Policy Study Stands by 100 Billion Pounds Claim for Off-balance Sheet PFI Liabilities

Howard Flight MP, Deputy Chairman of the Conservative Party, and the party’s Shadow Chief Secretary at the Treasury, has endorsed a new study of the Private Finance Initiative (PFI) published recently by the Centre for Policy Studies. As a banker himself and currently joint chairman of Investec Asset Management based in the City of London, Mr. Flight has written an introduction to a CPS survey of what originated as an initiative of Kenneth Clarke's when he was Chancellor of the Exchequer in the 1990s. Since that time PFI has been adopted with enthusiasm by the present Government, notably by Gordon Brown at the Treasury. The study, prepared by Philippa Roe, a director at one of the leading investment banks, assisted by Alistair Craig, a chartered tax adviser and CPS research fellow, raises the key question of whether PFI deals should be 'on' or 'off' balance sheet, the latter meaning that the money thus secured is not counted as government expenditure on public services. More precisely, the quantum of debt incurred in funding PFI deals ruled off-balance sheet is not included in the tally of government borrowing to finance public expenditure. Thus it does not count in the ratio of debt to gross domestic product (GDP) laid down as a regulator by the European Union. This is one of the important convergence criteria established by the Maastricht Treaty, which holds that as a general rule the ratio of government debt to GDP should not exceed 60 per cent. This requirement has been consistently met by the United Kingdom since the treaty was brought into force, but keeping a proportion of PFI expenditure off-balance sheet and so not counted against GDP gives the Treasury a wider margin in management of its debt operations.

On this issue, Mr. Flight says that the size of the liability contracted by public authorities entering into PFI deals is shrouded in unacceptable obscurity. "There is a clear argument for a thoroughgoing reform of the relevant accounting rules or for an independent body such as the Institute of Chartered Accountants determining for all PFIs whether, under current accounting principles, they should be on or off balance sheet. He adds:"There is also complete obscurity as to the total risk adjusted quantum of government off-balance sheet liabilities, covering not just the Private Finance Initiative and Public Private Partnerships, but structures such as Network Rail with Strategic Rail Authority (SRA) guarantees, and many other government contingent liabilities. "While all the data is published, there is no measurement of the risk adjusted quantum. In both the public and private sectors there is a sound case for requiring the total risk adjusted quantum for all forms of off-balance sheet and contingent liabilities to be assessed and disclosed each year." In short, what is the scale of the liability on the public services undisclosed in the government accounts? Mr. Flight agrees with the authors of the study that the Public Sector Comparator element of the procedure has become a discredited and expensive justification for the private finance option, where in fact alternative sources of funding would not in any case be available. In the light of experience, he suggests benchmarking as a sensible alternative for controlling PFI activities.

100 billion Pounds claim denounced as bogus - But Mr. Flight drew an angry response from the Chancellor of the Exchequer when he challenged Mr. Brown in the House of Commons to disclose the precise extent of the Governmentss long-term off-balance sheet liabilities in respect of PFI. An answer given by the Treasury spokesman in the House of Lords had previously asserted that 57 per cent of PFI projects by value were on the Government balance sheet. Mr. Flight asked what account the Chancellor had taken of 100 billion Pounds of off-balance sheet liabilities, representing the present value of total PFI payments for the next 30 years and the guarantees given on behalf of Network Rail and London & Continental [CTRL and other railway capital expenditure]. Mr. Brown retorted that the figure of 100 billion Pounds was totally bogus and completely wrong. He insisted that 57 per cent of PFI projects are on balance sheet, not off balance sheet, and accused Mr. Flight of trying to count every PFI commitment from now to 2030. The authors of the CPS study commented: "Neither the Chancellor nor his advisers would seem to have read a House of Commons research paper which stated [October 2003]:

The PFI has meant that more capital projects have been undertaken for a given level of public expenditure, and public service capital projects have been brought on stream earlier....The increased level of activity must be paid for by higher public expenditure in the future, as the stream of payments to the public sector grows. PFI projects signed to date have committed the Government to a stream of revenue payments to private sector contractors between 2003/04 and 2028/29 of over 110 billion Pounds. From this Philippa Roe and Alistair Craig deduce that in assessing how much of the Government's total liabilities under PFI are off-balance sheet (hence not included in overall government debt), account should be taken of the long-term nature of PFI transactions. In some cases, these extend for up to 60 years, whereas the current government employs an arbitrary cut-off date of 25 years when asked about the nature of its PFI liabilities. "Another way", they allege, "in which the Government has obscured the true extent of off-balance sheet liabilities is its reference to the current value of each project. This is not a true measure of how much the government is liable to pay to private sector contractors over the period of each PFI deal, as it fails to take into account all the service elements which the Government pays over the life of the contract. "In reality, the aggregate figure for payments to be made under PFI contracts, ignoring the 25 year cut-off date, is likely to be in excess of £130 billion (the figure is 124 billion Pounds at the 25 year point). However, this figure is not discounted to present day values. A discounted figure is likely to give a present day value of around75 million Pounds, depending on the discount rate agreed.

Risk transfer the deciding factor - "In assessing the extent of total off-balance sheet financing (i.e. not just PFI liabilities), certain adjustments have to be made to this figure of approximately 75 billion Pounds. Strategic Rail Authority guarantees given in respect of Network Rail and London & Continental need to be added, as well as sundry other defence and education sector sub-contract arrangements which do not fall within PFI. On balance sheet PFIs and PPPs (principally the Tube Public Private Partnership) need to be excluded from the calculation (approximately 20 billion Pounds)." This way of looking at the remaining liabilities (after removing the 25-year cap), the CPS study asserts, continues to give a total off-balance sheet liability of around 100 billion Pounds. The key factor, say the authors, in determining whether a PFI project should be on or off balance sheet should be the extent of the risk transferred from the public to the private sector. This rather than the convenience of central government, they argue, should be the true determinant of whether a project should follow the PFI procurement route. The CPS study though critical of the way PFI is being run at present is by no means opposed to it as a means of funding capital works and facilities for the public services. On the contrary, it proposes that PFI could be extended as part of a wider program of 'outsourcing' and sees the potential for real value for money and greater innovation as significant.

CIOB International News, UK, 17 January 2005

Trans-European Network: European Commission Grants €620 Million to Major Transport Infrastructure Projects

Trans-European network: European Commission grants €620 million to major transport infrastructure projects - The European Commission has just granted €620 million for the assessment and construction of trans-European transport network projects (TEN-T). More than 65% has been allocated to rail projects and 20% to innovative and intelligent transport systems (ITS), such as those concerning interoperability in the railway or aviation sectors. Among the projects and studies receiving significant support are GALILEO, the new Perpignan-Figueras rail link or indeed the future Lyons-Turin and Brenner transalpine rail crossings. "The construction of the trans-European transport network is a major element of European competitiveness and the balanced and sustainable development of the European Union" said Mr Jacques Barrot, Vice-President of the Commission responsible for transport. €515 million has been granted to projects which had already been identified in the 2001-2006 Multiannual Indicative Programme (MIP), which mainly covers the 30 priority projects approved by the European Parliament and the Council in April 2004. More than half of the funds are to support works (at a maximum rate of 10%). The remainder has been allocated to technical, economic, financial and environmental studies and to the other formalities required for obtaining planning permission (up to a maximum of 50%).

€105 million has been allocated to projects selected following a call for proposals open to all project promoters, whether public or private entities. This aid is for projects other than those financed by the MIP and which are smaller in scale. For the first time, the call for proposals for the co-funding of projects was open to the new Member States: €52 million has been allocated to them for this year, around half of which is for projects in the railway sector. Community financing has significant advantages over national schemes. It offers stability of funding over time. It has a multiplier effect, encouraging Member States to invest in projects with a high European added value and cooperate with each other on transnational routes. It helps to implement transport policy by focusing on the more sustainable modes, including support for cross-border railway links. It can also serve as a catalyst for the establishment of public/private partnerships. It should be noted that the 30 priority projects of the trans-European network[1] alone represent investments of €225 billion up to 2020. Given their importance in improving the competitiveness and cohesion of the Union, the Commission, under the 2007-2013 financial perspectives, has proposed a significant increase in the budget for trans-European networks[2]. In order to compensate for the national funding "shortfalls" identified on transnational routes, the Commission proposal favours an increase in aid rates (up to 30% and in exceptional cases up to 50% of the total project cost) and the targeting of funding on cross-border projects.

EUROPA (press release), Brussels, Belgium, 17 January 2005

2004 Described as "Golden Year" for Dubai

Mr. Mohamed Ali Alabbar, Director General, Department of Economic Development (DED), Government of Dubai, described the year 2004 as "a golden year," asserting that most of Dubai's economic sectors had broken previous growth records in the year. Statistics compiled by the DED suggest that the Emirate's GDP rose historically by 16.7 per cent in 2004 to touch almost AED 100 billion, as measured by current prices. Affirming that 2004 had been one of the best periods for the UAE economy in general and Dubai in particular, he said that he anticipated this strong growth to continue throughout 2005, predicting that Dubai's GDP would touch the AED110 billion mark and achieve 10 per cent growth at current prices.

"At current prices, Dubai's GDP has recorded a phenomenal increase to AED98.1 billion in 2004 up from AED84.1 billion in 2003," said Mr. Alabbar. "When compared to AED62.3 billion in 2000 and AED41.2 billion for the year 1995, this puts the accumulated annual growth of Dubai’s economy in the last decade at 10 per cent, the highest rate of growth in the world," he explained. "The phenomenal growth in 2004 is the result of several factors, including the ambitious initiatives launched by HH General Sheikh Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and UAE Defence Minister," said the DED Director General. "The Government of Dubai's unlimited support for the private sector coupled with dramatic increase in local spending, the constant growth of non-oil sectors and the sustained high oil prices have all contributed to Dubai achieving record growth rates," he added.

Mr. Alabbar pointed out that last year's performance indicators also reflected the success of the economic diversification policy of the Emirate. He said the policy had added maturity and vitality to the economy by enabling it to develop resistance to any unforseen circumstances faced by one or other sectors and asserted that the momentum would be sustained for many years to come. "The expansion and development in the non-oil sectors have played a pivotal role in the growth of the Emirate's GDP, despite the sustained high oil prices," he said. "Although oil contribution to the GDP grew 10.9 per cent in 2004, the corresponding growth of 17 per cent in the contribution of non-oil sectors enabled Dubai's GDP to reduce its dependency on oil to 6 per cent in 2004 down from 7 per cent in 2003," he added.

"Measured by current prices, the contribution of non-oil sectors to the emirate's GDP has increased from AED 78.22 billion representing 93.4 per cent in 2003, to AED 91.5 billion representing 94.3 per cent in 2004. This is a significant increase when compared to AED 55.9 billion in 2000 and AED 34 billion in 1995," he said. Alabbar noted that the positive growth in 2004 was clearly reflected in the continuous inflow of foreign capital - a trend that is expected to be maintained with the prevailing lucrative return on investment in key sectors. In addition, the aggressive initiatives by the government and large companies in the Emirate have helped local and international interest rates to stabilize at low levels, encouraging private investments and offering opportunities for a wide spectrum of segments.

"Economic indicators showed a quantum leap in the construction sector for the third year in line, making it one of the key elements of growth besides trade, tourism and aviation," said Mr. Alabbar."The growth in cross sector relations has further vitalized these sectors with the increase in tourist numbers having a positive impact on trade and services, tourism and trade benefitting from the continuous growth in the services sector and the exceptional growth of the construction sector creating similar positive impact on trade, services and banking," he added. According to DED estimates, the construction sector achieved the highest growth rate among Dubai's GDP components for 2004, registering 29 per cent growth and lifting its contribution to AED11.1 billion up from AED 8.6 billion in 2003. When compared to the sector's contribution of AED5 billion in 2000 and AED3.4 billion in 1995, the figures offer a clear indication of the increasing number of quality real estate developments by public and private sectors in the Emirate.

The real estate sector itself achieved the second highest growth rate, with 22 per cent growth in returns, which increased to AED10.3 billion in 2004 compared to AED 8.4 billion in 2003. Comparative figures for 2000 and 1995 stand at AED 6 billion in and AED 4.3 billion respectively. Alabbar praised the record 16.6 per cent growth rate in the industrial sector, with its contribution to the Emirate's GDP increasing to AED 15 billion compared to AED 12.9 billion in 2003, thus making it the second largest individual contributor. He said the growth was a result of the continuous effort by the government to diversify its income resources and establish a strong industrial base capable of meeting local needs and best utilizing Dubai's strong trade relations with external markets. He pointed out that the industrial sector's contribution to Dubai's GDP had been just AED10 billion in 2000 and AED4.6 billion in 1995.

Telecommunications, transport, travel and freight sector succeeded in enhancing its lead position as the largest contributor to the emirate's GDP, growing by 19.3 per cent to AED16.24 billion in 2004 from AED13.6 billion in 2003. The Trade sector alone grew by 14.7 per cent from AED12.9 billion in 2003 to AED14.8 billion in 2004. The contribution of the financial sector increased to AED9.8 billion in 2004 from AED8.6 billion in 2003, a growth rate of 13 per cent. In the tourism sector the hospitality and catering alone achieved 16.4 per cent growth in 2004 to AED4.4 billion from AED3.7 billion in 2003, while the governmental services sector contribution grew four per cent from AED7.2 billion to AED7.5 billion.

Alabbar said he estimated the economic growth to continue throughout 2005 supported by the high confidence in the local economy by investors from inside and outside the region. He also said the government's commitment to develop and enhance business, with major public and private sector partnerships would provide new opportunities for growth and investment. He expected that economic activity in 2005 would see a continuing trend from the previous year resulting in the establishment of a several emerging companies in addition to expansion plans being implemented by established private and public joint companies.

Mena Report, UK, 3 January 2004

No Country Left Behind

As the first George W. Bush administration moved toward its conclusion, many people asked me to sum up the president's foreign-policy record of the last four years. Almost invariably, their questions focused on September 11 and the war on terrorism, developments in Iraq and Afghanistan, the state of trans-Atlantic relations, or the difficulties of the intelligence craft. Almost invariably, my answers have keyed on distinguishing between issues such as these that tend to dominate the headlines, and issues of equal or greater long-term strategic significance that rarely generate as much interest. Among these latter issues, none is more important than economic development in the world's poorest societies. As the president wrote in the National Security Strategy in September 2002, "A world where some live in comfort and plenty, while half of the human race lives on less than $2 a day, is neither just nor stable." No issue has consumed more of the administration's concern and energy. And now that George W. Bush has a mandate for a second term, he intends to pursue his goals for economic development with the same determination that made possible the liberation of Iraq and Afghanistan.

The president has said that he intends to spend the political capital he earned in winning the trust of the American people, and the world can be assured that much of that capital will be spent helping the poorest of its citizens. In doing so, the president is building upon the legacy of President John F. Kennedy, who established the U.S. Agency for International Development (USAID) in 1961. Helping poor societies to prosper has long been part of our international goals. Achieving broad and sustained success, however, has proven more difficult than most diplomats and economists envisioned at the time. We have come to understand that development assistance does not work well when it is conceived and pursued as a narrow economic exercise. It has become ever clearer that political attitudes and cultural predispositions affect the economic behavior of individuals, and that history has shaped the economic institutions of societies. External factors, including security conditions, also play a role in determining economic progress, especially as globalization weaves together the fate of nations.

The first George W. Bush administration took these lessons to heart. We see development, democracy, and security as inextricably linked. We recognize that poverty alleviation cannot succeed without sustained economic growth, which requires that policymakers take seriously the challenge of good governance. At the same time, new and often fragile democracies cannot be reliably sustained, and democratic values cannot be spread further, unless we work hard and wisely at economic development. And no nation, no matter how powerful, can assure the safety of its people as long as economic desperation and injustice can mingle with tyranny and fanaticism. Development is not a "soft" policy issue, but a core national security issue. Although we see a link between terrorism and poverty, we do not believe that poverty directly causes terrorism. Few terrorists are poor. The leaders of the September 11 group were all well-educated men, far from the bottom rungs of their societies.

Poverty breeds frustration and resentment, which ideological entrepreneurs can turn into support for - or acquiescence to - terrorism, particularly in those countries in which poverty is coupled with a lack of political rights and basic freedoms. The connection between poverty and the absence of freedom is not an incidental one. Although resource endowments shape development, poverty is not inevitable in countries that possess few natural resources. After all, Holland and Venice in days gone by, and Singapore and Israel today, are small territories without significant natural resources - but they have not suffered from poverty and powerlessness. The root cause of poverty is social injustice and the bad government that abets it. Poverty arises and persists where corruption is endemic and enterprise is stifled, where basic fairness provided by the rule of law is absent. In such circumstances, poverty is an assault against human dignity, and in that assault lies the natural seed of human anger.

The United States cannot win the war on terrorism unless we confront the social and political roots of poverty. We want to bring people to justice if they commit acts of terrorism, but we also want to bring justice to people. We want to help others achieve representative government that provides opportunity and fairness. We want to unshackle the human spirit so that entrepreneurship, investment, and trade can flourish. This goal is the indispensable social and political precondition for sustainable development; it is the means by which we will uproot the social support structures of terrorism. Development is not only a difficult and complex job; it is also a very big one. Half the people on this planet, about 3 billion human beings, live in destitute poverty. More than a billion people lack clean water. Two billion lack adequate sanitation and electrical power. However complex and massive it is, we have embraced the challenge head-on, and to do so, we have joined with other countries in reshaping development policy worldwide. The Financing for Development Summit held in Monterrey, Mexico, in 2002 reached a new consensus on development. It is a consensus we fully share, one with three central pillars: a shared commitment to private sector-led economic growth; social development; and the sound stewardship of natural resources, built on a foundation of good governance and the rule of law.

Market Incentives - Economic systems work best when access to opportunity is fair, when free people can use their talents to help themselves and others to prosper. Aid can be a catalyst for development, but the real engines of growth are entrepreneurship, investment, and trade. They are what produce jobs, and a job is the most important social safety net for any family. If economic aid to developing countries is to succeed, it must be part of an incentive system for good governance. Foreign aid that succeeds is foreign aid that makes itself obsolete. If a country needs aid year after year, decade after decade, it will develop a dependency on outside assistance. Indeed, foreign aid to undemocratic regimes can be counterproductive in that it increases the longevity of the ruling autocracy by making it easier for despots to keep their small clique of supporters happy. Foreign aid will not make a real difference if markets are manipulated by autocrats who control access to credit, licenses, and jobs. Foreign aid will not generate growth if sound banking institutions cannot arise, because transparency exposes nepotism and other forms of corruption. Foreign aid does not work if the heavy hand of authoritarianism crushes individual initiative.

Ultimately, it is not possible to separate economics from politics. We should not expect democracy to work in places where there is blatant economic injustice. We should not expect sustained economic success in places where political life remains shackled. This symbiosis between political and economic freedom is the basis for the Millennium Challenge Account (MCA), which offers a contract modeled on the free market itself - that is its genius. Recipients of MCA money have to meet a set of eligibility requirements before they get a nickel. Governments must already have in place effective policies to rule justly, invest in their people, and promote economic freedom. They must also agree to achieve measurable results from aid assistance in terms of reducing poverty and generating broad economic growth. Put a little differently, the MCA is an incentive system to reward the spread of freedom of speech and assembly; broader access to credit so that people can start new businesses; adherence to the rule of law to protect private property and enforce the sanctity of contracts. It is an incentive system for countries to provide their people with the basic tools for their own prosperity.

The power of the MCA was evident even before it became law. For example, one country passed and enforced four pieces of anticorruption legislation in order to become eligible for MCA funds. Now that the MCA is up and running with 17 countries eligible for funding, its influence will spread rapidly as funds for the program grow. The U.S. Congress appropriated $1 billion for the first year. The administration asked for $2.5 billion this fiscal year, and we hope funding levels will increase to $5 billion a year by fiscal year 2006. Of course, not every country will be eligible for the MCA soon. Not every autocratic government will risk its grip on power to help their people. And the persistence of bad governance will continue to generate political instability and the humanitarian crises that usually go with it. We will continue to help alleviate those crises when we can. We will not punish people for the actions of bad governments over which they have little or no control. The work of USAID is critical in this regard. But humanitarian assistance is a stopgap measure. Our true aim is to eradicate poverty by challenging the leaderships of developing countries to take their nations’ futures into their own hands. They are ultimately responsible for the success or failure of their own development efforts.

We believe that no country is excluded from this responsibility, and the benign possibilities that arise from it. Just as the president believes that no child should be left behind in education, that every child can learn, he believes that no nation should be left behind in development, that every nation can prosper. Phase by phase, one country at a time, for as long as it takes, the president aims to bring every poor society along - with USAID pushing from one end as the MCA pulls from the other. In the meantime, we can help empower individual men and women worldwide. The international community needs to do better at matching people who want to work with markets that need their labor. At least 180 million people worldwide do not reside in their countries of birth. Some are political refugees, but the vast majority are migrants, legal and illegal. People want a better life, and they are often willing to take daunting risks to achieve it for the sake of their families’ future. Those risks are yielding rewards. Remittances sent home by migrant laborers have become a financial lifeline for developing countries, totaling around $93 billion dollars in 2003, compared to total official development aid of $77 billion. More people would migrate toward hospitable labor markets if the barriers to doing so legally were reduced. Remittances could double, or even triple. Yet there is no effective multilateral mechanism in the world today to handle these issues, nor any effective international regime to reduce the human costs of illegal migration.

The president's global initiatives on trafficking in persons - which seek to end forced prostitution, forced labor, and child soldiers - is a part of our effort to deal with illegal migration. The administration is also acting to reduce the costs of sending remittances from the United States. Most important in this regard, however, was President Bush's proposal last year of a new partnership with Mexico, calling for a temporary worker program that can match labor with markets. The president proposed a way to transform a process that is too often illegal, inefficient, and inhumane into one that respects the law, works economically, and understands that laborers are, above all, human beings. These principles need not be limited to our own borders. Wherever it occurs, illegal migration undermines the rule of law, poses public health and security risks, and ruins lives. Illegal migration also sustains organized criminals, who peddle people with no more scruples than they peddle drugs and weapons. The deaths of desperate people suffocated in cargo containers, in the back of unventilated trucks, and in the filthy holds of cargo ships tell us what is at stake here. Illegal migration is a global challenge, so it must be dealt with on a global scale. We must redouble our efforts to form international partnerships to deal with this pressing issue.

The Health of Nations - Sound economic and political institutions cannot work unless people are healthy and educated enough to take advantage of them. So we fight hunger and malnutrition through the Food for Peace program, which makes commodity donations and emergency food assistance available for developing countries facing food crises. We support poorer countries that invest in their own people, especially in education. We also try to spur business development through programs such as the Digital Freedom Initiative, which helps make new information and communications technologies accessible to entrepreneurs and small businesses throughout the developing world. We are conducting pilot information technology-development projects in Senegal, Indonesia, Peru, and Jordan. If these projects work as we hope, we aim to involve at least 16 more countries over the next four years. Above all, we see the achievement of basic health and sanitation as the key prerequisite for development, and we see clean water as central to this task. Growing populations and increased economic activity in many parts of the world have made access to clean water harder for millions of people. The United Nations Chidren's Fund estimates that 6,000 children die each day from water-related diseases, such as diarrhea, which are a consequence of poor sanitation. Our Water for the Poor Initiative, which helps partnering countries better manage their water supply and prevent the pollution of precious fresh water supplies, will help ensure that every person, particularly every child, can look forward to a world where the simple act of drinking a glass of water is not a life-threatening risk. With $970 million as seed capital, we are trying to leverage at least $1.6 billion worldwide for this purpose.

We are fighting disease on many other fronts. Along with the Group of Eight industrialized countries (G-8), we are determined to eradicate polio once and for all. To this end, the G-8 - with public and private partners - has pledged $3.48 billion. We are also combating malaria and drug-resistant tuberculosis. And we are dedicated to improving the global public health system, because, as the SARS epidemic revealed, infectious diseases know no borders. Above all, we are fighting the scourge of HIV/AIDS. President Bush sees the struggle against this pandemic as a moral imperative, but he also sees the ravages that HIV imposes on development. Its victims include not just those who become ill but whole societies held hostage by this tragedy. The president's emergency AIDS fund devotes $15 billion over five years to prevent new infections, to treat millions already infected, and to care for the orphans the dead leave behind. Under President Bush's leadership, the United States spends nearly twice as much as the rest of the world's donor governments on fighting AIDS. Here, too, fighting disease as a part of our development strategy cannot be separated from its political and security dimensions. AIDS is more than a medical problem, and money alone won't cure it. It is a problem with social roots, and political obstacles still loom large in some countries. Our world will be less secure if we fail this test before us.

Compassionate Conservationism - To be sustainable, development must be a process that invests and pays dividends, plants as well as harvests. We believe deeply in the sound stewardship of natural resources, as the organic connection between the words "conservation" and "conservative" suggest. It was, after all, a Republican president, Theodore Roosevelt, who pioneered the modern concept of conservation nearly a century ago. No one should be surprised, therefore, that the first George W. Bush administration initiated or joined 20 major programs promoting sustainable development. For example, in 2002, during the World Summit on Sustainable Development in Johannesburg, I launched the Congo Basin Forest Partnership. That program is a coalition of 13 governments, 3 international organizations, and 10 civil society groups united to protect the world's second-largest tropical forest. We want to protect it because it is beautiful and irreplaceable, but also because it provides a livelihood to millions of people by being a key source of natural resources and tourism. In 2003, the president presented his initiative against illegal logging worldwide. Poachers who chop down and sell timber harm the environment, the legal lumber business, and consumers by making the sound use of scarce resources far more difficult. We are organizing ourselves and others to put a stop to this form of environmental desecration and theft.

Also at the 2002 World Summit on Sustainable Development, the United States joined the Global Village Energy Partnership. This public-private partnership that started with just over 70 entities now encompasses more than 300 governments, international organizations, and business and civil society groups. It is devoted to shaping national and regional energy strategies that balance development needs with resources, and it is starting to yield results. In the first six months of 2004, for example, USAID spent upward of $7.2 million to provide more than half a million people with access to clean, efficient, and healthy forms of energy in areas either not served or underserved by current energy delivery systems. We also need to better husband ocean resources for sustainable development, and to that end the Bush administration helped launch the White Water to Blue Water program. This project has already mobilized more than $3 million to create or support over a hundred partnerships for watershed and marine ecosystem management in the wider Caribbean area. We live in a world in which our own self-interest depends on advancing the interests of others. Key environmental goals, such as ensuring biodiversity, affect all people in all nations. So we have shared our experience and our technology, and we have used our wealth to help others grow and develop. By helping others, we help ourselves.

