens, businesses and
government. That is where the return on these investments
are ultimately being achieved."
Among the main conclusions of this
year's rankings: Europe dominates. West European countries
take seven of the top ten spots in this year's rankings, and
the Nordics occupy four of them. Denmark (in 1st place), Sweden
(3rd), Finland (6th) and Norway (9th) remain best in class
in key areas of connectivity, such as mobile penetration and
Internet use. The first two are also standard-setters in e-government
implementation. Broadband development has also helped Switzerland
rise to 4th place, and the Netherlands to keep its 8th spot.
America resurgent. The US has recovered
the number two position after falling back in the previous
year. Not only has the US seen broadband adoption surge forward,
but the country remains a global leader in secure Internet
server penetration and ICT spending. Hong Kong leads in Asia-Pacific.
Moving up to 6th place, Hong Kong has overtaken Singapore
(11th) as the top Asian performer in the rankings, thanks
to innovative development of e-business services, a positive
legal and policy environment and advances in mobile services.
South Korea (18th) remains the world's most developed broadband
access market, but refinements to our model have revealed
weaknesses in that country's e-readiness armour, such as in
Internet security.
Emerging markets have some e-readiness
elements in place. All the components of a digital economy
-- infrastructure, security, transparency, innovation and
skills -- must be properly interlaced to ensure adequate e-readiness.
These are still in deficit in most emerging markets, but a
few are world-class or near to it in selected areas, the best
examples being Estonia (26th), Slovenia (27th) and the Czech
Republic (29th) with their strong development of e-government
services. India (49th) and China (54th) remain on the lower
rungs of the e-readiness ladder, but are making growing contributions
to the global digital economy on the strength of a strong
ICT skills base (India) and a prodigious ICT manufacturing
sector (China).
Economist Intelligence Unit e-readiness
rankings, 2005
rank (of 65) 2004 rank Country score (of 10)* 2004 score
1 1 Denmark 8.74 8.28
3 3 Sweden 8.64 8.25
4 10 Switzerland 8.62 7.96
6 (tie) 9 Hong Kong 8.32 7.97
6 (tie) 5 Finland 8.32 8.08
8 8 Netherlands 8.28 8.00
9 4 Norway 8.27 8.11
10 12 Australia 8.22 7.88
11 7 Singapore 8.18 8.02
12 (tie) 11 Canada 8.03 7.92
12 (tie) 13 Germany 8.03 7.83
14 12 Austria 8.01 7.68
15 16 Ireland 7.98 7.45
16 19 New Zealand 7.82 7.33
17 17 Belgium 7.71 7.41
18 14 S. Korea 7.66 7.73
19 18 France 7.61 7.34
20 22 Israel 7.45 7.06
21 25 Japan 7.42 6.86
22 20 Taiwan 7.13 7.32
23 21 Spain 7.08 7.20
24 23 Italy 6.95 7.05
25 24 Portugal 6.90 7.01
26 26 Estonia 6.32 6.54
27 31 Slovenia 6.22 6.06
28 27 (tie) Greece 6.19 6.47
29 27 (tie) Czech Republic6.09 6.47
30 30 Hungary 6.07 6.22
31 29 Chile 5.97 6.35
32 (tie) 36 Poland 5.53 5.41
32 (tie) 32 South Africa 5.53 5.79
34 39 (tie) Slovakia 5.51 5.33
35 33 Malaysia 5.43 5.61
36 39 (tie) Mexico 5.21 5.33
37 34 Latvia 5.11 5.60
38 35 Brazil 5.07 5.56
39 37 Argentina 5.05 5.38
40 38 Lithuania 5.04 5.35
41 n/a Jamaica** 4.82 n/a
42 42 Bulgaria 4.68 4.71
43 45 Turkey 4.58 4.51
44 43 Thailand 4.56 4.69
45 44 Venezuela 4.53 4.53
46 48 Saudi Arabia 4.38 4.38
47 50 Romania 4.19 4.23
48 41 Colombia 4.18 4.76
49 46 India 4.17 4.45
50 47 Peru 4.07 4.44
51 49 Philippines 4.03 4.35
52 55 Russia 3.98 3.74
53 51 Egypt 3.90 4.08
54 52 (tie) China 3.85 3.96
55 56 Ecuador 3.83 3.70
56 52 (tie) Sri Lanka 3.80 3.96
57 54 Ukraine 3.51 3.79
58 58 Nigeria 3.46 3.44
59 57 Iran 3.08 3.68
60 59 Indonesia 3.07 3.39
61 60 Vietnam 3.06 3.35
62 63 Kazakhstan 2.97 2.60
63 61 Algeria 2.94 2.63
64 62 Pakistan 2.93 2.61
65 64 Azerbaijan 2.72 2.43
From CRM Today, 22 April 2005
Government Wins Over Donors
Though no money was pledged at Monday's
donor consultative meeting at Safari Park Hotel, the Government
emerged the winner. Sources now say the Government went into
the meeting with the single purpose of convincing the donors
that it was still credible. Smarting from heavy criticism
levelled against by outgoing British envoy Sir Edward Clay,
the Government succeeded in coming up with a donor supported
anti-corruption strategy. "The donor community does not
have any reason to doubt the Government's commitment to fight
graft," says Raphael Mwai of the Kenya Private Sector
alliance (Kepsa). Mwai says the donors should now be confident
that the Government would account for every cent received
not only from the donors but also from taxes.
Though the corruption issue dominated
the meeting, the Government took the opportunity to drum up
donors' support for key areas like the budget and aid harmonisation.
It also took the opportunity to introduce the proposed external
aid policy to the donor community. Through the policy, the
Government pledges to harmonise the external aid framework
and to work to get the country out of aid dependency in the
next two decades. The policy, drafted by the Ministry of Finance
with the help of the Kenya Institute of Policy Research and
Analysis (Kipra), gives the Government power to reject aid
if the conditions are unfavorable. For the first time, the
policy gives Parliament the power to dictate the level of
country's indebtedness.
Currently, the Finance minister in
consultation with the Central Bank has the powers to put a
ceiling on external and domestic borrowing. The new policy
proposes to give Parliament power to place a ceiling on borrowing
based on the level of national wealth or GDP. "Time has
come when the Government should conceive, own and implement
developmental strategies through a national consensus supported
by the donor community," says Finance minister David
Mwiraria. Mwiraria. He sounded optimistic after the meeting
and reaffirmed that the days when donors used to dictate aid
terms were over. He was supported by outgoing World Bank Country
Director, Mr Makhtar Diop, who co-chaired the high-level meeting.
The minister, who presented the aid policy document, says
donor funds received since independence had been ineffective.
However, the draft document reveals the country has a serious
aid absorptive capacity problem. It blames poor utilisation
of the funds for the numerous stalled donor-funded projects
that dot the countryside. "Despite this development assistance,
its effectiveness, in terms of meeting the development goals
is questionable.
"Whereas gross Overseas Development
Assistance (ODA) inflows increased from an annual average
of US$582 million (Sh44 billion) in the 1970s, $673 million
in the 1980s to above $1 billion (Sh80 billion) in the late
1990s, this has not been translated into better economic performance,"
says the minister. Despite the huge injection of donor funds,
GDP growth declined from an annual average of about 6-7 per
cent in the first decade of independence to below 2 per cent
two years ago. The overall national estimated levels of poverty
increased from an average of 40 per cent in the 1970s to the
current high levels of 56 per cent. "The ineffectiveness
of aid to reduce poverty levels may be attributed to existing
weak institutional and policy framework," says the minister.
"This resulted in dismal completion rates of donor funded
projects and especially those which would have had direct
impact on the poor," he says. However, when the relations
between the Government and the donor community and especially
the World Bank and the International Monetary Fund (IMF) soured
in mid 1990s, more money was pumped through the civil society.
The document revealed that over the 1998-2004 period, donors
channelled Sh40 billion through NGOs. This means that since
1998, Sh10 billion from the donor community was channelled
through the civil society annually. The amount is almost equal
to what came in through Government agencies. Though the Government
admits that the organisations had superior aid utilisation
networks at the grassroots, accountability was a big problem.
"Unlike the Government which is
accountable to the public, the majority of the NGOs have been
reluctant to expose their financial statements to the public,"
the statement says. Sources say most of the NGOs are answerable
directly to their foreign-based supporters, some of whom do
not have the interest of the communities at heart. The NGOs
have also been at the frontline in criticising the Government
over corruption and embezzlement of public funds. Should the
Government win the confidence of donors, some NGOs would be
forced to wind up. In the new aid policy, the Government plans
to create a powerful external resources oversight committee.
It will comprise representatives of line ministries, civil
society, the private sector and academia and will review the
management and flow of ODA. "It will advise on the way
forward in reducing reliance on ODA based on the prevailing
macro-economic underpinnings," the report says. The external
resources technical evaluation committee will evaluate the
importance and significance of all ODA and recommend whether
negotiations should proceed or not.
From AllAfrica.com, Africa, by Benson Kathuri
of The East African Standard, Nairobi, 18 April 2005
IMF Approves $3.9 Billion
Zambia Debt Relief
The International Monetary
Fund (IMF) said on Saturday it had approved a $3.9 billion
debt relief plan for Zambia, lifting a crippling debt burden
on the impoverished southern African country, reports Reuters
(04/09). The IMF board approved the debt relief deal on Friday
under the World Bank's Highly Indebted Poor Countries (HIPC)
initiative, aimed at reducing crippling debt loads shouldered
by developing nations. The government in Lusaka has said the
debt relief package would enable it to shift funds currently
earmarked for debt servicing to the battle against poverty.
Zambia has said it spends an average of $123 million annually
to service its foreign debt. Its total debt is estimated at
$6.8 billion - equal to about 170 percent of gross domestic
The IMF said the debt relief would
be backdated to 2001 and would run through to 2020. The World
Bank's lending arm, the International Development Association,
would provide $885.2 million debt relief out of the $3.9 billion
debt cancellation. Zambia's Finance Minister Peter Magande
said Zambia would proceed to negotiate for debt write-off
from the Paris Club group of industrialized lenders in May.
"Our credit rating has improved as a result of our attaining
the HIPC completion point and the government will only be
borrowing money to support private sector production and development,"
Magande said. "Most tax revenue will now be directed
to community projects and development of infrastructure instead
of debt servicing. This will help to reduce poverty."
Zambia has also said it would improve roads, especially in
the rural areas, promote tourism and agriculture - two key
areas with potential for growth in a country heavily dependent
on copper mining.
Xinhua (China, 04/09) further notes
that according to Magande, the debt relief will cut Zambia's
debt service payment from $233 million to $137 million in
2006, and from $262 million to $121 million in 2007. Between
2008 and 2019, the country's debt service payment will be
cut from an average of $280 million per year to $120 million.
Agence France Presse (04/09) explains the IMF suspended Zambia
from its programs in 2002 and withheld aid amounting to $100
million after the country overspent on its budget after awarding
wage increases in the public sector. Trade unions have said
the funds that will be realized from the debt waiver should
be used to pay public service workers who had seen their wages
frozen at the behest of the IMF and World Bank. Xinhua (04/11)
adds that civil servants in Zambia will get a wage hike following
the agreement by the IMF and the World Bank, the official
newspaper Times of Zambia reported Monday. Magande was quoted
as saying on Sunday that the salary increment will be above
the 17.8 percent inflation rate.
The Post of Zambia (04/11) meanwhile
notes Magande said only economic growth and diversification
would solve Zambia's problems and that HIPC completion was
just one of the means to resolve the country's development
hurdles. "It is anticipated that Zambia will receive
high private sector investment which should increase growth
for the country," Magande said. "Reaching HIPC is
also expected to increase aid from cooperating partners."
He said the way forward would be to move away from mining,
improving efficiency in the delivery of service and managing
domestic debt. The Post of Zambia (04/09) further writes that
the United Nations resident coordinator in Zambia Aeneus Chuma
said that while HIPC was useful and commendable, it was not
a solution. Chuma observed that ultimately, the responsibility
for long-term development remained with the people of Zambia
themselves. He noted that while cooperating partners had a
role to play, they could only compliment and not supplant
national development efforts. Chuma called for continued work
in the realization of the Millennium Development Goals. Chuma
also said countries such as Zambia needed comprehensive debt
cancellation, increase in official development assistance
and a fairer trading system to allow the countries to invest
in industry and trade their way out of underdevelopment.
In related news, Xinhua (04/08) reports
that the Zambian government has introduced a new law on the
management of public finances, replacing an old one which
was considered not effective in guaranteeing transparency,
secretary to the Treasury in the Ministry of Finance and National
Planning Situmbeko Musokotwane said. The public finance act
of 2004 which has replaced the finance, control and management
act of 1969 has new features such as the punishment of controlling
officers who fail to manage finances properly in their departments.
The new law will also see the introduction of new financial
regulations expected to be ready by September this year as
well as the establishment of audit committees in various government
departments. It has also given the secretary of treasury power
to appoint controlling officers unlike in the past when the
minister of finance was responsible for the appointments.
From noticias.info (press release), Spain,
12 April 2005
Government Outlines
Be Austerity Measures to IMF
Johannesburg (IRIN) - Comoran authorities
are hoping that a series of belt-tightening measures will
strengthen the economy and boost investor confidence. In a
letter of intent to the International Monetary Fund (IMF)
dated 2 February, the government said it was determined to
reform fiscal policy, mainly by reining in state expenditure
and overhauling the tax system. The Indian Ocean archipelago
has endured two decades of internal strife, resulting in a
serious deterioration of public services and large drop in
donor support. Although a December 2001 agreement made the
islands of Moheli, Anjouan and Grande Comore more autonomous
and politically more stable, almost 60 percent of the country's
800,000 people still live below the poverty line and have
limited access to clean water and electricity. Sluggish economic
performance was largely attributed to a collapse in international
vanilla prices - from an average of US $251 per kilogram in
2003 to about US $50 per kilogram at present - while Gross
Domestic Product (GDP) had been well below population growth
in recent years.
Inflation, which had been very low
in the first half of 2004, picked up in the second half of
the year in response to the worldwide spike in the cost of
oil. According to government forecasts inflation is expected
to hover around a yearly average of 4.3 percent. Performance
in the external sector was mixed in 2004, with the impact
of the drop in vanilla prices counterbalanced to some extent
by travel receipts and remittances from Comorians living abroad,
which rose sharply following the opening up of a new direct
flight between France and Moroni, the Comoran capital. One
of the key concerns raised in the letter to the IMF was the
accumulation of arrears in servicing external debt, projected
at US $6.1 million in 2004; outstanding external debt at the
end of last year stood at US $290 million.
Authorities said an agreement between
the Union government and the autonomous islands to transfer
shared revenues to a special account at the Central Bank of
the Comoros would anchor fiscal policy in 2005. "Strictly
adhering to these agreements will be critical for achieving
our programmes' macroeconomic objectives," finance officials
remarked. There was also a decision to import only one shipment
of rice in 2005 instead of the usual two, and to discontinue
the surtax of 50 Comoran Francs per kg of rice on the islands
of Moheli and Grande Comore. The tax was introduced to finance
the launch of the new university last year, but had weighed
heavily on the most vulnerable segments of society. The harmonisation
of custom tariffs between the Union and the autonomous islands
was also expected to increase revenue during 2005 by about
0.4 percent of GDP. The 2005
budget limits primary expenditure to 14.4 percent of GDP compared
with 16.3 percent in 2004. The bulk of savings will come from
a 1.6 percent cut in the wage bill, brought about by not renewing
the contracts of temporary personnel hired over the last two
years, and applying a freeze on new hiring, except in the
social sector.
From Reuters AlertNet, UK, 18 April 2005
Financial Stability Threatened by
Deposit Cap System
Claiming the financial system has stabilized,
Tatsuya Ito, state minister in charge of financial policy,
recently said the lifting of the freeze on the introduction
of a refund cap would make the financial system more stable.
I'm not so sure. In April 2002, the government introduced
a cap on the refund available in the event of bank failure
for time deposits only. For all other types of yen-denominated
deposits, though, the government continued the full guarantee.
But from this month, the government reimposed a refund limit
at 10 million yen in principal and accrued interest for all
types of yen-denominated deposits. Recently, the Financial
Services Agency, through its administrative measures, effectively
drove UFJ Holdings Inc. into a corner, and the bank eventually
decided to merge with Mitsubishi Tokyo Financial Group Inc.
As a result, a megabank is to be created. When the number
of major banks drops from the current four to three, the financial
system likely will become more monopolistic and inflexible.
Judging from the current circumstances, the reimposition of
the refund cap may make the financial system more unstable
instead of healthier.
In comparison with other major nations,
Japan has fewer financial institutions, including credit unions,
credit associations and agricultural cooperatives, in relative
terms to the size of its economy. The number is 50 percent
lower than that of the United States and 20 percent lower
than in Germany. Even though it is said the number of banks
in the nation is excessive, in reality there is a shortage.
In my view, six to seven major banks are needed at the very
minimum. If the major banks are overly consolidated, the financial
system will face a significant decline in flexibility. If
one bank suffers from massive nonperforming loans, the financial
system will be shaken. It then would be difficult for the
banks to share the burden of major loan projects, thereby
limiting the prospects for corporate borrowers to expand their
businesses. In the case of regional banks, similar problems
are likely to arise if they unwillingly resort to mergers
to cope with the reimposition of the refund cap.
With the full-scale reimposition of the cap, the structure
of deposits at banks, including credit unions, credit associations
and agriculture cooperatives, has become highly unusual.
According to Bank of Japan statistics,
time deposits, which normally account for nearly 70 percent
of overall bank deposits, have plunged to about 40 percent,
while the proportion of demand deposits, from which depositors
can withdraw funds at any time, has increased to about 60
percent. This is because the number of settlement deposits
has reached about half of overall bank deposits. Settlement
deposits, which pay zero interest and carry a full government
guarantee, were introduced by the FSA as a way of coping with
the reimposition of the payoff system. Depositors have turned
to settlement deposits in droves with the aim of securing
their money. As a result, nearly 90 percent of deposits at
regional banks are virtually protected by the government's
safeguard scheme. However, if the amount of demand deposits
further rises, banks would have much fewer stable deposits,
and there would be a high risk of rapid withdrawals of funds.
As a result, banks would become fearful of lending to corporate
borrowers. Such a situation would have a negative impact on
economic growth. Furthermore, when the economy recovers, interest
rates will increase, causing depositors to shift from settlement
deposits to others bearing interest. In such a situation,
depositors likely would switch to the major banks.
There is concern that unexpected confusion
may occur as the financial market increasingly has become
monopolistic and inflexible. The cap on deposits originates
from the deposit insurance system established in the United
States in 1934, which allows banks to maintain their lending
capacities by limiting the amount of refunds in the event
of bank failure. But currently in Japan, nearly 90 percent
of deposits are virtually protected, and there are growing
concerns over the stability of the financial system. The market
has shown that the refund cap system is not suitable to this
country. The government should devise a different system in
line with the nation's circumstances so that the reimposition
of the refund cap will not increase uncertainty over the financial
system. Kikuchi is a professor at Bunkyo Gakuin University,
specializing in the Japanese economy and financial and public
finance affairs.
From Daily Yomiuri, Japan, by Hidehiro Kikuchi,
19 April 2005
Finance Ministry Bolsters
Free Economic Zones
Capitalizing on its geographical
advantage and superb logistics and industrial infrastructure,
Korea is poised to reinvent itself as the economic nerve center
of Northeast Asia. At the core of the plan is a trio of free
economic zones in Incheon, Busan-Jinhae and Gwangyang, complete
with ports, industrial towns, tourist attractions and financial
institutions. This year, the Ministry of Finance and Economy
pledged to attract $5 billion in investment for the three
free economic zones to spur the goal of becoming a financial
and logistics hub of Northeast Asia. Financial assistance
is available for the construction of facilities such as hospitals
and schools to make life more convenient for foreigners. They
will also be able to build leisure and sports complexes and
high-rise buildings inside the zones in a bid to create a
better investment and living environment.
In a report to President Roh Moo-hyun
at the start of this year, the Ministry of Finance and Economy
underscored the importance of the economic zones that could
serve as attractive bait in wooing overseas investors. The
government believes developing zones will advance the nation's
position as Northeast Asia, with a population of 1.5 billion
and accounting for nearly 20 percent of global gross domestic
production, is emerging as one of three major trade blocks
that fuel global economic growth. The global competition for
developing similar zones has recently intensified, with Korea
pitted against strong neighboring contenders like Singapore,
Hong Kong and Shanghai. However, the ministry believes Korea
has many advantages such as geographical location, abundance
of skilled human resources and a strong IT infrastructure.
