Government Courts Private Sector

Francistown - The government has embarked on the Public Private Partnership(PPP) initiative in recognition of the limited resources. Officially opening a Tati East Constituency development leadership workshop in Francistown over the weekend, the Minister of Foreign Affairs and International Cooperation, Mompati Merafhe, said PPP is an initiative through which the public sector hives off projects for private sector implementation. He said funds had been approved for the development of a comprehensive PPP implementation strategy as well as procedures and guidelines for the implementation and regulation of PPP by PEEPA. The planned strategy would guide the government on the type of projects to be conducted and introduce structures which would facilitate the smooth implementation and management of PPP projects.

Minister Merafhe told participants that Botswana was moving towards a new model of service that is decentralised, non-bureaucratic, catalytic results-oriented and empowering. "What is wrong with eventually having some government agencies transformed into Performance-Base Organisations (PBOs) that have both accountability and flexibility to achieve publicly defined goals, or what is wrong in letting organisations, both public and private, compete to deliver public services?" said Merafhe. He said in the new economy government needed to co-invest and collaborate with other organisations. Merafhe explained that this type of partnerships tend to have greater capacity to solve problems because they can be more flexible, leverage additional resources and face bottom-line pressures to boost performance.

"Yet public policy has only begun to explore the potential of bottom-up, decentralised network assuming the lead role in solving pressing societal problems". Minister Merafhe emphasized that the new economy would see technological innovation, higher education skills, open trade, e-commerce and digital transformation and balanced budget. He told participants that innovation was vital in productivity and economic growth. Merafhe described innovation and productivity as prerequisites for higher wages, saying that they were critical in giving Batswana opportunities in overcoming social problems. "This means that we should all play a key role in providing communities with the skills and tools they need to successfully navigate turbulent waters of development and guarantee prosperity." Merafhe further told participants that it was important to ensure that the benefits of innovation are spread broadly. He said it was upon those responsible to ensure that all Batswana benefited from the new economic opportunities and had access to the tools and resources needed.

He said in a skill-based economy, government and other providers must continue to provide every Motswana with access to continuous and affordable and life-long education. Your workshop should therefore look "at things, like how to increase access to public libraries, schools, job centres, community centres as well as ensuring the connection of Internet in the districts. "This will not drive economic growth, it increasingly determines individual opportunity," Merafhe said. He stated that Botswana offers 10 years of universal education, saying that she is proud in achieving one of the Millennium Development Goals (MDGs) ahead. Through minimalist, yet consistent rules, public policy should also ensure that consumers have that information they need, to make educated choices and provide a backstop and to protect consumers and citizens from abuse in markets, he said.

From Republic of Botswana, Botswana, 1 March 2005

Moroccan Forum Seeks to Promote Development Partnership

Public-private cooperation seen as key to sustainable development - Multinational partnerships between governments, nongovernmental organizations (NGOs), multilateral institutions and the private sector have become a centerpiece of international efforts to address the challenges of sustainable development. Public-private partnerships represent a new and innovative form of governance that links the strengths of government, NGOs and the private sector to implement internationally agreed development goals in local communities around the world. The Second International Forum on Partnerships for Sustainable Development, hosted by the Government of Morocco, in Marrakech, March 21-23, will study how these partnerships can best work toward meeting the water and energy needs of the developing world.

The forum is designed for "people who are looking for opportunities to join partnerships, people who have ideas and are looking for partners, and people who want to enhance the effectiveness of existing partnerships," according to the U.S. State Department's Special Representative for Sustainable Development Jonathan Margolis. He said, "If you're a smaller organization and you're wondering how you fit into this, this is a good opportunity to explore that. You will meet individuals who are carrying out the major partnerships on water and energy issues, and you will have a chance to interact with them directly." The first partnership forum, which met in Rome in March 2004, attracted high-level government officials, members of the private sector, and representatives from the United Nations, the World Bank, regional development banks and NGOs - more than 700 participants in all. Conference organizers expect a similar array of participants at the Marrakech Forum.

The chairman's summary from the Rome forum stated, "These partnerships constitute a major step in making sustainable development everyone's businessâ-oe [P]artnerships represent a way for governments, civil society and the private sector to pool their energy and resources in tackling difficult economic, social and environmental problems." According to announcements from the Moroccan officials organizing this year's conference, the forum will provide networking opportunities for groups seeking to forge partnerships and exposition opportunities for existing partnerships to showcase their achievements. Margolis said that this sort of exchange allows people to learn from each other's experiences.

Since the partnership model for development was first set forth at the 2002 World Summit on Sustainable Development in Johannesburg, South Africa, several hundred partnerships have been formed. The U.N. Commission on Sustainable Development, which serves as a clearinghouse for partnership initiatives, now lists 300 such projects under way. Margolis says that partnership initiatives take many forms and that project proposals come from all sectors. He mentioned a successful clean-water partnership that brought a water purification product to developing countries. This was only possible, however, with the help of government safety regulators; NGOs, who taught local populations how to use the product; and local business communities, who provided distribution networks.

Margolis said that the water and energy focus of the Marrakech Forum arose from the broader discussion at the U.N. Commission on Sustainable Development about the need to establish development priorities. Access to clean water was seen as the fundamental health concern. "We said we've got to look at water issues. That's first and foremost," he said. He said the commission is in the second year of a two-year cycle focusing on water issues and that it will be shifting its focus to energy issues next year. "Access to modern energy services is a prerequisite for a country's development," he said. Given the current focus on these two issues at the United Nations, he said, it was logical for the Marrakech Forum to explore how the international community could carry these discussions into practice, both by strengthening existing partnerships in these areas and by establishing new projects.

Margolis gave several examples of initiatives he would like to see raised at the forum. He said there is a great need for developing integrated water-resource management plans. A project of this type would bring together all the players in a country with an interest in water-resource development, including municipal leaders, representatives from the agricultural and industrial sectors, and water infrastructure engineers, to identify the country's needs and establish plans to achieve those goals. "All the relevant players are there. They're all consulted with. And they feel a vested interest. They feel ownership in bringing it forward," he said. Margolis said there are similar partnership initiatives aimed at creating comprehensive energy plans for developing countries. He noted that there is also a need to develop financing mechanisms to support the sort of infrastructure development that might be envisioned in water management plans and potable water projects. He said the private sector is the key.

"We're working with local municipalities in developing countries where we can, by pooling debt, help reduce investment risks for water infrastructure projects. We can provide partial loan guarantees to support domestic investors and establish revolving funds that sustain the initial investment by allowing the debt to be repaid and used again for further loans," he said. He said American investment banks and local banks in the developing countries could be partners in building financing programs and local bond markets. "These approaches help in many ways. It's private sector money used for public infrastructure. It's local money as opposed to money coming from the U.S. taxpayer. And if you create it right, you're creating not only the water infrastructure in one particular sector but the ability of that country to loan over and over again to whatever sector it feels is appropriate," he said.

Margolis said that the U.S. government is firmly committed to pursuing partnerships in sustainable development. He highlighted the over 20 partnerships the United States launched or joined at the World Summit on Sustainable Development, as well as the U.S. Agency for International Development's Global Development Alliance, which is promoting public-private alliances that address international development challenges. Margolis explained that since its launch in 2001, GDA has fostered more than 275 partnerships and leveraged over $3 billion in cash and in-kind donations from partners, ranging from host-country ministries and small businesses to international foundations and large corporations. He said the U.S. government is mobilizing its technical and financial resources behind global development and added that by working in partnership with other governments, the private sector, civil society, international organizations, the World Bank, and others, the United States can generate an energy with much greater power - power to set projects in motion that will make a real difference in the quality of people's lives, especially those living in the poorest areas around the globe. "That's a central piece of our foreign policy," he said, "but we could not achieve it without the help of our partners."

From AllAfrica.com, Africa, by David Shelby United States Department of State, Washington DC, 9 March 2005

World Must Support Nepad for Growth

The developed world must support the African Union's Nepad programme to help create a stronger climate for growth, investment and jobs in Africa, the Commission for Africa said in a report on Friday. Massive investment in infrastructure was also needed to break down the internal barriers holding the continent back, it said. "Africa is poor, ultimately, because its economy has not grown. The public and private sectors need to work together to create a climate which unleashes the entrepreneurship of the peoples of Africa, generates employment and encourages individuals and firms, domestic and foreign, to invest," the commission stated. Climate for growth, investment and jobs - It conceded that changes in governance were needed to make the investment climate stronger. But it said the developed world must support the African Union's Nepad programme to build public/private partnerships in order to create a stronger climate for growth, investment and jobs.

"Growth will also require a massive investment in infrastructure to break down the internal barriers that hold Africa back," it said. "Donors should fund a doubling of spending on infrastructure -from rural roads and small-scale irrigation to regional highways, railways, larger power projects and Information and Communications Technology." Emphasis on agriculture - Investment must include both rural development and slum upgrading without which the poor people in Africa would not be able to participate in growth. "And policies for growth must actively include - and take care not to exclude - the poorest groups. There should be particular emphasis on agriculture and on helping small enterprises, with a particular focus on women and young people. For growth to be sustainable, safeguarding the environment and addressing the risks of climate change should be integral to donor and government programmes. This programme for growth takes over a third of the total additional resources we propose," the commission said.

From IAfrica South African News, South Africa, 11 March 2005

New Call for End to Trade Barriers

The Commission for Africa on Friday called for rich countries to dismantle barriers against African goods, particularly in agriculture, and for trade-distorting agricultural subsidies to be abolished. In a report released simultaneously in London and Addis Ababa, the commission said these barriers hurt citizens in both rich and poor countries. It said Africa faces two major constraints on trade. It does not produce enough goods, of the right quality or price, to enable it to break into world markets. It also faces indefensible trade barriers that, directly or indirectly, tax its goods as they enter the markets of developed countries. "To improve its capacity to trade, Africa needs to make changes internally. It must improve its transport infrastructure to make goods cheaper to move. It must reduce and simplify the tariff systems between one African country and another. It must reform excessive bureaucracy, cumbersome customs procedures, and corruption by public servants, wherever these exist.

"It must make it easier to set up businesses. It must improve economic integration within the continent's regional economic communities. Donors can help fund these changes," the commission stated. But it said the rich nations must also dismantle the barriers they have erected against African goods, particularly in agriculture, adding that they hurt citizens in both rich and poor countries. "They must abolish trade-distorting subsidies to their agriculture and agribusiness, which give them an unfair advantage over poor African farmers. They must lower tariffs and other non-tariff barriers to African products, including stopping the bureaucratic application of rules of origin which excludes African goods from preferences to which they are entitled.

"And they must show this ambition by completing the current Doha round of world trade talks in a way which does not demand reciprocal concessions from poor African nations," the commission asserted. It added that careful attention must be given to ensure that the poorest people were helped to take advantage of the new opportunities and to cope with the impacts of a more open system of world trade. "Africa must be provided with the funds that can help it adjust to the new opportunities of a changed world trading regime," the commission said. World must support Nepad - The Commission for Africa also said in its report that the developed world must support the African Union's New Partnership for Africa's Development (Nepad) programme to help create a stronger climate for growth, investment and jobs in Africa.

Massive investment in infrastructure is also needed to break down the internal barriers holding the continent back, it said. "Africa is poor, ultimately, because its economy has not grown. The public and private sectors need to work together to create a climate which unleashes the entrepreneurship of the peoples of Africa, generates employment and encourages individuals and firms, domestic and foreign, to invest," the commission stated. It conceded that changes in governance are needed to make the investment climate stronger. But it said the developed world must support the Nepad programme to build public/private partnerships in order to create a stronger climate for growth, investment and jobs.

"Growth will also require a massive investment in infrastructure to break down the internal barriers that hold Africa back," it said. "Donors should fund a doubling of spending on infrastructure - from rural roads and small-scale irrigation to regional highways, railways, larger power projects and information and communications technology." Investment must include both rural development and slum upgrading, without which the poor people in Africa will not be able to participate in growth. "And policies for growth must actively include - and take care not to exclude - the poorest groups. There should be particular emphasis on agriculture and on helping small enterprises, with a particular focus on women and young people. "For growth to be sustainable, safeguarding the environment and addressing the risks of climate change should be integral to donor and government programmes. This programme for growth takes over a third of the total additional resources we propose," the commission said.

From Mail & Guardian Online, South Africa, 11 March 2005

Development: EU Urged to Stop Water Privatisation

Civil society groups are calling for a change of course in the European Union's approach to water and sanitation in developing countries. A consortium of civil society groups, led by the Dutch campaign groups Corporate Europe Observatory (CEO) and Both ENDS, and the Belgian non-governmental organisation (NGO) 11.11.11, says the European Union (EU) must end its preoccupation with private sector expansion and instead support "workable public water delivery options." In a letter sent to EU commissioner for development humanitarian aid Louis Michel to coincide with World Water Day (Mar. 22), the group of NGOs says they are concerned about the way "European aid money and political influence is being used to promote policies that are not working and hinge on providing extra money to European companies, rather than meeting real development needs in water and sanitation."

The EU launched a 500 million euro (665 million dollar) Water Facility for the African, Caribbean and Pacific (ACP) group of countries last year. The European Commission, the executive arm of the EU, says the facility marks a "watershed" in EU development strategy and will drive progress towards the achievement of the millennium development goal of halving the number of people without access to safe drinking water and basic sanitation by 2015. About 1.1 billion people lack access to safe drinking water, and 2.4 billion people to sanitation. Approximately 5 percent of the world's water is run by the private sector but 95 percent of that is by European companies. But the group of NGOs says the "water privatisation wave" during the last decade has "proven a failed experiment." "Concrete experiences in developing countries have shown that multinational water corporations are ill-equipped to deliver clean and affordable water to the poor. Private sector investment has not brought the expected financing for water and sanitation for the poor," they say in the letter.

"We believe that faced by experiences of what works combined with the failure of the global private sector, the time has come to refocus the global water debate to the key question: how to improve and expand public water delivery around the world?" The group says that instead of developing new policies "based on what works," European governments and international financial institutions are devising "new mechanisms for attracting the private sector into water and sanitation, including various financial instruments to guarantee corporate profits." "This ignores the fundamentals behind the private sector's failure and the fact that public utilities continue to supply water to an overwhelming majority of those with access to water in developing countries," the letter says.

The NGOs are calling for the EU to provide funding without "blatant political conditions", and say the bloc should use its powers to influence other international institutions. "European public water utilities should be enlisted to assist in meeting the water MDGs through not-for-profit public-public partnerships. In international fora, the EU must use its influence to reorientate the policies of the World Bank and other international financing institutions to end privatisation conditions linked to financial support to those requesting it." Olivier Hoedeman, research coordinator at the CEO says the group's appeal is timely. "We are writing this letter now because there has been a major change over the last few years and it's become obvious that private water companies are not the people to deliver affordable water to the poor," he told IPS.

"The moment has come to say that public water is working and delivers to 95 percent of the population also in developing countries. We need to look at how to make it work for the rest of the population. The EU should really take the lead in promoting this for a number of reasons - it's a major donor and so has a big responsibility.. There is also enormous amount of expertise within European public water utilities and this expertise needs to be mobilised to achieve the MDGs," he added. During his confirmation hearing at the European Parliament in October, Commissioner Michel said public services were "key to meeting basic needs in developing countries" and that "essential services should be exempt from market pressures." While the NGOs welcome Michel's comments, they insist that he must act upon them.

"Michel said some very encouraging things and made it clear that he does not support privatisation as the solution to the water crisis, so that is something to build on. He now needs to make that clear to his staff in the Commission and we hope that he will follow up on those statements," said Hoedeman. The civil society groups say that such action must come over the next 12 months. "We urge you to ensure that by the next World Water Forum in Mexico in March 2006 the EU will champion a different approach to water and sanitation in developing countries," they said. "By providing the necessary financial and political support for workable public solutions, the EU will be part of the solution rather than the problem."

From AllAfrica.com, Africa, by Stefania Bianchi, Inter Press Service, 21 March 2005

Government Gears Law-making Programme to WTO Bid

Ha Noi - The cabinet concentrated discussions on a draft of a law-making programme to meet requirements of the World Trade Organisation, of which the country has set itself to become a member by the end of this year, at a regular meeting on March 3. Prime Minister Phan Van Khai emphasized the urgent need to pass a regulation on public inspection in an effort to improve the inspection work, which he said remained weak, troublesome and continued to miss violations. He tasked the Minister of Home Affairs to collect recommendations from cabinet members in the process of making regulations on public inspection, which he said should be submitted to the Government for promulgation soon. In regard to the bill on corruption, Cabinet members shared a view that corruption has emerged as a pressing and wide-spread issue. They stressed that the matter now is how to make legal tools effective as the Government had taken a number of measures against the problem but they have not proven strong enough to stop the phenomenon. In response, Khai said the ordinance on corruption came into force six years ago and should be upgraded into a law. The Government should carefully prepare the draft for submission to the National Assembly for approval in the coming session.

The cabinet heard the Minister of Planning and Investment's report on the socio-economic situation in the first two months of the year. He said economic growth remained stable with industrial growth up by 16.1 percent year on year, of which the non-State sector recorded the highest rate at 27.2 percent. He also showed optimism in regards to agricultural production although prolonged droughts have hit a number of localities. In February, sales of commodities and services increased 18.5 percent from the same period last year. During the month, export value reached 1.9 billion USD, bringing the two-month total to 4.078 billion USD, representing a 16.2 percent year-on-year increase. Two-month import value also surged 9.3 percent year-on-year. Concluding the meeting, PM Khai said it is necessary to take measures in order to achieve the target of 8.5 percent GDP growth this year as set by the National Assembly. The measures should include increasing investment, reducing intermediate costs to raise added values and applying more advanced technology.

The PM asked the Ministry of Agriculture and Rural Development (MARD) to co-ordinate closely with other concerned ministries and agencies to instruct drought-affected localities to efficiently apply anti-drought measures. He also requested the MARD to strengthen measures to put an end to avian influenza as soon as possible. In addition, he asked ministries and agencies to continue simplifying administrative procedures to facilitate both foreign and domestic investors' operations. Moreover, he urged relevant ministries and agencies to move to stabilise the consumer price index (CPI) in the coming months, asking them to keep it within the level approved by the NA.

From Viet Nam News Agency, Vietnam, 3 March 2005

Seminar on Public-private Partnerships Organised

Ahmedabad - The state chapter of Confederation of Indian Industries (CII) on Monday organised a seminar on Public-Private Partnership (PPP). Experts from the United Kingdom, who recognised the potential of public-private partnerships in Gujarat, made presentations of their earlier experiences with an aim to bring awareness about PPPs. Chairman of United Kingdom of Trade and Investments (UKTI) John Davie while explaining the working of PPPs, said these make up for the efficiency and risk-taking abilities which the governments generally lack. He added that though PPPs might begin off as a financial crunch or a necessity, it eventually leads and open door to several benefits and facilities - both for the public in general and also the private parties.

He emphasised that the state government must enable conditions to attract investment and ensure long-term commitment to PPP, among all political parties. "Rather than an alteration in the existing approach what is required is a radical rethinking and an over all culture change," he said. Co-chairman of UKTI Stephen Harris said that PPPs are a contractual relationship unlike the privatisation. He insisted that for proper implementation of the PPPs, a task force should be set-up. "The force should be responsible to identify the blockages, propose solutions and report to the highest level of the government. It can also promote the policy to public and private sectors," he said.

And added that the state, with numerous infrastructure projects has a vast scope for PPPs. "We are looking for investments into basic development projects like roads, but eventually also into sectors like health and education," Harris said. CEO of Gujarat Infrastructure Development Board Jayant Parimal said the concept has already been implemented in the state. He added that the vision 2010 agenda of the state government has identified 282 infrastructure projects to be taken up with an investment of Rs 1,16,000 crore, of which projects worth Rs 50 crore have already been taken up.

From Ahmedabad Newsline, India, by Express News Service, 21 March 2005

State Sector Will Be Downsized

Athens - Alogoskoufis defends record, cites predecessors' bleak performance, sees investments ahead - Economy and Finance Minister Giorgos Alogoskoufis defended the government's economic policy yesterday, blamed the previous government for the lack of tangible results, so far, and promised to shrink the state's relative weight in the economy by 1 percent of GDP each year through privatizations and the further opening up of markets. Speaking almost a year after his New Democracy party came back to power, on March 7, 2004, for the first time since October 1993, Alogoskoufis said the new government had been handed an economy with huge budget deficits, very high public debt and badly managed public firms such as Hellenic Railways (OSE) and Olympic Airlines.

What Alogoskoufis did not mention was that, during the government's tenure, deficits have not improved, even allowing for the government's "audit" of public finances which inflated the figures - often unnecessarily, according to critics - and that the public companies he specifically mentioned continued to lose money at a rapid pace. Instead, he admitted that the 2004 budget deficit will exceed the 5.3 percent (of GDP) that he himself had announced back in September; and he sprang another surprise by saying that the 2003 deficit, revised by the present government to 4.6 percent of GDP - far up from the 1.7 percent claimed by its PASOK predecessor - will also be revised upward, to over 5 percent. "We have sent preliminary data (on the 2004 deficit) to the European Union. There is a budget deficit above 5.3 percent (of GDP) due to the inclusion of old debts such as those related to hospitals," Alogoskoufis told reporters. He added that Olympics-related spending and pension hikes also led to the fiscal slippage.

Back when announcing the 5.3 percent figure, the government had also overestimated tax revenues and the low absorption rate of EU structural funds. In fact, its pre-election tactics of attacking the tax-collecting bodies as partisan and anti-business and its promise to radically overhaul the Financial Crimes Squad (SDOE) significantly contributed to the pre-electoral collapse in revenue. Alogoskoufis also said that the revised 2003 budget deficit would exceed 5 percent of GDP. He added that EU statistics agency Eurostat would announce exact figures, but he did not say when. He added that economic growth in 2004 may have reached 4 percent, exceeding the original estimate of 3.9 percent. The minister acknowledged that the government's growth estimate for 2005 (3.9 percent), was higher than those of the Bank of Greece's (3.3 percent) or the European Union's (as low as 2.7 percent), but claimed that growth would be boosted thanks mainly to two new laws: First, the law on investment incentives, which he called "a pioneering law"; and second, a law on public-private partnerships which, he said, will be passed in a few weeks' time. Alogoskoufis's deputies also defended the government's record, so far. Petros Doukas said the cost of borrowing had been significantly reduced, Christos Folias said the prospect of losing EU funds had significantly diminished and Adam Regouzas remarked on the tax cuts introduced late last year.

From International Herald Tribune, France, by Kathimerini Greece, 3 March 2005

UK Government Pledges To Cut The Strings Attached To Aid

Britain has signalled that it will no longer use overseas aid as a means of forcing poor countries to follow free trade and privatisation policies. In 'Partnerships for poverty reduction: rethinking conditionality', published Wednesday, 2 March, the government appears to herald an end to the much criticised economic policy conditions it attaches to the aid it gives to poor countries. This syndrome of conditions - often referred to as 'conditionality - has often forced poor countries to open up their markets and privatise public services. In a foreword to the paper, Hilary Benn, the Secretary of State for International Development, says '...agreed benchmarks for measuring progress on the reduction of poverty, rather than policy conditions set by donors, will be the basis for both partners...' Mr Benn also says that the government's '...thinking and practice on conditionality has not kept pace with this new approach.'

Christian Aid's head of policy, Charles Abugre, welcomed the government's new paper.'For 25 years, Britain and other countries have pursued free trade policies in poor countries by attaching conditions to aid. 'If this means the beginning of the end of that approach then it is an important paper,' he said. 'But we must also challenge the policies themselves, as conditionality is only one way in which they have been imposed on poor countries.' On trade, 'Partnerships for poverty reduction' makes clear that '...in the 1980s and 1990s donors pushed for the introduction of reforms, regardless of whether these were in countries' best interests.' It also says that this approach prevented poor countries from learning from successful models of economic development such as those in east Asia.

'The acknowledgement that past policy conditions have caused problems is very important as reforms already undertaken have caused huge suffering in poor communities,' said Mr Abugre. 'The suffering continues to this day because many countries have now liberalised trade to the extent that their economies are more open than rich countries.'While stopping more of this from happening is vital, it is of similar importance that countries are able now to reverse some policies in order to reduce the harm done to the lives of poor people.' While committing Britain to abandoning explicit economic policy conditions, the paper signals that the government will continue to rely on International Monetary Fund (IMF) assessments of whether a poor country is 'on track' with its economic reforms. 'This is of concern,' said Mr. Abugre, 'because the IMF is still setting economic policy conditions that prescribe trade liberalisation and privatisation that may prove harmful to poor people. 'The UK government must also use its power as a shareholder in the both the IMF and World Bank to encourage them also to put an end to harmful economic conditions.'

From Christian Aid (press release), UK, 3 March 2005

USAID Official Addresses Challenges Facing the Americas

Adolfo Franco discusses need to help the region's poor - Latin America and the Caribbean must produce more sustainable equitable growth and develop diversified, broad-based economies if U.S. assistance is to address the chronic poverty that ails the region, says Adolfo Franco, assistant administrator for Latin America and the Caribbean at the U.S. Agency for International Development (USAID). In his March 2 prepared testimony before the U.S. Senate Foreign Relations Committee, Franco said that despite significant upswings in economic growth and increased trade between the United States and the rest of the Western Hemisphere, the region's population still suffers from a huge income disparity as compared to the rest of the world. Franco said the challenges for Latin America and the Caribbean remain formidable, because many regional economies are not growing quickly enough to generate sufficient jobs to keep up with population growth, let alone address high poverty rates.

The essence of U.S. policy toward the region is that real, long-term economic growth and political stability are only possible if governments "consciously extend political power and economic opportunity to everyone, especially the very poor," he said. Franco pointed to one problem in particular - corruption - as "leading to a crisis for democracy" in the region. Policy-makers and the public are growing more aware, he said, that corruption in the region has significantly increased, with surveys showing that seven of the 10 countries with consistently high measures of political corruption are in Latin America. Many officials in the Americas have won elections by promising to fight corruption, said Franco, adding that civic organizations and the media are "increasingly promoting transparency, lobbying for reforms, and informing citizens." Franco said the Bush administration's four top strategic priorities for the region are to advance democracy and human rights, increase economic prosperity and security, combat narcotics trafficking, and address social and environmental issues. These priorities, he said, address "key constraints" to development.

USAID's challenge in Latin America and the Caribbean, Franco said, is to continue helping to build a "hemispheric community where all governments are not only democratic, but their people are truly free." USAID continues to target its "scarce development assistance resources" mainly to those countries that are making the "difficult decisions to help themselves," he said. With the United States the world's leading donor nation to the region, Franco said Bush administration policy is to help the countries of the Americas "retool their economies" to take advantage of new trade opportunities, "to strengthen their social and political institutions through greater investments in health and education, and to encourage responsible policies and effective government."

Mr. Chairman, Members of the Committee, it gives me great pleasure to appear before the Senate Committee on Foreign Relations to discuss with you how USAID's Bureau for Latin America and the Caribbean (LAC) continues to promote the President's vision for the Western Hemisphere. The essence of President Bush's policy is that real, long-term economic growth and political stability are only possible if governments consciously extend political power and economic opportunity to everyone, especially the very poor. In her January 18 confirmation hearing before the Senate Foreign Relations Committee, Secretary of State Condoleezza Rice stated that the Western Hemisphere is "extremely critical" to the United States. "With our close neighbors in Latin America we are working to realize the vision of a fully democratic hemisphere bound by common values and free trade."

The strong economic, cultural, and geographic ties between the United States and the countries of the Western Hemisphere make their political and economic stability of vital interest to the United States. Approximately 40 percent of imports for LAC countries come from the United States, 50 percent of the region's exports ($217 billion) are purchased by the United States, and Latin America supplies more than one third of U.S. energy imports. In 2003, $20 billion of U.S. private investment was made in the region, and according to the Inter-American Development Bank May 2004 report, an estimated $30 billion in remittances were expected to flow to the region from the U.S. Still, the people of the LAC region suffer from huge income disparity compared to the rest of the world, and competitiveness lags behind other developing regions of the world. The challenges remain formidable as it becomes obvious that many regional economies are not growing sufficiently fast to generate enough jobs to keep up with population growth, let alone address chronic poverty.

