April 2005
    Australia: Lack of Investment in Infrastructure Putting Brake on Growth
    France: Public Private Partnership Law Deals Submitted - First French PPP Concluded
United Kingdom: Voters Rail Against Public Services
    Canada: A Cautionary Tale - Are Unsolicited Proposals Worth The Effort?
Canada: Public Private Partnerships (P3s): an International Disaster
U.S.: The U. S. Free Trade Agreement with Central America and the Dominican Republic: How Everyone Benefits
    Nepad Calls for Stop to Reliance on Foreign Aid
    Kenya: Why Western Aid Donors Won't Crack Down on Corruption
Nigeria: NPRC And Anti-Corruption Crusade
Nigeria: Obasanjo's Aide Seeks Adoption of Public Accountability Forum
Government Failures 'Revolve Around Grand Corruption'
Kenya: Diplomats Say They Are Unsure Corruption War is Being Fought
Uganda: Government's New Anti-Corruption Strategy Won't Bite Thieving Elite
Liberia: Sweden Wants NTGL Tackle Corruption to Encourage Donors
Kenya: Donors Grill Kenya Government on Corruption, Reforms
Kenya: Government Spends Sh1.2b on War Against Corruption
Nigeria: Obasanjo: It's Now Zero Tolerance for Corruption
Nigeria: 'Anti-Corruption War, A Political Revolution'
Nigeria: Tukur Hails Obasanjo's Anti-Corruption War
    Cambodia: UN says Corruption in Cambodia Hinders Progress
China, Thailand Boost Corruption Crackdown
Vietnam: PM Vows to Fight Corruption, Waste
Australia: Teachers to Adopt New Code of Ethics
India: Government Pushes for Administrative Reforms
China: China Committed to International Cooperation against Corruption
    Bosnia Herzegovenia: Bosnia Opposition Urges Anti-corruption Laws
Romania: Transparency International's Leader on Corruption in Romania
Ireland: Research and Markets Has Announced the Addition of Ethics and Corporate Social Responsibility in Retail Financial Services to Their Offering
Romania, Bulgaria Sign EU Entry Pact
    United Arab Emirates: The Dubai Ethics Resource Center Teams Up with Five Local Colleges and Universities to Launch the 'Future Leader Program'
Palestinian Authority: Palestinian President Tackles Corruption
    United States: Battle Over Ethics Reform Continues On Capitol Hill
United States: Bush Administration Fails to Support Update of Code of Ethics for International Trade in Foods
United States: Corruption: Congress to Seek Shorter Leash for Global Lenders
United States: Ethics Commission Sees Significant Rise in Complaints
    Better Protection for Small Nations Urged
United Nations Crime Conference to Focus on Responses to Threats Old and New
U.N. Seeks International Response to Crime
USAID Works To Improve Education from Morocco to Philippines
UN Forum Ends With Agreement On Measures To Provide Clean Water, Basic Sanitation And Housing
    Kenya: Team to Monitor Civil Servants Performance
Ghana: Civil Servants Deserve Better Treatment - Chief
Kenya: Will Civil Servants Change?
Nigeria: Civil Servants Condemn Proposed Mass Retrenchment
Nigeria: Labour Takes Civil Service Reform to Confab
Uganda: Leave Politics, Buturo Warns Civil Servants
Nigeria: World Bank Votes N72bn for Civil Service Reforms
    Malaysia: Civil Servants to Attend Mandatory Courses Every Year
South Korea: 180,000 Workers to Get 5-Day Workweek
Bangladesh: Three-phase Pay Hike for Bangladesh Civil Servants in the Offing
Malaysia: Don't Accept Any Gifts, Civil Servants Told
Australia: Public Service Slow to Share
Bhutan: Strengthening Human Resource Management
India: PM Asks Civil Servants To Be Sensitive to Winds of Change
    United Kingdom: Civil Servants in Joint Pay Plea
Ireland: Ministers and Senior Public Servants in Line for Pay Rise
United Kingdom: Labour Would Speed Up Public Service Reform
United Kingdom: Public Service Job Cuts Planned
United Kingdom: Unions Want Action on Civil Service Gender Pay Gap
United Kingdom: Overcoming Resistance to Remote Working in the Civil Service
Russia: Bureaucrats See Civil Service As A Business - Putin
    Yemen: University to Train Civil Servants
Israel: Panel to Examine Appointment of Senior Civil Servants
Israel: Ministers Face Ban on Interfering in Political Appointments
    United States: Bush Ends Civil Service Protections
United States: First International Compliance Awards Honors Those Dedicated to Advancing the Compliance Profession
    United Nations Weighs Ethics Unit to Protect Whistle-blowers
    Pakistan: E-governance to Improve Performance in Pakistan - Leghari
India: West Bengal District First in Rural E-governance
    United Kingdom: Website Self-Service Can Save Taxpayers 1.2 Billion Pounds
Greece: Partnerships between State, Private Sector
United Kingdom: We Will Harness Power of IT and Continue E-gov Work, Says Blair
United Kingdom: Global Alliance to Hold IT 'security day' in London
Ireland: E-government for Everyone
Europe Setting the Pace in E-business - We're All Switched On
E-government: Italian Models Appreciated Abroad - MIT-RGS Agreement
E-government on Agenda of Most European Cities
    Qatar: Qatar Providing Top Class E-services
Oman: Lecture on 'E-government to E-governance' Held at KOM
Saudi Arabia: Stage Set for Switchover to E-Governance
    United States: Virginia Launches Integrated E-Gov Web Application
    Citizens Not Using E-gov, Prefer Telephone
Cisco Systems to Sponsor 2005 Wireless and Mobile WorldExpo
United Nations E-governance Panel Focuses on Spam, Web Governance
India, Nepad in Talks Over Satellite Network
IT Briefing: PolarLake 'e-Government Integration' Solution
Jury Is Still Out On E-government
E-government Shortfall
Canada Again Leads in E-government
US, Switzerland and Slovakia the Biggest Gainers in Economist Intelligence Unit's Sixth Annual E-Readiness Rankings
    Kenya: Government Wins Over Donors
Zambia: IMF Approves $3.9 Billion Zambia Debt Relief
Comoros: Government Outlines Be Austerity Measures to IMF
    Japan: Financial Stability Threatened by Deposit Cap System
south Korea: Finance Ministry Bolsters Free Economic Zones
South Korea: Tax Burden Estimated at Record High
Thailand: Thailand Plans to Lift Public Spending
    Russia: Russian Finance Minister Bemoans"Stupid" Economic Policies
Czech Republic: Czech Euro Bonds Find Eager Buyers Abroad
Serbia and Herzegovina: IMF Demands Cuts in Spending
Greece: Reform of EU Fiscal Fules Doesn't Let Countries Off Easy
Czech Republic: Czech Republic to 'Graduate' From World Bank Borrowing
Greece: Inflation Set to Hit 4 Percent, BoG Warns
    Yemen: US to Grant $5.0 Million to Support Yemeni Commercial Judiciary
    Jamaica: Income Tax Threshold in Jamaica to Be Increased
United States: Timid, Yes, But Only the Conservatives Know How to Balance the Books
    Finding Consensus On Global Economy - Finance Chiefs Agree on Need for Change
Mexico, Russia to Increase Domestic Borrowing as Rates Rise
Asia, Africa Need New Strategy for Cooperation
G7 Issues Upbeat Growth Outlook, Pledges Action on Trade Imbalances
Major Finance Ministers Say World Economy Performing Well
UN Will Host Finance Ministers, Development Decision Makers, at Headquarters, 18 April
World Bank President Appeals to Rich Countries to Help Educate 100 Million Child
    South Africa: Private, Public ICT Partnerships Best for Government
Kenya: Kenya Says to Speed Up Privatisation with New Law
World Bank Gives $77m for Railway Privatisation
Libya: Urso, Italy to Sieze Privatization Opportunity in Libya
Morocco: Privatization Earns Morocco 7.55 billion Euros in 11 Years
    Private Sector Key to Growth, Poverty Reduction: Asian Development Bank
Austrialia: Public-private Rules to Change
India: PM against Excessive Privatisation of Health Care
Sri Lanka: Anti-privatisation Stir in Sri Lanka
India: Is Privatization Panacea for All Ills?
    Ireland: PPPs Not Yet A Success, Says Law Firm
Greece: Time for A Debate on Privatisation
Russia: Will Russia Announce a Privatization Amnesty?
Russia: Putin Promises Further Liberalization, Privatization of 8,000 Enterprises
Lack of Will Slows Down Eastern Europe's Privatization
Russia: Russia's "Privatization Amnesty" Law Is Ready - Minister
Georgia: Disagreements Emerge over Land Privatization
Ukraine: Yushchenko Wants Analysis of Previous Deals
Ireland: Privatisation Is Way Forward, Says Walsh
Georgia: PM: Georgia Welcomes Russian Investments
Serbia-Montenegro: U.N. Sets Rules for Kosovo Privatization
Ukraine: Ukraine Court Reverses Own Ruling on Illegal Privatization of Steel Giant
    Iran: "Iran's Privatization Organization Claims Early Success"
Iran: Iran's Central Bank's Privatization Opposed
Iran: Iran's 'Privatization Bill' Ready Next Month
Israel: Neutralization, Not Privatization
    United States: Political Face-Off: A Closer Look at Social Security Privatization
United States: The Average American Loses under Bush Privatization Plan
United States: AFL-CIO Protests Social Security Privatization
United States: Privatization Brings Big Savings to Michigan's State Universities
United States: GPO Seeks Public-Private Partnership
United States: Privatization Question Spurs Faculty Debate

Lack of Investment in Infrastructure Putting Brake on Growth

Economic development is being blocked by a $25 billion backlog of infrastructure investment to upgrade water, energy and land transport, the Committee for Economic Development of Australia says. The committee, a business think tank, blames federal and state governments for stripping money from the public investment required to meet future development. The committee says much of the nation's infrastructure is at a crossroads after two decades of underinvestment. It points to a mismatch between public and private sector capability, saying the gulf in infrastructure needs has widened despite Australia's world-class management skills and technical expertise. "Even with large increases in tax revenues and aggressive 'dividend stripping' of government trading enterprises, the infrastructure investment required to meet Australia's present and future needs has not materialised," it said. "Simultaneously, large capital resources are accumulating in the private sector, particularly in superannuation and managed funds, which could be increasingly tapped for infrastructure investment."

The committee said private investment in new energy infrastructure had significant potential, but governments continued to delay or avoid investment in new capacity, particularly in those states that had retained public ownership. Supply of significant new works through public-private partnerships seemed unlikely, other than for toll roads. The committee also blamed the long and costly bureaucratic processes afflicting infrastructure planning, saying public administration working alone "seems no longer up to the job". The fall in public infrastructure investment was highlighted by the steady drop in government capital spending, now down to 3.6 per cent of gross domestic product, about half the level of 30 years ago. It said government spending policies and "vexatious Commonwealth-state financial relations, and political considerations" presented "an apparently insurmountable obstacle to overcoming the backlog in Australia's infrastructure".

The Federal Opposition yesterday said the report was an indictment of the Government's neglect, following so quickly an International Money Fund report which cited the constraints that were hitting export performance. The shadow treasurer, Wayne Swan, raised the possibility of Labor looking to the British Government's model of greater private investment in traditionally public enterprises, including building schools, hospitals and public housing. He said Labor would consider private-public schemes as part of dealing with the urgent need to remove infrastructure bottlenecks that were "now seen to be a real handbrake on growth". The Business Council of Australia endorsed the committee's report and called for state and federal governments to unite in a more constructive way. The council's chief executive, Katie Lahey, said getting the right signals for private investment could only be done "by removing the myriad of obstacles and barriers to investment and planning that exist because of the lack of overall co-ordination between the Commonwealth and the states".

From Sydney Morning Herald (subscription), Australia, by Mark Metherell, 15 April 2005


Public Private Partnership Law Deals Submitted - First French PPP Concluded

French Public Private Partnership (PPP) project - research institute within the CHNO (Centre Hospitalier National d'Optalmologie) des Quinze-Vingts eye hospital in Paris considered as the first PPP in France. Linklaters has advised the "Caisse des depots et consignations", the "Caisse nationale des caisses d'epargne" and ICADE for the project involving the design, financing and creation of a clinical and biomedical research institute on the site of the Centre Hospitalier National d'Ophtalmologie (CHNO) des Quinze-Vingts (Central Eye Hospital) in Paris. Established in the 13th century (by Saint -Louis), the CHNO is one of the oldest and most prestigious eye hospitals in the world. The Institut de la Vision is a partnership between the CHNO, the Universite Pierre et Marie Curie, INSERM and the Fondation Adolphe de Rothschild. The total cost of the 30-year project is estimated at EUR 30 million. The deal is about to be signed, with construction due to start this month, and completion expected in just over 19 months time.

The transaction has been reported in the French press as the first PPP project since the French government launched its recent PPP policy. In allowing public/private partnerships, the government aims to speed up the completion of complex public building constructions in France. It is also the first important healthcare sector PPP outside the "Plan Hopital 2007" to be awarded. Paul Lignieres, head of public law - PPP department, Linklaters in Paris, said: "We are proud to have taken part in such a pioneering project which will open the way to similar partnerships between public and private sectors in France. Considering the long-standing public tradition of our country, this is indeed a big step forward". The Linklaters team included Paul Lignieres (public law/PPP), Bertrand Andriani (projects), Simon Ratledge, Ruxandra Lazar and Nicolas Panayotopoulos.