A Mandate for Hope - Our goal is to eradicate poverty. The president has a vision of how to achieve that goal: enabling the spread of political systems where access to opportunity is fair, and where democracy and the rule of law enable free people to use their God-given talents to prosper. And we have a strategy that sees economics, politics, and security as three parts of a whole - a strategy that combines growth methods that work with social development and sound environmental stewardship. We have a goal, a vision, and a strategy, but we also have something else of supreme importance: faith in the capacity of human beings to care about one another. After all, most people do not work to get rich; their labor is an act of love. They work to provide for spouses, children, and grandchildren, sometimes parents, grandparents, and other family members and dear friends. When we realize this underlying truth, then the all-important moral dimension of what we're striving for stands out - and that provides both our highest motivation and our greatest hope.

As President Bush begins his second term in office, the United States now has an unprecedented opportunity to translate our hopes into lasting achievements. Americans have been telling people around the world for many years that representative government and market systems are the best means to unleash the energy that produces prosperity. Through our words and deeds, we have demonstrated that respect for human dignity empowers people, motivating them to dream and to work toward those dreams. Today, just a dozen or so years after the Cold War, more people who believe in these principles can act on their beliefs. More national leaders accept these tenets. More societies are embracing freedom. But this task is not easy; results do not spring up overnight. The path to reform and development has many obstacles. The United States has a particular moral obligation to help overcome those difficulties, and we are doing so through the most creative development policies since the birth of USAID and that will be, if fully funded by congress, the most generous since the Marshall Plan. By 2006, U.S. government assistance will have doubled since 2000, and its trajectory remains upward. If one combines official development assistance, U.S. imports from poorer countries, and voluntary philanthropic grants from private citizens and foundations, the United States alone accounts for more than 65 percent of all Group of Seven economic development activities. Yes, development is a big job, but it is a crucial one. What is at stake is whether globalization can be made to work for enough people, in enough ways, to produce a world that is both stable and prosperous. We believe it can, and we are determined to ensure that outcome, for ourselves and for others.

noticias.info (press release), Spain, from Foreign Policy magazine, Washington DC, 12 January 2005

Risk-based Policy-making

In Short: Recent debates on issues such as GMOs and the review of the European chemicals policy have sparked heated discussions among stakeholders about the analysis and assessment of the underlying risks and the way in which these can be managed and communicated. Questions about the definition of risk, the objectivity of scientific information and the role that risk analysis should play in policy decisions are at the heart of the debates.

Background: When talking about risk-based decision-making, it is important to understand the concepts this approach is based on. In particular, there is often some confusion over the terms of 'risk' versus 'hazard' as well as the concept of risk management. The following definitions are therefore essential. Hazard is the potential to cause harm. A good example would be a chemical substance which, if in contact with humans, could cause serious health problems. Risk on the other hand is the likelihood of harm to actually occur. This normally depends on the degree of exposure to a given hazard. For example, a very low exposure to a highly hazardous chemical may result in a low risk, while on the other hand a high exposure to a substance of very low hazard may result in a moderate or even high risk. In other words, for there to be a risk, there must be both the hazard and the exposure to the hazard. Risk management describes the process of weighing up the policy options with regards to a controversial issue such as GMOs or chemicals in consultation with all the stakeholders. By looking at the risks involved, as well as at the risk perception of the public, policy-makers take decisions about what to do about the risk, communicate their decision, see through its implementation and evaluate the results.

Risk perception refers to the way the public and other stakeholders perceive any given risk. This can be quite different from the scientific evidence provided, such as in the case of GMOs in human food. Understanding the risk perception is crucial as it can make debate highly charged and helps determine the best ways to communicate the risk. Risk communication is key to gain stakeholder acceptance of policy decisions. It may include economic, social and ethical values as well as the scientific facts. Policy-makers used to take a top-down approach to risk communication (from regulator to public), whereas a more modern approach encourages public and stakeholders to participate actively in the communication process through public consultations, hearings etc. Precautionary principle: In 2000, the Commission published a communication on the so-called 'precautionary principle', saying that this covered "cases where scientific evidence is insufficient, inconclusive or uncertain and preliminary scientific evaluation indicates that that there are reasonable grounds for concern that the potentially dangerous effects on the environment, human, animal or plant health may be inconsistent with the high level of protection chosen by the EU". Applying the precautionary principle is a risk management policy decision.

Issues: In its 2001 White Paper on European Governance, the Commission recognised that scientific and other expert advice played an increasingly significant role in decision-making. Expert advice particularly serves to anticipate and identify potential problems and uncertainties, take decisions and ensure good risk communication. The White Paper points out that recent food scares such as the one generated by BSE (mad cow disease) have undermined public confidence in risk-based policy-making. Furthermore, it recognises that this problem is worsened by the "opacity of the Union's system of expert committees or the lack of information about how they work", making it unclear who is taken the decisions, policy-makers or experts. There is also more and more mistrust in the independence of expert advice given to decision makers. Questions such as "What is risk?", "Who defines it?" and "Who takes the decisions?" become even more pertinent as the EU is committed to applying the precautionary principle and to conducting thorough risk analysis and risk management. In December 2002, the Commission published a Communication on principles and guidelines on the collection and use of expertise, which stipulates that all gathering of expert advice should be underpinned by quality, openness and effectiveness.

Positions: There has been widespread debate on the advantages and disadvantages of risk analysis as a valuable tool for policy decisions. In particular, stakeholders, including industry, NGOs and academia are often at odds as to how risk analysis should be used and how much influence it should have on the decisions. One of the main points of debate concerns the objectivity of the consulting experts. The scientific community and industry often argue in favour of a strictly risk-based policy making, saying that risk analysis is the only 'objective scientific basis', which can lead to more 'rational' decisions. According to the proponents of this approach, problems and limits of risk analysis can be overcome through thorough data collection and research, as well as strict guidelines for the consistent conduct and presentation of the results. Others, mainly environmentalist, consumer interest groups and other NGOs, point to the danger that risk analysis tends to oversimplify the problems faced by policy-makers by focusing on one hazard and one effect at the time or on problems that are well understood. They criticise that because risk assessment methods tend to be very complex, they can be easily manipulated for political purposes. As a result, the decision-making process will be less democratic.

Euractiv, Belgium, 10 January 2005

IFC Commends Nigeria's Anti-Graft Crusade

Seeks strong domestic projects to support - The anti-corruption crusade of the Obasanjo administration Monday received an endorsement from Mr. Peter Woicke, Managing Director of the World Bank and Executive Vice President of the International Finance Corporation (IFC), the private sector arm of the World Bank Group, who declared "it a shift from what obtained in the past". The IFC boss also disclosed that the Bretton Wood institution is seeking strong domestic initiatives to support as it wants to be a catalyst in fuelling strong economic growth in the country. In an exclusive chat with THISDAY in Abuja, Woicke, who expressed his excitement about what has happened in Nigeria in the last two to three years, especially the reform process put in place by President Olusegun Obasanjo, also declared that things are actually looking up for the country.

"I am very excited about the last 2 to 3 years in Nigeria. I am excited about the reform process put in place by President Obasanjo. I am also excited because things are changing in the country. The reform is not like what obtained in the past and there seems to be a shift from just talking about corruption to fighting corruption. I am excited that government is taking steps to fight corruption", he stated. Woicke, who was in Nigerian to attend the first Business Roundtable with the federal government, an event organised by the Economist Group stated that Nigeria remains one of the single biggest challenges for Africa, adding that "if Nigeria succeeds, other countries will follow". He said that Nigeria is quite different from other African countries as it has huge economic potentials, huge human resources as well as an agricultural sector waiting to be reawakened.

According to him, unlike other countries in the region, Nigerians don't request for development aids but rather they talk of investments "because Nigerians are active and confident. I see a renewed self-confidence in Nigerians and I will like to see Nigeria get it right for Africa". He disclosed that the IFC is actively engaged in Nigeria and is now looking for new projects where the institution can partner with domestic investors. Woicke said this is because IFC wants to be a catalyst to fuelling private sector growth and thus looking for opportunities in Nigeria to support just is it was part of the success story of the country's telecom sector. Specifically, he said that IFC is seeking opportunities in the agriculture and food processing sector, goods manufacture and retail infrastructure, adding that "we are looking for local partners with good ideas because we are very happy with what is happening in Nigeria".

He disclosed that the IFC has changed its approach to lending in Africa and is now more business-like while approval process is now faster than before because the institution wants to really engage Africa. He also expressed satisfaction with the privatisation process while he declared that the IFC would like to invest more in the country but needs strong local partners. Although he has announced his retirement to take effect in about two weeks, Woicke stated that IFC will keep supporting Nigeria, adding that even of there are major changes in the management of the World Bank, Africa will still be on the front burner. Nigeria represents IFC's largest country portfolio in Sub-Saharan Africa, with a total country exposure of $290 million.

New investments already committed this fiscal year include a $35 million follow-up investment in MTN, Nigeria's leading mobile telecommunications company, which will complement IFC's $100 million investment last year. It also includes a $1.89 million investment for a 12.6 percent equity stake in Accion Microfinance Limited, a new microfinance institution in which IFC will be investing alongside a number of major Nigerian financial institutions and Accion Investments in Microfinance. The project will be managed by Accion International, one of the world's leading microfinance pioneers, and is expected to begin operations during the first quarter of 2005.

The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. It also finances private sector investments in the developing world, mobilises capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through 2004, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC's worldwide committed portfolio as of 2004 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications. In 2004, it committed 25 projects in 12 countries in Sub-Saharan Africa region, for a total amount of $407 million. IFC's committed portfolio for the region as of June 30, 2004, totaled about $1.8 billion.

AllAfrica.com, Africa, by Samuel Famakinwa of This Day, Lagos, 19 January 2005

West African Accountants-General Parley On Fight Against Corruption

Entrenchment of transparency in the administration of public funds would be the topic to engage the minds of the Forum of Accountants-General from fourteen countries of the West African sub-region as they converge in Abuja, on Tuesday. A statement from the Office of the Accountant-General of the Federation (OAGF), Mr. Kayode Naiyeju, said at the weekend said that the forum would discuss issues with regard to ethical and professional conducts of public accountants as they affect judicious utilization of government funds.

This concern was said to have stemmed from the increasing levels of poverty in sub-Sahara Africa, particularly the Sub-Region, due largely to corruption and fraudulent handling of public funds by the privileged few and to the detriment of the larger society. "The forum is expected to further strengthen economic regional integration in the West African Sub-Region as well as, enhance the on-going reforms of the federal government by promoting public and private sector partnerships.

"Other laudable objectives of the forum include: enhancement of accountancy and auditing professions in West Africa; Meeting global initiatives aimed at raising the standard and quality of assurance services and the enhancement of applicable professional standards; codes and ethics in line with universally acceptable codes of practice", the statement signed by the chairman of the Forum's local organising committee, Mrs. Elizabeth Adegbite, said. Presidents Olusegun Obasanjo and John Kuffor of Ghana and several other eminent African leaders would address the forum both at plenary as well as the scheduled meetings of the steering committee.

AllAfrica.com, Africaby Emma Ujah of Vanguard, Lagos, 24 January 2005

African and European Partners Collaborate to Foster Ethics in Medical Research

Four African countries in collaboration with the Medical Research Council (MRC), French Institut National de la Sante et de la Recherche Medicale (INSERM), the World Health Organisation and the Department of Parasitology of the University Eberhard Karls (Tubingen, Germany) have developed a project to foster medical research ethics committees in Africa. The initiative - Networking for Ethics on Biomedical Research in Africa (NEBRA) - which is launched today in Paris - also intends to promote the integration of the African committees in the international debate on ethics.

The project will be implemented by the four African coordinating countries - Mali, Benin, Gambia and Gabon - and eleven African participating countries. Its main aims are to develop an understanding of ethical issues raised by research in these regions, to identify the people working in ethics review of research and to acquire a real understanding of their needs. The first stage of the initiative will entail students from the fifteen participating countries conducting interviews in order to identify existing ethics review capacity and further needs in their countries. African and European supervisors will assist them in this work.

MRC Clinical Research and Ethics Liaison Manager, Dr Imogen Evans and Francois Hirsch, NEBRA co-ordinator said: "NEBRA is a logical response to the needs expressed by African partners who want to participate in international medical research and attract medical research for their countries health priorities. "Improved ethical practices will enable the participating countries to attract clinical research fulfilling international requirements in ethics in their regions. As a result the countries will benefit from the research which will lead to improved management of public health issues like Malaria, AIDS and Tuberculosis." Ends. For more information, or to arrange an interview, contact: The MRC Press Office, Tel: 020 7637 6011, Email: press.office@headoffice.mrc.ac.uk. INSERM, Severine Ciancia, tel: ++ 33 1 44 23 60 86, Email: severine.ciancia@yahoo.com

Notes to Editors - The eleven participating countries are: Burkina Faso, Guinea, Senegal, Cote d'Ivoire, Togo, Ghana, Nigeria, Democratic Republic of the Congo, Cameroon, Central African Republic, Congo.

The Medical Research Council (MRC) is a national organisation funded by the UK tax-payer. Its business is medical research aimed at improving human health; everyone stands to benefit from the outputs. The research it supports and the scientists it trains meet the needs of the health services, the pharmaceutical and other health-related industries and the academic world. MRC has funded work which has led to some of the most significant discoveries and achievements in medicine in the UK. About half of the MRC's expenditure of £450 million is invested in its 40 Institutes, Units and Centres, two of which are in Africa: one in The Gambia (involved in this initiative) and the other in Uganda. The remaining half goes in the form of grant support and training awards to individuals and teams in universities and medical schools. Web site at: http://www.mrc.ac.uk.

About Inserm (French National Institute for Health and Medical Research) Inserm's mission is to conduct research & support research enterprise in biology, medicine & health , and to uncover new knowledge that will lead to improved public health. As government-funded institute, Inserm is dedicated to transferring the latest findings of biological science for the better health of people. The institute has more than 360 laboratories throughout France and interacts closely with social or economical partners on a national and international level.
http://www.inserm.fr

Medical News Today, UK, 27 Jan 2005

Government Outlines Corruption Prevention Plan for 2005

Ha Noi - The Government has outlined an action plan to combat corruption in an effort to reduce graft, a major hurdle to the country’s future development. Under the three-point action plan for 2005, the Government will emphasise preventing corruption related to national infrastructure projects, which make up the majority of graft scandals exposed so far. The plan stresses the need for scrutiny into the management of public finances and property. Regulations on bidding and investing on public works projects will be reviewed with an eye towards diminishing legal loopholes.

Under the plan the Government will require its administrative agencies to build a people-oriented management culture and encourage officials to improve relations with the people. The Government has said leaders of these agencies will ultimately be held responsible for their subordinates misdeeds. Heads of central provinces and cities, ministries and services in charge of granting licenses or certificates should more effectively distribute information on new rules or procedures, the plan said.

The Government will ask ministries, industries and local authorities to intensify inspections of the management of construction projects so as to prevent misappropriation and wasteful spending. The Government has also instructed inspectors to improve their work by responding to complaints of local people or the media. Corruption cases reported by the media should be immediately inspected, the document said. Under the plan, the Inspectorate is tasked with reviewing the implementation of the Ordinance on Anti-corruption and accelerating the drafting of an anti-corruption law by November, 2005. Another task for the legal watchdog is to create a national steering board on corruption control to be submitted to the Government for consideration within the second quarter of this year.

Viet Nam News, Vietnam, 6 January 2005

China's Industry Watchers Take Class on Fighting Graft

Officials from the National Development and Reform Commission (NDRC), China's top economic planning body, have started a training program to learn how to detect and combat corruption. The 110-plus officials, who are NDRC's special inspectors to major projects across the country, will learn from Hong Kong consultants. They will watch over the construction of major business projects, such as real estate development, during the eight-day training program that started Tuesday, the Beijing Legal Evening News reported.

"Most of the lecturers are senior anti-corruption officials from Hong Kong's Independent Commission Against Corruption (ICAC), the region's No. 1 graft fighter, and the Department of Justice as well as professors from the Chinese University of Hong Kong (CUHK), " Kwok Man-wai, ex-deputy commissioner of ICAC and one of the teachers, was quoted as saying. Ren Jianming, an expert on clean governance with Beijing-based Tsinghua University, also lectured for the class. He outlined types and reasons of corruption in the Chinese mainland. The training is the first of its kind sponsored by CUHK and NDRC. In September 2003, CUHK launched the world's first full-time course on fighting corruption.

People's Daily Online, China, 17 January 2005

Human Resources Vital In Developing Nations Says Mahathir

Bandar Seri Begawan - Human resource development is not just a case of making training available to the target groups but it also requires vision and will on the part of the government and that the vision must be embraced by the people as a whole, said Tun Dr. Mahathir Mohamad. Speaking at the Brunei International HRD Convention and Exhibition at the International Convention Centre yesterday, the former prime minister of Malaysia underscored the important role played by the government in developing a nation and its people through the development of human resources.

He said human resource development is an integral factor in bridging the gap between the developing and the developed countries. In his keynote address at the event, Dr. Mahathir, who has been recognised as an instrumental figure in Malaysia's development during his tenure as the country's prime minister, said that through human resource development, skills can be acquired and honed to a high degree purely through focus and effort. And when paired with the right set of ethics and values instilled within the society, he said the harnessing of human resources enables societies to succeed in developing themselves. "There are really no intrinsic obstacles to the development of human resources," said the former Malaysian prime minister. "Obviously for those who are left far behind in terms of the skills of their human resources, a much longer period would be necessary."

He went on to say that dedication and persistence go hand in hand with any development. "With the willingness to repeat doing anything and everything over and over again no matter how difficult it is, the skills will be honed and the ability, whether it is manual or intellectual, will be acquired." Dr. Mahathir also placed great emphasis towards training in attitude and work ethics, highlighting that far too often the stress is on skills while the attitude and ethics are given less attention. The keynote speaker pointed out that while there are numerous qualities which will enhance the products of human resource development, diligence and pride over the quality of the products are among the most important.

When properly undertaken, the former PM of Malaysia stressed that a finely struck balance of skills acquisitions and cultivation of good ethical values allows underdeveloped nations and their people to be great. Therefore when human resources are being developed, it is with utmost importance that critical attention must be given to instill and develop the right attitudes and values. In conclusion, Dr. Mahathir stressed that the hope of the less developed people lies firmly in human resource development and that when industriously implemented, disparities or gaps within a community and between nations would be reduced. -- Courtesy of Borneo Bulletin

Bru Direct, Brunei Darussalam, by Izam S. Ya'akub & CT Hj Mahmod, 18 January 2005

President Urges Ethical, Ideological Education

Beijing (Xinhuanet) - President Hu Jintao on Tuesday stressed ideological and ethical education for college students to cultivate talents with noble minds, sound ethics and abundant knowledge to meet the need of the country's modernization drive. "The education should make it possible for college students to keep pace with the time, share the fate of the motherland and work hard together with all the people," Hu said at a national conference held from Jan. 17 to 18 on improving the ideological education for college students. "This is of far-reaching and strategic significance for ensuring the realization of an all-round well-off society in China,realizing the great target of modernization and achieving the rejuvenation of the Chinese nation," he said.

He said China should not only improve college students' knowledge of various sciences, but raise their ideological and political awareness. "Only with this job done well can we keep the society stable and the great causes of the people passed down to future generations," the president said. He urged Communist Party committees and governments at various levels to fully understand the importance and urgency of the work under the new circumstances. The president said that ideal, patriotism, ethics and ability should be all stressed to make college students developed in a comprehensive way.

He noted that as the key bases for ideological education, colleges should take the cultivation of socialist builders and successors as their fundamental goal. "It's one of the key jobs for the Communist Party to improve its ruling capability and consolidate its ruling status," the president said. Other Chinese leaders Wen Jiabao, Zeng Qinghong, Wu Guanzheng, Luo Gan and Li Changchun, officials of central government departments and representatives from 31 colleges were present at the conference.

Xinhua, China, 18 January 2005

US Excludes Philippines from $1.5-B Aid List

A United States government company administering $1.5 billion in aid this year, announced Tuesday it had excluded the Philippines from the list of countries eligible for a share in the aid for failing to address sufficiently problems in corruption and its budget deficit and public debt. "Corruption and its macroeconomic policies are still the issues confronting the Philippines," said Clay Lowery, vice president for market assessment of Millennium Challenge Corp. Millennium Challenge has put the Philippines on "threshold status," which means it does not qualify for the Millennium Challenge Account (MCA), a US grant given to selected poor countries, but may eventually qualify if appropriate policy reforms are implemented, Lowery said. According to US government policy, the MCA is given to poor countries that are "ruling justly," "investing in their people," and "encouraging economic freedom." For this year the US government has allotted $1.5 billion for the MCA, 90 percent of which will be automatically given to eligible countries for various anti-poverty projects. Ten percent will be given to selected "threshold" countries.

The Philippines is given until March 15 to submit project or program proposals that may be funded by the MCA, and to defend why it should qualify for the international aid. On the list of eligible countries are Morocco, Armenia, Benin, Bolivia, Georgia, Ghana, Honduras, Lesotho, Madagascar, Mali, Mongolia, Mozambique, Nicaragua, Senegal, Sri Lanka, and Vanuatu. On threshold status, aside from the Philippines, are Burkina Faso, Guyana, Malawi, Paraguay, and Zambia. Earlier, the Asian Development Bank said in a study that the Philippines' tax structure contained loopholes that encouraged corruption and tax evasion. It said corporate taxpayers in the Philippines on average declared only 77 percent of their revenues to evade paying proper taxes.

The ADB also cited the Global Competitiveness Report for 2003 and 2004 that ranked the Philippines as the sixth worst performer among 102 countries in tax collection because of delinquency and bribery. The Philippines budget deficit and debt was the reason international ratings firm Standard & Poor's early last week downgraded its credit rating to BB- from BB. The government has since reported a 2004 budget deficit of P186.1 billion as against its target maximum of P197.8 billion. Lowery said, however, that the Philippines needed to show more aggressive efforts to squarely address its budget woes. President Gloria Macapagal-Arroyo has proposed several laws to increase revenue but so far Congress has approved only two, raising taxes on alcohol and tobacco products, and instituting a reward-and-punishment system for revenue collection agencies. The government has also taken administrative measures to raise revenues, such as increasing fees and charges and a no-audit program for taxpayers who will voluntarily raise their tax remittances this year by 25 percent.

INQ7 Interactive, Inc., from Inquirer News Service, 25 January 2005

Delegates Identify Common Ground for European Action in Research Ethics

As European Union Commissioner for Science and Research Janez Potocnik is quick to recognise, the regulation of ethical issues in research remains the responsibility of Member States, reflecting the ethical pluralism of the Union. However, Mr Potocnik's presence on 27 January at a Commission organised conference for research ethics committees, entitled 'Facing the future together', suggests that he sees a role for the EU to play in supporting the work of such bodies while continuing to defer to national subsidiarity in this area. Commissioner Potocnik told delegates that: '[A] common set of basic shared values does exist at EU level. It is embodied in the European Charter of Fundamental Rights, which is an integral component of the constitutional project of the Union [and] a point of reference for all our policy making.'

As well as shared values, the Commissioner highlighted other issues that are common features for research ethics committees in a number of Member States, such as a lack of financial resources, the need for training, and the lack of an appropriate national legislative framework within which to operate. 'This conference is intended to launch a political debate. It has been designed to focus on the practical aspects of your work, in order to open a discussion on what can be done at a European level to help the work of research ethics committees at local or regional level,' Mr Potocnik emphasised.

Povl Riis, a former adviser to the EU and Council of Europe on research ethics, and an architect of the revised 1975 Declaration of Helsinki, gave a keynote speech detailing the development of research ethics to the present day. Professor Riis reminded the audience that improvements in human rights are sadly often the direct result of previous transgressions, and in marking the 60th anniversary of the liberation of Auschwitz, delegates also recognised one legacy of such atrocities as the widespread development of research ethics in the years that followed.

While undoubtedly a positive trend, the spread of research ethics also brings with it pitfalls, Professor Riis warned: 'Today, we have a multitude of research ethical codes, but we need to organise them in a sensible way as some are simply incompatible and we must avoid confusing researchers.' The Commission has previously carried out an analysis of the role of research ethics committees in Europe. A 2002 survey sought to determine the legal framework and organisation of REC activities in 33 countries, and identify where conditions could be improved. It found that ethics committees were present in every country, but that there was a wide variation in the number of such bodies.

Michael Fuchs, managing director of the institute for science and ethics in Bonn who helped conduct the research, also highlighted the differences in committee composition between countries. In Scandinavia, for example, lay people are well represented, and in Denmark they make up the majority. In other countries, however, lay people tend only to be present as the representatives of patient groups, and committees composed of medical doctors, researchers and lawyers are the norm.

Speaking to CORDIS News, Professor Riis, himself a Dane, said that he favours committees where the majority of members are lay people. 'Lay people have the same knowledge and right to an opinion as medical experts when it comes to research ethics, and they have the advantage of not being so close to the work,' he argued. He also feels that is it better for regional committees to govern such issues, rather than the institutional committees that are the norm in many areas of Europe, as there is less likelihood of conflicts of interest arising from, say, hospital committees assessing a research proposal from a pharmaceutical company that will pay to carry out research in its own institution.

Dr Fuchs revealed that a consensus had emerged among committee members during the survey that it would be helpful to promote exchanges of information and good practice at a national and international level. A number of interventions throughout the day identified a role for the Commission in this respect, as well as in building capacity and producing harmonised resources such as training manuals and textbooks.

For a research ethics committee to perform its role effectively, knowledge of the scientific and ethical issues themselves is only part of the story. The standard procedures by which a committee operates are equally crucial, and in this there also appears to be marked variation between countries. Dr Fuchs revealed that many survey respondents had asked for a database of resources for the administration of RECs, of the kind now provided by Infonetica. The company's 'ethics committee administration system' (RED) - developed in the UK but now available to all countries - helps administrators to manage every aspect of the application processes, including provisional decisions, rejections, approvals, and amendments.