Mexico is the largest source country for unauthorized immigration to the United States, and of the six other countries with more than 100,000 unauthorized residents in the United States, five are in Latin America. As stated by President Bush in November 2004, "In this century, countries benefit from healthy, prosperous, confident partners. Weak and troubled nations export their ills - problems like economic instability and illegal immigration and crime and terrorism.... Healthy and prosperous nations export and import goods and services that help to stabilize regions." The challenge ahead for the LAC region is to produce more sustainable, equitable growth, and develop diversified, broad-based economies if U.S. assistance is expected to make a substantial difference in reducing poverty. To this end, the United States can provide expanded opportunities that promote a peaceful and democratic hemisphere.

There is growing consensus that corruption is leading to a crisis for democracy in this region. Corruption is not only a consequence of weak governance, but is a barrier to economic development and growth of democratic and strong societies. The Center for Strategic and International Studies reported in 2003 that a corrupt or inefficient justice sector can slow economic development, undermine the strength and credibility of democratic institutions, and erode the social capital necessary for increased human wellbeing and the fulfillment of human potential. Further, research by the World Bank shows that countries that effectively address corruption and improve the rule of law can increase their national incomes by four-fold over the long term, and child mortality can fall as much as 75 percent.

Both policymakers and the public are growing more aware that corruption has significantly increased. A 2003 survey by the World Economic Forum of business leaders in 102 countries found that seven of the ten countries with consistently high measures of political corruption are in Latin America. Growing awareness of corruption has influenced the rhetoric of politicians, and many officials have won elections by promising to fight corruption. Similarly, civic organizations and the media are increasingly promoting transparency, lobbying for reforms, and informing citizens. LAC countries have adopted a wide range of legal, accounting, and auditing procedures to combat corruption, and some are prosecuting corrupt public officials. The pervasive nature of high-level corruption across the region makes prosecution and punishment imperative.

In December 2003, former Nicaraguan President Arnoldo Aleman was sentenced to 20 years in prison for corruption. Accused of helping to divert nearly $100 million of state funds into his party's election campaign and found guilty of money laundering, fraud, embezzlement, and electoral crimes. Aleman has been released from prison to serve his sentence in his home, where he continues to negotiate political deals that could result in reversing his conviction. In January 2004, prosecutors in Guatemala initiated a formal investigation of embezzlement charges against former President Alfonso Portillo, as well as his vice president, finance minister, and three other top officials, who are now in jail. Former Costa Rican President Miguel Angel Rodriguez resigned as secretary general of the Organization of American States in October 2004. This action followed allegations of corruption against Rodriguez who is presently under house arrest. And in Paraguay, six Supreme Court justices charged with corruption were impeached and replaced in 2004 and judges selected in an open and transparent process for the first time in Paraguayan history.

Just and effective legal systems increase government credibility amid its citizens and bolster support for democratic institutions. The 2004 United Nations Development Program Report on Democracy in Latin America drew attention to declining public faith in democracy due to persistent poverty and governments' inability to effectively deliver public services, including security. In addition, countries with more effective and equitable justice systems provide more stable and attractive investment environments by offering legal protections for investors. Although LAC countries have made strides to adopt procedures to make criminal justice more transparent, efficient, and participatory, much remains to be done to fully implement these reforms and provide access to justice for all. Crime and organized gangs, fueled by a combination of population density and resource conflict, rapid urbanization (World Bank estimates that 58 percent of Latin Americans live in urban areas) and persistent income inequality, present a growing problem that places further stress on democratic institutions. A study by the Inter-American Development Bank notes that Latin America's per capita gross domestic product would be 25 percent higher today if the region had a crime rate similar to the rest of the world.

Free and fair elections have become the norm in the LAC region. However, Haiti's fraudulent parliamentary elections in 2000 led to a protracted political impasse characterized by arbitrary and authoritarian rule, lawlessness, and violence. The impasse ended in 2004 with the resignation of President Aristide. To demonstrate commitment to advance and consolidate democracy, alleviate poverty and restore stability in Haiti, the donor community pledged more than $1 billion in short-term assistance to the interim Government of Haiti. That available funds are being utilized at a significantly slower than envisioned rate is indicative of Haiti's weak public institutions, unskilled workforce and insecure working environment - hallmarks of a fragile state. Despite bold efforts by Colombia, Bolivia, and Peru to combat narco-trafficking, the continuing lack of state presence and weak institutions in some areas allow illegal narcotics production and armed terrorist organizations to operate. Profits from narcotics offer large trafficking organizations the means to corrupt and undermine legitimate governments, and the lack of effective rule of law threatens business interests and puts citizens and Americans at risk.

Economic growth in LAC reached 5.5 percent in 2004 (according to a preliminary estimate by the Economic Commission for Latin America and the Caribbean), outperforming the most optimistic forecasts. With the exception of Haiti (where GDP fell 3.0 percent), every country in the region posted positive growth. This growth is a reflection of improved macroeconomic policies throughout the region, including fiscal consolidation and prudent monetary management. As a result, the countries in the region were able to reverse the trend where GDP has grown, on average, by a paltry 2.0 percent annually for the last nine years. The region's macroeconomic performance is closely tied to the international economy. World economic activity increased in 2004 and global GDP is expected to grow just under 4 percent (up from 2.6 percent in 2003), while world trade is expected to grow more than 9 percent. This international environment, especially rising prices for oil, metals, and agricultural commodities, also boosted the terms of trade in LAC. In 2003 the region marked its first balance of payments surplus in 50 years, and posted a surplus again in 2004. Importantly, this surplus is not only a reflection of high commodity prices, with export volumes rising an estimated 11 percent last year, but also improved terms of trade and migrant remittances, which rose 16.8 percent over 2003 levels.

Significant challenges remain, however, to lock in this higher rate of economic growth and reduce poverty. These include putting in place the microeconomic reforms needed to boost competitiveness and productivity growth. Nearly 128 million people (about 25 percent of the region's population) earn less than $2 per day and 50 million people earn less than $1 per day. The urban unemployment rate has hovered around 10 percent for the last several years. External debt for the region remains a concern; since the mid-1990s, external debt as a share of GDP has risen from a low of 35 percent in 1996 to 43.9 percent in 2003. Although the IMF estimates external debt fell to 38.4 percent in 2004 on the back of strong fiscal performances, this level of debt is still too high. This indicator was highest for Guyana (202 percent), Nicaragua (162 percent), Argentina (130 percent), and Belize (90 percent). Spurred by a growing global demand for timber and paper, illegal and destructive logging remains one of the key threats to the world's oldest forests. Illegal logging destroys forest ecosystems and displaces the poor, robs governments and communities of needed revenues, and acts as a disincentive to sustainable forest management. Only 0.5 percent of all forests are under ecologically sound management, as certified by independent international certification bodies.

Inequalities in access to quality health services, especially for maternal and child health, present major obstacles to achieving overall health improvements as well as economic and social development in the LAC countries. HIV/AIDS prevalence is increasing across the LAC region, with significant increases noted between 2001 and 2003 in Belize, Honduras, Suriname, and Jamaica. The adult HIV/AIDS prevalence rate in the Caribbean is surpassed only by Sub-Saharan Africa, and AIDS has become the leading cause of death in the Caribbean for both men and women aged 15-24. More than two million people now live with HIV in LAC countries. In the past year, over 250,000 people were newly infected with HIV and well over 140,000 people died from AIDS in 2004. The increase risk of transmission stems from social patterns of early sexual initiation and multiple partners, as well as stigma and discrimination, which keep the disease underground and discourage people from seeking testing and treatment. This poses a serious threat for the security and health of the United States, given the high mobility of LAC populations region-wide for employment, education, and tourism.

The quality of primary and secondary education in LAC countries is poor. In a recent study by the Organization for Economic Cooperation and Development of math and science skills among 15-year-olds in 43 countries, the five participating LAC countries ranked among the lowest. The majority of students attends weak and under-funded schools, and fails to acquire basic skills in mathematics, language, and science. Educational systems lack adequate financing, which translates into poorly trained and motivated teachers and a shortage of materials. Rural and poor populations, the majority in most LAC countries, face many obstacles - language barriers, long distances to schools, and poorly trained teachers - resulting in very high dropout rates. Fewer than 30 percent of students in the region complete secondary school, and many who do finish lack the skills to compete in the workplace, especially in an increasingly competitive global economy.

U.S. National Interests - As outlined in the U.S. National Security Strategy of September 2002, and the joint State-USAID 2004-2009 Strategic Plan, USAID's overarching goal is to advance sustainable development and global interests. In LAC, the four top strategic priorities are: 1) to advance democracy and human rights; 2) to increase economic prosperity and security; 3) to combat narcotics trafficking; and 4) to address social and environmental issues. These strategic priorities give paramount importance to the implementation of policies that address the key constraints to development.

USAID Operational Goals for the LAC Region - USAID's challenge in the LAC region is to continue to assist with building a hemispheric community where all governments are not only democratic, but their people are truly free. Within this environment USAID continues to target its scarce development assistance resources mainly to those countries that are making the difficult decisions to help themselves. We want to help our partners to retool their economies to take advantage of the new trade opportunities, to strengthen their social and political institutions through greater investments in health and education, and to encourage responsible policies and effective government. The LAC Bureau determines strategic priorities for transformational development countries (all of the 16 USAID presence countries except Haiti and Colombia - both grouped as strategic states) according to their performance against Millennium Challenge Account (MCA) indicators that reflect effective governance, economic growth, and investment in people. In low-income (MCA eligible) countries where there is political will and commitment to address the performance gaps, USAID's programs are designed to improve country performance to meet the MCA assistance criteria.

Three countries from our own hemisphere were among the first 16 to be declared eligible for MCA assistance: Bolivia, Honduras, and Nicaragua. Two additional countries were recently selected as "MCA threshold countries" for FY2005, Guyana and Paraguay. These countries will receive USAID assistance aimed at helping them achieve full eligibility. In both the low- and middle-income countries, USAID is strengthening the skills of host-country government institutions and local organizations to address MCA performance gaps and ensure sustainability of development progress, as well as addressing global and transnational issues such as HIV/AIDS, conservation of biological diversity and global climate change, trafficking in people, direct support for trade agreements, and counternarcotics.

In Haiti, a top hemispheric priority country, USAID's core program focuses on humanitarian assistance and support to the interim government in its efforts to re-establish political stability and improve economic performance, implement justice and police reform, and hold free and fair elections. To implement these activities, USAID is requesting additional resources from the planned Transition Initiative Appropriations account to fund the creation of short-term employment, environmentally sound agricultural production, improving access to micro-finance, primary education, justice, human rights protection, and civil society strengthening. The USAID program in Colombia, another Presidential priority country, is designed to attack narcotics trafficking. Other strategic program goals in the region include implementation of the Peru/Ecuador Peace Accords, bolstering security in the Caribbean and building international solidarity for human rights activists, especially strengthening the voice to Cuba's independent journalists.

In the Caribbean, USAID provides significant humanitarian assistance to countries recovering from several hurricanes and tropical storms which caused significant human suffering and economic loss in September 2004. Grenada, Haiti, and Jamaica were particularly hard hit. Following the disaster relief phase, the economic recovery program has drawn on lessons learned from post-Hurricane Mitch reconstruction efforts in Central America to implement community infrastructure rehabilitation and economic revitalization, including targeted assistance to particularly damaged economically important sectors, such as the tourism, agriculture, and fishing industries to create employment and revitalize economic growth.

Democracy and Governance - Justice sector modernization remains the largest focus of USAID governance programs in the LAC region. USAID is advancing criminal justice reforms, strengthening judicial independence, expanding access to justice, and improving administration of justice. Criminal justice system reforms developed and enacted over the last decade are making an impact through improved access to courts; more transparent, efficient, and participatory processes; faster resolution of cases; and increased citizen confidence in the integrity of the process. USAID has also made significant progress to provide alternative case resolution mechanisms, including the establishment of 61 mediation centers in eight countries. In addition, 61 community justice centers bring together a variety of justice-related institutions and services in a single location, often in areas where no access was previously available to justice. USAID plans to make operational 15 additional mediation centers and 15 additional justice centers by the end of 2006. These and other justice reform efforts will reduce the time to process cases in eight target countries by an additional 20 percent by the end of 2006 (for Bolivia, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, and Peru). New efforts in justice reform will target crime prevention and commercial codes.

USAID's governance programs promote accountability and transparency in national and local government institutions, strengthen civic organizations to advocate for citizens' rights, and increase the skills of national and local governments to manage resources and provide services. We can see the results of electoral reform in Honduras, where for the first time in history, citizens were able to vote directly for representatives, rather than for a party slate. Anti-corruption programs, such as establishment of transparent management and recordkeeping systems or auditing agencies, improve citizen oversight and build local capacity to address issues of weak governance, entrenched political institutions, and poor public sector management.

USAID investments since 1990 have encouraged adoption of national-level integrated financial management systems by all USAID presence countries in LAC, bringing transparency to national budgets for the first time. USAID plays an active role in anti-corruption efforts. At the local level, technical assistance and training for municipal leaders improves coverage of basic public services and infrastructure, transparent financial administration, and public participation in decision-making. USAID collaborates with U.S. government agencies in planning and managing the biennial Global Forum against Corruption, and convenes the Donor Consultative Group for Latin America and the Caribbean. The Agency advises the State Department in the work of the committee of experts for the implementation mechanism of the Inter-American Convention Against Corruption by involving USAID missions and civil society in the review process.

Economic Prosperity and Security - USAID is assisting LAC countries to enact legal, policy, and regulatory reforms that promote trade liberalization, hemispheric market integration, competitiveness, and investment. USAID was instrumental in providing technical assistance and public outreach in Central America and the Dominican Republic during negotiations for the U.S.-Central America Free Trade Agreement (CAFTA), which was signed by five countries in 2004. USAID continues to help countries meet new standards for rules of trade, such as customs and rules of origin, sanitary and phytosanitary measures (animal and plant health and food safety), and intellectual property rights. In addition, USAID assistance helps smaller economies benefit from a global trading system by addressing longer-term challenges, such as rural economic diversification and small and medium enterprise development and competitiveness.

Implementation of CAFTA will continue to be a major priority in 2006, along with increased efforts to negotiate other free trade agreements, including a U.S.-Andean Free Trade Agreement. USAID will continue to play a vital role with the United States Trade Representative and partners in the Andean region in trade negotiations with Colombia, Ecuador, and Peru. Our work related to CAFTA and in the Andean region is expanding as we partner with different governments, producers, associations, non-profit organizations, think tanks and especially corporations to promote an enlightened dialog about the role trade can play in stimulating economic growth. USAID will continue to support development of regulatory frameworks and innovative approaches to widen and deepen financial intermediation in the small and microenterprise sector to give marginalized business people greater access to borrowing capital. USAID plans to train an additional 10,000 people across the region in trade-related areas in 2006. USAID is also supporting cutting edge efforts to increase the developmental impact of remittances, which were estimated at $38 billion in 2003 - more than all other development assistance combined.

Andean Counternarcotics - Narcotics trafficking, guerrilla and paramilitary violence, human rights abuses, corruption, crime, and a lack of effective government presence in the coca-growing areas in the Andes pose a threat to democracy in the region. The Andean Counternarcotics Initiative has three goals: 1) disrupt the production and trafficking of illicit drugs in the Andean region; 2) strengthen law enforcement and judicial institutions that combat narco-trafficking; and 3) develop viable alternatives to illegal drug production. Working in partnership with the leadership in the Andean region, USAID's assistance has helped to expand state presence, strengthen democracy, create licit economic opportunities, improve social conditions, and provide assistance to internally displaced people. For example, in Peru from 1995 to 2001, the alternative development program contributed to a 75 percent reduction in the hectares under illicit coca. Today, the legal agricultural economy in the coca growing regions is larger than the coca economy.

In his remarks at an international donors' conference for Colombia held February 3-4, 2005, in Cartagena, Colombia, USAID Administrator Andrew Natsios noted the Government of Colombia's political will and commitment to coca eradication and asserted that the global community, by working together, can provide the appropriate types and levels of assistance Colombia needs to end the drug trade and strengthen "legitimate" state institutions in a manner that protects the rights and freedoms of its citizens. He added that the United States will continue to provide assistance on alternative development programs to expand opportunities for social, economic, and democratic progress by farmers "caught up in illicit drug cultivation."

Social and Environmental Issues - USAID programs in the health sector are improving access to and quality of health services offered by both private and public sector care providers. USAID assistance has directly contributed to important advances in detection and cure rates for tuberculosis, significantly raised vaccination coverage rates, and helped reduce or eliminate major childhood illnesses, such as measles in LAC countries. While progress is being made to lower maternal mortality and apply proven, cost-effective methods to combat malaria and other contagious diseases, infection rates remain unacceptably high.

In the LAC region, the HIV/AIDS epidemic is largely concentrated in high-risk populations. Under President Bush's Emergency Plan for AIDS Relief (PEPFAR), USAID assists in two focus countries (Guyana and Haiti), sub regional programs in the Caribbean and Central America, and 12 non-focus countries. These 12 "non-focus" programs are extremely important in combating the epidemic since they not only cover non-USAID presence countries (such as Costa Rica, Belize and nine Eastern Caribbean countries), and Panama, but they also engender economies of scale in cross-border initiatives. For example, the Central America program saves money by negotiating regional prices for media programs across Central America. In addition, these programs ensure effective collaboration with and among regional bodies working to fight HIV/AIDS. In the Caribbean, for example, USAID helps support the Caribbean Epidemiology Centre in its HIV/AIDS surveillance activities, and PANCAP (Pan-Caribbean AIDS Program), which was the first regional program to receive a Global Fund grant. Regional programs are also effective at leveraging other donor resources. In the past two years, the Guatemala-Central America Program has leveraged 7.6 million euros from the Germans (KFW) and an $8 million World Bank grant to complement USAID regional program efforts.

Across the LAC region, USAID activities have resulted in a significant decrease in risky behavior and an increase in protective behavior, a substantial increase in access to treatment and diagnosis, and a marked improvement in the quality of care and support available for people living with HIV/AIDS. USAID education and training programs develop innovative and more effective service delivery models, many of which are being expanded by host governments and multilateral development banks. USAID programs support the following: improved testing and student assessment; development of school level report cards; management information systems to help Ministries of Education make targeted investments in low-performing schools; and greater parental and community involvement in education.

In direct response to the poor quality of primary and secondary educational structures in LAC countries, USAID will train an additional 5,500 teachers and administrators in 2005 and 2006 through the Centers of Excellence for Teacher Training (CETT), a Presidential Initiative to improve the quality of reading instruction in the 1st through 3rd grades. USAID also supports advancements in workforce training and higher education to help young adults prepare to enter the workforce.

USAID's environment programs protect the region's natural resource base and biodiversity, and reduce environmental hazards. As part of the Global Climate Change Initiative, USAID strives to improve land use and management of scarce biological resources, and promote the transfer and wider adoption of clean energy technologies. Through the Initiative Against Illegal Logging, USAID attempts to reverse the sale and export of illegally harvested timber products and assist countries to establish and strengthen enforcement of laws related to forest management, strengthen protected areas management, and promote good business practices, transparent markets, and legal trade. Under the Clean Energy Initiative in Mexico, USAID supports clean energy production and promote energy efficiency concepts to selected municipalities.

USAID is also continuing efforts to improve the management of water resources and accelerate access to clean water in support of the Water for the Poor Initiative. A regional strategy for biodiversity conservation in the countries comprising the Amazon Basin will improve the capacity of indigenous communities and local law enforcement agencies to protect the biodiversity of indigenous peoples' reserves. As part of the work USAID conducts in this sector, an additional 1.5 million hectares (bringing the total to 19.5 million) will be under improved management for biodiversity conservation and an additional 5.3 million hectares (for a total of 23.5 million hectares) will be under increased protection and sustainable management of forest ecosystems by the end of 2006.

Management Efficiency and Effectiveness - To improve management efficiency and ensure that operating expense and staff allocations respond to priorities, the LAC Bureau has undertaken Mission Management Assessments in all 16 missions. These assessments have helped the Bureau streamline management support operations, focus program portfolios, reduce management units, identify efficiencies in procurement, and broaden the functions of its regional platforms throughout the region. The LAC Bureau continues to work on finalizing the regional services platforms for Central and South America. The bureau is defining core staff requirements (technical and management support) for small, medium, and full-sized missions, and redefining the roles of U.S. direct hire staff, as well as the missions' program delivery models.

The Program Assessment Rating Tool (PART), a component of the President's Management Agenda, focuses on assessing whether goals, indicators, and targets are in place and used to determine whether a program achieves results. The original assessment found that while strategic planning and performance evaluation were effective at the level of USAID's individual operating units (the 16 country programs), the LAC Bureau could not assess regional level progress due to the lack of regional performance measures and targets. To facilitate regional performance monitoring, the LAC Bureau in collaboration with the Office of Management and Budget undertook an extensive effort in 2004 to develop a set of contextual and regional indicators that would provide valuable performance information to managers in the field and in Washington. The Bureau's long-term goals are now supported by annual outcome and/or output-related regional performance measures which the Bureau will use to assess program progress.

Other Donors - Official development assistance across the LAC region by all donors totaled just over $5.2 billion in 2002 (latest available figures compiled by the OECD). Bilateral donors accounted for about 86 percent of this assistance and multilateral donors the remaining 14 percent. The largest multilateral donor is the European Commission, followed by the International Development Association and the Inter-American Development Bank.

The United States has been the largest bilateral donor since 2001, topping Japan, which was the largest donor for six years prior to 2001. U.S. assistance in 2002 totaled more than $1.2 billion in grant funds, followed by Japan and Spain. Germany, the Netherlands, and the United Kingdom are also active donors in the region. According to OECD, nearly 60 percent of the assistance to the LAC region was geared toward social (health, education, water, housing, employment) infrastructure and services; approximately 14 percent was focused on economic (transportation, energy, and business development) infrastructure and services; and 12 percent on improved economic production (agriculture, industry, trade, and tourism). Mr. Chairman, this concludes my statement. I welcome any questions that you and other Members of the Committee may have. Thank you.

From All American Patriots (press release), Sweden, 3 March 2005

Public-private Partnerships May Not always Be The Best Solution

Recently, there has been a massive growth, in many countries, in public-private partnerships for the provision of public service infrastructure, such as, roads and health care facilities. Research funded by the Economic and Social Research Council confirms the potential benefits of partnerships, but also identifies circumstances under which more traditional forms of procurement are preferable. The project, conducted by Professor John Bennett and Professor Elisabetta Iossa, Brunel Business School, Brunel University, examined the case for using public-private partnerships (PPPs), and especially the Private Finance Initiative - in which a consortium owns the assets for a period of time. "We wanted to evaluate the current case for using PPPs, so we compared them to other forms of procurement, looked at alternative PPP models and specified the best circumstances for using the Private Finance Initiative," said Professor John Bennett. "PPP contracts involve an element of 'crystal ball gazing' as they can last for decades and unforeseeable developments will inevitably occur. We used an 'incomplete contract' methodology in our work to account for this longevity and uncertainty."

A major argument used to justify Private Finance Initiative projects has been that bundling allows the exploitation of synergies between different phases of a project, e.g. design, build and service delivery, that induce more innovative and cost-effective solutions. However, the research found that under some circumstances this may not necessarily be the case. "We've shown that bundling phases of a project doesn't always work in favour of a Private Finance Initiative," said Professor John Bennett. "As a case in point, newly introduced safety features to a building may raise social benefits, but will generally result in increased operational costs for the skilled labour needed to operate them. In such circumstances, the case for bundling, and therefore Private Finance Initiatives, may be weakened."

The research also showed that the market value of a facility at the end of a contract is critical to Private Finance Initiatives. If, for example, a building has little residual value despite the contractor's actions, then it may be preferable for control rights to stay with government - as would be the case under traditional procurement arrangements. But the argument for a Private Finance Initiative is stronger if the residual value of the facility is significant higher than it was in the first place. The research covers the recent developments of reliance on commercial not-for-profit firms to provide public services and the delegation to a private consortium of long-term management of service provision. A crucial role in determining the desirability of the inclusion of not-for-profit firms in PPPs is played by the links between the effect of investment on social benefit and profit. For example, a negative correlation between the two favours not-for-profit firms. The case for public-private partnerships apparently depends on partnership structure, operational decisions, residual values and, because of the longevity of contracts, a substantial element of fate.

From EurekAlert, DC, USA, 2 March 2005

United Nations Again Asserts Water Targets for Poor

For the third time in five years, the United Nations is trying to wake up the world to one of its most scandalous problems: 2.4 billion people have no toilets or sewers, and 1.1 billion do not even have drinkable water. Yet investments to deal with the problem are inadequate and about as stagnant as a blocked drain. The lack of santitation and clean water is the leading cause of death in the world, ahead of malnutrition. Every day, an estimated 22,000 people, half of them children, die of diseases borne by polluted water, such as typhoid, cholera, malaria and diarrhea. For World Water Day on Tuesday, under the slogan "water for life, water for all," the UN was again stressing the target to halve the number of people without access to sanitation or drinking water by 2015.

That pledge was made for drinking water at the millennium summit in 2000 and for basic sanitation at the world summit on sustainable development in Johannesburg in 2002. The promises have so far proved empty, because UN member countries made no provision for the hundreds of billions of dollars of new investments that would be needed on top of the money needed to maintain and repair the crumbling infrastructure of many existing water systems. To meet the UN targets would mean providing sanitation for more than 300,000 additional people every day and clean water for nearly 150,000 a day. But public aid for water projects declined from 2.7 billion dollarsbillion euros) in 1997 to only 1.4 billion dollars in 2002, according to the Organization for Economic Cooperation and Development, and has stagnated at that level since. In fact, less than five percent of multilateral development aid goes to water projects.

Neither the public aid nor private investments go to the poorest countries that most need of it, including 60 countries listed by the UN Development Programme in which at least one fifth of the population has no access even to a public tap or a safe well. Because public assistance falls so far short of promises, the development mantra since the 1990s has been "public-private partnerships," an idea pushed in his book "Water" by Michel Camdessus, special adviser on water to UN Secretary General Kofi Annan. But many oppose the commercialization of water supplies, which is an issue in France, home to three of the biggest private water companies.

"Public-private partnerships are not the solution for building the infrastructure of poor countries - it demands too much of them," said Laurence Tubiana, director of the Institute of International Relations and Sustainable Development in Paris. She said water development had to come from development aid, an idea supported by the alternative development movement. One non-governmental organization, Attac, has called for a global tax to finance development. A small step in this direction has been made in France, where local administrations and water companies are now legally permitted to dedicate one percent of their receipts to development aid. A small tax on water bills in the Seine-Normandy region of France, for example, has provided enough money over the past 15 years to provide clean drinking water for a million people in developing countries.

From Tribune de Geneve, Switzerland, 21 March 2005

'Due Process, Only Antidote to Corruption'

Except Due Process is established as an operating guide to government's activities in the country at all levels, corruption may as well remain elusive, Vision For Nigeria (VFN), a US-based non-governmental organisation has said. Re-appraising corruption as a major albatross in the country, Chairman of the group, Mr. Elvis Ndubueze the world over, a major tool of fighting corruption by any responsible government is the establishment of the office of due process which would be saddled with the responsibility of monitoring the activities of government with a view to ensuring accountability and transparency. He described President Olusegun Obasanjo's resolve to have due process in the Nigerian system as commendable adding that the move showed the president's sincere desire to have corruption stamped out of the system without fear or favour. Besides, he said having traversed the world, Obasanjo must have personally observed that the only way out of the country's woods is to get in the system, the concept of due process which would among other things, operate itself and the system without interference from any quarters.