"I'm confident that the free economic
zones have the edge over those in other nations," Finance
Minister Han Duck-soo told reporters earlier the month after
his trip to the free economic zone in Incheon. Enticed by
tax breaks and other incentives offered to foreign investors,
a growing number of well-known multinational companies have
begun investing in the zones. Most free trade zones in the
world offer similar duty incentives but Korea stands apart
by paying greater attention to providing competitive living
conditions and an efficient business environment, the ministry
officials said.
Role of FEZs - Free
economic zones were established as part of Korea's survival
strategies to cope with rising competition with other countries
in the global economy. With neighboring China growing fast
as a global manufacturing hub, Korea, Asia's third-largest
economy, has encountered limits in its manufacturing-driven
economic growth. Free economic zones, which will be featured
with globally competitive businesses and pleasant living conditions,
have tasks to develop the nation's knowledge-based new growth
engines, replacing manufacturing businesses, mainly by attracting
foreign direct investment. Developing the zones is also one
of the nation's key strategies to prepare for the era of Northeast
Asia, featuring Korea, Japan and China. The region has been
emerging as a global economic powerhouse with a population
of 1.5 billion, four times the population of Europe, accounting
for nearly 20 percent of global gross domestic production.
At the same time, the completion of the zones project also
means Korea will have more international-styled cities. Songdo
City under construction in the Incheon zone is a model case
for building a global city. Songdo is aimed at becoming a
corporate hub in the Incheon zone, a bilingual English-Korean
city where international schools and hospitals for foreigners
are located and where international companies can obtain relief
from taxes and bureaucratic red tape.
Legal framework - The
Planning Office of the Free Economic Zone under the Ministry
of Finance and Economy took small but meaningful steps recently
by revising the Free Economic Zone Law. Under the revised
Free Economic Zone Law, foreign-invested hospitals will be
allowed to treat local patients. To cultivate a more attractive
residential environment in the zones, the government will
go ahead this year to build foreign schools and hospitals.
The foreign hospitals issue had been a source of contention
between the government, which supports the move, and those
in the medical profession and civic groups who opposed the
idea. Opponents were worried that the fees at a foreign hospital
would inflate expenses for the nation's health care system.
Civic groups voiced concern about a further polarization of
medical services depending on wealth.
The government argued that the benefits
outweigh possible negative effects. To promote the further
development of the free economic zones, "We're willing
to help the government resolving all the legal issues,"
new Uri leader Moon Hee-sang said last week. In addition to
being an attraction for foreign investors, the government
believes foreign hospitals could help improve the quality
of health care in Korea. It also believes foreign hospitals
will help attract biotech companies, one of the nation's potential
growth industries.
Future success of the FEZs - The
success of the free economic zones greatly depends on whether
Korea is able to promptly improve and supplement laws and
regulations according to foreigners' expectations, the ministry
officials said. The recent revision of the law also would
guarantee more independence and autonomy for economic zone
authorities. Under the revised law, the commissioners of zone
authorities will be guaranteed more autonomy over personnel
appointment and office operations. The authorities will also
not be subject to applying standard qualifications when hiring
pubic officials but have a more free hand to employ suitable
workers, such as those with international business experience.
The revision also includes easing of construction-related
regulations to allow construction of taller buildings and
golf courses within the zones.
To ensure the success of economic zones,
what is more important is to remove negative factors that
are deeply rooted in Korea, including excessive regulations,
soaring labor costs, labor strikes, political instability,
expensive land prices, high tax rates and anti-business sentiment.
The central government will fully support the construction
of infrastructure in the zones and boldly ease regulations
in areas related to living conditions such as education and
health care centers. Han said that without world-class international
schools and hospitals, foreigners would not invest in the
Promote FEZs - The
government is in talks with a number of highly recognized
foreign medical institutions about setting up operations in
Korea's free economic zones, according to the planning office.
The economic zone planning office has been aggressively promoting
the three areas to find potential foreign investors. The planning
office held a separate briefing session to promote the zones,
complete with video presentations and question-and-answer
sessions at the 16th World Real Estate Fair, held in Cannes,
France last month. Korean officials also held separate talks
with about 20 companies which have expressed interest in investing
in here at one of the world's two most authoritative real
estate events. In March, the government hosted an investor
relations session for members of the American Chamber of Commerce
in Korea to encourage more U.S. companies to invest in the
nation's free economic zones. "The IR session will provide
a good opportunity for U.S. firms to better understand Korea's
FEZs and be acquainted with the various merits of investing
in the zones," Cho Sung-ik, deputy minister for the ministry's
economic zones planning office, said during a speech at the
Millennium Seoul Hilton in central Seoul.
In cooperation with the three zone
authorities in Incheon, Busan-Jinhae and Gwangyang, the planning
office organized the session to publicize a wide range of
benefits and incentives, including tax breaks, foreign language
services and the establishment of foreign education and medical
institutions for U.S. companies and investors. The government
will continue to support the construction of the necessary
infrastructure to host the regional headquarters of the world's
top 500 corporations, Cho said. By 2008, they will become
the world's premier cosmopolitan cities where people of all
nationalities come and interact, outpacing rivals such as
Hong Kong and Singapore, he said. The government set up foreign
investment ombudsman's offices in each economic zone to assist
foreign companies and their employees, and public documents
will be published in English, the deputy minister noted.
A number of foreign companies have
already expressed keen interest in investing in the zones,
the ministry officials said. They expect more global firms
to follow suit as they are attracted to Korea's advanced information
technology and telecommunication infrastructure and highly
educated and skilled work force. A joint IR session for the
European Union Chamber of Commerce in Korea and Japan Club
member companies is scheduled for the second half of 2005
as part of efforts to attract more investment.
Busan-Jinhae FEZ (BJFEZ) - In
October last year, the government selected the cities of Busan,
Gwangyang and Incheon as special zones and eased various restrictions
on labor and taxes for companies that wanted to start businesses
in those areas. In these special zones, foreign-invested companies
and their employees can enjoy exceptional benefits and incentives
compared with the rest of the country, including tax breaks,
expanded foreign-exchange circulation, language services,
labor flexibility, relaxation of greater-Seoul restrictions,
and establishment of foreign education and medical centers.
The Busan-Jinhae FEZ (BJFEZ) aims to become a center for telecommunications
and high-technology industries and maritime logistics. The
BJFEZ has been encouraged by the Organisation for Economic
Cooperation and Development Territorial Development Policy
Committee's recent review of Busan.
In its evaluation from July 2003 through
December 2004, the global organization gave Busan high marks
and said the city had vast potential to develop further. It
also said Busan would steer Korea's economic growth as a manufacturing
center. The BJFEZ has also kicked off various initiatives
to induce foreign direct investment since the start of the
year. One of them is to develop a new international city within
the zone, complete with a business/convention center and living
and leisure facilities. Officials said a master plan is being
drawn up by a consortium led by the Korea Development Bank
and will be completed by early June.
Busan, Korea's second-largest city
at the southeastern tip, and neighboring Jinhae hope to attract
more than $15.5 billion in foreign investment by 2020, emerging
as a Northeast Asian logistics hub surpassing Shanghai, Hong
Kong and Kobe. At the center of developing the Busan-Jinhae
belt into a logistics hub is the construction of a new port
and distribution park with 30 berths, to be completed in 2011.
To attract global logistics companies, Busan-Jinhae will fix
rents at about 4,000 won per 3.3 square meter, about one-tenth
of rents in Shanghai.
Gwangyang FEZ - The
Gwangyang FEZ is expected to emerge as an international maritime
logistics center and an industrial cluster for petrochemicals
and steel. Gwangyang has expanded its container port from
eight to 12 berths. The expansion, which was completed on
last October at a cost of more than 640 billion won, is part
of the Korean government's effort to create an outstanding
national free economic zone triangle along with Incheon and
Busan. By 2011, the government intends to pour 6.6 trillion
won into the area to construct an ultramodern 33-berth international
trading port. Due to its location in the center of Northeast
Asia's shipping network, experts predict that Gwangyang, traditionally
the nation's center for modern steel production, will soon
emerge as one of the principal trade container transshipment
ports in the world. The area has ideal docking conditions
for large containerships such as deep water, stable water
temperature and natural breakwater provided by the surrounding
Yeosu peninsula.
With more infrastructure projects under
way, Baek Ok-in, commissioner of the Gwangyang Bay Area Free
Economic Zone Authority, said the zone that includes Gwangyang
and surrounding areas was ready to make a great leap to become
a center of logistics and new materials industry, as well
as tourism and leisure. In describing this year's plans, Baek
said efforts will be made to turn the 14 memoranda of understanding
signed last year, including one with German medical equipment
maker Drager Group, into actual investments. SembCorp Logistics
Ltd., a Singapore-based transportation firm, also has expressed
intention to invest more than $10 million at the port. He
added special efforts will be made to attract world-class
logistics companies, such as the U.K.'s Henrybeth and Netherlands'
Conelder Co., so the region will be equipped to provide quality
port services. This year, the free economic zone is aiming
to attract $200 million in foreign direct investment. By 2020,
it plans to raise $12 billion in foreign investment.
Incheon FEZ - The
Incheon free economic zone (IFEZ), the first zone to be designated,
is equipped with ideal infrastructure and geographical conditions
sufficient to serve as a hub city of Northeast Asian business.
Incheon International Airport and Incheon Port are the gateways
to the zone. Fifty-one cities with more than 1 million residents
each are within a 3 1/2-hour flight to the airport. The city
of Incheon designated 2005 as the "Year of Investing
in Incheon." Along with the slogan "Buy Incheon,"
the designation reflects the region's resolve to put spurs
to efforts to attract foreign direct investment. The development
of the IFEZ is the centerpiece of such efforts. Plans this
year include breaking ground for the construction of a 65-floor
landmark building in relation to the development of Songdo
International City and laying the foundations for creating
IT clusters in cooperation with the Ministry of Information
and Communication. Also, the IFEZ is set to kick off preliminary
preparations to turn the area into a "ubiquitous City."
The U-City project, which will be supervised by a consortium
consisting of such companies as KT Corp. and Samsung SDS is
aimed at maximizing the region's business and living environment.
A final blueprint is scheduled to be announced in June.
Lee Hwan-kyun, commissioner of the
IFEZ Authority, went on an investor relations trip to the
United States in January. His itinerary included a visit to
the Gale Co. The New Jersey-based developer is spearheading
the creation of Songdo International City in Incheon by 2020.
The city is to serve as a base for international companies
serving North Asia. POSCO, the nation's leading steelmaker,
is the local partner. Lee also visited Angelo Gordon, an investment
company, to discuss a plan for establishing a venture cluster
as part of developing a digital entertainment cluster in Songdo.
From Korea Herald (subscription), South
Korea, 18 April 2005
Tax Burden Estimated
at Record High
Stoking yet more criticism
toward the government's tax policy amid a slow economy, the
per-capita tax burden for Koreans is expected to have grown
to a record-high of 3.16 million won ($3,090) in 2004. This
amount is up 2.3 percent compared to 2003 when the average
Korean paid slightly over 3 million won in taxes, according
to estimations from the Ministry of Finance and Economy and
the Ministry of Government Administration and Home Affairs.
In total, the government collected 151.9 trillion won of taxes
last year, which took up 19.5 percent of the 778.4 trillion
won of the country's gross domestic product.
In 2003, taxes per-capita stood higher
at slightly over 3 million won so that the aggregate amount
accounted for more than one-fifth of the GDP. Responding to
protests that the taxes are exceedingly heavy considering
the fragile domestic demand that is weighing down on the economy,
the Finance Ministry argued that compared to 2003, taxes actually
shrank to take up less of a percentage of the GDP. Exact figures
will be available late next month when provincial governments
close their books for 2004. "But the data is expected
to be in line with the central government estimations,"
said an official of the Ministry of Government Administration.
Still struggling to recover from a credit-bubble that burst
in 2002, the Korean economy grew at a lower-than-expected
pace of 4.6 percent last year. Weak consumer spending and
tepid corporate investment were cited as the main culprits
of the decelerationg growth.
This year, although strong exports
are helping to fuel a recovery, the government expects the
economy to make a similarly weak performance due to soaring
crude oil prices and a strong local currency that is threatening
the competitiveness of local goods abroad. Shipments abroad
make up about two-fifths of the nation's economy. Noting the
damp consumer sentiment, experts had voiced concerns about
the increasing tax burden on the public. A report from Samsung
Economic Research Institute last year said that Korean taxpayers
are burdened with as much taxes as the United States, the
world's top economy. Korea ranked eleventh in individual tax
burden, surpassing Japan, which showed that taxes make up
about 17 percent of GDP. The report also said that according
to the International Tax Comparison Index in 2000, Koreans
suffer from heavier taxation when compared to economies in
the same size bracket. The tax load coupled with debt from
the credit bubble weighed down the ability of consumer spending
to lift the domestic economy, the report said.
From Korea Herald (subscription), South
Korea, 18 April 2005
Thailand Plans to Lift
Public Spending
Bangkok - Thailand's government will
increase spending 8.8 percent to a record in the next financial
year to help the economy, Finance Minister Somkid Jatusripitak
said Monday. Spending will rise to 1.36 trillion baht, or
$34.5 billion, in the year starting Oct. 1 from 1.25 trillion
baht this year, Somkid told reporters in Bangkok. Officials
from the Finance Ministry, the central bank and government
agencies met Monday to discuss next year's budget. The government
expects economic expansion to slow to as little as 4.75 percent
this year from 6.1 percent in 2004 because of slowing export
growth, worsening drought, falling tourist arrivals and high
fuel prices. Somkid said he expected the economy to expand
5.5 percent to 6.5 percent in calendar year 2006.
"Growth in the first half of this
year has slowed down significantly," he said. "Higher
spending will help economic growth to rebound next year."
Prime Minister Thaksin Shinawatra has pledged to bolster economic
growth by spending on new subways, water pipelines and other
public works projects. The government will spend 2.35 trillion
baht on infrastructure projects over the next five years,
the Finance Ministry said on March 14. Somkid has forecast
that Thailand's inflation rate will be 3.5 percent this year.
Indonesian power projects - Indonesia
plans to offer on Tuesday $1.1 billion worth of projects for
the construction of a coal-fired power plant and two gas pipelines
on the island of Java, an official from the Energy Ministry
said. The government wants to build a 450-megawatt power generation
plant and a gas pipeline linking Semarang city in Central
Java to Cirebon in West Java, and another pipeline between
Semarang and Gresik in East Java, Yogo Pratomo, the director
general of electricity, said in Jakarta. "We're planning
to offer another 10" power projects, he said in an interview.
Indonesia faces electricity blackouts
because the state utility Perusahaan Listrik Negara lacks
the funds to build power plants. The company needs $16 billion
over 10 years to help avoid shortages and more than half the
investment is likely to come from foreign investors, Eddie
Widiono, president director, said in December. The power plant
in Java, PLTU Banten, is estimated at $500 million while the
pipelines may cost 6 trillion rupiah, or $620 million, Yogo
said. The Indonesian government had planned to start inviting
bids on March 30 for the power plant and pipelines. Sumitomo
Corp. and Mitsui & Co. have said they may bid to build
the pipelines that will channel natural gas to households
and industries, Tubagus Haryono, chairman of the Indonesian
oil refining regulator, said on March 17.
From International Herald Tribune, France,
by Anuchit Nguyen of Bloomberg News, 26 April 2005
Russian Finance Minister Bemoans
"Stupid" Economic Policies
The Russian government is guilty of
committing economic policy blunders, Finance Minister Alexei
Kudrin said on Monday, April 18, taking the blame for failing
to convince the Cabinet to take a more sensible course. "The
government is making stupid mistakes," Kudrin told the Russian
Gazette (Rossiiskaya Gazeta) daily in an interview. "I am
responsible -just as all government members are. That means
I was not able to convince the government to do the right
thing." Kudrin gave his assessment after losing a budget battle
to Prime Minister Mikhail Fradkov, who wants to double public
sector pay and pensions by 2008 to drive economic growth.
Kudrin reluctantly backed a decision to raise the cut-off
level at which windfall oil revenues flow into a fiscal stabilization
fund to $27 a barrel from next year from the current $20,
despite misgivings that pumping up spending may stoke inflation.
He agreed to do this to help avoid a budget deficit of $18
billion which threatens Russia as early as next year. The
stabilization fund was established last year to prevent the
inflationary boom from petrodollars pouring into the Russian
economy. The cash was to be set aside for foreign debt repayment.
"Economic policy is now drifting toward
the increasing role of the state, reducing liberalization
in certain sectors and weakening financial policy," Kudrin
told the newspaper. "For the second year running we are not
reducing inflation - even though we could. We need to take
timely steps to remove factors which support price growth.
But we are taking steps in the opposite direction, preserving
inflation." Inflation spiked at the beginning of 2005 after
totaling 11.7 percent in 2004, and the government now expects
it to stay in double digits for the rest of the year. Kudrin
and Economy Minister German Gref, a fellow Cabinet liberal,
have long been at loggerheads with Fradkov, but despite their
ill-tempered relationship there is as yet no sign that either
might quit the government.
From MOSNEWS, Russia, 18 April 2005
Czech Euro Bonds Find
Eager Buyers Abroad
But rising public debts have analysts
worried - The Czech government celebrated what looks to be
a Pyrrhic victory after again oversubscribing its recent euro-bond
issue, as economists warned that the growing public debt could
have serious repercussions. Despite the current shaky political
scene and the worsening public finance deficit, foreign investors'
demand for government-issued euro bonds exceeded the actual
offer. It took mere hours to sell out 1 billion euros ($1.3
billion/33.2 billion Kc) of bonds March 11. The 15-year euro
bonds were purchased by investors from Germany (35 percent),
Benelux countries (25 percent), Austria (9 percent) and Finland
(8 percent). Other investors came from as far afield as Asia.
The second Czech euro-bond issue attracted
high interest despite having terms that were less lucrative
than in the first euro-bond issue in June 2004. Then, 1.5
billion euros in bonds were sold at 4.6 percent interest,
and the yield for investors was 0.2 percent higher than comparable
bonds issued by other EU countries. This time, euro bonds
worth 1 billion euros were sold at 4.1 percent and their yield
against usual EU bonds was higher only by around 0.1 percent.
For European investors, Czech euro bonds are attractive because
the government has made only two issues so far; therefore,
they are quite rare, said Ceska sporitelna analyst Lubos Mokras.
This generally means a more stable investment.
A quick fix - Expanding
the pool of creditors, however, is not the solution to fix
the country's deteriorating public finance sector, and further
growth of the public finance deficit could bring about economic
collapse to this country, warned Miroslav Sevcik, director
of the Prague-based Liberal Institute. The country's public
debt reached 1 trillion Kc in 2004, or 41 percent of gross
domestic product (GDP). The Maastricht criteria for adopting
the single European currency set the ceiling on the ratio
of public debt to GDP at 60 percent. As a result, the Czech
Republic is still considered solvent in the eyes of foreign
Deputy Finance Minister Tomas Prouza
said the government was able to borrow money on foreign markets
under more advantageous terms than other new member states
in the region including Slovakia, Hungary and Poland. The
reason is that not only does the Czech Republic have a relatively
low ratio of public finance deficit to GDP, but it also entered
the euro-bond market later than other neighboring states,
thus its euro-bond issues are still rare and valued. "Investors
trust the Czech Republic the most and perceive the risk as
the lowest," Prouza insisted. Moreover, when borrowing
abroad, the government no longer needs to rely on domestic
players, and has more advantageous terms nearing those enjoyed
by the euro zone states, said Eduard Janota, deputy finance
minister. "We would never be able to sell 15-year bonds
to local investors under terms as advantageous as the 15-year
euro bonds. ... We saved up to 1.5 billion Kc," Janota
said. The success of the first two offers has prompted the
government consider other euro-bond issues in the future,
Janota admitted. He said the government could come up with
one more euro-bond issue this year and at least one for next
year. The Finance Ministry can still issue another 500 million
euros in bonds this year. To issue more bonds it would need
parliamentary approval.
Growing deficit - In
contrast to the first euro-bond issue in June 2004, in which
the government sold 10-year bonds worth 1.5 billion euros,
longer-term 15-year bonds were put up for sale in the recent
euro-bond issue. By raising the share of long-term bonds at
the expense of short-term bonds and treasury bills, the state
wants to take advantage of low interest rates and reduce the
costs of repaying its growing debt. "The government will
show a slower growth in debt because it is switching to long-term
loans that it will not pay off for many years," said
Raiffeisenbank analyst Helena Horska.