It is in areas such as this that many at the conference felt the EU can play a significant role in helping the work of research ethics committees in Europe without encroaching on areas of Member State responsibility. Professor Riis, for one, is keen that this should happen. 'I've tried to push for European level involvement in research ethics for the last 30 years, and I'm very positive that it's starting now. It's not difficult to agree on fundamental human rights for when patients work with scientists, but no one is telling another country how to conduct their ethical reviews. From [areas of common ground] each culture can be left to operate their own system,' he concluded. For further information, please consult the following web addresses: http://europa.eu.int/comm/research/conferences/2005/recs/index_en.htm
http://europa.eu.int/comm/research/science-society/ethics/ethics_en.html

Cordis News, EU, 28 January 2005

Romanian Chief Vows War on Corruption

London - Romanian President Traian Basescu says he is confident the government will stamp out corruption sufficiently for the Balkan country to join the European Union as planned in 2007. "I can guarantee we will start to deliver very soon and we will reach the objective of becoming an EU member by January 1, 2007," Basescu told Reuters on Monday during a visit to London. Basescu's presidential victory allowed his centrist alliance to take power last December with the help of two smaller parties. He pledged to tackle corruption, one of the main conditions of EU entry.

Emphasising his determination to tackle graft, Basescu also said there was a danger that Romania's integration into the EU could be stopped if it failed to live up to its promises. "I am convinced the integration of Romania can be blocked, not just delayed, if we don't clear the business community of the corruption, if we don't make the institutions function according to the law," he said. He also said corruption was so engrained in Romanian society and reached such a high level that it affected the country's national security. The government has said measures to fight graft are already underway, including ordering investigations into suspect deals to preparing laws making tax evasion a crime. Basescu said Britain had pledged to send a high level adviser to help the government clear up corruption from April. Basescu earlier met Prime Minister Tony Blair who expressed his support for Romania's membership of the EU. The two countries also agreed to enhance cooperation in tackling drug smuggling and people trafficking.

Reuters.uk, UK, 31 January 2005

Fighting Corruption: German Experience to Help Yemen

Yemen will get help from German experiences for fighting corruption. It comes after a German delegation conducted discussions with the Yemeni side in the Higher Committee for Combating Corruption COCC. The talks focused on supporting the coordinative capabilities of the COCC. Ali Mohammed al-A'nsi, director of the residency office, the deputy chairman of the COCC and protection of public property, said corruption is a "development-killing octopus and an enemy having no features. It changes its colour and forms and places as well as it has a world identity and has no specific homeland."

On their part, the minister of civil service and securities Hamoud Khalid al-Soufi Mr Abdulmalik al-Ma’lami, minister of communications and information technology and Dr Abdullah al-Sanafi, head of the central apparatus of monitoring and auditing, affirmed the necessity of developing institutional mechanisms to monitor and fight corruption. The consultative meeting was chaired by al-A’nsi and included a number of ministers, parliament members and officials. Prime minister Abdulqder Bajammal noted,” We have to go further. The topic of decentralization is an essential and a major one and it goes directly in the direction of destroying corruption as a direct task. Those who stick to a big group of authorities in the center would have an evil intention.”

The government policy of restructuring some ministries aims at encircling of corruption on administrative and financial machinery. There is also a plan and intention to by the Yemeni government to merge some ministries and establishments and to cancel function of some establishments or adding them to other establishments. The Yemeni government also believes that economic reforms are directed against corruption. An example of that is wheat. It has become diversified and there are no less than 11 types of wheat available in the market and importation of rice in Hadramout has dropped by around 30-40%, although Hadramout is a major consumer of rice. That is because others have been prevented from smuggling this commodity to external markets.

Yemen Times, Yemen, 17 January 2005

Development Agencies Support Government Anti-corruption Drive

Sana (IRIN) - Recent surveys suggest that institutional corruption is widespread in Yemen, one of the Middle East's poorest countries. But recent developments suggest that Sanaa is taking the problem more seriously following a number of judicial and political reforms. At the same time, development agencies are working with the Yemeni government to tackle the issue. The Transparency International (TI) annual Corruption Perception Index (CPI), published in October 2004, placed Yemen at 112 out of 146 countries surveyed in 2004, down from 88 in 2003. It scored 2.4 out of a squeaky-clean 10 compared to 2.6 in 2003, ranking it below only Sudan and Iraq in the Arab world.

In IRIN's own informal straw poll of both international and local NGOs and donors, including embassies, corruption was cited again and again as the chief impediment to development in Yemen. It is seen to be discouraging foreign donors and investors from working in the country. Flavia Pansieri, the United Nations Representative in Yemen, said in an interview with IRIN that "corruption is a cancer in society, and like cancer, needs strong and focused measures to treat it". Khaled Ishaq, a communications analyst at the UN Development Programme (UNDP), explained there had been a change in mentality since 1988 as poverty had increased. "People can't make ends meet on a legitimate salary, so they find ways to supplement their income, so taking bribes has become more expected."

As a result, the country is infused with corruption, from petty back-handers, such as a policeman demanding 100 Yemeni rials (just over US $0.50) to overlook a traffic offence, to major abuses of power, such as the acceptance of bribes for contracts in the oil sector. Corruption permeates the education system, where students frequently have to pay their teachers for graduation certificates. Low public-sector salaries encourage the practice. Corruption even has a detrimental effect on the environment. In this water-scarce country, a Yemen-based environmentalist pointed out that contracts went to companies close to the government who would then build multi-lane - and more costly - highways, which create massive land erosion, where in fact only two lanes would be sufficient.

As Grosskreutz explained, "With infrastructure projects, if the wrong company gets the contract, it's a double loss for the country." UNDP, the Word Bank, and German Technical Cooperation (GTZ) are working with the Yemeni government, providing support in the development of institutional structures to try to close the gaps where corruption can take place. The UNDP's Pansieri told IRIN that it has identified two chief areas ofconcern - the oil sector and employment. "The really big corruption is the sell-off of the country's natural wealth for private benefit, where it's oil or jobs. The oil industry has to be fully transparent in exploring, exploiting and marketing this country's largest source of revenue." However, she is very encouraged by the steps the government has taken ineradicating corruption. "It signals that Yemen is aware of the problem and committed to make it a more desirable country for outside investment, which is essential for development".

Yemen signed the UN's Convention Against Corruption in 2003 but, as Pansieri put it, "it's not just a matter of signing a convention". She said that she was "seeing a common commitment across the administration". In recent weeks the Yemeni president, Ali Abdullah Saleh, has announced further changes and new appointments within the Higher Judicial Council, which monitors the performance of judges, after 22 of them were dismissed for abusing their positions and a further 108 were forced into early retirement. And last month Saleh ordered a further crackdown on corruption when he established two committees, one to investigate abuses in the oil sector, and the second to check the misuse of public office for recruitment in the education sector.

The Yemeni government approached the German government in 2003 and in September 2004 GTZ implemented a one-year pilot project supporting the Committee for Combating Corruption and Safeguarding Public Funds. As Grosskreutz told IRIN, echoing the sentiments of UNDP, "our job is not to uncover cases of corruption, but to support the government of Yemen to develop more efficient procedures in the field, which will make corruption more difficult". Both UNDP and GTZ said that Western and Arab/Yemeni conceptions of corruption can be very different. Pansieri said that they had to be "very mindful that cultural specificity is important and deserves respect".

Habib Sheriff, GTZ's Programme Officer for the project explained, as an example, that "there is a cultural obligation to help a relative get a job," something that would be deemed corrupt in many other countries.They stressed the importance of involving civil society in the fight against corruption. "Addressing the issue is still new," Sheriff said. "When we meet at a qat chew [a reference to the mildly narcotic qat plant], we always talk about it [corruption] but everyone has a different definition. Some research has to be done to classify the concept". Both agencies, and others IRIN spoke to, acknowledged that the picture in Yemen was not completely bleak. They pointed to the relatively free press, which is not afraid to highlight cases of corruption, to the progress in advancing human rights, and to the reform of the justice system.

Reuters AlertNet, UK, by IRIN News, 18 Jan 2005

Group Aims to Make Trust Part of Corporate Culture

Camden, Maine - The Institute for Global Ethics announces the expansion of its business ethics practice with the opening of the Center for Corporate Ethics. The new division is based in New York City, the financial capital of the world, and is devoted to helping chief executives and business leaders focus on the challenges of maintaining integrity within large, complex, values-driven corporations. "The objective of the Center for Corporate Ethics is to work with companies to create and sustain the finest corporate culture with the highest sense of integrity, the greatest customer loyalty, and the most dedicated and mission-driven group of employees," says Rushworth Kidder, founder and president of the Institute for Global Ethics.

Robert W. Hutchinson, a respected corporate consulting executive, will serve as the Center's managing director. Hutchinson has spent a lifelong career as a trusted adviser to CEOs and corporate executives from around the world, whom he counsels on critical decisions affecting corporate policies and procedures and supply chain management. "Companies may be open about their business practices, but what are they doing to foster an open-door culture that promotes honest feedback from their employees," says Hutchinson. "The Center for Corporate Ethics helps business leaders separate perception from reality by identifying gaps in employee attitudes regarding their business," says Hutchinson. "We help identify those gaps and develop solutions to sustaining a culture of integrity and trust." Prior to joining the Institute for Global Ethics, Hutchinson served as national director and global practice leader of Supply Chain Management Consulting at KPMG.

He was executive vice president of Garr Consulting Group, a division of Deloitte & Touche and vice president of W&H Systems. He also served in executive positions at Dayton-Hudson Corporation (now Target) as well as the United States Air Force. "Under Bob's leadership, the Center for Corporate Ethics is well-positioned to equip companies with the tools, knowledge and strategies that help minimize the risks and costs of potential ethical lapses," says Kidder. The Center for Corporate Ethics' assessment tools, training seminars and custom consulting services give organizations insight into the attitudes and values of employees and how their ethical outlook may impact business. For more information, visit the Center for Corporate Ethics at http://www.ethics-center.com. Founded in 1990, The Institute for Global Ethics (http://www.globalethics.org), is a nonprofit organization dedicated to promoting ethical behavior in individuals, institutions, and nations through research, public discourse, and practical action.

Clients include BD (Becton, Dickinson and Company), UnumProvident, Accenture, and The J.M. Smucker Company. In 2004 Fortune magazine ranked J.M. Smucker No. 1 on its "100 Best Companies to Work For" list, an achievement the company attributes in part to its years of work with the Institute. In a joint statement, Smucker's co-CEOs Timothy Smucker and Richard Smucker say, "Ethical conduct has been central to our culture throughout our hundred-year history, which is why every Smucker's employee is trained in the Institute for Global Ethics' Ethical Fitness(R) discipline. We believe this is a key reason why The J. M. Smucker Company achieved Fortune's No. 1 ranking." The Institute for Global Ethics is headquartered in Camden, Maine, and has locations in Washington, D.C., London and Toronto. Contact: Angela Harrington, Harrington Communications, New York, N.Y. Phone: 212-937-8455, cell: 201-306-7163, e-mail: angela@harringtoncom.com.

PR Newswire (press release), 26 January 2005

World Bank and Haiti Sign US$1.5 Million Grant Agreement

The Government of Haiti and the World Bank have signed a US$1.5 million grant agreement for the Bank to provide technical and financial assistance in support of critical economic governance reforms. The grant agreement is part of a US$6.4 million trust fund grant program approved by the World Bank in September 2004 and developed in coordination with the Government of Haiti and other development partners. "Key to the success of these reforms is their transparent and effective implementation," says Caroline Anstey, Country Director for the Caribbean. "This grant is designed to assist the Government in its plans to improve transparency and strengthen civil society’s participation in the reform program." The grant is being financed by the World Bank's Low-Income Countries Under Stress (LICUS) Trust Fund. Grant activities will be administered by the Ministry of Economy and Finance and include technical and financial assistance to:

- Improve the public procurement framework by putting in place an interim national tender board or Commission Nationale Interimaire des Marches Publics; organizing national workshops on public procurement; preparing standard bidding documents and creating a common database of government suppliers; and training private and public sector agents on new procurement practices. - Design and implement a comprehensive framework for sound public expenditure management and financial control at the central and local levels, which will be supported by a new computerized expenditure management system. In addition, this component will strengthen the capacity of the country's Supreme Audit Institution and the recently created anti-corruption unit.

- Undertake a financial audit in a key state-owned enterprise; create an institutional capacity to mobilize additional financing to undertake audits and carry out management consulting reviews in four other major public enterprises, and to coordinate and manage the process of improving transparency in the financial management of public enterprises. - Involve civil society in the monitoring of economic governance policies and reforms by creating a civil society oversight committee; hiring an executive secretariat to help coordinate the civil society monitoring program and disseminate its results; and recruiting five civil society organizations to monitor specific components of the economic governance reform program.

"Restoring credibility in public institutions and increasing transparency are among the principal objectives of the Transitional Government," said Henri Bazin, Haiti's Minister of Economy and Finance, at the World Economic Forum in Davos. "With the signing of this agreement today, the World Bank has again expressed its confidence in our economic governance reform program and reaffirmed its intention to provide financial and technical support for our goals." The World Bank's LICUS Trust Fund established in January 2004 is providing grant financing for these activities. The trust fund was designed to support low-income countries with severe conflict and institutional problems to implement the reforms necessary for re-engagement with the international community and to address urgent social needs through a coordinated multi-donor approach.

The US$6.4 million trust fund program in Haiti is a key instrument in the Bank's overall strategy of restoring credibility in institutions and delivering hope to the population by helping the Government deliver quick wins - in the provision of basic services and job creation - and launch reforms that promote longer-term good governance and institutional development. In Haiti, the trust fund will also support a disaster risk management pilot, school feeding activities, public-private partnerships for education, labor-intensive basic infrastructure rehabilitation, rural water and sanitation services, solid waste management and communications activities. Th grant has been prepared on the basis of the Government of Haiti's two-year transitional program, identified in the Interim Cooperation Framework (ICF). The ICF was prepared through a joint international effort led by the Government of Haiti with the coordination support of the World Bank, the United Nations Development Programme, the Inter-American Development Bank, and the European Union. The preparation of the ICF included the participation of 26 bilateral and multilateral agencies, UN agencies, civil society and the private sector.

Harold Doan and Associates, CA, 31 January, 2005

Nepad Comes Up Short 3 Years Later

Because African governments have failed to explain initiative's ideals to the people, and donor countries have given it a wide berth, its future seems grim. Three years after its formation, the New Partnership for Africa's Development (Nepad) is still struggling with an identity crisis. Nepad's proponents are still grappling with preliminary details, while Western donors have ignored groups that could help the initiative achieve its objectives. Prof Wiseman Nkuhlu, who chairs the Nepad Steering Committee, argues that the initiative should be evaluated not in terms of the funds it has mobilised, but rather on its ability to galvanise political will and encourage African countries to develop their own programmes and implement them. While conceding that broadening ownership in Africa remains a big challenge, Nkuhlu said: "The majority of African people do not have access to information about Nepad, and this must be given urgent attention with the support of all stakeholders." Apart from Canada, which has already pumped into Africa over Sh11.4 billion, no other member of the G8 most developed countries seems ready to support Nepad initiatives.

Formed in October 2001, Nepad is an amalgam of South Africa's President Thabo Mbeki's Millennium Partnership for African Recovery Programme and Senegalese President Abdoulaye Wade's Omega Plan. Nigerian President Olusegun Obasanjo and his Algerian counterpart Abdelaziz Bouteflika bought the idea, joined the bandwagon, and the quartet became Nepad's high priests. The initiative was later adopted by the defunct Organisation of African Unity during its last summit in Lusaka, Zambia, a move that was immediately endorsed by the G8 in Genoa, Italy. But Dr Samuel Nyandemo, a University of Nairobi economics lecturer, says: "Nepad is an amorphous outfit that only exists in the minds of its architects and West donors. Prof Jasper Okello, also an economics lecturer at the same university, says Nepad's direction is still muddled. "We were told it was to make the investment environment in the continent better, but nothing to that effect has happened," he says. Mr Peter Ondeng, the immediate former head of the Nepad secretariat in Kenya said: "It is a new spirit of optimism emanating from the continent, a historic opportunity for both Africa and the international community to work together in a renewed spirit of partnership."

To make the continent attractive for foreign direct investments (FDIs), Nepad came up with the African Peer Review Mechanism (APRM) to which all OAU (now African Union) member states were expected to submit. Under the APRM, countries voluntarily engage in self-monitoring in relation to democracy, governance and socio-economic development. Each country's rating is expected to guide potential investors in deciding where to invest. The business environment, risks involved in terms of security, corruption, infrastructure, among others, are also expected to appear on the APRM scorecard. Nepad has now developed comprehensive policy frameworks and indicative priority plans for each sector and African countries have demonstrated commitment to implement sectoral plans. However, lack of political will to act on commitments remains a major concern not only in the continent but also among the G8 members.

Since its inception, only Kenya, Rwanda, Mauritius and Ghana have shown enthusiasm for APRM. Due to bickering over the constitution reform, Kenya missed the maiden review by APRM and the exercise was pushed to a yet-to-be-decided date this year. But considering that no consensus is in sight with regards to a new constitution, APRM could remain a pipedream and as such affect FDI inflows. The country has, however, laid a foundation for the peer review exercise. For instance, the University of Nairobi's Institute of Development Studies, Kenya Institute of Public Policy and Research Analysis, African Centre for Economic Growth and the Centre for Corporate Governance have been incorporated to lay the strategy on reviewing political, economic and social governance, which are thought to be crucial ingredients in ensuring a conducive environment to do business.

And taking into account the number of Nepad member countries, it could take long for the review to cover the entire continent, assuming all AU member states are willing to take part in the exercise. Neither Zimbabwe's Robert Mugabe nor Muammar Gadaffi of Libya has shown zeal in pursuing APRM ideals. This also applies to many North African countries where the western kind of democracy practised in most sub-Sahara Africa is alien. Somalia, which has still not been able to get its government functioning since 1991, has enough problems of its own and technically cannot participate in APRM, as do the Democratic Republic of Congo, Burundi and Sudan which are all faced with civil strife. The continent is not short of international, regional and sub-regional institutions with mandates ranging from promoting economic integration, human rights and conflict to peacekeeping matters. These institutions include the East African Community, African Development Bank (ADB), Economic States of West Africa (Ecowas), Southern African Development Cooperation and Comesa

Nepad was not formed to compete with, but rather to complement, their efforts by engaging in trade negotiations and encouraging change of policies on the continent to attract investments. South African church leaders argue that Nepad is little more than re-colonisation of the continent with the consent of African leaders. They say the initiative could leave African economies at the mercy of Western powers. And some critics argue that the charter establishing Nepad was drafted and debated at high levels without the input of ordinary Africans, who are expected to own it. It is seen as an initiative that could lead to privatisation of basic services such as water, health and education, which would then be sold back to Africa at a profit.

Richard Pithouse, of the University of Natal, Durban, criticised Nepad's aim of opening African markets to the West. "Nepad is not an African concept and will not benefit Africa," he said, adding it would leave Africans and their resources open to exploitation. Its proponents argue that Nepad could put Africa's development firmly on the global agenda and generate a new confidence in the continent, correcting perceptions that it was a doomed continent. Experts argue that it is important to prioritise meaningful debt cancellation for Africa if sustainable development is to be achieved. Debt relief could provide budget support for public investment in social services, such as health-care and education as well as the provision of water and electricity.

Nepad was also to propose decisive structural changes to the existing international financial and trade systems, including proposals such as an international currency transaction, tax and special protection for vulnerable African industries. But three years later, Nepad has not done enough on that front. The world trading and financial regime still remains largely skewed against Africa. Observers say most initiatives from the West, such as African Growth and Opportunity Act of the US and Commission for Africa, are distractions that could vanish as soon as there's a change of leadership in America and Britain. For instance, in the event that Tony Blair is not relected this year, it is doubtful that the Commission for Africa, his brainchild, would survive under a government formed by his greatest enemies.

The Agoa initiative, introduced by then US Bill Clinton, the World Trade Organisation's new rules in apparel products that took effect on January 1, 2005, have made it irrelevant. Quotas to the US market for African cotton products have ended. Okello argues that for Africa to develop, Nepad should encourage countries to ensure affordable cost of doing business so as to attract direct foreign investment. "As long as 40 per cent of the cost of production is consumed by things such as poor infrastructure, high electricity and telephone tariffs, the cost of services and goods will be expensive, making the continent a no-go-zone for potential investors," argues Okello.

AllAfrica.com, Africa, by Ken Ramani of The East African Standard, Nairobi, 10 January 2005

Global War Against Corruption

Corruption is a worldwide problem, and in many countries is a very serious scourge. In Papua New Guinea, it has become a major issue hindering development. In past and in more recent times, the problem was rarely discussed and even more rarely addressed. However, this is slowly changing for the better. The international community now readily recognises the issue. UN secretary-general Kofi Anan has said: "Corruption hurts the poor disproportionately - by diverting funds intended for development, undermining a government's ability to provide basic services, feeding inequality and injustice, and discouraging foreign investment and aid." Corruption leads to bad governmental decisions and bad business, to the misallocation of resources on a frightening scale across the world, to endless subterfuges, disputes and litigation.

The above is true in every aspect in PNG and is as plain as the nose on many Papua New Guinean faces. In PNG, the people are feeling the pinch of corruption in their daily lives, in the form of misadministration, nepotism, misuse of public monies and white-collar crimes. This is clearly indicated by the country's economic problems and general breakdown in society. One only has to read the daily newspapers to see the scores of corruption taking place in government institutions and private organisations. Take the MP who was found guilty of misusing K1.7 million of public funds. The Leadership Tribunal could only dismiss him from office. Or take the former chairman of a public institution who misused millions of public money and whose court trial is still pending. Contrast this with the bank teller who stole K500 from a personal bank account and received a five-year jail term. Papua New Guineans wonder if there are two separate laws for the "big men" and for ordinary citizens.

Many Papua New Guineans want to see accountability, transparency, good and effective governance in the public and private sector and in the different levels of government. They want to live to see the day when justice, in its full meaning is acted upon. Ordinary Papua New Guineans want to see politicians who steal and misuse public monies be put in jail, just as the poor street kid who steals a can of Diana Tuna from a shop. The United Nations Convention against Corruption (UNCAC) is a newly-founded agreement that calls for transparency and accountability in matters of public finance and public procurement, and establishes requirements for particular critical areas of the public sector such as the judiciary. It is the first global legally binding instrument whereby countries that are signatories join together to combat corruption on an international scale. The UNCAC, as Transparency International chairman Peter Eigen explains, "offers a powerful set of tools and demonstrates that the international community can work together to battle the scourge of corruption".

The convention represents international consensus about what countries should do in the areas of criminal corruption such as in domestic and foreign bribery and embezzlement of public funds, trading in influence, concealment and "laundering" and obstructing justice. It also covers preventive measures as well as technical assistance provisions. It breaks new ground in many of its provisions, including those on asset recovery. The UN General Assembly adopted the UNCAC on Oct 31, 2003. The signing ceremony was held in Merida, Mexico on 9-10 Dec 2003. On Dec 22, 2004, Foreign Affairs and Immigration Minister Sir Rabbie Namaliu signed the convention against corruption at the UN headquarters in New York, making PNG the 116th signatory to the UNCAC and the third country from the Pacific Islands Forum that include Australia and New Zealand.

Sir Rabbie said that he is happy that Papua New Guinea joined the international community to prevent and control the phenomenon of corruption which is found in all countries, and more so in the developing countries where its effects are most destructive."The convention is a comprehensive, balanced and pragmatic framework for effective action which all countries can apply to strengthen their legal and regulatory regimes to fight corruption," said Sir Rabbie. Sir Rabbie further stated that one of the major features of the convention is that member states can return assets acquired through corruption to the country from which they were stolen. "These provisions are the first of its kind and it introduces a new fundamental principle as well as a framework for stronger cooperation between states to prevent, detect, and return proceeds of corruption," added Sir Rabbie. Sir Rabbie also announced that PNG has already begun to draft bills on proceeds of crime, mutual assistance that may have centred for the provisions of the UNCAC. However, in order to make the promise of the UNCAC a reality, Papua New Guinea will need to ratify the convention. Ratification or approval, usually through legislature is the next step after signing to the UNCAC.

The National, Papua New Guinea, 12 January 2005

Leaders to Sign Plan to Fight Corruption

Davos, Switzerland - World business leaders were set Friday to announce the signing of several major firms to an international effort to stave off corporate corruption, mindful of the accounting scandals at Enron and WorldCom and Italy's Parmalat AB. The chief executives of Malaysia's PETRONAS, the Newmont Mining Corp. and the Fluor Corp., will announce the "zero tolerance" pact that will clamp down on bribes and corruption in the business world.

Since the start of the World Economic Forum this week in this Swiss mountain town, more than 45 international companies have agreed to abide by the new pact, which has been developed with help from Germany's Transparency International and the Working Group on Bribery operated by the Organization for Economic Cooperation and Development. The pact calls for absolute prohibition of bribery and improper influence peddling worldwide, be it taking bribes from government officials to build a new plant in a poor area or trying to influence public policy to a corporation's advantage, officials said.

Dubbed the Partnering Against Corruption Initiative, the companies that have signed onto it will set up internal programs to provide education and oversight for company executives in an effort to stem and eliminate gifts aimed at currying favor. Newmont chief executive Wayne W. Murdy is among the business leaders scheduled to announce the pact at a press conference Friday, even though the company is being investigated for bribery in Peru and influence peddling in Indonesia.

Forbes, 28 January 2005

Hi-Tech:- N50b Lost Annually in Civil Service Productivity

The Nigerian Information Technology professionals in America (NITPA) has called for massive training of Civil Servants in Information Communications Technology. ICT, skills as over N50 billion is lost annually in low productivity due to untrained labor force in the country. The Association's President, Prof. Manny Aniebonam in a recent paper delivered at the Academy of Civil Service {ASCON} in Badagry noted that the implementation of a Civil Service Enhancement Program with ICT Capacity Building as the bedrock will not only increase the productivity in the labor force but will also prepare Nigeria for digital competitiveness.

In the seminar represented by over 25 Heads of Service, Aniebonam argued that it takes 10 civil servants in Nigeria { with lower ICT skills} to do the job of 1 civil servant in America (with updated ICT skills). The IT expert who observed that Nigeria is 25 years behind developed countries in e-government, 10 years behind South Africa, and 3 years behind Ghana noted that capacity building with human resource development is a national imperative for all Heads of Service. He was of the opinion that the most appropriate means of sustainable solution to this readiness problem is Public Private Partnership -PPP, approach.

"There is a big gap in ICT skills between the average Nigerian workers and workers of comparable economies around the globe. This gap , at the rate of Nigeria's current ICT intervention, will continue to grow far beyond the present 15 years deficit,"he said. According to him, Nigeria University graduates, many of whom end up at the civil service of the States and Federation, do not possess adequate computer skills needed for basic tasks, such as internet surfing, word processing, paper presentation, database management and speed-sheet application to office tasks.