"An American lawmaker once told me that the only thing that is saving the country is that there is due process in place. So, if America, despite their near-perfect system chose to put the due process in place, how much a developing country like us. As a Nigerian, I am worried and therefore buy the idea of due process", he said. He argued that if there was due process in place, "PENTASCOPE would not have mismanaged NITEL funds the way it did. Even in NNPC where there is due process, it is not independent and therefore not functional. But at the federal government where it is functional you can imagine how much has been saved in just two years of its introduction." Ndubueze however called on the National Assembly to show interest in the growth of the country which would be measured by such things as corruption level.

He enjoined them to pass the due process bill into law so that genuine Nigerians can begin to heave a sigh of relief. "They should make laws that will protect the people, laws that would make more money for the country and stamp out corruption in the country. They should not talk like there's no tomorrow. This is the time for them to write their names in gold by reviewing their stand on the issue. "It is their duty to ensure that the bill on due process is passed into law with independent offices because posterity would not ignore their contributions to the growth and development of the country. As far as I am concerned, they need not be told before they do it. The country is fasting changing with Obasanjo as president and can be better if they join hands in this direction. Ndubueze said as representatives of the people, "it is baffling that they are not prepared to fight corruption, otherwise, they would not be opposed to due process that is seeking to fight corruption. They are people we look up to for untainted patriotism. They must prove to the public that they are truly our representatives by doing what will improve our lives".

From AllAfrica.com, Africa, by Olawale Olaleye of This Day, Lagos, 1 March 2005

Malawi President's Reforms Win Senior US Visit

Blantyre - A senior U.S. State Department official will visit Malawi on Wednesday for the first time in 15 years to assess President Bingu wa Mutharika's reform programme, officials said on Tuesday. Assistant Secretary of State for African Affairs Constance Newman's two-day visit would concentrate on progress in Malawi since it qualified for help last November under the new U.S. Millennium Challenge Account (MCA), the U.S. embassy said. The programme is designed to provide cash in exchange for economic and democratic reforms in some of the poorest countries.

Wa Mutharika was elected to succeed former President Bakili Muluzi in May last year but soon ran foul of the ruling party that sponsored him, prompting a crisis in February when he quit the party rather than end an anti-graft campaign that had targeted senior party members. Both the International Monetary Fund (IMF) and the U.S. government have applauded the anti-corruption drive. Wa Mutharika has embarked on additional reforms to put the impoverished southern African country on track with the donors and the IMF, which suspended budgetary support fours years ago. "This means that Malawi has demonstrated a commitment to undertake policy reforms necessary to improve conditions for development and is close to qualifying for full MCA assistance," said U.S. deputy chief of mission David Gilmour. Malawi has been hit hard by HIV/AIDS and an estimated 80 percent of its 11 million people survive on the equivalent of $1 a day.

From Reuters South Africa, South Africa, 1 March 2005

Blair Targets Corruption in Africa Plan

Banks urged to inform on pilfering leaders - Commission also recommends doubling aid - Tony Blair will next week demand a radical shake-up of the west's approach to the world's poorest continent when his year-long Africa Commission calls for a doubling of aid, the dismantling of trade barriers, the writing off of debts and immediate action to stamp out corruption. In what is being billed as the most serious analysis of Africa's problems for a generation, the prime minister will use the launch of next Friday's report to urge a new partnership between developed and developing countries.

The report's recommendations - likely to be the subject of hard bargaining between Britain and her G8 allies in the run-up to the Gleneagles summit in July - include tough measures to tackle bribery by western multinationals in addition to huge injections of cash to fund health, education and improvements to Africa's rudimentary infrastructure. Among the proposals are demands that banks in the developed world repatriate money pilfered by corrupt leaders and inform on suspicious accounts.

The report concludes that corruption has been the single most important factor holding Africa back, but adds: "Fighting corruption involves tackling those who offer bribes as well as those who take them." The 400-page report says the west should write off the debts owed by poor countries to the World Bank, the International Monetary Fund and the African Development Bank, increase aid by $25bn (about 13bn Pounds) immediately and by a further $25bn from 2010, and eliminate the trade practices that damage poor nations. Originally suggested by the singer and activist Bob Geldof, the commission was launched by Mr Blair a year ago.

It has 17 members, including Benjamin Mkapa, the president of Tanzania, and Meles Zenawi, prime minister of Ethiopia. While not absolving Africa of the need to reform, it says governments, companies and banks in rich countries must all act to help clean up governance. "African governments must crack down on corruption," the report says. "Developed nations can help in this. Money and assets stolen from the people of Africa must be repatriated. Western banks must be obliged by law to inform on suspicious accounts. "Those who give bribes should be tackled too: foreign companies involved in oil, minerals and other extractive industries must make their payments much more open to public scrutiny. Firms who bribe should be refused export credits."

The report, due to be published next Friday, was obtained by the magazine Africa Confidential. It contains a detailed list of recommendations that Mr Blair and Gordon Brown will urge on other western nations in 2005, while Britain has the presidency of the G8 and the European Union. The report says extra aid and more generous debt relief should be used to fund: · $20bn a year investment in infrastructure. · $10bn-$20bn a year on health systems. · $7bn-$8bn a year to fund basic education. ·$5bn over 10 years for higher education. · $3bn over 10 years to help bridge Africa's technology gap. · $10bn a year to tackle Aids within five years.

With conflict seen as a prime cause of poverty, the report says that the west should fund half of the Africa Union's peacekeeping budget and that the global community should start work on an international arms trade treaty. The prime minister and the chancellor believe that 2005 is a "make or break" year for Africa, but are prepared for a tough fight to get the recommendations of the report accepted, particularly by the United States. In a challenge to the European Union and the US ahead of this December's meeting of the World Trade Organisation in Hong Kong, the report says rich countries "must agree to immediately eliminate trade-distorting support to cotton and sugar and commit by 2010 to end all export subsidies and all trade-distorting support in agriculture."

It also endorses Mr Brown's aid proposal for an international financing facility, which was rejected by the US and Canada at the February G7 summit. Some of the proposals throw into sharp relief the British government's recent reluctance to enforce policies dealing with the exploitation of resources and stolen public funds. Critics, including members of the all-party committee on genocide, have pointed out that the Department of Trade has been unenthusiastic about the investigation of allegations by the UN of alleged improper exploitation of resources in the Congo.

From Guardian, UK, by David Pallister, Patrick Smith & Larry Elliott of The Guardian, 4 March 2005

Main recommendations from Commission for Africa

A 17-member international commission chaired by the prime minister, Tony Blair, has made a series of recommendations for addressing Africa's problems. Following are the main points of the Commission for Africa's report released today. · Immediate$25bn (13bn Pounds) a year increase in international aid to Africa, followed by further $25bn a year from 2010. Specific recommendations made for spending in key areas of education, health and infrastructure. - Debts of poor countries in sub-Saharan Africa to World Bank, International Monetary Fund and African Development Bank be written off, but recipients must be committed to good governance and use the money to deliver "development, economic growth and the reduction of poverty". - Donor countries "should aim to spend" 0.7% of their gross national product on development aid. - British proposal to raise money for Africa on the world capital markets endorsed, but countries opposed to that - United States has rejected the mechanism - asked to focus on other ways to contribute. - Western nations called on to "agree immediately to eliminate trade-distorting support to cotton and sugar and commit by 2010 to end all subsidies and all trade-distorting support in agriculture". - African governments called on to commit to transparent governance and ratify the UN Convention against Corruption in 2005. - Governments, states and banks in rich countries also said to have a duty to tackle corruption, including repatriating illicit African funds held in overseas accounts, and more transparent business dealings with African governments in a bid to cut bribery. - Negotiations on an international arms trade treaty must open no later than 2006. - Western nations called on to fund at least 50% of the African Union's peacekeeping budget.

From Guardian, UK, by Associated Press, 11 March 2005

Aid Boost Offered to Africa If Corruption Rooted Out

A grand bargain in which Africa will receive a massive boost in aid and debt relief if the continent's leaders root out "the systemic rot" is proposed today by the Commission for Africa chaired by Tony Blair. The analysis, described as "blisteringly honest" in the report, is designed to rouse moral indignation across the west, but also respond to the anger within Africa at the behaviour of some of its "kleptocratic leaders". The emphasis on governance came from the African commissioners. It may also help to lure a still wary George Bush into increasing aid and reducing subsidies, but ministers now accept the United States will not join the proposed international finance facility, a means of increasing development aid for Africa. Instead, Britain is hoping to set up what ministers describe as "a coalition of the willing" prepared to put in resources.

The report to be unveiled in London, New York and Addis Ababa, and aimed initially at the British chaired G8 summit in Gleneagles in July, acknowledges past promises by the west have been systematically broken. It warns: "What began as the greatest bond between the rich and the poor for our times now risks turning into the greatest betrayal of the poor by the rich of all time". The commission insists its proposals are realistic and must be seen as a comprehensive package. The report proposes a two- stage increase in aid with a third of the initial amount of resources needed, roughly $12.5bn (6.5bn Pounds), being provided by Africa via extra growth and two-thirds coming from aid increases. Subject to improvements in African government's managerial and administrative capacity, aid would be increased to $25bn a year.

The report warns: "Corruption is systemic in much of Africa today. Corruption has a corrosive effect on efforts to improve governance, yet improved governance is essential to reduce scope for corruption." The report, welcomed by aid agencies, says: "The amount stolen and now held in foreign bank accounts is equivalent to more than half the continent's external debt." It also reveals no G8 nation has signed the UN anti-corruption convention, committing the west to repatriate stolen funds. "It is pointless for the developed world to bemoan African corruption when it does not take the measures needed to counter it".

From Guardian, UK, by Patrick Wintour, 10 March 2005

Permanent Anti-corruption Squad to Be Set Up

President Yahya Jammeh has disclosed his plan to establish the Public Accountability and Anti-Corruption Unit (PAACU) as a permanent anti-corruption squad "to constantly monitor and combat corruption in all its forms and manifestations." Meanwhile, the president personally expressed gratitude to all officials who "willingly cooperated during the probe" by the Paul anti-corruption commission of enquiry. He also thanked all those who were not found wanting by the commission, describing them as officials with "high standards of public comportment".

A release issued by the Office of the President states: "Following receipt of the report of the Presidential Anti Corruption Commission of Inquiry into the Assets, Properties and Activities of Public Officers form the period 22 July 1994 to 22 July 2004, His Excellency, the President of the Republic of The Gambia wishes to thank officials who willingly cooperated during the probe. Sincere thanks go to all those who maintained a high standard of probity and have not been found wanting in any way or manner by the commission.

Sincere thanks also go to members of the public who exercised their civic responsibility and good citizenship to provide vital information to the Commission without malice. Officials maintaining high standards of public comportment as holders of public office will immensely contribute towards strengthening the principles of good governance, probity and accountability and help to maintain and sustain a stable political and economic environment for the alleviation of poverty. The exercise would be a continuous one as a Public Accountability and Anti-Corruption Unit (PAACU) would soon be established as a Permanent Anti-Corruption Squad to constantly monitor and combat corruption in all its forms and manifestations."

From Daily Observer, Gambia,by DO, 26 March 2005

Mauritania Government Increases Wages to Fight Corruption

The Mauritanian government decided the increase of wages of ministers at a rate of 700%. Finance ministry sources said that the monthly payment of the minister increased from $ 520 to $ 3500. The sources did not explain the reasons of this great increase, but the local papers stressed that the decision aims to limit administrative corruption and stealing the public funds. The opposition accused senior officials in the government of corruption and stealing public funds. A court in the capital Nouakchott accused of corruption in 2004 four of government officials and obliged them of returning back one million dollars they stole from the program for "supporting victims of the drought." Worthy mentioning that the government increased the minimum rates of wages by 400% as from January this year. It also announced a monthly allowance of $ 30 for public workers. Mauritania hopes to be a rich country after sea oil sites were discovered. It is expected that the production will start in these sites by the end of 2005.

From Arabic News, Middle East, 25 March 2005

Summit Adopts Resolutions to Fight Corruption

The Second National Anti-Corruption Summit concluded yesterday, with delegates adopting in unity several resolutions to intensify the fight against corruption in the country. Heeding President Thabo Mbeki's call to unite in the fight against corruption and recommit to this cause, the summit recognised however that there were still a number of outstanding challenges that needed vigorous tackling. This despite progress made since the first such summit was held in 1999. Opening the summit on Tuesday, President Mbeki said much as South Africa had made significant strides in fighting corruption there were still serious challenges that needed to be dealt with, hence the need to look at the real issues surrounding corruption. "We need to ask the question whether it is correct that important bodies such as Transparency International should rate corruption levels in any country on the basis of the tools and surveys that are based on perceptions," he said.

The summit resolved to translate resolutions taken into a programme of action of the National Anti-Corruption Forum (NACF) within the next three months. These built on the resolutions adopted at the First National Anti-Corruption Summit that entailed drawing up relevant legislation and setting up institutions to deal with corruption. The summit agreed on a strong focus on ethics and awareness, to form part of a critical part of training programmes in all sectors including incorporation in the school curricula. The delegates decided that the capacity for the implementation of anti-corruption legislation should be strengthened, particularly at the site of service delivery to help to protect those most vulnerable to corruption - ordinary people. For example, the shortcomings of the Protected Disclosure Act should be addressed and resolved by the SA Law Commission and a report to be provided to the Parliamentary Committees on Justice by the end of 2005.

They also resolved to encourage regulation of post public sector employment to ensure a "cooling off" period to avoid conflict of interest. Law enforcement agencies will also be strengthened to identify and recover assets obtained through illicit or corrupt means in line with Chapter 5 of the United Nations Convention Against Corruption. The Financial Disclosure Framework of public representatives and senior public managers will be reviewed and where necessary to ensure better management through greater compliance, timeous submission, improved procedures and the enforcement of penalties/sanctions in the absence of compliance. The framework should be extended to include senior management in local government, parastatals and other public officials with designated responsibilities in procurement. To ensure that there is transparency and accountability, a joint research initiative to monitor implementation of recommendations made to Parliament pertaining to corruption must be established.

The delegates recommitted their support to the NACF and acknowledged that more resources were needed to implement the programme of action for the forum. For this reason, task team must be established to implement the action plan drawn up from the resolutions. The NACF will coordinate a national cross-sectoral educational campaign to promote whistle blowing and the reporting of corruption in all sectors. The forum's executive should meet quarterly and annually as a whole between bi-annual summits. Each sector, including business, civil society and government should have a plan of action with regard to representation of the NACF within three months. Chairperson of the Public Service Commission Stan Sangweni said the First National Anti-Corruption Summit cleared the way forward. "Now we can build up statistical data and work on concrete matters regarding corruption," Professor Sangweni said. Civil society has been given the task to prepare a research report on crimes of corruption under apartheid and present these to the NACF for consideration within six months.

From AllAfrica.com, Africa, by tumelo Modisane of BuaNews, Pretoria, 24 March 2005

Mbeki Slams 'Flawed' Corruption Survey

President Thabo Mbeki has hit out at the Transparency International corruption index - which last week berated SA for the country's high corruption levels - saying that the methodology used in the survey was flawed. Such reports tended to create a negative perception among global investors wanting to do business in SA, he said. Transparency International has authored more than 60 studies, including a dozen on African countries, using a National Integrity Systems research method that caters for comprehensive civil society assessments of corruption and efforts to combat corruption. This year's rating means SA has not moved from its position of 36 since 2002 - which it shared with Tunisia, Lithuania and Belarus. It was 12 places below neighbouring Botswana, which was the highest-placed African country at 24. "We need to ask the question whether it is correct that important bodies such as Transparency International should rate corruption levels in any country, including ours, on the basis of the tools and surveys that are based on perceptions," Mbeki told an anticorruption conference in Pretoria yesterday.

He said people should take note that the report called for a recognition that "perceptions do not necessarily reflect the actual experience of corruption in the country". "The premise that levels of corruption in SA are high, needs to be tested ... this is what the report says," Mbeki said. He said corruption was inimical to development. It constrained the country's ability to fight poverty, negatively affected economic development, damaged social values and undermined democracy and good governance. He said corruption was "a handy label, used arbitrarily by commentators, politicians, the media and those who have one or another axe to grind". Mbeki said in some instances allegations of corruption were rarely substantiated. Transparency International's regional office in Botswana could not be reached for comment.

From AllAfrica.com, Africa, by Hopewell Radebe of Business Day, Johannesburg, 23 March 2005

Communist Party Leaders Struggle to Contain Rising Corruption in China

A group of women stand outside a Beijing train station hawking slips of paper. They are blank receipts, complete with the official stamps of hotels, restaurants, office stationery providers and other businesses. The receipts go for $2 each - a small investment for those who buy them and then submit them to their employers for fraudulent reimbursement. Analysts say this Beijing street scene is a broad-gauged reflection of what is happening within China's political system. They say corruption has become pervasive, especially in the atmosphere of a booming economy and rampant materialism. In January, President Hu Jintao told Communist Party officials that corruption is the strongest factor threatening the party's ability to stay in power. He urged changes to - in his words - "gradually remove the soil that generates corruption." Mr. Hu called for new rules that would fight corruption by promoting education, institutional accountability, and civil monitoring.
Politics professor Joseph Cheng at the City University of Hong Kong says such remarks indicate that leaders recognize how corruption threatens the government. "They are certainly aware that the widening of the gap between the rich and poor, when exacerbated by corruption and abuse of power on the part of the cadres, that will be a sure recipe for general social and political dissatisfaction and instability. They are taking the issue very, very seriously," he says.

Many political experts say the government fears that public anger over corruption could trigger mass protests that could destabilize the country. China has seen a rising number of peasant protests recently. Several were triggered by revelations that local officials had stolen public money that was meant to compensate impoverished farmers for land the government seized for development projects. In the weeks leading up to this year's National People's Congress, the government stepped up its anti-corruption campaign, publicizing the arrests of allegedly crooked Communist Party cadres and officials at banks and other state-owned enterprises. Authorities say they disciplined more than 150,000 corrupt party members last year and uncovered more than $300 million in misused public funds. However, many China analysts predict the effect of the arrests and campaigns will be minimal. University of Michigan political science professor, Kenneth Lieberthal, says the greater challenge for China's leaders lies in finding a deeper, structural cure. "The problem for them is that the Communist Party itself has become very corrupt, along with government officials and along with many who don't serve in the political apparatus. It's hard to clean up corruption when the instruments you're relying on are themselves corrupt," he says.

Observers say one big problem is the way the Communist Party's system of checks and balances is structured. The system relies on what are known as disciplining commissions to investigate corrupt activities. But Professor Lieberthal says the commissions are flawed. "The people that they're investigating are also their bosses. As long as you have that situation existing, you're not going to get very thorough investigations of the real centers of corruption at each level of the national hierarchy," he says. He and other experts say one solution is to make the commissions answerable to higher-level officials. Another problem lies in the lax management of many state-owned businesses. Officials at these inefficient industries have long been able to pad their own bank accounts by siphoning off cash or taking favors from vendors.

Analysts say the government does not appear ready to relinquish direct control of state-owned enterprises, because the individual interests of literally millions of officials are at stake. But even China's rapid economic liberalization and move toward private business foments new corruption. Liao Ran with Transparency International, an anti-corruption group based in Germany, says economic reforms, including privatization, provide officials with new opportunities to cheat. "It's a market economy, but it's still halfway a centrally planned economy. That means the government officials still have power, but the market is there so all the people try to get rich. They trade money with power," he says. As a result, analysts say, while deputies at this session of the National People's Congress may discuss anti-corruption legislation, profound changes are unlikely. While officials talk, many Chinese on the streets express anger over the seemingly unending reports of graft. At the funeral of purged Communist Party reformer Zhao Ziyang in January, a mourner stood on a sidewalk and recited a poem she wrote, one that speaks of despair over failed efforts to stamp out corruption. The mourner says the government has long fought corruption, seemingly to no avail. She says the hearts of the Chinese are heavy as they see what is happening. Leaders, she says, should be clean, righteous and honest.

From Voice of America, by Luis Ramirez of Beijing, 1 March 2005

With UNESCO's Aid, Journalists Work against Corruption

A handful of Mongolian journalists are participating in a project aimed at rousing public awareness of corruption in their country. Editors and journalists from more than 15 national and regional news media are working on several print and broadcast stories focusing on corruption. Their reports, to be completed in April, follow a series of eight training sessions organized by UNESCO in November and December. The training program is part of the Media for Transparent Governance project, sponsored by UNESCO's International Program for the Development of Communication. A local Mongolian NGO, Globe International, is implementing the project. H. Naranjargal, head of Globe International, noted in a UNESCO news release that Mongolia has a small population, "and almost everybody knows each other." This can make reporting on corruption particularly uncomfortable for journalists. "It creates condition[s] for corruption and it is difficult to write serious materials," Naranjargal said. "Mongolian journalists do not have personal commitment to exercise investigative journalism and they are afraid to be imprisoned." The reports produced by the trainees will compete in a national competition for the best anti-corruption media campaign. The top prize is worth US$3,000. The US$40,000 project also includes a detailed content analysis of the Mongolian media and a workshop for investigative journalists, conducted in January.

From International Journalist's Network, 2 March 2005

Anti-Corruption Pact - Less Talk, More Action

Korea has vowed - once again - to create a transparent, corruption-free society. However, Wednesday's ceremony sets itself apart in terms of both the scope of participants and the coverage of issues. It may be the first time that key representatives of society - politicians, businesspeople, bureaucrats and civic activists - voluntarily sat together to root out its biggest ailment. Few other countries might have tackled the problem of corruption with such scale and resolve. Conversely, it shows the gravity of the situation. In a February survey, 91 percent of the pubic thought corruption was serious, 78 percent said the level of corruption in the present administration has not changed or has gotten worse. The world's 11th-largest economy was ranked 47th out of 147 countries in a transparency index last year. Juxtaposed against its national status and economic power, corruption is the biggest stumbling block to Seoul's objective of joining the ranks of advanced countries.

The contents of the vow are practically revolutionary: launching a special agency to investigate officials' corruption; limiting lawmakers' immunity from arrests; protecting corporate whistle-blowers; and, introducing an ombudsman of civic groups are just a few examples. In order to turn them into real action, the participants will also set up a body to check and grade each sector's implementation. This, more than anything else, raises the expectation that the latest accord would bring about some real changes. Still the pact has a long way to go before attaining the desired results. First, it should draw wider participation by other important sectors such as labor, legal and educational communities, the media and religious circles. Second, it needs to legislate key provisions to have a binding force. Korea joined the U.N. anti-corruption pact in 2003, but is yet to come up with follow-up measures. We will watch whether political leaders will complete legal procedures by the end of this year as promised.

For all the resolve and action plans, people do not appear to be very impressed. Lest this ends up as just a publicity stunt, the political leadership should do something concrete. Political parties, for instance, should return illegal campaign funds to put party coffers right again. Government officials ought to reveal their asset-making processes more honestly, as shown by the scandal of former Deputy Prime Minister Lee Hun-jai, while slashing administrative red tape, particularly those involving money. As long as ranking officials, elected or appointed, are bent on making money in office, all words or pledges sound hollow. People are already suspecting the ongoing movement has something to do with the blanket amnesty extended to some politicians and businessmen under the pretext of social reconciliation. We hope to be proved us wrong this time.

From Korea Times, South Korea, 9 March 2005

Corruption: The Other Side of Economic Expansion

With China awash in speculative money intended to fuel its economic boom, growing numbers of people are funneling millions into offshore accounts or gambling funds away at border casinos. China has been shaken by a series of large-scale bank robberies in recent years, but they are not the Bonnie-and-Clyde type. These are inside jobs: Top executives, branch managers, loan officers and thousands of everyday employees have been running off with billions in customers' money. Consider what has happened in just the first two months of this year. First, a branch manager at the Bank of China disappeared with more than US$100 million in cash. A few weeks later, dozens of employees of another commercial bank were arrested for conspiring to steal nearly US$1 billion in funds. And then midlevel officials of the China Construction Bank apparently fled the country with about US$8 million in cash.

There is no word yet on whether any of the money has been recovered. But the chain of events underlines an ugly byproduct of China's aggressive embrace of a get-rich-quick form of capitalism: a long-running wave of corporate and government corruption scandals. The financial scandal watch gained new prominence last week with news reports that Zhang Enzhao, the head of the China Construction Bank, resigned after a lawsuit accused him of having accepted a US$1 million bribe from a US information technology company, Alltel Information Services. The bank later issued a statement saying he resigned for "personal reasons." The scandals are by no means limited to banks. Since the early 1990s, China's modern robber barons have focused on all manner of state-run companies. Brokerage houses, government-controlled asset management firms and dozens of state-owned companies have been looted of billions, according to government investigators.

The official media are filled with accounts of executives and public employees accused of embezzling money and sometimes gambling away those funds at border casinos. With China awash in speculative money intended to fuel its economic boom, many corporate executives have turned greedy, and even low-level employees are engaging in conflict-ridden, self-dealing transactions and learning how to funnel millions of dollars into offshore accounts. "Corruption is pervasive in China," said Larry Lang, a professor of finance at the Chinese University of Hong Kong. "A lot of state-owned companies have been simply stripped clean." Few experts say that the scandals will slow China's roaring economic growth anytime soon. But economists and government officials worry that the glaring examples of fraud, bribery and embezzlement could seriously hinder the development of the nation's banking and financial systems, which desperately need to be modernized for China to become a full-fledged economic superpower.

In the last four years, at least 25 government officials have been sentenced to death for accepting bribes and kickbacks. Hundreds more are serving lengthy prison terms. But every month, the number of fraud cases seems to mushroom. On March 9, the government announced that 58,000 people had been punished for misappropriating money or making unauthorized loans at just two of the big four state-owned banks. In 2003 alone, officials said that nearly US$8 billion was pilfered from government-owned enterprises. In many ways, the corruption scandals offer a telling glimpse into the darker side of China's remarkable ascent. Though the economy is soaring and foreign investment continues to flood into the coastal provinces, China's finances in different ways are in a mess. The benchmark index for the Shanghai stock market is down about 40 percent over the last four years. Nearly half the nation's 130 brokerage houses are insolvent. And the biggest banks are weighed down by enormous debts. "The financing system that supports China's economic growth is very fragile," said Sun Lijian, a professor at Fudan University in Shanghai.

"People are often impressed by the look of cities like Beijing and Shanghai, or with the GDP growth every year. But without a strong financing system, China's economic growth is unhealthy," Sun said. Experts say that weak regulation and oversight, deep-seated government corruption and poor risk-management practices are to blame for allowing fraud artists and looters to run off long before investigators discover that anything is amiss. "The incompleteness of the legal system provides an environment in which some people are willing and able to take chances to do illegal things," said Zhou Chunsheng, a Beijing University professor. One industry plagued by scandal is also the one that holds everyone's cash: the state-run banks, which had bad loans valued around US$204 billion last year, according to McKinsey & Co, the consultants. Part of this results from greed at the top. In recent years, two high-ranking executives who worked at the Bank of China were sentenced to long prison terms for economic crimes. And in 2002, the Bank of China discovered that US$500 million was missing from accounts after three of its bankers fled the country.

Hoping to prepare for foreign competition, some of the largest banks are trying to revamp their operations and apply stricter controls. The government also lent a helping hand by dipping into its huge foreign reserves last year to wipe out some US$22.5 billion in bad loans at two of the Bank of China and the China Construction Bank. Some of the worst-performing loans were taken over by state asset management companies. But they too are in trouble. In January, the government said four big state-run asset management companies engaged in illegal practices that involved US$800 million. Brokerage firms are in worse shape, with at least US$20 billion in debt on their books. Many were poorly managed and undercapitalized when they began dealing in shares for investors in the 1990s, experts say. But for a while, those problems were masked by rising stock prices.

When prices began to fall in 2001, a lot of brokerage houses ran aground - accused of gambling with investors' money, investing in pet real-estate projects that turned into money pits, and siphoning off large amounts into private or offshore accounts. With lawsuits piling up, more than a dozen brokerage firms have been seized by regulators in the last two years. Part of the problem, experts say, is the poor state of the stock markets, which many liken to a casino. The Shanghai and Shenzhen stock exchanges, where 1,300 companies are listed, most state-run, are just over a decade old. Traders and experts complain about trading restrictions, ineffective regulations, a lack of transparency with listed companies and an obvious disconnect between corporate profits and stock prices. "Here, earnings are irrelevant," said Song Fengming, a professor at Qinghua University in Beijing. "Even if the performance is the worst, the stock price can still go up. And vice versa. Investors think the market is an ATM machine."