Most economists, including CSOB chief
analyst Petr Dufek, agreed the fast pace of growth of Czech
public finance debt was dangerous. "Reforms should be
implemented as soon as possible in order to avoid economic
collapse," Dufek said. Public debt is expected to grow
from 1 trillion Kc in 2004 to more than 1.1 trillion Kc this
year as the government continues to overspend its income.
The public deficit has more than tripled since 1998, when
the Social Democrats (CSSD) took over the government. Meanwhile,
the government deficit, which includes debts of health insurers,
off-budget funds and local budget debts, should grow by 50
billion-90 billion Kc and reach up to 680 billion Kc by the
end of this year. In order to finance the growing deficits,
the state plans to issue bonds worth up to 120 billion Kc
this year. Treasury bills worth another 202 billion Kc are
to be issued in 2005, as well.
From Prague Post, Czech Republic, by Frantisek
Bouc, 7 April 2005
IMF Demands Cuts in
Washington D.C. - Serbian
Finance Minister Mladjan Dinkic announced that the International
Monetary Fund feels that Serbia must cut its public spending
immediately. "If we plan on making the budget deficit this
year 1.4 percent of the collective gross product, officials
of the IMF think that we must make more accommodations in
order to reach the decrease in salary-balance deficits with
the international community." Dinkic said. Dinkic said that
talks with the IMF are very stressful, because very important
deals are being discussed. "We are discussing the wiping away
of a debt of 700 million dollars, finalizing a three-year
arrangement made with the IMF, and we have set very ambitious
goals. The IMF thinks that we have a realistic chance of increasing
exports by 25 percent this year, which is not an easy task."
Dinkic said. He added that the IMF "has commended the Serbian
government for its efforts in the restructuring and privatization
of the public sector."
From B92, Yugoslavia, 18 April 2005
Reform of EU Fiscal
Fules Doesn't Let Countries Off Easy
The Greek finance minister on Tuesday
challenged the notion that a recent reform of the European
Union's public spending regulations will make life easier
for countries with big public deficits. Finance Minister George
Alogoskoufis, in an interview with AFP, contested criticism
of the reform, arguing that recently approved revisions to
the Stability and Growth Pact would only give more flexibility
to countries that just barely and temporarily overshoot an
EU deficit limit of three percent of output. Chronic violators
of the rules would still be taken to task, he insisted.
"The reform makes little difference
for countries that are way above the three percent with a
high level of public debt like Greece," he said. "If
you are near the limit of three percent and have a temporary
deviation, then the reform of the stability pact will make
some difference," he added. EU governments agreed last
month to water down provisions of their 1997 stability pact,
much to the horror of the European Central Bank (ECB) and
some private economists. But Alogoskoufis downplayed such
reactions, saying: "I think there has been a kind of
overreaction to the changes that have taken place in the Stability
and Growth Pact. "I will not make any comment regarding
the ECB but I think the perception that we have destroyed
the credibility of the pact by making it flexible is not the
correct perception," he added. After a new centre-right
government came to power last year, Athens revised its deficit
figures sharply higher, reporting a shortfall of 6.1 percent
of output for 2004.
Greece expects to get its deficit down
to 3.5 percent this year and 2.8 percent by 2006 and has won
praise from the EU's executive commission, which has the job
of policing deficits in the EU. He said that even with the
looser public finance rules Greece would have had to take
painful measures to make up for the "spending spree"
ahead of the 2004 Olympics in Athens. The country last month
unveiled plans to improve its public finances through higher
indirect taxes, namely in the form of a one percent increase
in value added taxes. "The main reason for Greece having
to take tax measures and other drastic measures is the size
of the deficit that has to be corrected," Alogoskoufis
said, adding: "It is not a question of fairness."
"We had such an imbalance, with a deficit slightly over
six percent last year and now we have to go to three percent,"
he said. EU finance ministers, impressed with Greece's new-found
budgetary rigor, agreed on Tuesday to call off excessive deficit
procedures against the country.
From EUbusiness (press release), UK, 12
April 2005
Czech Republic to 'Graduate'
From World Bank Borrowing
The Czech Republic has announced its
intention to 'graduate' from borrower status with the International
Bank for Reconstruction and Development. The Czech Republic
will transition from being a recipient of Bank financial and
technical assistance to being an important partner and provider
of development assistance. "After 15 years of economic, social,
and political transition, the Czech Republic is a country
with an advanced and growing economy, a member of the European
Union, integrating in the global economy, and striving to
reestablish its position among the world's most developed
economies," said Czech Finance Minister Bohuslav Sobotka.
Czechoslovakia was one of the founding countries of the World
Bank and the IMF, but, in 1954, the then-ruling communist
regime withdrew the country's membership in the World Bank.
Membership then resumed in 1990. Following the dissolution
of Czechoslovakia in 1993, the Czech Republic joined the World
Bank as one of the two successor states.
"The Czech Republic has made remarkable
progress over the past decade and a half and is now well placed
to share its experience of successful transition with other
countries," said Shigeo Katsu, World Bank Vice President for
the Europe and Central Asia region. In the early 1990s, World
Bank support focused on key structural reforms and the modernization
of the country's energy and telecommunications sectors. In
addition, through Global Environment Facility (GEF) grants,
the Czech Republic successfully reduced production of ozone-depleting
substances, better protected biodiversity, and improved energy
efficiency use, including district heating. From 1998 onward,
the Bank engaged with the Czech Republic primarily through
knowledge partnerships focused on institutional reforms.
To this end, World Bank advice and
analytic activities conducted in collaboration with the Czechs
supported capital and financial market reform, enterprise
restructuring and fiscal management improvement. In addition,
joint efforts to assess corporate governance and its importance
in underpinning the transformation to a market economy had
a profound impact on the Czech reform process. "We have enjoyed
and appreciated the collaborative relationship that we have
had with the World Bank since our renewed membership. Even
though the period of our borrowing from the IBRD was brief,
the loans played an important role in the early transition
stage of the Czechoslovak, and, later on, the Czech economy.
The ensuing dialogue on economic policies in recent years
also had an enduring impact on the economy," remarked Mr.
Recently, the Czech Republic worked
with the World Bank and IMF to pilot a system for diagnosing
financial sector vulnerability, within the framework of the
International Financial Architecture. "The Czech Republic
played an important role in pioneering most of the country-based
work on the international financial architecture, allowing
the Bank to 'learn while doing' and providing rich best practice
lessons for other countries to apply," explained Mr. Katsu.
Work undertaken in the Czech Republic in this context includes
a Financial Sector Assessment, Reports on Observance of Standards
and Codes, a pilot assessment of bank failure resolution mechanisms
in the context of the Global Bank Insolvency Initiative, and
a series of pilot financial sector corporate governance assessments.
In another partnering activity, the
Czech Republic and the World Bank Group organized a Forum
on governance for Public Private Partnerships (PPP) in February
2004 in Prague. At the Forum, 10 governments as well as participants
from several European institutions agreed to set up a Prague
Public Private Partnership Platform. The so called "Five Ps"
initiative is facilitating networking and capacity building
among PPP experts and stakeholders in Central and South Eastern
Europe. A donor to the International Development Association,
or IDA, since 1993, the Czech Republic is committed to gradually
increasing development assistance and enhancing its role as
a partner in development, both through multilateral vehicles
and bilaterally. The Czech Government has recently committed
to increasing its contribution to the IDA14 replenishment
by 30 percent. Its history as a GEF donor is similarly established
and is expected to continue.
From Harold Doan and Associates, CA, 18
April 2005
Inflation Set to Hit
4 Percent, BoG Warns
The economy is at a crucial juncture,
according to Bank of Greece (BoG) Governor Nicholas Garganas,
who presented the central bank's annual report yesterday highlighting
unemployment as the economy's biggest problem while predicting
slowing growth and rising inflation for this year. Garganas
said the rate of growth would "still remain high"
at around 3 percent in 2005. His forecast, however, may come
as a disappointment to the government, whose Economy and Finance
Ministry has predicted a much higher, 3.9 percent growth rate.
The BoG figure would represent a marked drop in the growth
rate from 4.2 percent last year. As for the inflation rate,
Garganas again went against the government's forecasters by
predicting that it would average 4 percent this year, a 1.1
percent increase from 2004. The government officially expects
a 3 percent inflation rate for this year.
The head of the central bank identified
unemployment as the key problem facing the Greek economy and
recommended the removal of obstacles that bar the entry of
young people and women into the labor market. He said that
Greeks, on average, stop working when they are 59.5 years
old and that this creates more problems for Greece than any
other European country since it has a declining population.
According to BoG figures, the government will be paying out
an extra 10 percent for pensions by 2060 - meaning that such
payments will amount to a quarter of the country's GDP. "Under
these conditions, no economy could function since it will
not be possible to face the increased expenditure just through
public finance measures," said Garganas.
From Agenzia Giornalistica Italia, Italy,
4 April 2005
US to Grant $5.0 Million to Support
Yemeni Commercial Judiciary
SANA'A - The United States will extend
a $5.0 million grant to the Yemeni Ministry of Justice for
the development of the country's commercial justice system.
According to justice minister Adnan Al-Jafri, the ministry
is increasingly interested in the development of Yemen's commercial
justice and public finance courts in line with the latest
achievements and innovations in the filed of information and
communication technologies. The ministry will invest $3 million
to upgrade the existing IT systems of the commercial courts,
connect them via a centralized network and develop a database.
The ministry will also provide the courts with Internet access
and conduct training and qualification courses for 75 judges
and 150 assistant judges. The remaining funds will be invested
in development of the public finance courts, upgrade of their
IT systems and provision of vocational training for their
From Yemen Observer, Yemen, by Observer
Staff, 17 April 2005
Income Tax Threshold in Jamaica
to Be Increased
Kingston - Jamaican Minister of Finance
and Planning, Dr. Omar Davies announced Thursday that the
government had taken a decision to increase the income tax
threshold to just over $169,104, effective July 1, this year.
This will be moved to $193,440 in January 2006, and $275,000
effective January 2007. Thereafter, the threshold will be
indexed to inflation, as proposed by the Matalon Committee
in its recent report. Dr. Davies made the announcement when
he opened the 2005/06 Budget Debate in the House of Representatives.
"I have been told by several accountants that introducing
the new threshold in the middle of the year will create difficulty
for them but the Cabinet, on the insistence of the Prime Minister,
decided that immediate action should be taken, particularly
in light of the concessions made by public sector workers
to the fiscal targets under the Memorandum of Understanding
(MOU)," he told the House.
The two increases in the threshold
for the fiscal year 2005/06 would result in the loss in revenue
of $1.4 billion, Dr. Davies said, adding that on the other
hand, 54,600 taxpayers would benefit in July, and an additional
12,100 when the new threshold came into effect in January
2006. In addition, the Minister informed that as of July 1,
pensioners under 65 years old would have tax-free income of
$240,000, while those over 65 years old would have tax free
income of $259,000. Also, as of January 1, 2006, the tax free
allowances for the two groups will be $238,000 and $283,000,
Meanwhile, as it relates to transfer
tax on estates at death, he told the House that government
intended to, as of June 1, simplify the system as follows:
estates valued less than $100,000 (no transfer tax payable);
estates valued over $100,000 (7.5 per cent on the value in
excess of $100,000). This change, he said, not only represented
a major benefit for many middle and low level income persons,
but would result in the "cleaning of the system". Currently,
the transfer tax payable on estates at death is structured
as follows: The first $10,000 - exempt; the next $10,000 -
7.5 per cent; the next $40,000 - 10 per cent; the next $50,000
- 12.5 per cent; over $50,000 - 15 per cent. This structure,
the Finance Minister said, was not only complicated but had
resulted in many persons not seeking to probate estates because
of the total cost involved in legal fees and associated taxes.
Turning to property tax, Dr. Davies
said the Matalon Committee had proposed the removal of the
property tax caps, which had led to an overly complicated
system. He said the government accepted the proposal in principle,
and would implement, with effect in this fiscal year, a flat
tax of $600 on the first $300,000 of valuation; and a rate
of 0.5 per cent on the amount in excess of $300,000. This
is expected to yield $280 million for the Parochial Revenue
Fund and will therefore not accrue to the Consolidated Fund.
The Minister noted that even with this additional amount,
the collection from property tax would not be adequate to
meet the costs of garbage collection and street lighting.
Therefore, there was still the need for the Consolidated Fund
to provide support for these services.
From Caribbean Net News, Cayman Islands,
17 April 2005
Timid, Yes, But Only
the Conservatives Know How to Balance the Books
In markets, there is something rather
charming about the influence that old men can have. The thought
strikes me because everywhere I go in the City people are
suddenly more worried about the economy than they have been
since the liberation of Baghdad. The evidence that they cite
is always the same: a piece Paul Volcker, the 77-year-old
former chairman of the US Federal Reserve, wrote recently
for the Washington Post: "Altogether, the circumstances
seem to me as dangerous and as intractable as any I can remember,
and I can remember quite a lot," he said. "We are
skating on thin ice." If you want to make market prophecies,
it helps if you look the part and Mr Volcker benefits from
being more than six feet tall, despite the burdens of age.
He ran America's central bank for President Reagan and recently
investigated the oil-for-food scandal at the United Nations.
But what is currently furrowing Gandalf's brow is the huge
imbalances in the world economy, in particular America's current
account and government deficits.
Volcker is an even more revered figure
than his successor, Alan Greenspan, who is widely criticised
for cutting interest so dramatically in the wake of September
11. Greenspan, say his detractors, has simply moved a bubble
in the stock market to the debt markets. By contrast, Volcker
has a heroic reputation as a hawk who raised interest rates
in the 1980s in order to squeeze inflation out of the system,
despite the curses of manufacturers and Congress. President
Reagan himself seemed to appreciate the bitter Volcker medicine,
but his treasury secretary, Don Regan, did not.
Although the situation in Britain today
is not identical to that in America, there are close parallels.
The United States is running enormous fiscal and current account
deficits. You might think it precocious of me to quibble with
Mr Volcker, but I am not sure he is right about the current
account deficit. It is essentially caused by a deficit in
trade and I don't think that matters very much. First, the
data on trade are incredibly unreliable, so if you add up
each country's trade deficit, you discover the world is running
a trade deficit with itself. Second, the ultimate point of
all economic activity is consumption. America's trade deficit
might actually be a sign of a healthy economy. But even if
Mr Volcker is right, we can take comfort in Britain from the
fact that our overall current account deficit is less than
half America's, at about two and a half per cent of GDP, thanks
to the big surpluses earned on our service exports, such as
media and finance, plus investment income received from abroad.
America's equivalent inflows are much smaller and do not offset
its deficit in goods trade to the same extent. What we do
share with the United States is a big fiscal deficit of more
than three per cent of GDP. This is much more serious. For
the government is the biggest participant in markets. Governments
have large financing needs, both in terms of taxation and
borrowing. They therefore set the tone. And a panic over the
government's ability to finance itself can pretty soon erupt
into a generalised loss of confidence.
Mr Volcker says: "America cannot
go on spending more than it earns for ever. I don't know whether
the change will come with a bang or with a whimper, whether
sooner or later. But as things stand, it is more likely than
not that it will be financial crises rather than policy foresight
that will force change." For America, also read the British
Government. Last week's public finance figures from the Office
for National Statistics were hardly noticed. But they revealed
another deterioration. Treasury officials were delighted that
the Government's total net borrowing was �34.5 billion in
2003-04, only �100 million more than forecast in the Budget
in March. But that estimate was the seventh effort from the
Chancellor, and coming within a whisker of it is hardly a
great achievement. There are already signs that both consumers
and businesses sense this bulging deficit hanging over their
heads and are preparing themselves for a post-election slowdown,
made worse by tax rises. Sales of new cars to private individuals
are at their lowest for more than a decade. A survey of house
prices from Hometrack, published this morning, shows another
drop. Retail sales fell in March. Job vacancies are down.
Unemployment has crept up for three months in a row. And inflation
- though still low by historical standards - is at a seven-year
high. The economy may be slowing, but the Bank of England
has a legal duty to control inflation and another interest
rate rise after the election is a near certainty. Ah yes,
the election.
According to the Institute of Fiscal
Studies, the difference between the three main parties is
minute and taxes may have to rise, whoever is in power. The
Government currently collects about 38 per cent of GDP in
taxation and by 2008 that will rise to 42.1 per cent under
Labour, 41.5 per cent under the Conservatives or 42.2 per
cent under the Liberal Democrats. Behind the scenes, many
Conservatives are angry at the timidity of the party's approach
to economic reform, which they believe has neutered the election
strategy. They are right about that. But the fact remains
that the Conservatives are the only ones to realise the importance
of slowing the growth of public spending. And one part of
the Conservative programme that has received far too little
attention is the promise to allocate �8 billion to reducing
the national debt. Shadow chancellor Oliver Letwin is no Paul
Volcker. But, in his desire to balance the budget and reduce
borrowing, he has much in common with the old wizard. The
Tories may lose this election, but, if the Volcker view is
correct, a fiscal crisis will propel them into office next
From Telegraph.co.uk, UK, by George Trefgarne,
24 April 2005
Finding Consensus On Global Economy
- Finance Chiefs Agree on Need for Change
A serious danger looms over the otherwise
robust global economy, and the tough measures needed to reduce
it are clear. On that score, there was almost unanimous agreement
among the dark-suited policymakers from around the globe who
converged on Washington this weekend for the spring meetings
of the International Monetary Fund and World Bank. One after
another, in public declarations and private conversations,
officials from the world's leading finance ministries and
central banks concurred that financial turmoil triggered by
a plunge in the U.S. dollar could erupt sometime in the future
unless strong steps are taken to shrink "global imbalances"
- the massive U.S. trade deficit, and the corresponding trade
surpluses of other countries, especially Asian ones. The result
"could be disruptive and very damaging to the world economy,"
warned Sultan Bin Nasser Al-Suwaidi, governor of the United
Arab Emirates Central Bank.
So what are these powerful people doing
to prevent this dire threat from materializing? Not much,
many of them admitted. As Raghuram Rajan, the IMF's economic
counsellor, put it: "Their attitudes toward the needed
policy changes seem much like St. Augustine's - "'Lord,
give me chastity ... but not just yet.' " That is not
for lack of a broad consensus on the needed changes. At a
high-level IMF meeting Saturday, participants from rich and
poor countries alike issued formal statements repeating, in
one form or another, what Swiss Finance Minister Hans-Rudolf
Merz called "the well-known mantra": The U.S. budget
deficit must be sharply curtailed; that would dampen the over-consumption
by Americans that draws in a flood of goods from overseas.
The sluggish economies of Europe and Japan must be revived
with growth-inducing reforms; that would enable them to pick
up the slack and import more when U.S. consumers finally become
less free-spending. And Asian economies, particularly China,
must let their currencies rise; that would eliminate an unfair
competitive edge their exporters enjoy against products made
The Bush administration declared itself
fully behind that set of prescriptions, including the part
about Washington's budgetary responsibilities. Following a
meeting Saturday of top officials from the Group of Seven
major industrial nations, Treasury Secretary John W. Snow
said, "Deficits matter, they are unwelcome, and must
come down," and he reiterated the U.S. commitment to
President Bush's goal of cutting the budget gap to less than
2 percent of gross domestic product by 2009, from about 3.5
percent of GDP now. "I'd underscore, this isn't just
words," Snow said, referring to the G-7's call for "vigorous
action" to address global imbalances. "It's an action
plan." Such stirring rhetoric, however, is belied by
recent developments in major economies. In the United States,
figures released this month show that the budget deficit for
the current fiscal year is running close to last year's record
$412 billion, a problem that will only worsen when Congress
approves $80 billion in emergency spending for the wars in
Iraq and Afghanistan. More important, the willingness of Congress
to enact the spending cuts proposed by Bush has come under
fresh doubt following rebellions by Republican lawmakers against
reductions in Medicaid and farm subsidies. And in the latest
sign of Washington's eagerness to reduce taxes rather than
raise them, the House just voted to repeal the estate tax
Across the Atlantic, a slowdown in
continental Europe has prompted economists to slash their
forecasts for the zone of countries using the euro currency;
the IMF predicts growth at an anemic 1.6 percent this year.
With unemployment in those nations averaging nearly 9 percent,
hope that the European Central Bank might respond by lowering
interest rates was dashed when Jean-Claude Trichet, the bank's
president, told reporters after the G-7 meetings, "A
decrease of rates is not an option" because of worries
about inflation. Meanwhile, European politicians have announced
moves in the past few days that are arousing despair among
economists who believe the continent will achieve dynamic
growth only by lifting the heavy hand of government protection
from labor, product and capital markets.
In Germany, the government - responding
to widespread concern about low-cost eastern European workers
invading the German market - has proposed a plan that includes
setting a minimum wage equal to the lowest wages negotiated
by unions and employers' associations. Separately, the European
Union's executive body retreated from a proposal to open up
the continent's service markets to greater cross-border competition.