From Lawfuel (press release), New Zealand, 15 April 2005

Voters Rail Against Public Services

London - "Would you wipe somebody's backside for five pounds an hour," nurse Marion Brown asked Prime Minister Tony Blair on live TV. Great-grandmother Valeria Halsworth told him she yanked out seven of her own teeth because she couldn't find a dentist. "It would be nice for somebody to take them out properly for me," she said. Voters feel passionately about the state of their public services. Health, education, crime and the country's much lamented transport links are key battlegrounds in next month's election. The railways have long been the butt of media scorn, as leaves on the tracks, snow on the lines or too much sunshine bring parts of the network to a virtual halt. "Overcrowded, late, cancelled. You name it, it's happened," said salesman Dale Chatfield, 49, after commuting in to a gritty London station. "The new carriages are like cattle trucks." In a recent heatwave, Londoners crammed into aged train carriages in conditions deemed unfit for transporting cows. Temperatures on the world's oldest subterranean rail network in the capital topped 40 degrees Celsius.

Many voters cannot fathom why Britain compares so poorly. "French trains are fantastic. When you look to Europe, we don't fare too well," said Marco Nadini, 23, a recruitment consultant who calls the service from his southwest town to London "awful," adding "the trains are disgusting". Aware the public services can swing votes, Blair's Labour party and the Conservatives are engaged in an all-out war over their promises to make things better. The cherished National Health Service (NHS) is on the front line. Health topped voters' priorities in a recent MORI poll. Education was third after race/asylum and crime was fourth.

Blair - expected to win a third term on May 5 - argues that Labour has made progress, bemoaning a legacy of under-investment in the public services after 18 years of Conservative rule. But the Conservatives say the world's fourth-richest country deserves better than hospitals riddled with a killer superbug, schools beset by truancy or cities plagued by violent crime. They accuse Blair of wasting billions of pounds of taxpayers' money over the past eight years without results. Many voters agree cash has been squandered, polls show. "My poor doctor is grossly overworked -- he showed me his list of patients," said Alex Starkey, 81, emerging from an ugly tower block at a sprawling London hospital. "He's completely demoralised and is thinking of packing it in." Campaigning on a message of cleaner hospitals, the Conservatives have homed in on a rise in the MRSA superbug. Party leader Michael Howard says his mother-in-law died three years ago of a hospital-acquired infection.

Public Scepticism - Labour has invested heavily in the public services. There are more nurses, doctors, teachers and policeman than in 1997 when Blair came to power and hospital waiting times are down, government figures show. But scepticism over statistics feed into a public mood that services overall have not got better or not fast enough. "People who've had a good experience think that they're lucky and don't think the public services have generally improved," said Nick Pearce, director of the centre-left think tank, the Institute for Public Policy Research. That perception gap could prove Labour's biggest enemy, although any Conservative attack on Labour's performance on the public services is blunted by its own poor track record.

Former prime minister Margaret Thatcher advocated reduced spending on public services and privatisation of state-run industries. The 1996 privatisation of the railways was widely deemed a failure. Howard means more of the same, Labour charges, calling its health policies elitist and a first step to scrapping the NHS. In contrast, it was Labour in 1945 that put in place the provision of welfare services by the state and founded the NHS. But critics slam Blair's target-driven NHS and education reforms and accuse the government of fiddling the figures. The Conservatives unashamedly propose spending less of the nation's wealth on the public services than Labour. While the percentage difference is tiny, Labour has seized on a Conservative plan to save 35 billion pounds in government waste to claim the party will slash spending on key services.

From, UK, by Katherine Baldwin, 19 April 2005


A Cautionary Tale - Are Unsolicited Proposals Worth The Effort?

Last February, Ontario released Building a Better Tomorrow, billed as "A Discussion Paper on Infrastructure Financing and Procurement'. The Paper makes clear that the Government needs help from the private sector in tackling some of the Province's infrastructure challenges, which are many. The Paper welcomes the feedback, the creativity and the capital that the private sector can contribute to the development of the Province's economy. It also parallels a mounting interest across Canada in public-private partnerships. Last February, Ontario released Building a Better Tomorrow, billed as "A Discussion Paper on Infrastructure Financing and Procurement'. The Paper makes clear that the Government needs help from the private sector in tackling some of the Province's infrastructure challenges, which are many. The Paper welcomes the feedback, the creativity and the capital that the private sector can contribute to the development of the Province's economy. It also parallels a mounting interest across Canada in public-private partnerships.

There is a growing rapprochement between the public and private sectors. Now then is a good time to revisit the place of private sector proposals to provide goods and services, submitted to the public sector on an unsolicited basis. This article looks at why the public sector in Canada appears to remain aloof to an idea which, on its face at least, offers the possibility of forging new relationships, as well as the potential for achieving a more efficient and cost-effective means of delivering services to Canadians. It also examines some internal public sector dynamics that private sector companies should take into account when planning to make a proposal to a public a sector entity that is subject to the trade agreements.

THE TRADE AGREEMENTS - A familiar comment heard from those who oppose the use of unsolicited proposals is that Canada's major trade agreements - the North American Free Trade Agreement (NAFTA), the World Trade Organization (WTO) Agreement on Procurement, and the Agreement on Internal Trade (AIT) - allow for competitive bidding only. It's not that the trade agreements explicitly forbid the use of unsolicited proposals. Rather, it's that unsolicited proposals do not fit neatly into the language that lays down competitive bidding as the preferred method of procuring goods and services. For example, Article 501 of the AIT provides that the purpose of the procurement chapter of the Agreement is to "establish a framework that will ensure equal access to procurement for all Canadian suppliers in order to contribute to a reduction in purchasing costs and the development of a strong economy in the context of transparency and efficiency."

Detractors argue that a public sector entity that receives and evaluates an unsolicited proposal is in breach of the principle set out in Article 501 on the basis that "if it isn't expressly authorized, it's illegal" - a weak argument, in light of the fact that the AIT includes explicit exceptions to the principle of competitive bidding. In fact, it could be argued, under the right circumstances, that an unsolicited proposal amounts to one of the stipulated exceptions. As weak as the detractors' argument is, those who support the acceptance of unsolicited proposals have taken to heart the old adage that a flow of words is no proof of wisdom, and have made little if any effort to try to explain how the trade agreements allow the practice. Some justification is called for, at least from those who have put in place the infrastructure to facilitate unsolicited proposals.

MERITS OF UNSOLICITED PROPOSALS - Quite apart from the legal status of unsolicited proposals under the trade agreements, a view offered in defense of unsolicited proposals is that they promote a thoughtful, non-traditional, value-added approach to the management of government operations and service delivery. According to this view, unsolicited proposals are designed to encourage proponents to submit ideas that are "unique, innovative, and valuable". This view assumes that the private sector is capable of much energy and creativity, which should be tapped in the interest of the broader public good. Not everyone, however, shares this view. Others hold that the private sector is rarely if ever able to submit ideas that are truly 'unique', that can only be shared with the public sector through an unsolicited proposal. This view may be overly cynical, to the point where it loses all credibility. It assumes that only the public sector is capable of creativity (a reversal of the old cliché idealizing the boundless genius of the free enterprise system).

These commentators are not afraid to go the extra length. They say that unsolicited proposals are not likely to provide any substantive advantage in the quality of the proposals over those submitted through the more conventional, competitive bidding framework. And to the extent that an idea is truly innovative, they add, it should be channeled through the competitive bidding process. The final blow is their claim that the quality of innovation may in fact be inferior, because proponents may be tempted to use unsolicited proposals as an easy opportunity to market their offerings, without offering value or innovation.

THE IMPORTANCE OF AN INFRASTRUCTURE - Aside from the legalities and the merits, it is not possible to overstate the importance of having in place a robust infrastructure for processing unsolicited proposals (such as a guideline or other similar procedure or directive). Not having this infrastructure makes it difficult if not impossible for any public sector entity receiving an unsolicited proposal to make sure that the proposal - and the process followed to evaluate it - is credible, defensible, and is perceived that way by the public. It leads to a clear disincentive to accept unsolicited proposals. It is not surprising then that the public sector often greets unsolicited proposals with fear, sometimes even with scorn.

Closely related is the risk that the public sector entity may end up at the centre of a storm of controversy. As one experienced critic put it, the acceptance for consideration of unsolicited proposals in the public sector has a tendency to lead to abuse, and even collusion between the proponent and the public sector participants who are responsible to shepherd the proposal through the maze of government. Whether this is true most of the time or in a small number of cases only is anyone's guess. Still, everyone's anxiety level would drop several notches if a well defined procedure were in place.

Where a policy decision is made to accept unsolicited proposals, for a start there should be a well articulated rationale. What is the public sector trying to achieve? What broader public policy purpose is being served? Such a rationale should be supported by a solid, well documented procedure that provides guidance to would-be proponents, and assists in defending any challenge launched against a contract award. A well developed procedure would also help to ensure that the public sector entity had the vision and the tools to show that the decision to go ahead with an unsolicited proposal served the best interest of the public.

WHAT TO DO WITH GOOD IDEAS BUT NO INFRASTRUCTURE - Notwithstanding the debate swirling around unsolicited proposals, the fact is that the public sector is beginning to recognize the value of working closely with the private sector. For example, more and more public sector entities are putting in place strategies where they are moving from traditional purchasing where suppliers are treated as providers of commodities and where only price matters, to strategic partners where common business goals and objectives are developed, and where the risks and rewards are shared. There is a growing recognition that treating suppliers as just vendors increases costs and reduces efficiencies. Increasingly the procurement process is put within a wholistic context that includes the entire lifecycle of the goods and services being procured, which in turn helps generate cost savings and the solutions that are so much needed to tackle the challenges of modern government. While the private sector typically welcomes the more collegial approach, it often lacks the kind of nuanced understanding of the public sector environment that is needed to do well. This is also true where private sector organizations themselves take the lead in seeking a closer and more synergistic relationship with the public sector.

Private sector organizations are often puzzled by the lukewarm response their ideas receive when they propose to the public sector. They generally assume that if a proposal has merits, it will be picked up by the target department or ministry, and the wheels almost immediately put in motion to implement the project. As was noted above, the absence of an infrastructure for handling the process pretty much guarantees that the wheels - if they ever began to turn - will come grinding to a halt. Another major factor is simply the workings of government itself. Public sector priorities and capital plans are typically set years ahead of their intended implementation. If the subject matter of a proposal is not already recognized in the target department's agenda, it is improbable that the proposal will be received with any level of interest. Civil servants have enough challenges on their individual and collective plates and too few resources to go around. Taking on another project that has yet to receive the imprimatur of the appropriate internal authority is not going to be attractive - not to mention that taking up the mantle could be seen to be infringing the tendering laws.

Obviously what works for the private sector does not necessarily work for the public sector. Rather than spending time and effort pushing through a proposal that no one asked for, it is better to take a strategic view of what can be achieved, recognizing that the strategic view also tends to be the longer view. It is best to work to socialize the good idea and have it put on the target department's agenda. This may take years, but once the public sector entity has 'bought in', the road ahead will be much smoother. However, where a good idea makes it on someone's agenda, there is always the possibility that the target department could decide to compete the idea or proposal received - a risk that a private sector proponent has to be prepared to live with. There is also the related risk that proprietary information may be shared. A private sector proponent will normally try to protect the propriety information through a non-disclosure agreement. But it isn't always possible to get public sector entities to agree to bind themselves that way. There can be very good reasons for that.

CONCLUDING REMARKS - In principle, the potential value to the public of unsolicited proposals is significant. But unless the related procedural issues are addressed, there isn't likely to be much appetite for unsolicited proposals in the public sector. Procedure is integral to the success of the concept. It requires articulating a centralized process that is designed to ensure the transparency of both the evaluative criteria and the decision-making structure, a necessary step to protecting the integrity of the decisions made by public sector decision makers. Without the appropriate infrastructure, it is often better to take a strategic approach and to work with the particular public sector entity to help shape the agenda of the future. This demands something other than a purely transactional focus. Among other things, it calls for a nuanced understanding of the workings of the machinery of government at many levels, and a commitment to stay the course for the long haul.

From Mondaq News Alerts, World, by Denis Chamberland, 11 April 2005

Public Private Partnerships (P3s): an International Disaster

"New Deal for Cities" poised to spread faulty financing mechanism as new report exposes 100 "flawed, failed, abandoned" P3s in Canada, Australia & the UK - Ottawa - A new report exposes 100 examples of flawed, failed or abandoned infrastructure projects using the controversial "public private partnership" (P3) privatization model in Canada, Australia and the UK, undermining the overblown claims of P3 backers. The report, produced by health coalitions and national unions, comes as governments at all levels persist with plans to privatize hospitals, roads and schools under P3s, controversial long-term deals with private finance and service corporations. "All governments have a moral and fiscal responsibility to stop encouraging this fatally flawed financing model," said CUPE National President Paul Moist. "The federal government in particular must show leadership by making sure that the 'New Deal for Cities' boosts public investment, not
privatization through P3s."