In the last year, regulators have pressed hard to shore up the flagging stock market. Nonetheless, over the last four years, the Shanghai Stock Exchange has the worst-performing major stock index in the world. That the economy could be sizzling hot and the stock market sharply lower during much of the last few years is an oddity not lost on industry officials or small investors. "Why is GDP going up and the stock market going down?" asked an official at Gold State Securities who insisted on being identified only as Li. "That's why investors won't come here." Few investors seem to trust public companies created out of state enterprises anymore, experts say. In one of the latest examples of fraud, three senior executives, including the chairman and chief financial officer at the Yili Corp, a big dairy company, were arrested on suspicion by regulators that they had embezzled US$50 million from the company. Can fraud here compare to cases in the US, like those of Enron or WorldCom? The US companies were far bigger, but analysts say that corporate fraud in China is far more routine and pervasive than in the West.

"The concept of an arm's-length transaction or arm's-length dealings are relatively new concepts in China," said Chen Zhiwu, a professor of finance at Yale University's School of Management. According to a study conducted by Beijing University, about 16 percent of the companies listed on the Shanghai and Shenzhen exchanges over the last decade were subjected to a range of enforcement action, like fines or trading suspensions, compared with 2 percent in the US. Song said he abandoned a research project with Standard & Poor's to rate state-owned companies because so many financial statements were not believable. Until that changes, China will find it tough to join the economic front ranks. "If China doesn't have a strong and stable financial system," said Din Jianping at the Shanghai University of Finance and Economics, "the economy of the entire country won't be very stable."

From Taipei Times, Taiwan, by David Barbazor of NY Times News Service, Shanghai, 23 March 2005

Greek Parliament Passes Draft Bill for Transparency in Justice

Athens - The Greek Parliament on Wednesday passed a draft justice ministry bill that aims to promote transparency and internal control of corruption in the courts by the judiciary. Justice Minister Anastasios Papaligouras told the assembly thatthe justice ministry had set up a committee to look into other aspects of the justice system that might be linked with corruption,such as the system of administration of higher courts and public prosecutors departments, the appointment and promotion of judicialofficials and the terms and conditions for judge transfers. He said the committee's report and another draft bill will be ready in roughly three to four months. The government was under fierce fire recently after a series ofjustice scandal were exposed by the local media. The minister has promised that the cleanup act of the justice system will give a thorough, complete and satisfactory result to the society. But he warned that it would be a very long process, adding thatit's too early to say when and where it will end.

From Xinhua, China, 3 March 2005

Corruption Named as Top Investor Obstacle

Moscow - A survey of 158 foreign companies found that corruption remains the biggest obstacle for investment into Russia, the government said Friday. A total of 71 percent of the companies polled named corruption as the top barrier to investment, according to the survey, which was conducted by PBN Company for the government's Consultative Council on Foreign Investment. The companies, about two-thirds of which are already working in Russia, were asked to name five top problems that obstruct foreign investment. "We all know that corruption is a problem, but the number of people who put corruption at the top of the list came as a surprise," Deputy Economic Development and Trade Minister Andrei Sharonov said Friday after a meeting of the Consultative Council on Foreign Investment.

Sharonov reiterated the government's goal to cut corruption by reducing the number of situations where a bureaucrat can make a subjective decision - a key goal of the yet-to-be completed administrative reform. The other four obstacles named were administrative barriers (66 percent), selective application of the law (56 percent), conflicting laws and laws that poorly reflect reality (51 percent), and conflicts between the state and business (29 percent). Surveyed companies put reduction of corruption at the top of their list of suggestions on what the government must do to attract foreign investment. Interestingly, the survey indicated that foreign businesses working in Russia consider the investment climate to be in a better shape than those that are looking at Russia from abroad. A total 66 percent of investors said noninvestors see the situation worse than it really is.

Almost half of investors, or 47 percent, said the investment climate is better than what is often reported in foreign media, while only 30 percent of noninvestors felt the same way. While 49 percent of noninvestors expressed concern about their personal safety if they were to work in Russia, only 10 percent of investors shared their fears. In addition, 70 percent of investors said they had access to enough information to make investment decisions, while only 41 percent of potential investors agreed. At the same time, 35 percent of investors and noninvestors said that information from state officials was not trustworthy. The most trusted source of information proved to be other foreign investors working in Russia. The survey suggested that the investment climate appears to be improving on many counts but some problems remain the same as they were a decade ago, including bureaucracy, regulations and a weak judicial system.

From St.Petersburg Times.ru, Russia, by Valeria Korchagina, 9 March 2005

Ethics Amid Prosperity - Document Aims to Orient Debates in United Kingdom

London - An umbrella group of Britain's major Christian churches has called for greater attention to the area of social justice in the lead-up to national elections in the United Kingdom. Churches Together in Britain and Ireland (CTBI) published a discussion document, "Prosperity with a Purpose," on Feb. 28. The publication "calls for an attack on poverty to be driven by wealth creation based on market economics," the press release explains. The document calls for a new and wider sense of solidarity, together with a deep renewal of civil society. The churches recognize the positive contribution of the market economy. "Under the right conditions, economic growth can serve God's purposes," they affirm.

The conditions outlined in the document are the following: - That humanity is seen as one human family, with a universal bond of solidarity. - That wealth creation and the pursuit of social justice are inextricably linked. - That market forces encourage economic growth but are regulated in the interests of the community. - That the environment is safeguarded by substantial efforts to mitigate the harm caused by pollution. - That advancing prosperity leaves no one behind, not children, retired people, those who care for families, disabled people, nor any other section that is vulnerable or liable to neglect. - That globally, priority is given to those whose economies are burdened by unmanageable international debt or are victims of unfair international trading conditions. - That the structures of civil society are renewed so that local communities can shape their own future.

Progress in meeting these conditions so far is "patchy," the CTBI contends. Poverty has been reduced in some areas, but is on the increase in others. Sharing the fruits - To improve matters, a number of principles for inspiring economic activity are outlined. In general, the principles call for a greater attention to the poor and the common good, so that the fruits of economic prosperity are shared more equitably. The document calls, above all, for priority to be given to moral considerations in order to avoid problems associated with economic inequality, consumerism and the exclusion of some groups from the benefits of growth.

Regarding poverty in Britain, the document contends that there needs to be a rethinking of the government's anti-poverty strategy, which has failed to remedy the problem to a satisfactory degree. A number of more specific points are also mentioned. The document is in favor of both a minimum wage and the establishment of a "living wage," which can be met by a combination of employer and state contributions. The CTBI also notes that those on low incomes also face problems due to difficulties in obtaining credit, and when it is available they are often obliged to pay excessively high rates of interest. The discussion paper also deals with the international arena, stating: "The moral case for contributing a greater share of national wealth to the relief of poverty overseas is a compelling one." Deficiencies in international markets and problems related to movements of global capital sometimes leave "some of the world's poorest and most vulnerable people open to great hardship and injustice."

Christian contribution - The contribution that the Christian churches can play in determining economic policy is another subject dealt with. An essential starting point for any reflection on prosperity "has to begin with the inalienable dignity and infinite value of the individual human person," the CTBI argues. As well, the Christian churches, the document continues, "share a commitment to social justice, nationally and globally, which flows from a deep conviction that Christ Himself commands them to identify and oppose injustice and oppression committed against any person, regardless of status or description." And even though in many countries poverty is on the decline the report adds that "the more prosperous a society becomes, the more important it is for social justice and community cohesion that nobody be left behind."

Ensuring social justice is not only about protecting those in need. "It is also about mutual responsibility at all levels, and a shared commitment to the common good." It is therefore necessary that the better-off sections of society recognize the responsibility they have toward the welfare of others. The document further explains that social justice is not limited to questions of wealth. Problems such as an imbalance between work and personal life, a breakdown in community relations, and a deteriorating physical and social environment, also pose a challenge. These conditions can create "a spiritual malaise and a different kind of poverty," the study notes. And it is also important to keep in mind the parable of the rich young man of the Gospels, the document adds. Creating wealth and accumulation possessions should not become an all-encompassing attitude. Moreover, "once a certain level of material success has been achieved, further affluence does not lead automatically to happiness, and often leads away from it."

The modern economy - Churches have been criticized in the past for an excessively negative view of economic activity, the document admits. "On the contrary this activity is something to celebrate," the CTBI states. Raising the standard of living in a community, and thus helping the poor "is part of God's will for humanity." In fact, Christians need to recognize that economic progress "is one of the chief engines of progress and greater well-being in the modern age, directly and indirectly; and to thank God for it." But, the document adds, "the pursuit of profit as an end in itself does frequently result in hardship and injustice." Therefore, the operation of economic laws needs to be tempered by government intervention to correct injustices and remedy situations where the market fails to adequately address society's needs.

Another means to address these problems is ensuring a greater respect for ethical principles among businessmen and companies. A commitment to honest trading practices, remunerating fairly employees, and maintaining a minimum level of trust and responsibility are necessary elements in ensuring the common good. Along with economic capital the community needs a stock of "moral capital," which is essential to guiding business activity. Fomenting morality and virtue in society is a task for churches and parents, the document states. The media and legal system also play a part in setting the moral tone.

The document also recognizes a need for a greater level of economic sophistication on the part of those working for social justice. "Moral principles applied simplistically and without due respect for economic analysis can easily lead to erroneous solutions," it warns. Therefore, churches need to avail themselves of the expertise of their members who are specialists in the field of economics and business. The document states that Christians want to contribute to the national debates that will precede the next election for the British Parliament, as well as intervening in local elections in Scotland, Wales and Northern Ireland. But, the document adds, "none of the Churches participating in this study wish to be seen to be telling their members how to vote." The aim of the CTBI document, rather, is to make "a genuinely nonpartisan contribution" to the debate.

From Zenit News Agency, Italy, 12 March 2005

Berlin Considers Ethics Class for Schools

Berlin, Germany: Students in Berlin may soon be able to choose between periods of religious education and a class that covers ethics, religion, philosophy and life choices. The Deutsche Welle reports that some difficulties need to be resolved. Under the current system, the Protestant and Catholic churches, the Islamic Federation and other religious groups provide and pay for teachers for the religion classes. Students who opt out get a free period. Under the proposal by Klaus Boger, Berlin's senator for education, students would have to take the ethics class if they don't want religious training provided by their faith. But the state would have to pay the teachers. While Protestant and Catholic churches and many other religious groups approve of Boger's plan, a lot of his political colleagues say that the ethics class and exposure to the basic teachings of all faiths is such a good idea it should be compulsory for all. They say that students can opt for religion classes as an extra. Church leaders do not approve. "What normal 14-year-old is going to volunteer to take on extra classes if they don't actually have to?" asked Stefan-Rainer Schulz, a Protestant.

From Washington Times, DC, 26 March 2005

Municipalities Get Helping Hand to Fight Corruption and Inefficiency

Beirut - Municipalities throughout the country are getting a helping hand in their fight against corruption and inefficiency from a new program that will generate computerized "maps" of information. Head of Jounieh municipality's IT department, Fawzi Baroud, said: "Think of a map of Jounieh where you can zoom in on a house and find out everything about it, from taxes owed, to its size, to number of residents and so on." He added: "It is basically the computerization of the municipalities. This is an important step toward efficiency control of municipality activities." The new U.S. Agency for International Development-funded municipal governance assistance program was initiated in 2004 with a budget of $17 million. As part of the program, a municipal geographic information system (GIS) will be implemented over the next two years in 20 municipalities to create a computerized "mapping" of some 70 layers of physical, financial and taxpayer data. The GIS has already been implemented in Jounieh as a pilot project, where inspectors are using the system to evaluate "pending municipal transactions for citizens as well as overdue transactions."

According to a statement released by Usaid: "Lack of information, inadequate human resources, corruption, inability to enforce laws ... are components of a multifaceted problem that has lessened municipal effectiveness in Lebanon in providing services and infrastructure to local communities." The statement further said: "Specifically, the system will enable all cadastral, financial and administrative data related to municipal taxpayers to be maintained and tracked." Highlighting the need for such programs, Mahmoud Batlouni, director of the Center for Legislative Development in Lebanon, stressed the importance of modernizing local government institutions. Batlouni said: "In the future - municipalities in Lebanon can move beyond traditional mandates to become the engines of growth in local communities."

From Daily Star, Lebanon, by Rym Ghazal, 2 March 2005

Anti-corruption Experts from the Region Meet at OAS

Washington, USA - During the opening of a meeting at the headquarters of the Organization of American States (OAS), on Monday, government officials and anti-corruption experts were reminded that corruption weakens democratic systems and erodes trust in institutions. According to William Berenson, Director of the OAS Department of Legal Affairs and Service, who welcomed the high-level experts on behalf of the General Secretariat: "Without trust in institutions, democracy cannot flourish," in addition he cautioned that, besides its effect on democracy, the scourge of corruption also "diverts resources from development in countries."

The Committee of Experts of the Mechanism for Follow-Up on the Implementation of the Inter-American Convention against Corruption is expected to meet until March 12 where they will discuss draft reports on the Bahamas, the Dominican Republic, El Salvador, Honduras, Mexico, and Trinidad and Tobago. Already the experts have adopted follow-up reports on the fight against corruption in 12 other member countries. Guadalupe Cajias, Bolivia's Presidential Representative against Corruption, chairs the Committee of Experts and stressed that in recent months there has been "a greater and more dynamic coordination" in implementing the Inter-American Convention against Corruption.

Governments in the region are making major efforts to fulfill their commitments under the treaty and have undertaken initiatives to enhance cooperation and mutual assistance and to increase the dialogue with civil society. In presenting her report to the delegates, Guadalupe Cajías noted that recent international anti-corruption meetings in Bolivia, Brazil and Venezuela had reinforced regional alliances on this issue. She also invited participants to attend the up coming global anti-corruption forum slated for June 7 to 10 in the Brazilian capital of Brasilia.

Some twenty-eight OAS member states are presently participating in the Mechanism for Follow-Up on the Implementation of the Inter-American Convention against Corruption, which was created to strengthen countries' compliance with the treaty. The reports adopted analyze the progress in each country against corruption and recommend concrete measures for improvement.

From Caribbean Net News, Cayman Islands, by Norman 'Gus' Thomas, 9 March 2005

Transparency Report Counts Cost of Corruption in Massive World-wide Infrastructure Spend

Opening a discussion on the role of the multilateral development banks and the export credit agencies in financing international construction contracts in the 2005 edition of Transparency International's Global Corruption Report, Dr. Susan Hawley says that the economic and social benefits of necessary and much-needed infrastructure in developing countries have been whittled away, if not eliminated completely, by corruption. As Peter Eigen, chairman of Transparency International, puts it in his introduction to the report, nowhere is corruption more ingrained than in the construction sector. "From the Lesotho Highlands Water Project to post-conflict reconstruction in Iraq, transparency in public contracting is arguably the most important single factor in determining the success of donor support in sustainable development. Corrupt contracting processes leave developing countries saddled with sub-standard infrastructure and excessive debt."

Dr. Hawley, a policy adviser at the Corner House research and advocacy group, says that this year the World Bank is set to increase its infrastructure lending to $7 billion: in 2002, the multilateral development banks taken together spent more than $16 billion on infrastructure. "Many of the large infrastructure projects around the world that have been plagued by corruption allegations were backed in part by either a multilateral development bank (MDB) or an export credit agency (ECA). Given their major role in financing and facilitating finance for infrastructure projects, MDBs and ECAs have a critical role to play in preventing corruption in the construction sector. While they have taken significant steps in recent years, serious vulnerabilities remain." As Dr. Hawley says, until recently the impact of the multilateral development banks and the export credit agencies in facilitating corruption in the construction and other sectors, was largely overlooked by these institutions and the governments that support them.

Last year however, as CIOB International News readers may recall, the United States Senate Foreign Relations Committee under its chairman Senator Richard Lugar began an inquiry into the work of the multilateral development banks, to the evident disapproval both of these institutions and the governments which support them. None of the heads of the MDBs would accept an invitation to appear before the committee. Senator Lugar himself was in no doubt as to the gravity of the issues with which his committee was confronted, having in mind that it is the poor who suffer most from the harmful effects of corruption. He was not pleased with the attitude of the U.S. Treasury's Inspector General's office towards information supplied by his staff concerning a specific allegation of World Bank corruption. He was told in reply:

"We are in the initial phases of determining Treasury OIG's criminal investigative jurisdiction in matters like the one you have referred to this office…..At this time, we anticipate no further action in the matter.' The Senator's answer to this wave-aside response was:'I am perplexed that the Office of Inspector General of the Treasury Department remains unsure of its jurisdiction in multilateral development bank matters, because the Treasury Department has had the responsibility for MDB oversight since the creation of the World Bank in 1946." 'An unfortunate development' - In September the committee was faced with the action of the U.S. Treasury in barring executive directors from the European Bank for Reconstruction and Development and the Asian Development Bank who had both agreed to give testimony regarding the anti-corruption strategies of the banks to which they are assigned. Senator Lugar regarded that as ‘an unfortunate development', especially since the U.S. Congress was considering the reauthorisation of more than $1 billion funding for the multilateral development banks.

Nothing further has been made public about the committee's inquiries since last September's session, after which the presidential election intervened. However, Senator Lugar may be expected to resume his investigation later this year: the controversy over the nomination of Paul Wolfowitz as successor to James Wolfensohn at the World Bank brings the whole issue to the fore once again. Whether Mr. Wolfowitz has been asked to look into the questions raised by the Foreign Relations Committee is not yet clear, but that might explain some of the furore over his nomination. Mr. Wolfowitz himself, in a statement issued by the U.S. Treasury, says that twenty years ago working with the people of the Philippines on economic development, and later in Indonesia, he saw at first hand what the World Bank could accomplish working in support of dedicated development professionals in the Indonesian Government and from many donor countries.

"I saw first-hand the harm that corruption and weak institutions can inflict to defeat development and poverty reduction. That is one of many reasons why I applaud the legacy that Jim Wolfensohn will be leaving at the World Bank. "He has deepened the Bank's commitment to poverty reduction, and has brought an important focus on issues of transparency, accountability and governance as critical elements of the economic development agenda – and indeed as critical elements of human progress more broadly." It may well be that the U.S. President has invited Mr. Wolfowitz to deepen that focus still further. Whether he is allowed to do so or not remains to be seen. In his commentary on the recent report of the World Bank on its institutional integrity activities and investigations, Mr. Wolfensohn said that the Bank now has a budget of $10 million for work in this area, making it by far the leader in resources committed among international institutions in the fight against fraud and corruption.

As a result, the Bank's sanctions committee heard 16 cases involving alleged fraud and/or corruption by parties involved in Bank projects, leading to the debarment of 55 firms and 71 individuals in fiscal 2004. These were for the most part relatively small traders compared with Acres International whose three-year debarment was not announced until July last year. The Transparency International report has an informative comment on this in which Fiona Darroch, barrister-at-law, describes Acres as a Canadian engineering giant, involved in two contracts within the Lesotho Highlands Water Project. Of this and other trials in the High Court at Maseru she says: "These trials provide a number of crucial lessons. First and foremost, from the perspective of Lesotho, no other small and impoverished country has taken such a comprehensive approach to the excision of corruption from its economy by prosecuting international companies that engage in bribery.

"Many have expressed their admiration for the determination and tenacity of the attorney-general and the prosecutors. The trials went ahead without financial support, in spite of promises that it would be given, although more recently Lesotho has benefited from some mutual legal assistance. "Since many of the legal aspects of corruption have now been thoroughly tested in the Lesotho courts, judges and lawyers can refer to clear, developed common law jurisprudence on the question of jurisdiction and citation."

From CIOB, UK, 24 March 2005

Curbing Laxity and Indiscipline in Public Service

Chief Ephraim Inoni's government seemed to have scored a pass mark in its efforts to re-institute discipline and curb laxity in the Public Service. Results registered within the first 100 days in office speak volumes. The Prime Minister took office against a backdrop of repeated promises (2004 Presidential election campaign in Monatelé and at the swearing-in ceremony at the National Assembly) by President Paul Biya, that there would be change in Cameroon this time around. But sceptics remained indifferent until Inoni embarked on unannounced visits to some government offices in the nation's capital. Even then, some Cameroonians, rightly or wrongly, shrugged off the move as a charade. But when the PM paid an impromptu visit to the Ministry of Public Service and Administrative Reforms and discovered that two workers in that Ministry were unjustifiably absent, and when the administrative sledgehammer fell on the two, Cameroonians started reasoning differently. This move caused panic in that Ministry as well as in others. Some civil servants who had abandoned their offices resurfaced.

A case in point was at the Public Service where some absentee civil servants showed up to beg for clemency. Many gave varied reasons. Some said they were sacked from their duty posts and they found it shameful and inadmissible to share the same tables and offices with subordinates they had bossed. Others complained that they were called back from the provinces but no offices were attributed to them at the central administration, and so on. This move by Inoni was immediately followed by the institution of 8:00 am as the latest time for civil servants to be in their offices during the five working days of the week. To reinforce the move, the police were instructed to lock up the gates at 8:00 am prompt, each day. The time for accessibility into government offices also witnessed modification. It ranges from 11:00 am in the Ministry of Secondary Education, and Basic Education respectively to 1:30 pm in the Ministry of Public Service.

Some civil servants, including top government functionaries were embarrassed during the early days of the operation. Many who were prevented from gaining access into their offices openly complained that the act was a disgrace on their personalities. After a series of press reports, the operation, which started in the Ministry of Finance, rapidly spread to other Ministries. It is today successful even though it still needs re-enforcement, as police officers at many of the gates continue to demonstrate weakness by letting in latecomers after simple pleas. The impact was equally felt in the provinces as Governors also began paying unannounced visits to public services within their jurisdiction. Some truant civil servants paid the price as a number of queries were reportedly registered and letters of reprimands issued. The Governor of the South Province, Enoh Abrams Egbe, moved a step further and sealed a number of Provincial Delegations when, during one of such visits at midday, nobody was found in the said offices.

The Minister of Labour and Social Security, Prof. Robert Nkili, whose Provincial Delegation was one of the victims, sacked the Provincial Delegate and his collaborators instantly. With the institution of the strict working hours regime in Yaounde, some streets that used to witness traffic jams from around 8:00 am to midday during which some civil servants lazily went to work, now enjoy a smooth traffic flow. Some observers, however, hold that going to work early does not necessarily mean improvement in productivity. Even though almost all Ministries have limited the duration of treatment of a file on each table to a maximum of three days, from close observation, much still needs to be done to enforce such a move in order to fully attain the desired results. When the Inoni-led team came to office, some civil servants in several Ministries, who saw themselves as untouchables and persistently stayed in office years after due retirement, were told to go home and have a deserved rest. Even at the Prime Minister's office, four senior officials, who were overdue retirement, were asked to leave.

Delinquency in the Public Service is not limited to laxity and indiscipline at work; corruption and pilfering of state funds is also the order of the day. That is why in the days ahead, the Permanent Disciplinary Council in the Ministry of Public Service and Administrative Reforms, chaired by its Minister, Benjamin Amama Amama, will be meeting to decide the fate of the 500 fraudsters in the Finance Ministry, who were recently caught by the anti-corruption dragnet of the Inoni government. The civil servants are accused of squirreling FCFA 1 billion from the state coffers every month. They were said to be earning salaries of civil servants who had long died, faking documents and attributing undue allowances to themselves. Security reports revealed that some civil servants, who are guilty of the same crimes in other Ministries that were given the privilege to single-handedly manage their personnel, are now working with accomplices in the central administration to delete incriminating information from computers, which was the basis of their entitlement to high pay. The move is aimed at circumventing any attempt by the Inoni anti-corruption team to tract them down. Some shades of opinion hold that the verification team must act swiftly and have the names of the culprits published, to make the entire exercise more credible.

From AllAfrica.com, Africa, by Nformi Sonde Kinsai of The Post, Buea, 18 March 2005

Public Sector Workers Reject Civil Service Reform

Give Obasanjo 21 days to avert industrial unrest - Following palpable tension and apprehension in the federal service over the Federal Government's plan to sack 74,000 workers, the eight public sector unions have written President Olusegun Obasanjo to inform him of their rejection of the reform. They also requested him to intervene within 21 days to reassure workers that their jobs are safe so as to avert the looming industrial unrest in the sector. Apparently finding it increasingly difficult to explain the policy to their members, the unions said the failure of presidential intervention within the period may possibly lead to disruption of services.

"If the prevailing situation of suspense and fear persists int he civil service without the government deeming it fit to meet the unions as proposed in our letters, it will become difficut to guarantee industrial peace; in this case unions should not be blamed," the workers said in a letter signed by the representatives of the eight unions. The unions include the Agricultural and Allied Workers Union of Nigeria (AAWUN), Association of Senior Civil Servants of Nigeria (ASCSN), Amalgamated Union of Public Corporations (AUPCTRE), Medical and Health Workers of Nigeria (MHWUN), National Association of Nurses and Midwives of Nigeria (NANMN), National Union of Civil Service Typists and Stenographers (NUCSTAS) and the National Union of Printing and Paper Products Workers (NUPPPROW).

A letter entitled "Federal Civil SErvice Reform and STaff Rationalisation" and addressed to President Olusegun Obasanjo said the planned staff reduction has thrown the service into confusion with a negative impact on productivity. "The entire federal civil service is now engulfed in frightening uneasiness, anxieties and the fear of the unknown as regards the security of tenure of employment. The effects of the above include discontentment, frustration and demoralisation, all of which have consequences on performance", it said. The public sector workers declared that although they were not averse to reforms, the magnitude of premature retirement expected to accompany the exercise is not only avoidable but also uneconomical. Particularly, the workers expressed concern that the Obasanjo government which emphasises dialogue as a means of resolving disputes did not consider it necessary to consult the unions on such a sensitive issue.

"We are therefore particularly at pains to appreciate why the issue of rationalisation of civil servants is not considered critical enough to justify consultations with the trade unions in the civil service within the framework of the public service negotiating council", the unions noted. They affirmed that it is possible to optimally utilise the different cadres in the civil service by application of new management techniques, which place emphasis on target-setting, appropriate monitoring, performance appraisal and cost effectiveness. According to the workers, to retire staff prematurely is uneconomical because it constitutes a serious strain on pension fund and entails paying a large number of workers, who would have retired at a future date their terminal benefits now. "We therefore expect that Mr. President would find time within the next twenty one days to put in place appropriate machinery to examine with the unions the issues raised in this letter and our earlier letters on the subject of premature retirements", the eight unions representing the 187,000 workers in the federal service declared.

From AllAfrica.com, Africa, by Chris Nwachuku, of This Day, Lagos, 23 March 2005

'Cooling off' Mooted for Public Servants

Government could soon enact legislation to enforce a cooling-off period for public servants who quit the state sector to go into business, in terms of a resolution endorsed by an anticorruption summit in Pretoria yesterday. The move comes after public ethics issues were raised by senior government officials leaving the public sector to take up employment or empowerment deals in sectors in which they had acted as regulators and policy enforcers. The matter has been debated publicly for the past five years, with nongovernmental organisations and political analysts calling on government to legislate. Among others, the speaker of the National Assembly Baleka Mbete has already been quoted as saying she is in favour of a cooling-off period. Auditor-general Shauket Fakie has also submitted to Parliament that such legislation was ideal - "as long as the terms were reasonable and practical".

People whose career moves attracted public criticism include former public enterprises director-general Sivi Gounden, who left his job in 2003 to become CE of Bateman, the company that won the government tender for the Coega smelter. The department was a central player in the Coega tender process. Former justice minister Penuell Maduna was appointed to the board of law firm Bowman Gilfillan. He also became an adviser to Sasol, a company he administered in his previous portfolio as minerals and energy minister. Maduna also was involved in the creation of Uhambo Oil out of Sasol and Engen's liquid fuels businesses. Communications director-general Andile Ngcaba quit his government job, and quickly became involved in a consortium that put in a R6bn bid for a 15,1% stake in Telkom owned jointly by US-based SBC Communications and Telekom Malaysia. He was also involved in Dimension Data.