"The problem is not complacency," said a senior
European policymaker who attended the G-7 meeting and agreed,
on condition of anonymity, to discuss the sentiments expressed
behind the scenes about global imbalances. "It is not
a lack of recognition that we have a real risk. But the problem
is delivery. We have to fight against the difficulty of running
modern democracies." The dangers of failing to act were
spelled out in IMF reports issued on the eve of the meeting.
The U.S. trade deficit, at a bit more
than $660 billion last year based on the broadest measure,
has risen to about 5.7 percent of GDP - a far higher proportion
of the economy than at any time in history. IMF projections
show that if the trade gap continues to expand as currently
anticipated, the collective indebtedness of the United States
to other nations will mount steeply over the next half-decade.
That is because as U.S. consumers buy imported cars, clothes
and electronic goods, the dollars they pay end up in the hands
of foreigners who effectively lend those greenbacks to the
United States by investing in U.S. Treasury bonds and other
securities. By 2010, the net indebtedness of the United States
will roughly double as a proportion of the economy, to 50
percent of GDP, according to the IMF. That doesn't have to
spell disaster, because as some private economists contend,
foreigners may well be willing to continue lending to the
United States far into the future - as they have up to now
- given the dearth of good alternatives. But the higher U.S.
indebtedness rises, the greater the chance that foreigners
might get worried that the United States' burden is getting
out of hand, prompting them to dump the Treasury bonds they
have accumulated.
Part of the reason that scenario has
not galvanized policymakers to take more-ambitious preventive
measures, according to some attendees at the weekend meetings,
is that the global economy has been expanding briskly and
shows scant sign of faltering. The IMF projected global growth
at 4.3 percent this year and 4.4 percent in 2006, down from
last year's 5.1 percent pace but still plenty healthy. "In
private, there is agreement that there has to be multilateral
movement [on imbalances], but the fire is not under them,"
said one senior international official who attended the meetings.
"Until such time as that happens, there may be more willingness
to procrastinate."
From Washington Post by Paul Blustein, 17
April 2005
Mexico, Russia to Increase
Domestic Borrowing as Rates Rise
Mexico, Russia and Brazil will sell
more debt in domestic markets and reduce borrowing in U.S.
dollars in response to higher international interest. Finance
ministers from all three countries said at meetings with International
Monetary Fund officials over the weekend they will seek to
expand their own capital markets, boosting public and private
borrowing in local currencies, to lessen the effect of rising
borrowing costs abroad. "To be able to meet most of the
financing needs of both public and private sectors in your
own country is becoming crucial," Mexican Finance Minister
Francisco Gil Diaz said in an April 16 interview in Washington.
"This move is going to accelerate - not only in Mexico
but in many other large emerging economies." Gil Diaz
made the remarks after emerging market bonds slumped last
week on concern global growth is slowing and higher rates
in the U.S. will hurt demand for riskier assets. The average
extra yield investors demand to buy developing country debt
instead of U.S. Treasuries grew to 4.1 percentage points,
the widest gap since November, according to JPMorgan Chase
& Co. The yield spread widened 0.73 percentage point last
week, more than during any five-day period since May 2004.
Brazilian bonds, the most widely traded
emerging market securities, led the declines. The country's
benchmark bond due in 2040 fell 4.2 cents over the past week
to 110.6 cents on the dollar, pushing up the yield to 9.91
percent. Mexico's bond due in 2015 fell 0.7 cent on the dollar
to 103.6 cents, raising the yield to 6.13 percent.
Growing Economies - Developing
nations including Brazil and Mexico have stepped up borrowing
on domestic markets as their economies expand. The IMF last
week boosted its forecast for economic growth in Latin America's
two largest economies, saying Brazil and Mexico would grow
3.7 percent this year. Brazil's economy grew 5.2 percent in
2004, the fastest pace in a decade, and Mexico's grew 4.4
percent. "Our dependence on foreign debt has been coming
down very fast and it's one of the reasons why the country
is in much better shape today to absorb foreign market volatility,"
Brazilian Finance Minister Antonio Palocci told reporters
April 15 in Washington. About 60 percent of Brazil's $450
billion debt, the largest amount among developing nations,
is tied to the local currency and domestic interest rates,
and that portion may increase to as much as 90 percent in
coming years, Palocci said.
'Start to Hurt' - Christian
Stracke, head of emerging markets fixed-income research at
New York-based CreditSights Inc., said Brazil still must contend
with higher borrowing costs overseas. By early February, Brazil's
government had raised $3.4 billion of the planned $6 billion
in financing on international markets this year. Declines
in Brazilian bonds since last month resulted in an increase
in the country's borrowing costs of at least 1 percentage
point, according to estimates by CreditSights. "No matter
how well a country like Brazil is doing, the sheer size of
their total debt is so high that at a certain point, higher
rates and higher borrowing costs will start to hurt,"
Stracke said. In Latin America in particular, debt levels
are so high that a sudden pullout of international capital
would be dangerous for the economies, Anoop Singh, the IMF's
director for the Western Hemisphere, told reporters in Washington
on April 15. "Despite remarkable progress in Latin America,
a shock on rates could have a negative impact," Singh
said. Higher borrowing costs and lower demand for emerging
market bonds led Uruguay to postpone on April 14 a planned
$300 million bond offering. In March, Uruguay said it would
need to borrow $500 million in international markets to help
close its budget gap.
'Closed' Markets - "I
can't think of another deal that has been pulled out like
Uruguay's in recent memory," said Siobhan Manning-Morden,
emerging-market analysts with Wachovia Corp. in New York.
"The question is how long the markets will be closed"
for new emerging market issues. The Philippine government
will wait for emerging market bond yields to stabilize before
raising $1.5 billion on international markets, National Treasurer
Omar Cruz said in an interview on April 15. The U.S. benchmark
4 percent note due in February 2015 last week surged about
1 3/4, or $17.50 per $1,000 face amount, to 98 1/16 in New
York, according to bond broker Cantor Fitzgerald LP. The yield
fell 0.23 percentage point to 4.24 percent, and touched 4.23
percent, the lowest since Feb. 24. The drop was the most since
the week ended Aug. 6.
Demand for U.S. Treasuries gained as
minutes of the U.S. Federal Reserve's March 22 meeting showed
policy makers aren't ready to boost rates in higher increments.
The 10-year note yield is up from last year's low of 3.68
percent. In a Bloomberg News survey conducted on April 7,
the median forecast of 61 economists was for the note to reach
5 percent by the end of the year. The Fed has boosted the
benchmark lending rate seven times since last June to 2.75
Trade Surplus - Palocci,
Brazil's finance minister, said his country has reduced its
international debt and boosted its trade surplus enough since
President Luiz Inacio Lula da Silva took office in January
2003 to withstand higher yields overseas and a pullout of
international investment. Mexico has reduced its net foreign
debt to about $80 billion, or 11 percent of gross domestic
product at the end of 2004, from 32.4 percent in 1995 by replacing
it with peso securities. Mexico's net international debt as
a share of GDP is at its lowest in 32 years and is the fifth
lowest among all developing economies, according to JPMorgan.
Petroleos Mexicanos, Mexico's state-owned oil monopoly, sold
15 billion pesos ($1.3 billion) of bonds in February, tapping
into demand from the nation's pension funds to help lower
its borrowing costs. About half of the company's total debt
is in pesos. Mexico's Gil Diaz said the country's 2005 borrowing
needs were already met and Brazil's Palocci said the country
didn't plan to issue bonds in international markets in coming
months. Other countries, such as Venezuela, opted to repurchase
short- term debt and refinance at lower rates and with longer
Venezuela, Russia - Venezuela
"won't be going to the markets to raise funds to amortize
debt or do swaps," Armando Leon, a director for Venezuela's
central bank, said in an interview April 17. "This allows
the operations to be less pressured. When you have debt maturing,
the markets understand it and tend to pressure for higher
rates." Earlier this month, Venezuela, the world's fifth-largest
supplier of oil, sold $1 billion of bonds on domestic markets,
avoiding the higher borrowing costs abroad to raise funds
from local banks flush with cash. In Russia, the government
is seeking to repay foreign debts ahead of time to save money.
Andrei Illarionov, an aide to President Vladimir Putin, said
in an interview April 6 that Russia may pay back its entire
$110 billion of foreign debt as soon as 2007 as record oil
prices swell government revenue. The debt decreased from $119.7
billion in early 2004, according to the Finance Ministry.
Russia defaulted on $40 billion of domestic bonds in August
1998. "We want to facilitate and invest in the expansion
of our own financial markets," Finance Minister Alexei
Kudrin told reporters in Washington on April 15. "We
are interested in covering our debts fast."
From Bloomberg, 18 April 2005
Asia, Africa Need New
Strategy for Cooperation
The conjuncture of rapid structural
transformation in a growing number of economies of Asia, the
adoption of reforms to revive Africa's economic prospects,
and the expected leveling - off in demand and income growth
in the advanced economies provides a propitious setting for
renewed efforts to strengthen Afro-Asian economic cooperation.
Emerging complementarities between the economies of the two
regions, buttressed by macro-economic reforms of the recent
past, have contributed to a rapid growth in trade, investment
and financial flows between them. The expansion in inter-regional
trade has, potentially, far reaching consequences not only
for these two regions but for the world economy as a whole.
It signals, for example, a rupture in the center-periphery
pattern of trade that has historically defined developing
countries relations with the North. These shifts are also
likely to affect the quality of trade relations: intra-developing
trade is more likely to reflect equality and mutuality of
interests, unlike the rancor and dependence that characterizes
North-South trade relations.
As regards OECD economies, the New
Strategy will need to take into account demographic trends
and consequences of an aging population, declining savings
(and long-term investment) and stagnation in demand due in
part to a saturation of consumption and stagnation in income
growth. The New Strategy must therefore address the implications
of shifts in the loci of dynamism and growth away from developed
to other regions of the world. Deepening Afro-Asian ties,
however, will require sustained political efforts. One of
the lessons deriving from earlier measures to increase economic
cooperation and promote integration, no less within regions
as between them, suggests that in the absence of a high degree
of political commitment and support, such efforts are unlikely
to secure the full benefits of mutual cooperation. At the
same time, given the considerable heterogeneity within and
between the two regions, efforts towards enhancing cooperation
must necessarily embody multiple approaches. In this regard,
strengthening intra-regional cooperation will itself have
spillover effects towards strengthening inter-regional ties
via the provision of more secure and larger trade and investment
The several existing structures designed
to promote sub-regional, regional and even inter-regional
arrangements will be required to play a leading role in providing
form and content to a New Strategy for Enhancing Trade, Investment
and Technical Cooperation (New Strategy). Likewise, beyond
the important catalytic role of Governments, civil society
will have to play a greater role than heretofore. New partnerships
embracing business, industry, centers of learning and research
and other non-governmental structures will, to a much greater
extent than before, be expected to drive the process of cooperation.
A tri-partite framework of cooperation involving inter-governmental
forums, sub-regional organizations and people to people and
civil society interaction should be formalized to the extent
possible and structured to permit its growth. The forthcoming
Asian-African Summit in Jakarta therefore has a central role
in designing and establishing such a framework within which
the New Strategy can be nurtured.
An important component of such a framework
must be the establishment of follow-up arrangements to service
the technical and policy-making organs of the New Partnership,
to monitor progress in the implementation of the decisions
and to help coordinate the work of existing institutional
structures and private-public partnerships in support of the
New Strategy. Such an effort would require political guidance
and leadership on an on-going basis and for which a standing
bureau of the conference could be established to meet periodically,
including at heads of states levels, to monitor progress and
take appropriate decisions. The follow-up structures could
consist of one or more of the regional organizations and new
ones to be created such as, for example, An Afro-Asian Trade
and Investment Chamber.
Priority areas critical for the success
of the New Strategy include: Policies and measures regarding
international trade and the harnessing of comparative advantages
between the two regions; the role of a revived Global System
of Trade Preferences; cooperation in the field of commodities,
investment and transfer of technology and special measures
for the least developed countries. Likewise, sharing of expertise
and knowledge, learning from best practices concerning agricultural,
industrial and commercial policies, and related measures covering
FDI and its promotion, transfer of technology and competition
policy should be expected to form a key component of the New
Strategy. In this respect, the role of non-governmental actors
in promoting learning and sharing of experiences must be highlighted.
Access to the resources at the disposal of the private sector
and related associations such as Chambers of Commerce, Business
and Industry associations and Export and Investment promotion
agencies would complement the traditional Government to Government
mode in the delivery of technical assistance.
The establishment of a network of relations
between Asian and African Universities and centers of research
could play a leading role in training, increasing exchanges
of students and faculty, building technical capacities and
sharing of knowledge in a wide range of development policies
and areas. Given the similarities of development experiences,
provision of technical assistance between Asia and Africa
is likely to be more productive, cost-effective and better
adapted to each other's need than support from the traditional
providers of such assistance. However, this will not take
place spontaneously or at levels warranted by needs or demand.
The transfer of technical knowledge and assistance among them
must be supported by, as necessary, contributions from Governments
and private entities and for which consideration may be given
to the establishment of an Afro-Asian Technical Assistance
Pool to be managed and administered by one or more of the
existing institutions of cooperation in the two regions.
From Jakarta Post, Indonesia, by Yash Tandon
and Chandra Kant Patel, Geneva, 15 April 2005
G7 Issues Upbeat Growth
Outlook, Pledges Action on Trade Imbalances
Despite last week's sudden
plunge in stock prices, top economic policymakers from the
world's richest countries expressed confidence Saturday that
the global economy remains on track for "solid growth"
this year, while acknowledging that high oil prices are generating
economic "headwinds," reports The Washington Post.
The upbeat joint statement by finance ministers and central
bank governors from the Group of Seven major industrialized
nations broke little new ground, but their meeting in Washington
provided an opportune moment to issue soothing words about
the outlook. In its communiqu�, the G7 pledged "vigorous
action" to deal with "global imbalances" --
a reference to the massive US trade deficit and corresponding
trade surpluses of other nations, especially the export-driven
economies of Asia. But the statement mostly reiterated past
calls for countries to take measures that should help shrink
the trade gap, including a reduction of the US budget deficit
and "structural reforms" in Europe and Japan to
help speed growth.
The G7 conspicuously refrained from
commenting directly on one politically charged issue related
to the trade deficit - China's decade-old practice of keeping
its currency, the yuan, pegged to the US dollar at a rate
of about 8.3 yuan per dollar. The G7 communiqu� included only
the language that has been contained in every such statement
for the past year. "More flexibility in exchange rates
is desirable for major countries or economic areas that lack
such flexibility," the statement said. Senior Treasury
officials, briefing reporters on condition of anonymity because
of the sensitivity of the issue, maintained that no importance
should be attached to the communiqu�'s lack of a specific
reference to China or the timing of a change in currency policy.
But they dodged questions about whether there was unanimity
in the G7 on the matter.
The Associated Press further reports
that concern that rising oil prices could harm the global
economy also dominated weekend meetings. The news agency writes
that oil prices are expected to remain high - and volatile
- given tight supplies and rising demand, especially in rapidly
developing countries like China. Finance officials from the
world's seven richest countries on Saturday signaled their
resolve to deal with the energy situation and reassure financial
markets that they are on top of the matter. However, they
urged producers to increase energy supplies and said countries
should conserve more. The G7 countries endorsed more timely
and accurate information about the oil market, which officials
said could help control price fluctuations and make companies
more willing to expand production. For now, energy prices
are expected to slow economic growth modestly this year in
the United States and elsewhere. "The outlook continues
to point to solid growth for 2005," the finance officials
said in their statement.
Reuters also adds the G7 welcomed progress
toward clearer data on global crude oil inventories to help
tame wild price swings and avoid being caught off guard by
future demand fluctuations. A global effort launched in 2001
to improve oil data, called the Joint Oil Data Initiative,
is underway but barely half of the 93 participant nations
submit regular data, the IMF said earlier this month. The
database could see public use later this year and include
information from China, India and OPEC nations. Global oil
markets focus on official weekly stock data released from
the world's largest oil consumer, the United States, and on
monthly stock data on 26 industrialized nations that submit
information to the IEA. But data on non-OECD members like
China and most OPEC members is lacking, the IMF has said.
The G7 and IMF want more universal rules to peg how countries
measure their reserves.
In related news, Reuters notes that
world financial leaders on Saturday heaped more pressure on
Argentina to change course and negotiate with the bondholders
who rejected its massive debt swap offer in February. But
Argentina thumbed its nose at any suggestion that it should
reopen the swap and repeated it will not give a second change
to the 24 percent of creditors who refused its debt exchange
deal, which shaved 70 percent off investor holdings. Still,
the Latin American country is being pushed to court the disconcerted
creditors as it seeks to restart a suspended IMF loan program
and lay to rest its 2002 sovereign default. Finance chiefs
from the Group of Seven industrialized countries said engagement
with Argentina's holdout creditors should be a prerequisite
for any new IMF loans to the country. The IMF has not asked
Argentina to reopen talks with its holdout creditors, who
still hold nearly $20 billion in defaulted bonds, but has
urged the government to develop a "realistic strategy"
to deal with them.
From noticias.info (press release), Spain,
18 April 2005
Major Finance Ministers
Say World Economy Performing Well
Finance ministers and
central bank governors from the world's richest nations concluded
a two-day meeting in Washington Saturday saying vigorous action
is needed to remedy global economic imbalances. Their statement
came one day ahead of a meeting of World Bank and International
Monetary Fund officials that is expected to address such topics
as debt relief for poor nations. Unlike previous meetings
of the finance ministers of the major industrialized countries
- the Group of Seven - this one was quiet on the inside and
outside. The ministers made no public remarks and their meeting
attracted few protesters. At the end of the meeting, the ministers
from Japan, America and western Europe, including Alan Greenspan,
the head of the U.S. central bank and Jean-Claude Trichet,
the head of the European Central Bank, did issue a written
statement calling for vigorous action to improve the economy,
but the ministers did not commit themselves to specific policy
Despite this week's sharp decline in
U.S. stock markets because of worry the economy may be slowing
down, the group of seven ministers say the global expansion
remains robust. The statement describes the 37 percent rise
in oil prices over the past year as a headwind that can be
countered by more efficient policies. They say that the United
States needs to reduce its budget deficit and Japan and Europe
need to reduce structural rigidities that hold down economic
growth. In a veiled reference to China, the statement says
that strong economies with big trade surpluses should have
more flexible exchange rates. Though the value of the U.S.
dollar has been declining against other major currencies in
the past two years, China maintains its currency at a fixed
rate to the dollar - 8.3 yuan to a dollar. U.S. policymakers
want China to raise the value of the yuan, which they believe
would stem the flood of Chinese goods into the U.S. market
and give U.S. exporters more opportunities in China. Immediately
following the end of the meeting of finance ministers, the
officials from Europe, America and Japan went into a larger
meeting of the International Monetary Fund's policy making
committee. That latter group includes major oil exporting
nations, and key developing countries from Africa, Asia and
Latin America. The multiple gatherings of finance officials
continue through Sunday.
From Chosun Ilbo, South Korea, 17 April
UN Will Host Finance
Ministers, Development Decision Makers, at Headquarters, 18
A full day of discussion at the United
Nations next Monday constitutes an important opportunity for
finance ministers to consider foreign aid outlays in a multilateral
and inter-institutional context, prior to the summit taking
place at the United Nations in September, United Nations officials
In a note prepared for the 18 April
meeting of finance and development ministers, central bankers,
executive directors of the Bretton Woods institutions, leaders
from the major international trade institutions and delegations
belonging to the United Nations Economic and Social Council
( ECOSOC ), United Nations Secretary-General Kofi Annan repeated
his call for rapid increases in official development assistance
( ODA ) and measures to front load aid, as a means to meet
the Millennium Development Goals set at the year 2000 Millennium
Summit. The full range of areas covered by the 2002 International
Conference on Financing for Development - trade, aid, investment,
debt, international financial systemics and mobilization of
resources in the developing countries - will be under discussion
during Monday's plenary meeting and at late morning informal
round-table discussions.
Opening remarks will be delivered beginning
at 9:30 a.m. on 18 April by UN Secretary-General Kofi Annan
and by Ambassador Munir Akram ( Pakistan ), the President
of ECOSOC. The 54-member United Nations body will be hosting
finance ministers flying in from Washington, D.C., at the
conclusion of the 16-17 April International Monetary Fund
( IMF )/World Bank spring meeting, including Development Committee
Chairman Trevor Manuel, the Finance Minister of South Africa.