The average civil servant, he said, would prefer to use a type-writer, have someone to assist or write reports by hand, than utilize basic word processing tools such as Microsoft word. "This is because such tools may not exist or where they exist seem to be very deficient,"he added. AfriHub , as a private partnership which is already building state of the Art ICT parks at Universities and Polytechnics throughout Nigeria, each with its own backup power, robust C-band satellite connectivity to the internet, he said, is willing to work with the State Heads of Service to initiate a training program in fulfilment of the Nigerian e-government initiatives.

Before now, the immediate past President of Information Technology Association of Nigeria (ITAN), Chris Uwaje who has been preaching capacity building in the country has raised alarm on the slow pace of IT policy document implementation, which he said, is the bedrock of any meaningful development in the Nigeria. Uwaje, who is one of the most celebrated IT professionals of the time noted that the country will continue to lag behind in the economic development, unless adequate attention is paid to IT education. "We may not continue like this when we have the resources. IT education is not a wish but a necessity. The country must embrace it in all levels. The civil service productive capacity will remain low unless the government begins immediately the implementation of a civil service enhancement program with ICT capacity building. It is a must,"the Apostle of IT education noted.

AllAfrica.com, Africa by Emeka Aginam of Vanguard, Lagos, 5 January 2005

Civil Service Union Raises Alarm Over Planned Retrenchment by Federal Government

The civil service Union of Nigeria has raised alarm over the planned retrenchment in the public service by the federal government and said that it would further create social insecurity for the people. A resolution reached at the Quadra Annual Delegate Conference of the federal branch of the union signed by its vice chairman, Mr Emiloju Elisha, equally frowned at the implementation of the National Health Insurance Scheme (NHIS).

The union pointed out that should the federal government go ahead with the retrenchment, it would be counter-productive as thousands of people would be sent to the unemployment market. It condemned the implementation of the Health Insurance Scheme which made participation compulsory instead of voluntary. They called for the stoppage of further deduction of the National Housing Fund, and the refund of previous deductions. According to the union, the federal government should be more labour-friendly and allow for consultation and dialogue on issues that border on workers' welfare. The conference, however, restated their commitment and loyalty to the leadership style of the president of the Nigeria labour congress (NLC), Comrade Adams Oshiomole, and his executive members.

AllAfrica.com, Africa, by Dayo Johonson of Vanguard,Lagos, 4 January 2005

Civil Servants to Contribute to Their Pension

Civil servants will from next year start contributing to their pension when a new system which is currently being worked out by the ministry of finance is implemented, Nation Online has established. The development has irked the Civil Servants Trade Union (CSTU), which has warned of "serious mass action" if government rushes to implement the new scheme without conducting proper consultations.
Secretary to the Treasury Milton Kutengule confirmed last Thursday that government, through his ministry, is designing a new pension scheme to be effective next year where civil servants will contribute something from their salaries for their pension just like what happens in the private sector.

"We are coming up with a new pension scheme and we are now at design stage. We want it to be effective in the next budget. It's my ministry that is working on that," Kutengule said. He said government has decided to design the new pension system because the current system is not contributory which causes delays in paying out gratuities and pensions after retirement. But Kutengule could not be drawn to divulge more information on how the new scheme will work, claiming such issues are part of the design aspects that are still being worked out.
"There is a lot of work that needs to be done. We want to be as fast as possible," he said.

CSTU general secretary Pontius Kalichero warned of serious mass action by servants in the country if proper consultations are not conducted "so that we could voice our concerns" before the implementation of the new scheme. Kalichero said civil servants would love the current system to be properly phased out before the new system starts working "otherwise there is a strong fear that the system will work to the disadvantage of the civil servants". But Kutengule said government is still carrying out consultations on the issue, adding that all players, including CSTU officials, will be fully consulted. He said a task force has been set up comprising legal and other experts from the public and private sector who will be looking into the issue before implementation. We haven't finished consulting. All stakeholders will be consulted," he said.

The Nation, Malawi, by Joseph Langa, 5 January 2005

Civil Servants to Sign New Job Contracts

All civil servants will sign performance-based contracts this year. The contracts will set goals for the 190,000-plus workers, complete with a time-frame. Those who fail to meet the set targets would be sacked, said Government spokesman Alfred Mutua yesterday. "All Government workers will be evaluated using specific task schedules based on accountability and those unable to adjust to the new system will not be retained," he said. The changes were part of the public sector reform programme being carried out by the Government to improve performance in the public sector. "The Government is aware of the problem of low utilisation of project funds and the delays in the completion of development projects and implementation of government policies and will do everything to rectify the problem," said the official. He urged the public to report to his office and other law enforcement agencies' workers who defied the new rule. "The reforms will ensure that Government officers realise the importance of being servants and that customer service is paramount to providing results," he said.

Dr Mutua, who was speaking on the Government's agenda for the new year at the Kenyatta International Conference Centre, announced that a police reform strategy aimed at improving security was almost complete. "Part of the strategy includes changing the way our police units function and how they respond to crime," he said and urged the public to involve themselves in community policing and report criminals living among them. "The war against crime will not be won unless all citizens work together with the Government to root out criminals and also halt habits that encourage it," he said and announced that the Local Government ministry would soon embark on a major clean-up of cities. "Public vehicles will provide garbage bags for disposal of litter and the public will be expected to use these facilities," he added. On Nairobi, the official said buildings and streets would be numbered to make their identification easy for security and emergency reasons.
The Government would continue to carry out public sector reforms to speed up implementation of projects and promotion of investments. The objective was to create a business-friendly environment for local and foreign investors.

AllAfrica.com, Africa, The Nation, Nairobi, 8 January 2005

Kgathi Recognises Role of Civil Servants

Bobonong - Bobirwa MP, Shaw Kgathi has recognized the role played by public servants in the implementation of government policy and projects. He said if the implementation of projects and programmes are not done on time, public officers were the first people to be blamed since they are the implementers. Kgathi, who was addressing a meeting for both heads of departments for council and central government in Bobonong recently, said there should be a direct relationship between them and politicians. Kgathi said that poor delivery of service leads to misuse of government funds and high cost overruns. He encouraged civil servants to pay close attention to the finance and audit associated with government-related projects. The MP also told them that good performance leads to progress. On poverty alleviation, he said that this year, a poverty reduction advisor will be hired at the Ministry of Finance and Development Planning (MFDP) to work with ministries dealing with poverty alleviation.

He said Bobirwa was again hard hit by drought and poverty is bound to rise to alarming proportions . He said the outbreak of foot and mouth disease has also worsened the situation. Kgathi said service delivery and effective implementation of projects and programmes can determine progress in the eradication of poverty. He also called on civil servants to show more commitment and accountability to the nation they serve. He noted that there were too many incomplete projects and that there is a backlog of development projects in his constituency. But he congratulated them for good performance on projects they managed to finish on schedule. For their part, heads of departments (HODs) expressed concern on the delay in replacing vehicles boarded by the Central Transport Organisation (CTO). They said the situation adversely affects service delivery.

They noted that the other problem they faced was that some supervisors were not effectively controlling CTO vehicles , while some suggested that CTO licences should be provided to the HODs. Some complained about shortage of equipment in their offices, adding that some of the projects are left incomplete because of the irresponsibility of citizen building contractors. They also appealed to the government to repair and construct internal roads in Bobonong, which they said, are in a bad state, especially during the rainy season. They complained of transport shortage especially for tribal administration where cases were pending due to such a situation. The assistant council secretary for Bobirwa sub-district, Isaac Mabechu suggested that the council should be provided with clerks of works to supervise citizen contractors on a full-time basis. He said its high time government talked to citizen contractors to do a better job instead of only being interested in making money. HODs' also complained about the fence erected along Botswana/Zimbabwe border along Shashe river, which they said has not yet been electrified. The fence is now being broken by elephants - allowing livestock to cross into Zimbabwe. BOPA

Republic of Botswana, Botswana, 21 January, 2005

Civil Servants Threaten Government

Civil Servants Trade Union (CSTU) have threatened to stage a national strike if Finance Minister Goodall Gondwe will not resume payment of pensions and rectify other problems noted in the calculation of pensions. CSTU president Thomas Banda, secretary general Pontius Kalichero and treasurer Hastings Kachikopa sounded the warning at a press conference in Lilongwe on Monday. The three said they wanted to communicate to their members to prepare for the next course of action if their grievances will not be sorted out after failing to resolve the issue during a meeting with Gondwe and his officials last Friday. Banda accused the finance minister of violating workers’ rights by withholding their pensions and basing it on the old salaries instead of the new consolidated one, which he claimed gives a better package.
The three officials accused the minister of taking things in his own hands and abusing civil servants rights. They threatened a national strike and a demonstration to have the minister removed from his position.

Banda claimed Gondwe gave a verbal instruction to Accountant General to freeze payment of pensions and gratuities from October last year to June as government works out the new pension scheme. "The Union does not also subscribe to the proposal by the minister of finance to freeze payment of and gratuity while they are working on a contributory pension scheme. This would mean restraining us from attaining our retirements. We will monitor every day to see what is going on. We humbly request government to consider our views seriously to avoid fuelling undesirable repercussions and it will be very serious," Banda warned. "They should remember our action during the Chatsika report. The next thing will be to demonstrate against him that he is incompetent and he can be removed." Banda also accused Gondwe for the proposal to increase the mandatory retirement age from 55 to 60 years and the voluntary retirement to 30 years of service from 20.
They also accused the minister of failing to rectify the anomalies in the restructured salaries promised by President Bingu wa Mutharika, notably increasing the taxi free package from K3,000 ($28) to K5,000.

Efforts to speak to Gondwe and Accountant General Reckford Kampanje failed because their phones were just calling and were reported in a joint meeting. But director for Pension Reform David Kandoje, who attended the meeting with the union, confirmed that they are basing the pension on the old salaries "because calculating on new salaries is translating into huge amounts and there is no money in the budget". He cited some Principal Secretaries who are getting about K900,000 as gratuity basing on old salaries and would get up to K4.5million if they base their gratuities on the new consolidated salary. Kandoje said the total budget for pensions is K2 billion but the government will require K8 billion if they pay the pension based on the new salaries "and we don't have that money in the budget". He said government is trying to find a way of striking a balance and people will be paid the difference after finding the solution. But Kandoje denied that there was an order to freeze the payment of pensions and gratuities. He said the issue of extending the mandatory retirement age is just a proposal that is coming out as they are working out the new pension scheme which was also explained during the meeting the union had with them last Friday.

The Nation, Malawi, Malawi, by Joseph Langa, 25 January 2005

Fresh Plan to Retain Retirees in Civil Service

Civil servants could soon work until the ripe old age of 60, even as the Government freezes new employment. Already a Cabinet paper proposing to raise the mandatory retirement age to 60 years is on the table waiting for approval by Kenya's 29 ministers at a round-table forum, traditionally chaired by the President. The Cabinet is set to meet in two weeks. The highlights of the proposal by the Directorate of Personnel Management under the stewardship of Cabinet Minister William ole Ntimama include the introduction of a phased-out retirement programme from the age of 45 for those clustered as non-performers to 60 for high-performers. The proposal comes in the wake of a freeze on employment, announced recently by the PS for Treasury, Mr James Kinyua. The Government is also in the middle of a court battle with its workers, who are demanding a 600 per cent salary increase.

Only yesterday, a Ministry of Labour unit recommended that the Government pays Sh3.2 billion to workers it has been underpaying for over 20 years. A report tabled in the Industrial Court by Mr Joseph Macharia of the Central Planning Unit criticised the Government for underpaying civil servants since 1980. The CPU, which serves as the court's secretariat and advisor on economic matters says: "Paying below the statutory minimums at whatever time and for whatever reason is against the law and criminal. It amounts to stealing from the poor." A source in the Office of the President said criteria for retention will be an appraisal system that will slam doors on deadwoods and reward the highly skilled as well as the high-performers within the ranks of the 200,000-member workforce. "Everything is in place. It is now left to the Cabinet to discuss in two weeks. Retention up to the age of 60 is not automatic, one has to be exceptionally efficient and competent," said the source.

Already, the department is teeming with optimism that the proposal will sail through the Cabinet since various arms of government were consulted at the crafting stages. "We are confident, we are very firm, the proposal will be adopted. There are adequate monitoring systems to identify those to be off-loaded at each phase," he added. The proposal comes amidst major reforms in the Civil Service, including the introduction of performance-based contracts. Under these contracts, those civil servants who fail to meet set targets will be sent home. Only recently, Kinyua, in the Medium Term Expenditure Review, put a freeze to employment in the civil service.He also announced that the Government would go ahead to reduce its workforce by 21,000. The proposal to extend the retirement age could increase the rising perception that the Kibaki administration is bent on employing "old men".

Questions have been raised on several occasions in Parliament over what MPs termed "grey-haired appointees". A number of top civil servants are currently on contract as they are beyond the official retirement age of 55 years. They include Public Service Head Francis Muthaura (58), Education PS Prof Karega Mutahi, 63, Land and Housing PS Erastus Mwongera and his Energy counterpart Patrick Nyoike (58). Those against the proposal argue that the new plan has not taken into serious consideration Kenya's demographic and employment realities. While countries with ageing populations and probably a labour succession crisis can comfortably retain or recall senior citizens for formal employment in the public sector Kenya has thousands of jobless graduates, they argue. They also say that Narc's promise of creating 500,000 jobs annually seems to be nothing but a mirage. The country's unemployment rate currently stands at 35 per cent and is one of the highest in the world, with India leading at 47 per cent.

East African Standard, Kenya, by Francis Openda

'Repositioning of Civil Service Under Way'

Massive repositioning of the Federal Civil Service is under way with the inauguration yesterday of a 13-man committee on the Review and Revision of Civil Service Rules, Procedures and Regulations by President Olusegun Obasanjo. The committee which is to be chaired by the Principal Secretary to the President and Permanent Secretary, State House, Mr Steve Oronsaye, is expected to "provide a guideline for tackling issues in the implementation of the Civil Service Reforms as well as redefine roles, functions and scope of operation of the Civil Service."

President Obasanjo in his address observed that "it would appear that we will not be able to make progress if extant rules, procedures and regulations that affect effective service delivery are not aligned to fit into the modern systems. While emphasising that the Federal Government had no alternative than to reform the civil service, the president advised the committee "to apply a sense of creativity and to take advantage of developments in modern management systems in this country and overseas where changes have resulted in best practices. Such experience can be adapted to our system in so far as they suit our peculiar circumstances."

Terms of reference of the committee include: -an immediate work out transitional arrangement to facilitate on-going Public Service Reforms. -Study, analysis and review of the existing January 2000 Public Service Rules, Financial Regulations, Circulars and other extant regulations.-Incorporating into the proposed Revised Public Service Rules and Final Regulations, other relevant rules and procedures. Other members of the committee include, Alhaji Bello Maitambari (permanent secretary); Alhaji S.A. Suleiman (permanent secretary, Establishment and Pensions); Chief N.C. Okoronkwo (commissioner, Federal Civil Service Commission; representative of the Ministry of Federal Capital Territory; representative, Ministry of Finance; Mr N.K. Naiyeju, Accountant General of the federation and Professor Ayua, Solicitor General of the federation and permanent secretary, Ministry of Justice.

In his remarks, chairman of the committee observed that "there is no doubt whatsoever that to operate in an orderly, transparent and accountable manner, public servants, especially civil servants, who are responsible for day-to-day policy advice and implementation must operate within a set of rules, procedures and regulations for the internal institutional integrity of the service, in the interest of the public who are the consumers of public goods and services produced by the service."

AllAfrica.com, Africa, by Josephine Lohor of This Day, Lagos, 27 January 2005

Public Servants to Monitor Zimbabwe Elections

Public servants, rather than independent observers, will monitor the March parliamentary election in Zimbabwe, according to that country's justice minister, Patrick Chinamasa. The decision was criticised yesterday as being likely to further compromise the integrity of the election, although Chinamasa said it was intended purely to enable the government to discipline the observers "if they do any monkey business". News of the decision came as a group of lawyers from the Southern African Development Community (SADC) arrived to assess Zimbabwe's compliance with the group's principles and guidelines on elections.

The opposition Movement for Democratic Change (MDC), which has still not decided whether to take part in the poll, said it would take the latest development into account when it made a final decision next week. President Robert Mugabe has not yet set a date for the election, but there is already widespread concern over its integrity after a series of laws were passed putting the government in charge of the process and appointing soldiers, police, prison wardens and other government staff to key positions.

Khabele Matlosa, research director at the Electoral Institute of Southern Africa, which helps monitor elections in the region, said while the move was not against SADC guidelines, the use of public servants rather than nongovernmental organisations would compromise the poll. The MDC said the SADC guidelines were very clear on the need for elections to be monitored by impartial individuals. "Given that the public service in Zimbabwe has been heavily politicised in recent years, there can be no guarantee that the public servants used will discharge their duties in an impartial manner," it said.

Business Day, South Africa, South Africa, 28 January 2005

Unions Back Plan to Retain Retired Civil Servants

Plans to raise the mandatory retirement age for civil servants from 55 to 60 years have received mixed reactions. While trade union leaders wholeheartedly welcomed the move, a section of political leaders and professional bodies dismissed it as unwise and aimed at locking hundreds of unemployed youths out of jobs. The Kenya Institute of Management (KIM) has subsequently written to the Permanent Secretary in-charge of Personnel Management Simon Njau raising concerns over the proposal. The letter, copied to the Head of Civil Service, Mr Francis Muthaura and PS Treasury, said the move posed great danger to Civil Service succession arrangements in a situation where there is a simultaneous freeze on recruitment.

KIM Executive Director Mwangi Ngumo said the proposal could only work with a robust performance management system. "In Tanzania and Uganda Civil Servants are retiring at 60 and this is becoming the trend world over," he said. Atwoli said with the revival of the East Africa Community Kenya should raise the retirement age to 60 to make it uniform with other member countries. The Union of Kenya Civil Servants, Secretary-General Alphayo Nyakundi welcomed the proposal, saying it would help retain experienced civil servants. "Five years does not make much difference and should not be seen as aimed at denying the youth employment opportunities," he said.

AllAfrica.com, Africa, by Francis Openda, The East African Standard, Nairobi, 27 January 2005

Obasanjo Inaugurates Committee for Civil Service Restructuring

The Federal Government yesterday inaugurated an 18-member committee to among other things facilitate the implementation of the proposed Civil Service Reforms. President Olusegun Obasanjo inaugurated the committee at the State House Abuja, insisting that his regime was poised at expunging extant rules, procedures and regulations that frustrate effective service delivery consistent with modern systems in the Civil Service. In his address at the short ceremony, he charged the committee under the Chairmanship of his principal Secretary and Permanent Secretary State House Mr. Steve Oronsaya to immediately work out transitional arrangements to facilitate on-going public Service Reforms, especially in the areas of recruitment/appointments, developments, deployment, discipline, performance management and incentives and voluntary exit incentives.

The committee he also said should "study, analyze and review the existing January 2000 public Service Rules, financial regulations, circulars and other extant regulations and to bring them in line with current reforms of government, taking into account, recent policies and legislative instruments such as monitisation, the pension Act, and the public procurement Bill that is now before the National Assembly, and bring them in line with the current regulations". The committee among its terms of reference the president said is again to "incorporate into the proposed revised Public Service Rules and Final Regulations, other relevant rules and procedures that will ensure enforcement of compliance, strict observance of transparency, justice, equity and accountability in the conduct of government business; and to make appropriate recommendations that will ensure that application of Public Service Rules and Financial Regulations on public officers is consistent with provisions of the constitution".

President Obasanjo said that the exercise would help to provide a guideline for tackling service-wide issues in the implementation of the civil service reforms as well as redefine roles, functions and scope of operation of the Civil Service. Responding on behalf of the committee, Chairman of the Committee, Mr. Steve Oronsaya assured the President of the committee's preparedness to perform admitting that the targets of the proposed Civil Service reform cannot be achieved unless a fresh look is taken at the sets of rules, procedures, regulations and guidelines that govern the day to day operations of the Public Service as a whole and the Civil Service in particular.

Other members of the committee are Alhaji Bello Maitambari, Alhaji S.A Sulieman, Permanent Secretary Establishment and Pensions, Chief N.C. Okoronkwo, Commissioner, Federal Civil Service Commission and Mr O.O. Oyelakin a retired permanent secretary. The rest are Prof Shiek Abdullahi, Director General ASCON, Prof. I. Ayua, Solicitor General of the Federation and Permanent Secretary Justice, the Accountant General of the Federation Mr. N.K. Naiyeju, Mr. J.O. Ajiboye Auditor General of the Federation, Mr David Waminaje Permanent Secretary Public Service Office and Goke Adegoroye Director General of Bureau of Public Service.

AllAfrica.com, Africa, Vanguard (Lagos), 28 January 2005

Government Approves 45 Percent Salary Increase for Civil Servants

The government has approved a 45 percent increase in the normal salary of the civil servants with effect from January 1, 2005. According to a news release from the Prime Minister's office, the salary increase is expected to reduce anomalies brought about by special allowances granted to certain categories of civil servants. Civil servants like teachers and doctors who are already getting a 45 percent allowance will not be included in the pay revision. The forthcoming position classification exercise to be undertaken by the Royal Civil Service Commission (RCSC) is expected to further rationalize the grading and remuneration system in the government.

The news release stated that His Majesty commanded that there was an urgent need to review the salary of civil servants in view of the high cost of living and the subsequent difficulties faced by them. The Prime Minister in a press conference today, said that the pay revision was long over due since the last revision was done about five and half years ago. He told the media that the pay revision could not come in time due to budgetary constraints and the security threat faced by the nation till last year. The government was able to approve the salary increase as a result of the increase in the export tariff of power from Chukha Hydro Power Corporation (CHPC) to Nu. 2 a unit. The increase in tariff was agreed by India during His Majesty's visit to New Delhi in December 2004. The government needed about Nu. 520 million a year for the salary increase which the CHPC was able to contribute due to the increase in the export tariff.

Kuensel, Bhutan, 14 January 2005

Civil Service Drops Requirement to State Educational Background

Aspiring civil servants will no longer have to detail their educational background when they take the public service exam. The Korea Civil Service Commission (KCSC) announced Sunday that it will no longer require applicants for civil service exams at all levels to state their educational background in the application form or compel those who pass to submit documentary evidence like diplomas prior to the interview.

The KCSC's measure is largely symbolic but could have a considerable effect on the recruitment methods of other public and private organizations. A KCSC official said that since a candidate's educational background or school record had never been a factor determining success or failure in public service exams, the measure aimed to send a message that educational background is not the be-all and end-all in determining a person's success, adding workers should be selected based on their abilities.

Chosun Ilbo, South Korea, 16 January 2005

PM on How to Reinvent the Civil Service

Putrajaya - To safeguard the image of the civil service, public sector employees must be creative, inventive, fluid, consultative, courteous and free of corrupt practices, Prime Minister Datuk Seri Abdullah Ahmad Badawi said. Addressing over 3,000 decision-makers in the public sector, ministers and chief executive officers of government-linked companies yesterday, he said there must also be a free flow of ideas between top-level officers and their subordinates for the betterment of the service. Efforts, he said, were under way to quicken the delivery of services, including by empowering officers so that they could independently make decisions without consulting higher levels. "Soon, the towering pyramid system that has been entrenched in our civil service for more than 50 years will be no more. "We will seriously cut down on red tape to fulfil the public's expectation of faster, quality service," he said at the Sixth Civil Service Premier Convention at the Putrajaya International Convention Centre themed Realising the People's Aspiration Through Courteous Civil Service yesterday.

In his "heart-to-heart" and "eyeball-to-eyeball" talk, Abdullah said civil servants must also be able to "think out of the box" and make strategic adjustments so that they could act speedily when faced with adversity. He also reminded them to not ever shut people out and give them the run-around. "Do no not pass the buck either. When things are not done, just do it instead of blaming others for the things that are not done. "I know that these are still happening and I want them to stop as they are causing a blight in our effort to improve the image of the civil service," he added. On free flow of ideas within the service, Abdullah said department bosses must be willing to acknowledge good suggestions, which came from subordinates. Good ideas and inventions, he said were not the monopoly of decision makers alone. Civil servants, he said, should be encouraged to give feedback on approaches and these responses must be taken seriously by decision makers who should also institute changes whenever necessary.

The Malaysia Star, Malaysia, 20 January 2004

6,000 Civil Servants Told to Leave Capital

Six thousand civil servants have been told to leave London and the South-East in the first round of a Government dispersal scheme. The total emerged as Labour and the Tories clashed over civil service waste and bureaucracy. This weekend the Tories are set to claim that they can slash £35billion from the cost of running central government. Treasury figures released to the Evening Standard show that 5,949 civil service posts in and around London have been identifiedfor relocation, with more in the pipeline. The Chancellor is well on his way to meeting a target he set in April, to disperse 20,000 civil service jobs by 2010. At the same time, a further 84,000 Whitehall jobs will vanish altogether in a cost-cutting drive aimed at tackling bureaucracy. Officials whose jobs are moved out of London face a painful choice between uprooting their families or accepting alternative posts in the capital. And the job losses will hurt London's economy, already suffering from above-average unemployment and pockets of severe deprivation. They come on top of a separate move by the BBC to move 1,700 staff from London to Manchester.

The shake-up for the civil service is the biggest since Harold Wilson ordered a major dispersal from Whitehall in the Sixties. Mr Brown seized on a report by Sir Michael Lyons of the University of Birmingham, which claimed moving jobs out of London would save money for taxpayers because wages in the provinces are lower and housing is cheaper. Politically, the move could shore up support for Labour in its heartland industrial areas, which stand to gain. However, the scheme will cost millions in the short term. Staff who leave London will be offered help with costs and assistance in finding new homes and schools. Tory leader Michael Howard is preparing to unveil a report identifying Whitehall waste by business troubleshooter David James. Shadow chancellor Oliver Letwin said: "Relocating staff is a marginal saving compared to the bloated size of the current Government.

"Superficial efficiency savings based on relocating staff away from London is not sufficient when we have a civil service the size of Sheffield and more tax collectors than nurses." So far, all the relocations have been voluntary. Unions are seeking assurances that no one will be dismissed for refusing. A Whitehall source said: "The idea is that it is voluntary - where possible." But those who stay behind face upheaval, and adapting to new roles. Tony Travers, director of the Greater London group at the London School of Economics, warned the Government's plans were based in part on a mistaken notion that shifting jobs could benefit other regions without harming the capital.