In a separate development, the summit also resolved to blacklist companies that corrupt public servants. The conference also urged government to strengthen legislation to protect whistle-blowers. Nongovernmental organisations raised concerns that "bold people" who spoke out against corruption were being victimised while others lost their jobs. Describing the outcome as "very successful", National Anti-Corruption Forum head Geraldine Fraser-Moleketi said there appeared to be a lack of understanding of the whistle-blowing legislation. She said more measures to protect all who exposed corruption and unethical practices from victimisation should be put in place. While acknowledging progress since the first anticorruption conference in 1999, delegates this year recognised "that there are still a number of outstanding challenges which we need to tackle together", Fraser-Moleketi said.

The second day of deliberations was almost derailed after delegates disagreed over a set of resolutions handed out overnight. Delegates from the civic organisations complained their input had not been captured in the resolution, forcing the organisers to redraft them. South African Non-Governmental Organisation Coalitions's Hassen Lorgat said a set of reworded resolutions was finally adopted yesterday afternoon. Meanwhile, Transparency International said President Thabo Mbeki, who attacked it for using public perception to rate it 4,8 out of 10, was not referring to the National Integrity Systems (NIS) country study report released in Pretoria last week because it had not rated SA. The body said that Mbeki was quoting an old corruption perceptions index. Their NIS study had highlighted challenges of capacity of the public sector to deliver services to the poor posed by corruption at provincial and local government level.

From Business Day, South Africa, by Hopewell Radebe, 23 March, 2005

Promotion In Civil Service - Seniority Criterion

There are three types of practices of promotion: seniority, merit and mixed scanning. The first practice serves those who are senior ones in the organization. It is also called automatic promotion. Under second practice, those employees are promoted who pass the examinations taken for the purpose. The methods of testing merit are personal judgment, promotional examinations and efficiency rating. Under mixed scanning practice both seniority and merit are taken into consideration. Training, academic qualification, work performance, seniority are the basic criteria of mixed scanning system for promotion. This form of principle promotes them, who fulfill the criteria of both seniority and merit and those getting the highest marks are promoted to the higher position. Work performance evaluation system in civil service carries the characteristics of mixed scanning principle of promotion.

Concept - The East India Company initiated Civil Service concept in India when a need to separate it from the army was felt. In the case of Nepal, it has not very long history. Before the new era of democracy, the Rana regime did any thing they liked. They ruled the country as they wished. So promotions were their blessing- they promoted whom they liked and dismissed whom they disliked. No fixed system of promotion was established during this period. After the advent of democracy in 1951, Civil Service Commission was established in 1952. On recommendation of this commission, the Civil Service Act was commenced in 1956, in which the system of promotion was also incorporated. Furthermore, promotion system took a better shape in 1968. In the latter days, several changes of promotion system in civil service took place. At present civil servants are promoted to the vacant positions through tests (merit) and work performance evaluation (mixed scanning).

In a ladder of hierarchy, one is expected to get promotion where more responsibilities, right and power including financial incentives are provided. This is the reason why promotion is one of the most important aspects of career development. This is directly related to motivation, which is reflected in one's work performance. Better performance contributes to good governance, which is main concern of the time. The endeavour of nation building, growth, socio- economic changes is linked one way or the other with the promotion of the civil servants. Better public service delivery can be expected if the system of promotion functions well. The importance of promotion in public service can be viewed from the perspective of both organization and employees.

Promotion creates opportunity to get expert service in the organization, increase productivity, settles conflict in an organization, minimizes cost of appointing from outside. Promotion itself is a reward. Therefore, it helps to save cost of other motivational expenses. Capable, young, energetic and efficient manpower is attracted, and it leads to achieve the organizational goal contributing to benefit from the competent and efficient employees. Similarly, employees feel proud, develop confidence, and enhance skills and knowledge that contribute to make them more responsible and accountable.

According to the current Civil Service Act, Chief Secretary is promoted by His Majesty the Government on the basis of seniority and work performance and promotion on other officials are promoted on the recommendation of the 'promotion committee'. According to the Civil Service Regulation, in 1972 the total marks for promotion through work performance evaluation was 670, whereas as in 1980 and 1985 it was 470 and 300 respectively. The present practice of promotion through work performance evaluation totals 100 marks as given in the table.

Work performance evaluation has been changed frequently without any linkage with the previous ones. Promotion policy is based on the whim and wish of a few persons. Work performance evaluation in real term is not functional. This is neither transparent nor fair. Similarly, there are no similarities amongst various services, groups and subgroups of civil service regarding the promotion. In some services/groups, there is less competition; whereas in other services, group or subgroup there is always a tough competition..

Both merit and seniority are equally important from the point of organizational results of an organization. Significant contributions made by an employee for the company counts much more than somebody who cannot make any impact on driving the organization. On the contrary, experience, know how and skills of dealing and working with people inside and outside the organization turns up to be quite important when we talk about the prosperity of the company. A senior employee could be the driving force and managerial inspiration that leads others to perform better.

Merit - However, Nepalese experience in civil service shows that exam oriented merit system has not contributed to the work performance. This type of exam has always discouraged the working environment. There are many civil servants who always gave importance to the office work/assignments but were unsuccessful in achieving promotion. On the other hand, those taking office work lightly have been succeeded in being promoted. Similarly, mixed scanning principle of promotion has some practical problems in a society like ours. Frequent change in its criteria keeping in view of the interest of certain people and irrational and secret work performance evaluation system has contributed to 'spare the rod' culture. In other words, it carries the characteristics of X theory. Subordinates in this culture do not prioritize work rather they use different means to get higher marks from their boss. Moreover, the work performance evaluation committee residing at the Ministry evaluates the work performance of those whom they know nothing. Seniority is more important than a competitive struggle for promotion. The merit and mixed scanning method of promotion practice in our country cannot solve the present problem.

From Gorkhapatra, Nepal, by Bishnu Bahadur, 14 March 2005

Number of Civil Service Personnel to Decrease by 5,700 Next Year

Starting next year, the number of civil service personnel will decrease by a great amount. On March 14, the Military Manpower Administration (MMA) announced that due to the decline in military service resources the number of civil service personnel assigned to state organs, local government bodies and welfare facilities will be cut by 5,756 to 20,960. Accordingly, in the case of overloaded or exhaust fume-discharging vehicles and unlicensed buildings, the 1,747 civil service personnel that were assigned to them this year will be fully suspended by next year. Also, in the case of general administration aid and facility guarding, the number of civil service personnel will drop to a little over 8,000, and will continually decrease in stages until 2008. However, the MMA has explained that in such cases as welfare facilities, support vehicles, and activity aid for the disabled, they will assign civil service personnel according to the corresponding group's demand, and will further increase the number of civil service personnel in this field.

From Donga, South Korea, by Sang-Ho Yun, 14 March 2005

AusAID and Vanuatu Governtment Discuss Public Service Reform

After more than five years of work in Vanuatu, the Australian-funded Public Service Reform Project is coming to an end on 30 June 2005. The Project was part of the original Comprehensive Reform Program. When the Project was designed in November 1998, it was expected that: "At the end of the five-year project the following achievements will have been made:

- The Public Service Commission (PSC) will be able to give strategic advice to government in an accurate and timely manner.
- The PSC will play a lead role in coordinating and supporting human resource development across the public service.
- The time taken to process Human Resource (HR) issues and to make decisions will be reduced.
- There will be a consistent set of policies in place, which will support the Public Service Act.

The line Ministries will have increased involvement in human resource processes which will allow the PSC to focus on its strategic leadership role particularly with regard to policy formulation and auditing of implementation of policies across the public service." As part of the necessary arrangements for the conclusion of the Project, a stakeholder workshop was held on Tuesday, 8 March 2005 at the Rossi Restaurant to assess the performance of the project. Over sixty people from across government agencies turned up.

From Vanuatu Online, Vanuatu, by The Ni-Vanuatu, 19 March 2005

Expert Calls for Technical Posts in Civil Servant System

Along with its WTO membership, China is in urgent need of senior personnel who are familiar with international economic and technical rules, said Professor Song Shiming with National School of Administration. This need can be addressed by establishing technical posts in the civil service system, as proposed in the draft of Civil Servant Law, of which Song is one of the authors.

Upon the country's WTO accession, technical barrier has gradually replaced tariff barrier to become a major tool in protecting national economic interests, experts pointed out. Whether administrative authorities are able to provide prompt and effective technical appraisal in international trade frictions, studies showed, has a direct impact on government's capability to protect national economic interests under the new situation.

Establishment of technical posts, that is, those providing technical support and guarantees for administrative departments, will help to optimize the current post structure, build a more professional government and raise administrative efficiency, Song said. Technical posts should firstly go to experts in a specific field, such as in commodity classification and management of original production area; and secondly belong to general technical staff as on engineering and chemical examination. People from government advisory and research institutions should also be included.

From People's Daily Online, China, 24 March 2005

Government to Conduct Civil Service Pay Survey

Fair comparison: Secretary for the Civil Service Joseph Wong says a pay-level survey for the civil service will be conducted this year to ascertain whether civil service pay is broadly comparable to private sector pay. A pay-level survey for the civil service will be conducted this year to ascertain whether civil service pay is broadly comparable to private sector pay, Secretary for the Civil Service Joseph Wong has announced. Mr Wong said the survey is a technical, fact-finding exercise to ascertain whether there are any differences in the pay levels of the civil service and the private sector. He expected the results will be available before the end of this year. The Government will consider the application of the pay-level survey results in due course after the conclusion of the proceedings in the Court of Final Appeal on the appeals in relation to the judicial review applications concerning the civil service pay-reduction legislation. However, Mr Wong pointed out that the consultation paper published last year had already suggested that serving officers would not have their salary cut even if the results show their pay is higher than in the private sector.

Public views fully considered - The secretary said the survey will use the methodology recommended by the Phase One Consultant that was refined following the consultation in November 2004. "We are satisfied the survey methodology serves the purpose of an objective, professional and credible pay-level survey," he said. The methodology had taken full account of the relevant policy considerations, the views of the Steering Committee and the Consultative Group on Civil Service Pay Adjustment Mechanism as well as the feedback received in the recent extensive consultation, he added. The field work will start immediately with a view to capturing the pay adjustments in the private sector up to April 1. It will include inspections of civil service benchmark jobs, and analysis of pay data to be collected from the private sector. The Civil Service Bureau will shortly select and appoint a professional consultant to carry out the survey field work in accordance with established procurement procedures.

Survey to be professional, impartial - "The survey consultant to be appointed will be required to ensure the survey field work is conducted in a professional and impartial manner. At the same time, staff representatives at different levels will have an opportunity to participate in the job inspections for civil service benchmark jobs," Mr Wong said. The Government has decided that no pay-trend survey will be conducted for 2004-05. It will also consider the future of the pay-trend survey under the improved civil service pay-adjustment mechanism. The upcoming survey marks an important milestone in the ongoing exercise to develop an improved civil service pay-adjustment mechanism, Mr Wong stressed. The conduct of periodic pay-level surveys will form an integral part of the improved mechanism now under development.

Consultation history - A two-month extensive consultation was launched in November 2004 on a consultation paper which sets out the Phase One Consultant's proposals regarding the methodology of the pay-level survey and the bureau's proposals on the general approach for the application of the survey results. Ninety-one written submissions were received.

From GCN.com, by Jason Miller, 22 March 2005

Tories to Abolish Tax!

Shadow Chancellor, Oliver Letwin has responded to Gordon Brown's budget by announcing that a future Conservative government would completely abolish taxation. "We've done our sums." Said Old Etonian Letwin. "We can achieve a rate of zero for all taxation; no income tax, no VAT, no poll tax, basically, no tax! This will mean that ordinary people will be able to keep all of their money to spend on whatever they like."
When asked for details on how this would be achieved Mr. Letwin replied, "It's quite simple. There is a tremendous amount wasted in administration. The Civil Service is top heavy with red tape and bureaucracy. What we will do is remove a whole layer of management, in fact we will completely dismantle the Civil Service as it is. If we are not collecting tax then we don't need all those people who are employed to collect it do we?"

Mr. Letwin was further questioned as to how the drop in tax revenue would affect public services. "The savings we will make on reducing bureaucracy will fund any changes and we're going to give people more choice." He replied. "People want choice and that's what we're going to give them. The choice between dying in a state run hospital corridor or having first class service in the private sector. The choice between being educated in the state school without money for books and pencils or even teachers and doing what my parents did and sending your child to one of the many excellent public schools we have. The elderly are one of our priorities and they to will have the choice of working until they drop dead or saving for retirement in a pension fund which could, if they are skilled investors, provide them with a modest income in old age." Mr. Letwin went on to explain that the responsibility for local services such as, refuse collection, the police service, street lighting and road maintenance would be handed over to the local people who used the services and said, "People will be able to decide how, in their streets, the services which they want will be funded. It's all about choice."

It was pointed out to Mr. Letwind that many ordinary people would not be able to afford the choices which he had outlined. He replied. "I've met some of these people and on the whole they seem very nice. Of course there is always a certain underclass for whom the state provision will remain - for the time being - but it is our belief that people must take responsibility for their own welfare and we intend to give them the tools to do it. Of course, as we make society richer then there will be a trickle down effect with those more fortunate looking after those less fortunate in society. In fact, just like us in the Conservative Party. We want to go back to basics and re-instil those Victorian values to which we all aspire."

From The Spoof (satire), UK, 18 March 2005

Unions Welcome Government Pledge to End 'Two-Tier' Workforce

Unions today welcomed an announcement by the Prime Minister aimed at ending the so-called two-tier workforce, affecting staff such as cleaners, cooks and porters whose jobs are transferred from the public sector to private firms. Tony Blair said a code to outlaw different rates of pay and employment conditions will be extended from local government to the NHS, civil service and other parts of the public sector. David Miliband, Minister for the Cabinet Office, said: "Fairness at work is part and parcel of the move to achieve a more flexible and adaptable workforce to deliver the best possible public services to local communities. "I am therefore delighted with this extension of the 'Two-Tier Code' across the public sector. "By building on the successful introduction of the code in local government, we are ensuring that all new entrants taken on by contractors in new or re-tendered service contracts will benefit from terms and conditions that are no less favourable than those of transferred public sector employees. They will also be offered a reasonable pension."

Dave Prentis, general secretary of Unison said: "Ending the two-tier workforce has always been a defining issue for me with this government and I am delighted that the Prime Minister's promise to Unison has finally been honoured. "This decision will also result in many public services being taken back in-house as contractors struggle to win new contracts. "It is great news for all the low paid workers – cleaners, cooks, porters and many more who have been shifted from company to company across the public sector and treated so badly along the way. "Private companies will no longer get away with treating some workers like second class citizens undercutting their pay, sick pay, holiday pay or pensions."

Tony Woodley, general secretary of the Transport and General Workers Union said: "This is a significant breakthrough for public sector workers and for the delivery of public services. Public sector workers will welcome this as a restatement of the Government's positive attitude towards public sector delivery of public services. "Whilst there is still work to be done in negotiating the detail, this is the green light to starting the process of ensuring that public servants are paid the same rate for the same job, whoever their employer is." TUC general secretary Brendan Barber said: "This is a very good result from the intense discussions we have been having with the government over recent months and a clear victory for a sustained union campaign. "But most of all it is a victory for thousands of mainly low paid public service workers. No longer will private companies be able to win work from the public sector purely by cutting the terms and conditions of staff. It builds on the agreement in local government that has worked well." Debbie Coulter, acting general secretary of the GMB, said: "This is a major win for the GMB and other public sector unions and an important act of faith from Labour. It will safeguard the terms and conditions of millions of people working for the public sector."

Scotsman, UK, by Alan Jones, 18 March 2005

30,000 Flemish Civil Servants on Strike

Brussels - Some 30,000 civil servants from Belgium's Flemish community and Flemish government came out on strike on Friday. The christian and socialist trade unions are protesting against the Flemish government's austerity plans. They allege that some EUR 13 million will have to be cut from the budget for civil servants. According to the trade unions, more money is needed to improve the provision of services, not less. They are also demanding that the Flemish government comply with personnel plans that have already been agreed. Flemish Prime Minister Yves Leterme however says that those plans need to be reviewed. The Flemish civil servants held protests in several key parts of Flanders. Activity at the port of Antwerp was disrupted by the strike and flights in and out of Ostend airport were also affected.

From Expatica, Netherlands, 25 March 2005

Prescott Caves in Over Forcing Civil Servants to Retire at 65

John Prescott caved in to 1.5 million civil servants and council workers last night in a desperate attempt to avoid a national strike next week over plans to raise their pension age. The Deputy Prime Minister offered a "fresh start" in talks with unions and said the Government would revoke changes to the retirement age which were due to come into effect on April 1. The unions had decided to prepare for a strike because of the government's previous refusal to negotiate over plans to change pension arrangements for public sector workers and to raise pension age from 60 to 65. They said the reforms would force people who entered a career in which they expected to retire at 60 to work longer before they got their full pension. Last night it appeared that unions would call off the strike after it was agreed that a series of meetings would be held this weekend and early next week.

If the action were to go ahead on Wednesday, as planned, it would be a severe embarrassment to Labour in the run-up to a general election, expected on May 5. The 24-hour walk-out would shut schools, libraries, job centres, council offices and cripple the working of government departments. Customs and Excise operations would also be forced to shut down. After the talks Mr Prescott said: "Following constructive dialogue on the local government pension scheme I have decided to establish a tripartite committee which I will chair. It is my clear intention to revoke at my earliest parliamentary opportunity the local government pension scheme regulations. It is my intention also to begin consultation on new regulations." A statement said there had been "misunderstandings and suspicions" about the reforms that needed to be addressed.

Mr Prescott added: "We have listened to concerns and recognised the need to get this right for the long term. Rather than rush and risk getting the policy wrong we want to ensure we get it right and carry the people affected with us." The unions reacted positively to Mr Prescott's climbdown, saying they would decide their position by early next week. Officials hinted that the strike would be called off. A joint statement from Unison, Amicus, the GMB, the Transport and General workers and Ucatt, which represent more than a million council staff, said: "After three weeks of intensive negotiations, the Deputy Prime Minister has made clear his intention to revoke the changes to the local government pension scheme and to introduce a new negotiating body to deal with the long term future of the scheme." Brendan Barber, the TUC general secretary, said: "The major complaint by all the public service unions has been that changes, particularly on pensions age, are being imposed rather than negotiated." Mr Barber said he was calling a meeting of public service unions next week to discuss the development.

From Telegraph.co.uk, UK, by Toby Helm, 18 March 2005

Panel Clears Bill to Make Civil Service Jobs Political

The ministerial committee on legislation yesterday ignored vehement objections by Attorney General Menachem Mazuz and approved a far-reaching private member's bill that would turn most of the high-ranking executive jobs in the civil service into political appointments. The bill, proposed by freshmen Likud MKs Gideon Sa'ar, Gilad Erdan and Gila Gamliel, would affect some of the most sensitive positions in the civil service, including the treasury's accountant general and budget director, director of the capital markets, the head of the Government Companies Authority, the chairman of the Securities Exchange Commission, the Registrar of the Population at the Interior Ministry, the head of the National Security Council, the head of the National Investments Authority and the antitrust commissioner.

Voting in favor of the bill were Finance Minister Benjamin Netanyahu, Deputy Prime Minister Ehud Olmert, Minister for Diaspora Affairs Natan Sharanksy, Agriculture Minister Yisrael Katz, Transportation Minister Meir Sheetrit, Public Security Minister Gideon Ezra, Tourism Minister Avraham Hirchson, almost all of the Likud and the Labor Party's Minister without Portfolio Haim Ramon. Against were Justice Minister Tzipi Livni of the Likud and Housing Minister Isaac Herzog of Labor. Ministers Matan Vilnai and Shalom Simhon, both of Labor, were absent.

The ministers ignored Mazuz's opposition to the bill, which will now have the coalition's support when it begins its passage through the Knesset. The bill removes the requirement for tenders for each of the positions it names. The bill reached the Knesset three months ago, but its proponents were holding it back, waiting to see if the ministerial committee approved it. Sa'ar spent those three months trying to persuade Livni to back the bill, but while she agrees that some of the senior executive positions in the civil service should be made ministerial appointments, she is opposed to many of the posts named in the bill being turned into such ministerial "positions of trust."

Instead, Livni insists on stringent professional criteria for any appointment to take place. She proposed Sa'ar adapt his law to include a professional public committee that would decide which of the executive posts could be ministerially-appointed positions of trust, but Sa'ar, reckoning he had a majority in the ministerial committee, moved to win that vote. He did, however, win Ramon's support for the bill by promising a 90-day hiatus between the preliminary reading and the first reading, during which a blue-ribbon panel of professional experts will decide which of the senior civil service positions will indeed become political positions.

From Ha'aretz, Israel, by Yuval Yoaz, 6 March 2005

Bill on Politicizing Civil Service Draws Fierce Criticism

The Ministerial Committee on Legislation's approval of the bill to turn some of the most sensitive positions in the state's civil service into political appointments is under attack from good government groups. The Movement for Quality Government termed the bill corrupt, and the Women's Lobby urged the government to drop its support for the legislation, even before it goes to the Knesset for its preliminary reading. The bill, proposed by Likud MKs Gideon Sa'ar, Gilad Erdan and Gila Gamliel, would affect some top positions in the civil service, including the accountant general and budget director, the head of the Government Companies Authority, the chairman of the Securities Exchange Commission and the antitrust commissioner.

"If the current executive appointment mechanism is canceled," wrote the Movement for Quality Government to all the ministers in the government, "we will find ourselves on the slippery slope that will turn the public sector into the operations headquarters of the ruling party. One does not need to be a great prophet to say that if the bill is passed, the jobs will be turned into more axes grinding more interests foreign to good government, with nothing in common with the goals of the public sector." As for "being like America," as some of the bill's proponents have called it, the movement notes that right now, there is already one political appointment per 228 jobs in the public service here, while in the U.S., the proportions are one political appointment per 918 positions. The Women's Lobby also appealed to Prime Minister Ariel Sharon against the bill.

From Ha'aretz, Israel, by Yuval Yoaz, 7 March 2005

5.5% More civil Servants in '99-'04 Despite Promised Cuts

The average salary of civil servants fell by 4.8% in 2003, except at the Ministry of Defense, where salaries rose by 2%. Belying all the talk about cuts in the public sector, the number of civil servants in government ministries, excluding teachers and defense personnel, rose by 5.5% in 1999-2004. Israel had 51,304 civil servants in January 2004. The number of public sector jobs rose by a negligible 0.15% in 2004. Although this was the smallest increase since 1999, the government was again unable to reduce the number of its employees, despite all its promises to the contrary. Salaries of almost all civil servants eroded significantly in 2003. The steepest decline was for research staff (7.75%), and social workers (7.34%). Salaries of paramedics fell by 1.98%, and microbiologists and biochemists by 2.08%.

Altogether, salaries of civil servants in civilian ministries, excluding teaching staff, fell by 4.81% two years ago to an average gross monthly salary of NIS 10,489. Salaries of teaching staff fell by 6.51% to an average of NIS 6,851 a month. The only civil servants to win salary increases in 2003 were at the Ministry of Defense, where salaries rose by 2.03% to an average of NIS 15,155 a month. Pay hikes at the ministry were highest for lawyers (6.4%), and engineers (5.64%). These figures do not include IDF career officers and NCOs. Ministry of Defense figures indicate that salaries of all officers, except for lieutenants, fell by 2.3-5.4% in 2003. Salaries in the Israel Police fell more steeply - 3.9-7.7%. 1,978 civil servants were employed through personal contracts in 2003. Their average gross monthly salary was NIS 15,637, 3.7% less than in 2002. The salaries of female civil servants continued to be less than their male colleagues in 2004 as well. The average gross salary of men was NIS 12,346 in May 2004, compared with NIS 9,388 for women - a gap of 31%. The gap was 35% in May 2002.

From Globes Online, Israel, by Itamar Levin, 21 March 2005

Administration Pushes Hill for Civil Service Reform

The White House is working with Congress to reform the federal personnel system for all agencies, not just the Defense and Homeland Security departments. Clay Johnson, the Office of Management and Budget's deputy director for management, today said the administration will ask a lawmaker to introduce legislation to change the General Schedule so it reflects DOD's and DHS' new pay-for-performance structures. "Some think we should wait until we see how Defense or Homeland Security does, but we don't think how DOD does will reflect or impact how Interior or any other agency implements the reforms," Johnson said at a luncheon sponsored by the IBM Center for the Business of Government in Washington. "The success of civil service reform is a function of what we define agencies have to do to covert and now much time they need to meet the new requirements."

DOD and DHS are implementing personnel systems that will change the way the departments hire, pay, promote and discipline civilian employees. The systems give managers more flexibility to move civilian workers where they are most needed and cut hiring time for new workers. Defense will convert to a pay-for-performance system by 2008 and DHS by 2009, Johnson said. "We want to get it done now and pick a time, like five years, and get started," Johnson said. "We've received a good reception on the Hill so far, and we are hopeful to get it done." The administration also is seeking congressional support for a legislative proposal to formalize the Sunset and Results commissions, Johnson said. The White House goal is to find a sponsor by May. The Sunset Commission within Congress would review 120 programs a year and require agencies to justify each program's continued existence. The nonpartisan Results Commission would look at programs by subject area, such as training, and recommend how to improve performance. OMB would then send change proposals to Congress.

From GCN.com, by Jason Miller, 22 March 2005

Long Way to Go for South Africa's E-Government

Massive cost saving incentives are pushing government to implement e-government strategies, but they are currently far off the pace, delegates at an e-government conference in Sandton were told this week. Joe Mazibuko, State Information Technology Agency (SITA) marketing services managing executive, told delegates e-government would achieve greater transparency, revenue growth, cost reduction and convenience for local citizens. According to a study conducted by Accenture, SA is badly lagging in terms of e-government readiness, with countries such as Brazil, Mexico and Portugal all ahead of South Africa. But while there is still much work to be done, Mazibuko said SA was making progress and was in the process of rolling out certain e-government strategies, pointing to the e-Government Gateway Project launched last year August. "The project aims to develop a single online system that will provide South Africans with access to government services any time, anywhere. It will deliver optimised service delivery, public participation and governance through technologies such as the Internet and one-stop shop services," he said.

The timeline for any effective strategy will be a broad one, said Mazibuko: "Phase one of six has just been completed, which has taken for or five years and cost a lot of money. This is not something that will happen overnight, but rather will be rolled out well into the future, possibly up to 20 years." Accenture government senior manager Isabel Malheiro agreed that such an initiative would not be achieved overnight, and stressed the need for government to focus in its citizens throughout the process. "The full benefits of e-government will be realised only if citizens take advantage of them. The reason why Canada has been so successful in its roll out is because it is so citizen-centric. More bang for your buck - Providing a foreign perspective on the roll-out of e-government, Software AG Northern Europe and SA regional manager Paul Smith said savings accrued was a significant motivator in the process, provided it was invested in properly. "It can be very expensive, and it is IT dependant. The key is to leverage existing infrastructure. The rewards are significant - the UK government will have saved up to £1.2 billion by 2007/08 thanks to its e-government strategies. Malheiro agreed, stating that there were no "quick wins here, but the realisation of savings will validate the potential of e-government in the long run".