The report, Flawed, Failed, Abandoned: 100 P3s, Canadian & International Evidence, documents dubious P3 projects in the health, municipal and education sectors, providing examples in provinces across Canada, as well as in Australia, England, Scotland and Wales. It details a litany of cost overruns,legal disputes, bankruptcies, environmental disasters, and shoddy construction. Many P3s have been abandoned outright as the steep terms required by the for-profit companies become clear. Moist noted that P3s will only drain resources away from public services. "Continuing with P3 privatization in health, municipal and other sectors will only weaken public services and redirect scarce resources to multinational companies, eager for taxpayer-guaranteed profits," said Moist. The report, written by Natalie Mehra of the Ontario Health Coalition, was produced with support from the BC Health Coalition, the Canadian Health Coalition, the Council of Canadians, the Canadian Union of Public Employees, the Friends of Medicare/Alberta, and the National Union of Public and General Employees.

From CNW Telbec (Communiques de presse), Canada, 7 April 2005

The U. S. Free Trade Agreement with Central America and the Dominican Republic: How Everyone Benefits

Brett D. Schaefer: This year is going to be tremendously important for America's trade agenda. The Bush Administration and Congress have made great progress in concluding free trade agreements with Australia, Chile, Morocco, and Singapore. These trade agreements bring real economic benefits to producers and consumers in the United States and our trade partners. Our event today focuses on what we think will be a pivotal issue in deciding the future direction of America's free trade agenda: the free trade agreement with the Dominican Republic and Central America (DR-CAFTA). The proposed free trade agreement would liberalize trade between the United States, the Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.

DR-CAFTA promises to provide significant economic benefits for all the nations involved. It would promote freedom and stability in a region of critical importance to the United States. It offers a framework for increasing economic growth that will bolster political stability and enhance hemispheric stability and security at the crossroads of North and South America. Moreover, the agreement would help spur growth in job creation in the region, which would help mitigate illegal migration to the United States. We are delighted to have our distinguished panel of ambassadors and our moderator, John Murphy, who know the subject of the Free Trade Agreement with the Dominican Republic and Central America inside and out.

John G. Murphy: It's a real pleasure to be here today at The Heritage Foundation. You do a fantastic job leading the public policy debate in this country. I think that this forum and the excellent level of interest that we're seeing here today is an indication of your ability to move that agenda. To open this program, let me make a few brief remarks about the free trade agreement we call DR-CAFTA from the perspective of the U.S. business community. First, I'd like to disabuse all the listeners here today of the notion, which is all too common, that this is a small trade agreement. On the contrary, this is the largest free trade agreement the United States has negotiated in the past decade. In terms of the trade flows it will liberalize and turbocharge, we see that today these six countries are purchasing more than $15 billion in U.S. exports, which puts this market on par with France and Italy, two G-7 countries. The business community has rallied strongly behind this agreement. The U.S. Chamber of Commerce, the Business Roundtable, the Emergency Committee for American Trade, the Council of the Americas, the National Association of Manufacturers, and the National Foreign Trade Council are all hard at work making the case for DR-CAFTA's approval as soon as possible. Just in the last weeks, we've seen letters to the Congress signed by, in one instance, more than 50 agricultural commodity associations strongly endorsing the agreement. Dozens of high-tech groups have come out in support, and recently about a dozen Central America-based environmental non-governmental organizations have endorsed the agreement, which they see as good for the environment as well.

You can read all of our arguments on the Business Coalition for U.S.-Central America Trade's Web site,
We'll hear today from the ambassadors that there are many excellent reasons to support the agreement, but let me give you three from the perspective of the business community: new exports, higher incomes for workers, and more jobs here in the United States. The U.S. Chamber of Commerce today is releasing a series of state-by-state economic impact studies that found substantial economic gains for workers and the economy in this country. Employing a widely used input/output economic model developed by the U.S. Department of Commerce, we've generated data on how DR-CAFTA would affect the states of California, Florida, New Jersey, New York, North Carolina, and Texas. We also have data from a Louisiana study that uses the same methodology. We've made a few very conservative assumptions based on how previous free trade agreements have stimulated commerce. The U.S.-Chile Free Trade Agreement, for instance, has generated a surge in exports to Chile in its first year of implementation of 30 percent. For our studies, we have projected export growth at about half that pace: 17 percent.

Even with these assumptions, we found that in the first year, DR-CAFTA would generate over $3 billion in new sales across all industries just in the seven states. It would boost payrolls by $685 million and would generate 20,000 jobs in year one in the seven states. Projecting out over nine years, DR-CAFTA would boost sales by over $17 billion in the six states for which we have data. The agreement would also raise worker earnings by $3.5 billion and create more than 100,000 jobs in the six states. Some say that 20,000 new jobs in the first year is not that much, given that the U.S. labor force is about 140 million people. But how often does public policy have such an overwhelmingly positive impact on the broader economy? To aid us in broadening the perspective, we have five ambassadors who are not just ambassadors for their countries and for their region jointly, but also for this free trade agreement.

To start off, I'd like to direct a question to Ambassador Tomas Duenas, who represents Costa Rica here in Washington: What are the economic impacts here? We know that trade has flourished between the United States and these countries under the Caribbean Basin Initiative (CBI), which was created in 1984. Trade surpassed $30 billion last year. If trade is already blooming, what is in the agreement for these six countries, and what does it mean for the economic development of the countries that you represent?

His Excellency Tomas Duenas: To put the DR-CAFTA in economic perspective, DR-CAFTA is much more than trade. More than 50 percent of the region's imports come from the United States, and more than 50 percent of our exports go to this market. In addition, 65 percent of the foreign direct investment in our region is American capital, 65 percent of the tourists that come to our countries are from the United States, and many of us have come to school here, so there is already a very strong bond between the Central American and Dominican Republic region and the United States. There is also, as John mentioned, a two-way trade of some $32 billion, which is only behind Mexico and Brazil as trading partners. So as small as we are as countries, as a region, we are an important business partner of the United States, and we provide a series of goods and services that provide this economy with the productivity that has been quite apparent in the last year. To put it in another perspective, we are more important as business partners to the United States than Italy or France or India or even Russia. We sell and we provide this market with fruits, melons and bananas, flowers, coffee, the tilapia fish that you buy, and medical devices--very sophisticated medical devices are made in Central America to send to the U.S. market, as well as computer chips. Trade has been growing for a period of years.

What this is about is market access. We already have market access through the CBI, and what the DR-CAFTA provides is a means for that two-way trade to become better in the legal sense. But market access is not totally the essence of the DR-CAFTA. This is a very interesting scheme by which market access is granted to our countries in exchange for institutional reform that is going to be the backbone of the DR-CAFTA effort. Sometimes it seems that we see trade agreements only in the perspective of market access or trade. In the commitments that our countries have made together in an agreement with the United States, market access is very important, but institutional reform is the principal backbone. This agreement will provide extra access to our products as well as new opportunities for U.S. goods and services in our markets, which at some points has not been there, so the U.S. economy today, which is built around services, will have a new opportunity to expand. I'm talking about telecommunications, financial services, insurance, and, of course, the tourism industry. It also provides rules, and the rules are very important--rules of transparency, the enhancement of investment climate, intellectual property, consumer rights, e-commerce, government procurement, etc., as well as a firm commitment to provide labor and environmental best practices as we have been negotiating with and have committed to with international institutions.

Finally, what DR-CAFTA will provide is certainty. It will enhance, as I have said, the rule of law; it will enhance the climate to invest; it will enhance institutional reform; it will enhance the rights of consumers, the rights of people in general, the right to compete. This is a development tool, and probably one of the most important ones that has come to our region. So I hope that you will realize that this is, once again, much more than trade. This is a development issue, and we certainly are committed to it, and we hope that DR-CAFTA will be a reality very, very soon.

John G. Murphy: Next, we'd like to move the discussion to the topic of foreign policy, and I'll direct this question to Ambassador Stadthagen of Nicaragua. I think many people in this room, and possibly even the protestor out in front of the building, remember the last time that Central America was high on the agenda here in Washington. It was the 1980s, when there were wars raging in El Salvador and Nicaragua and implications for all of the countries here. A great deal has changed since then. In fact, few regions of the world have changed as much as Central A. But how do you see this agreement as a foreign policy tool and a way for the United States to make a difference in Central America and the Dominican Republic?

His Excellency Salvador Stadt-hagen: Twenty years ago, we would have talked about the domino theory. We had a Marxist-Leninist government in Nicaragua, and the Cold War was a reality in Central America. Twenty years ago, we would have been discussing about the MiGs from Russia that were coming to Nicaragua, about Sandinistas finishing what was then the largest airport runway in Central America, still out there in the jungles of Punta Huete. That's a reality, a historical fact. Also a historical fact is the amount of tanks, too heavy and totally impractical for the jungles of Central America, that the Sandinistas had and the $12 billion in debt that the Sandinistas left when they left power in 1990. Those are historical realities. Was El Salvador going to be next? Was Guatemala going to follow and Honduras, which also had a guerrilla warfare going on there supported by Cuba and the Sandinistas?

But, thanks in no small part to the leadership of President Ronald Reagan and some conservatives here in Washington who helped us in the struggle for freedom and democracy, we were able to turn back the leftist tide, and now you see the progress we've had in the last 15 years. We have consolidated democracy in every Central American country. We have reformist governments committed to democratization and the rule of law, no civil wars. The military are back in their barracks, and we've had sustained periods of economic growth. Yet our gains are not consolidated. There are still forces of disorder and instability that are hostile toward democracy in the region. That is precisely one of the reasons why we insist that DR-CAFTA is more than a trade agreement. It is the foundation of a partnership, a lasting partnership with the United States, which will give us the means to develop the region, the economy, to lock in the political and economic gains we have made, and to consolidate our democratic institutions and the security of the region. Without DR-CAFTA, we run the risk of exacerbating the current problems faced by our region--problems that, taken collectively, may pose a threat so serious that they go beyond the limited resources and possibilities available to our governments.

We have pervasive poverty throughout the region, with huge unemployment rates, an exploding young population, and a lack of opportunities for many job seekers. Narco-trafficking and gang-related activities are on the rise. Right now, about 50 percent of the narco-trafficking going on from Colombia, from the south to the north, goes through the Central American region, through our territory or territorial waters. This scourge of organized crime enslaves our citizens and threatens national and regional security. On the immigration side, today, one out of five Central Americans lives here in the United States--one out of five. Therefore, our human links with the U.S. are something that will never go away. We would rather not have our people leaving their country of origin and coming into the U.S. seeking better opportunities; but, unfortunately, that is not the situation, and we are now exporting people. This situation is causing us grave social and economic problems, let alone the serious brain drain we are suffering; we are losing a large percentage of our young and ambitious future leaders. They say migrants are probably the most innovative and hardworking of people. We need to generate employment. We need around 100,000 new jobs every year just to accommodate the young people coming into the labor market -100,000 new jobs in Nicaragua alone every year--but with the current economic situation, it is difficult to achieve such a target. As a consequence, conditions for civil and political unrest are beginning to flourish.

The possibility of leftist movements returning to power is also a reality. In Nicaragua, we are seeing the upsurge of the Sandinistas, and there is a possibility that they may come back to power in 2006. Unfortunately, it would appear that their policies and their ideal of democracy have not changed much since 1980s. If you saw the letter that Daniel Ortega sent to Fidel Castro on the occasion of the 46th anniversary of the Cuban revolution, you will see what I mean. In this letter, Ortega asserts that Cuba has developed a social, political, and economic model that is truly democratic when compared to those failed representative democracies imposed by the oligarchic capitals and the Yankee Empire. My friends, we all need DR-CAFTA. The democratic cause in Central America, the Caribbean, and the United States makes it impossible for all of us to see the region going backwards. DR-CAFTA represents a mutual commitment of all of its parties to free trade, open markets, and democratic institutions. Those are the enemies of poverty. Those are the antidotes to poverty, corruption, crime, and insurgency. We believe that DR-CAFTA can unleash the pent-up ingenuity and initiative of our peoples as a chance to compete and trade, and we will start new businesses, produce new goods, and create new opportunities at home. Moreover, we can diminish new threats to the region and the consolidated gains for which so many of us have fought so long and hard. Thank you very much for your interest in DR-CAFTA, in Nicaragua, and in Central America.

John G. Murphy: Next, we'll turn to some of the sensitive issues in the agreement. I'd like to direct this question on labor standards in the environment to Ambassador Rene Leon of El Salvador. Critics contend that there is a kind of race to the bottom underway here and that this free trade agreement will actually accelerate it. The ambassadors have long experience talking about the provisions in this agreement, and it was interesting to me to see, when they met with the editorial board of The New York Times, a few days later the "gray lady" came out and admitted that the labor standards are quite excellent. So I'll turn it over to Ambassador Leon to share some comments on labor and the environment and the agreement.

His Excellency Rene Leon: With respect to the claim that DR-CAFTA will be a race to the bottom with respect to worker conditions in our countries, it is revealing that the same claim had been made when the United States signed free trade agreements with countries that do have higher working standards than the United States. Australia has a greater minimum salary and, some argue, even better working conditions than the United States, and exactly the same type of argument was used to portray the free trade agreement between the United States and Australia. So that is not, I would say, a real portrait of how workers will benefit with DR-CAFTA when this kind of argument is put on the table. The reality is that DR-CAFTA will imply more economic opportunities, more opportunities for economic growth in our region, more social equality in our societies, more civil society participation, more social cohesion in our economies, and more ways to protect the environment and to protect our worker rights in our countries. I would like to spend just a few minutes talking about the cost of labor.