This is London, UK, by Ben Leapman of Evening Standard, 14 January 2005

Berlusconi, Civil Service Financing to Be Doubled in 2005

Milan - Prime Minister Berlusconi, speaking at a conference on civil service in Milan today at the Salesian Institute, the school he attended as a young boy, said the government is to double financing for the National Civil Service. He stated, "to serve in the National Civil Service is a formative and enriching experience, a sign of solidarity for the citizens of a civil and modern state. A state is not worthy if it does not consider the well-being of the emarginated and the poor. To help them is a duty and will not be forgotten". Berlusconi continued, "It includes not only aid for the elderly, but also assistance in natural calamities, such as the flood in Florence in 1966 when many went to lend a hand, there is also the cultural sector with work opportunities abroad. There are no risks and your children will come back better people".

Agenzia Giornalistica Italia, Italy, 22 January 2005

Civil Service System Being Phased Out at Homeland Security in US

World News, Washington - Seeking to reform civil services on the lines of private business, the US Administration has unveiled a new personnel system for the Department of Homeland Security in which government workers will be paid, promoted, deployed and disciplined on the basis of merit and not seniority. The new system will "reward performance, not longevity. It can truly serve as a model for the rest of the Federal Government," Office of Personnel Management Director Kay Coles James told reporters.

Under the revised rules at Homeland Security, one of the biggest civilian departments, pay raises will be based on performance rather than longevity. Employees who get low ratings will not get increments and pay steps will be replaced by ranges within occupational clusters. Labour bargaining will be limited and management rights expanded. The Merit Systems Protection Board and arbitration on employee complaints will be retained and Mandatory-removal offences will be identified.

Salary ranges in the department will be based partly on geographic location and annual market surveys by a new compensation committee of what similar employees earn in the private sector and other government entities. Within each occupational cluster, workers will be assigned to one of four salary ranges, or "pay bands," based on their skill level and experience. The White House will propose legislation within a month to all government agencies to restructure their personnel systems in a similar way, the Washington Post quoted Clay Johanson, Deputy Director for Management at the Office of Management and Budget, as saying.

New Kerala, India, 28 January 2005

Overhaul of U.S. civil Service Under Way

Washington, DC (UPI) - An overhaul of the U.S. civil service system has begun, initially within the Department of Homeland Security, the Washington Post reported Thursday. The new system will replace the 50-year-old General Schedule, with its 15 pay grades and raises based on time in a job, and install a system that more directly bases pay on occupation and annual performance evaluations, officials said.

Under the new plan devised by the Bush administration, employees will be grouped into eight to 12 clusters based on occupation. Salary ranges will be based, in part, on geographic location and annual market surveys by a new compensation committee of what similar employees earn in the private sector and other government entities. Within each cluster, workers will be assigned to one of four salary ranges, or "pay bands," based on their skill level and experience.

No employees will lose their jobs or see a reduction in pay during the transition to the new system, officials said. About 10,000 Homeland employees and at the Federal Emergency Management Agency will switch over to the new evaluation system this fall, but will not see their first changes in pay until next January.

Washington Times, DC, 17 January 2005

Bush Administration Plan to Reform Civil Service Draws Union Ire

Federal employee union leaders reacted with anger Thursday to news that the Bush administration will begin a governmentwide push to dismantle current civil service rules. On Wednesday, Clay Johnson, Office of Management and Budget deputy director for management, announced the decision to replace the General Schedule with a new personnel system, arguing that it would be unfair to leave other government agencies without the flexibility the Homeland Security and Defense departments have to limit union bargaining rights, set pay based on performance and discipline workers. But union leaders, already furious over the new DHS pay for performance personnel system released Wednesday, said they would continue to fight a civil service overhaul. "This isn't any modernization," said American Federation of Government Employees President John Gage. "This isn't any improvement. This is gutting the civil service."

On Thursday, AFGE, the National Association of Agriculture Employees, the National Federation of Federal Employees and the National Treasury Employees Union followed through on their promise to sue DHS in federal district court in Washington. The groups want the court to block implementation of the new DHS personnel system, arguing that its limits on collective bargaining and employee disciplinary appeal rights are a violation of Congress' original intent when it approved the new system as part of the 2002 Homeland Security Act. Johnson provided few details on the proposal, but said it would be released with President Bush's fiscal 2006 budget on Feb. 7, and will be modeled on the personnel system changes under way at the Homeland Security and Defense departments.

The plan immediately drew fire from congressional Democrats. "Congress decided the Homeland Security Department needed extraordinary flexibility to waive civil service protections because of its unique security mission," said Sen. Joseph Lieberman, D-Conn., ranking member on the Senate Homeland Security and Governmental Affairs Committee. "Now that DHS is undertaking a grand experiment in revamping the civil service system, we should see how it works before we consider whether it would be appropriate for agencies without critical national security responsibilities." DHS announced Wednesday that it had completed regulations that will over the next six months create a stricter disciplinary system and impose new limits on and controls over union bargaining.

A pay system replacing the General Schedule will be developed and phased in over the next four years. Employees will receive raises based on market conditions and managerial evaluations of their performance. Gage insisted that budget constraints would make it unlikely that federal pay would keep pace with the raises now anticipated for General Schedule workers. Under the DHS system, the department will have wide discretion to set raises, and can deny them altogether to employees who receive poor performance evaluations. "This is depressing federal pay, and this will hurt these important agencies that we represent," said Gage. The plan to expand pay-for-performance personnel rules to the rest of government would "let everyone suffer equally," Gage added. "I have a lot of problems with that."

When the Defense Department sought authority in 2003 to revamp its personnel system, just a few months after the new Homeland Security Department had won similar power, many Democrats in Congress said they had been tricked into voting for the DHS system, believing it would be fully tested before additional agencies sought similar authority. But Congress approved the Defense Department's request anyway, in November 2003. The Bush administration's plan to expand personnel flexibilities to the rest of government would dismantle the existing civil service system before any department has even begun to test new personnel rules. "Everyone has been kind of just bamboozled by the words 'pay for performance,' " said Gage. "This pay for performance needs a lot of work if it will ever work." Colleen Kelley, president of NTEU, said the union would "strongly oppose any efforts to extend similar regulations throughout the government."

During a briefing on the new system on Wednesday, DHS Secretary Tom Ridge insisted that agency managers had carefully considered union concerns and delayed the rollout of the pay-for-performance rules to ensure that they were implemented fairly. Department officials also said they would maintain communication with employee unions and hold extensive training sessions for managers and employees. "We decided it was better that we do it right than doing it quickly," Ridge said. But Democrats in Congress expressed frustration with the final DHS regulations. Lieberman said that he objected to "excessive limits on collective bargaining that go beyond what is necessary to maintain the critical mission of the department, changes to the appeals process that interfere with employees' rights to due process, and unduly vague and untested pay and performance provisions." Others agreed. "It is essential that any human resources system be both fair and perceived as fair in order to be credible. I am afraid that, as a whole, the final regulations fall short of this requirement," said Sen. Daniel Akaka, D-Hawaii. Rep. Steny Hoyer, D-Md., added that he was "deeply concerned that these regulations might be used to eliminate important protections for employees and taxpayers on a governmentwide basis.... I am particularly troubled that the new regulations significantly limit basic employee rights and protections."

GovExec.com, by Shawn Zeller, 27 January 2005

The Future of Civil Service: Reforms Empower Managers, Set Course for Entire Government

During the next few years, managers at the Homeland Security Department - and potentially across government - will be able to steer larger pay raises to high performers, more easily fire poor performers, and bypass union negotiations when introducing new technology or redeploying employees to meet urgent needs. These and other changes to Homeland Security's personnel system will be phased in over four years and ultimately cover 110,000 of the department's 180,000 employees. Some large sections of the department, such as the Transportation Security Administration and parts of the Federal Emergency Management Agency, are exempted. New labor, appeals and adverse-action rules will take effect by June, while no one's pay will be affected until 2007.

Homeland's new rules are the first step of what the Bush administration hopes will be governmentwide reform. The Pentagon is expected to unveil as early as this week its own plan to overhaul personnel rules for 746,000 workers. And the Office of Management and Budget announced it will press Congress this year to allow all agencies to adopt similar personnel reforms. "We think those flexibilities make it possible for agencies to better focus on results and to hold the people and managers accountable," Clay Johnson, OMB deputy director for management, told reporters Jan. 26. "We think that the same opportunity to better manage our agencies exists in the rest of the federal departments."

Labor unions, on the other hand, are outraged by the new Homeland Security personnel system and filed a lawsuit the day after it was unveiled in an effort to derail it. "I think this is going to hurt homeland security in a very significant way," said John Gage, president of the American Federation of Government Employees. "It will not serve as an incentive to employees, but rather it will be a morale buster. It will drive away, I believe, the best and brightest, not attract them."Designers of the new system, including Homeland Security Secretary Tom Ridge, defended it, saying it retains fundamental employee rights while giving managers and supervisors greater ability to reward outstanding performance and more agility to meet ever-changing work-force requirements.

"At the end of the day, we honor our commitment to protect our basic employee rights and fundamental due process and we honor our commitment to America to create a work force that rewards performance and that gives this department, with its very unique mission, the flexibility and adaptability that is required in a post-9/11 world," Ridge said. It took nearly two years for the Homeland Security Department and the Office of Personnel Management to issue the final rules, which total 300-plus pages and were sent to the Federal Register on Jan. 26 for publication this week. Yet much heavy lifting remains: Key details remain undecided on how the department will set new pay scales, reclassify employees into new job categories, craft new performance plans and calculate annual raises. Those details will be subject to union input, though not formal negotiations, and they will be laid out in directives published on Homeland Security's Web site.

OPM Director Kay Coles James and Ridge both are leaving their posts this week. According to James Carafano, senior fellow at the Heritage Foundation, success will depend largely on how the new leaders execute these new rules. He said particular focus should be placed on offering long-term career development paths. Reduced union influence: One of the most significant features of the new system is that it severely limits which workplace decisions are subject to collective bargaining. Managers no longer will need to bargain with unions before changing an employee's work assignment, detailing an employee to another location or introducing new technologies.

The new rules require managers to confer with unions for up to 30 days on the procedures the agency will follow in taking those actions, but managers retain the right to act even if the unions disagree. Formal collective bargaining would be required in those areas only if there is a substantial and significant impact on multiple employees in the bargaining unit lasting 60 days or longer. Ridge said officials crafting the new rules tried to balance the need for managers to act quickly with employees’ rights to due process. "There are many occasions where we have to move people around quickly, and we don't have the latitude to sit down and discuss it or bargain those conditions before we move," Ridge said. "This is providing tools, when necessary, to better protect the country when the circumstances or the intelligence dictate."

The unions say stripping employees' longstanding statutory rights to participate in workplace decisions affecting them violates a requirement in the 2002 Homeland Security Act that employees retain the right to bargain collectively. The new rules retain collective bargaining for procedures managers will follow in selecting, promoting, disciplining and laying off employees. More managerial flexibility: The new personnel rules will give managers more latitude to reward high-performing employees, discipline poor performers and alter employees’ duties in response to changing needs and circumstances.

The overhauled pay system, which will be deployed in three stages during the next four years, is based on rewarding employees for their performance instead of longevity. No longer will employees receive across-the-board annual raises or within-grade increases tied to how many years they've been on the job, as is now the case under the General Schedule. Instead, employees will receive annual raises if market surveys indicate they're underpaid for their jobs or locations and will be eligible for performance-based increases each year based on the ratings they receive from their supervisors. Higher ratings will translate into larger raises. A senior Homeland Security official who asked not to be identified said that while parts of the GS system should be changed, the pay-for-performance plan is "probably not the perfect fix."

"The problem is there’s limited money," the official said. "There are agencies like ICE [Immigration and Customs Enforcement] that are very short of money now, so the likelihood that they would really be able to participate is probably very limited." Better pay? Union leaders also are concerned the new system will actually reduce federal pay, instead of increasing it, because it will be up to the department to budget money for raises. "Let’s not be naïve," Gage said. "They are not going to pay-for-performance to increase federal pay."

Colleen Kelley, president of the National Treasury Employees Union, said the department will not be able to offset higher raises for good performers by withholding raises for poor performers, because there aren't enough poor performers. She said managers - not the pay system - are the cause of the current system’s problems. Those problems will continue unless the department trains managers, holds them accountable and provides enough money to reward good employees.

The new rules also change how managers set performance expectations for employees. Managers no longer will be required to list in writing at the beginning of the year the specific performance expectations and requirements on which an employee will be appraised. Instead, managers would communicate those requirements to employees throughout the course of the appraisal cycle through specific work assignments, directives and other means. Removing the written standard should simplify the performance management process and allow managers to adjust performance expectations as the department's needs and mission requirements change during the year, officials said.

The new rules also provide managers with a streamlined process for addressing poor performance and misconduct. Previously, managers had to give employees between 60 and 90 days to improve their performance or conduct before they could propose disciplinary action. Under the new rules, managers must give employees just 15 days' notice before taking disciplinary action. Employees still will be able to appeal personnel actions taken against them for performance and conduct to the Merit Systems Protection Board, but the board will have to meet tighter deadlines for issuing decisions and will have less authority to mitigate disciplinary actions. Under the new rules, the board will be able to reduce penalties only when they are so extreme as to be "wholly without justification" based on the conduct or performance.

"The rationale for having a higher, more difficult mitigation standard goes back to DHS' mission and the need to have an exceptionally high order of work-place discipline and public trust [and] greater accountability in the work force," said Ronald Sanders, OPM's associate director of strategic human resources policy. Because penalties can be imposed more swiftly and can be potentially more severe, managers will have to meet a higher burden of proof to discipline poor performers. Managers previously had to present substantial evidence of poor performance to justify their disciplinary actions. That burden of proof will be raised to a preponderance of evidence, which is the standard that already exists for taking actions based on misconduct.

Congressional reaction: House Minority Whip Steny Hoyer, D-Md., said he supports the concept of a new personnel system but that it must be fair and transparent. "The new personnel system appears to have scrapped the General Schedule and replaced it with a new and untested ‘pay-for-performance’ system," Hoyer said in a Jan. 26 statement. "The last thing the department needs is turmoil in the rank-and-file." OPM Director James expressed confidence that the continuing uncertainty over much of the new system won't get in the way of employees doing their day-to-day jobs. "I think it's important to remember these are patriotic, loyal Americans who are excellent civil servants who will do their jobs while these things are sorted out. I don’t anticipate that it would create any kind of problem in terms of managing the department while we go through that process," James said.

Sen. Joseph Lieberman, D-Conn., ranking member on the Senate Homeland Security and Governmental Affairs Committee, said Homeland Security supervisors must include employees and their representatives in the design and development of the system. "The key to success is to foster a spirit of collaboration between managers and front-line employees and to prevent arbitrary and abusive workplace practices," Lieberman said. As the new system takes shape, employees will receive regular updates through an internal Web site dedicated to the system, called MAXHR . If employees have questions about the new system, they can e-mail "Max" at MAXHR@dhs.gov.

Federal Times, by Tim Kauffman and Eileen Sullivan, 31 January 2005

Sierra Leone Invests in Financial Management

Sierra Leone invests in financial management: The government of Sierra Leone in Africa has chosen a supplier to implement a financial management IT system across the administration. Software firm FreeBalance will initially deploy its Integrated Financial Management Information System (IFMIS) for the Ministry of Finance and for the Sierra Leone Police Force, with rollout across all ministries, departments and agencies to take place at a later date. The IFMIS forms part of the government's Institutional Reform and Capacity Building project, which is an essential part of the administration's programme to decentralise, improve financial management and reduce poverty in the country. The government will use FreeBalance software to manage budgeting, accounting and financial planning throughout the public sector. FreeBalance will also provide associated hardware and networking infrastructure for the project, as well as training and support services.

ElectricNews.net, Ireland, 12 January 2005

Eighth National Conference on E-governance from Feb 3-5

Bhubaneswar - The eighth national conference on E-governance, being organised here from February three to five, would provide a forum for discussion of E-government related issues. Experts from administration, industry and academia would take part in the conference which would lead to formulation of regional and national E-governance strategies, Orissa's Minister Suryanarayan Patra told reporters here today. Organised jointly by the Union Ministry of Information Technology and department of Administrative Reforms and Public Grievance, the theme of this year's conference would be "capacity building for E-governance", he said.

The convention would provide a platform to delegates to share their experiences from different states which had already taken a lead in E-governance, Patra said. There would be deliberations on landmark E-governance projects such as 'Bhoomi' in Karnataka, E-seva kendras in Andhra Pradesh and 'gyandoot', the community-owned rural internet kiosk schemes in Gujarat. The conference, he said, would provide an excellent opportunity to showcase the advances made in this front over. the last few years and help build intimate relationship between government and prospective investors in the state. Union Communications and IT Minister Dayanidhi Maran would inaugurate the conference.

New Kerala, India, 19 January 2005

Kadhmir: Kalam Spells out 10-Point Action Plan on R-Day Eve

President A P J Abdul Kalam today suggested a ten-point Action Plan for creation of job and generation of wealth in the effort to transform India into a developed nation by 2020. In his address to the nation on the eve of the 56th Republic Day, he gave top most priority to education and rural development. Following is the ten-point Action Plan:

- The education system should proactively build entrepreneurial and vocational capacities in students. Whey they come out of educational institutions, they should have the confidence to start small enterprises and also possess the skill to do it. Above all the education system has to impart the spirit that "we can do it."

- Rural development has to be a mission mode operation through the PURA programme, which will enable the provision of maximum benefit to villagers in a cost effective way.

- Banks have to provide, hassle free loans to rural enterprises and those who have creative ideas. Banks have to assist them with venture capital. Existing agriculture and agro processing credits have to be increased so that agriculture communities are empowered for enhancing the productivity of agricutural produce, food processing and marketing.

- The tsunami has caused severe damage to our coastal regions and islands. Our fishermen and others living in these areas have lost their dwellings and livelihood. While planning the reconstruction of homes it is important to take the task as an integrated PURA complex for promoting the prosperity of the coastal region. This can include infrastructure for fish storage and chilling plants, sea food processing and marketing centres, boat and fishing net maintenance centres, schools, hospitals, water sources and other small scale industrial units.

- In our country we have experiences in certain government departments in the field of defence, space, nuclear, agriculture and metro railway in executing mission mode projects, which has resulted in the emplowerment of the programme and removal of normal adminitrative delays through an empowered management structure. Major programmes of the country should use this mission mode management for employment generation schemes.

- Since broadband fiber connectivity has reached beyond the block level in districts and our satellite communication density has also increased this is the time for all our information technology, R & D and ICT industrial establishments to reach out to rural areas. The e-governance GRID should be established between the state governments and the central governments with the national ID as the primary database, linking all parts of the country for providing government to government, government to citizen access and extending tele-education, tele-medicine services to people in rural areas.

- Small scale industries are widespread in our country with tremendous employment potential. For a dynamic and competititve performance, technological upgradation of these units is essential in national planning.

- The media is indeed a dynamic and creative system in our democracy and all the more it is important that media constituents reach out to 600,000 villages of the country and be active partners in rural development. Artists have a great role to play in societal transformation.

- The youth have to create a movement of making their own homes righteous, make their environment clean and excel in their studies and their tasks.

- The national parliamentary system should become the role model for the nation; in legislative performance, in clean and progressive administration and nobility and speedy judiciary.

India Daily, NJ, 26 January 2005

E-Government Motivation

France to offer 20 Euro break to everyone who files taxes online; one way to drive electronic government initiative. The French Government has sent a clear signal about the importance of e-government, specifically by reducing the taxes of citizens who file online. The reduction is 20 Euros, which comes to about $26. That may not sound like much - in fact, it is something like .1 percent of the average French citizen's gross yearly wages - but it is a substantial potential commitment. France has 61 million people and is an aging country, meaning that about 55 million of its people are old enough to regularly pay taxes. If a significant percentage of that sub-population avails itself of online filing, the French government will have committed millions of Euros to this online tax break.

Even before this monetary initiative, French citizens have been flocking to embrace online tax filing. In 2002, online about 120,000 taxpayers filed online; that number rose to 1.2 million by 2004, representing almost a fifth of all taxpayers with Internet access. In 2005, France is offering not just the 20 Euros but more advanced functionality to lure more taxpayers online. The coming year will see advances like pre-filled online forms, better data management, and visibility into three years of tax records online.

Analyst Francois Dauriat of Ovum says that the tax break is an example of how ADEA, France's new e-government agency (set up in 2004), "has clearly regenerated the way that e-government is handled in France." This is due, he says, not just to a "willingness to promote network teamwork, best practices, and standardization," but also to a decent marketing budget that comes in at 13 million Euros over the next four years. For the government of France, as for its citizens, the primary motivation behind e-government is convenience, not just for taxpayers but also for administrative organizations that no longer have to bother with the same volume of time-consuming, error-admitting manual processes, in this case around tax filing.

Line 56 News, by Demir Barlas, 6 January 2005

British E-government Hailed by United Nations

A global study has given the UK government a high rating for the way it provides public services electronically, but America still leads the way. The UK has been ranked third in a global chart measuring the readiness of its e-government strategy, according to a report published by the United Nations (UN) this week. The UN Global E-government Readiness Report 2004 ranking system compares countries' e-government readiness and their extent of e-government participation. It placed the US at the top of the table, followed by Denmark. It was put together by United Nations Online Network in Public Administration and Finance (UNPAN), a division of the UN that details the public policies, administration and services of UN member states.

Although it does not provide any further information on individual countries, its Web site states that "governments have made rapid progress worldwide in embracing ICT technologies for e-government in the past years. In 2001, the UN e-government survey listed 143 member states as using the Internet in some capacity; by 2004, 93 percent or 178 out of 191 member states had a Web site presence." It continues: "Broad trends of e-government development around the world in 2004 reaffirm that political ideology, economic and social systems; level of development; resource availability, human and technological infrastructure; institutional framework and cultural patterns all have a bearing on how, and how well, an e-government initiative is utilised." Research found that between 85 percent and 92 percent of all countries now provide a number of government databases, laws, policies and other documents online. And more than 75 percent of the 170 countries surveyed allow the downloading of documents online. However, the number of countries providing public services online did not improve on a third from last year and progress in providing transactional services online appears to be limited to the more developed countries.

ZDNet.co.uk, 12 January 2005

EU Sees Potential in E-government

A survey has found that while users are satisfied with the e-government services they have tried, but that it can be hard to find the service you need. Online services have 'huge potential' to save time and money but they need to be more user friendly, says the European Union. Only a minority of users are experiencing service improvements through e-government, according to a "snapshot" survey issued by the EU. While e-services such as tax returns, online VAT, social security benefits, car registration and birth and marriage certificates have "huge potential" to save time and money, they are yet to present an improvement on their offline counterparts, says the report.

The research finds that online income tax returns are saving EU citizens "seven million hours a year", while companies are saving about €10 per transaction on VAT returns. Overall, 62 percent of users say they are "very satisfied" with e-services, and less than 10 percent report they are not satisfied. Over three-quarters (77 percent) say that they would recommend online services to others. It adds, however, that "real service improvements" are only experienced by 30 to 40 percent of users, and that e-services need to be made more user friendly. The "most common" usability problem is that people can't find the e-service.

"The most important action item in order to improve value for citizens is to make the services easy to use and to provide better help regarding the e-service on the Web site," said the report published on Friday. "Fundamental process integration [back office] and improved service delivery [front office] is needed to create integrated services and deliver maximum benefits." Commenting on the findings, Viviane Reding, the EU information society and media commissioner, said that it is now time to make e-services more widely available.

"Using new technologies to provide public services can become a powerful way to cut red tape," she said. "The survey shows that public services online clearly deliver concrete added value both to citizens and business. "The challenge now is for public authorities to provide online public services interactively wherever possible and relevant, and in a manner which is as user-friendly as possible. We have to ensure that citizens and businesses across the EU get the maximum benefit from quality, efficiency and productivity gains achieved by supplying public services on line." The EU's eGovernment-impact survey got responses from 48,228 users and recorded their attitudes to the usability, benefit and value of e-services. It was commissioned to assess progress under the eEurope action plan for 2005.

ZDNet.co.uk, UK, 17 January 2005

E-government Services Yield Real Benefits Says EU

A new survey of eGovernment services prepared for the European Commission has found that EU citizens are saving 7 million hours a year on the time it takes to do their income tax returns, and EU firms are saving about 10 euros per transaction on their VAT returns by doing them on line. Moreover, there is still huge scope for further savings.

Viviane Reding, Information Society and Media Commissioner, welcomed these latest findings: "Using new technologies to provide public services can become a powerful way to cut red tape. The survey shows that public services on line clearly deliver concrete added value both to citizens and business. The challenge now is for public authorities to provide online public services interactively wherever possible and relevant, and in a manner which is as user-friendly as possible. We have to ensure that citizens and businesses across the EU get the maximum benefit from quality, efficiency and productivity gains achieved by supplying public services on line."

The 2004 eGovernment-impact survey covered 48,228 users (19,896 replies from citizens and 28,332 from businesses). It provides an extensive snapshot of general user satisfaction with public services provided online by measuring perceptions of their usability, benefit and value. According to the survey, 90% of users appreciate the quality of services offered electronically and over 60% are very satisfied with these services. The most commonly reported benefits are saving time and gaining flexibility.

The key findings of the new survey include the following: - Online income tax declarations already save 7 million hours. If generally available and widely used in all Member States, the savings could rise to more than 100 million hours for citizens each year. - Online VAT declarations save about €10 per declaration. If maximum take-up were achieved, this could translate into savings of some € 0.5 billion for businesses across the EU each year. - On average, citizens and businesses save over one hour per service transaction. - 77% of users said that they would recommend the on-line services already used by them to others. - There were also some clear messages about areas for improvement. Citizens want systems to be easier to use with much better on-line help facilities. Businesses want services that are easier to find and that save them money.

The Commission is currently consulting on the development of a new coherent and forward-looking European Information Society policy and intends to bring forward proposals for a new eEurope 2010 initiative, including proposals for public services, before summer 2005.

PublicTechnology.net, UK, 17 January 2005

EU Recommends Re-focusing E-government Strategy on Lisbon Objectives

A group of senior national officials have proposed re-focusing the EU's e-government strategy on bolstering administrative efficiency in order to meet the Lisbon competitiveness objectives. In a statement, Information Society Commissioner Olli Rehn said the recommendations were "an important contribution to the review of the EU's 'Lisbon' competitiveness strategy" and emphasised the "key contribution that public administrations can make to improving Europe's competitiveness, growth, innovation and employment rates".