The Chair of the International Finance and Monetary Committee
will be represented by Augustin Carstens, the Deputy Managing
Director of the IMF. Besides Mr. Manuel and Mr. Carstens,
Mary Whelan, Chair of the Trade and Development Board of the
United Nations Conference on Trade and Development ( UNCTAD
), will address the morning session, following the United
Nations speakers. The World Trade Organization ( WTO ) will
also participate in the meeting.
Concerns on Financing for Development
- The Secretary-General's note brings up the need for effective
macroeconomic coordination among countries, given that massive
global imbalances have not yet been corrected by the sharp
decline in the United States dollar. Moreover, the potentially
destabilizing effects of these imbalances are causing developing
countries to build up costly reserves as a form of self-insurance.
The problem was exacerbated when the IMF's Contignent Credit
Line was allowed to lapse. Concern is also expressed in the
note from the Secretary-General about progress on bringing
developing countries into decision-making positions at the
Bretton Woods institutions ( the World Bank and IMF ), and
norm-setting agencies such as the Basle Committee and the
Financial Stability Forum. There is good news that ODA is
growing, according to new data released this week by the Organization
for Economic Cooperation and Development ( OECD ). But ODA
needs to be stepped up in order to meet the Millennium Development
Goals, according to the UN Secretary-General. The same point
was driven home by the World Bank's Global Monitoring Report,
issued 12 April. Also endorsed is the need for "development-friendly
liberalization" of international trade, through successful
conclusion of the Doha negotiations.
Input to September Summit - At
the conclusion of the meeting, ECOSOC President Akram will
issue a summary of the proceedings. The results of the 18
April meeting will be forwarded to the High-level Dialogue
of the General Assembly on Financing for Development, which
will take place in New York in late June. Discussion of the
Millennium Development Goals at the June ECOSOC meeting, in
turn, is considered to be a critical input to decision-making
at the September summit at the United Nations, which constitutes
a review of the year 2000 Millennium Declaration.
Reporters without United Nations press
credentials who wish to attend the 18 April ECOSOC meeting
from 9:30 a.m. to 10:30 a.m., or from 2:45 p.m. on, should
fax a letter of assignment to 1-212-963-4642, and follow up
with a call to the UN Media Accreditation Unit at 1-212-963-7164.
For more information, contact Tim Wall of the Development
Section of the UN Department of Public Information, at 1-212-963-5851,
or at email@example.com. If you have questions regarding information
in these press release contact the company listed below. Please
do not contact us as we are unable to assist you with your
inquiry. We disclaim any content contained in this press release.
From I-Newswire.com (press release), 16
April 2005
World Bank President
Appeals to Rich Countries to Help Educate 100 Million Child
Washington - World Bank President,
James Wolfensohn, today appealed to rich countries to honor
their overdue promises to help educate more than a hundred
million children out-of-school in the world's poorest countries,
despite overwhelming evidence that teaching children how to
read, write, and count, can blunt the spread of AIDS, boost
economic growth, and break the cycle of poverty that haunts
the lives of too many of the world's children. "Today, we
see that the rich world is not even close to meeting its commitment
to children in developing countries," said World Bank President
James Wolfensohn. "In a world tragically short of magic solutions,
primary education remains one of the most dramatic development
solutions available. And progress on education-as with many
other development challenges-is possible when political will
and resources come together."
Wolfensohn said girls in particular
could greatly benefit from education, and yet millions of
them continued to languish outside the school system. Girls
make up almost 60 percent of the youngsters out of school,
despite 2005 being the year the world agreed to remove the
gender barriers preventing more girls going to primary and
secondary school. At the Millennium Summit in 2000, world
leaders agreed to remove the gender barriers preventing more
girls going to primary and secondary school by 2005, and said
every boy and girl should have the chance to get a quality
primary school education by 2015, as part of the Millennium
Development Goals. They later built on that promise by vowing
at various international summits over the recent years that
no country would be blunted in its achievement of universal
primary education because of a lack of money and support.
Progress is possible - According
to Wolfensohn, the chances of getting every boy into school
by 2015 are more promising than for some time. For example,
gross enrollments have jumped dramatically in Sub Saharan
Africa from 78% in 1997 to 95% in 2002, an historically unprecedented
surge that had resulted in 17 million more children in school
in 2002. While the factors contributing to this trend vary
from country to country, generally they include more economic
growth, the hiring of more teachers, and better policies including
the elimination of school fees. Given the high repetition
rates in this region, the gross enrollment rate would need
to be well over 100% to indicate that all children are in
school. While progress has been made in some countries, there
is no room for complacency. Over 40 million primary school
aged children in Sub-Saharan Africa and 36 million in South
Asia, are not even enrolled in school.
Pledge to the World's Children - However,
what was especially frustrating, Wolfensohn said, was that
the development community could do so much more to help poor
countries educate their children by 2015if world leaders were
to make good on the very public pledges they had to finance
the credible education expansion plans of developing countries
seriously committed to achieving universal primary education
by 2015. Wolfensohn said it was essential that the additional
education aid that donor countries had long promised had to
be provided in a coordinated and predictable manner to avoid
"kids being in school one year and then being thrown out the
next." While poor countries themselves must make a firm commitment
to education and develop credible education plans, he said,
rich countries had to do more to help reach this goal. The
Bank's President said that the development community had a
tried and tested means for helping poor countries speed up
efforts to get their children into school, called the Fast
Track Initiative, which the world's finance and development
ministers asked the Bank set up in 2002, and which already
has been showing results. But financial and political support
to FTI needs to be stepped up substantially.
The Education for All - Fast Track
Initiative - The World Bank,
along with other leading donors, launched the Fast Track Initiative
(FTI) in 2002 to help an initial handful of countries get
more primary school-aged children into classrooms. Currently
there are 13 countries in FTI; Burkina Faso, Ethiopia, Gambia,
Ghana, Guinea, Guyana, Honduras, Mauritania, Mozambique, Nicaragua,
Niger, Vietnam and Yemen. Built on a new-style development
compact, the FTI required donor countries to provide increased
aid in a coordinated and predictable manner, while poor countries
agreed to make primary education a national priority and draw
up educations plans that would get them to the 2015 target
of primary education for all children. This global compact
for education is now open to all low-income countries endeavoring
to accelerate progress toward universal primary education.
Established in 2002, Fast Track Initiative
has been recognized for having played a significant role in
promoting better donor coordination and faster results. It
has put into place two funds including the Catalytic Fund,
which provides short term financial help to close the education
financing gaps for poor countries with too few donors, and
the Education Program Development Fund, which provides technical
support enabling countries to develop sound education strategies.
"The Fast Track Initiative has already been recognized for
promoting better donor coordination and getting more kids
into school, so why is this tried and true program still being
starved of the large-scale money and support it needs to reach
its achievable goal of helping every child to go to school
by 2015?" Wolfensohn asked. "Looking at the millions of children
standing outside of the classroom, it is clear that bold action
is urgently needed."
Donor Commitments - President
Wolfensohn said a number of donors should be recognized for
their efforts to increase ODA for education, particularly
the Netherlands, Norway, and France. The Netherlands has demonstrated
both political leadership and financial commitment as the
largest donor to the Fast Track Initiative, having pledged
$243 million through 2007. Moreover, there are countries poised
to make new contributions including Norway, Sweden and Canada.
And Spain has recently become the 7th donor to the FTI's Catalytic
Fund, pledging $6.5 million dollars.
But the Catalytic Fund commitments
total only about US$300 million over 2004-2007, with $28.5
disbursed to date. Pledges, for this period, have been made
by the following seven donors: Belgium (US$ 5.2 million) ,
Italy (US$ 5million), the Netherlands (US$ 243 million), Norway
(US$ 20 million), Sweden (US$ 5.3 million), the UK (US$ 16
million) and Spain (US$ 6.5 million). "The upcoming G8 meeting
provides an opportunity for the donors to keep their promises
to encourage countries to invest in education,"Wolfensohn
said. "I'm worried that if we don't get the extra financing
at the G-8 meeting in the early summer and then the UN Millennial
Summit in September, we're just not going to achieve the Millennium
Development Goals by 2015."
Financing Needs - External
aid for the countries within the Fast Track Initiative increased
from about $300 to $350 million in 2004, closed the financing
gap in Mauritania, Guyana, Gambia, Honduras and Nicaragua.
But more country financing gaps could be closed in 2006 and
beyond with additional continuing commitments from donors.
If the compact expands to help as many as 25 new countries,
including large countries such as Ethiopia, Madagascar and
Pakistan, over the next year, bringing the total countries
receiving support to 38, there will be a need for ODA of $2.3
billion a year for many years to help these countries achieve
the goal of universal primary education.
Wolfensohn said that aid spent effectively
does have real impact. In Nicaragua, $3.5 million from the
Fast Track Initiative, enabled an additional 70,000 six year
olds go to school, improvement of teacher facilities and the
number of children receiving a daily meal in school rose from
200,000 in 2004 to 800,000 in 2005. In Gambia, $4 million
enabled the government to purchase thousands of text books
for grades 1-4 resulting in a better quality of education
in poor rural areas. In Yemen, $10 million is being used to
increase the quality of education and the enrollment of girls
in rural areas, where only 30% attend school. Already, 14,000
teachers have been trained, 86 new schools are being built
and female teachers are being hired.
From Harold Doan and Associates, CA , 18
April 2005
Private, Public ICT Partnerships
Best for Government
Johannesburg - ICT industry experts
agree that private and public partnerships and bringing down
the cost of technologies will help African governments to
enhance service delivery to their citizens. Local and African
delegates at the 2005 ICT in Government Conference in Vanderbijlpark
last week all shared the same vision for the private and public
sector to work together to enhance government service delivery
through cost effective IT technologies, technology convergence,
and comparing strategies. They also agreed that while the
variety of technology innovations and solutions has grown,
none of them could be 'all things to all people'.
Private, public partnerships - Microsoft
SA MD Gordon Frazer said the public and the private sector
needed to work together, to maximise the use of technology
in government, for the benefit of citizens, as well as enhancing
economic growth. "The idea is to build information technology
(IT) as a means to ensure digital economic success, co-operation
between private and public sector, and to improve productivity
and service delivery, locally and globally," said Frazer.
IT companies had a choice - to either innovate or stagnate,
said Frazer. "The obvious would be to innovate, move forward
and create a healthy competitive environment." He added: "There's
a need to build a healthy knowledge economy through fostering
innovation, protecting intellectual property rights, IT training
and education, removal of trade barriers, and digital inclusion."
Telkom's role in government service
delivery - Telkom CEO Sizwe Nxasana,
said: "From Telkom's point if view, we are looking at convergence
of IT solutions, formulating partnerships and transformation,
to help the government provide better service delivery to
its citizens, as well as offering services to African governments
at large." Telkom chief sales and marketing officer, Nombulelo
Moholi said Telkom has already geared up for convergence in
terms of implementing new technologies. Asked about Telkom's
"slow" service delivery and satisfying customer needs, Moholi
admitted the telecoms giant is facing challenges regarding
customer loyalty and quick service delivery, but she added
that they are making daily improvements. She added: "It doesn't
make sense for new companies to involve Telkom late in the
conception of their projects and expect to get a quick response,
as installing new lines requires digging up infrastructures
to accommodate new buildings." "We advice everyone to involve
us early in their projects, thus giving us ample time to respond
to their needs as quickly as possible, by the time they are
ready to do business."
Boosting Africa's ICT skills - NEPAD
e-Africa programme commissioner Peter Kinyanjui told delegates
to the conference: "African countries need to accelerate roll-out
of their ICT infrastructures and skills development through
initiatives like the NEPAD e-Schools, in order to bridge the
digital divide." "African governments, the corporate sector,
development agencies and civil society organisations, need
to partner to enhance education through learnerships, skills
developments and teacher training, added Kinyanjui. Kinyanjui
urged African governments to act faster. "We are tired of
pilot projects that never go beyond the pilot stage. Now is
the time for demonstration projects that are cost effective
and can improve ICT skills in the African population." Kinyanjui
said "a partnership model is what African governments need,
as ICT is not cheap". "Collectively a lot can be achieved
by implementing NEPAD e-Schools. Therefore in partnership
with African governments we have developed the Information
Society Partnership for Africa's Development (ISPAD)." ISPAD
is made of 15 partners, including HP, Microsoft, Oracle, and
others, and aims to offer an end-to-end technology solution
to develop the NEPAD e-Schools, which will provide advanced
training to both learners and teachers.
Kinyanjui said that with 60 000 schools
participating in the e-Schools initiative throughout Africa,
NEPAD could not drive the process alone and needed African
governments to help. In support of skills development and
training locally, ISETT SETA CEO Oupa Mopaki said they are
happy with the development strategy in the latest ICT Empowerment
Sharter, as the document addressed their concerns. "The issues
regarding skills development and training are well reflected
in the ICT charter document," said Mopaki. "In terms of equity
representation, we hope that the new National Skills Development
Strategy (NSDS) will empower or meet equity targets, in terms
of numbers," said Mopaki. He however admitted that this will
create a big challenge for ICT companies to reflect and meet
this targets," Director of research and consulting at ForgeAhead,
Pierre Venter, said in his closing remarks: "What this conference
has taught us is that there is a need for private and public
sector partnerships, to compare notes and strategies, as well
as inter-governmental initiatives to meet and solve challenges
facing government's service delivery."
From ITWeb, South Africa by Itumeleng Mogaki,
18 April 2005
Kenya Says to Speed
Up Privatisation with New Law
Nairobi - The Kenya government
said on Monday it would speed up its long-delayed privatisation
programme, hoping to complete the sell of key state-owned
companies between 2005 and 2007. "Given the importance
of privatisation to growth, governance and increasing efficiency
and competitiveness of Kenya's economy, the government is
committed to initiating the reforms as soon as possible,"
the government said in a paper prepared for donors attending
a two-day meeting in Nairobi. "The government intends
to fast track some of the key public enterprises."
Kenya's privatisation programme has
been delayed after President Mwai Kibaki's government, which
took office in late 2002, said it would enact new laws to
ensure the process is transparent. A law, which is awaiting
final approval by parliament, proposes the establishment of
a Privatisation Commission, which will spearhead the process.
Kenya's privatisation programme under former President Daniel
arap Moi was dogged with accusations of corruption with influential
politicians and top government officials accused of selling
companies cheaply to their friends and cronies. The programme
which begun in 1992 had raised 10.4 billion Kenya shillings
by December 2002. Most of the companies privatised were small
with the government baulking at selling the large strategic
firms. This year, the government is preparing the fixed line
telephone company Telkom Kenya, the state-run electricity
generating company Kengen and the National Bank of Kenya for
From Reuters South Africa, South Africa,
11 April 2005
World Bank Gives $77m
for Railway Privatisation
The World Bank offered $77m (sh136b)
to prepare for the privatisation of Uganda and Kenya railways,
the International Railway Journal has revealed. The January-February
journal reported that $28m (sh50b) out of $77m, would cater
for staff layoffs in the two countries. "Another $6m
(sh10.4b) will finance technical assistance and cross-border
improvements. About $35m (sh61b) will cushion the railways
and the concessionaire against risks," the journal read.
Uganda Railways Corporation (URC) employees last week went
on strike after the corporation board declined to sign an
agreement consolidating their allowances with the basic salary.
During a meeting last week, privatisation state minister,
Prof. Peter Kasenene failed to reach a compromise with the
workers on terminal benefits. According to a tentative plan
by the Privatisation Unit, a new concessionaire will take
over URC management by December 31.
From AllAfrica.com, Africa, by Chris Kiwawulo
of New Vision, Kampala, 9 April 2005
Urso, Italy to Sieze
Privatization Opportunity in Libya
Rome - As the embargo is being dropped,
Italy is in the frontline of countries vying to get a share
of Libya's wealth. Which is why Deputy Minister of Productive
Activities in charge of foreign trade, Adolfo Urso, is currently
on an official visit to Tripoli along with representatives
from over 250 Italian medium and small-sized firms. Their
first stop is Tripoli's International Exhibition, followed
by a workshop arranged by Simest, a company dealing with foreign
trade. During his two days' stay, Mr Urso will meet with Libya's
PM Shukri Ghanem, Finance Minister Elkheir and Deputy Foreign
Minister Siala. "Libya is about to launch a major development
and privatization plan", said Mr Urso, "so the time
to invest is pretty much now. Italian firms have already invested
in Libya to a satisfying degree, turning our country into
Libya's main commercial partner". Figures show that last
year 39.1pct of Libya's exports were destined to the Italian
market, and 27.7pct of its imports came from Italy.
Mr Urso's visit has been saluted by
Finance Minister Elkheir, who is pushing for more joint venture
to be set up. In his address, Mr Elkheir pointed out that
there are already "more than 360 privatization projects
currently under way in Libya. More than 1/3rd of these are
destined to medium and small-sized firms operating in industry,
agriculture, fishing, tourism and telecommunications".
Mr Urso has pinpointed four key-sectors in which joint-ventures
can be developed, adding that Simest has extended its 66m
euro venture capital fund to Libya. "First of all, there's
telecommunications", he said. "The Libyan government
is currently seeking to expand its mobile phone network and
to renovate its landline phone connections. Italian IC firms
such as Marconi and Pirelli stand a remarkable chance of being
entrusted with these works. Electricity production and supply
is another crucial sector.
A number of Italian firms backed by
the EU are in touch with Libyan authorities hoping to be entrusted
with a project which aims at connecting the electricity network
in North Africa with that of European and non-European countries
in the Mediterranean area. A number of plants are expected
to be built in Libya, including an undersea cable connecting
the country with Italy. Shipbuilding is another opportunity,
with Italian firms traditionally providing Libya with ships.
Finally, air transport is another sector to watch out for".
Some 50 Italian firms are currently operating in Libya, mostly
in relation with oil production. Eni, in particular, has been
there since 1959, and is Italy's main investor in the country.
It is in control of 13pct of the yearly production of oil
in Libya. Eni's presence is set to increase after a number
of deals were signed providing for the creation of a 600-km-long
undersea gas pipeline transferring some 8 billion cubic metres
of gas per year from Libya to Sicily. Eni expects to blow
5.5 billion dollars on the project.
From Agenzia Giornalistica Italia, Italy,
6 April 2005
Privatization Earns
Morocco 7.55 billion Euros in 11 Years
Abdelaziz Talbi, the director of public
enterprises at the privatization and finance ministry, announced
in a press conference, held recently in Casablanca, that 66
Moroccan companies were fully or partly privatized between
1993 and 2005. Talbi explained that the move earned the Moroccan
government with an overall sum of MAD75.5 Billions (about
7.55 billion euros) and helped attract direct foreign investments
to Morocco. He also reported that these figures place Morocco
in the first spot, in this respect, among Arab countries and
in the third place among African states, based on 2004 terms.
Talbi added that these privatization transactions also positively
affected the local financial market, allowing growth of capital
at the Casablanca stock exchange, from MAD5 billion to MAD206
billion, between 1989 and 2004. Maghreb Arabe Presse reports
that among the privatized companies, mentioned by Talbi, were
Ittissalat Al Maghrib (Morocco Telecom) and Regie des Tabacs
(The tobacco distribution company).
From Al-Bawaba, Jordan, 3 April 2005
Private Sector Key to Growth, Poverty
Reduction: Asian Development Bank
New Delhi - Increased contribution
from the private sector is key to economic growth and poverty
reduction, Asian Development Bank (ADB) Vice-President Geert
van der Linden said Monday at a conference. The three-day
conference at the ADB headquarters in Manila has senior government
officials from Malaysia, Nepal, Sri Lanka, Thailand, and Vietnam
participating alongside academics from China, Indonesia, South
Korea, as well as a representative from the Federation of
Indian Chambers of Commerce and Industry (FICCI). "Throughout
Asia and the Pacific, private sector development and increasing
the contribution of the private sector to the economy is key
to economic growth and poverty reduction," said van der
Linden, according to an ADB statement.
"ADB's Asian Development Outlook,
released earlier this month, shows that gross domestic product
in developing Asia grew by well over seven percent last year,
the highest rate since the 1997 financial crisis. A major
driver behind the high rate of growth was a marked revival
of business investment." He, however, noted that many
studies had shown that private investors regarded high tax
rates, regulatory and administrative requirements, corruption,
and insufficient infrastructure, finance and skills as significant
investment barriers. "The Millennium Development Goals
and increasing globalisation pose significant challenges for
economies in Asia and the Pacific," Malaysian minister
Dato Mustapa said in his keynote speech. "The key challenge
is how to focus government-led efforts in creating a conducive
business environment."
The conference is looking at private
sector development strategies as processes and examining how
planning and executing them could be effective in accelerating
reform by increasing accountability and focusing on results.