First, there is a myth that the Central American countries do not comply with the international labor standards, and that's completely false. There has been an investigation and assessment of all our legislation and constitutions, our labor costs, our labor laws with respect to how they compare to international standards; and the outcome of that investigation by the International Labor Organization is that, largely, the legislation of the Central American countries complies with international labor standards and international workers' rights. This is not a claim that is made by us; it is a claim that is made by the ILO experts. They have identified some areas, some gaps, some issues with respect to implementation, with respect to compliance, with respect to enforcements of the law where the Central Americans have to work. And in order to address that issue, with the collaboration of the Inter-American Development Bank, we're working currently in strengthening, in building on whatever we have done to improve the labor legislation in our countries and to strengthen labor enforcement and labor implementation in our countries.

Second, it is very important to recognize that the labor chapter of DR-CAFTA provides enough assurances that workers' rights will be not only respected, but also enforced when the agreement is implemented. If you read the labor chapter and make an objective analysis of the obligations and the labor provisions of DR-CAFTA, you will find even stronger provision than other free trade agreements that have been passed and ratified by the U.S. Congress. It is important to acknowledge that, even as the agreement provides provisions, if we don't observe those provisions, we will be subject to sanctions that can, at the end, become trade sanctions against our countries. So the labor chapter in DR-CAFTA guarantees that the labor legislation of our countries will be enforced. I would like to point out that the Central American governments, with the help of the IDB and the Dominican Republic, have been working to strengthen our institutional capacity to implement our workers' legislation. We have been working in the area of freedom of association and collective bargaining, trying to examine our own constitutions and our own labor codes in order to find where there is room for improvement through regulations or procedures to ensure this basic right, and there will be recommendations coming up from the Vice Minister of Trade and Labor, presented to the Minister of Labor, on how we can proceed and further ensure the freedom of association and collective bargaining.

We have also been discussing budget reinforcement and strengthening of personnel in our labor ministries and labor courts in Central America in order to ensure not only that we have institutional capacity to apply our legislation, but also that the labor ministries have the personnel and the resources to enforce this legislation in such areas as labor compliance, child labor, and discrimination in the workplace. All of these issues have been addressed besides the provisions of DR-CAFTA and in recognition of the fact that our governments will have to go an extra mile in order to comply with our own legislation. I think that, at the end, the fair comparison will be how workers' rights and how labor laws will be 10 years down the road in Central America with DR-CAFTA and without DR-CAFTA. That's the real scenario that we have to think of. We believe that DR-CAFTA is propelling imposition of this transformation already in the Central American countries, independently of whether DR-CAFTA is passed by the U.S. Congress or not.

We embark on this process because we so often forget that there is life after DR-CAFTA. There is the Doha Round; there is the Free Trade Area of the Americas (FTAA); there are other bilateral negotiations and other trade agendas; there are countries that are implementing with other regions of the world, including the European Union. So we have to prepare our countries for this globalization, and DR-CAFTA is propelling this transformation in Central America. I will end by saying that, of the countries that are represented here, we're the only country that has ratified DR-CAFTA, including the United States, of course. I think that it is very important to recognize what the people are expecting from DR-CAFTA. In El Salvador and the rest of the Central American countries, more than 75 percent of the population support DR-CAFTA, and that reality speaks louder than words. I think that people are expecting from DR-CAFTA better living conditions, more economic opportunities, and more social equity. So we have an obligation, not just to the international fundamental workers' rights, or to the ILO or to the U.S. Congress or to our governments ourselves, but to our own people who have supported us to approve DR-CAFTA.

John G. Murphy: Next, one of the key industrial sectors affected by the agreement is textiles and apparel, which accounts for several hundred thousand jobs in the six countries of Central America and the Dominican Republic, and in the United States where it's equally critical. About a third of U.S. exports to the region come from textile manufacturers here in this country. Ambassador Espinal from the Dominican Republic, the man who put the "DR" in DR-CAFTA, what can you tell us about what this agreement will mean for the textile and apparel sector?

His Excellency Flavio Dario Espinal:The Dominican Republic was not part of the original negotiation of the DR-CAFTA agreement; we joined later, and I would just like to tell you what we bring to the table. The Dominican Republic is the third largest market for U.S. products in Latin America and the Caribbean, just behind Mexico and Brazil. In 2003, U.S. exports to the Dominican Republic were 73 percent higher than to Argentina, 48 percent higher than to Venezuela, and 55 percent higher than to Chile, with which the U.S. has a free trade agreement. U.S. exports to the Dominican Republic are higher than those to Turkey, Egypt, Indonesia, and the Russian Federation; and when we mention, for instance, Morocco and Jordan--countries with which the U.S. has a free trade agreement--exports to the Dominican Republic are 900 percent higher than to Morocco and 750 percent higher than to Jordan. Putting together all Central American countries and the Dominican Republic, we are going to be the second largest U.S. trading partner in Latin American, next to Mexico.

The Dominican Republic, alone, is already the third largest market in the region; therefore, we bring to this FTA an important market for the U.S., which is obviously of mutual interest because the U.S. is the most important trading partner for the Dominican Republic and for the Central American countries. Going back to the question about textiles, I've been asked a very important question concerning one particular industry that is vital for Central America and the Dominican Republic over the last, let's say, 20 years, and the question revolves around whether DR-CAFTA will harm the U.S. textile industry.

First, in order to answer that question, we have to place it into context. As we all know, the signing and possible ratification of DR-CAFTA is taking place at a moment when new rules of international trade regarding textiles have come into effect as a result of the ending of the quota system under the Multi-Fiber Agreement of 1973, which allowed developed markets to put quotas on the imports of a number of products from developing markets. What is more likely going to happen with the end of the quota system is that low-cost suppliers from regions like Asia, mainly China, will benefit from the elimination of these quotas, which took effect on January 1, 2005. As you all know, previous to this date, since the beginning of the 1980s, DR-CAFTA countries had preferential access to the U.S. market under the Caribbean Basin Initiative. This access expanded further under the Caribbean Basin Trade Partnership Act of 2000, the so-called CBTPA. In that context, 90 percent of U.S. apparel imports from the Dominican Republic and Central American countries have U.S. content, compared to only 0.26 percent U.S. content on imports from China. DR-CAFTA countries purchase $2.3 billion a year in U.S.-made yarn and fabric, compared to $250 million by Chinese manufacturers. There is a tremendous difference between what we buy from U.S. industry and what the Chinese buy.

A study sponsored by the U.S. Agency for International Development in the Dominican Republic shows that the elimination of quotas will have an immediate impact on U.S. apparel imports from the Dominican Republic of 31 percent, which in absolute terms represents $662 million. For the sake of argument, if we apply a 31 percent decrease on U.S. textile imports to the rest of the DR-CAFTA countries, the impact will be of enormous proportions. It is logic: Without an FTA, we're not going to be buying as much as we used to buy. Therefore, with the end of the textile quota, the DR-CAFTA is vital for the survival of both the U.S. and the Central American and the Dominican Republic textile industry. And why is that? Because it will provide manufacturers an incentive to stay in the region where they are more likely to buy U.S. textiles rather than moving their production to Asia in a search for cheaper inputs.

Second, a competitive Central America and Dominican Republic apparel industry is absolutely critical to U.S. fiber, yarn, and fabric producers, taking into account that these six countries represent the second largest markets for these products: second only to Mexico, which has had a free trade agreement with the U.S. for over a decade. If DR-CAFTA is not approved, manufacturers will have very little incentive to stay around, knowing that the preferential benefits enjoyed by our countries under the CBTPA will end in 2008, leaving them with no access to the U.S. market, duty-free, as they do now.

In conclusion, this preferential scheme that has been in place since the beginning of the 1980s and was expanded in the 1990s is coming to an end in just three years time, eliminating the duty-free access to the U.S. market that the textile industries in our countries currently have. In consequence, access provided under a free trade agreement not only will give permanence to preferences acquired under the CBTPA, but also will increase confidence in the region and on the part of both investors and buyers, which will be very positive for trade relations between the U.S. and the DR-CAFTA countries. In short, the fundamental argument is one of common sense. Given that trade rules concerning textiles have dramatically changed with the end of the quota system, we have to respond to the new circumstances by adopting a free trade agreement as the only way to guarantee the survival of the textile and apparel industry in the U.S., Central America, and the Dominican Republic.

John G. Murphy: To conclude this portion, we have a man who is last but not least in a topic that is last but not least--agriculture and Ambassador Castillo of Guatemala. Agriculture is a sensitive sector in a number of these countries, but it's also an area where some of the greatest promise of this agreement is on display here. Ambassador, how do you see agricultural sectors for the different countries faring under this agreement?

His Excellency Guillermo Castillo: This is a very sensitive issue in all the countries, and that includes the U.S. I am going to talk a little bit about one of the most sensitive agriculture issues, which is sugar. Basically, 20 years ago, we were in the middle of a war in Central America. We had a military regime in some countries, and we had war in several countries. Nowadays, we have disagreements in all the countries. We have democratically elected governments in all the countries. We are trying to solve our differences through dialogue, and we are trying to find our path for development in the region. In the ministries of economy, we made that commitment in the early 1990s. We started to open our markets, and we lowered our tariffs for most of our imports from an average of 23 percent to an average of around 5 percent. What happens when you open a protected market? Some companies went down; some other companies were bought off; but a lot of companies found a way out. They found a way to increase their sales, their imports; and more than that, they were not looking only at Guatemala or at each one of the markets; they were looking at the world as their market.

When we were negotiating this free trade agreement, there was one thing that we put up front in the negotiation, and that was no exclusions. It didn't work completely, but agriculture was the main issue that we were discussing on the exclusion side. So let me say a few things about agriculture to bring the issue into perspective. Yes, we are opening our markets. Some of the products still have some protection, but they are going to be fully open to the world market and to the U.S. market, and we are talking about great opportunities for corn producers here in the U.S., for soybean producers, as well as meats, pork, poultry, and other type of goods. What did we get in return? Well, we have an open market here in the U.S. for lots of products too, and we have better standards for sanitary and phytosanitary measures that apply to other cultures. So it's just like looking at this glass: Is it half full or half empty? I'd like to say it's half full. Let me tell you a few things that I would add to this agreement. When I go back to my country and I see the effect of the disagreement, for example, on the corn producers, most of the corn producers take over 23 percent of our land, and most of them live in poverty. Why is that? Because they are not using the right seeds. They are not using the right technical ways of cropping corn. What is the alternative?

DR-CAFTA brings opportunities, but DR-CAFTA is not the solution. The solution is DR-CAFTA plus our work, internal policies to make it happen in the right way, and that is going to bring prosperity to a lot of companies. Let me give you a few examples. I was visiting Cuatro Pinos -"four pines," which comes from these four cities surrounding this crop--and they have over 500 Guatemalans as members of this organization. They moved out of corn. They're planting broccoli, snow peas, tomatoes, anything, and they are exporting those goods to the U.S. and to the European markets. I went to visit their facilities: beautiful building. You were looking at all these natives with all their native dresses: beautiful dresses. You could see that they were leading a better life than the average people in their communities. Why was that? Because they found a way out of poverty. They found a way to fish: They were not given fishes; they found their own way to fish. And when you were looking at this community, you saw men working the fields with these plantations, the women working in the packaging area, and the women were giving the family a second source of income working in the same field. The literacy rate within this community -the average for natives in Guatemala is around 40 percent; the average in this community was 5 percent. They had an educational support within the group, and medical support, dentistry, everything. So I said, "Why cannot we replicate this model throughout our countries?" Not all of them start to produce broccoli. They had lots and lots of opportunities out there in regard to their sectors. We have the market open. Now let's make it a success.

Now, going to the issue of sugar: I was telling you that one of the first things we said about this agreement is that nothing was meant to be excluded, but sugar is excluded, and it was excluded by the U.S. Why do I make this claim with all the things that you see in the media nowadays? One, the quota the U.S. is giving the Central American countries, in a period of 15 years, will amount to about 1 percent of the U.S. production and very little, a very small quota, for all six countries. But it doesn't stop there. Tariffs are not going down, so we have the same level of protection they do today. More than that--and this is something that anyone would love to have -if by any chance sugar imports affect the industry in the U.S., imports are going to be stopped, and the U.S. government is going to pay our producers for their exports that they are not making to the U.S. markets, so that's as protected as it can be. At the end of the day, we all are looking to open our markets, strengthen our societies, and strengthen our institutions. And when you ask our people about agricultural products, yes, we will love to sell our products at five times the price and, as consumers, buy the other people's products at one-fifth the price. That's reality. We are going to open our markets. Yes, there is going to be more competition in the market, but we know how to live with that. A lot of companies found ways to live with it, and now they are better.