From AllAfrica.com, Africa, by Damian Clarkson and Itumeleng of ITWeb, Johannesburg, 4 March 2005

'Public-private Partnerships Key for Good E-gov'

New Delhi - While inaugurating the third Egov Summit in New Delhi - Suresh Pachauri, Minister of state-Personnel, Public Grievances & Pension, said that public private partnerships are a key factor in taking forward the spirit of e-governance. "The UPA government is fully committed towards enhancing public private partnership environment when it comes to e-governance initiatives. E-governance is all about good governance and it involves creating a viable financial environment when it comes to evolving public private partnerships. We are making necessary efforts to reduce the digital divide in the country," he added. Stressing the need to realize the full potential of ICT - Pachauri said that technology is not an all-important factor when it comes to implementing an e-governance project and there are other issues to be addressed. "Technology can only facilitate good governance. So we should not give too much of emphasis on technologies and try to concentrate on implementation. We are yet to realize the full potential of ICT. Lot of effort is needed to transform the government in order to usher in an era of economic and social growth. Ideally, ICT should benefit from technological advancements in all strata of society," he explained.

Speaking at the same occasion and giving insight into issues relating to the national roll-out of various e-gov projects, R Chandrashekhar, Joint Secretary & CVO-DIT said that the whole orientation of government has now shifted towards services and e-gov is no more just a government issue. "While services and their right delivery is key for e-gov projects. The very concept of e-governance has now gone out of the government environment and now we have a lot of stakeholders who have interest in these projects and their implementations. We are moving from a supply-driven atmosphere to a demand-driven situation," he explained. Highlighting the importance of process re-engineering while introducing various e-governance projects, Chandrashekhar said that process re-engineering is a critical part of change management and it should be given due importance. "There are some people who say that we should get IT first and that we should not re-engineer the processes. Second category of people say that we need to re-engineer the processes. I firmly believe that process re-engineering is required to aptly reap the benefits of introducing IT into a process and this is a critical part of change management," he explained.

Explaining the advantages of technology for the whole society - Chandrashekhar said that neutral behavior of technology towards introduction of good governance into disparate social and political environment is beneficial for all. "A good e-gov project helps in decentralisation as well as provides a centralised approach towards managing resources. As technology is always neutral - it helps is curbing red-tapism and issues related to other malpractice's," he added. Highlighting some of the problems that the government is facing when it comes to rolling e-gov projects on a larger scale, Chandrashekhar said that there is a lack of capacity within the government to grapple with critical issues related to e-governance."Within the government there is a huge deficiency of capacity to grapple with such issues and this is the single biggest bottleneck for the government. So whether it is department of IT or the planning commission - capacity building is a major task," he explained. With a theme 'Making E-Governance Happen' this series of seminars attracted a lot of interest from the industry as well as the government quarters. Having touched Kolkota on Feb 21 and Mumbai on Feb. 24th - New Delhi was the third stop. The next seminar from this series is scheduled on March 3rd at Chennai.

From CIOL, India, 1 March 2005

Adopting E-governance

Computer is a tool which is making government administration more efficient in developed countries. But even a poor and developing country like Bangladesh can start making good use of computers to achieve efficacy and transparency in its governmental functions. There are many areas in Bangladesh where the use of the computer can revolutionise the administration.

For example, computerisation of the courts and land administration can help to overcome the present very ossified and corrupt systems of work in these two areas of the administration . Anyone who ever stepped inside a court house in Bangladesh would realise how outdated and archaic is the system of work there. Record rooms of the court houses are dens of corruption. Work is done manually and very tediously where getting the copy of a record can take a very long time if the palms are not properly greased. Then again, the records can allegedly be manipulated through bribing. Record keeping through the traditional document writers takes both time and leaves open the scope for deliberate manipulation. All such ill practices can be effectively brought to a close probably through computerisation of the court houses and their recording systems. If this is done, both the speed of the functioning of the courts will increase and record keeping can become foolproof. People at land offices are harassed at every step and have to bear the torture of unscrupulous ones there who tamper with ownership and other documents of land for underhand payment. Computerisation can help bring an end to such harassment of people and the tampering of records.

At present, the police spend a great deal of their time in writing diaries of cases and investigations by hand. The system has hardly changed since the colonial era. Records of criminals are similarly kept hardly befitting the need for speed when the soaring number of crimes and the voluminous investigation reports call for much speedier handling. In some police stations of the country, files of years ago even turn unreadable from disuse due to a careless or unprotected filing system. Computers can come to the rescue in such a situation. A single computer in a police station can make redundant thousands of files accumulated over the years and release space at the station and extra time for the policemen for their field work. They would not have to do so much tedious writing work any more. Furthermore, computerisation can tremendously aid detection of criminals as their pictures can be preserved and the same brought to the screen any time through the flick of a mouse.

How computerisation can speed up administration is evident from only the working of the Bangladesh Road Transport Authority (BRTA). Even in the eighties, the BRTA did its work manually. Mountains of paper at each BRTA office was the common scene. This situation understandably breeds delays and corruption for such a thing as even the simple act of registration of a car after its purchase. Things began to change from the early part of the nineties when BRTA offices were fully computerised. Now registration and other documents can be obtained fast within one working day and also without hassle from a BRTA office by those who are familiar with its current system of working and who do not fall prey to touts at these offices. Anyway one looks at it, computerisation marked an advance for the better in BRTA offices.

The same kind of efficiency, speed of working, transparency and reduction of corruption can be achieved by introducing computers in all spheres of the government administration. The Customs department is considered very corrupt one in Bangladesh. But use of the computer--which has much reduced the need for human application - is reportedly already succeeding to bring corruption down in this key department. With its greater computerisation, perhaps the corruption in this department can be reduced substantially. Thus greater application of computers for governance can be a very potent factor in the fight against corruption in the government as well as for speeding up of the functioning of government departments.

From The New Nation, Bangladesh, 10 March 2005

World Bank Offers USD 500 Million Assistance for E-governance

New Delhi: The World Bank has offered 500 million US dollar assistance for the first phase of the National e-Governance Plan. "In 2005 the World Bank approved the India government's e-governance project concept and gave the green light to proceed which could in-principle lead to a contemplated 500 million US dollar financing over the next four years," Mark Dutz, Senior Ecomomist at the bank said. "The final decision of bank support, including amount of financing and other modalities, is expected to be forthcoming within next nine to 12 months subject to adequate government preparation," he said, adding the bank is willing to upscale that support to the extent required. The World Bank proposal comes after government of India started a dialogue with the bank for possible support for its National e-Governance Plan (NEGP) towards end-2003.

Apart from funds, the World Bank will also help in capacity building and provide managerial and other expertise. "The learnings of the bank while working with the Indian government will be useful for similar plans in other countries," he said. Joint Secretary in DIT, which is anchoring the entire programme, R Chandrashekhar said the Department would bring out the guidelines for capacity building for e-governance projects next week. The plan has identified 25 projects as Mission Mode of which 10 are in state sector, 8 in central sector and seven integrated ones. Planning Commission has allocated Rs 300 crore as additional central assiatnce for NEGP in 2005-06 while DIT's own allocation is also of the same amount.

From New Kerala, India, 12 March 2005

Swiss Lag Behind in E-government

Switzerland has been ranked a lowly 20 out of 28 in a pan-European survey of online government services. Only a few former Eastern European countries did worse than Switzerland, whose bad performance was blamed on its federalist structure. According to the survey carried out for the European Commission, the Swiss only scored 60 per cent for the online accessibility of its cyber administration. This compares to a European average of 65 per cent, said the report's authors in a statement on Wednesday. Topping the list was Sweden, with Swiss neighbour Austria coming a close second. Other countries that did well were Britain, Ireland, Norway and Denmark, who all scored over 80 per cent. Only 40 per cent of the Swiss internet services examined were found to be completely online, placing it in the second-to-last in this ranking, just ahead of Lithuania.

The survey, compiled by Cagemini, compared e-government in the 25 EU countries, as well as Iceland, Switzerland and Norway. Poor performance - The authors said the main reason given for this year's poor performance was Switzerland's federalist system of government, under which public powers and administrative practices are shared between the government, cantons and municipalities. "Many of the services are in the hands of cantons and municipalities; not all of them have given these services the same priority," said the statement. But it added that the government's efforts were not much better. Switzerland launched its e-government initiative in 2002 and has stated that it intends to become a world leader in the domain. One of its largest projects is the "ch.ch" website, a guide to Swiss administrative services at the federal level and in the cantons and communes. But last year it was announced that the site would not be as ambitious as originally planned due to disagreements among cantons over its content.

From NZZ Online, Switzerland, 9 March 2005

Sweden Most Advanced Member State for E-government - Commission Survey

Over 90 per cent of public service providers in Europe now have an on-line presence, and 40 per cent of basic public services are fully interactive, says the European Commission's fifth annual survey of online government services in Europe. Availability and interactivity measures show that EU's new member states are already where the EU 15 ones were just two years ago. 'This study points to impressive progress in developing and delivering public services on line across the EU,' said information society and media commissioner Viviane Reding. 'The service delivery gap between new member states and the pre-enlargement EU 15 is lower than many expected and could close very quickly.'

The survey, done for the European Commission by consultants Capgemini, examined 14,000 websites in 28 countries, the 25 EU member states plus Norway, Iceland and Switzerland. Sweden is the most advanced country for online public services; Austria is a close second. The method used defined an index of sophistication of services ranging from simple online information to fully interactive services including online payments and, where appropriate, online service delivery. This index increased at each measurement and has now reached 65 per cent.

The ten new EU member states still score largely in the lower half of the ranking. However, their development of e-government services is now at the level of EU15 two years ago, so they are progressing fast. Estonia is already situated in the upper part of the ranking. The study has been carried out since 2001 in the former 15 EU Member States and Norway, Iceland and Switzerland. Countries with the biggest advance in the past year are Iceland (+20 per cent), Germany (+15 per cent), Italy (+13 per cent), the UK (+13 per cent) and Belgium (+ nine per cent). The study suggests that growth in online sophistication (such as full interactivity of services) will level off in the coming years.
Further progress will require greater connection between civil services' front and back offices, increased collaboration and cultural and process change.

From DMasia.com, France, by Leigh Phillips, 9 March 2005

E-government Focus Switches to Cost Savings and Efficiency

Local authority e-government projects will be subject to much greater value for money, cost-effectiveness and efficiency assessments from 2005, according to the government's second annual report on the progress of councils in putting services online by the end of 2005. The Office of the Deputy Prime Minister (ODPM) report, Two Years On - realising the benefits from our investment in e-government, says "tremendous progress" has been made to date. The average council is now 79 per cent "e-enabled" compared to 59 per cent a year ago and 98 per cent of councils report they will achieve the target of putting all their services online by the end of this year. The National Projects programme, which supports 22 projects to create standard products, systems and best practice that can be adopted by councils across the country, has been declared a success with projected cost savings of £320m.

Other achievements highlighted include the ability of citizens in over 100 councils to go online to submit planning applications, check their council tax balance and calculate their benefits. But further cost-savings from local e-government will be an increased priority beyond 2005, party in response to the Gershon efficiency review, according the report. It says the framework for the Comprehensive Performance Assessment from 2005 will have a much greater focus on local authorities' delivery of value for money and their approach to cost-effectiveness and efficiency. Local e-government minister Phil Hope said in a statement: "If local e-government is to make a genuine and sustainable contribution to the improvement of public services, then the next 12 months must see us driving through the benefits of our investment to make a real difference to the lives of ordinary people."

From Silicon.com, UK, by Andy Mccue, 7 March 2005

UK Climbs EU E-government League

The government wants to get most of its services online - The UK is among the best in Europe at providing public services online, but Britons still need some persuading to use them, say researchers. While people can renew passports and book driving lessons, they are more likely to use the internet to shop. An EC report ranked the UK third out of 28, after Sweden and Austria, in its online public service "sophistication". A year earlier it was eighth. The survey covered 14,000 public bodies in Europe in the last quarter of 2004. It looked at online access to things like income and corporate tax, car registration, benefits and custom declarations. The survey ranked Sweden and Austria as having the most sophisticated online provision - the extent to which a service is provided, from downloading information to filling in forms electronically. Graham Colclough of researchers Capgemini, said internet services were bound to be better used in countries with more dispersed populations.

But the fact that the UK was doing better than countries like France and Germany was "something we should be quite proud about", he told the BBC News website. Iceland, Germany, Italy, the UK, and Belgium were singled out as making "important progress" in the fifth annual e-government benchmarking report. The new EU accession countries were about two years behind the others, but had "very satisfactory" online provision, it found. The report found that in most countries "income-generating" services, such as paying taxes, were the best developed. Those that do not bring money in, such as applying for licences and planning permission, are less so, the report found. Most "e-transactions" are carried out by businesses, and persuading ordinary people to use websites to use public services was still a problem, said Mr Colclough.

"People are much more comfortable dealing with the private sector than the public sector," he said. "If you're online at your local supermarket, you know the experience is relevant to you and know it's going to work - you don't have that same level of comfort with public services so we have to work on that." He said that public sector websites needed to be made more consistent and easier to use and be better promoted. A Cabinet Office report last year found 48% of the adult population in the UK was "digitally disengaged". The Alliance for Digital Inclusion has been charged with finding ways of persuading them to use the net and other new technologies.

From BBC News, UK, 8 March 2005

Ireland Slips in E-government Rankings

Ireland's reputation as a top performer in the provision of e-government services is declining as other Member States make advances. So says the annual report from Capgemini conducted on behalf of the European Commission, which placed Ireland fourth in Europe in terms of online sophistication of e-government services with a score of 84 percent. This score tied with the UK but was five points behind the leader, Sweden. Last year Ireland had a score of 86 percent, making it joint second with Denmark, and in 2001 Ireland topped the list with 68 percent. Though still a top performer in the sophistication arena, Ireland was one of only two countries to show a decline in comparison with the previous year. Other countries have made impressive advances in the past twelve months. The UK, for example, jumped from 71 percent in 2003 to 86 percent for 2004. Norway too is gaining on Ireland, improving from 75 percent in 2003 to 82 percent in the current survey.

In the three years between 2001 and 2004 sophistication of public services in Ireland has grown by an average of 15 percentage points, making it the country with the second slowest growth rate, the lowest being Switzerland at 11 percentage points. Austria and Belgium stand out as the top growers of online sophistication, with both achieving growth of over 40 percentage points in the past three years. In terms of availability of online public services, Ireland is in lowly 11th position with just 50 percent, a long way off the leader Sweden with 74 percent. In this section too, Ireland has lost ground in the past year falling from fifth in 2003 with 56 percent. Denmark has experienced a more pronounced fall from grace in terms of online availability - it ranked first in 2003 with 74 percent but slipped to fifth with 58 percent in the 2004 survey. Sweden, Austria, Finland and the UK all picked up ground in this area with growth of 7, 4, 6 and 9 percentage points respectively.

"Ireland is still performing well, we are fourth in terms of online sophistication as we continue to make more information available online, primarily through the increased provision of downloadable forms," said Nick Forbes, managing director of Capgemini in Ireland. "Yet as the maturity of e-government grows, we have not seen the same level of drive and commitment within Ireland to make services fully available online..." Looking at specific online e-government services, Ireland scored third in car registration, enrolment in higher education and attaining environment-related permits online. The Republic scored fourth in attaining a driver's licence online and for social security benefits such as child allowances. However Ireland is performing less well in health-related services and also public libraries where it ranked 23rd and 16th respectively.

The report, which also assessed the e-government services of the 10 new Member States, concluded that their scores were satisfactory, corresponding, on average, with the level where the original 18 countries were two years ago. The report, which covered the 25 EU member countries plus Norway, Iceland and Switzerland, broke government services into four main categories: Income-generating: services such as taxes and social contributions; Registration services such as births, deaths or marriages; Returns, or services provided in return for taxes such as public libraries; and permits and licences, for activities like home construction or business registration.

From ElectricNews.net, Ireland, by Deirdre McArdle, 8 March 2005

IBM: New E-government Centre in Rome

Rome - The E-government open solution centre has been inaugurated in Rome at the headquarters of Ibm. This facility aims at promoting innovation in the public sector and represents an advanced workshop for planning a new administration which is able to provide better services to citizens through IT technology and the Internet. The centre can rely on Ibm's resources and knowledge as well as on the know-how of the other two centres specialized in e-government in Berlin and Washington. The centre will work together with partners such as Cisco Systems, Sap and Siebel and will be supported by the software laboratory in Tivoli (Rome) (500 experts whose average age is 32 and 140 patents granted only in 2004) which develops advanced solutions for system management. In particular, Cisco will contribute its competence in voice, video and data-related services. Sap will deal with the review and innovation of processes while Siebel will contribute solutions for relationship with citizens. "The Public administration has made important progress" the president and CEO of Ibm Italia, Andrea Pontremoli, said " both from a legal and an administrative point of view: now, we must make sure that the regulations are enforced, thus making life and work easier for all citizens".

From Agenzia Giornalistica Italia, Italy, 7 March 2005

E-government Meet to Address Latest Challenges

Doha: A symposium on e-government to be held at the Intercontinental Hotel on April 14 will bring together Arab e-governments and experts to discuss major issues and challenges facing the implementation of e-government in the region. The symposium titled "e-government challenges" is being hosted by Qatar e-government. The topics at the symposium will include the infrastructure to establish e-governments, a case study of the Qatari e-government which is already in place, laws covering e-governments, co-operation between e-governments, e-payment gateway, challenges confronting e-governments, Post as a mode of enhancing services and purchases and the role of communication in further developing e-government. Experts from local banks, other leading companies and corporations and international organisations will also attend the event.

Talking at a press conference yesterday, Dr Ahmad Hamed Al Mohanadi, director of e-government said the major challenge faced in implementation of e-government in Qatar was to change the mindset of people in the process of migrating from the conventional system to the electronic one. He, however, said despite the obstacles, Qatar had gone a long way in implementing e-government in the functioning of various ministries and government departments. "The infrastructure, technology and standards are already set. The new system is in place in various sectors. The major challenge now is to create more public awareness about the benefits of e-government," he said. Haytham Abduljawad, programme executive manager, e-government project said, 4.5m people had visited the e-government website and more than 4,450 transactions were made through the facility only in February. "

In the number of transactions, Qatar comes among the nine countries leading in implementation of e-government," claimed Ahmad Al Mohanadi. It has been growing at a rate of 15.6 per cent every month, the officials said. Eng Ahmad M Al Kuwari, acting operations manager, e-government project, Ahmed Zidane, its marketing assistant and Abubacker Othman, executive manager, Geotec, organisers of the symposium were also present at the press conference. "We are aiming to set up a single window, an electronic gateway for all who wish to avail of the facility. This is our goal although it would take time to achieve," said Ahmed Al Mohanadi. He said implementation of e-government would not have an adverse impact on the labour market. "e-government is to enhance intelligence and improve the efficiency of the government functioning. The bureaucracy will be pulled down, as people will have direct access to information," he said.

More departments to go electronic - DOHA: Any ministry or government department which has employed a minimum of 150 people will be required to go through e-government, Ahmed Hamed Al Mohanadi, director of e-government, said yesterday. There is a plan to expand the electronic services for issuance of exit permits after its successful implementation in the issuance and renewal of visas, residence permits, health cards etc, he added. He said the postal sector in Qatar has been taken as a model for other sectors in the implementation of e-government.

From MENAFN, Middle East, 3 March 2005

Harvard Professors Present Executive Education on Global E-government Best Practice Tailored to the Middle East

Dubai School of Government (DSG) is organizing an Executive Education Program in E-Government Leadership this month, highlighting definitive international e-government knowledge for the first time in the Middle East. This program highlights ways in which technology is being used to streamline processes and drive large scale change in the public sector across the globe, using case studies customised to the Middle East region. Mohammed Al Gergawi, Secretary General of the Executive Council of Dubai said, 'E-Government is an appropriate topic for the DSG's first executive education program held in cooperation with Harvard's J.F. Kennedy School of Government.

'Information technology has a critical role to play in the evolution of governments and the public sector,' said Mr. Al Gergawi. 'It is no longer appropriate to leave major technology decisions to IT departments - leaders themselves must have a good appreciation of the concepts involved and the potential hurdles they may face. This program will provide delegates with the knowledge and skills to apply the lessons learned in their own countries.'

The Harvard-certificated program to be conducted from 26-30 March 2005, is aimed at the most senior levels of government and policy making, and will be attended by ministers, undersecretaries, director generals and governors from across the region as well as senior advisors in government departments. The course will use the famous Harvard Case Study Method, transferring knowledge and tools to the top echelon of the public sector of the region. Harvard experts will work with course participants to assess the global e-government experience and how it can be applied to the Middle East region. The internationally recognised program combines lectures on selected topics with indepth case studies, highlighting real life experiences and challenges faced by organisations and governments around the world.

From AME Info, United Arab Emirates, 7 March 2005

e-Gov Intelligence, Speed-trap Limited's e-business Intelligence Solution, is Launched to Address Latest Local Government On-line Efficiency Drive

As local authorities go on line and are pressured to improve efficiency by Central Government efficiency drive, speed-trap launch a solution specifically tailored to meet their needs for the measurement of web site performance, usability and take-up - Newbury, Berkshire: speed-trap limited announced today that their e-government intelligence solution, recently used by Socitm for their Better Connected 2005 study of e-government progress (see previous release), is now available to local authorities as a fixed-price ASP service from speed-trap. e-Gov intelligence provides quantitative and qualitative analysis of how people are using the websites to provide an insight into the user experience and site effectiveness. The ODPM (Office of the Deputy Prime Minister) recently published a document which, as part of their "local e-gov" program, documented a set of "Priority Outcomes" which local authorities must implement by the end of 2005 to ensure that effective online e-government is available.

This document defines as a key objective "assisting local government to achieve 100% capability in electronic delivery of priority services by 2005, in ways that customers will use". speed-trap recognised that this objective clearly demanded the implementation of on-line services via web sites which provide great user experience to encourage high levels of service take-up – and many have demonstrated that this can only be done if the on-line applications include mechanisms to measure and understand users' on-line experiences. This recognition caused speed-trap to become involved in the Socitm Better Connected program.

More recently as part this same Government program, the IDeA (Improvement & Development Agency) produced a document called "Priority outcomes: explanatory notes for practitioners", which explains exactly how each of the priority outcomes should be implemented, and this document clearly specifically identifies measurement of on-line resources (web sites, e-forms and e-processes) as being a mandatory requirement in several of the Priority Outcomes. Specifically outcomes R25 & R26 (web performance and availability), G22 (take-up of on-line process and forms) and G23 (Monitoring and analysis of Web site usability), are mandatory requirements.

Given this background, and the success of the Socitm trials, speed-trap decided to develop a specific version of their product, to meet these goals and objectives, and position this solution to allow local authorities to meet these objectives as easily as possible. As Malcolm Duckett, VP Marketing for speed-trap, commented: "Our experience with Socitm and the Beacon councils, proved speed-trap's technology could be extended from major retail and travel sites to meet the needs of local government - if we could offer a solution packaged to fit this market niche". He continued: "Therefore we added a new member to our e-intelligence suite called 'e-gov intelligence', with a specific set of functionality and pricing aimed to meet this requirement".

e-government intelligence is available for immediate deployment to monitor, measure and analyse local authority, NGO, and central government sites. It is provided as an ASP managed service in 3 price bands, starting at £575 per month for a site with up to 75,000 visitors a month and with a range of optional bolt-on modules for the measurement of transactions, processes, e-forms and in-site search engines. Moreover, fixed price usability and usage analysis, including speed-trap's unique ClickMap(Trade Mark) technology, is available at 1,000 Pounds per page. "We believe that by packaging state-of-the-art solutions in this way we can allow local governments to exploit award-winning technologies to economically meet the needs of local communities, and deliver the best in web solutions," explains Bill Brindle, chairman and CEO of speed-trap.

Ian Taylor MP, a non-executive director of speed-trap and a former Minister for Science and Technology commented, "for e-government to work effectively and in depth, more analysis and understanding is needed of the customer experience. speed-trap have offered a solution which should be rapidly deployed". E-government intelligence uses speed-trap's unique Dynamic Collection technology to reduce deployment costs, and includes their innovative e-form and search modelling software to analyse use of forms and search engines to produce information for site owners on the effectiveness, efficiency and use of these elements to highlight problem areas and build more effective web sites.

About speed-trap - speed-trap is the e-business intelligence company. The company provides technology and solutions that provide accurate, real-time and complete data on the interactions between customers and web sites. Moving beyond traditional Web Analytics speed-trap not only provides statistical and business information on activity in the site, but uses the in-depth data provided by its Dynamic Collection™ Technology to give a unique view of visitor experience and customer journeys providing valuable insights into how well on-line assets are meeting objectives. speed-trap's solutions are being used by businesses to drive and monitor their on-line marketing activity including the monitoring, measurement and management of their on-line business. This includes applications such as campaign management, customer segmentation, customer experience monitoring and performance measurement. Other customers are using the technology to monitor key business metrics and drive real-time content management systems. speed-trap was founded in January 2000 and is based in the UK with headquarters in Newbury, Berkshire. See www.speed-trap.com for further information.

About Dynamic Collection™ - speed-trap's unique and patented data gathering technology delivers two benefits to speed-trap's clients. Firstly, it can be fully deployed in less time than any other solution – avoiding costly tagging processes, or complex web server and content management system integration. Secondly, it provides insight and data, which is being used by on-line organisations to drive and monitor their on-line marketing activity including the monitoring, measurement and management of their on-line business. This includes applications such as campaign management, customer segmentation, customer experience monitoring and performance measurement. Other customers are using the technology to monitor key business metrics and drive real-time, anonymous personalisation and content management systems.

Media Contact for speed-trap: Jim Crowther, Ad-Lib International Limited, Tel: 01189 744189, Email: jim@adlibinternational.com. For Socitm:
Vicky.sargent@socitm.gov.uk

From E-consultancy (subscription), UK, 14 March 2005

USAID to Help Moroccan Audit Court Promote Transparency

The United States Agency for International Development (USAID) signed, in Rabat Thursday, a memo of understanding (MoU) with the Audit Court of Morocco to improve its performance and transparency at all levels. The US agency will provide technical assistance to the Audit Court, with a particular emphasis on regional courts. Under the accord, the USAID will train judges on issues of public finance and will organize seminars for local officials and administrators on the principles of transparent financial management and reporting. Besides, it will support the publication, dissemination and public discussion of audit reports, and will assist in the establishment of improved mechanisms for interacting with other government bodies at the national and sub-national levels. The court publishes annually a public report that is submitted to king Mohammed VI. It includes the overall activities of the Audit Court and proposals for a better management of public funds.

The MoU was signed by first president of the Audit Court, Ahmed El Midaoui, US ambassador to Morocco, Thomas Riley, and visiting US Comptroller General David Walker (March 23-29). Following the signing ceremony, Walker highlighted at a roundtable the American experience in public funds management, giving an overview on the evolving role of Supreme Audit Institutions. On his part, El Midaoui underscored the reforms instituted in the Audit Court aiming to improve its performance and efficiency. The goal, he explained, is to define and develop the modalities of public control, reinforce the State's credibility as well as ethics and transparency in public management. Members of parliament, representatives of the private sector, the civil society and USAID took part in the roundtable that focused on the current tendencies in auditing and control.

From Morocco-USA, Judicial, 26 March 2005

China's Public Finance Presented Quite Some Spotlights

Spotlight 1: finance increment witnessed a breakthrough of RMB 400 billion yuan - Backdrop figure: the financial revenue reached RMB 2.635,588 trillion yuan in 2004, an increase of RMB 464.063 billion yuan over that of last year, an increase rate of 21.4 percent. It is the biggest increment in recent years and the best year in fulfilling the financial budget. This indicates that the total economic amount in China is on the increase with the national economy tending towards a better situation and the economic system reform is being carried out steadily forward. It also indicates that the mechanism for a smooth and steady increase of financial revenue has been established and the reform for a system of taxation distribution is successful. The financial revenue in 2004 has proved to be four times that of 1994. Before the reform of the system of taxation distribution in 1993, the yearly increment saw only an increase of 20 ¨C 30 billion yuan and from 1994 ¨C 1999 the yearly increment registered over 100 billion yuan while the period between 2000 ¨C 2003 witnessed an annual increment of 200 ¨C 300 billion yuan and in 2004 the increment had surpassed 400 billion yuan. If it goes on like this, the financial revenue in 2005 is expected to reach around 3 trillion yuan.