It provides an opportunity for exchange of good practices,
challenges and lessons learned among countries from all over
the region. As an institution committed to poverty reduction,
ADB actively pursues private sector development. "Working
with both the public and private sector, ADB has developed
the expertise, and a range of instruments and approaches,
to assist governments in achieving an environment in which
the private sector can grow and prosper," van der Linden
said. ADB's involvement in both public and private sector
operations uniquely positions itself to leverage private funds
for large investment needs, and to promote partnerships between
private and public sector players. Helping to mitigate investment
risks through guarantee instruments, ADB is proposing to publish
a good practice reference guide for taking a strategic approach
to private sector development.
From Webindia123, India, 18 April 2005
Public-private Rules
to Change
The federal government will revise
rules governing public-private partnerships (PPPs) to make
it easier for business to participate in managing and designing
key national infrastructure projects. Parliamentary Secretary
for Finance and Administration Sharman Stone plans to abolish
limits on the sorts of activities for which the government
can enter into the partnerships. The procedures for assessing
benefits and risk would also be simplified, The Australian
Financial Review reported. The move would open up the federal
government's $17 billion procurement market to more direct
engagement from business in major contracts. "We have
got to establish value for money," Ms Stone said.
"What we are trying to do is level the playing field
so a PPPs can be considered without extra layers of bureaucracy."
Business groups identified lack of investment in infrastructure
as a major brake on growth and have called on the federal
government to use PPPs to overcome capacity constraints, the
newspaper reported.
From Daily Telegraph, Australia, 19 April
PM against Excessive
Privatisation of Health Care
Prime Minister Manmohan Singh on Wednesday
cautioned against "excessive privatisation" in the
health care sector saying it could be dangerous for the country
as it would lead to creation of two worlds. "With excessive
privatisation, we are in the danger of creating two worlds,
one which is getting high-class medical care and the other
not. We must never allow to happen this," he said while
delivering the convocation address at the Post Graduate Institute
of Medical Education and Research (PGIMER). Singh, however,
said he was not against the involvement of the private sector
in the health care.
The Prime Minister stressed the need
for further strengthening public institutions and said modern
medical research should reach to interiors of rural areas.
"A not so uncommon perception among the lay public is
that institutes running on public money end up being ivory
towers. To a limited extent, this perception is not correct,"
he said. Noting that nations do not become great only by virtue
of progress, he said, "nations become great only when
the large mass of people are allowed to eat at the table of
economic success." "That is possible only if we
have a population that is healthy, both physically and mentally.
We cannot aspire to become a super-power someday if our population
remains unhealthy," he said.
Expressing displeasure over "our
failure" to provide comprehensive health care to all
citizens, the Prime Minister said the government's mission
was to deliver healthcare at grassroots level. Suggesting
multi-sectoral approaches and multi-pronged attacks on the
health problems, he said, "in this era of super-specialisation
in all disciplines it was crucial that we should not get over-compartmentalised."
Singh said there was a need to devise "imaginative ways
and means" to tackle both the diseases of our past (TB
and malaria) and future (diabetes, hypertension and coronary
artery diseases). Asserting that it was essential for the
country to invest in the development of knowledge, Singh said
"the challenge before the country is to operate on the
frontiers of knowledge." "Our educational system
must be forward-looking and meet the need of the 21st century,"
he said adding, "we will be a shinning example in new
knowledge economy."
From Hindustan Times, India, by Press Trust
of India, 13 April 2005
Stir in Sri Lanka
Colombo - Trade unions
led by the JVP (People's Liberation Front) have been leading
an agitation against privatisation, vowing to bring the administration
down if it goes ahead with the sale of state ventures. President
Chandrika Kumaratunga has openly lashed out at the unions.
"Democracy does not mean the opinion of a handful," Ms Kumaratunga
said in a statement posted on her website since Saturday.
"My government in the future will go ahead with decisions
in the strictest meaning of democracy and that the government's
effort so far to obtain 100% consent of everyone has proved
unsuccessful." Diplomatic sources said that the government
was forced to carry out reforms in the energy sector in order
to win foreign funding for investment and keep tariffs down.
Ms Kumaratunga said electricity charges could be substantially
reduced if proposed restructuring took effect.
From Financial Express, India, 3 April
Is Privatization Panacea
for All Ills?
The underlying factor is the frustration
that user's experience given the awful quality of the services.
One feels helpless and unable to do anything about the same.
There is a general belief that privatization may be the answer.
This is the tragedy of the Indian intelligentsia that engages
in juvenile debates about the same. A brief history is required
and it would become amply clear that privatization is another
name for imperialism and how harmful it is for the country.
It all started back around 15th century when the Europeans
wanted a share of the wealth that passed through Africa and
Asia. Since Spaniards had a formidable navy, they were the
first ones to "explore the world". It was Gold and Glory that
got them to conquer the foreign lands. They destroyed the
local economies and gave a second-class status to the natives.
It is futile to prolong the narrative, which is out of scope
here. Fast forward to British rule in India and contemporary
historians describe it as the dark period in the history of
nation that was described as the "Golden kingdom".
After the World War II, there was a
realignment of the former colonies under their rule. It was
not that Indians had so far discovered the "moral strength"
to overcome British. The fact was that there was widespread
mutiny in Indian army; hence, the British were forced to leave.
As I mentioned, they set up institutions like World Bank and
International Monetary Fund (IMF), which remains a front for
these neoliberals. With this brief history in mind, it is
important enough to discuss the various factors behind the
reason for "globalization". It has brought in hordes of Multinational
Corporations (MNC), which seek to invest in the "foreign countries".
These MNC remain a front for these Governments who dictate
the foreign policy by proxy. Since they control the media
on a widespread scale, it is obvious that they carry out their
propaganda through the same. Therefore, these debates that
globalization is bringing about "Social and cultural revolution"
is all crap.
Fact is the South Asian meltdown amply
proved the fragility of the World Bank and IMF dictated policies.
Why this didn't happen in India at that time? This was because
India was isolated far more than it is today. In other words,
institutions like World Trade Organization remain another
front for extension of their hegemony. Routinely we are lectured
on the benefits of increased FDI in the India industrial sector.
To propagate these myths, industry has formed an association,
which remains pro government irrespective of the government
at the centre. I mean, haven't you noticed after the budget
presentation as to how these heads keep on gushing about the
"dynamic budget"? The reality on the ground is vastly different
from the statistics. Inflation may be around 5% but then,
there are different ways to calculate the same. Irrespective
of the same, anyone would testify that prices are increasing.
Is this sufficient enough for our country?
I have my doubts and apprehensions because one needs to learn
from History. If we fail in that, there is no unfortunate
nation. Without going in further details, the hike in the
Foreign Direct Investment is an ill planned step, which is
retrogressive in nature. It is like giving away the family
silver in times of happiness. The primary complaints have
been with the quality of services. No one in this country
wants to complain for shoddy services. BSNL and MTNL have
got away with almost everything when they were in a monopoly.
Everything changed AFTER they were forced to show results.
The customer care centers sprung up in every city. The roll
out of the mobile services. I mean look at the amazing progress
that they have made. Yet, it is difficult to shake of the
lethargy of 50+ years, which has percolated down to their
The fact is that I strongly favor the
control of our assets in our own hands. I do not need anyone
with dubious record lecturing me to open up my resources in
the name of increased profits. How the money is repatriated
out of this country is well known. Would these people pay
at par with the developed countries? There have been reports
of discrimination on the same. What is the argument that increased
privatization leads to better quality of services? For example,
Sify is a NASDAQ listed company with wide ranging interests.
Yet, there are confirmed Sify haters on line given the increased
number of complaints against them. It is a different matter
altogether that they refuse to heed to complaints or act on
them to improve on the same.
Isn't that surprising that MTNL's CDMA
services got thumbs up from satisfied customers? What happened
to the biggies? Arguably, the quality survey may be flawed
in its assumptions, yet it is a pointer towards the fact that
there is a lot that needs to be done. This is a worrying trend;
all the talk about BSNL and MTNL merger. Make it slow step,
as the governments are loath to do. Increasingly there is
a talk in the media about synergisms between these two companies
for "operational reasons". Whatever the heck they do, it is
clearly a step closer towards integrating both the companies
and finally selling them off en bloc. If private sectors is
so good and are like angels with wings, why doesn't VSNL deal
with Airtel to open up their local loop for competition? Why
is that BSNL is being pointed at? Let Airtel take the lead
and invite competition on its own networks. I would appreciate
it more then. Yet, all in the name of 128 kbps or less that
is marketed as "broadband".
In the foregoing account, I believe
that national security remains paramount. Any debate needs
to be structured and based on facts. It is easy to dismiss
the idea that privatization would in any way affect India.
Yet, I strongly feel that those people need to woken up from
their slumber. The nation's assets should remain in the hands
of Indians. I had earlier argued that privatization has only
benefited the foreign companies. If they wanted, these companies
could have invested in building up Research and Development
in India. It has not happened and one of the biggest tragedies
of Indian Telecom. The fact remains that it points towards
the myopic ideas of the decision-making bodies in the governance
who have not weighed in national interests before formulating
those policies.
From TechWhack, India, 6 April 2005
PPPs Not Yet A Success, Says Law
The Government has more to do before
public private partnerships can be judged a success, according
to a leading law firm. Timothy Bouchier-Hayes, a partner in
McCann FitzGerald said that the flow of PPP deals had not
yet met expectations. "There have been many successful
PPPs such as the local housing projects in Dublin and in road
developments, but there has been no new education PPP for
three years and no progress in construction of community nursing
units for two years," he said. Bouchier-Hayes, speaking
today at the Irish Public Private Partnerships Policy Forum,
also said that while several important Acts had been passed
to help the progress of PPPs, the Critical Infrastructure
Bill had yet to be enacted. "Enactment of this Bill is
vitally important to allow speedy planning and development
of all infrastructure projects - not just PPPs."
On the positive side, he said that
the success of many of the PPPs had proven critics of the
risk transfer model wrong. "It had been anticipated by
some that private sector greed and public sector intransigence
would scupper PPPs. The reality though is that there has been
willingness by the private and public sectors to develop model
contracts that have delivered projects of benefit to both
parties," he said. Bouchier-Hayes said the flexibility
promised in the recently introduced new EU procurement rules
would not be fulfilled because it would add to the cost for
companies as they have to invest greater resources in the
early stage of the process at a time when their involvement
is not guaranteed.
From Business World, Ireland, 13 April 2005
Partnerships between
State, Private Sector
Bill to be tabled in the next few days
- Less than a month after Public Works Minister Giorgos Souflias
announced plans to effectively privatize Greece's national
highway network, the Economy Ministry has drafted a bill on
future partnerships between the public sector and private
investors to build and maintain major public works. The bill,
the text of which was obtained by Kathimerini, is expected
to be made public and tabled in Parliament within the next
few days. It allows for public-private partnerships mainly
in the field of road building, but also in other infrastructure
works, including airports, harbors, hospitals and schools.
Most of the projects are expected to be within the budget
range of 150-200 million euros, while more expensive works
will be arranged through special contracts that will require
ratification by Parliament. The private investors will be
expected to undertake all or most of the risk in every project,
while the state will be obliged to fast-track procedures for
issuing the necessary construction permits. This process will
take a maximum of 60 days. All environmental impact studies
- a delicate issue on whose absence many major public works
have been successfully challenged in court - will be completed
before the concession is assigned.
The government hopes through the new
system of partnerships to achieve greater speed and quality
in the construction of public works, and at the same time
to set aside funds that can be used for politically sensitive
sectors, such as health and education. A similar drive had
been initiated by the previous, Socialist government last
year, with the then economy minister Nikos Christodoulakis
tabling the relevant draft legislation in Parliament in February
2004, shortly before the national elections, which PASOK lost.
However, the bill was never pushed through.
The current bill, drawn up by Economy
Minister Giorgos Alogoskoufis, enjoys the backing of Souflias,
who, on March 10, announced an ambitious plan to expand the
country's highway network by 50 percent through partnerships
with the private sector. According to Souflias, the self-financing
system would mean the state contributing only 2 million euros
- half of which will derive from EU funding - to the estimated
7-billion-euro budget of the works, which would involve over
750 kilometers of new highways being built over the next five
years. The deal will also see Greece's entire standing highway
network being handed over for 30 years to private contractors,
who will be responsible for road maintenance while receiving
all tolls paid by motorists.
From Kathimerini, Greece, 4 April 2005
Time for A Debate on
In an attempt to reduce Greece's fiscal
deficit, the Karamanlis government has embarked on a new wave
of privatisations that could raise as much as 1.6 billion
euros. The government plans to sell part of its shareholding
in the Post Savings Bank, in Olympic Airways, Eleftherios
Venizelos Airport and the lotto company, OPAP. In order to
minimise political opposition and cost, the government has
been selling off state shares in instalments. In the case
of OPAP, it has already sold a part of its shareholding and
now plans to sell another package of state-owned shares to
the public. This, according to the Greek Finance Minister,
could reduce the government's shareholding to below 50 per
cent. In the case of the Postal Bank, the government has decided
to list it on the Athens Stock Exchange, putting for sale
35 per cent of the company. Similar plans exist for the new
airport, with the government set to sell off a large chunk
of its shareholding, currently at 55 per cent.
In Cyprus, in stark contrast, the selling
off of state enterprises remains anathema, despite a pressing
need to reduce the fiscal deficit as well as the public debt.
This government is not even willing to consider selling off
a part of its shareholding in state enterprises. The previous
government had toyed with the idea, but met with the opposition
of all the political parties. In the end, all that it sold
off was a relatively small package of shares in Cyprus Airways,
because the airline was listed on the Cyprus Stock Exchange
and the government was obliged to reduce its holding.
Now we are back to square one. With
the communist party AKEL - a strong supporter of state ownership
- in government, there will be no privatisations, not even
on a small scale. President Papadopoulos has also vowed to
keep big public enterprises under state ownership, ignoring
the benefits for the economy of even a restricted privatisation
plan. The sad thing is that there is not even debate on the
issue, the government fully adopting AKEL's dogmatic position
that the sale of public assets is intrinsically bad. And the
reason it is bad (though nobody will admit this) is that it
would limit the powers of the parties to interfere in these
organisations, as they had been doing, with disastrous effect,
in Cyprus Airways.
Strangely, the Commerce and Industry
Ministry is currently working on establishing a Cyprus Investment
Promotion Agency, in the hope of attracting foreign capital.
It is doubtful such an agency will be successful because there
are very few incentives for foreign investors in Cyprus -
labour costs are high and the domestic market is tiny. Now
if the government was prepared to sell off a part of CyTA,
the EAC, marinas or the airports it would attract foreign
investment, because investment in such organisations offer
real opportunities for a high return. But first, the government
must get over its hang-up about keeping everything under state
From Cyprus Mail, Cyprus, 5 April 2005
Will Russia Announce
a Privatization Amnesty?
Moscow - The government has prepared
amendments to the Civil Code reducing the statute of limitations
for privatization deals from ten to three years, Economic
Development and Trade Minister German Gref said. "If
not in the spring session [of the State Duma], then in the
autumn session, the bill will be surely adopted," said
Oganes Oganyan, chairman of the Federation Council committee
for economic policy. Many Russian businesspeople expect the
adoption of these amendments to signify a virtual privatization
amnesty in the country. However, this is not quite so, but
in any case the authorities have prepared a whole action plan
rather than just this amendment. President Putin raised the
idea of reducing the statute of limitations at a recent meeting
with the country's top businesspeople. During the talk, Putin
clearly demonstrated his desire to support Russian business
and after warm words, some businessmen decided that the President
was ready to announce a privatization amnesty.
Privatization in Russia was carried
out in two stages. During the second stage, top state-run
enterprises were sold at the loans-for-shares auctions, which
generated the largest number of claims. In fact, at these
auctions entrepreneurs acquired the country's key enterprises
for a song, and, moreover, were given the possibility to paying
back the state only in subsequent years. This procedure was
extremely opaque and deeply unpleasant for most Russians.
Therefore, the issue of a possible review of the results of
privatization has been a constant issue ever since: for example,
in December last year, the Audit Chamber of Russia placed
on its Website an analytical report, "Analysis of the
Processes of State Property Privatization in Russia, 1993-2003."
The auditors investigated the circumstances of privatization
and gave the following diagnosis: "the flawed legislative
base, under-developed privatization institutions and procedures,
and the lack of external control created possibilities for
numerous violations in the process of particular privatizations."
The document also included a long list of enterprises under
Hardly surprisingly, after reading
the Audit Chamber's heavyweight report, major Russian businesses
got nervous. The auditors intended to submit their report
to State Duma deputies for consideration, as a result of which
a decision could be taken on reviewing the results of privatization
as a whole, while participants in many transactions of the
time could draw specific conclusions for themselves. After
the Yukos case, this threat took on real proportions for businesspeople.
However, it seems unlikely that the authorities indeed intended
to take such radical measures. Possibly, at that time, the
country was more in need of a political assessment of privatization.
In the final account, businesspeople are not the only; ordinary
people need to know that the authorities have the situation
under control and are not indifferent to how, in whose favor
and at whose expense the country's property was re-distributed.
Moreover, according to public surveys in December 2004, most
Russians consider it necessary to review the results of the
country's privatization, although they do not hope to gain
anything from it. For this reason, from the standpoint of
domestic policy, a privatization amnesty is hardly possible,
because this decision would not be fair to the feelings of
more than half of the country's population.
From the legal standpoint, the President's
proposal does not suggest that he promised any amnesty. Charges
such as abuse of office, mercenary interest, collusive crime
and fraud can still be brought under the Criminal Code of
Russia. However, many episodes from the privatization period
fall into these categories. Parliamentarians are now clarifying
the situation. Oganyan stressed that the new bill would not
be retroactive and would not apply tothe privatization deals,
under which claims are being considered today. He also referred
to the Audit Chamber report: "I believe this report can
be taken as the basis to define the list of enterprises whose
privatization the state can challenge before the law on reducing
the statute of limitations from ten to three years comes into
effect." But it would also be reckless to completely
ignore the feelings and problems of entrepreneurs, because
the country's economy depends on their sentiments. The Yukos
saga has shown that tough measures, even if they are fair,
harm the country's business and investment climate. The fall
of economic growth rates in Russia last year is a real indication
of that.
The authorities are obviously looking
for ways to remedy the situation and an entire series of measures
might be taken. Putin's recent meeting with entrepreneurs
fits into such a program. The authorities' latest initiatives
in this area include the government's new draft law "On
Competition Protection," which, according to Putin, "is
designed to fight the diktat of monopolies and help open up
markets, including regional ones, to many thousands of new
Russian entrepreneurs." Another major project is a review
of tax control and administration procedures. The Finance
Ministry has already agreed that tax administration has not
always been up to the mark recently. As Deputy Finance Minister
Sergei Shatalov said, "We have agreed some proposals
with business to protect taxpayers." There are plans
to introduce the possibility for taxpayers to discuss the
results of tax audits with independent experts. A special
approach will apply to tax authorities' large claims (over
$100 million). For this purpose, special structures will be
set up inside tax bodies to include highly qualified specialists
who will re-examine tax audit certificates. Tax claims will
be presented only when the specialists have approved these
Moreover, the presidential administration
has prepared a bill stipulating the possibility for tax officials
to write off penalties extra-judicially. According to some
sources, it is also possible that soon the liberalization
of legislation on the placement of Russian securities on foreign
stock exchanges may top the agenda. The Central Bank is currently
discussing the possibility of issuing permissions for the
export of capital to be spent on working in privatization
programs abroad. Another area is to simplify the procedure
of issuing licenses to start-up enterprises. The government
is already working on this issue.
From RIA Novosti, Russia, by Yana Yurova,
13 April 2005
Putin Promises Further
Liberalization, Privatization of 8,000 Enterprises
Speaking at the opening ceremony of
the Hanover trade fair on Sunday, April 10, Russia's President
Vladimir Putin promised to further liberalize the Russian
economy and to privatize 8,000 state enterprises and 3,500
joint stock companies. Putin said that by 2007 Russia will
be ready for full foreign exchange liberalization and for
a lifting of all limits on financial operations. "These decisions
are already made, everything that was planned has been put
into operation and functioning," the Russian president said,
adding that Russia plans to join the World Trade Organization
on standard terms.
The state will transfer to private
hands 3,500 joint stock companies and 8,000 state unitary
enterprises, Putin said. He also promised to continue restructuring
of natural monopolies (such as Gazprom and power grid monopoly
Unified Energy System) and the banking sector, paying special
attention to the competitiveness of Russian credit organizations.