One last comment: With this tradition, the companies that are exporting goods have higher standards in their manufacturing and labor conditions, and they have better standards throughout their companies for quality of the products, packaging, everything. We want more to look like that. DR-CAFTA is going to give us the opportunity. We have been working internally to make those opportunities realities. Don't take away opportunity. His Excellency Tomas Duenas is Ambassador to the United States from Costa Rica; His Excellency Salvador Stadthagen is Ambassador to the United States from Nicaragua; His Excellency Rene Leon is Ambassador to the United States from El Salvador; His Excellency Flavio Dario Espinal is Ambassador to the United States from the Dominican Republic; and His Excellency Guillermo Castillo is Ambassador to the United States from Guatemala. Brett D. Schaefer is Jay Kingham Fellow in International Regulatory Affairs in the Center for International Trade and Economics at The Heritage Foundation; John G. Murphy is Vice President, Western Hemisphere Affairs, U.S. Chamber of Commerce. Stephen Johnson, Senior Policy Analyst for Latin America in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation, served as co-host for this program.

From, DC, 18 April 2005


Nepad Calls for Stop to Reliance on Foreign Aid

The Nepad Council yesterday asked the international community to stop offering aid to Africa, saying it was no solution to the continent's poverty. Instead, the council said, the developed world should support increased investment by their firms in Africa. The president of the council, Dr Birahim Seck, said massive flow of aid to Africa over the 50 years had not make any impact on the poverty situation on the continent. He urged African leaders to come up with workable strategies that can attract investment in key sectors such as information and communications technology (ICT). "For the past 50 years, Africa has been dependent on aid and grants from international donors with only marginal change as far as development is concerned," Seck said. "There is more poverty now, there are more diseases and the level of literacy is still low." He said the council would soon convene a Presidential Business Forum that will bring together at least 10 heads of state, 10 chief executive officers (CEOs) of the world's leading ICT companies and 20 CEOs from Africa's top ICT companies to chart the way forward.

The meeting will be held between May 17 and 21 on the sidelines of the inaugural ICT Africa Fair that will take place at KICC, Nairobi. Seck is a critic of Africa's reliance on aid andrecently caused a stir at the European Union headquarters in Brussels when he told delegates at the European Programme on Investment (Proinvest) conference that Africa did not need their support. I told them that the best help and service they could provide to the continent is to encourage their company and business leaders to invest in Africa," he said.

Speaking at the International Press Centre, in Nairobi, Seck said his message to the EU, IMF and World Bank was that the sure way of reducing poverty in Africa was employment creation through investment. "When African people have jobs, they can feed their families, they can afford quality health care for their children as well good education," he said. Seck urged African governments to team up with the private sector in order to promote the growth of ICT in the region. In Europe, North America and Asia, he said, ICT had become a major component of the global economy and positioned their firms for leadership in the global business. Africa, Seck said, has not yet succeeded even in laying the foundation for a strong and competitive ICT sector. "The existing gap between Europe, North America and Asia on one hand and Africa on the other can only be narrowed through the involvement of private sector and promotion of public/private partnerships." He said the Nairobi fair would address the ICT gaps on the continent with the aim of finding solutions.

From East African Standard, Kenya, by Elizabeth Mwai and Waweru Mugo, 12 April 2005


Why Western Aid Donors Won't Crack Down on Corruption

Britain is haunted by memories of the exodus of Ugandan Asians in the Amin era. Some 30,000 Kenyan Asians have British passports and London wants them to stay put. Anyone who believes that western aid donors are committed to cracking down on corruption should take a look at an aid meeting that took place in Nairobi last week. The story begins in London in early February, when the man who represented the hopes of Kenyans for a graft-free society went into self-imposed exile. John Githongo had resigned from the toughest and most dangerous job in Kenyan politics - permanent secretary in charge of governance and ethics. It seemed a watershed in his country's sad record of 40 years of post-independence corruption, and an unprecedented opportunity for a decisive crackdown by the foreign donors who have invested billions of dollars into Kenya for a negligible return. Numerous efforts by donors to persuade or coerce past governments to end their venal ways had been made over nearly four decades. None worked.

This time, it seemed, it would be very different. Githongo, the former head of Transparency International Kenya, had spent two years in a job that placed him at the very heart of the beast. For the first time, the donors would have the chance to tap the insights of an insider, an informed and detached witness, with an unblemished reputation for probity. Surely the donors now had the country's corrupt elite by the throat? But as the weeks went by and nothing happened, it became clear that the opportunity was not to be seized. According to well-placed diplomatic and other sources, two months after Githongo resigned, the British Foreign Office has not made a single effort - apart from an initial exchange and a social lunch with a Whitehall Kenya expert - to engage with Githongo. This failure is not an accident or oversight: it is the product of realpolitik. UK foreign policy may be informed by its ambassadors around the world, but strategy is devised in London. Kenyans should not be misled by the splendid "vomit" speeches delivered in Nairobi by Sir Edward Clay, the courageous and feisty British High Commissioner to Kenya. The reality is that the men and women at the Foreign Office and at the UK aid agency, DFID, are the ones who make Kenya policy. And while those officials are ready to help Mr Githongo in many ways, they will not encourage or assist in the exposure of the contents of his metaphorical briefcase.

If you doubt this, look at Nairobi, where the aid agencies have just been meeting, taking part in a consultative group meeting. This traditional dance of the donors has its moves as carefully choreographed as an old-fashioned quadrille. A speech of outrage about corruption from the donors is met by a persuasive response from the government, rebukes are balanced by cautious praise, and pre-arranged manoeuvres take place on a stage full of verbal props and rhetorical flourishes. They huff and they puff about the impact of corruption on the good work they claim to do. No fewer than 25 UN organisations were represented last week, and UNDP resident representative Paul Andre de la Porte extolled his agency as Kenya's "lean but effective development partner".

But the UN impact on Kenya has little to do with its programmes and everything to do with its huge presence in Nairobi. The Financial Times once calculated that in 1998 the combined direct and indirect benefits of the UN agencies to Kenya amounted to more than $350m, or 19 per cent of exports, second only to tea as a source of foreign exchange, and equivalent to 3 per cent of GNP. In theory, that level of investment should give the UN huge leverage over Kenyan government actions. In fact, it makes the international community jumpy and neurotic at the thought of doing - or saying - anything that might disturb a mutually-convenient arrangement. But the UNDP is a lightweight compared to the really big boys - the International Monetary Fund and the World Bank. Their eve-of-conference pirouettes sent a clear message: whatever John Githongo may think about his government's anti-corruption efforts, Kenya will not be cut adrift. "The [pre-conference] talks have been very constructive … We do need to see action in a number of areas, but I think that the government is willing to act," said IMF resident representative Jurgen Reitmaier.

So why do the donors duck away from this unique opportunity to tackle graft? The truth is, they do not have the stomach for a fight. They do not believe it is ultimately in their interests to have a showdown with the barons of corruption. They do not want to upset what they see as a regional "island of stability" from which UN and other international relief agencies, including hundreds of foreign NGOs, operate. Weighing in the balance are the military agreements Kenya has signed with the US and the UK, which have assumed particular importance since Bush launched his War on Terror.

And finally, Britain does not want to do anything that might jeopardize its multi-million dollar investments in Kenya and, in particular, it is haunted by memories of the exodus of Ugandan Asians in the Amin era. Some 30,000 Kenyan Asians have British passports and London wants them to stay put. So, far from cutting aid, Britain's DFID is set to increase it, from £30m in 2003-04 to £50m in 2005-06. Ask about the problems presented by corruption, and there's a carefully rehearsed response. "It is possible to deliver benefits directly to poor Kenyans without releasing resources to be misused elsewhere," says the local DFID head. But if these policies actually worked, how can we explain the growing pauperisation of Kenya? In 1990, 48 per cent of the population was living below the poverty line. By 2001 that figure had risen to 56 per cent, and economists are confident the level is even higher today. Every social indicator, whether life expectancy or access to basic services, is pointing in the direction of decline. As the international aid agencies sound off in Nairobi, we can be sure of one thing. The donors' ritual will follow its usual pattern - and nobody is about to ask John Githongo to join in the dance.

From Times Online, UK, by Michael Holman, 19 April 2005

NPRC And Anti-Corruption Crusade

The recent intensification of the war against corruption by President Obasanjo has provoked different reactions from different Nigerians. What is not in doubt, however, is that Nigerians want the mess cleaned up. The point of divergence seems to be how different people perceive the war against graft. Some doubt the motive. Others point to a seeming selectiveness. A few are convinced that what we are witnessing is a stage-managed show not billed to last. Put all of these together, you arrive at the point that I have been making, that not every Nigerian has bought into the war on corruption. They still think that it is Obasanjo's personal headache. And the President has, expectedly, shown some irritation about this kind of attitude towards his effort. Therefore, my point has been that corruption, being an entrenched establishment that has been with us for several years, needs to be overthrown, not just attacked; and to overthrow it, the people of Nigeria must be enlisted as soldiers; and the war must be fought on all fronts, by every Nigerian, at the same time. I expect a war where it should be possible for Nigerians to strip corrupt people naked and drag them through the streets! In other words a mass revolt against corruption.

Critics of the current effort should endeavour to look at the existing laws. They will find that with such laws, the war cannot be won. Corruption thrives under the cover of "secret" and "confidential" files. Our system of government is essentially a secret cult known only to the inner operators. It is so bad that some Deputy Governors do not know much of what their bosses are up to. Information get to them on a need-to-know basis. You can then imagine the position of the Commissioners. And if it is that bad with the Deputy Governors and Commissioners, then you can see that those below do not know much of what goes on above them. And in that situation, subordinate officials indulge themselves with whatever trickles down to them, because the secrecy above them does not build the confidence in them that there is transparency. In other words, only a culture of open society can make the war on corruption winnable.

Secondly, we must remember that people who take bribe do not issue receipts! They do not accept cheques. So to trace their iniquitous activities is difficult. Even more daunting is how much the thin line between what is unacceptable and what is acceptable in public office has been eroded. There is even the more intriguing aspect of our culture, which blurs the true identity of corruption. Would a Westerner understand a Nigerian Big man who on leaving a public official, "dashes" his messenger fifty naira? How does one react to the groveling gateman who gives you a military salute sharper than that of a Major, and dashes to open your car door for you, gives you another salute as he closes the car door, and throws in a hundred "bye sir" into the theatrics? How does the policeman who, reeking of alcohol, reminds you that "oga your boys dey here o" or announces to you that his life "don better as I see you so" regard his abject lack of dignity? Pray, what is "dash" as in our culture, and what is corruption?

All of these, point to some of the difficulties, which the President sometimes tries to surmount, even if by violating some principles, in order to sustain the war on graft. It therefore seems to me that we need an urgent redefinition of our code of conduct in public office. Many of our laws relating to behaviour in public office have to be looked at again and beefed up. I have looked at the ICPC law. With luck, the ICPC may convict two corrupt people in eight years of Obasanjo. The law leans too much towards inactivity and that is why the ICPC has been redundant. Most of the action has been from the EFCC. The challenge before the National Political Reforms Conference is to seize this opportunity to look at all the laws relating to corruption and abuse of power and strengthen them for effectiveness. The Conference must draw up clear, stringent and unambiguous code of conduct for public officers and their relations.

But more important is that the activities of government should be open to public scrutiny. The law on declaration of assets by public officers remains a joke if the declaration is not for public consumption. The authors of that law were more concerned with protecting people in public office than protecting public interest. Once people get into public office, they invariably loose some of their privacy. Those who do not want to be put to public scrutiny have a choice not to get into public office. Nigeria is not lacking in people. The public is always teased by government to provide information if they have them. You cannot give what you do not have, including information. We 've got to do better than that. Nigerians must be able to know what a man presiding over their commonwealth had for breakfast, to know when the man has eaten what belongs to the public.

The controversy surrounding the immunity clause is that the authors were more concerned with the protection of their kind at the expense of the public. Such a law derives its nature from the philosophy of the military looters who enacted the law. How could anybody ever contemplate such a law if he wasn't a looter? Any nation that operates such law simply ordains corruption. However, throwing the immunity clause out of the window wholesale is to go to the other extreme. The solution is to limit immunity to civil litigations. But we must not stop there. If a serving President, Vice President or Governor commits criminal acts, what will be the procedures to bring him to justice? All of that must be spelt out now so that we will never be in doubt as to what to do in any future Dariyegate. We must also prevent those who have run foul of the law, as it presently exists, from escaping justice at the end of their tenure.

The Access to Information Bill, although it has made some progress in the National Assembly, deserves a second look by the NPRC now before a feeble law is passed. The Bill does not seek to empower only the media as people erroneously think. It seeks to empower Nigerians to protect their commonwealth. When the American Founding Fathers designed a nation with unfettered press, they did not intend at all to empower the publishers and the journalists. Rather they saw an open and transparent society as necessary for the democracy they were establishing. Had they thought that a gagged press would serve the interest of their democracy, they would have opted for it. Often I imagine public offices where the walls are made of glass, where nobody hides behind a thick wall and where microphones pick up and rebroadcast every conversation and I imagine how wonderful it would be for transparency in public office!

The NPRC should design laws that protect the public sphere, not the individuals. The place to begin to check corruption really is with our electoral laws. If we can institutionalize the sanctity of the peoples ballot and the inviolability of the people's choice, then we would have gone a long way fighting corruption. Our electoral system must serve as an effective quality control in the production of our leadership. But for as long as miscreants can sneak into public office, for so long would we have corruption multiply instead of reducing. The Federal Government also has an additional burden on its hand if it must make progress in the anti-corruption war. It is a moral responsibility. The Federal Government must show its aversion to corruption by avoiding the promotion of decadence.