Spotlight 2: Implementation of a stable and healthy financial policy - Backdrop figure: the deficit saw a decrease of 19.83 billion yuan and the long-term treasury bonds reduced by 30 billion yuan. The budgeted deficit is going to reduce from a rate of 2.5 percent of the GDP of last year to 2 percent in 2005, a reduction of 0.5 percentage point. The active financial policy which started to be practiced in 1998 for 7 years on end will gradually fade out. With regard to the financial policy this year it will see a transition from an expanding and active one to a steady and healthy financial policy of a moderate intensity. That is mainly manifested in a reasonable reduction of financial deficit, reasonable shrinking of the issuance of long-term treasury bonds with efforts being made to regulate well the structure of financial expenditure and the structure for the investment of the treasury bonds gathered in. The adjustment of the financial policy is based on the correct judgment of the economic situation in China. On the one hand, the agriculture, education, science and culture and health work and environment protection, social insurance as well as infrastructures are required to be strengthened and on the other it has witnessed a too fast growth of the investment in some economic sectors and a serious overlapping in construction. It has already indicated a very large investment in the whole society with too much growth of social capitals and so the inflation pressure is still hung overhead.

Spotlight 3: financial support for "3 issues in rural areas" extremely strengthened - Backdrop figure: last year saw the expenditure afforded by the central finance for the "3 issues in rural areas" come to a total of 262.6 billion yuan, an increase of 22.5 percent. The financial support for agriculture include the production, livelihood, social affairs, capital construction, mechanism innovation and the training of farmers and so on and so forth, benefiting wider and wider areas in countryside. The direct subsidy to farmers witnessed a big rate of increase. In 2004, the direct subsidy to farmers covered the three items of fine seeds for grain, direct subsidy for grain, and for the purchase of agro-machineries and it totaled four items if including the former subsidy for returning farmlands to forests. The four items covered some 15 percent of the central finance support for the "3-issues in rural areas" while the rate in 2003 came only to 3 percent. The direct subsidy cut down the intermediary links and brought direct benefits to farmers. The finance in 2004 was focused on promoting the grain increase and the increase of income for farmers, the "double promotions" to express the conception of "taking the people as basis for point of departure" and thereby satisfied the needs of the broad masses of farmers.

This year is going to introduce a big reduction of agro-tax on an extensive scale. The agro-tax will be exempted without exception in 592 counties that have been made by the state as emphasized poverty-aid counties. The provinces which had 1 percentage point reduction of the agro-tax in 2004 will continue to have 4 percentage points reduced this year and those provinces already reduced 3 percentage points to have 2 percentage points further reduced. The levying of agro-tax is going to be exempted throughout the country. The central finance will have a newly added fund of RMB 14 billion yuan for transfer payment to support for the implementation of these policies. There will be no reduction of RMB 10 billion yuan direct subsidy to the main grain production areas this year and the subsidy to fine seeds will see an increase of RMB 850 million yuan and a subsidy of RMB 230 million yuan to the purchase of agro-machineries. And a sum of 15 billion yuan will be allocated for local areas to carry out the "three awards and one subsidy" so as to alleviate the financial difficulties in part of counties and townships of which RMB 5.5 billion yuan will be used for direct award to the major grain production counties.

Spotlight 4: The input of the extra-increased revenue promoted the realization for macro-controls - Backdrop figure: last year saw the national extra-increased revenue come up to RMB 406.1 billion yuan of which the central finance revenue witnessed an extra-increase of RMB 253.771 billion yuan and the local revenue to RMB 152.3 billion yuan. Of the financial revenue, the budgeted increase has already been allotted to budget expenditure and only the portion of the extra-increased revenue can be used otherwise as disposable one. Therefore, the extra-increased revenue catches much more attention of the people. The financial budget report has made a detailed publicity of the use of the extra-increased revenue of the central finance: the newly added export drawback took up RMB 127.5 billion yuan. A sum of RMB 40.5 billion yuan was used to solve the account in arrears for returning farmlands to forests and another added investment of RMB 15.6 billion yuan was used to support for the reform of agro-tax and fees and for promoting the grain production in rural areas. And a sum of RMB 3.25 billion yuan was used for increasing the basic life pension of the retired and the subsidies for the "low-living standard guarantee" in cities and a sum of RMB 14.9 billion yuan was used to pay for the nationwide social insurance funds and the increase in the expenditure for education, science, return for local taxes, transfer payment in general and the transfer payment for ethnic minority areas came to a total of RMB 32.1 billion yuan.

This indicates first of all the extra-increase of financial revenue has promoted the realization of the macro-control goals by way of reasonable usage. Secondly, it did not incur any base increase in general expenditure. It has ensured a sufficient fund guarantee for the reform year, thereby providing a wider space for the reform. Still more, the extra-increase of financial revenue hasn't been used for offsetting the deficit on an extensive scale yet that it has solved the account in arrears was as good as for reducing the hidden fiscal deficit. Though it is not so widely famed to many people as to solve the deficit in the open it is of great significance. Because it has been used to clear up the past account of export drawback without issuing bonds and so it has helped guarantee the reputation of the government on the one hand and on the other helped reduce the financial risk.

Spotlight 5: a great support to employment, reemployment and social insurance - Backdrop figure: in the whole year of last year the fund used by the central finance for social insurance came to RMB 146.5 billion yuan, an increase of 18.1 percent. This year will see an allocation of RMB 10.9 billion yuan for the expense of reemployment, an increase of RMB 2.6 billion yuan as against the budget of last year. Active measures have been taken by the finance for implementing all kinds of preferential financial and taxation policies by the central administration and increase the capital input for reemployment and to do well the "two guarantees" and the work for the "low living standard guarantee". The basic substance for the life of the people in difficulties has been ensured to be paid in full and in time and the substance for the basic life of the laid-off workers has been carried forward into the same track for unemployment insurance.

Spotlight 6: Increase the input for developing the fragile links in society - Backdrop figure: the central finance has already allotted RMB 129.709 billion yuan for the expenditure of education, science and technology, health work, culture and sports and broadcasting and for family planning as well, an increase of RMB 17.876 billion yuan as against that of last year.

The expenditure carved out by the central finance for supporting science and technology, education, culture, health work and sports activities meant a great deal for strengthening the support of the social affairs for education, science and culture and health work, and it also meant a big deal for improving the basic conditions for running elementary education in rural areas and for forming an initial way for providing free-of-charge text-books to poor students in primary and secondary schools, for exempting their miscellaneous charges and subsidies for boarding students and all in all, this also meant a great deal for helping poverty-stricken students in institutes of higher learning to seek for study-aid loans, the construction of a financial input system supported by the state with solving the life-substances as main contents and it has achieved a great deal in this aspect. The increased fee for education this year will mainly be used for rural areas with RMB 1.3 billion allotted by the central finance and RMB 2.81 billion yuan by local financial bodies. This will be used to provide about 14 million primary and secondary school students of poor families under compulsory education in the 592 poor counties emphatically aided by the state with text-books free of charge, exempting the miscellaneous charges and gradually offering life-substance to boarding students. This year will see the students from poor families under compulsory education who are going to enjoy free-of-charge text-books in rural areas in China's middle and western regions reach a number of around 30 million all told.

From People's Daily Online, China, 8 March 2005

Direction of China's Financial Reform

Though China has made great achievements in its economic reform and development, some in-depth problems in the economic life, which have been piled up in a long run, still exist. The contradictions that must be faced with during the eleventh five-year period are mainly represented in the following 5 aspects:

a. The contradiction between high input and low output. For a long period, China's economic growth has been driven by a high input; but this kind of high rate of economic growth supported with high consumption of resources is hard to become persistent. In addition, it is impossible for such a growth to couple with demands in the market and a squander of resource configuration will be led to.

b. The contradiction between high rate of economic growth and low employment. Firstly, as technical advancements lead to capitals' replacement of labor, the flexibility in the growth of employment tends to fall down; secondly, as the reforms of state-owned enterprises and urbanization process expedite, people who need to change their posts and re-employment in state-owned enterprises and surplus labors in the countryside who need to be transferred increase; thirdly, China's population base is comparatively large, the annual growth of labor force is high.

c. The contradiction between high growth of financial incomes and low capability of adjustment and control. The main representation lies in that both financial functions and the financial operation mechanism cannot adapt to the principles and fundamental requirements of market economy: firstly, some of financial functions are short of and some have exceeded the authority; secondly, the features of function decentralization and the sectional division of financial funds are evident; thirdly, the financial input is administrative and there is an imbalance between fund allocation and risk incomes and a deviation of rights and responsibilities; fourthly, it is difficult for the public finance to cover the countryside effectively. All these problems have seriously affected the finance's efficiency in macro control and adjustment.

d. The contradiction between high growth of finance and high risks. As the reforms of state-owned enterprises, the financial system, social security, and grain circulation system get conducted, latent risks in these fields (such as financial deficits and a comparatively large scale of debts) will be pooled to the government finance gradually.

e. The contradiction between the quickened marketization process and the behind-lagging systematic reforms in certain fields. The representations lie in that the government's functions cannot be transformed successfully, some local governments interfere too much in the resource configuration in competitive fields, the administrative resource configuration results poor efficiency and becomes the fundamental reason for the extensive type of growth; the market mechanism is less perfect and the prices of such constituents as land, funds and laboring in the market are distorted; the reforms of enterprises lag behind relatively, restrictions on the budgets of many enterprises (with state-owned commercial banks included) are still weak and distortions also exist in management behaviors.

The fundamental reasons lying in the financial reform and development:

a. During the Eleventh Five-Year Period, especially in the early part of it, moderate financial policies should be implemented with three aspects made conspicuous: the orient of increments balance, the orient of structural optimization, and the marketing orient in systematic innovation. In the meantime, the financial policies should be adjusted properly and timely in compliance to the economic conditions, making them effectively implemented.

b. To increase financial incomes. Considering such policy-leading income-cutting factors as that the transformation toward value-added taxation will be implemented henceforth, that the income taxes for foreign funded enterprises will be aligned with domestically funded enterprises, that the agricultural taxation will be abolished, that the tariffs will be cut, and that the export rebates will be ensured according the actual sum, the task of financial increment will be formidable. With an eye on the international comparisons, the proportion of China's financial incomes in its GDP is obviously lower that the average abroad and needs to be improved. As to the preconditions for the increase of financial incomes, the first is to aggrandize the GDP and support the economic development with effective financial and taxation policies, the next is to impose tax according to the laws strictly and regulate favorable taxation policies, and the third is to make full use of the potential of non-taxation incomes.

c. To adjust the structure of financial outlay.
1. Pick up the settlement of issues concerning the countryside, agriculture and farmers;
2. Support the development of social causes;
3. Make perfect the financial system and relevant policies;
4. Strengthen the efforts to conduct the construction of ecological environment;
5. Plan the domestic development and opening up to outside as a whole. Consummate the export rebate mechanism, constitute and make perfect the tariff policy, make reasonable use of anti-dumping and anti-subsidy ensuring measure, optimize the utilization of foreign funds, and strengthen the supports for state-owned enterprises' reforms.

d. Further impulse the reform of the taxation system, consummate the financial management system on levels lower than the provincial level, and further promote the reform of the management system for financial outlays.
e. Build up the risk monitoring and early-warning mechanisms for the government's debts. Control the financial deficits, and set up the government's system of debt-repayment reserves. Dissolve various hidden debts and contingent liability so as to prevent and dissolve financial risks.

Note: "Eleventh Five-Year Plan": The "Five-Year Plans" form a part of China's plans for its national economy. They are mainly used to make programming for national key construction projects, productivity distribution and important proportion relations in the national economy, and prescribe objectives and directions for the development prospects of the national economy. Except for the Rehabilitation Period of National Economy from 1949 to the end of 1952 and the Adjustment Period of National Economy from 1963 to 1965, China has compiled eleven "Five-Year Plans" since the first was compiled in 1953.

From China Economic Net, China,by Wang Baoan, 25 March 2005

Finance Ministry Predicts Strong Economic Growth for this Year

Unemployment easing, investments growing, and inflation staying in check - In a cyclical forecast issued on Thursday, the Ministry of Finance predicts a second consecutive good year for the Finnish economy. According to the survey, GDP should grow by 3.3% this year. Last year's figure was 3.7%. Other indicators also suggest that Finland has taken care of its matters well. There are fewer jobless than the average for the euro-zone, and prices are rising more slowly than in Finland's competitors. The Finance Ministry's view of the state of the national economy has become clearly more positive. In September the ministry predicted a growth rate of 2.7% for this year, raising it to 2.8% in November. Finance Ministry official Eero Kallio attributes the autumn "pessimism" to expectations that economic development in the last months of 2004 would have been weak. "However, the third quarter of last year turned out to be quite strong, and the last quarter was also good. The second half of the year was much better than we had expected, for which reason the starting point for this year is much better", Kallio says.

Kallio adds that the high price of oil may have had an impact on the forecasts. "We imagined that it would have a greater impact than proved to be the case." However, the biggest difference between what was predicted and how things turned out was in investments. "We were quite cautious in this respect, because we imagined that the uncertainties would reduce the enthusiasm of companies to make investments, but this did not happen." The strong economic growth this year is expected to lead to the creation of new jobs, with employment figures rising above the average for the euro-zone. Finland's relatively better figures can be ascribed to Germany's poor performance, including its millions of jobless. The five percent rise in investments is seen to reflect optimism in the business community.

The Finance Ministry nevertheless sounds a warning on global hazards. "The phase of fastest growth has apparently been passed in the global economy, because the rise in the price of oil is weakening possibilities for consumption, and is bringing uncertainty to the private investment environment", the survey says. According to the forecast, the United States will tighten its monetary and financial policy to fix the deficits in public finance and the balance of trade, and in the euro-zone the limited domestic demand will keep growth prospects of production at a modest level. However, the economies of China and India will continue to show strong growth.

From Helsingin Sanomat, Finland, 11 March 2005

Public Finance Plan Would See PIT, CIT and VAT Locked into Flat 18% Rate

Finance Minister Miroslaw Gronicki has announced a public finances management strategy for 2005-2008. Its main points are limiting public spending, introducing major changes to the tax system and a reform of public finances management. It is possible that a new unified tax rate of 18% will be introduced for PIT, CIT and VAT. Reform is, in part, necessary because of EU's stability and development pact, but mainly because Poland needs to create conditions favorable for stable economic growth. Minister Gronicki believes now is the best time for such changes as currently the economic situation is favorable, making reforms easier to implement. The strategy will be introduced in stages in order not to slow down economic growth. It is thus proposed to introduce new VAT rates from next year. The 0, 3, 7 and 22% levels would be replaced by 7, 12 and 20%. In 2007 there would be only two rates: 14 and 19% and in 2008 there would remain only one - 18%. PIT rates would also change, they would be 28 and 35% in 2006, 18 and 25% in 2007 and finally 18% in 2008. The reform would result in lowering public spending by zl.4.53 billion (0.45% GDP) in 2006 and by zl.12.4 billion in 2007. (Rzeczpospolita, March 12-13, pp. A1, B1, B2) D.W.

From Warsaw Business Journal, Poland, 13 March 2005

Minister Defends the £8bn Bill for Public Private Partnership Programme

SCOTLAND'S controversial Public Private Partnership projects will have cost taxpayers £8 billion by 2018-19, according to the Scottish Executive's own figures. Tom McCabe, the finance minister, has released information showing that the burden on the taxpayers of the PPP schemes has risen from just £13.8 million in 1997/98 and will eventually reach a projected £555 million annually by 2018-19. Last night the Scottish National Party claimed that the real figure will be more than £13 billion and condemned the Executive for allowing the banks to make "excessive" profits out of the projects. But a spokesman for the Executive said that PPP had delivered a massive programme of modernisation of schools, colleges, hospitals, and water infrastructure for Scotland over a short period of time. The figures Mr McCabe gave to MSPs show that, from a slow start in the first years of Labour when PPP emerged from the Private Finance Initiative, the amount spent on these programmes - which usually run for 20 or 25 years - increased rapidly.

By 2000-1 it was £108.9 million a year. This financial year, from April, it is projected to be £413.5 million, and it rises steadily over the next 13 years to the projected £555 million. Stewart Stevenson, the SNP MSP who uncovered the figures in a parliamentary answer from Mr McCabe, last night said there would be a huge burden placed on future generations. Mr Stevenson claimed last night that the actual sum would be higher. He said: "These figures relate only to projects up to 2004. Since then there have been a number of new schemes begun and, by my calculations, it could end up with a total bill of £13.8 billion, which is a huge burden on the taxpayers of today and tomorrow." The SNP MSP for Banff and Buchan said that his figures would put the annual burden at £1,257 million by 2018-19. Mr Stevenson added: "This is a substantial commitment which this Executive has made but which binds the hands of future generations of politicians of whatever political colour.

"This is not about denying private companies profit. The logic that you can get everything built by the state does not wash. But the structure of PFI deals delivers unreasonable profits to people like the banks. "And whatever the Executive may say, the ultimate risk is still with the state - what happens if a firm running a school or a hospital goes bust? The Executive will not let them close, that is for sure." Mr Stevenson continued: "Instead of paying silly interest rates, way above what the rate the government itself could get, we could be getting much more for our money. "We should be making this money work harder for us, helping to build up our infrastructure rather than helping to build up excessive profits." The MSP said that the SNP's plan for a Scottish Trust for Public Investment, where the finances would be pooled and so lower interest rates could be negotiated, was a better scheme for the taxpayers.

But last night the Executive hit back emphatically, citing the rebuilding of most schools in Glasgow since 1998 as an example of the scale of work which would not have happened without PPP. Mr McCabe's spokesman said that, across Scotland, PPP already had delivered three major new hospitals - including the new £184 million Edinburgh Royal Infirmary - 80 or so new or refurbished schools, three further education colleges, nine water and sewerage schemes and a road. The spokesman said that one of the main sectors in which PPP is active is in schools where some 300 new or refurbished schools will be provided by 2009. This represented the largest single investment ever made in school buildings, with long-term maintenance locked in to the contracts and project funding. He added: "The benefits of PPP are well recognised. They deliver large capital projects of quality and they deliver them quickly with the risk being borne by the private sector, not the public sector. "The way PPP works is similar to a mortgage - but with the maintenance costs built in. "Of course, you will pay more than you would with cash but the public also gets a well-maintained building at the end of the period. "It is a moot point whether it would be maintained as well if it were not under a PPP scheme."

From Scotsman, UK, by Peter MACMOHAN of Scottish Government, 26 March 2005

Economy-Burkina Faso: For Workers, Privatisation Has Little Appeal

More than a decade ago, Burkina Faso embarked on privatisation of the country's state-owned companies. This process does not appear to have won the confidence of government employees, however - and with another group of public enterprises coming up for sale, their concerns have sharpened. Tole Sagnon, general secretary of the General Confederation of Workers of Burkina is demanding "the end of privatisation of state-run companies, a true and accurate accounting for previous privatisations, and the punishment of (officials) found guilty of committing financial crimes while managing state-run businesses". While government agreed at the start of the privatisation process in 1991 to consult unions in the sale of state assets, workers are unhappy with the way in which these negotiations have taken place. This has prompted Sagnon to call for the employees of public companies to be involved in "all decisions that affect their lives and the future of the country".

The increased concern on the part of workers concerning the latest wave of privatisations is perhaps due to the fact that several firms up for sale are in strategic sectors such as telecommunications, electricity and water provision - and the supply of petroleum. These companies include the Burkinabe Precious Metals Syndicate and two companies that are responsible for mines and geology, and water management and purification respectively. "We are apprehensive," says Georges Kouanda, a staff representative from the National Electricity Company of Burkina (Societe nationale d'electricite du Burkina, SONABEL). "The studies on this subject show that this reform will in no way benefit the Burkinabe government nor, more specifically, SONABEL personnel." These words are echoed by Sagnon."Right now, electricity is already expensive. It will be even more expensive after privatization," he told IPS.

At present, SONABEL supplies electricity across almost 14 percent of Burkina Faso's territory - a figure it plans to increase to 60 percent within the next decade. "To reach this goal, a huge investment programme...has been adopted, estimated at 240 billion CFA francs (about 480 million dollars)," Cheick Omar Bony of the company's communications office told IPS. For its part, government maintains that workers have been kept abreast of developments in the privatisation process. "The rights of workers in the privatised enterprises have been respected," Commerce and Business Promotion Minister Benoit Ouattara said at a press conference recently. "No privatisations have been conducted without first consulting worker representatives." The sale of public companies, adds Placide Some, president of the National Privatisation Commission, is also central to "improving the quality of service and reducing costs to support growth" at state firms.

In addition, the Ministry of Finance points out that subsidising loss-making government companies has taken a heavy toll on public finances. In 1991, the state needed about 41 million dollars to keep a number of companies which have since been privatised afloat. However, the profits from selling off these firms netted government a profit of over 43 million dollars by December 2003. The companies in question included Air Burkina, and the Burkina Leather and Pelt Company. Government also claims that investments in these enterprises rose from 4.6 million dollars in 1991 to 50 million dollars by the end of 2003. But, say workers, these figures tell only part of the story. "Each privatisation leads to new lay offs," Moussa Kaboré, who lost his job in a government transport firm, told IPS.

And, he says, such lay offs have far-reaching consequences in Burkina Faso, where people have large families: "In a country where a worker supports about ten people, you can understand why we resist privatisations which lead to hardship." Sidy Barry, a lawyer who teaches at the National School of Administration and Magistracy, questions whether government may be failing in its responsibilities to Burkinabe citizens by selling off public firms. "Who better than the state can take care of people? By privatising companies of this sort, isn't (government) simply mortgaging the development of the country and its people?" he asks. In instances where privatisation does go ahead, economist Moussa Nogo believes a more considered approach needs to be adopted. The sale of state assets, he says, needs to be combined with developing the "participation of personnel (from government companies)...and small investors" in the private sector. To date, 27 state-owned firms have been privatised.

From AllAfrica.com, Africa, by Tiego Tiemtore of Inter Press Service Johannesburg, 8 March 2005

... Says Nass Sabotages Privatisation

President Olusegun Obasanjo has, in a letter to the Senate, accused the National Assembly of trying to create unnecessary bottlenecks to scare away investors and undermine the whole privatisation exercise while rejecting amendments to the privatisation and commercialisation Bill. The president noted that some of the amendments will spell doom for the entire privatisation exercise, pointing out that the amendments were clear cases of interference and encroachment into executive functions by the National Assembly. The letter read on the floor of the Senate by the Senate President, Adolphus Wabara, yesterday indicated President Obasanjo's rejection of the Bill even as the president appealed to the senate to reconsider its position and amend the Bill by, among other things, deleting the sections considered undesirable in the overall interest of the nation to enable him (Obasanjo) assent to the Bill.

Obasanjo has, in a letter to the Senate, accused the National Assembly of trying to create unnecessary bottlenecks to scare away investors and undermine the whole privatisation exercise while rejecting amendments to the privatisa-tion and commercialisation Bill. The president noted that some of the amendments will spell doom for the entire privatisation exercise, pointing out that the amendments were clear cases of interference and encroachment into executive functions by the National Assembly. The letter read on the floor of the Senate by the Senate President, Adolphus Wabara, yesterday indicated President Obasanjo's rejection of the Bill even as the president appealed to the senate to reconsider its position and amend the Bill by, among other things, deleting the sections considered undesirable in the overall interest of the nation to enable him (Obasanjo) assent to the Bill.

President Obasanjo said in the letter: "A situation where the National Assembly is given a blanket power under the law to, at its discretion, review or even overturn any action taken or anything done by government in respect of a privatised or commercialised enterprise is, no doubt, capable of undermining and making mockery of the whole privatisation process. In the same vein, a situation where the National Assembly has to investigate, determine and approve before any financial assistance or subvention could be given to a commercialised enterprise by government is, to say the least, an encroachment on executive functions as it amounts to running the affairs of such commercialised enterprises by the National Assembly. This, no doubt, is against the letter and spirit of the principles of separation of powers enshrined in the 1999 constitution."

Obasanjo who in fifteen instances, cited the National Assembly's encroachment into his powers, sounded clearly that the lawmakers have no right to have a say on crucial issues that have to do with the privatisation exercise that include, determining enterprises to be privatised and confirming the appointment of chairman and non-ex-officio members of the National Council on Privatisation. The president pointed out that amendment to section 30(3) of the Bill empowering the National Assembly to appraise actions of privatised enterprises in the over-riding public interest is "too wide and sweeping which could easily undermine and make a mockery of the whole privatisation process as well as capable of scaring away investors from participating in the exercise."

"With all due respect, the Senate will agree with me that, a situation where an investor who might have borrowed money from a bank to invest in a privatised enterprise would have to wait for the National Assembly to amend the law establishing that enterprise to give full effect and legal framework before such an enterprise could operate in accordance with its new status is, no doubt, a serious dis-incentive that will scare away investors from participating in the exercise," the president explained. President Obasanjo in the letter, rejectec1"non-inclusion of specific provision for the removal of members of the National Council on Privatisation (NCP) and the Director-General of the Bureau for Public Enterprises (BPE). He then proposed six conditions that includes, 'breach of code of conduct or serious misconduct in relation to duties.

Others are, conviction for felony or any offence involving dishonesty, corruption or fraud and if the president is satisfied that it is not in the interest of the council or the interest of the public that the member should continue in office and the president removes him from office. The president maintained that to ensure transparency in the conduct of government affairs and to enable him assent to the Bill, all undesirable sections should be deleted. The Sections are, 7(3), 12, 16, 30(2), 30(3), 11(2).

From AllAfrica.com, Africa, by Isa Sanusi of Daily Trust,Abuja, 16 March 2005

Obasanjo Vetoes Privatisation Amendment Bill

Rivalry between President Olusegun Obasanjo and the National Assembly was rekindled yesterday as the president accused the legislature of excessive interference in executive matters. The president made the accusation while lambasting the National Assembly over the Privatisation Amendment Bill. He, however, vetoed the bill. President Obasanjo, in a letter to Senate President, Chief Adolphus Wabara, read on the floor of Senate also returned the bill to the Senate for proper re-working and deleting of alleged offensive sections. According to him, certain provisions of the bill as passed by the National Assembly, are clear case of undesirable interference and encroachment of the lawmakers into executive functions.

He described as unnecessary, Section 1 (1) (4) of the bill which required the National Council on Privatisation (NCP) to present (at the beginning of the fiscal year) to the National Assembly for approval, a list of public enterprises slated for privatisation. "It is purely an executive function which does not require involvement of the National Assembly," the president informed the lawmakers. He also noted that Section 5 (7) of the bill, which empowered the National Assembly to amend the law establishing a privatised public enterprise. "will inevitably discourage and scare away investors from participating in the privatisation exercise due to inherent risk it poses." According to him, Section 7 (3) of the bill is a clear case of interference into executive function which amounts to near running the affairs of commercialised enterprises of the National Assembly." "In view of the above, I am constrained to return the bill herewith, with a passionate appeal to the Senate to reconsider its position and amend the bill by among others things, deleting the sections considered undesirable in the overall interest of the nation and in order to ensure transparency in the conduct of government affairs," he added.

Meanwhile, the bill to repeal the Federal Capital Territory (FCT) Act sailed through the second reading yesterday in the Senate. The bill, sponsored by Senator Isa Maina (Abuja) is seeking to provide a democratic structure for the running of FCT like every other state of the federation, in accordance with section 299 of the 1999 constitution. The bill, which received the overwhelming support of senators, is also seeking to create an FCT council, a body that would have oversight function on the FCT. Briefing newsmen later, Senator Maina explained that the bill was a prelude for the possible creation of a mayor for Abuja, adding that proposals for such have been forwarded to the National Political Reform Conference. He said the bill, when passed, will check the excesses of both the FCT minister and chairman of the Federal Capital Development Authority (FCDA).