The Russian president stressed the intention of the country's
government to create as comfortable conditions as possible
for the development of small and medium-sized business. Putin
said that Russia's private sector should expand by creating
a competitive environment in education, the social sphere
and in the housing and utilities sector. The head of the Russian
state promised to cut the number of administrative barriers,
to order and simplify tax procedures and to create the necessary
conditions for both domestic and foreign private investments.
Putin noted that one of the most important levers of modernizing
Russia's economy is active participation in international
and regional integration processes.
From MOSNEWS, Russia, 11 April 2005
Lack of Will Slows
Down Eastern Europe's Privatization
Advertising The fragile state of governments
in new EU member states is emerging as a major obstacle to
the region finishing off the privatization process launched
following the fall of communism 16 years ago. Despite several
big sell-offs in sectors such as airlines, finance and utilities
that are still to be completed, the current political weakness
of governments - in particular in the Czech Republic, Poland
and Hungary - combined with the widespread unpopularity of
privatization, appears to have pushed the issue onto the back
burner in many nations. "Political weakness is a a major
hindrance to privatization," said Lars Christensen, emerging
markets analyst with Danske Bank in Copenhagen. At the same
time, signs of softer equity markets have also helped to dampen
the enthusiasm among governments for pressing on with privatizations
when the return might be lower than what they had hoped for.
Last week Poland called off holding
a tender for an adviser for the privatization of key insurer
PZU, raising doubts as to when Warsaw will proceed with what
was seen as one of the biggest sell-offs this year. Poland
is already in the grip of moves towards a national election,
which could mean that highly-charged political issues such
as restructuring the country's coal mining sector, along with
its huge financial burden of liabilities and debt, are now
likely to handed over to the country's new government. This
leaves the Czech government's sale last week of its 51 percent
stake in Cesky Telekom as likely to be one of the key sell-offs
for the year.
NO FORWARD MOVEMENT - "There
are some sell-offs but privatization is not really going forward,"
Christensen said. "There is no real popular support for
privatization." Even then Prague's sale of the holding
to Spain's Telefonica for US$3.59 billion was held as Prime
Minister Stanislav Gross' ruling coalition faced collapse.
Further underscoring the political uncertainty facing the
nation, Gross's minority left-center government went on to
survive a parliamentary vote of no-confidence only after several
deputies including the bloc of communist representatives abstained
from voting. "The political cycle has been by no means
helpful," said Michael Dybula, emerging markets strategist
with BNP Paribas in Warsaw. However, political pressures are
not the only forces acting against governments moving ahead
with privatizations. Last week Hungary's state privatization
body announced that it had again failed in sell off the nation's
flag carrier Malev because, according to Hungarian press reports,
of the reluctance of bidders to takeover the loss-making airline's
FEW CANDIDATES - Analysts
point out however that a decade after the round of sell-offs
across Central and Eastern Europe (CEE) as governments embarked
on dismantling their nations' command economies, the number
of candidates that can be lined up for privatization has shrunk
considerably, with the state share of the economy having dropped
significantly in recent years. Moreover, the scale of the
privatization which took place across the region in the early
years following the fall of communism means that the companies
now on the sell-off list are often in highly politically sensitive
areas. "It is harder to privatize now than it was five
or 10 years ago," Christensen said. This is despite the
pressure on many CEE governments to knock their public finances
into shape in the hope of merging their currencies with the
euro, possibly by the turn of the decade. Selling off the
remaining utilities presents more risk of a political backlash
for governments than the privatizations that have already
taken place in sectors such as telecoms, banking and manufacturing.
UTILITY SECTOR - "Everybody
is paying an electricity bill so it is a sensitive question,"
Dybula said. Selling off utilities also raises complicated
issues such as how a privatized utilities sector should be
regulated. But with the numbers of mergers and acquisitions
across the CEE increasing sharply, the competitive pressures
unleashed by nations such as Poland, the Czech Republic, Slovakia
and Hungary signing up for EU membership last year may have
resulted in companies already starting to move into a new
phase of consolidation.
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From Taipei Times, Taiwan, 8 April 2005
Russia's "Privatization
Amnesty" Law Is Ready - Minister
Russian authorities have prepared amendments
to current legislation promised by President Putin during
his recent meeting with businessmen. The amendments will put
privatization deals made more than three years ago beyond
the reach of criminal inquiry, Economy Minister German Gref
said on Wednesday, April 6. "After negative trends emerged
on the market last year ... this step had to be taken, of
course," said Gref, who was meeting with U.S. investors at
a conference organized by the U.S. Chamber of Commerce in
Russia. "All the necessary changes (to legislation) have been
prepared and will soon be submitted to the State Duma for
approval." The minister was quoted by Reuters.
After passing through the Duma, the
new law has to be approved by the Federation Council and signed
into law by Putin. It will then come into force after official
publication in the official state newspaper, Rossiiskaya Gazeta
(Russian Newspaper). Business confidence in Russia has been
hammered by the partial re-nationalization of Yukos Oil Company
and the trial of its ex-CEO Mikhail Khodorkovsky on fraud
and tax evasion charges linked to the 1994 privatization of
a fertilizer company. A number of tax claims involving other
Russian companies that followed the Yukos case have also scared
investors and hampered economic growth.
From MOSNEWS, Russia, 7 April 2005
Disagreements Emerge
over Land Privatization
Government decides to refrain from
looking into which leases were obtained illegally - Parliament
is currently considering a draft law on the privatization
of agricultural land, which the government says will help
the development of the land market and will bring great economic
profit to the country. Parliamentarians are divided over the
draft, however, some MPs arguing that it is not in the interests
of the country and will have a negative impact on local farmers
who do not have enough money to buy land. The land privatization
process began 10 years ago, since when 55 percent of agricultural
land has been sold to private owners. Now the government is
planning to privatize 465,000 hectares of land currently being
According to the draft the privatization
of agricultural land will take three forms. It is expected
that about 300 thousand hectares will be sold directly to
the farmers currently leasing it. Around 165,000 hectares
will be sold through a closed auction in which only the local
population will have right to participate. Thirdly, any land
remaining unsold will be privatized at open auctions in which
anybody can participate. Today there are around 40,000 land
leasers in the country, of whom the majority - 30-35,000 -
work only small plots of land of 1-10 hectares. The best agricultural
land is farmed generally by those who had good relations with
the Shevardnadze administration or some other privileges -
often former governors or majoritarian MPs and their relatives.
The idea of redistributing land in
a fair and just way became prevalent immediately after the
Rose Revolution but Khvalindeli Dghe reports that today this
idea has been rejected and the government has decided not
to look through leasing agreements to find out illegal leasers
who would then be investigated by law enforcement agents.
Only if individual Georgians take claims against what they
believe are illegal leasers to court, and their accusations
are upheld, will the land be divided and sold at auction.
Land leasers will be able to buy the land they rent for ten
times the annual rent: the cost of buying the land must be
paid off over nine years. Profitable agricultural land is
normally leased for GEL 50-60 per hectare, and State Minister
for Economic Reform Kakha Bendukidze says that according to
his preliminary calculations, the land privatization process
should bring about GEL 40 million over the next nine years,
as reported by Khvalindeli Dghe.
MPs opposed to the draft law, however,
state that according to the regulations it lays out, foreigners
will be able to buy a large part of the land, and that the
majority of Georgian peasants will not be able to buy the
lands they are currently leasing. This will, they warn, lead
to inevitable unrest in the countryside, reports Rezonansi.
One issue that has caused great debate is the regulations
regarding agricultural land near to Georgia's borders. Khvalindeli
Dge reports that the border line is defined by 500 meters
and the border zone by five kilometers. The government thinks
that it is possible to privatize about 50-60,000 hectares
of land within the five kilometers border zone, but critics
of the plan say this will make it difficult to defend the
country's border. Some government members have countered this
argument by saying that private landowners will provide for
better defense of their land.
From Messenger.ge, Georgia, by M. Alkhazashvili,
12 April 2005
Yushchenko Wants Analysis
of Previous Deals
President Viktor Yushchenko on Monday
ordered the new head of Ukraine's privatization agency to
analyze all past deals, complaining that the previous government
awarded enterprises based on political connections. "Everything
that could have been handed out, (agency managers) handed
out like Catherine the Great doled out land to her lovers,"
Yushchenko said. He named Valentyna Semenyuk, a Socialist,
to head the State Property Fund, and ordered her to carry
out an urgent analysis of its work over the past years. He
argued that under the cover of privatization "objects
of strategic importance were simply distributed" without
any significant gains to the state.
Yushchenko again cited the privatization
of Ukraine's biggest steel mill as an example of the corruption
that he says flourished under former President Leonid Kuchma.
The steel mill was bought last year by Investment Metallurgical
Union, a consortium largely owned by Kuchma's son-in-law,
Viktor Pinchuk, and tycoon Rinat Akhmetov, for about US$800
million (euro624 million), despite reportedly higher offers
from bidders from the United States and Russia. ushchenko's
government has said that several dozen other shady privatization
deals are being investigated and could be overturned.
From BusinessWeek, 18 April 2005
Privatisation Is Way
Forward, Says Walsh
Former Aer Lingus boss Willie Walsh
has no doubts about the need for private ownership as the
way forward for the Irish economy. Having attempted to buy
the national airline before he quit as chief executive, Mr
Walsh's support for the sale of Aer Lingus yesterday came
as no surprise. But he was not alone in his stance at the
Irish Management Institute conference, that addressed the
issue of privatisation, state ownership and regulation of
markets, as part of its two-day conference called Crouching
Tiger, Hidden Opportunity. Communications Minister, Martin
Cullen, took the conference by surprise when he called for
the sale of up to 90% of the national airline. However, it
is understood that the cabinet are in favour of selling off
a 51% stake of Aer Lingus into private hands.
The five speakers were virtually unanimous
in their view that the State ownership should be kept to a
minimum. Brendan Tuohy, secretary general at the Department
of Communications, side-stepped the question without totally
taking the counter view. Given the two issues involved, Mr
Tuohy suggested market liberalisation with the State sector
also involved. Noting the success of Ireland's deregulation
policies, he pointed out that the telecoms market was liberated
five years ahead of EU requirements. In that context, Mr Tuohy
suggested that distribution networks such as the ESB transmission
system could stay under State control.
Mr Tuohy made it clear the State was
not under any pressure to sell, but he recognised there was
a "dominance issue" in both the case of the ESB and Bord Gais.
In that context the possibility of the State buying back Eircom's
infrastructure in order to open up the market faster for broadband
and other services was raised in the question and answer session.
Eircom chief executive Dr Phil Nolan, who totally backed the
privatisation position, said that option was there at any
time because the company was publicly-quoted. John Fingleton,
chairman of the Irish Competition Authority, was adamant on
the question of over-regulation. "Get the State off our backs,"
he said. Mr Fingleton also disagreed with Mr Cullen's view
that the second terminal should be controlled by the Dublin
Aviation Authority. "A competitive environment will deliver
the goods," he said.
From IrishExaminer.com (subscription), Ireland,
by Brian O'Mahony, 21 April 2005
PM: Georgia Welcomes
Russian Investments
Georgian Prime Minister Zurab Nogaideli
said, in an interview with the news agency Interfax on April
25, that Georgia will take no steps that would restrict the
participation of Russian capital in the privatization or investment
processes underway in Georgia. "On the contrary, we will welcome
Russian companies to the Georgian market," Nogaideli said.
He said that the boosting of Russian capital in Georgia can
"facilitate the settlement of bilateral problems." The Georgian
Prime Minister also stressed that Russian companies are already
participating, and will further participate, in the privatization
process. "So, I think, economic relations with Russia are
developing positively," he added. Zurab Nogaideli also added
that trade turnover between Georgia and Russia has increased
by 90% since 2003 and has reached an annual mark of USD 362
million. "Russia is Georgia's largest trade partner," he added.
From Civil Georgia, Georgia, 26 April 2005
U.N. Sets Rules for
Kosovo Privatization
The United Nations mission in Kosovo
set new rules Friday for the privatization process, pledging
a faster sell-off of the province's socially owned companies.
Soren Jessen-Petersen, the province's chief U.N. administrator,
said the move would speed up privatization and secure employment
opportunities in the economically troubled Kosovo, where unemployment
runs at over 50 percent. In the past, the Kosovo Trust Agency,
a U.N.-run office charged with selling hundreds of enterprises
- a term used for enterprises owned by the workers and managers
under the system set up during communist-era Yugoslavia -
was tasked to determine the owner and the status of each enterprise.
That was a lengthy and complicated process that brought privatization
nearly to a halt.
With the new rules, the agency can
make clear and final ownership determinations after a sale
of assets. "Now with this change ... we no longer have
to establish ownership before the sale of the socially owned
enterprise," Jessen-Petersen said. A special court will
continue to adjudicate in ownership disputes. However, it
will no longer prevent the sell-off of the companies. Privatization
is among the most sensitive issues in Kosovo, which was put
under U.N. protection in June 1999 following a NATO air war
that pushed Serb forces out of the province after they cracked
down on ethnic Albanians seeking independence. The
process of privatization is complex in part because it is
unclear whether Kosovo will become independent or remain part
of Serbia-Montenegro, the successor state of Yugoslavia. Serbia's
authorities have fiercely opposed the process of privatization.
Many of the companies are overwhelmingly inefficient and often
dilapidated after years of neglect and ethnic conflict in
the province.
From BusinessWeek, 22 April 2005
Ukraine Court Reverses
Own Ruling on Illegal Privatization of Steel Giant
On Thursday, April 21, a regional Kiev
court upheld last year's privatization of Ukraine's largest
steel producer Krivorozhstal. The court in effect reversed
its own ruling made on Feb. 17 which considered the privatization
illegal. The latest court ruling was made after a claim from
the Investment-Metallurgical Union consortium headed by Donetsk-based
businessmen Rinat Akhmetov and Viktor Pinchuk, the son-in-law
of Ukraine's former President Leonid Kuchma. Krivorozhstal
was sold at a privatization auction to Investment-Metallurgical
Union for $800 million, despite the fact that other bidders,
such as Russia's Severstal and U.S. Steel, offered much larger
sums. It was believed that the consortium was allowed to win
the auction because of its close connection with Kuchma.
After President Viktor Yushchenko came
to power he called the privatization of Krivorozhstal a theft
and promised to return the enterprise to the state for further
re-privatization. A group of lawyers contested the sale in
a Kiev court, which made a ruling on Feb. 17 to halt the privatization.
Now that ruling has been reversed and the fate of Ukraine's
largest industrial enterprise is hovering with no clear understanding
of what will happen next.
From MOSNEWS, Russia, 22 April 2005
"Iran's Privatization Organization
Claims Early Success"
London - State Privatization Organization
has managed to offer 100% shares of state companies listed
in the privatization project for the year to March 2005, said
deputy head of the organization on Monday. Seyyed Mehdi Haqdaei
told ISNA that the achievement come at a time when the stock
market was facing serious upheavals. "As the year drew to
a close, the situation of the stock market deteriorated, but
the organization managed to fulfill its commitments," he said,
adding that once the final decision about Article 44 of the
Constitution is announced, the organization would be able
to cede rls 50-60 trln (nearly $5.6-6.8 bln) worth of shares
in the next 11 months. He said the Privatization Organization
has to deposit rls15 trln (nearly $1.7 bln) with the State
Treasury from sale of shares until March 2006.
Experts believe that offering shares
on the stock market is one thing and having them sold to the
public is another.
Although the Privatization Organization has managed to offer
state companies' shares, it has failed to sell them due to
various reasons, including unstable prices and bad market
conditions. Experts say frequent fluctuations in share prices
of state companies are signs of an ailing economy, stressing
the need to exercise extra care in the capital market. "This
is a very young capital market which has to be taken care
of more effectively to prevent it from reacting so strongly
to every minor development," said Deputy Minister of Economic
Affairs and Finance Heydar Mostakhdemin-Hosseini, who heads
the Board of Directors of Iran's Stock Exchange, last week.
A veteran Tehran Stock Exchange (TSE) broker said earlier
that the stock market would experience relative stability
in the year to March 2006 provided political issues do not
have a negative impact on the market. Nassrollah Barzani told
ISNA that foreign threats and results of the ongoing talks
between Iran and the EU big trio would largely influence the
stock market, expressing hope that the impact would be in
favor of indices and not against them.
From IranMania News, Iran, 12 April 2005
Iran's Central Bank's
Privatization Opposed
London - A lawmaker said
that Central Bank of Iran (CBI) should not be subject to privatization
since it is in charge of formulating macroeconomic policies,
criticizing calls for the CBI independence. Nasser Ashouri,
a member of the Parliament's Economic Commission, told ISNA
that the CBI could not be allowed to act independently of
the government, stressing that the idea is naive. "We should
not rush into such important decisions," he said, adding,
however, that the initiative needs to be studied further.
The lawmaker said poor expert studies would entail the destructive
consequence of such decisions. "It is possible to privatize
all the banks except the CBI," he said, adding that the CBI
has to remain under state control, if it were to be held responsible
for its performance.
Banking experts say the independence
of Central Bank of Iran could help bring about economic stability
and preserve the value of the national currency. Ahmad Mojtahed,
who heads the Banking and Monetary Research Institute, said
last week that the initiative seeks mainly to help the CBI
overcome pressures by various state organizations over the
next five years, when the key fourth five-year development
plan is in force. The CBI governor would only be held answerable
to the chief executive as per a recent government decision
which is part of preparations to make CBI an independent entity.
Minister of Economic Affairs and Finance Safdar Hosseini said
earlier steps are underway to turn Central Bank of Iran into
an independent entity.
From IranMania News, Iran, 11 April 2005
Iran's 'Privatization
Bill' Ready Next Month
London - The government will complete
its much-publicized Privatization Bill for submission to the
Seventh Parliament by mid-May, said deputy minister of economic
affairs and finance on Saturday. Heydar Mostakhdemin Hosseini
told ISNA that the bill deals chiefly with issues related
to the privatization goals and relevant responsibilities delegated
to state organizations involved in the initiative. "The bill
also addresses other key issues such as overseeing procedures
and economic rules that have to follow privatization," he
said, adding that the 29-articled bill aims at boosting the
share of private and cooperative sectors in economic activities.
The official said the Privatization Bill, once it becomes
a law, could help improve the productivity rate at both the
levels of human and financial resources. "This bill gives
high priority to competition and economic growth," he said,
stressing that the bill has drawn up mechanisms on how to
reduce the financial commitments of the government.
The Privatization Bill would be the
Khatami administration's first serious economic initiative
in the year to March 2006. This is while the Parliament already
has the customs affairs and stock market bills at hand for
ratification. The Parliament failed to look into the customs
affairs and stock market bills in the last Iranian year due
merely to its prolonged study of the budget bill. The Khatami
administration would reportedly spend the last few months
of its second and last term trying only to pave the way for
the incoming government to implement the key fourth five-year
development plan (2005-2010).
From IranMania News, Iran, 10 April 2005
Neutralization, Not
The government, under
the baton of the finance minister, is now involved in a frenzy
of privatization. The entire world is one big business, and
the humanity of every person is defined according to one of
the three sectors to which he belongs: 1. sellers; 2. buyers;
and 3. those who lack buying power. The government is slowly
but surely privatizing almost everything that moves or doesn't
move in the Israeli economy - medicine, the media, seaports
and airports, factories, shipyards, welfare services, airlines,
highways, parks, beaches. All this in the name of efficiency,
proper economics, rehabilitating the economy, market forces,
the global village and the rosy future awaiting us when we
are all privatized into very small units.
The reasons that serve to justify the policy of unbridled
privatization also serve the government when justifying an
opposite policy when it comes to research-oriented universities.
According to the tune being heard from the finance minister,
the minister of education and senior government officials,
that same policy of "proper economics" and the market
forces also require an aggressive process of nationalizing
the universities, rather than privatizing them. In the name
of "efficiency" and "rehabilitation,"
the government is now attempting to dictate from above the
manner of administration and the academic content of these
institutions. Although these days we are finally sensing some
public resistance to the higher education policy of the State
of Israel, as opposed to what some of the leaders of the struggle
think or declare, the government has no intention at all of
privatizing the universities, and the same may be true of
the academic colleges. A private research-oriented institution
worthy of its name is intolerable in the political philosophy
prevailing today in Israel.
A number of cabinet members and politicians
understand something that not all the members of the academic
community understand: In this country's present political
situation, almost the only centers where there is independent
political and economic thought and a culture of skepticism,
are the universities. True spiritual freedom is liable to
be seen by the "rulers" as a threat to their continued
rule. For example, Benjamin Netanyahu, formerly Israel's prime
minister and today the finance minister, said (Haaretz, November
22, 1996): "I think that what we have in the country
is an entirely different thing. We have academic and media
institutions that are committed to the prevailing uniformity
of thought, 'unithinking,' and they are simply making copies
of themselves. They are turning out more and more generations
of young people with the same monotonous way of thinking.