It must be deliberate in its choice of who it honours so as not to honour thieves at the expense of upright people. It must scrutinize the people Federal Universities award honouary degrees, while the Governors do the same for State Universities. The Governors and Local Government chairmen should also be interested in those the traditional rulers give chieftaincy titles. We cannot be fighting corruption and at the same time elevating knaves of yesterday as role models., Africa, by Pini Jason of Vanguard, Lagos, 19 April 2005

Obasanjo's Aide Seeks Adoption of Public Accountability Forum

Presidential Special Adviser on Inter-Party Affairs, Chief Rochas Okorocha has suggested the adoption of a public accountability forum whereby public officers would publicly account for their stewardship to the electorate as a way of checking corruption. He said in a chat in Jos last weekend that such a forum would afford the electorate to ask questions on how public funds are expended and to express their satisfaction or dissatisfaction with the manner they are spent. According to him, "Fighting corruption must involve the public who have the right to know where public funds are being expended. It is the right of every Nigerian to demand to know how public funds are spent. By publicly giving account of whatever monies entrusted in their care, public servants would be wary of spending such funds in the wrong places. We should create a forum whereby accountability should be the focal point."

"Owelle Okorocha argued that such fora will serve as a check on public servants when they know they will have to publicly account for any public fund in their custody adding that public opinion would achieve more results in the war against corruption than even laws. He reaffirmed the commitment of President Olusegun Obasanjo to the war against corruption pointing out that the vigour with which he (Obasanjo) was pursuing the war will send the right signals to the international community and encourage investors to com to the country. He therefore urged Nigerians to join the president in the anti-corruption crusade and not leave the fight to him alone. He believed that the N55 million bribe-for-budget scandal in the National Assembly would have taught all concerned the appropriate lessons especially on the issue of seeing taking money as a form of lobbying rather than a form of corruption.

From, Africa, by Taye Obateru of Vanguard, Lagos, 19 April 2005

Government Failures 'Revolve Around Grand Corruption'

Kenya's former Permanent Secretary for Governance and Ethics has said in Germany that grand corruption has caused the failure by many African countries to achieve their economic objectives. "Corruption -in particular grand corruption and looting of the kind that has tangible economic implications- is at the epicentre of the failure by many African countries to achieve the economic objectives so finely articulated in their development plans," John Githongo said on Tuesday, April 12, 2005, during a ceremony in which he received the 2004 German Africa Award for his anti-corruption efforts. Githongo, who was the President's advisor on graft matters, resigned on February 7, 2005, while on an official trip to England. He has not gone back to Kenya since.

Githongo, in a speech published by The Standard, said grand corruption and looting cannot take place without the skilled facilitation of Western professionals. "We must recognise that the grand corruption and looting that holds African economies back cannot take place without the skilled facilitation of professionals here in the West . . .who are integral to the architecture of the complicated transactions via which the most serious cases of corruption are perpetrated," said he.

From, Africa, by Catholic Information Service for Africa, Nairobi, 15 April 2005

Diplomats Say They Are Unsure Corruption War is Being Fought

Key diplomatic missions yesterday expressed skepticism over the commitment and the pace of President Kibaki's Government in fighting corruption. US Ambassador William Bellamy said Kenya seemed unable to move away from talking and into implementing measures that it had agreed with donors. Bellamy said in an interview that the although some crucial anti-graft Bills had been passed into law, Parliament was being too slow in formulating laws that would speed up the fight against corruption. "Generally," he said, "the government is making slow progress especially in passing legislation that will enable Kenya attract investments." Bellamy named the privatisation Bill and Public Procurement and Disposable Bill as some of the bills that should have already been passed into law. Though the US government-which has co-opted Kenya in its fight against terrorism-has been a major supporter of the Narc Government, it recently seemed to waver in its confidence and recently froze Sh200 million it had pledged to fund the Kenya Anti-Corruption Authority. Other donors like Germany took the cue and cut funding. "We want to see a full and strong political commitment from the government in the fight against corruption," Bellamy said. "It is not up to the donors to investigate and (initiate) prosecution because the Government has all the machineries in place." He spoke moments before the donor consultative meeting began behind closed doors. Journalists were asked to leave.

Outgoing Word Bank Country Director Makhtar Diop said future financial assistance would depend on the Government's commitment to implement the economic recovery plan and the fight against corruption. "We wish to emphasse that the level of our support will ultimately depend on the Government's success in implementing the Investment Programme and Economic Recovery Strategy, and especially, in tackling corruption," he said. Diop, who was instrumental in shifting the consultative meeting from Paris to Nairobi, said donors were committed to supporting the Government. He is co-chairing the two-day event with Finance Minister David Mwiraria. He urged the Government to end perennial wrangling in the ruling coalition. "We wish to emphasise that creating solid, independent, and efficient institutions is not an end by itself," said Diop. "In this area of governance the various institutions will be judged not only on the process, but also on their outcome." The Leader of the Official Opposition Uhuru Kenyatta, however, said the Government risked losing the war against graft. "Talking about corruption is one thing but taking a firm and decisive action is another," he said. He said the President must crack the whip and sack Cabinet ministers involved in corrupt deals.

From, Africa, by Tom Mogusu and Benson Kathuri of The East African Standard, Nairobi, 12 April 2005

Government's New Anti-Corruption Strategy Won't Bite Thieving Elite

President Yoweri Museveni on April 6th launched the new National Strategy to Fight Corruption and Build Ethics and Integrity in public office 2004- 2007. This is second government strategy, after the first one, which covered the period 2001-2004. The strategy, which was drawn up by the Directorate of Ethics and Integrity, is a framework on which anticorruption actors are to carry out their mandates up to the end of 2007, says Minister of State for Ethics and Integrity Tim Lwanga. However, only days after the launch, the strategy whose overall aim is to "minimize levels of corruption and increase and increase transparency and integrity in public office, has come under criticism.

Many legislators, pro anti-government alike questioned its effectiveness, and therefore government's commitment. This is a sort of government anticorruption blueprint, but does it address the real political problems on which corruption breeds? Will it make any difference or is it a waste of time? According to Lwanga, the strategy details a four-year plan being implemented and it a very crucial tool needed in the war against corruption. "We are in a war fighting corruption and we must have a plan. W are going to sit down and come up with what is necessary to win the war," he says. But the real problems, which have been pointed out again and again are not addressed by the strategy, according to former IGG Augustine Ruzindana. What has now become sort of a 'theme song' in the corruption debate; the lack of political will is nowhere near mention in the strategy. "Whatever strategy they come up with, this government does not have the capacity to fight corruption. There is simply no political will at all levels of government from the center to the lower councils. They can have a strategy, but it will not be useful," he says.

The anti corruption blue print touches on the political environment as one of the factors that will affect its implementation. "Political commitment on the part of government and all parliamentary and local government institutions to take on issues of corruption and accountability in a consistent and vigorous manner is central to the success of the strategy," it says. But a look at recent events suggests that such a statement is actually blunt, and the strategy therefore fails to address the problem. In the ongoing prosecution in which Emma Kato is accused of causing loss to government in the junk helicopter saga is puzzling because the DPP chose to leave out some people whom the Ssebutinde probe recommended for prosecution. Government has also not caused prosecution of other individuals implicated by various judicial probes. There is also another question that has been asked over and over: can government talk of political will given the cabinet recommendations to the constitutional review commission regarding the institution of the IGG? Although Cabinet later dropped some, the fact that cabinet could recommend such measures says volumes about government's apathy. Also, although the strategy calls for strengthening of the institutional framework, it does not call for any action concerning the row over the Leadership Code, in which some crucial sections were nullified during the Mutale petition.

The Constitutional Court ruled that the IGG could not recommend to the President sacking of some officials because it would interfere with Presidential Prerogative. Jotham Tumwesigye, the IGG at that time, questioned government's commitment to support the institution of the IGG. Lwanga acknowledges that there were some loopholes in the code, a reason the AG chose not to appeal. "You appeal when you feel the judgment is wrong. In this case, the judges were right. The legislators made mistakes in the code. But we are making constitutional amendments and they will take care of the loopholes," he says. What the strategy therefore refers to as a mere "perception that there is inadequate political commitment in support of anti corruption efforts" turns out to be not just a perception but reality. This is what the strategy refers to as "the ambiguity in high level political commitment [which] is associated with an inability or unwillingness to penalize high profile corruption." But the strategy is spot on, noting that such ambiguity "increases public cynicism, and increases perceptions that grand corruption can be committed with impunity.

The strategy must seek to increase political support and commitment for the anti corruption agenda." Such passing statements have led critics to point out that this is just another of government's rhetoric. Do these reports reflect a genuine desire on the part of government to fight corruption, or they are merely seeking to portray a populist stance? "On the surface, whatever strategies, government wants to show its commitment. But is has been undermining institutions that are supposed to fight corruption at the top, the ministries and local governments," Ruzindana says. However, Lwanga says that such a criticism is unfounded. "This strategy has strategic goals and objectives. We are basically fighting poverty by eradicating corruption. How can you say that such a grand plan is a populist stance?" he says. More telling is the fact that the previous 2001-2004 strategy was never fully implemented and the same problem will happen. "We need al lot of money but we shall use what we have within our means but we will complete our mission," the minister says. The strategy addresses a few issues, but still to the big fish and the political elite, the strategy could turn out to be a big let off. Yet, this is where Uganda's problem with corruption is.

From, Africa, by Victor Karamagi of The Monitor, Kampala, 20 April 2005

Sweden Wants NTGL Tackle Corruption to Encourage Donors

The Swedish Government is calling on the National Transitional Government of Liberia (NTGL) to take proper action in addressing issues and allegations of corruption in the use of the country's resources. Sweden Counselor to Liberia, Irena Schoulgin, made the statement Tuesday at a signing ceremony between the Swedish Government and the United Nations Development Programme (UNDP). At the occasion, the Swedish Government donated 25 million Swedish Kroner, the equivalence of US$3.5 million to the UNDP/DDRR Trust Fund. The Swedish Counselor said, tackling the issues of accountability and transparency will demonstrate to the Liberian society and the international community that Liberia's Transitional Institutions are sharing the commitment of reconstructing post-war Liberia.

Madam Schoulgin stressed that the rehabilitation and reintegration of former combatants is one of the important components of rebuilding Liberia. It is not an easy or fast route ahead but together with Liberians and other partners in the international community, it is the hope of the Swedish Government that we can assist in the efforts made to stay on track towards a peaceful, democratic and prosperous Liberia," the Swedish diplomat added. She said further, Sweden is currently supporting community development, health, education and the judiciary via UN Agencies and International and National NGOs as a way of contributing to the speedy recovery of war-torn Liberia.
The 25Million Swedish Kroner is intended to speed up the RR component of the DDRR program already on-going in the country.

The latest donation brings the Swedish Government contribution to the UNDP/DDRR Trust Fund to a total of about USD $7 million. Sweden is the second largest donor to the UNDP/DDRR Trust Fund. Also speaking at the ceremony, the Executive Director of NCDDRR, Dr. Moses C. T. Jarbo said the donation which brings to four the number of donations made by the Swedish Government, signifies not only the love that Sweden has for Liberia, but it demonstrates a clear manifestation of Sweden's concern for world peace and stability in the West African sub-region. Dr. Jarbo thanked the Swedish Government on behalf of the NTGL for the level of contributions it has made to the achievement of peace in Liberia.

From, Africa, by L. Alaska Bryant of the News, Monrovia, 13 April 2005

Donors Grill Kenya Government on Corruption, Reforms

Nairobi - Kenya on Monday faced a tough job of convincing sceptical donors to give more aid, after many said they would make no new pledges until the government tackled corruption and accelerated economic reforms. The relationship between Kenya's major donors and the government is at its lowest ebb since President Mwai Kibaki took office in 2002. It was against this backdrop that donors and Kenya on Monday began a two-day meeting, led by the World Bank, to decide if the east African country will receive more aid. Donors said the government did not start with its best foot forward, after Kibaki kept the assembled dignitaries waiting for more than an hour and stumbled over a speech they characterised as uninspired and repetitive of old promises still undelivered. Kibaki apologised for his tardiness and blamed it on a cold.

Donors have been angered by a resurgence of rampant corruption among top government officials, and also by the slow pace of crucial reforms such as privatisation, banking and streamlining the civil service. "Uneven progress in implementing the key reforms ... particularly concrete actions to eradicate corruption, is affecting the confidence of stakeholders in the government," said Makhtar Diop, the World Bank's country director for Kenya. The failure of Kibaki's government to tackle crime and improve roads as promised during elections has also strained relations with donors and ordinary Kenyans. Many donors, who had pledged more than $4 billion at the last consultative meeting in 2003, said they would not give more aid until they were convinced their funds were being properly used and not being wasted by corruption.

REASSURANCE - "I don't expect a lot of new pledges to come out of this meeting, but I expect a reassurance by the donor community that we are committed to assist Kenya and we do not intend to cut back on promises we made in the past," Frederic Renard, Belgium's ambassador to Kenya, told Reuters. Key donors like the European Union, the United States, Germany and Canada have said they will not commit new funds at the meeting but would be keen to hear how the government planned to address their concerns. "We all want to be positive. It really depends on what we see and what we hear from the government. So we have an open mind," U.S. ambassador to Kenya William Bellamy said. "My hope is that we will come out of this meeting with a much stronger sense of the way forward." The EU representative to Kenya, Derek Fee, said the EU would not release 120 million euros in budgetary support it is withholding until the government enacts procurement laws that will reduce chances of corruption. But he added that the EU would release more than 100 million euros in project support for agriculture and road construction. Kibaki said he hoped the meeting would help to improve relations with donors and promised their funds would be put to proper use. "I want to assure you that the assistance you give we shall use it in the most effective way and for the purpose for which it is intended," he told donors.