From AllAfrica.com, Africa, by Cosmas Ekpunobi of Daily Champian, Lagos, 16 March 2005

India to Raise More than US$1b Through Privatisation

New Delhi - India plans to raise more than a billion dollars in fiscal 2005-2006 by selling state-run companies, Finance Minister Palaniappan Chidambaram said announcing his government's privatisation plans for the next financial year. Though there were no targets, he told the BBC he expected to garner 50 billion to 70 billion rupees (1.1 billion to 1.5 billion dollars) during the financial year starting April 1, once the cabinet cleared the names of companies he planned to put up for sale. In presenting his budget last week, his second since a left-leaning Congress-led government took office in May, Chidambaram made no mention of his privatisation plans and said he had left them out of his speech purposely. "(Disinvestment) is off-budget now," the Press Trust of India news agency quoted Chidambaram as telling the BBC. "I just have to raise (funds through privatisation) over a period of time. So this gives us much greater flexibility."

It would also help the government scout for the best price in the market, he said, adding that there would now be no artificial pressure to raise the money by March 31 every year. Proceeds from the sales would go into a "corpus fund" which would be invested in public sector mutual funds to enable the government to earn returns on it, the minister added. "This fund has been set up and we have a list of companies that will have to be approved (for privatisation) by the Cabinet Committee on Economic Affairs." Chidambaram, who has faced stiff opposition from India's left-wing parties to the privatisation of state-owned companies, said the returns would be deployed in public sector spending. In their common policy document, the Congress and its allies, including the left-wing parties who are providing crucial outside support, pledged not to sell off "profit-making state-run units." "All privatisations will be considered on a transparent case-by-case basis," the document said.

Successive finance ministers have in the past announced privatisation targets in their budgets but in most cases missed the deadlines to raise the money. Chidambaram said the budget had "not strayed" from the path of reform, launched in 1991 by then finance minister Manmohan Singh. Singh now heads the Congress-led government as prime minister. "We have not strayed from the path of reforms... We will try to get some external audit to measure the outcome of major programmes," Chidambaram said. He said most Indians were happy with his budget proposals, including industry which thought it was "pro-growth." "My party is happy and my alliance party is happy."

From Channel News Asia, Singapore, 6 March 2005

Public-private Partnership for Core Sector Underscored


Can India follow the UK's example of public-private partnerships (PPP) to build infrastructure to meet public needs? If Stephen Harris, head-international, International Financial Services, London and John Davie, director, Vector Management are to be believed, then India, like Britain, can also form similar public-private partnerships. Today the UK depends on PPP to build and manage schools, transport, water, hospitals, prisons and even managing air traffic control at the airports. Harris, Davie and Kamala Sekar, head-export finance and PPP promotion, UK Trade & Investment, part of the expert PPP team, were in Mumbai after a whirlwind round of meetings with the central and various state government bodies to discuss the possibilities to share expertise in setting up these partnerships in India.

"No government today can support the kind of infrastructural needs that are required by a country's growing population. After 25 years of working with this model, we have an expertise that can be modified to a country's requirements," said Davie. Today more than 700 projects across various sectors come under the PPP umbrella in the UK leading to cost efficiencies and mitigating increased cost risks related to time overruns. Added Harris, "PPP, unlike privatisation is a contractual relationship. In privatisation operations are taken out of government control, whereas in PPP the government controls the output specifications given to the private player with no interference in the running of the project."

Setting up a PPP involves a central task force in, ideally the ministry of finance to frame policy and liaison with state governments and other departments as well as a strong regulatory body to ensure that the specifications are met. "The government states what it requires in the long run, a projection that can run from 20-30 years and one that looks at the mega picture," said Sekar. The project goes through a bidding process, where Harris and Davie feel, the player with maximum expertise should win over the player that is the lower bidder. "It's the only way to ensure quality," they said. Currently, India has seen a few disinvestments and the build-operate transfer model between the public and private sectors. But Harris and Davie feel that to meet growing infrastructural requirements, India will need to move beyond these models.

From Ahmedabad Newsline, India, 21 March 2005

Privatisation Target Easy to Meet: Indonesia

Hong Kong - Indonesia aims to reduce the number of state-owned enterprises to less than a third of the present 158 by a combination of mergers and privatisations, State Enterprise Minister Sugiharto said. Southeast Asia's largest economy hopes to raise 3.5 trillion rupiah ($374 million) in 2005 from the sale of stakes in government companies, a plan vital to reducing its budget deficit to 0.8 percent of gross domestic product (GDP) from 1.3 percent last year. "My plan is to corporatise, profitise and privatise," Sugiharto told Reuters in an interview and added that the government should easily meet the current year's privatisation target. "Given the timing and the current sentiment is not a difficult exercise, I have a shopping list to sell. This could include banks and mining companies."

But Sugiharto declined to name the companies that would be privatised, calling it a sensitive issue, but he said the list included names that were approved by the parliament in 2003. Currently, 17 listed companies in Indonesia are state-run and they account for 32.5 percent of the total market capitalisation, underlining the dominance of the government in the corporate sector. Sugiharto said his primary aim was to enhance operational efficiencies rather than shifting the balance of dominance. "Many good and reliable companies in the future could be state-owned ... privatisation is not only soliciting funding for the company but also accelerating the implementation of good corporate governance," he said.

He said that he was willing to increase the free float in the country's third-largest lender, PT Bank Negara Indonesia Tbk, after it had met certain targets. "I am trying to challenge the management to increase value by two to three strategic initiatives," he said. These included enlarging networks to tap the core business, increasing its price-to-book value, which was below the sector's average and "value addition through inorganic growth". Sugiharto did not give details of this acquisition strategy but he had earlier, at a business seminar, emphasised the need for the banking sector to consolidate. "We believe that there are too many banks in Indonesia right now ... a further consolidation of the banking sector is important," he said. Firms in industries that are strategic in nature or which had public service obligations would continue to be controlled by the government, Sugiharto said. The remainder could be considered for privatisation if they met the operating excellence benchmarks, he added. - Reuters

From Daily Times, Pakistan, 19 March 2005

Benn to End Link between Aid and Privatisation

Britain is to announce that it will no longer urge poor countries to privatise large swaths of industry or open their markets to foreign trade overnight as a condition for receiving development aid. The international development secretary, Hilary Benn, will announce the policy change at a high-level forum of the Organisation for Economic Cooperation and Development in Paris today on aid effectiveness. He will not entirely remove conditions, as countries with high levels of corruption or human rights abuses will still struggle to receive British aid, but those with good governance and poverty reduction strategies will have much less trouble receiving money.

John Hilary, director of campaigns and policy at the charity War on Want, said: "This is a welcome first step in delinking British aid from harmful policies such as privatisation and trade liberalisation. "The British government's support for such policies has always been incompatible with its stated commitment to poverty reduction." So-called "conditionality" has been widely criticised for increasing poverty among vulnerable groups in the developing world, and the credibility of the British aid programme has suffered as a result, say campaigners. Mr Benn will press fellow donor countries and the World Bank and International Monetary Fund to relax their conditions under which poor countries receive aid, in the interests of greater poverty reduction as well as aid harmonisation by rich country donors. Mr Benn will say that it is important that developing countries have a greater say in how the aid money they receive is spent as well as greater certainty that aid would flow in the long-term. Donors should focus more on outcomes such as the number of children in school or levels of poverty rather than the specific means to achieve them, he will argue.

Britain is involved in moves to jump-start efforts to achieve the internationally agreed millennium development goals, which include halving the numbers of people living on less than $1 a day and getting all children into primary school by 2015. Mr Benn has long had misgivings about the so-called Washington consensus - the policies urged on developing countries by the IMF and World Bank - and has been working on his proposals since early last year. "We want less stringent conditions on aid and this is what we are now committed to. We hope it will set an example to other donors," said one official. Commenting on the policy paper Mr Benn will present, Patrick Watt, an ActionAid spokesman, said: "The paper contains much positive language on the need to stop tying aid to specific policies in poor countries. It makes a qualified admission that the Washington consensus on structural adjustment policies has failed."

From Guardian, UK, by Ashley Seager, 1 March 2005

Political Issues in Russian Privatisation Legacy

How to defuse the heat on what went wrong and why it isn't easy - A partial revision of the privatisation results in Ukraine is among the first priorities of the new government. Prime Minister Yulia Timoshenko has announced that the courts will look into the privatisation of 3,000 enterprises. Russia is attentively following developments, since Russia's privatisation drive was conducted on almost the same pattern as its Ukrainian counterpart (primarily, for major enterprises), which means it has similar problems.

In the 1990s, when the Russian government declared it would make the transition from a command to a market economy, the country was confronted with the task of creating the basis for this economy, i.e., private property. The easiest way to do this was through a large-scale privatisation drive of state-owned, public and municipal property. It was largely a political decision. How effectively this property would be used, the benefits for the state as it gave away its assets for a song, the compliance of the privatisation mechanisms with legislation, and raising living standards - was thus relegated to the background.

Maxim Boiko, a high-ranking official of the State Property Management Committee in the 1990s, recently admitted his main task was to transfer the former state-owned property into private hands as soon as possible. "We did not think about effectiveness at that time," he said. Each Russian citizen received a voucher, i.e., a privatisation certificate, giving him the right to a chunk of state property. In advertising the voucher campaign, Anatoly Chubais, chairman of the State Property Management Committee at that time, declared each voucher was worth two cars. When it turned out later that the real value of a voucher for most Russians was no more than that of a bottle of vodka, it was already impossible to turn the clock back.

Surveys show two-thirds of Russians believe privatisation to have been illegal and even criminal. They are not ready to accept and support the political decisions of the 1990s, and are waiting for new ones. The only sensible way to avoid major social upheavals is to transfer the problem from the political onto a technical plane. If legal violations occurred during the privatisation of state-owned property, it is a matter for the courts. Ms. Timoshenko proposes to pursue this option in Ukraine and there can be no certainty that all the 3,000 enterprises she talked about will be linked to illegal privatisation cases. Whatever the case, the court must rule by law and finalise matters. Some mid-level Russian businessmen have long taken this road.

Last April, the Russian government tried to close the book on the privatisation decade, but in a milder way (superficially at least) than the current Ukrainian version. Accord-ingly, revision of the 3,000 privatisation transactions made in Ukraine over the past five years was announced following an inspection by the prosecutor-general's office. In Russia, the Audit Chamber did similar work. Although it is an authoritative agency, it is not part of the law-enforcement branch. Last April, the Audit Chamber prepared a report on both, voucher privatisation and loans-for-shares auctions. It assesses privatisation as a whole and individual cases connected with major enterprises. The State Duma was scheduled to discuss the report in December, but the hearings were postponed until spring, because the document met with a great political outcry in Russia.

From Financial Express, India, by Yury Filippov, 4 March 2005

Privatisation Agency Plans at Least 500 Sell-offs in 2005

Belgrade - Privatisation Agency Director Miodrag Djordjevic has said that nearly one half of socially-owned enterprises have been privatised so far, with 1,406 companies sold for a total of €1.5 billion. This year's plan is for at least 500 enterprises to be sold, he said and added that 300 of them will be auctioned, 18 will be offered at tenders, and between 200 and 220 through the sale of shares from the state Share Fund. Djordjevic told today's Vecernje Novosti daily that 31 enterprises were sold in the first two months of the year. One was sold through a tender (Veterinarski Zavod for €9.1 million), 16 were auctioned off for a total of €5.5 million, and the Share Fund sold its minority stakes in 14 companies, raising a total of €9 million. He added that €4.1 million of this sum is the Pension Fund's stake in mineral water firm Knjaz Milos.

He said that the privatisation process should be carried out much faster, adding that it is not about the Privatisation Agency being slow but rather a consequence of actual circumstances. According to him, privatisation started with the best performing enterprises, since they had their market positions and had attracted buyers' interest. It is now the indebted companies' turn to be put up for sale, said Djordjevic. The Privatisation Agency has so far initiated cancellations of the purchase agreements of 141 companies, which, combined with those whose sell-offs are at the brink of cancellation, make up some 20 percent of the entire privatisation process, according to Djordjevic.

He said that foreign companies have acquired only five percent of the privatised enterprises, but given that these enterprises were the most expensive, their share in total privatisation revenues has amounted to over 60 percent. Domestic buyers have purchased most of the privatised companies thanks to the option to pay in installments, Djordjevic said. Speaking about the problem of "bad" buyers, Djordjevic recalled that the laws on privatisation and the Share Fund will be amended to allow for a prompt termination of a contract, without taking the case to court. Also, under new regulations, the Share Fund will administer the company until a new sale, which will enable the Privatisation Agency to work faster.

From Harold Doan and Associates, California, USA, 7 March 2005

Privatization Progress In Central Eastern Europe

In terms of the private sector share of gross domestic product, the new EU member states from Central and Eastern Europe (CEE-8) have achieved substantial convergence towards the developed Western countries. Private activities generate over 80% of national income in the Czech Republic, Estonia, Hungary and Slovakia, 75% in Lithuania and Poland, 70% in Latvia and 65% in Slovenia. Furthermore, the 2004 Transition Report of the European Bank for Reconstruction and Development gives the whole CEE-8 a ranking of 4.3 (in a range of 1.33 to 4.33) in small-scale privatization, a structural indicator comparable to the average of advanced capitalist economies. In contrast to the Soviet successor states (e.g., Armenia and Georgia), whose high private income shares reflect the outsized role of retail trade and services with little value-added, private small and medium-sized enterprises in CEE make a significant contribution to regional manufacturing and local job creation along with a growing integration in foreign trade.

However, nearly a year after EU accession and 15 years after the 1989 revolutions, the CEE-8 still exhibit significant gaps in large-scale privatization. The EBRD identifies Poland and Slovenia as the main laggards, with Latvia and Lithuania occupying intermediate positions behind the Czech Republic, Estonia, Hungary and Slovakia. However, even early reformers like Hungary, which began large-scale privatization in the early 1990s, have encountered delays privatizing major state-owned enterprises. The CEE-8's remaining SOEs are clustered in four sectors: financial institutions, energy, telecommunications and transport. In November 2004, Poland's Treasury Ministry divested its shares of PKO BP, the country's largest state-owned bank, via a public issue on the Warsaw Stock Exchange (WSE). Ministry officials conceded that the offer price was lower than what might have been obtained -underscoring that political considerations can influence the use of public offerings as a divestiture tool in CEE. Major insurer PZU may follow this year.

Following the global trend towards cross-border consolidation, foreign mergers and acquisitions are driving bank privatization in other CEE-8 countries, where political concerns over the remaining "national assets" being bought by foreign firms are generally less than in Poland. For example, in January 2005, Austrian-based Erste Bank exercised an option to purchase the residual 20% shares of Slovakia's Slovenska Sporitelna to supplement its assets in Czech Republic, Hungary, Slovenia and Croatia. Possible candidates for further privatization in Hungary include the Land Credit and Mortgage Bank.

Under pressure from the EU to restructure their energy sectors, CEE governments are turning to strategic foreign investors to buy shares in state energy companies: The authorities in Bratislava are in discussions with Italy's Enel to sell 66% of power monopoly Slovenske Elektrarne; Nafta Polska, the state agency overseeing energy privatization in Poland, is negotiating with ConocoPhillips (nyse: COP - news - people ), possibly to purchase a 17.5% stake in oil group PKN Orlen; PKN is expected soon to finalize its purchase of a 63% stake in the Czech Republic's Unipetrol, signalling the growing importance of intraregional investments in CEE power; and regional investors are also figuring importantly in the divesture of state shares of Hungary's energy giant MOL, which initiated trading on the WSE in December 2004 to augment its long-standing listing on the Budapest bourse.

However, political factors have impeded energy privatization in CEE-8. For example, citing unacceptably low bids, the Czech government cancelled a tender for coal-mining firm Severoceske Doly in March 2004. The low offer prices reflected conditions (notably the effective exclusion of foreign buyers) imposed to avoid mine closures. The country's accession to the EU removed the foreign investor restriction and opened the way for a renewal of the Severoceske tender in 2005. The government must now reconcile the allure of an attractive offer price (which would boost privatization revenues to lower its budget deficit) with the socio-economic fallout of a foreign divestiture (which might heighten unemployment at marginal mines). The government has postponed the privatization of energy firm CEZ beyond the 2006 parliamentary elections.

The Czech government has pursued a more proactive strategy in the telecoms sector, launching an aggressive restructuring of Cesky Telecom (CT)--the last state-owned telephone company in the CEE-8--to maximise the firm's attractiveness to foreign buyers. From a $78 million loss in 2003, the company reported a $235 million profit in 2004, the best performance of any telecoms operator in CEE. This will be the country's flagship privatization this year. Government authorities have invited tenders from five bidders (including Belgacom, Swisscom, Telefonica and Tiscali), whose final offers are due by March 29, and anticipate proceeds surpassing $2 billion for the 51.1% stake.

Rising fuel costs, eroding pricing power and diminishing margins have complicated divestiture of CEE-8 transport sectors. The Czech Republic has deferred privatization of Czech Airlines and Czech Airports until after the 2006 elections. Similarly, the Hungarian government has postponed selling railway firm MAV and bus company Volan until after the next electoral cycle. However, Hungarian officials are proceeding with plans to divest state shares of troubled national airline Malev - problems in privatizing the company have exemplified the challenges to divestiture of state-owned carriers in CEE.

The CEE-8 stock exchanges (led by Slovakia, Slovenia and the Baltic states) posted stellar performances in 2004, well surpassing those of the West European bourses. This largely reflected the salutary effects of EU accession, strong GDP growth and increasing trading activity. However, the regional stock market surge also demonstrates the growing use of initial public offerings as a privatization method in CEE. This phenomenon is most pronounced on the WSE, which, in addition to issues by MOL and PKO, has served as an IPO platform for Polish liquor companies (Polmos Lublin) and biotechnology firms (Bioten). Notwithstanding the controversy surrounding the PKO offer price, the CEE stock markets will be important mechanisms for divestiture of the region's remaining state banks.

Yet IPOs are unlikely to become dominant privatization venues for CEE's energy, transport and telecoms sectors, whose large capital requirements favor strategic foreign investors. Among a dwindling number of regional divestiture targets, those sectors are apt to attract the bulk of privatization-related foreign investment as "second wind" FDI ramps up in the new member states. Economic factors--namely the absorptive capacity of local equity markets and the strategic calculations of Western investors - are likely to shape the final phase of CEE privatization during the second half of the decade. However, political sensitivities remain, and will continue to complicate and potentially delay some major sell-offs.

From Forbes, (by Oxford Analytica), 10 March 2005

Putin Promises to Set 1990s Privatisations in Stone

Russia's President Vladimir Putin took a big step to draw a line under the Yukos affair when he told Russian business on Thursday he would make it impossible to reverse the controversial privatisations of the 1990s, analysts said yesterday. Mr Putin's surprise initiative seemed aimed both at reassuring foreign investors and at reinforcing a truce with Russia's remaining "oligarchs", whom he needs to invest to help meet his goal of doubling Russia's gross domestic product in 10 years. Mr Putin told a meeting of 24 of Russia's oligarchs he planned to reduce the statute of limitations on privatisations - the time limit during which legal challenges are possible - from 10 years to three. He also promised to rein in Russia's tax police. Mikhail Khodorkovsky, the former Yukos chief executive, is on trial on charges partly connected with a 1990s privatisation, while Yukos has been hit by a $28bn (£15bn, €22bn) back tax claim. The oil group's biggest asset, Yuganskneftegaz, was effectively renationalised to help pay the claim.

Administration officials say they had no choice but to act against Mr Khodorkovsky after he started using his vast wealth to block legislation he opposed. But the Yukos affair has damaged investment growth in Russia, with knock-on effects on economic growth. Capital flight tripled last year to $7.9bn, suggesting business was nervous about keeping money in Russia. Participants in the meeting said Mr Putin was conciliatory. "It was different in tone from recent meetings with the president," said Mikhail Fridman, head of Alfa Group. "It was more informal, it resembled the meetings in the first years of Putin's presidency." Christopher Granville, chief strategist at United Financial Group, said the "road to any further Yukos-style expropriations is looking reassuringly blocked". "Putin aims to put the Yukos affair behind him," he said. The meeting followed rumours that the Kremlin was looking for ways to retake the political initiative and bolster its image. Mr Putin and the government's approval ratings have been dented by mass demonstrations by pensioners over mishandled benefits reforms.

It also came after indications that liberal economic reformers in the government, such as German Gref, economy minister, and Alexei Kudrin, finance minister, were regaining influence. Investors had feared for months that the liberals were losing ground to the siloviki hardline former secret police and military men around Mr Putin, who advocated a stronger state role in the economy. Two weeks ago, Mr Gref had a highly publicised meeting with Mr Putin in which he reportedly warned the president of the toll the slowdown in investment growth was taking on the economy. Mr Gref and Mr Kudrin headed off proposals they strongly opposed from Mikhail Fradkov, Russia's prime minister, to reduce Russia's VAT rate from 18 per cent to 13 per cent, which would have injected $11bn into the economy with likely inflationary effects. Analysts warned investors would be looking for further evidence of Mr Putin's commitment to respecting property rights. Russia's market rallied sharply last year after the president said Yukos would not be bankrupted. The company has since been taken to the edge of bankruptcy by the massive tax claims against it. Al Breach, economist at Brunswick UBS, said Mr Putin had realised he could not reach his growth goals without improving the investment climate.

From BBC News, UK, by Neil Buckley and Arkady Ostrovsky 26 March 2005

European Union Urged to Stop Privatisation

Brussels - Civil society groups are calling for a change of course in the European Union's approach to water and sanitation in developing countries. A consortium of civil society groups, led by the Dutch campaign groups Corporate Europe Observatory (CEO) and Both ENDS, and the Belgian non-governmental organisation (NGO) 11.11.11, says the European Union (EU) must end its preoccupation with private sector expansion and instead support "workable public water delivery options." In a letter sent to EU commissioner for development humanitarian aid Louis Michel to coincide with World Water Day (Mar. 22), the group of NGOs says they are concerned about the way "European aid money and political influence is being used to promote policies that are not working and hinge on providing extra money to European companies, rather than meeting real development needs in water and sanitation."

The EU launched a 500 million euro (665 million dollar) Water Facility for the African, Caribbean and Pacific (ACP) group of countries last year. The European Commission, the executive arm of the EU, says the facility marks a "watershed" in EU development strategy and will drive progress towards the achievement of the millennium development goal of halving the number of people without access to safe drinking water and basic sanitation by 2015. About 1.1 billion people lack access to safe drinking water, and 2.4 billion people to sanitation. Approximately 5 percent of the world's water is run by the private sector but 95 percent of that is by European companies. But the group of NGOs says the "water privatisation wave" during the last decade has "proven a failed experiment." "Concrete experiences in developing countries have shown that multinational water corporations are ill-equipped to deliver clean and affordable water to the poor. Private sector investment has not brought the expected financing for water and sanitation for the poor," they say in the letter. "We believe that faced by experiences of what works combined with the failure of the global private sector, the time has come to refocus the global water debate to the key question: how to improve and expand public water delivery around the world?"

The group says that instead of developing new policies "based on what works," European governments and international financial institutions are devising "new mechanisms for attracting the private sector into water and sanitation, including various financial instruments to guarantee corporate profits." "This ignores the fundamentals behind the private sector's failure and the fact that public utilities continue to supply water to an overwhelming majority of those with access to water in developing countries," the letter says. The NGOs are calling for the EU to provide funding without "blatant political conditions", and say the bloc should use its powers to influence other international institutions. "European public water utilities should be enlisted to assist in meeting the water MDGs through not-for-profit public-public partnerships. In international fora, the EU must use its influence to reorientate the policies of the World Bank and other international financing institutions to end privatisation conditions linked to financial support to those requesting it."

Olivier Hoedeman, research coordinator at the CEO says the group's appeal is timely. "We are writing this letter now because there has been a major change over the last few years and it's become obvious that private water companies are not the people to deliver affordable water to the poor," he told IPS. "The moment has come to say that public water is working and delivers to 95 percent of the population also in developing countries. We need to look at how to make it work for the rest of the population. The EU should really take the lead in promoting this for a number of reasons - it's a major donor and so has a big responsibility.. There is also enormous amount of expertise within European public water utilities and this expertise needs to be mobilised to achieve the MDGs," he added.

During his confirmation hearing at the European Parliament in October, Commissioner Michel said public services were "key to meeting basic needs in developing countries" and that "essential services should be exempt from market pressures." While the NGOs welcome Michel's comments, they insist that he must act upon them. "Michel said some very encouraging things and made it clear that he does not support privatisation as the solution to the water crisis, so that is something to build on. He now needs to make that clear to his staff in the Commission and we hope that he will follow up on those statements," said Hoedeman. The civil society groups say that such action must come over the next 12 months. "We urge you to ensure that by the next World Water Forum in Mexico in March 2006 the EU will champion a different approach to water and sanitation in developing countries," they said. "By providing the necessary financial and political support for workable public solutions, the EU will be part of the solution rather than the problem."

From Inter Press Service (subscription), World, by Stefania Bianchi, 21 March 2005

Iran Starts Major Stage in Privatization Process

Privatization in Iran is set to take an important step forward as the governmet decided to cede the shares of a large part of its owned companies. 5000 billion tomans (close to US$5.9 billion) of governmental companies' stocks will be offered to market gradually. The Head of the Privatization Organization, Pourhosseini told IRIB that about 700 billion tomans (US$825 million) of the state-owned companies had been sold during the preceding year. According to the report, he added that the organization will offer another 1000 billion tomans (close to US$1.1 billion) at the begining of the new Iranian year, 1384, started on March 21. Pourhosseini expressed hope that all of the US$5.9 billion of the governmental companies' stocks would be ceded by the end of the year. He announced that 69 percent of governmental organizations stocks were sold last year.

From Mena Report, UK, 22 March 2005

Privatization of US Toll Roads and Other Infrastructure Gaining Speed Says White & Case Lawyer

Washington - After privatization of US infrastructure slowed significantly in the 1990s, the concept is rapidly gaining speed now that several international private-public toll road projects have proven successful, according to a project finance lawyer with White & Case. "US states and municipalities are taking a look at many of the structuring and financing techniques and newer tolling technologies employed by overseas transportation projects to see if such techniques can be applied to US projects. Some of those techniques include shadow tolls, managed lanes, free-flow tolling technologies and innovative lease structures that combine public and private financing sources," said project finance lawyer Ned Neaher, who has advised on numerous toll road projects in Latin America and Europe. "Public-private partnerships are now viewed by states and municipalities as an attractive method to obtain budgetary support while ensuring first-class transportation infrastructure is provided to their citizens."

Neaher says that throughout the country, state governments and municipalities are making the decision to privatize toll roads, bridges and
other vital infrastructure in an effort to combat state funding shortages and reduce procurement costs. California Governor Arnold Schwarzenegger recently unveiled a three-prong plan to reduce traffic congestion, including legislation that would allow private construction of toll roads. To offset its $100 billion transportation deficit, Colorado's state legislature is considering privatized toll roads to pay for the construction and maintenance of its 953-mile highway system. And New Jersey's Acting Governor Richard Codey is studying the possibility of leasing one or more toll roads, including the 148-mile New Jersey Turnpike.

In fact, at least 19 states have enacted some kind of public-private partnership program for the transportation sector. "Public-private partnerships in toll road projects like the Chicago Skyway, where the City of Chicago granted a 99-year lease to Cintra Concesiones de Infraestructuras de Transporte (Cintra) and Macquarie Infrastructure Group to operate, maintain, manage, rehabilitate and toll the Skyway, infused $1.83 billion into that city's coffers," said Neaher, who represented Cintra and other developers and financiers in various toll road projects in Chile. "Given the financial crunch that many local and state governments are facing, it's not surprising that US states and municipalities are giving privatization a serious look again."

White & Case has one of the foremost project finance and infrastructure practices in the world, with significant experience advising on toll road projects including the AKA M5 Motorway in Hungary (Europe, Middle East and Africa Infrastructure Deal of the Year by Project Finance International); Autopista del Maipo refinancing (Latin America Refinancing Deal of the Year, Project Finance Magazine); Mexico's Autopista de Nuevo Leon toll road (Americas Infrastructure Deal of the Year, Project Finance International) and Chile's Costanera Norte toll road financing in Chile (2003 Latin American Deal of the Year, Project Finance International).

From PR Newswire (press release), 22 March 2005