The group, which brought together officials from 30 European countries under the chair of the Dutch Presidency, issued the recommendations on 28 September in Amsterdam. The recommendations focus on: - Transforming public administrations to speed up responses to businesses and citizens to help deliver the Lisbon competitiveness objectives in 2010; - Defining concrete targets for 2010:
-Reducing the administrative burden for businesses and citizens by 25%; -Ensuring interoperability of pan-European public services using open standards; -Defining common measurements for efficiency, red tape reduction, quality, trust and security of online public services; - Financing issues (ease of access, standard set of measurements on benefits, etc.). The recommendations come as the EU prepares to assess the e-Europe 2005 Action Plan, which expires on 1 January.

Euractiv, Belgium 20 January, 2005

E-Government Introduction in Armenia to Be Started from Foreign Ministry

Yerevan - A pilot project of e-government is being carried out in Armenia's Foreign Ministry under the EU IT. Am program, says the program director Antony Jagus. The project will be finished in a year. If successful this model will be applied to the whole Armenian Government. The project envisions creating a modern computer network, installing necessary equipment, retraining FM employees. The best example of e-government in FM is the issuance of e-visas. The next step is e-certificate of no previous conviction for those seeking jobs abroad. This phase is to be carried out together with Justice Ministry. For this purpose the computer networks of the two ministries will be united. The FM's experience will be applied to the whole government structure. Officials from different ministries are now being trained in England under the program.

Jagus says that the Armenian authorities are actively promoting the e-government introduction into the executive power. He hopes that the demonstration of the pilot project results will stimulate the whole process. The other bloc of the IT.Am program envisions technically modernizing the European Regional Institute of Information Technologies of Armenia, creating a modern academic network and drafting a flexible IT education program there to allow to train necessary e-government specialists. This education system will timely react to changes on the market and will be open for novelties in the sphere. The two blocs of the program cost a total of 1.2 mln EUR.

Armenia Diaspora, Armenia, 26 January 2005

United Arab Emirates Member State Launches Stellent-Powered E-Government Initiative

Information portal provides citizens with a comprehensive gateway to government services and information - Stellent, Ltd., the London-based subsidiary of Stellent, Inc. (Nasdaq:STEL), a global provider of content management solutions, announced today that Ras Al-Khaimah (RAK) - a member state of the United Arab Emirates - has gone live with a Stellent-powered e-government portal, www.rak.ae, under the initiative of His Highness Sheikh Saud. The portal offers residents fast, easy, Web-based access to all government services, news and weather information, and facilities for handling transactions such as bill payments. Content can be accessed in Arabic or English. The government portal team partnered with local systems integrator Microsystems to implement its Stellent-powered portal and help ensure all relevant content was included and easily accessible by visitors.

The first phase of the deployment focused on providing information and links to government departments online, and integrating legacy content. The second phase, currently in progress, focuses on integrating more complex portal functionalities, such as search facilities, transactional capabilities and interactivity within departmental areas of the portal. "Stellent has a great deal of experience in providing e-government solutions, but it is still very exciting to play such an important part in the development of a project such as this one," said David Macey, vice president of Europe, Middle East and Africa for Stellent. "Citizens can now access critical government services online, and the government can more quickly and easily communicate with them. In addition, the portal is playing a critical role in bringing new investment into the area to support local businesses and increase employment levels. As the portal and its functionality evolve over the next few years, the benefits will increase even more."

Rak.ae was designed to be easily maintained by government staff. Two editors, one Arabic and one English, are employed to retain overall control of the portal's content. Two other staff members within the e-government authority are also trained in the use of the technology to provide further resources if needed. The system was designed, however, to be compatible with Microsoft Word so that smaller changes - such as minor additions or revisions - can be made by staff without requiring special training. This ease-of-use ensures content can be updated regularly.

Microsystems was selected for this implementation based upon its ability to provide - using Stellent technology - a content management solution capable of working across different databases and platforms. The Stellent technology also provides Microsystems with a range of solutions that are scalable, have a low cost of ownership and display fast, tangible results. "As a systems integrator, our core competency is identifying specific IT solutions to handle particular information resources for our customers," said Sufian Barakat, business development manager at Microsystems. "Stellent was the ideal partner for us in the development of this United Arab Emirates member state government portal. Not only did the technology fit all our requirements, but it provides a seamless fit for their - and all of our other customers' - business needs because it can be easily localised and integrated."

About Stellent, Inc. - Stellent, Ltd. is the London-based subsidiary of Stellent, Inc. (www.stellent.com), a global provider of content management software solutions that drive rapid success for customers by enabling fast implementations and generating quick, broad user adoption. With Stellent, customers can easily deploy multiple line-of-business applications - such as Web sites, call centers, dealer extranets, compliance initiatives, accounts payable imaging and claims processing - and also scale the technology to support enterprise-wide content management needs. Stellent has more than 3,500 customers, including Procter & Gamble, Merrill Lynch, Los Angeles County, The Home Depot, British Red Cross, ING, GlaxoSmithKline, Georgia Pacific, Bayer Corp., Coca-Cola FEMSA, Emerson Process Management and Genzyme Corp. The company is headquartered in Eden Prairie, Minn. and maintains offices throughout the United States, Europe, Asia-Pacific and Latin America.

About Microsystems - Microsystems (MS) is a leading IT solution provider company established in 1990, with the objective of addressing the growing segment of emerging technology markets, and in recognition of the IT needs of the region. MS provides world class business and technology solutions through its partnership with international companies of repute. MS is a company with offices in Dubai and Ras Al-Khaimah, and partners all over the Middle East. MS develops information technology solutions for government agencies and business organizations. Our services include consulting on the strategic use of information technology, and the development and implementation of complete information systems covering the full range of our client's information technology activities. We develop solutions that rely on the state-of-the-art in information technology, and that are suitable for the implementation environment. In 15 years of MS' successful existence, MS has proved to be one of the most trusted names as an IT solutions provider and systems integrator, a fact that has been proven beyond doubt by an ever-growing list of clients, supported by a highly qualified and technically competent team of employees.

Any forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risk and uncertainties including, without limitation, risks of intellectual property litigation, risks in technology development and commercialization, risks in product development and market acceptance of and demand for the Company's products, risks of downturns in economic conditions generally and in the Web content management tools and intranet information management markets specifically, risks associated with competition and competitive pricing pressures, risks associated with foreign sales and higher customer concentration and other risks detailed in the Company's filings with the Securities and Exchange Commission. Stellent and the Stellent logo are registered trademarks or trademarks of Stellent, Inc. in the USA and other countries. Outside In and Quick View Plus are registered trademarks of Stellent Chicago, Inc. in the USA and other countries. All other trade names are the property of their respective owner.

Business Wire (Press Release), CA, 5 January 2005

Italy, Iraq Agree to Strengthen E-government Cooperation

Italy and Iraq have signed an agreement to strengthen e-government cooperation as part of a project aimed at creating an intranet linking some 30 ministries and state institutions, Italy's Innovation and Technologies Ministry announced Friday. The agreement, an addendum to a memorandum of understanding between the two countries agreed to last July, was signed in Rome late Thursday by Iraq's Science and Technology Minister Rashad Mandan Omar and Italy's Innovation and Technologies Minister Lucio Stanca, the ministry said in a prepared statement.

The Italian government confirmed its commitment to the completion of the ongoing government intranet project, which is due to become operational in the next few weeks with the creation of an IT link between the first 13 government ministries, the statement said. The broadband system uses advanced laser technology and has been chosen for its operational efficiency and security, Stanca said in a statement. The intranet will have a supplementary satellite back-up system, he said.

"The laser technology is American, but everything else is Italian," said Dario De Marchi, an Innovation and Technologies Ministry spokesman, in an interview. "It's a new and very secure technology, which is not subject to meteorological interference, including from sand storms. We have made a lot of progress since July, despite the security problems in Iraq."

Half a dozen Italian technicians have helped to implement the project in Iraq and 40 Iraqi government technicians have received training in Italy as part of the project, De Marchi said. The project is part of a wider program promoted by the G8 and the United Nations to encourage the introduction of e-government in developing countries. Italy has been playing a leading role in the project. The G8 consists of the world's eight leading industrialized countries.

The Italian Foreign Ministry is financing the first phase of the project with an investment of US$3.2 million, the statement said. The next stage of the project, which is expected to be ready for approval within a couple of weeks, will be the presentation of an Iraqi government portal, De Marchi said. Under the latest agreement, Italy will provide strategic, technical, legal and other assistance to the Iraqi Science and Technology Ministry for the definition and implementation of its e-government strategy. "The Science and Technology Ministry is doing very important work,," De Marchi said. "It's responsible for the conversion of the country's research institutions from military to civilian purposes."

IT World, by Philip Willan of IDG News Service, 14 January 2005

Four More Years of IT

When President Bush took office four years ago, he brought to government a cut-to-the-chase business mentality that included a promise to leverage technology to deliver efficiency and stimulate change. In August 2001, eight months into his first term, Bush launched his management agenda, emphasizing the use of E-government initiatives to cut costs while improving services. On Sept. 11, 2001, everything changed, including federal technology priorities. Homeland security overshadowed all else. Data gathering and sharing among intelligence agencies and law enforcement topped the nation's tech agenda, with cybersecurity taking a close second place.

With the president's second inauguration last week, national security continues to drive the administration's second-term agenda. Data sharing and cybersecurity remain top IT priorities (see stories, "Data Sharing: There's Still A Long Way To Go" and "Federal Role In Ensuring Cybersecurity Isn't Clear"). In addition, increased competition from abroad is forcing the federal government to get more involved in technology innovation (see story, "U.S. Needs To Regain Top Tech Innovation Spot"). But what's probably the most important IT priority for the next four years is emerging from the mounting budget deficit, which is forcing the government to refocus on cost cutting and efficiency and could result in a rearrangement of federal IT priorities.

The escalating budget deficit--projected to reach $521 billion for fiscal 2004 -is likely to stimulate E-government initiatives at all levels of government, says Paul Taylor, chief strategy officer at the Center for Digital Government, a technology research group that focuses on the public sector. "It's this budget deficit and focus on cost cutting that makes serious conversation about the future of E-government possible," Taylor says. "The government needs a service-delivery system that takes cost out of the process of conducting government."

To date, federal agencies have undertaken more than 43 E-government initiatives, many of which facilitate internal government operations. The White House Office of Management and Budget noted in a report last month that the pursuit of E-government is important to connecting different government agencies with one another. For example, the Department of the Interior's National Business Center, which already provides payroll services to 65 federal agencies, is competing for a project that would let it build a financials system for the entire federal government. By moving to a common IT platform for services that all agencies require, the government will save taxpayers millions of dollars per year, Interior CIO Hord Tipton says. "There are huge savings to be achieved if we can get beyond the turf and cultural issues."

But E-government isn't just about providing internal services at lower costs, Sen. Susan Collins, R-Maine, says via E-mail. E-commerce-type Web sites facilitate interaction with businesses and private citizens, says Collins, who chairs the Senate Governmental Affairs Committee, which oversees many federal IT initiatives. For example, the primary component of the president's disaster-management E-government initiative is the DisasterHelp.gov Web site, which lets 15,000 registered users from all levels of government and the private sector communicate and coordinate with one another.

The Internal Revenue Service's 8-year-old online tax-filing program is probably the best-known E-government initiative. In 2003, 3.4 million U.S. taxpayers filed their taxes using the Free File program, a 21% increase over 2002. The IRS also received 2.2 million applications for electronic employer identification numbers in 2003 and 350,000 business tax forms. Federal agencies will spend nearly $6 billion annually by fiscal year 2009 on E-government technology, government IT market-intelligence firm Input predicts in a report published earlier this month. That's an increase from the $4 billion spent in fiscal 2004, which ended Sept. 30. Much of the E-government spending will be done by the departments of Defense and Homeland Security, Input says, with software investments expected to make up the bulk of it.

The E-government software market will grow 43% to $970 million in 2009, up from $680 million in 2004, Input says. The primary factors behind the growth of E-government initiatives include the President's Management Agenda, which encourages adoption of tech solutions; increased oversight by the White House Office of Management and Budget; and federal laws that promote Web- and IT-based improvements to government processes, including the 2002 E-Government Act. OMB views E-government as a way to cut overall costs but also expects these initiatives to reduce the need for IT funding. "If an agency is properly managing their portfolio, their IT budget might go down because they're achieving the same or better results with the same amount of tax dollars," says Karen Evans, OMB's administrator for E-government and IT.

Expanded access to broadband and wireless communications infrastructures is critical to creating an environment for participation in E-government, says Phillip Bond, the Commerce Department's undersecretary for technology. "We expect WiMax to burst onto the scene during the [president's] second term," Bond says of the wireless-broadband-interoperability standard that already has the backing of China and South Korea. WiMax is expected to help the Bush administration deliver on its promise of affordable broadband for most citizens by 2007. Also important to that effort is work being done to enable broadband over power lines. The Federal Communications Commission is working on rules for implementing such services.

In the end, President Bush's legacy as an innovative IT policymaker will depend upon his ability to follow through on many of the programs put in motion during his first term. On the front lines, federal CIOs will be the ones to make E-government happen, and they understand that conditions are rarely perfect for following through on these initiatives. "There's not ever enough money to do all of the things that need to be done," Interior's Tipton says. "I always tell my people not to be distracted by budgetary restraints because you'll always have that."

InternetWeek.com, by Larry Greenemeier, 25 January 2005

United Nations to Set Up Computer Centres in Africa

[World News]: New York, Jan 11 - The United Nations will provide 20 African countries community telephone and computer centres to help them develop education, health, agriculture sectors and governance and create information societies, the United Nations International Telecommunications Union said today. "Multipurpose Community Telecentres (MCTs) are one of the most innovative and practical ways to bring the benefits of the information society to the people of Africa," Director of the ITU Development Bureau said.

"Not only will they create employment and provide basic information services but they will also establish community focal points for e-Education, e-Health and e-Governance initiatives through web-based multimedia content. They also stimulate the development and growth of local businesses, as well as Information and Communication Technology skills among the local population," he added. Private sector partners were being invited to provide the necessary technology for the centres and "in exchange companies will get a better understanding of the potential of the ICT market in Africa and of women as active participants in its economy," ITU Project Manager Asenath Mpatwa said.

The ITU said it had already established four MCTs in Tanzania and Guinea Bissau. "These MCTs are already providing basic training in the use of computers, and will soon supply other services such as public telephone, fax and internet connectivity as well as basic information." Several African ministries have requested help in fulfilling the first phase of the Dec 2003 Plan of Action of the World Summit on the Information Society to extend ICTs globally.

New Kerala, India, 11 January 2005

Brunei Ties Up With Korea For e-Government Roadshow

Bandar Seri Begawan – Brunei is getting ready for e-Government program aimed at improving the quality and efficiency of public services through interactive and networking information and communication technologies. This was disclosed by Awang Haji Ahmad bin Haji Abdul Rahman, the Deputy Permanent Secretary at the Prime Minister's Office, at the launching of the Korean IT Roadshow, Towards "e" Innovation held in Jerudong yesterday. Awang Haji Ahmad said that the governments throughout the world faces a common challenge, that is, how to respond to the significant increase in citizens and customer expectations.

Brunei's government is committed to making profound changes in its public service culture. One of theme is to improve the way services are rendered to the public by making it easy for citizens and customers to access all the services quickly and to improve their experience of dealing with the government. Awang Haji Ahmad said that e-government project contributes to the modernisation of government, the transformation of the public sector and the development of new models of citizen participation and engagement.

Some 40 delegates from Korea took part in the showcase, which features high-tech communications equipment. The exhibition makes a strong emphasis and bringing possible forward new connections and partnerships in the drive to improve quality of life and technological literacy to the community. The function also included the signing between E-Prime Network with Korea Energy Assistant Centre (KEAC). The E-Prime was represented by Pengiran Haji Mohd Suhaimi, its president, while Vice the KAEC was represented by Mr Kim Ton Hun, its president. - Courtesy of Radio Television Brunei

Bru Direct, Brunei Darussalam, 10 January 2005

MOF to Propose Minimum Tax to Achieve Greater Social Equality

With tax revenues dwindling as a percentage of Taiwan's overall economy, the Ministry of Finance will soon propose a minimum tax rate on new business investments that benefit from tax credits, the finance minister said yesterday. The idea of establishing a minimum tax was first raised by the Pan-Purple Alliance and financial experts who contend that greater equality was needed in Taiwan's system of taxation. "Setting a minimum tax rate should be the first important element in the MOF's tax reform proposal," said Tseng Chu-wei, a professor in National Cheng Chi University's Department of Public Finance, last month. The Pan-Purple Alliance, a civic group committed to greater social equality, also sees a minimum tax rate as an essential part of reform and plans to launch a tax boycott movement in the spring to push for more equitable changes.

The MOF's proposed measure is not likely to satisfy these groups. Lin said that the minimum tax rate would not apply to companies already benefiting from tax credits. He cited as an example the Formosa Plastics Group, which has been granted an NT$100 billion tax credit on its nearly NT$600 billion investment in its sixth naphtha cracking plant. After the minimum tax rate goes into effect, FPG would still enjoy the NT$100 billion tax credit as the new minimum would only apply to new investments, the minister said. Lin also acknowledged that the minimum tax rate would not apply to personal income taxes for the time being, even though the depletion of Taiwan's tax base is largely the result of breaks and allowances for the average taxpayer.

He indicated minimum tax rates could be applied to individuals' taxes in the future. "It's not enough to apply a minimum tax rate to enterprise income only," he said, but because of the complexity of personal income taxes, "we would only implement (a minimum) on them gradually." A minimum tax rate on businesses and individuals would not be put into effect at the same time, Lin noted. In order to encourage enterprises to invest more domestically and commit to local research and development projects, the government has offered tax credits to businesses in Taiwan based on the "Statute on Upgrading Industries." Thanks to the tax reduction preferences, Lin said, some enterprises don't have to pay any tax as a result. Setting minimum tax rates for those businesses would be of some help in collecting taxes from ventures eligible for tax credits in the future, Lin contended.

That will require revisions to both the "Income Tax Act" and the "Statute on Upgrading Industries," which Lin said the Finance Ministry would submit to the Legislative Yuan in February for review. Lin admitted that because the proposed minimum tax rate for businesses would only apply to new investment, it would take three to five years before its impact would be felt. According to the MOF's assessment, the new tax rate would influence several thousand enterprises and raise an additional NT$10 billion in revenues. The ministry would not disclose the minimum rate it has in mind.

Meanwhile, the Pan-Purple Alliance held a press conference yesterday, urging legislators to abandon a measure that would make cuts in the land value increment tax permanent. The measure is scheduled for a second reading on Thursday or Friday. The alliance argued that keeping the tax low will only widen the gap between rich and poor. The tax, similar to a capital gains tax, is assessed on the increase in a property's value at the time it is sold or transferred. "We will publicize the names of legislators who support this amendment so that people know who helps conglomerates make unreasonable profits," an alliance statement said. With one its suggestions for tax reform partially accepted by the MOF, the emboldened alliance is also expected to push for the reinstatement of the securities exchange income tax and land exchange income tax, and the imposition of a tax on external income.

eTaiwan News, Taiwan, by Shih Hsiu-chuan, 19 January 2005

Now It Is the Turn of the Public Sector to Put into Practice a Better System of Governance

Sir, Good governance in the private sector is the subject of constant scrutiny and review. The City pages provide a running commentary on the trials and tribulations of organisations that fail to observe all of the proper standards set down in the Combined Code. Many of these trends are paralleled in the public services. Certainly the governance arrangements of organisations providing public services are keenly observed and sometimes criticised. And in the event of significant governance failings there is an inevitable frenzy of attention - and rightly so. According to the Treasury, public expenditure in the UK will exceed £500bn by 2005-06. The quality of the services - in transport, housing, education, health, policing and many other fields - is vitally important to us all as taxpayers and citizens.

But the public services are different from the private sector in a critically important respect. They have no equivalent of the Combined Code. Instead they have a plethora of individual codes and guidance that apply to different specialised groupings of public bodies, including local authorities, National Health Service bodies, schools and housing associations. Despite the excellence of much of this work the overall picture inevitably appears disjointed and fragmented, especially to the public. At best, it is a case of occasional good governance.

Twelve months ago the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Office of Public Management (OPM) became increasingly concerned about the seriousness of this problem. Working in partnership with the Joseph Rowntree Foundation, they established an independent commission to tackle the challenge of developing something like the Combined Code for the public services. Our work has now been concluded and the resulting Good Governance Standard for Public Services is available at www.opm.co.uk/ ICGGPS.

We believe the Standard will act as a powerful tool to help the directors and governors of the UK's public services to review and improve governance arrangements in a highly systematic way. Equally importantly, we believe our work will enable members of the public to scrutinise organisations providing public services more confidently and effectively and - where appropriate - to demand best, or at least, better practice. The Standard has already been widely welcomed and endorsed by key public service leaders. The challenge is to put it into action. (Sir Alan Langlands, Chairman of the Independent Commission on Good Governance in Public Services, Principal and Vice-Chancellor, University of Dundee)

Financial Times, UK, by Alan Langlands, 12 January 2005

EU Finance Ministers Okay Czech Macroeconomic Plan

European Union finance minister have approved an updated version of the Czech government's macroeconomic program, including reservations about the plan expressed by the European Commission (EC) last week. The ministers also approved measures adopted by the Czech Republic, Slovakia, Poland, Cyprus and Malta to cut ballooning budget deficits. The EC called on the Czech Republic to tighten its medium- and long-term fiscal policy as well as to carry out reforms to the pension and health care systems. Under the government's plan, the Czech public finance deficit should fall to below 3 % of GDP by 2008, allowing the country to adopt the euro by 2010. Like the EC, the EU council believes the Czech Republic will be able to meet this goal provided it implements the necessary cuts in public spending. According to the EU, however, more reforms will be necessary over the long term in order to eliminate risks related to the huge spending required by the country's aging population.

Interfax, Russia, 19 January 2005

Tax Breaks Are Weapon of Choice in Fight to Win Investors

The revival in globalforeign direct investment, confirmed yesterday by the United Nations, is likely to intensify competition between governments seeking to attract new investors. Many countries intent on increasing their appeal to foreign businesses have embarked on legal and regulatory reforms designed to create a sounder business climate. But in addition, tax has become one of the most popular weapons at governments' disposal - as illustrated by several prominent examples over the past year. The US passed the American Jobs Creation Act, which gave US companies a one-off tax break to encourage them to bring home offshore earnings to invest in the US. Australia introduced a package of tax reforms designed to create a simpler, more business-friendly tax system, in an effort to appeal to international investors.

And in the European Union, the importance of tax regimes to business location decisions was underlined by a dispute over the low corporate tax rates used by eastern European states to attract foreign investment. The argument ahead of the EU's admission of 10 new members in May pitched France and Germany against the European Commission, the EU's executive body, and lower-tax candidate countries, which stressed the economic merits of tax competition. Economists have traditionally disapproved of the use of tax incentives to attract business, on the grounds that they do not usually justify their cost by creating a sustainable increase in investment. Other factors, including infrastructure, political stability and the cost and availability of labour, are considered more important.

But there are exceptions. There is growing evidence that tax rates and incentives can influence location decisions within regional economic groups, such as the EU, according to research by the Foreign Investment Advisory Service (FIAS), an arm of the World Bank and International Finance Corporation. This argument is backed up by research from the Institute for Fiscal Studies, the UK-based public finance think-tank, which says that "tax differentials may also be assuming greater importance in company decision-making, as other differences between countries within the EU diminish". The realisation that lower tax countries may be luring investment away from their neighbours has prompted many governments to redesign their tax policies.

Between 1988 and 1997, the average statutory corporate tax rate in countries belonging to the Paris-based Organisation for Economic Co-operation and Development declined from 44 per cent to 36 per cent. A fear that the proliferation of tax breaks will lead to a "race to the bottom" has prompted several attempts to achieve greater co-ordination of corporate income taxes. In the late 1990s, both the EU and OECD introduced forms of co-operation, designed to counter what was seen as "harmful" tax practices. Similarly, several West African countries have been undertaking a joint effort to harmonise their tax incentives for FDI in one unified investment code. The OECD identified 47 tax regimes that potentially resulted in tax-induced distortion of investment flows. The EU's Code of Conduct initiative listed 66 measures, mostly "ring-fenced tax breaks", that constituted harmful tax competition.

Such exercises, coupled with the Commission's clampdown on illegal state aid, have prompted changes. Belgium, for example, was forced to overhaul its tax regime for "co-ordination centres", which offered favourable tax treatment of financial, accounting and administrative operations. Ireland has phased out its low 10 per cent corporate tax rate for manufacturing, but introduced a general 12.5 per cent corporate rate. But governments still face tough political and economic challenges in reducing the distortions caused by tax incentives. As capital and companies become increasingly mobile and investment environments increasingly similar, "the temptation to use tax incentives to attract foreign direct investment will certainly increase", concedes FIAS. Even now, many examples of tax differentials remain, some of which were evident in the uneven distribution of investment flows revealed in the UN figures.

Financial Times, UK, by Vanessa Houlder, 12 January 2005

Public Procurement: Commission Acts to Enforce EU Law in Germany, Greece, Spain, Italy, Austria, Portugal and Finland

The European Commission has decided in twenty cases against seven Member States either to refer those Member States to the European Court of Justice or to formally request them to correct breaches of EU public procurement law. Requests of this kind take the form of "reasoned opinions", the second stage of the infringement procedure under Article 226 of the EC Treaty. If no satisfactory response is received within two months, the Commission may go to the Court. Germany will be referred to the Court over the award by the municipality of Hinte of a concession for waste water disposal services and will receive reasoned opinions on the transport of works of art and on various service contracts or concessions in Hinte, Eisenhuttenstadt, the Rhein-Neckar district, various districts in Lower Saxony, Brandenburg and Oestrich-Winkel. The Commission has decided to refer Greece to the Court over several contracts to provide technical assistance to farmers and to send it a reasoned opinion on irregularities in the tender procedure for the construction of a thermoelectric plant in Lavrio.

Spain will be referred to the Court over inadequate review procedures for unsuccessful bidders to challenge contract awards. It will receive a reasoned opinion on the exclusion in Spanish law of certain contracting entities from the list of those subject to the requirements of the EU Directive on service procurement. The Commission will meanwhile refer Italy to the Court over national rules allowing procurement contracts to be renewed without competition and over waste treatment services in Sicily. It will send Italy reasoned opinions on a motorway concession for a route serving Montichiari airport, contracts to supply ambulance services in Tuscany, and on a decree allowing the authorities to buy police and fire brigade helicopters without a competitive tendering procedure. Austria will receive a reasoned opinion on a waste disposal contract in Villach. Portugal will be referred to the Court over the non-conformity of its national law with EU provisions on procurement in the water, energy, transport and telecommunications sectors. The Commission has issued a reasoned opinion against Finland over awarding a contract for government officials’ air-travel services using discriminatory criteria. Finally, a case against the UK over its failure to apply EU procurement rules to providers of social housing will be closed now that the UK has agreed to comply with the Commission’s position.