From Reuters AlertNet, UK, by David Mageria, 11 April 2005

Government Spends Sh1.2b on War Against Corruption

The Government has spent Sh1.2 billion in the fight corruption, the Justice and Constitutional Affairs ministry has said. In a status report released to donor agencies yesterday, the ministry cited prosecution of 14 former heads of parastatals as one of the milestones realised in the war against corruption. "Cases being prosecuted included those of directors of Euro Bank, NHIF, NSSF, Postal Corporation of Kenya, Kenya Post Office Savings Bank, and the Pyrethrum Board of Kenya," the statement said. Also in court are former officials of the Kenya Sugar Authority, Kenyatta National Hospital, Kenya Tourist Development Authority, National Aids Control Council (NACC) and the Kenya Pipeline Company.

Release of the report cames a week before a high-level donor consultative meeting fixed for April 11 and 12 at Nairobi's Safari Park Hotel. It was therefore seen as an attempt to defuse tension between the Government and the donor community. Since the beginning of the year, a section of the donors led by the British High Commissioner Sir Edward Clay have renewed their criticism of the Government over the manner in which it has dealt with cases of corruption involving senior public officers.

Last week, Finance minister David Mwiraria said that the donors, who had pledged Sh300 billion in support of the Economic Recovery Strategy, were looking forward to detailed defence of its record during the meeting. Yesterday, the Justice and Constitutional Affairs ministry headed by Kiraitu Murungi maintained that Government's record on corruption was solid. He however conceded that some senior personalities in government were frustrating the efforts because their involvement in past corruption. "While a common understanding of the need to fight corruption was generally assumed, there were and still are many in the coalition government who stood and stand to lose from an effective campaign against corruption," the statement said. "Many corrupt individuals have found political comfort and support among such people." The ministry maintained that it was closing in on those involved in the theft and banking of Sh80 billion public funds in foreign banks. "Legal experts have been identified for this purpose and are initially targeting the identified $1billion for freezing," the statement said. The statement said that further asset search and recovery, both local and international, would be undertaken by Justice Ringera-led Kenya Anti-Corruption Commission.

From East African Standard, Kenya, by Benson Kathuri, 4 April 2005

Obasanjo: It's Now Zero Tolerance for Corruption

Warns ministers to 'get caught, be fired and tried'- President Olusegun Oba-sanjo yesterday declared what amounted to a 'red alert' to his ministers and other top government officials on the administration's battle against corruption as he said he has "zero tolerance" for the scourge. Speaking at the launching and handing over of helicopters and special motorcycles to the Nigeria Police in Abuja, Obasanjo said, "I have a zero tolerance for corruption and I will not accept corrupt practices any longer." According to the President, "henceforth any minister or government official caught engaging in corrupt practices would not only be dismissed from office but would be made to face the full wrath of the law at the court." He also used the ocasion to warn members of the Police High Command to be at alert in fishing out those he described as the bad eggs within the force.

The President said the on-going crusade against corruption is total as no one would be spared if caught. He urged the Police High Command to flush out all those that are corrupt. "The war against corruption is total and we are not going to spare anybody no matter how highly placed," he said. He expressed dismay and disappointment at the unsatisfactory reports reaching him on the police force and vowed to go the extra length to restore diginity and sanity in the Force. On the launching and handover of the special motorcycles and helicopters to the police,Obasanjo said the equiptment were acquired to enhance the operational efficiency of the Police Force. Obasanjo stated that the helicopters would be deployed in search and rescue mission while the motorcycles would assist the police to penetrate pathways and other difficiult terrain.

In the last one-month when the President has pursued the anti-corruption battle with vigour, two ministers, - that of Education and Housing, Prof. Fabian Osuji and Mrs. Mobolaji Osomo, have been fired while Senate President Adolphus Wabara has been forced to resign. Osuji and Wabara were indicted in the N55 million bribe-for-budget scandal while Osomo was removed for not following due process in the sale of Federal Government houses in Ikoyi, Lagos. Also, the former Inspector General of Police, Mr. Tafa Balogun, was last Monday arraigned in a Federal High Court, Abuja on a 70-count charge of money laundering and stealing. Speaking at the occasion, the Minister of Police Affairs, Chief Broadrick Bozimo, advised that the maintenance of the equipment should be given priority. He said that plans are under way to embark on regular foreign training of policemen in order to enhance their operational performances. Earlier, the occassion was nearly marred by an accidental discharge of bullets from the rifle of one of the policemen on guard duties. A lady hawker at the Eagle Square Venue of the launching was nearly killed. Eye witness account said the lady whose name was not immediately known was badly wounded and was immediatley rushed to the hospital for medical care. The scene of the shooting was immediately cordoned off by stern looking policemen on the order of senior police officers. Over 1,000 specialised motor-cycles and two helicopters were handed over to the police at the ceremony.

From, Africa, by Chuks Okocha of This day, Lagos, 8 April 2005

'Anti-Corruption War, A Political Revolution'

Vision For Nigeria (VFN), a US-based non-govermental organisation, has described as a political revolution, the on-going anti-corruption war by President Olusegun Obasanjo, saying such revolutions had existed in all advanced democracies of the world, prelude to their successes. Chairman of the group, Chief Elvis Ndubueze, said the recent development in the country, which culminated in the sack of the Housing Minister, Mrs. Mobolaji Osomo, her education counterpart, Professor Fabian Osuji, resignation of Senate President, Adolphus Wabara and the appearance in court of the former Inspector-General of Police, Tafa Balogun, were twists commendable in the polity. "All the things happening in Nigeria now are political revolution, and they have happened in all the countries that aim at success. For the first time, this is happening in Nigeria, I think we should call a spade a spade. People should look at what is happening with discerning mind and come up with constructive argument.

"Each time we talk here, we talk about US, London, France, Singapore and all the advanced countries as if they never went through similar experiences. People in those countries fought corruption openly and that is why they can stand up to be counted. That is why everybody who is honourable will support Obasanjo's crusade," he said. Ndubueze said the elites must have to drop their cynical disposition towards everything, before they can be able to see the beauty in the on-going revolution. "Obasanjo is thorough and genuine with what he is doing and whoever is against this will incur the wrath of God," he said.

"The democratic groups in the world today are supporting Obasanjo. So, the elites should help build the country for the betterment of all. The world is in support of what's happening in Nigeria today and whoever is against the cleansing in Nigeria will not find favour in the sight of God", he stated. He therefore called on all well-meaning Nigerians to rally round the President with a view to ensuring he succeeds in the on-going revolution. He said many may not appreciate what is presently going on, but that the dividends of the present sacrifice would soon come to maifestation.

From, Africa, by Olawale Olaleye of This Day, Latos, 7 April 2005

Tukur Hails Obasanjo's Anti-Corruption War

Chairman of NEPAD Business Gruop, Dr. Bamanga Tukur, has praised the courage of President Olusegun Obasanjo in his on-going anti-coruption crusade, saying the presidential initiative deserves the support of all Nigerians. Commenting on the promptness with which the President reacted to the N55 million bribe-for-budget scandal that rocked the National Assembly last week and the Ikoyi houses sale scandal, Tukur said the President has taken the bull by the horn, adding that "the crusade now started should not be stopped untill sanity is restored into the polity." Saying there should be no sacred cow in the on-going crusade, Tukur who is also the Executive President of African Business Roundtable advised that whoever is caught should be made to account for it. While also saluting the courage of Economic and Financial Crimes Commission (EFCC), Alhaji Nuhu Ribadu, NEPAD chief said the commission should be strenghtend. He said the anti-coruption crusade has rekindled hope that Nigeria can be great again, adding that "Nigerians can now walk tall around the world as a result of this initiative." Tukur prayed God to give President Obasanjo the strenght and wisdom to carry through this crusade. He however condemned what he called "misguided moves" by some National Assembly members to initiate impeachement move against Obasanjo.

From, Africa, by This Day, Lagos, 5 April 2005


UN says Corruption in Cambodia Hinders Progress

A U.N. human rights expert says rampant corruption in Cambodia is hindering the country's progress toward democracy and economic development. In a report submitted to the U.N. Human Rights Commission in Geneva, the expert says problems of impunity have become systemic to the detriment of the society. U.N. human-rights expert Peter Leuprecht says his last visit to Cambodia in November left him more pessimistic than ever about the future of the country. He says the government of Prime Minister Hun Sen seems to be increasingly autocratic and is concentrating power behind what he calls a shaky facade of democracy. Mr. Leuprecht calls impunity a "gangrene" that undermines the fabric of Cambodian society. He says the necessary mechanisms for accountability are not in place. "The judiciary is very weak," he said. "There is no separation of powers in Cambodia, and the rule of law, also in this respect, is elusive. Now, among many other things, impunity fosters corruption, which is endemic in Cambodia. It is everywhere, at all levels."

Mr. Leuprecht is very critical of Cambodia's system of forestry and land concessions. He says granting concessions often involves large kickbacks. He says the system has led to human-rights violations, while neither the people nor the state has benefited from the concessions. The human-rights expert says the companies, often foreign, are only interested in timber and this has led to the rapid destruction of forests, with far-reaching ecological consequences. Mr. Leuprecht says he is concerned about restrictions on freedom of assembly and association. He says he has documented a system of intimidation and threats. "I think if somebody denounced cases of corruption by high-placed people, probably he or she would run into trouble," he said. "There is still, and, regrettably, a very high degree of violence, also connected with impunity. You know, these contract-style killings. Quite a lot of these have happened. There have been quite severe measures, quite brutal measures against people, who protest peacefully, for example, against the concession system."

Mr. Leuprecht says there is hope that trials of people accused of mass murder under the Khmer Rouge will begin toward the end of this year, or early next year. He calls this one of the few positive developments he has seen in the country. Although he does not view the tribunal as ideal, he says it could have a good effect on the administration of justice in Cambodia. He says the head of Cambodia's Human Rights Committee, who has read his report, has commented that the information contained within is not based on facts.

From Voice of America, by Lisa Schlein, Geneva, 18 April 2005

China, Thailand Boost Corruption Crackdown

Manila - China and Thailand on Tuesday joined the anti-corruption group of the Asian Development Bank and the Organization for Economic Cooperation and Development. The Manila-based ADB and the OECD of Paris welcomed China and Thailand as the 24th and 25th member of the anti-corruption initiative. Launched in 1999, the group focuses on promoting anti-corruption policies both at the national and regional levels. The two countries' decision to join "is important proof of China's and Thailand's highest political commitment to fight corruption and a major step forward for the (Asia) region's efforts in this regard," said Jak Jabes, the ADB's director for governance and regional cooperation division.

From Washington Times, DC, 19 April 2005

PM Vows to Fight Corruption, Waste

HCM City - The draft laws to fight corruption and economic waste, which are expected to be submitted to the National Assembly this year, will allow the people to take a more active role in the fight against these malpractices, said Khai at a meeting with voters in HCM City on Tuesday. At the meeting with 400 voters in District 12 and Hoc Mon District, citizens told the PM that they are most concerned about the shortcomings of planning and urban management, traffic accidents, increasing social vices, administrative hassles and slow administrative reform. District 12 voters were concerned that compensation for road construction projects like the Trans-Asia Highway has been inadequate and has taken too long.

They also complained that 90 percent of the roads in the district are made of dirt and in bad condition, which affects their daily lives. Meanwhile, Hoc Mon District voters said that rural planning and development lack sufficient attention. Factories and residential buildings built on farmland have negatively affected the agricultural livelihoods of many people. The PM admitted that even though significant administrative reforms have been made over the past few years, many people still experience administrative hassles when dealing with land-use or home-ownership rights. This problem has diminished the people's faith in reforms, the PM said. Prime Minister Khai also asked the local government to be more determined in dealing with those who violate the law.

From Viet Nam News, Vietnam, 14 April 2005

Teachers to Adopt New Code of Ethics

Victorian teachers will be asked to adhere to a new code of ethics covering values such as integrity, honesty and respect. The draft code has been developed by the Victorian Institute of Teaching in consultation with teachers around the state. The state's 98,000 registered teachers will get a copy of the draft code this week - the formal code is due in July. The institute's chairwoman, Susan Halliday, says it provides teachers with a benchmark of what is expected. "It's important to understand that I suppose for a long period of time teachers have worked particularly well without a code, but I think it's also important to note that we do need one set of standards that everybody has access to and can adhere to," she said. "For some people it may be a confirmation of what they were thinking mEay have changed over more recent times, for others it will appear just like commonsense, something you know that they will read and they'll go 'oh I would have assumed this automatically'."