I intend to change that."
We can therefore assume that the intention
"to change that" is the main reason why the present
government sees a need for a major tightening of government
supervision of the universities. It may be possible to suffocate
the free human spirit that is liable to flourish in the colleges,
by means of various economic steps, under the banner of privatization.
Scientific research, on the other hand, is very hard to privatize,
to the chagrin of the government. The time required for the
ripening of the economic fruits of basic research is too long
for private investors. Therefore, when it comes to the universities
where such research is conducted, the government is engaging
in an aggressive economic policy that is exactly the opposite
of its privatization slogans. It desires to neutralize these
institutions from any influence that is not governmental,
by removing all leadership authority from the academic faculty
- not only with respect to administrative matters, but with
respect to academic matters as well.
The government's great privatization
tsunami is its avoidance of responsibility for providing rights
and material services to the ordinary citizen, which he has
coming to him because he is a human being. At the same time,
and flowing in the opposite direction, he is facing an equally
strong stream, manifested in the attempt by the government
to take over ownership of the spiritual assets of the country.
In effect, when it comes to running the universities, it is
interested in increasing its involvement. Far more than it
is economic policy, the attitude of the State of Israel toward
the research-oriented universities is a cultural revolution.
The spiritual and economic damage caused by this revolution
will not soon be evident to everyone, but its destructive
effect on all of society will surely come. Those with sharp
eyes can already detect the first signs.
From Ha'aretz, Israel, by Elia Leibowitz,
3 April 2005
Political Face-Off: A Closer Look
at Social Security Privatization
In the current debate over President
Bush's Social Security proposal, the most common critique
of his plan focuses on the enormous transitional costs of
creating private accounts. According to this line of thought,
privatization would not only fail to address the expected
revenue shortfalls facing Social Security, it would actually
put the system in an even shakier fiscal position. Allowing
workers to divert 4 percent of their Social Security taxes
into private accounts would starve the Social Security Trust
Fund, require $2 trillion in government borrowing, and hasten
the system's insolvency.
However, many critics who oppose privatization
because of the cost of transitioning to the new system still
believe that in theory privatization could strengthen Social
Security because the stock market generally earns a higher
rate of return than the government securities currently held
by the Trust Fund. This argument seems reasonable, but it
ignores the large administrative costs required by private
accounts. Under today's system, Social Security is one of
the most efficiently managed government programs: the administrative
costs are less than 1% of annual revenues, and yet the checks
still arrive like clockwork every month.
In contrast, managing private accounts
for more than one hundred million taxpaying workers would
require the creation of a massive federal bureaucracy. A Treasury
Department working group in the late 1990s concluded that
even a bare-bones scheme for creating individual accounts
would incur significant administrative costs. With the range
of investment choices for private accounts limited to a dozen
firms offering broad-based index funds, account statements
that are mailed only once a year, and phone inquiries that
are not toll free, the plan would still have an annual cost
of $20-$30 per account. That's an annual cost exceeding $5
billion a year, which is larger than half the current IRS
budget and would require hiring tens of thousands of new government
A plan for private accounts with services
similar to 401(k)s (although not including loans) would cost
two to three times as much as the bare-bones scheme, and thus
be prohibitively expensive. Consequently, the administrative
costs of managing private accounts would cancel-out almost
any gains obtained by investing in the stock market as opposed
to government securities. The privatization scheme pushed
by President Bush also assumes a very high annual rate of
return on stocks, roughly 6.5% to 7.0% after inflation for
the next 75 years. Since profits grow at the same rate as
the economy in the long run, the economy would need to grow
at a very strong pace over the coming decades to achieve this
rate of return. But isn't the retirement of the Baby Boomers
and the coinciding decline in economic growth the reason why
we need to privatize Social Security in the first place? President
Bush and the privatizers are trying to have it both ways:
an impending economic slowdown requires the creation of private
accounts, but somehow the stock market will continue to grow
at its present rate for the next seven to eight decades.
From Vanguard Online (subscription), MA,
by Adam Langley, 6 April 2005
The Average American
Loses under Bush Privatization Plan
Consider this: A 29-year-old averaging
$40,000 per year would receive an annual Social Security benefit
of $21,970 under the current system. If President Bush succeeds
in privatizing Social Security, that benefit would decrease
27 percent to $15,988. Those figures are from a Social Security
calculator U.S. Sen. Chuck Schumer has unveiled on his Web
site for Americans to see how the plan could affect their
future benefits. The calculator uses economic assumptions
from the Congressional Budget Office, based on one's year
of birth and average annual salary.
"Retirees are against Social Security
privatization," said Schumer, a New York Democrat who
is leading his party's efforts to let Americans know the truth
about the president's privatization plans. "Baby boomers
are against privatization. And what we are now seeing is that
young people - the group that the president hoped to woo with
privatization - have also turned against this risky scheme.
The more young Americans hear about Bush's privatization plan,
the less they support it." The cornerstone to Bush's
plan is allowing younger workers to open private personal
retirement accounts. Schumer and others opposed to the plan
worry that diverting those payroll taxes to private accounts
will not only jeopardize benefits to future retirees by relying
on how well an individual "plays" the stock market,
but also will decrease the amount of benefits available to
current retirees, forcing the government to borrow more money
to pay promised benefits.
"It's simple math," Schumer
said, "You can't use the same dollars for two different
things." Young people are not the only group who'll see
decreased benefits. In fact, at least 8 million people in
New York City and Long Island under age 55 are set to lose
under the risky privatization plan, Schumer said. Other
losers include: � at least 700,000 Central New Yorkers; �
at least 760,000 Capital Region residents; � at least 712,00
people in Erie County ; � at least 576,000 Monroe County residents.
From New York Teacher, NY, by Senator Schumer,
14 April 2005
AFL-CIO Protests Social
Security Privatization
On March 31 the AFL-CIO organized a
"national day of action" to protest the President's plans
on partially privatizing Social Security, a program that nationally
has received a resounding "no way" from a majority of citizens.
The President continues to insist the program is broken and
his fix is the way to travel. The AFL-CIO pointed their protests
at Charles Schwab stock brokerage firm for obvious reasons.
Stock brokerage firms of course have everything to gain through
the President's plan. Kenneth Boehm, Chairman of the National
Legal and Policy Center (NLPC), stood on the sidelines and
encouraged Schwab and other brokerage firms to stand up against
union protests. The NLPC is a self-proclaimed guardian against
union corruption. In a nutshell, Boehm told Schwab not to
give in to union protests. His premise was that unions have
historically stolen from retirement funds and unions have
been the cause of corruption within their rank-and-file. He
told the brokerage firm, "it was time to stand up against
the bullying" of organized labor." A remarkable statement
coming from an industry that stands to gain much from privatization
of Social Security. It is laughable statement at the very
Historically, it has not been unions
stealing from employee retirement plans. One needs only to
look at social history books to realize the first thing to
be tossed out the window when industries are in their death
throng is retirement plans. It is a definitive signature of
collapse. Mr. Boehm of course must have been talking about
unions of the 1800s. Or, he simply was speaking like a man
with paper lips. Good research will tell you that employees
lost their retirement plans in the Singer (sewing machines)
shutdown in the late 1970s. The Studebaker Automobile Plant
shutdown left between 4 to 6 thousand employees with 15 cents
on the dollar of their retirement plans (an agreement between
management and union officials. Today, many employees claim
to have had their retirement benefits or plans pinched by
the likes of General Electric, General Motors, the old Bell
Telephone, IBM, NCR, and others.
Unions are quickly blamed for industry
woes, mismanagement, poor sales, and high wages. Management
never wants to take a fall for their ineptitude. It's much
easier to blame an external source. Management never wants
to admit that the exuberant wages given to their CEOs and
other upper echelon administrators is part of the problem.
They choose not to discuss their lack of marketing foresight
or consumer trends as a reason for failure. After all, those
darn unions fought for fair wages and benefits so their families
could live comfortably. I assure you, however, that no union
member makes the amount of money a CEO makes. Blaming unions
for a company's mishandling of money is like blaming the congregation
for the preacher's sins.
From Useless-Knowledge.com, by Stan Grimes,
8 April 2005
Privatization Brings
Big Savings to Michigan's State Universities
Budget pressure in recent years has
forced Michigan's public institutions of higher education
toward cost savings and contracting out of services, according
to news reports and a recent survey by the Mackinac Center
for Public Policy. In fiscal 2005, for which the state government
approved an effective "no change" in funding for
Michigan's 15 public universities, those institutions have
been working overtime to balance their budgets. This has led
them to increase contracting out to the private sector for
services. In May 2004, for example, Western Michigan University
(WMU) signed a contract with Commercial Sanitation Management
Services Inc. to handle custodial needs in its 22 residence
halls. The contract is projected to save the university $1.5
million annually.
$1.1 Million Below Union - Before
choosing Commercial Sanitation, WMU received bids from five
private firms and from the union that represented the 60 custodial
workers WMU had employed prior to its decision to privatize.
Commercial Sanitation submitted the lowest bid--approximately
$1.1 million less than the union's. Similar evidence of cost
savings and institutional efficiency appeared in a survey
of the state's public universities conducted by the Mackinac
Center for Public Policy last summer. Of the 15 schools, 10
took part in the survey. Four universities--Central Michigan
University, Grand Valley State University, Saginaw Valley
State University, and Wayne State University--did not respond,
and Western Michigan University declined to participate because
of ongoing contract talks.
According to the survey results, the
most commonly outsourced services among the responding universities
were garbage and sanitation services (90 percent of the schools
outsourced these services), bookstore operations (80 percent),
vending operations (70 percent), and legal services (70 percent).
Other outsourced services included maintenance (50 percent),
utilities (50 percent), food services (40 percent), busing
(30 percent), laundry (30 percent), and custodial services
(30 percent).
Need for Firms' Expertise - Almost
all of the university officials interviewed for the Mackinac
Center study said expertise was their main reason for outsourcing.
"What we are is an educational institution; that's where
we have our expertise," said David W. Barthelmes, vice
chancellor for administration at the University of Michigan-Flint.
Gary Reffitt, director of purchasing and communications at
Eastern Michigan University, echoed Barthelmes, telling the
Mackinac Center, "Universities are starting to realize
they're in the education business, not the bookselling or
food or laundry business."
Cost savings and efficiency also rated
high among universities' reasons for privatizing. Ferris State
University's (FSU) vice president for administration and finance,
Dr. Richard P. Duffett, reported going from losses of $85,000
per year to profits of $85,000 per year on the school's vending
services once the university partnered with Consolidated Vendors
Corporation of Norton Shores, Michigan in August 2003. Some
school administrators also cited equipment needs and capabilities
as driving their schools to outsource. FSU contracted with
Automated Apartment Laundries to purchase and replace the
school's old laundry equipment when it hired the company to
provide laundry services beginning in August 2003. Duffett
said of outsourcing, "I think we [universities] have
taken advantage wherever we can ... to serve both students,
faculty, and staff. [There's] been a lot of good, hard work
Advantages of Consortium - Officials
of the universities have adopted a creative solution to their
budget problems through creation of the "Higher Education
Purchasing Consortium," which the schools formed with
the state of Michigan in August 2003 to gain leverage when
negotiating contracts with private firms. Michael Boulus,
executive director of the Presidents' Council, State Universities
of Michigan, said of the consortium, "[The] overarching
goal is for universities to work creatively to keep costs
down." All 15 public universities in Michigan are part
of the consortium. Each university participates only in the
contracts it chooses. One example of the consortium's work
was a recent contract for electrical power. In February 2004,
the State Department of Management and Budget, Michigan State
University, Western Michigan University, and the University
of Michigan-Flint signed a contract with Consumers Energy
through the consortium. The agreement is expected to save
each signer 7 percent on electricity, or approximately $730,000
for the three universities combined. The universities also
have used the strength-in-numbers approach to manage their
rising costs of health care and insurance, forming the Michigan
Universities Coalition on Health (MUCH) and Michigan Universities
Self-Insurance Corporation (MUSIC).
Room for Improvement - Despite
the progress made so far in response to the state's current
budget crisis, there is still room for improvement in state
university spending, said Michael LaFaive, director of fiscal
policy at the Mackinac Center. "Institutions that contract
out for important services should remember a few basic items
to optimize results," LaFaive said. "Maintain an
open bidding process; include multiple vendors; give appropriately
detailed specifications for the desired service; and engage
in periodic, competitive rebidding. If schools don't get these
minimal aspects right they may risk giving privatization a
bad name." LaFaive said contracting that saves money
and focuses the schools on education will be good both for
Michigan citizens and state university budgets.
From Hawaii Reporter, HI, by Laura J. Davis,
6 April 2005
GPO Seeks Public-Private
The U.S. Government Printing Office
(GPO) offers a wide variety of publications to the public
through its Documents Sales programs. These publications include
books and pamphlets on starting a business, cooking gadgets,
U.S. Census Bureau information, federal benefits for veterans,
gardening, aviation, art, the space program, and U.S. history.
In the future, these publications may be distributed and made
available through bookstores, newsstands, airport kiosks,
and other businesses. On April 4, 2005, the GPO announced
that it is seeking private sector vendors to partner in expanding
access and sales of government information. The request for
information (RFI) seeks innovative ideas for transforming
the current sales operation (http://www.gpo.gov/bidopps/partnership.html).
Responses are due May 4, 2005.
The announcement states: "The GPO is
currently evaluating the functions related to its Sales and
Agency Distribution Programs and is seeking alternative revenue
sharing models that could be provided by the private sector.
GPO is interested in increasing public awareness of its products,
enhancing customer access for broader dissemination, expanding
distribution channels, and utilizing advanced technologies
for the sale, production and distribution of print and tangible
publications to the public." GPO's primary mission is to ensure
public access to government information. The agency is responsible
for the production and distribution of information products
and services for all three branches of the federal government.
Bruce James, the Public Printer, stated
the aim of the program: "Our goal is to increase awareness
of government publications by making them available in a commercial
mainstream setting, expand distribution channels and use the
latest technology, while achieving significant cost reductions.
This is a prime example of how the government and the private
sector can partner to provide to provide the public greater
flexibility in accessing publications found within our sales
Last year, the GPO and the 9/11 Commission
partnered with W. W. Norton & Company to print and sell
the commission's report. Norton sold the report through bookstores
around the world. The public obtained copies of the 571-page
document without having to wait for the GPO to fill an order
and without the inconvenience and expense of downloading and
printing a long document. In this partnership, all parties
won - the GPO distributed the report to the public with no
wait, Norton earned revenue, and the public had immediate
access to the printed report. According to Bob Wietrak of
Barnes & Noble, the report was "flying out of the
stores" several days after it went on sale (USA Today,
July 26, 2004). Currently, there are more than 3,000 publications
available from the GPO at an average price of $25. Ninety-five
percent of these documents are available online and can be
downloaded and printed through GPO Access (http://www.gpoaccess.gov/index.html).
The GPO is moving away from offset print and large inventories
of print products and is heading toward print-on-demand (POD).
The need for inventory adds substantially to GPO's costs.
Elimination of inventory will reduce costs while increasing
the availability of publications and sales. GPO now has more
than 1,600 titles in its POD files.
Judith Russell, Superintendent of Documents,
oversees the sales operation. She pointed out that GPO "has
many titles that are of broad public interest, but the general
public would not necessarily come to GPO." The public may
not be aware of the broad range of titles published by the
GPO that are of interest. Integrating GPO titles with other
similar titles will increase visibility of government activities
and publications, create opportunities for private sellers,
and increase revenue to offset GPO costs. The lack of awareness
of government publications dampens sales and prevents people
from learning about their government and its activities. The
private sector could make a difference and increase awareness
and learning by marketing and distributing GPO products and
services to booksellers and others. The GPO is not in a position
to actively market its products and services. People aware
of online access to publications or the sales program know
how to obtain needed documents. People not aware of the GPO's
dissemination services remain uninformed. The private sector
has the opportunity to increase awareness, create a new revenue
stream, and help keep the American people informed.
Since federal government information
is in the public domain, private companies can access and
acquire information, add value to it, and sell it. The U.S.
Census Bureau's population database is an example of a resource
used by hundreds of private companies and individuals to create
value for paying customers. The RFI represents an important
opportunity. The RFI states: "Operating as a Government agency,
the GPO has been limited in its ability to aggressively promote
its information products and services � The GPO has not effectively
participated in channels that would help increase visibility
and distribution of its offerings to new markets � It is no
longer economically feasible for GPO to continue to operate
its Sales and Agency Distribution Programs using its traditional
methods. Therefore, GPO is seeking alternative models for
its Sales and Agency Distribution Programs that could be provided
by innovative relationships with the private sector." Generally,
private industry has not been involved in the distribution
of government publications. While the plan envisaged by the
GPO and noted in the RFI will not give industry a monopoly,
it does represent an important opening for private business
to participate in the distribution and sale of government
information. The plan does not preclude the public from downloading
and printing needed or wanted documents. The marketing, distribution,
and sale of the 9/11 report demonstrated that the market for
government information exists and that partnerships can be
beneficial to all.
From InfoToday.com, by Miriam A. Drake,
11 April 2005
Privatization Question
Spurs Faculty Debate
Academic Senate Rejects Motion To Research
Option as Possible Way Control Student Rising Fees - With
state support on the decline and increasing competition in
higher education, some public universities are scrambling
to explore privatizing their campuses to stay on par with
private universities. But the idea of turning to private funds
to sustain a traditionally "public" education has stirred
debate at UC Berkeley, where some faculty fear the line between
the public and private university is being blurred. While
some faculty are open to exploring the possibility, a motion
at Monday's Academic Senate meeting to create a committee
to research the effects of privatization was defeated 25-18.
But professor emeritus Charles Schwartz, who sponsored the
resolution partly in response to UCLA Chancellor Albert Carnesale's
"outrageous" statements last year recommending doubling or
tripling student fees, said he wanted to establish the committee
to examine what he said was the increasingly privatized direction
in which the university is moving.
"The proposal was meant to be a wake-up
call," said Schwartz, who expressed concern that UC is starting
to look more and more like its private counterparts. "I'm
afraid undergraduate students are going to get squeezed more
and more to pay for other parts of the university's operations.
Research might be wonderful stuff, for instance, but why should
undergraduate students have to subsidize it?" Schwartz emphasized
that he and the proposal's 10 co-sponsors were not advocating
privatization but trying to pave the way toward public awareness
and strategic thinking. "I'm very surprised at the outcome,"
said law professor I. Michael Heyman, who co-sponsored the
resolution. "This motion didn't seek to get a decision one
way or the other. It just thought to get a more deeply considered
picture of where the university is and where it's heading."
Still, some university officials are quick to steer clear
of the term altogether, fearing that shining the spotlight
on privatization on campus could place the university in an
unfavorable light and cause the campus community to misinterpret
the university's intentions.
Last fall, UC Berkeley Chancellor Robert
Birgeneau sent a clear message that he had no intention of
leading UC Berkeley toward privatization. "I state unambiguously
and unequivocally that if Berkeley wants a chancellor who
will lead in the privatization direction, it should find someone
else, and I'll go back to the lab," he said in his first address
to the Academic Senate in October. But some university officials
are not shying away from resembling private competitors. Boalt
Hall School of Law Dean Christopher Edley, for example, is
pushing for private donations and more autonomy from the university.
Edley has argued that in order to stay competitive with private
schools, Boalt needs more control over the school's funds
and direction, but he is quick to note that governance and
the public mission will not take a back seat to gaining funds.
Turning toward privatization is easier
for professional schools than entire campuses, since professional
programs have a smaller scope and focus to begin with, said
Lara Couturier, associate project director of the Futures
Project, a five-year project that found that market forces
are increasing competition among top-tier schools, making
privatization an increasingly attractive option. "It's not
harmful for institutions to be more entrepreneurial, but the
question is, are they being entrepreneurial with the public
mission at heart," Couturier said. The risk of compromising
the public mission for the sake of a climbing up national
rankings is not as threatening as first thought, according
to the project. The project's findings pointed to rising tuition
costs, limited financial aid, lack of accountability and the
rising rate of corporate funding versus government funding
as the four primary weaknesses in public higher education.
"When everything comes together we have a snowball effect
that is pushing higher education in a different direction,"
Couturier said. But despite the trend of fudging the lines
between private and public, it is crucial for public universities
to stick to their mission of serving the public. "If we want
to continue to have a system that strives for that mission,
public ties are critical to ensuring that future," Couturier
From Daily Californian, CA, by Traci Kawaguchi
and Jane Yang, 27 April 2005