The open and transparent tendering procedures required under EU law mean more competition, stronger safeguards against corruption, and better service and value for money for taxpayers. Germany – transport of works of art and service contracts/concessions in Hinte, Eisenhuttenstadt, Rhein-Neckar Kreis, Lower Saxony, Brandenburg and Oestrich-Winkel. The Commission has decided to pursue seven infringement cases against Germany over the award of service contracts and concessions without competition.

In December 1999 the municipality of Hinte in Lower Saxony awarded a service concession to the Oldenburgisch-Ostfriesischer Wasserverband for the provision of waste water disposal services. No transparent award procedure was carried out as required under EU law as interpreted by the Court of Justice (C-324/98, Telaustria). Germany argued that the municipality of Hinte had not procured a service on the market but rather that the service had been transferred between public bodies, which, it maintained, are not covered by the EU rules on public procurement. The Commission does not accept this view, since the ECJ has established that contracts concluded between public bodies are covered by the obligations of EU law. Thus, EU law was broken by the award of the service concession and the Commission has therefore decided to refer the case to the Court of Justice.

Reasoned opinions are being sent to the German authorities in six other cases. Several German museums regularly award service contracts for the transport of works of art for temporary exhibitions to specifically qualified transport companies without carrying out transparent award procedures. Germany claims that the transparency obligation is reduced in these cases, which it argues – because of their low contract values – are not covered by the EC procurement Directive. Furthermore, Germany maintains that direct awards are objectively justified because of the quality requirements for these services and the need to comply with conditions stipulated by lenders of the works of art. However, as a developed market for the transport of works of art exists in Europe, the Commission considers that the non-application of internal market rules is not justified in this field.

In November 2000, the Stadtwerke Eisenhuttenstadt GmbH awarded a service concession for the provision of broadband cable services in Eisenhuttenstadt. No transparent award procedure was carried out. Germany argues that the contract concluded concerns only the privatisation of the Telekommunikationsgesellschaft Eisenhuttenstadt mbH. However, the opinion of the Commission is based on the fact that, with the contract, specific rights and obligations relating to the service were assigned to the private service provider and thus principles of EU law on the freedom of establishment and the freedom of services have been breached.

In 2002, the Abfallverwertungsgesellschaft des Rhein-Neckar Kreises mbH (AVR) awarded a contract for waste disposal services in the Rhein-Neckar Kreis to the AVR Service GmbH, of which it owns 51% of the shares. Germany claims that the award is not subject to public procurement law, in accordance with ECJ case law in the "Teckal" case (C-107/98), which establishes that EU procurement laws do not apply when contracts are awarded to an "in-house" entity within the authority awarding the contracts. However, the Commission has concluded that the "in-house" criteria were not met in this case and that there was therefore a breach of the provisions of Directive 92/50/EEC on the award of public service contracts.

In 1995, the German Landkreise (districts) of Rotenburg (Wumme), Harburg, Soltau-Fallingbostel and Stade, all in the Federal State of Lower Saxony, awarded a service contract for waste disposal services to be provided until the year 2019 directly to Stadtreinigung Hamburg. Germany argues that the contract concerns cooperation between municipalities outside the scope of the public procurement Directives. As the ECJ has ruled that contracts between public bodies fall under EU law, the Commission concludes that Directive 92/50/EEC was infringed.

The Federal State of Brandenburg set up four external platforms for its policy to support its foreign economic relations. In this context, four contracts for consultancy services, public relations services and advertising services were directly awarded in 2001 without procurement procedures. The German authorities claim that the contracts are not covered by EU procurement obligations. However, the Commission considers that the contracts concern services provided for remuneration and fall under the scope of Directive 92/50/EEC.

In 2003, the City of Oestrich-Winkel awarded a service contract for planning services directly without any form of advertising. The contract was below the threshold value above which 92/50/EEC applies, but services below that threshold nevertheless have to be awarded in compliance with the principles of the EC Treaty. The German authorities acknowledge that, but argue that the award procedure was sufficiently transparent. The Commission disagrees with this view. As the service contract was directly awarded without any form of advertising or publicity, the principles stemming from the EC Treaty were clearly breached.

Greece - technical assistance for farmers and construction of the Lavrio thermoelectric plant - The Commission has decided to refer Greece to the Court of Justice over irregularities in the award of several contracts to provide technical assistance to Greek farmers. To help farmers benefit from certain European Union support under the Common Agricultural Policy, the Greek Government signed technical assistance contracts with specialised firms every year, on the basis of a competitive procedure. However, in 2001 it departed from that approach and directly awarded contracts for the management of a framework programme and for the detailed implementation of that programme, without following the procedures for notification and competitive tendering required by Directive 92/50/EEC.

The Commission does not accept the Greek authorities’ argument that despite their disagreement with the Commission, they have in practice complied with the reasoned opinion sent in December 2003 (see IP/03/1763) by having subjected the contracts to competition in line with the Directive and through the Secretary-General of the Agriculture Ministry issuing a circular. According to the information available to the Commission, the alleged opening up to competition of the contracts in question since 2003 is no more than theoretical as, through the application of various mechanisms, the same association of farmers has been awarded the contracts. The Commission considers in addition that there is a continued risk of similar infringements occurring in future and that the Secretary-General's circular did not, as drafted, allow the infringement to be corrected and could even have led to a repetition of it.

The Hellenic Public Power Corporation (DEI) launched a call for tenders for the construction of a thermoelectric plant in Lavrio. The Commission considers that the two companies that reached the last phase of the procedure (submission of financial bids) did not meet the conditions set out in the call for tenders, despite the fact that in the announcement of the call and the invitation to tender it was explicitly stated that any bid not meeting the specific requirements would be rejected.

One of the companies concerned did not have the requisite experience, while the bid submitted by the second company, which was in the end awarded the contract, did not comply with one of the conditions concerning the long-term maintenance agreement. By accepting these two companies for the final stage of the procedure, and by awarding the contract to one of them, the DEI infringed Article 4 para.2 of Directive 93/38/EEC (excluded sectors), as well as the principles of the equal treatment of participants and of transparency set out in the ECJ's case law. Failure to apply these principles may be unjust not only to the companies that take part in a given procedure, but also to those who might have participated if they had known that the contracting entity would not apply the terms it had itself set in the tender.

Spain - inadequate review procedures and exclusion of certain bodies from the concept of contracting authority - The Commission has decided to bring Spain before the Court of Justice in connection with a case of incorrect implementation of Directive 89/665/EEC on the application of review procedures to the award of public supply and public works contracts. The Commission considers that Spanish law is not in line with the Directive on the grounds that by allowing the award to coincide with the conclusion of the contract it denies unsuccessful tenderers the possibility of challenging, in good time, the validity of the award decision and taking legal action against it at a stage when infringements can still be rectified. The Commission considers that allowing reasonable time for unsuccessful tenderers to challenge the award decision would be the solution that would, in legal terms, best meet the requirement of the Directive on review procedures as interpreted in ECJ case law. In addition, Spanish law stipulates that, if the cancellation of a contract could seriously affect the public service, it may be decided that the provisions of the contract can continue to apply on the same terms after its cancellation until urgent measures had been taken in order to prevent an undermining of the public interest. The Commission considers that making a declaration of invalidity subject to an exception for the protection of the public service could also render the provisions of Directive 89/665/EEC ineffective, since, under Spanish law, the scope is very broad, covering, in addition to cases of (automatic) absolute invalidity of decisions, the pure and simple cancellation of illegal decisions.

The Commission has also decided to send Spain a reasoned opinion on incorrect implementation of Directive 92/50/EEC relating to the coordination of procedures for the award of public service contracts. The Commission considers that Spanish law[1], even after an amendment in 2003, does not correctly implement the concept of bodies governed by public law within the meaning of the Directive, since it excludes certain bodies governed by private law, such as foundations, from the definition and hence from the scope of the Directive.

Italy: renewal of contracts without competition, waste treatment in Sicily, police and fire brigade helicopters, motorway concession in Lombardy, ambulance services in Tuscany - The Commission has decided to bring an action against Italy before the European Court of Justice for infringement of Community law on public procurement if the Italian Parliament, before which the question is currently pending, fails, within three months, to withdraw the provision set out in Article 44 of Law 724/1994 (in conjunction with Article 6 of Law 573/1993), which has already, in December 2003, been the subject of a reasoned opinion addressed to the Italian Government (IP/03/1763). The Commission considered that this provision was contrary to the abovementioned Community rules to the extent that it authorises contracting authorities in Italy to renew a public supply or service contract without any tendering procedure.

Following a reasoned opinion sent to the Italian authorities in July 2004 (IP/04/951), the Commission also intends to bring Italy before the Court of Justice for infringement of Directive 92/50/EEC on public procurement in the choice, by the competent authorities, of operators to provide the service of processing all the urban waste produced in Sicily by converting it into electricity. This contract has been awarded for a period of twenty years. Even though the awarding authority published a notice in the Official Journal of the EU, this did not contain the information required under the Community directives with a view to enabling potential candidates to take part in the tendering procedure.

The Commission has sent Italy a reasoned opinion on a decree issued by the Minister of the Interior on 11 July 2003 permitting the purchase of light helicopters for the Police and the National Fire Brigade without applying the tendering rules set out in Directive 93/36/EEC on public supply contracts. The Commission considers that this decree constitutes an infringement of that Directive, since Italy has not demonstrated that one of the strict conditions for derogations, and in particular the one concerning contracts the execution of which must be accompanied by special security measures, is met in this case. The Commission has already decided to bring Italy before the Court of Justice in two other cases also concerning the procedures applied by the Italian Government for the purchase of helicopters for civil use, the first being in connection with a Government Order authorising the Italian body responsible for the surveillance of woodland (Corpo forestale dello Stato) to purchase helicopters without competition (see IP/03/1037). The second case concerns the Italian Government’s practice of awarding contracts for the purchase of helicopters for its main public services directly to the company Agusta (IP/04/875).

The Commission has also addressed a reasoned opinion to Italy on the direct award, without prior competition at Community level, of the construction and operation of the motorway linking the Ospitaletto toll-area (A4), the new Poncarale toll-area (A21) and Montichiari Airport in Lombardy. The Commission considers that this direct award constitutes a infringement of Directive 93/37/EEC, which stipulates that contracting authorities wishing to conclude a public-works concession contract must announce their intention by means of a notice published in the Official Journal of the European Union. The Commission also considers that the justifications adduced by Italy for the legality of this direct award are not tenable.

A third reasoned opinion has been sent to Italy for infringement of the rules on the award of public service contracts set out in Directive 92/50/EEC on the occasion of the award, by Tuscany, of a contract for transport services in connection with healthcare on the regional territory (essentially ambulance services) – more specifically, the conclusion, between the regional authorities and several consortia in 1999, 2003 and 2004, of agreements on these services without applying the tendering procedures provided for under Community law on public procurement.

Austria - waste disposal - In 2001, the City of Villach concluded a waste disposal service contract for a minimum period of 15 years after selecting a service provider from a limited number of companies operating in Austria that already had an establishment in the Austrian State of Carinthia. The Austrian authorities claim that the contract concerns a service concession and does therefore not fall under the scope of the specific rules on public service contracts set out in Directive 92/50/EEC. However, the Commission concludes that the contract is covered by Directive 92/50/EEC and should have been advertised in accordance with the rules applying to public service contracts. But even if it did qualify as a service concession, the selection procedure applied by the City of Villach would breach the general principles of the EC Treaty, and in particular the principle of non-discrimination on grounds of nationality. A reasoned opinion has therefore been sent.

Portugal – non-conformity of national law in the water, energy, transport and telecommunications sectors - The Commission has decided to bring two cases of incorrect implementation by Portugal of Directives 93/38/EEC and 92/13/EEC before the Court of Justice. The first of these Directives concerns the coordination of procurement procedures in the water, energy, transport and telecommunications sectors, while the second is aimed at ensuring effective application of the first by providing suppliers, entrepreneurs and service providers with effective and rapid remedies in the event infringement of Community law in that field or national rules implementing that law. The Commission considers that Portuguese law is not in conformity with Community legislation, particularly as regards its scope and application thresholds, deadlines for receipt of bids, competition and abnormally low bids.

Finland – air-travel services for government officials - The Commission has decided to issue a reasoned opinion against Finland concerning a decision by the Ministry of Finance to award a framework contract for air-travel services for government officials using discriminatory award criteria and thus infringing the public services Directive 92/50/EC. The Ministry of Finance had awarded the contract on the basis of non-published criteria, compared ticket prices that were not based on equal or similar terms, and included a destination among the routes to be served that was already reserved for a certain Finnish air-line company thus making it impossible for others to tender for this route. The estimated value of the contract was € 30 million. The Finnish authorities have not acknowledged the infringement. If the national authorities do not give a satisfactory reply to the reasoned opinion within two months, indicating a change in their pattern of procurement for such contracts in the future, the Commission may refer the matter to the Court of Justice.

UK - closure of a case concerning Registered Social Landlords - The Commission has decided to close infringement proceedings against the United Kingdom following a change of position on the part of the United Kingdom Government concerning Registered Social Landlords. Registered Social Landlords are providers of social housing in the United Kingdom. The Commission had opened infringement proceedings in December 2001 over the failure of the United Kingdom to accept that Registered Social Landlords are bodies governed by public law and must comply with the requirements of the EU public procurement Directives. In December 2003, this culminated in the Commission's announcement that it would commence proceedings in the European Court of Justice against the United Kingdom. The Court of Justice had already ruled on housing associations before in its "HLM" judgment (case C-237/99) against France.

In September 2004, the United Kingdom Government decided to change its position and publicly accepted that the Commission is correct in its view that Registered Social Landlords are bodies governed by public law for the purposes of EU procurement law and therefore must comply with the public procurement Directives where these apply. The United Kingdom government furthermore prepared guidance for Registered Social Landlords on the application of the Directives. In view of the public acknowledgement by the United Kingdom Government, the Commission sees no need to continue its proceedings before the Court of Justice and has decided to close the case. The latest information on infringement procedures against any Member State can be found at: http://europa.eu.int/comm/secretariat_general/sgb/droit_com/index_en.htm

[1] The amendment of Article 2(1) of the Law on contracts concluded by government bodies", approved by Article 67 of Law 62/2003.

Commission Européenne (europa.eu.int),Edubourse.com, France, 14 January 2005

World Bank Pledges Sh6b for Kenya

The World Bank has pledged Sh5.85 billion (US$75m) support towards Kenya's Economic Recovery Strategy (ERS). The funds to be made available under the World Bank's Economic Recovery Strategy Support Credit (ERSSC) facility is earmarked for release after approval by the bank's board in September. The bank’'s senior economist and team leader, Praveen Kumar, said the funding is crucial to Kenya's economic recovery and will help supplement internally generated cash set aside towards this initiative. "External concessional assistance is likely to be a significant source of funding for scaling up the implementation of the ERS," he said. However, Kumar said given Kenya's disappointing track record of structural adjustment operations, it must first meet certain requirements before the funds are released.

The bank has so far pledged to disburse a total of US$75 million for budgetary support to Kenya that has already been approved. The new credit whose appraisal authorisation date has been set for April 7, 2005 has three components - budgetary and financial management, rural development and improvement of private sector competitiveness. The budgetary component will finance the restructuring of public expenditure and strengthen governance in financial management. The rural development component will support government efforts designed to increase agricultural productivity and ensuring food security.

The new funds that target rural development are tied to reforms in coffee, pyrethrum the co-operative sectors. The World Bank says though coffee has traditionally been a key export crop, Kenya appears to have lost dominance it earlier enjoyed in the world market. Main issues identified by the bank as key to improving its performance include increase in the efficiency of marketing and providing farmers with better incentives and institutional support. The bank identified pyrethrum production as another area where Kenya has traditionally held a dominant export position yet the sector is struggling to survive. The bank is optimistic that the sector has a good potential to reclaim its top position after implementation of the reforms. Under the third component, the credit would support privatisation of Kenya Power and Lighting (KPLC) and facilitate divestiture of the remaining state owned banks. It will also cover privatisation of Telkom Kenya and Kenya Railway.

East African Standard, Kenya, by John Oyuke, 24 January 2005

World Bank Announces $200 mn Loan for Pakistan

The World Bank (WB) has approved a $100 million International Development Association (IDA) credit and a $200 million loan to support Pakistan's ongoing efforts at improving its banking sector. "Pakistan has the most safe and sound banking system in South Asia due to far-reaching reforms in the financial sector during the last decade," said John Wall, World Bank's Country Director for Pakistan.

"The banking sector has undergone fundamental changes through a three phased reform programme. The reforms managed to address the root cause of the sector's problems and achieved a complete turnaround in the environment for banking in the country." With the privatisation of two of the three nationalised commercial banks, which accounted for nearly 25 per cent of the system and sale of Allied Bank Limited, nearly 80 per cent of the country's banking sector assets are now in private hands," Wall said.

Hindustan Times, India, from Press Trust of India, Washington, 14 January 2005

IMF Expresses Concern on Rising Inflation

Islamabad - The International Monetary Fund (IMF) has expressed "grave concern" over rising inflationary pressure in the country and has asked the government to bring the rate down to 5 percent or lower. "The IMF's Deputy Managing Director Augustin Carstens expressed grave concern over increasing inflation in Pakistan during a meeting at the Finance Division on Wednesday, in which he was given a presentation on Pakistan's various economic sectors," an official who attended the meeting told Daily Times.

He said the government had told the IMF during the meeting that the inflation rate would be between 6.5 and 7 percent by June 2005, but Mr Carstens said this was too high and should be reduced to at least 5 by the end of the current fiscal year. The official said the government defended the high inflation rate saying it was a result of rapid GDP growth. Nevertheless, it plans to control the inflation rates. The official said the increased inflation was because of a surge in oil prices in the international market and the shortage of wheat and sugar.

He said inflation was recorded at 9.25 percent in November 2004 and 8 percent in December. "If the government cuts this down to 6.5 or 7 percent, this would be an achievement," he said. In December, the prices of food and beverages surged. Sugar prices increased from Rs 22 per kilogramme to Rs 25 per kilogramme, the official said. Similarly, flour prices also increased immensely. These, however, might decrease following the imposition of 15 percent export duty on flour, the official said.

The official said the GDP growth, which was three percent three years ago, had now doubled and it would continue to increase in the coming years if the current economic policies remained consistent. The official said the State Bank of Pakistan made a presentation to the IMF on the status of Pakistan's economy. The Privatisation Commission also made a presentation on the pace of privatisation of various state owned entities. "The IMF's managing director appreciated the macroeconomic indicators and expressed satisfaction over ongoing growth in GDP," he said. The IMF also appreciated the pace of privatisation, particularly in the oil and gas and the power sector, and asked the government to protect consumer rights in the post-privatisation scenario, the official said.

Daily Times, Pakistan, by Khalid Mustafa, 12 January 2005

Public-private Partnerships in Basic Infrastructure

Indonesia achieved an important scoop in organizing the Infrastructure Summit last week, when more than 600 infrastructure bigwigs and local entrepreneurs assembled in Jakarta to hear of a "new partnership" in infrastructure investments, which was proclaimed by President Susilo Bambang Yudhoyono. Public-Private Partnerships or PPPs in infrastructure are a means of "farming out" public sector goods and services to the private sector to design, build and operate for a specific period of time (normally 25 to 30 years); different from outright privatization, PPPs do not involve the state selling the public assets to private companies, but "leasing" them to the private sector to deliver public services more efficiently, according to their best practices in technology, finance and management.

At the Jakarta Infrastructure Summit, it was hoped that the private sector would massively invest in Indonesia's infrastructure through the PPP scheme; the government would need some US$145 billion for infrastructure development in the next five years. The first tranche offered consisted of 91 projects worth $22,5 billion, whereas another Summit in November could release another $57.5 billion of projects. In fact, the government hopes to get the private sector financially committed to two-thirds of the country's infrastructure investment needs (for at least $80 billion), leaving depleting public coffers and local financial institutions to support the remaining one-third ($30 billion). Key sectors identified would include power, water and sanitation, oil and gas facilities, information technology, transport and logistics (highways, ports and airports).

Indonesia is in dire need to develop and improve its infrastructure, after years of wanton neglect and political uncertainties. To attract manufacturing and services investments urgently into the country (so as to tap its vast natural resources for growth and development), Indonesia clearly needs good infrastructure to "re-kick-start" foreign direct investment (FDI) and local investments. In fact, Java is facing severe brown-outs, as electricity production capacity is currently seriously strained; unclean water and ineffective sanitation threaten big cities such as Jakarta or Surabaya, whereas IT limitations could "cringe" future FDIs. Good infrastructure is the key to development and growth.

Decentralization in Indonesia could however provide both a boon and formidable challenge to PPPs, as local governments and bupati lack both the financial resources and technical expertise to provide basic infrastructure and public services to the people. But to facilitate FDI flows and the massive participation in the private sector, the Government must set a clear, transparent and credible framework for PPPs to be implemented at both the central and local levels; the bureaucracy at central and local levels must be equally trained to handle PPPs honestly. Indonesia's financial plight and huge budget deficit are therefore at the core of its decision to turn to PPPs in infrastructure, but its biggest challenge is in its sound implementation.

But in the region, Singapore, Malaysia and Brunei are also warming up to the PPP approach, although their goals and rationale differ. Indonesia should take cognizance of such regional developments and appreciate their challenges as well, whilst implementing its own infrastructure PPP scheme. Singapore launched into Public-Private Partnerships (or PPPs) in a big way when the government announced in early October a $1.3 billion package of projects to be "farmed out" to the private sector over the next three to five years. The rationale and goal of the government is to use these PPPs to accompany its creative and entrepreneurial drive in the Republic, thus re-kindling the Singaporean private sector.

Under the Singapore government's PPP scheme, public sector non-core projects worth more than $50 million could be out-sourced to the private sector to operate and maintain for as long as thirty years. Six big projects have since been identified and open tenders would be awarded this year; but in fact, Singapore's first sea-water desalination project was already awarded earlier to home-grown environmental company, Hyflux, and Keppel Engineering clinched the first of four new water plants, both under the PPP in infrastructure scheme too.

Malaysia's interest in PPPs presents another political and economic dimension. Prime Minister Abdullah Badawi has pledged to "put some order back" into the private sector, after charges of cronyism had plagued the last Administration. As part of his electoral pledge, Abdullah Badawi has also stressed the importance of making Malaysia's "delivery system" more efficient and people-friendly. These two political reasons would therefore form the basis of Malaysia's current interest in PPPs; unlike Indonesia's financial and technical reasons, Malaysia's attraction for PPPs appears therefore to be more politically and socially motivated.

A report on privatization was commissioned by the National Economic Action Council (or NEAC) last year to re-examine and re-evaluate Malaysia's privatization process thus far and recommend measures to improve the present system, especially in corporate governance and what is deemed a failure of its public goods and services delivery system. The balance between financial viability, efficiency and social benefits is being stressed, especially when the Abdullah Administration has to deliver on its electoral promises of cleaning up corporate governance in Malaysia, opening up huge infrastructure tenders publicly and transparently, and drastically cutting down wastes, inefficiencies and moral hazards in both the public and private sectors.

Brunei's greatest problem in adopting PPPs would come from the dearth of its private sector and its growing fears that the economy is being kept turning, only thanks to some 70,000 migrant Indian, Filipino and Indonesian workers, whereas some 8,000 Bruneians are "voluntarily" unemployed. PPPs in the region's four economies present different rationales, goals and challenges. Singapore's PPPs stress the socio-economic imperative of outsourcing to the private sector, whereas Indonesia needs PPPs for financial and technical reasons. On the other hand, Malaysia has a politico-social imperative of corporate governance and efficient "delivery systems", whereas Brunei's dilemma is undoubtedly social, dovetailing PPPs into its diversification and employment policies. PPPs in infrastructure are hence set to affect regional economies in diverse ways, but challenges remain enormous for their successful implementation in Southeast Asia.

Jakarta Post, Indonesia, by Eric Teo Chu Cheow, Singapore, 25 January 2005

2004 in Review - Progress in Privatisation

Fifteen years after the start of its transition to a market economy, Bulgaria has not yet finished the privatisation process, but marked one of the most successful years in this field in 2004. The process, dragging on for years however, will probably help the country rank among the leaders in Central and Eastern Europe in terms of attracted foreign direct investments. According to the updated forecast by the Bulgarian Investment Agency, announced in the autumn of 2004, the total amount of foreign investment to be poured into the economy by the end of 2004 was expected to be 2.5 billion euro. At the beginning of last year , the Government announced that it expected direct investment from abroad to reach two billion euro. The height of the figure that was mainly because of the more than 693 million euro revenues from the sale of six electricity distribution companies, as well as the implementation of the 200 million euro investment programme of Viva Ventures, the new owner of the Bulgarian Telecommunication Company (BTC). Although the sale of BTC attracted the most comment in 2004, it was the electricity distribution companies' privatisation that is going to be on the list of serious successes of the Government for 2004.

CEZ of the Czech Republic won the competitive bidding procedure for the privatisation of the Sofia City, Sofia Region and Pleven electricity distribution companies. The Plovdiv and Stara Zagora electricity distribution companies went to EVN of Austria, and the Varna and Gorna Oryahovitsa utilities to E.ON of Germany. The sale of a 67 per cent stake in the companies brought an aggregate 693.2 million euro, or 230 euro a subscriber, which placed Bulgaria first in Eastern Europe, ahead of 229 euro in the Czech Republic, 100-150 euro in Romania, and 80 euro in Ukraine. Since, under the privatisation procedure, the price per share in a possible future sale of the 33 per cent residual state-owned interest must be equal or higher than the price achieved in the privatisation of the majority stake, this transaction guarantees revenue of 1.33 billion euro for 100 per cent of the power distributors' capital. The successful sale of the distributors allowed Energy Minister Milko Kovachev to announce in November that the European integration process of Bulgarian energy sector is over. Kovachev's portfolio will continue to be active with the privatisation of three of the largest thermal power plants of Bulgaria - the ones in Bobov Dol, Varna and Rousse. Trade unions are opposing the sale of the three plants, and especially of Bobov Dol, without a clear view on what will be the fate of thousands of miners currently employed in mines attached to the power generating facilities.

On December 1, the Privatisation Agency announced three independent public biddings for the sale of up to 100 per cent of the capital of Bobov Dol, Varna and Rousse power plants. The bidders should have sold at least two billion kilowatt-hours of electricity annually in the past three years. The capacity of the companies' facilities should not be less than 1000 megawatts. The bidders' base capital should be equal or exceeding 500 million euro by December 31. The Government suffered a serious setback on one of the most important deals that had been dragging on for years - the sale of Bulgartabac Holding. Despite offering the so-called dream pairs of the best performing cigarette factories of the holding, the entire army of privateers led by Deputy Prime Minister and Economy Minister Lydia Shuleva was not able to conquer the hearts and minds of investors. British American Tobacco (BAT) was the only candidate to submit a bid for two cigarette factories - Sofia BT and Plovdiv BT.

Surprisingly, no one wanted to buy the other dream package of Blagoevgrad BT and Stara Zagora BT. Philip Morris and Imperial Tobacco pulled out of the tender after learning that the deal is 'politically burdened'. Rumours were that BAT was also on the verge of making such a decision, which will return the privatisation of Bulgartabac to the basics. The Boyana Film studios privatisation became the toughest deal for the newly appointed Privatisation Agency executive director Atanas Bangachev. The State is selling 446 426 shares, representing 95 per cent of the capital of Boyana Film, in a competitive bidding procedure. The closing date for receipt of conclusive bids is March 4. The State will keep a single share in the company whose voting power will be exercised by the Minister of Culture. The idea is to protect the integrity of Boyana Film's real estate, which could be sold as it costs more than the studios themselves. All four PA-certified candidates submitted tentative bids by the November 15 deadline: Ealing Studios of the UK, Nu Image Bulgaria, Dragon International Studios Bulgaria Limited, and Bavaria Film of Germany.

Future 2005 privatisations lists have not been compiled but they should definitely include Bulgarian River Shipping and Navigation Maritime Bulgare, as well as a number of defence plants, which are always considered a painful topic. Nine companies bought documents for participation in the first stage of the tender for the sale of packages of shares of eight defence companies of Terem EAD. They are BAE Systems Avionics Ltd. of the UK; Fr. Lurssen Werft (GMBH&Co), Germany; Lurssen Bulgaria and Partners; Financantieri S.p.A, Italy; Millennium Industry AD, Sofia; Electron Progress AD, Sofia; Strategicheski Otbranitelni Sistemi AD, Sofia; FINMECCANICA Societa per Azioni, Italy; and Morska Tehnicheska Groupirovka Varna AD. Parliament left for 2005 also the voting on the draft resolution for the privatisation of the national flag carrier Bulgaria Air.

The major requirement potential investors should meet is that they are registered in a European Union Member State or in Bulgaria. The new strategy provides for the holding of a two-stage competitive bidding procedure. The first stage is opened to strategic bidders that are Bulgarian corporate bodies registered under the Commercial Code, in which 100 per cent of the capital is owned directly by companies with revenues derived from aviation services exceeding 100 million euro in the past three financial years. Should the privatisation offer fail to draw serious interest on the part of such investors, financial investors will also be allowed to take part in the bidding procedure. Despite the Government having said that it was committed to reducing corruption, past privatisation deals continue to have serious problem in this area. About 500 privatisation deals have been put under investigation, including some involving foreign companies. So far this has not had a serious impact on foreign businesses but a risk remains that the Government's anti-corruption measures will increase levels of government interference in business.

Sofia Echo, Bulgaria, by Ivan Vatahov, 7 January 2004

Brazil Prepares for First Big Privatisation

The left-leaning government of Brazilian President Luiz Inacio Lula da Silva is preparing its first large privatisation, Antonio Palocci, finance minister, told the Financial Times. The government will soon present a legislative proposal to congress that would end the state monopoly in the reinsurance industry and sell a majority stake in the Brazilian Reassurance Institute (IRB), Mr Palocci said. The move is a break with Mr Lula da Silva's historic aversion to privatisation and part of a new round ofmarket-driven reforms designed to ensure international competitiveness.

Mr Palocci also denied recent speculation that the government intends to sack conservative central bank directors. The announcements help reinforce the perceived government commitment to economic orthodoxy. Several press reports in recent days suggested Mr Lula da Silva had been upset with the central bank's decision to tighten monetary policy for the fifth consecutive time last week and was considering dismissing "ultra-conservative" directors. Yet Mr Palocci not only denied imminent changes at the central bank but insisted he would push ahead with legislation to grant formally the central bank autonomy, after the debate within the government coalition. "This controversy strengthened our perception that the central bank needs autonomy. At no time did the [president] question a central bank director, nor does he have plans for change."

Brazil's economy last year grew at more than 5 per cent, the fastest rate in a decade, and Mr Lula da Silva's popularity ratings have been close to their highest since he took office in January 2003. Yet business leaders and at least one senior cabinet member have recently warned that excessively tight monetary policy to meet aggressive inflation targets was putting at risk Brazil's export-led economic growth. Mr Palocci insisted the president fully backed the current inflation targets. "As a union leader fighting for wage adjustments, the president knows better than anybody else the [negative] impact of inflation on people's income and the economy. I am very at ease with the president's position on economic policy," he said.

Following its legal proposal to reform corrupt and unrepresentative labour unions, the government later this year plans to push ahead with legislation that will deregulate the labour market and cut back many costly benefits. In an effort to improve the investment climate, the government is also to "fundamentally overhaul" its antitrust legislation, under which the government considers approval of mergers only after they have been completed. Two years after Nestle, the Swiss foodcompany, acquired a localchocolate company, itreceived a red light from authorities. Analysts caution that the finance minister's success in pushing ahead with an ambitious reform agenda depended on the government patching up a shaky alliance in congress. The ability to maintain its narrow majority may depend on the forthcoming election of the president of the lower house and a pending cabinet reshuffle designed to increase representation of allies. Yet the former physician is optimistic. "Congress has not only backed every important legislation we sent, it improved them. I don't see a risk scenario on the horizon."

Financial Times, UK, by Raymond Colitt, Brasília, 26 January 2005

Oman Urges India Inc. to Join Privatisation Drive

Kolkata - Oman wants Indian industry to participate in the Gulf nation's ambitious privatisation drive as it continues to open up a host of key industrial sectors including power and telecommunications. Oman has also offered to collaborate with India in oil and natural gas and other labour intensive industries such as information technology. "I certainly want a large number of Indian companies to participate in Oman's privatisation process," said Oman's Minister of Commerce and Industry Maqbool Ali Sultan, who is here to participate in the Partnership Summit 2005 organised by the Confederation of Indian Industry (CII).

"Our privatisation process can be a crucial area for enhancing business collaboration between Oman and India. Indian companies have the expertise to run joint ventures in Oman successfully," Sultan told IANS in an interview. The minister said the ongoing privatisation of airport, power, and telecom sectors offered good prospects for Indian companies to make a foray into the Gulf nation in the months ahead. "All the privatisation processes are carried out through international competitive bidding and we would certainly welcome it if the Indian firms also joined in the exercise," said Sultan.

According to the minister, telecom liberalisation in Oman will open up access for public data networks, value-added services providers, prepaid calling cards for fixed, mobile and Internet services, and private data networks. The entry of Internet service providers and audio text services in Oman will also be encouraged, he added. Other business areas that are likely to be liberalised for foreign investments in Oman include waste management projects, postal services, setting up of industrial estates, and the legal system.

Sultan said Oman favoured the setting up of joint ventures between India and the Gulf Cooperation Council (GCC) in oil and natural gas to meet India's petroleum needs. Similarly, joint ventures in labour intensive industries can be set up in India, the products of which can be exported to the GCC countries, he said. "There is need for continuous dialogue between the two countries to collaborate in trade and industry. The GCC have to diversify and reduce dependence on oil, which is a limited resource," said Sultan.

"They need to increase dependence on energy efficient industries, tourism and information technology," he added. "The Gulf Cooperation Council countries face the challenge of human resource development, and diversification of economy. India, on the other hand, faces the challenge of securing its oil resources to sustain its economy. "Each of these challenges offers opportunities for co-operation between the GCC and India." He said the governments in India and Oman must start negotiations to create free trade area, infrastructure of international levels, and an investor-friendly climate in both the countries.

Sultan said the trade relations between India and Oman has been greatly boosted with the construction of a giant fertiliser manufacturing facility that has seen New Delhi making one of its largest investments abroad. Two Indian firms - Indian Farmers Fertilizer Cooperative and Krishak Bharati Cooperative have a 25 percent stake each - while the Oman Oil Company has a 50 percent share in the joint venture Oman-India Fertilizer Company. (Indo-Asian News Service).

New Kerala, India, 14 January 2005

Looting of Nations by Pension Privatization

Ibero-America - Eleven countries in Ibero-America have privatized their social security systems, under pressure of the International Monetary Fund and their creditor banks. Chile was the model for the others, both in privatizing its system in 1981, and in its spectacular failure over the long term - so much so, that all forces in the country now agree it must be radically reformed. The Chilean government itself will be submitting a proposed reform to congress in early 2005.

Chile: The Chilean fiasco can be summarized in a few statistics: - Only 20% of the labor force are covered with a pension greater than the government minimum standard of $110/month. - About 25% of worker payments are skimmed off as "administrative fees" by the Pension Fund Administrators (AFPs). - From 1997-2004, the AFP annual profit rate was a cool 50%. The AFPs are 94% controlled by foreign banking interests. - From 1982-2004, the annual return on individual accounts with the AFPs has averaged only 5.1%. - If two co-workers with the same salary in 1981 entered, one the old pay-as-you-go system, and the other the new privatized system, the co-worker in the privatized system today would receive less than half of the amount that the person who had remained in the old public system would be receiving.

In the other countries where social security has been privatized, it has followed the same trajectory of attaching billions of dollars in workers' pensions, and using it to bail out foreign banks. For example, in Peru, workers in the privatized system are forced to pay in 11.2% of their gross wage, the AFPs take an average 28.7% of the amount paid in as a "commission," and the AFP's average profit rate, as of May 2004, was 68%.

Mexico: Mexico attempted a privatization of its system of retirement assistance in 1992; when that "reform" fell apart, a more dramatic privatization was legislated in 1997. The old pay-as-you-go system, based in significant part on the employer's contribution, had generated surplus reserves for years, but these reserves had often been tapped by the government for expenses and public investments. The new private funds, called by the acronym AFORES, are based very closely on the "Chile model."

The AFORES manage $30-40 billion in funds of 12 million workers previously affiliated with the Mexican Social Security Institute (IMSS). These funds were created in 1997 with very large increases in retirement contributions by the Mexican government (from 0.425% of wage under the old system to 2.425% under the new) and employers (from 9.5% under the old system to 12.9% under the privatization scheme). As a result: - Under the new scheme, the Mexican government is burdened with expenses estimated (by a CBO analysis in 1999) at 0.4% of GDP in 2006, and at 0.8% of GDP in 2025. As in Chile, the government is left guaranteeing a minimum pension to millions of workers who don't qualify for it under the privatization. - That minimum is itself reduced, from 40% to 35% of the average wage. - Foreign banks - The Banco Santander, Banamex, Bank of Nova Scotia, Banco Bilbao Vizcaya-Mexico - are now owners of the private pension funds of Mexico. - The AFORES, from the outset, charged fees equal to at least 8-10% of the combined retirement contributions paid by employee, employer, and government. Now, it is estimated that the AFORES' fees are up to 30% of contributions paid - a swindle by any standard. The Social Security Commission of the Mexican Congress is demanding that the "fiscal cost" of the AFORES be investigated. - As of Jan. 1, 2005, the AFORES may invest 20% of its funds in the stock market, and 15% in foreign markets, Chile-style. This was a demand of Jose Pinera of the Cato Institute (who was Chile's privatizer when he was Labor Minister in 1981) and other ideologues, who objected to the AFORES' investment mainly in federal, state, and municipal debt paper.

Argentina: The partial privatization of Argentina's Social Security system in 1994 was a major contributing factor in the explosive debt crisis, default, and economic collapse of the country in December 2001. - Aside from the looting represented by the large and illegitimate foreign debt, the 1994 privatization deprived the government of a significant amount of tax revenue which the privatization scheme diverted into private accounts, known as AFJPs. To make up the resulting deficit, the government was forced to borrow abroad - at very high interest rates - and accept the austerity conditionalities attached to IMF loans, in particular. By 2001, the deficit created by lost revenue was close to 3% of GDP, according to a 2002 study by the Center for Economic and Policy Research in Washington. - The December 2001 default punctured the claims of lunatic analysts - just like those now coming out of the woodwork around the White House, and Congressional Republicans - that Argentina could take 75 years to pay off these "transition costs." - In September 2001, three months before the debt default, the IMF forced the government to make a 13% cut in benefits in its old pay-as-you-go social security program - still functioning alongside the new private system - as a conditionality for a new agreement. The old program had been generous, offering a broad array of survivor and disability benefits, in addition to pensions. - By the late 1990s, 48% of AFJP funds were invested in bonds, on which the government defaulted in late 2001.

The other Ibero-American countries that have privatized social security to date are: Peru (1993), Colombia, Costa Rica, Ecuador, Uruguay (1994), Bolivia (1997), El Salvador (1998), Panama (1999).

Canada - Canada's Old Age Security system was privatized in 1999 with the creation of the Canadian Pension Plan (CPP). In 1997, in preparation, the Chretien government, of which present Prime Minister Paul Martin was Finance Minister, drastically raised the contribution rate (payroll tax) from 5.8% of earnings to 9.9% - needless to say, creating since 1998 a substantial surplus of $74 billion, projected to keep growing through 2015. Under Law C-2 passed by the government in 1999, this surplus was then turned over to a CPP Investment Board (CPPIB); the CPP's chief actuary charged that figures were being faked in this process, and the government fired him. The CPP Investment Board's self-description: "We are an investment corporation managed independently of the CPP by experienced investment professionals drawn from the private sector." The CEO for 1999-2004 has been John McNaughton, former president of Nesbitt-Burns Investment Advisors, an investment firm linked to the Bank of Montreal.

- In the CPPIB's five years under McNaughton's direction, it has already suffered one year - 2002 - in which it invested $18.4 billion of CPP funds and lost $3 billion, a negative 15.9% return. In 2004, its rate of return will apparently be only about 4%. - McNaughton's Board has used the CPP as a fund to back favored start-ups, and energy companies like Talisman Energy, making dubious investments in Sudan. In a January 2000 speech he said: "We are long-term investors. We can be patient and can support companies during adverse periods if they have strong boards of directors...." In 2003, the CPPIB put $50 million in a Canadian Venture Capital fund for "early-stage software companies," and so on. - As of 2003, the CPP's mandatory 90-day benefits reserve fund was abolished, and 100% of its surplus fund is now in the account of the CPPIB.

Sweden: In 1998, the Swedish social security system was opened to "the markets." Of the Swedish worker's income, 2.5% (about one-seventh of the total retirement contribution) was diverted to private accounts managed by funds, for investment in the stock market, after a TV propaganda blitz to convince Swedes they would become millionaires thereby. Though most Swedes remained opposed to privatization, it was done anyway. An Oct. 29, 2004 Swedish investigative TV report exposed those 1998 claims as simple lies, including the patently false "warning" that Swedish pension funds invested in safe government Treasury bonds would soon be losing money.

Also in 1998, the four large public funds which manage the other 16% in "pay-as-you-go" retirement contributions, suddenly shifted from 30% equity investment of those public funds, to 70% equity investments. And the government began heavily to "borrow" the funds' surpluses for general expenses, Bush-style, in anticipation of their great near-future gains!

The IT bubble's collapse ensued. The losses by the public funds are likely to increase the retirement age from 65 to 69 in near-future legislation. The individual employees, on their own modest scale, are also losing: In 2003, some 87% of all the private investors of retirement funds, in 654 investment funds available, were losing money, with an average annual loss of 10%-20%. Now, Swedish employees and retirees dread opening the bright red envelopes which contain their checks and statements about "their" accounts.

Britain: Another disastrous early privatization example - Great Britain under Margaret Thatcher - broke into the U.S. debate in mid-January. Many media reported a scathing account of the British privatization scheme by a London Financial Times senior reporter, which is appearing in American Prospect magazine in February. This history of the switch to private accounts almost 20 years ago under Thatcher, is titled, "A Bloody Mess," and reports, "It was the biggest financial scandal in the United Kingdom to date." The only privatization with a longer and more conclusive history, is that of fascist Chile itself.

The study delineates the disaster and scandal which resulted from Prime Minister Thatcher's 1984-88 series of laws which forced privatization of a part of Britain's public old-age pension system. The old system, though set up after World War II, closely resembled America's Social Security in its insurance benefits and its means of funding. Thatcher's privatized system did indeed prop up the British stock and bond markets after 1988. But it was such a loss for most of the British workers who flocked into it like lemmings, that the current Blair government of Britain has had to order those workers to be paid 12 Pounds ($20 billion) in compensation, for being taken in by a swindle!

Thatcher's first government cut the old-age pension benefits - no surprise, by the same method as Bush's scheme, switching from wage-indexing of benefits to inflation-indexing. Thatcher's second government bribed (with expensive tax rebates from the public treasury) and hyped (with a huge advertising campaign) 4.3 million Britons by 1991 to shift from Social Security into private accounts, like 401(k)s. By the late 1990s, it became clear that most of those who switched, were doing much worse toward their retirement, than if they had stayed in the public system even with its benefit cuts. "On average, fees and charges [reduced] pension lump sums by up to 30% on retirement," the article reports.

The succession of stock collapses since the later 1990s has made their situation even worse: "According to the Department for Work and Pensions, in 2004 alone, 500,000 people abandoned private pensions and moved back into the state system. Government actuaries expect another 250,000 to contract back in this year." In 2004, the Association of British Insurers urged all its member firms, to avoid further liability, to warn those still "contracted out" that they "might have made a bad choice" for their retirement.

Executive Intelligence Review (EIR), VA, 15 January 2005

Development Challenges Cannot Be Met Without Public-Private Partnership, According to CEO Survey

World Economic Forum (Geneva) - Nine out of ten surveyed CEOs feel that partnerships between business, government and civil society must play either a major role or some role in addressing key development challenges facing the world today. This is one of the key findings of a report released by the World Economic Forum's Global Corporate Citizenship Initiative (GCCI). The report entitled "Partnering for Success: Business Perspectives on Multistakeholder Partnerships" assesses the current experience of the international business community with multistakeholder partnerships.

Partnering for Success: Business Perspectives on Multistakeholder Partnerships is the fourth annual report of the Global Corporate Citizenship Initiative, produced in collaboration with The Prince of Wales International Business Leader's Forum (IBLF) and the Kennedy School of Government, Harvard University. Based on surveys conducted with the GCCI's over 40 member companies, the report focuses on the innovative approaches that the GCCI member companies are taking to build partnerships with other private enterprises, government bodies and civil society organizations to address key international development challenges, and to do so in a manner that makes sound business sense and does not replace or undermine the role of government.

"Many public-private partnerships are new and untested and some of them are likely to fail. Yet, these partnerships offer an important new approach that has the potential to drive innovation, improve governance, raise living standards and provide opportunity to millions of people. They deserve continued support, engagement and evaluation from business leaders," says Richard Samans, Managing Director of the World Economic Forum's Global Institute for Partnership and Governance. The World Economic Forum report describes 15 concrete and practical ways for companies to engage in partnerships for development. All of them are based on existing partnership examples that GCCI member companies actively join in or support. Between them, these alliances have engaged thousands of different partners around the world and leveraged millions of dollars in cash and in-kind resources.

"The report reviews the thoughts of a group of leading companies who are already committed to being good corporate citizens. Their views reflect a growing consensus amongst business and development circles of the importance of new types of non-traditional alliances and funding mechanisms," says Jane Nelson, Director of the Corporate Social Responsibility Initiative at the Kennedy School of Government, Harvard University and a Director of the International Business Leaders Forum. And she continues: "Partnership is critical to effective problem solving of the challenges facing business and the developing world. Simply put, the issues are too complex and interdependent, and the resources and legitimacy for tackling them too dispersed between sectors, for any one group to have all the solutions alone."

The two most common reasons that respondents gave for engaging in such partnerships were committing to the company's own values, principles, policies and traditions and protecting corporate reputation and brand. Meeting project financing, investor and other funding requirements, investing in a sound and secure operating environment and entering into untapped or underdeveloped markets were also listed as key reasons. The CEOs who support the Global Corporate Citizenship Initiative emphasize that the most important contribution they can make to development is in the way they run their own businesses. They also recognize, however, that engaging with stakeholders inside and outside their companies can help to leverage the resources, skills, competencies, technology and networks of these business operations, thereby increasing the contribution that business can make to development.

The partnership examples identified by the GCCI companies include collective efforts to address systemic challenges. Examples are improving the quality of public education, reforming healthcare delivery, strengthening the financial sector, building mechanisms to tackle corruption and supporting specific projects. Examples of these include the training of Venezuelan judges on human rights issues; logistics support for disaster relief in Morocco; provision of credit and mentoring to small-scale enterprises and youth entrepreneurs in India, South Africa and the Middle East; supply of clean energy to rural communities in Madagascar; e-learning in Pakistan, the Philippines and Malaysia; technical assistance for small-scale farmers in Kenya; and efforts to tackle malaria and HIV/AIDS throughout Africa. All of these examples shed light on one of the key leadership challenges of our time: How to find new ways to harness the innovation, technology, networks and problem-solving skills of the private sector, in partnership with others, to spread the benefits of development more widely.

In the context of the survey, companies were also asked to rank the three most important and consistent development challenges they face in the developing countries in which they operate. The ranking is as follows:
1. Promoting good governance and tackling corruption
2. Alleviating poverty
3. Achieving sustained economic growth and education
4. Sustaining peace and security
5. Eliminating HIV/AIDS
6. Securing access to energy and water.

Nearly all the respondent companies listed China as the most important emerging market. The other emerging markets most highly ranked were India, Brazil, Russia, Southern Africa, South-East Asia and the Middle East. The rapid economic development and growing geopolitical significance of these markets offer enormous long-term business potential, but pose a variety of leadership challenges and risks for most private enterprises. These include the challenges of dealing with fundamental economic restructuring and uncertainty, political transition, evolving governance structures, poor working conditions, human rights concerns, environmental stress and high levels of inequality. All of these have important implications for business success and survival, but none of them are issues that the private sector can address alone.

Partnering for Success: Business Perspectives on Multistakeholder Partnerships is produced in collaboration with The Prince of Wales International Business Leaders Forum and the Corporate Social Responsibility Initiative at the Kennedy School of Government, Harvard University. Some of the findings of the survey are supported by research conducted by SAM Sustainable Asset Management, which covers over 1,300 companies.

Background Information on the Global Corporate Citizenship Initiative (GCCI): Launched in July 2001, the World Economic Forum's Global Corporate Citizenship Initiative (GCCI) has the objective of increasing business engagement in corporate citizenship as an element of business strategy. With over 40 company members representing a variety of regions and sectors, the Initiative concentrates on defining and facilitating the leadership role of CEOs and boards in integrating into business practice policies that respond to the evolving expectations of society regarding the responsibilities of companies in a global economy. Using the Forum's Annual, Regional, and Governor meetings as platforms, Initiative members exert thought leadership and expand the market for enlightened corporate citizenship in cooperation with experts and other organizations around the globe that specialize in corporate responsibility. For further information, please go to http://www.weforum.org/corporatecitizenship

Background Information on the The Prince of Wales International Business Leaders Forum (IBLF): The Prince of Wales International Business Leaders Forum (IBLF) was formed to promote responsible business practices internationally that benefit business and society, and which help to achieve social, economic and environmentally sustainable development, particularly in new and emerging market economies. The IBLF focuses on building partnerships as a more effective and legitimate approach to engaging business in development. It has built close and longstanding working relationships with its member companies, and with a broad range of national and international agencies, NGOs, business associations and media around the world and has a current membership at CEO level or above from more than 65 of the world's leading multinational companies. For more information see www.iblf.org

Background Information on The Corporate Social Responsibility Initiative at the Kennedy School of Government, Harvard University: The Corporate Social Responsibility Initiative at the Kennedy School of Government, Harvard University is a multi-disciplinary program that undertakes research, education and outreach activities, to study and enhance the public role of private enterprise and develop the next generation of leaders. It focuses on exploring the intersection between corporate responsibility, corporate governance and strategy, public policy, and the media. The initiative is a cooperative effort between the Kennedy School's Center for Business and Government, Center for Public Leadership, Hauser Center for Non-Profit Organizations, and Joan Shorenstein Center on the Press, Politics and Public Policy. For more information see www.ksg.harvard.edu/cbg/CSRI

AllAfrica.com, Africa, Press Release from World Economic Forum, Geneva, 18 January 2005

EU Must End Global Water Privatisation Push

European governments must stop imposing water privatisation and instead support the expansion of public water supply in developing countries, a new book concludes. Challenging widespread prejudices, 'Reclaiming Public Water' presents a wide range of examples of how public utility reform has resulted in major improvements in access to clean water and sanitation, not least for the poorest. The book is written by water utility managers and civil society campaigners from more than twenty countries.

'Reclaiming Public Water' was launched today at a seminar during the World Social Forum in Porto Alegre. This Brazilian city is a prime example of how public water delivery can be upgraded through democratic reforms, a common theme of the book. Expansion of clean water to the poorest happens against major odds, the new book stresses. Among the most serious obstacles for expanding public water delivery is the continued bias against public utilities in the policies of international financial institutions and donor governments.

"The European Commission and many European governments use international aid and trade policies to encourage privatisation", says Satoko Kishimoto of the Amsterdam-based Transnational Institute (TNI), co-author of the book. "It is high time for European governments to acknowledge the failure of privatisation and start providing ambitious support for public sector options", says Kishimoto. In numerous cities around the world, multinational water corporations - most of which are based in Europe - have failed to deliver the promised improvements while raising water tariffs far beyond the reach of poor households.

'Reclaiming Public Water' includes concrete recommendations for creating a more enabling environment for public water supply in developing countries. The book urges the EU to end the pro-privatisation bias in its aid flows and to convince the World Bank and other international financial institutions to do the same. Debt cancellation, the authors point out, could make vast amounts of domestic public funds available for expanding access to clean water. The book insists that the EU should end its push for including water in international trade agreements (for instance through the WTO's GATS talks) and instead work to enshrine the human right to water in a legally binding UN convention. A free copy of 'Reclaiming Public Water' is available on request. Send an email with your name and postal address to satoko@tni.org.

EUbusiness, UK, 28 January 2005