From ABC Regional Online, Australia, 19 April 2005

Government Pushes for Administrative Reforms

New Delhi - In a significant move aimed at improving governance, the government on Friday annou-nced in principle the setting up of a second administrative reforms commission (ARC). The Union cabinet, chaired by PM Manmohan Singh, decided to constitute a group of ministers to finalise the terms of reference of the body that will be set up to prepare a blueprint for revamping the public administration system acr-oss the country. The cabinet also decided to fill up the backlog of jobs reserved for the scheduled castes and scheduled tribes and regularly monitor the progress made in those reserved for the other backward classes (OBCs). A committee - headed by the cabinet secretary - will be set up to strengthen the process of filling up of the backlog of vacancies of members of the SCs and STs. The meeting also decided that the backlog of vacancies of OBCs should be monitored strictly and reports regarding SCs, STs and OBCs should be periodically submitted to the cabinet, I&B minister and cabinet spoke-sman S Jaipal Reddy told reporters.

In another significant decision, the cabinet gave news and current affairs TV networks the "last" extension of six months to raise the equity base of Indian partners to 51% as required by the policy on uplinking. "The policy requires the news channels to adhere to a cap of 26% of FDI and the Indian entity to have not less than 51%," Reddy said after the meeting. He said the cabinet "gave its last extension of six months from now (till September 2005) to show that the structural equity conforms to this regime".

"There will be no further extensions," Reddy said. He said the firms operating such channels were earlier required to conform to the revised guidelines by March 2004, that is, to restructure their equity to conform to these guidelines. The decision for extension of the deadline will give time to the ministry to finalise the proposal to review the uplinking guidelines, Reddy said. The administrative reforms commission, meanwhile, would go into the entire gamut of issues relating to public administration and submit its report to the government within one year of its constitution. Reddy said the panel, with four members and a member secretary, would be created as a commission of inquiry with its chairman enjoying cabinet rank. In keeping with the changed dynamics of governance, as compared to what they were four decades ago, the new body would grapple with new issues like citizen-centric administration, promoting e-governance and crisis management.

From India, India, 14 April 2005

China Committed to International Cooperation against Corruption

Bangkok: China has always been committed to international cooperation in fighting against corruption and is ready to push forward the efforts, Justice Minister Zhang Fusen said Saturday at a United Nations conference here. "Chinese law enforcement authorities have long put the priorityon anti-corruption and achieved remarkable results in recent years," said Zhang in a speech to the 11th United Nations Crime Prevention and Criminal Justice Congress held in Bangkok. In a bid to further crack down on corruption and other forms ofcrime, the Chinese government also reached for international cooperation in related fields, said Zhang.

China has ratified the UN Convention against Transnational Organized Crime and signed the UN Convention against Corruption, signed 71 bilateral justice cooperation instruments with 47 countries, had agreements on extradition with 23 countries and been a member of more than 20 international justice cooperation conventions, according to Zhang. "We also called on UN member states to speed up their adoption and implementation of the anti-corruption convention and the convention against transnational organized crime," he said.

The Chinese government is ready to use the two instruments as basis for international cooperation in fields of extradition, seeking and returning embezzled assets and cross-border sample collection, he said. On the domestic level, the legislature authorities are working to draft a law against money laundering, according to Zhang. How to fight against corruption, transnational organized crime,economic and financial crime and terrorism through international cooperation are major topics being discussed at the UN crime prevention congress, which is being held in Bangkok from April 18 to 25.

From Xinhua, China, 23 April 2005


Bosnia Opposition Urges Anti-corruption Laws

Opposition forces are furious that ruling parties and the international community's Lord Paddy Ashdown have united to quash a law enabling courts to seize illegally obtained assets. Bosnian opposition parties are angry that the internationally appointed authority in the country has refused to support what they say is a crucial law aimed at cutting down corruption, tax evasion and money laundering. They say the lack of legal provisions enabling courts to seize illegally acquired property and other assets is costing the state millions of euro in lost money. Although they presented a draft law on the seizure of illegally obtained assets almost 18 months ago, the ruling nationalist parties have refused to adopt it and the office of the High Representative (OHR) under Paddy Ashdown, has also held aloof.

The scale of the problem is not seriously disputed. Studies by international and legal experts over several years have shown that huge amounts of money are lost to the government every year through money laundering, embezzlement, tax evasion and the illegal acquisition of property and other assets. Only this year, studies pointed to the extent to which organized and economic crime structures are damaging the country's coffers. They pointed out that while Bosnia has received huge financial donations over the past decade, including more than US$5 billion in aid from 1995 to 2000, little of this investment is visible on the country's shabby streets, or in the life-styles of the poverty stricken population. The OHR has also admitted that several billion convertible marks (KM), the Bosnian currency, earmarked for social spending had ended up in private hands in the past few years.

Losing billions to corruption - In Bosnia's reconstruction sector alone, about 74 million KM are embezzled every year, according to Transparency International, a respected anti-corruption watchdog. The Customs and Fiscal Assistance Office, CAFAO, says another 1.2 billion KM, which is more than the annual budget of the Federation - Bosnia's larger entity - is lost to the government each year through scams such as fake companies, or companies registered in the name of dead people. This corruption has more than purely economic consequences. An efficient fight against organized crime and corruption is one of 16 conditions set by the European Commission if Bosnia is to get a green light for a Stabilization and Association Agreement (SAA), a key stage on the road to EU membership. The establishment of a special legal department for tackling organized and economic crime and corruption marked a first step by the courts to bring the criminals to justice. But this initiative has proved insufficient. While the department has launched many court cases, only a few people have been sentenced. Additionally, those who were convicted and sentenced have usually retained ownership of their illegally acquired assets through legal loopholes.

Legislation lacking - Legal experts say the courts have been unable to remedy this basic deficiency because they lack a specific law that would entitle them to requisition such assets. "We sorely need a law that would allow the seizure of illegally acquired assets," Transparency International's spokesperson, Srdjan Blagovcanin, told IWPR. "It could be a very efficient way to combat organized crime and other acts of crime." The existing regulations in Bosnia on the issue are either ignored, unexplored or are not used efficiently. For example, the country is a signatory to the Council of Europe convention on money laundering, obliging the authorities to seek out and confiscate property acquired through crime. But the obligation is rarely implemented. Similarly, the new Bosnian criminal code states, "No one can retain illegally acquired property." But, in the two years since that law has been in place, only 500'000 KM of such assets have been seized in a handful of cases. Lawyers say the existing regulations are not sufficient and that the lack of a precise law on the matter is a hindrance. "If we had the legal possibilities to act, we could seize €5 million of assets in real estate and cash from just one man now under investigation," a source close to the Bosnian judiciary told IWPR. The source added, "We know that this man can't prove the origin of his property but it's hard for us to prove this under the current regulations."

Targeting assets - Several European countries possess special guidelines or laws designed to ensure that illegally acquired assets do not remain in the hands of the people who have been found guilty of committing crimes. With this in mind, opposition parties in the Bosnian state parliament put forward draft legislation based on an existing law in Ireland, which would have set up a special agency to receive assets acquired through criminal activities. If the owner was found unable to establish a legal title to the property, the law would permit the agency to retain control and assess its value. It would then decide how to use the money or property and whether to sell it. The Socialist Democratic Party (SDP), the Alliance of Independent Social Democrats (SNSD), and the National Croat Initiative (NHI), presented the draft law to the Bosnian parliament in late 2003. "We wanted to secure a tool that would help the fight against one of the greatest evils facing [Bosnia] today - crime and corruption," Jozo Krizanovic, head of the SDP group in the Bosnian assembly, told IWPR. "Before we proposed the law and the forming of the agency, we reviewed one of the annual reports on the work of the state prosecutor, which said the prosecution had processed some 30 acts of crime and seized just over 50'000 KM under the [current] rules. We noted that even when a crime was dealt with and the perpetrators sentenced, their property remained in their hands. It is in the interest of citizens for those assets not to remain in the hands of the people who acquired it in an illegal manner."

Reform gets nowhere - The proposed reform has got nowhere, though. It was rejected twice by deputies of the governing nationalist parties, namely, the Party of Democratic Action (SDA), the Serbian Democratic Party (SDS), and the Croatian Democratic Union (HDZ). "The reaction in parliament from the ruling parties was very negative even before they looked at the law," Krizanovic said. They said this law was not needed because there were other laws that enabled the same thing. Some said it recalled the "dark days of the previous [communist] system". The SDA's Mirsad Ceman, chair of the Constitutional Legal Commission of the Bosnian Parliamentary Assembly House of Representatives, said the failure to adopt the proposed law was "not a catastrophe". Cerman rejected the need to adopt this or any similar law, insisting that the existing laws afforded ample possibilities for the courts to combat crime and corruption. Even when reminded that the state prosecutor himself this year told parliament of the need to adopt such a law, Cerman remained adamant. The state prosecutor, he said, had "voiced a political, not an expert, stand". "Obviously, the people who made the proposal think they are the image of honesty while all the others are the image of thievery. I say that there are thieves…among both," he went on.

Opposition seeks OHR support - After the ruling parties refused to budge, the opposition sought support from the OHR. Their initial hopes were high. The previous High Representative, Wolfgang Petritsch, prior to leaving, had drafted a document entitled Work and Justice, which concluded that the authorities "have to draft and adopt a law which orders the seizure of assets acquired through acts of crime". But the current High Representative, Paddy Ashdown, has refused to take the same stand. Sources close to the OHR say this is partly because the OHR prefers to have its own legal team drafting laws, which it then imposes. However, a second reason may be that most of the existing laws, which the prosecution complains about, have been imposed or drafted by people that the OHR itself engaged. When the OHR did voice an opinion on the draft law, it demanded major changes and amendments. For example, the OHR wanted changes to the part of the law that stated that it would be enough for the state to keep illegally obtained assets if the owner could not prove their legality, rather than requiring the state prosecutor to prove their criminal origin. When the initiators of the law declined to change this section of the wording, the OHR refused to give its support, saying that adoption of a law like this would be "premature". This decision by the OHR went effectively in favor of the ruling parties and their refusal to adopt the law or give it another hearing. To Cerman, a leading opponent, the arguments that many European countries have such laws and agencies is no reason for Bosnia to follow suit. "Nothing can convince me that we need this law," he said. "All of this is aimed at creating political tension."

From ISN, Switzerland, by Nidzara Ahmetasevic in Sarajevo for IWPR, 18 April 2005

Transparency International's Leader on Corruption in Romania

In Short: The view prevailing in the EU institutions is that combatting corruption remains a key issue for EU candidate Romania. Miklos Marschall, executive director of Transparency International, believes that Bucharest's latest initiatives on this front appear serious but that the EU also needs to set up clearer anti-corruption policies and standards.

Brief News: In an interview with EurActiv Romania, Marschall said that the new Romanian government has a relatively limited window of opportunity to convince the public that it means what it says. "They should demonstrate that a new era with new rules has started," said Marschall. Furthermore, he recommended that Bucharest take the related warnings from Strasbourg and Brussels very seriously, noting that "window-dressings" by various "anti-corruption crusaders" serve only to undermine the credibility of the anti-corruption campaigns. In Marschall's opinion, the fact that Romania has the worst score in Transparency International's Corruption Perception Index among the recent EU accession countries can be explained by the existence of a "stronger consensus" within the political elites of the other countries about the necessary reform agenda.

From Euractiv, Belgium, 14 April 2005

Research and Markets Has Announced the Addition of Ethics and Corporate Social Responsibility in Retail Financial Services to Their Offering

Ethics and Corporate Social Responsibility in Retail Financial Services sets out to provide a comprehensive review of the increasing importance of ethical issues in financial services. Today financial services companies find themselves exposed to ever greater public scrutiny as successive scandals have severely damaged the sector's image. Reputation is everything in financial services and companies have been forced to realise that without sound ethical values and active policies on corporate social responsibility (CSR) and sustainable growth they will be vulnerable to customer and investor criticism.

This report shows how financial services companies can reduce their reputational risk by developing a genuinely ethical profile in the marketplace, which underpins their brand, increases customer retention and locks in shareholder value. The report gives special attention to ethical marketing and describes how a company can avoid mistakes like mis-selling and deceptive advertising. It looks at how financial services companies can structure their CSR programme, how to develop an ethical approach to product design and how to organise themselves so that they minimise reputational risk. Using case studies to illustrate why ethical mishaps take place, the report also looks at best practice in companies with a developed sense of corporate citizenship. Details are given about the new regulatory background and how a raft of EC financial legislation is about to transform the whole ethical and compliance background of the industry. Attention is given to how ethics in financial services relates to internal control and how companies can uphold their values through independent ethical committees. The strategic implications of the new ethical awareness are discussed in detail including the implications for boards and senior management, transparency and disclosure, risk management, diversification and acquisitions and liability cover.

Regulators have decided to get tough on financial services companies who are now exposed to considerable regulatory risk. Financial companies also realise that as much as 90% of their shareholder value is tied up in their reputation and that they need to act to reduce regulatory risk. Directors and senior management are at greater risk of being sued today and the many headline cases have scared industry leaders into taking action to protect themselves and their companies. Companies are also being measured and rated for their ethical and CSR status and sometimes companies are being "blacklisted" by investors if they don't measure up to the highest standards. Thus there is an urgent need to protect shareholder value by demonstrating the company has an ethical stance. No other publication has pulled together all the ethical issues, which
affect financial services.

Why do you need this report? - Safeguard yourself from 'blacklisting' by investors; - Protect shareholder value by demonstrating your company has a sound; ethical stance - Learn from your peers through case studies that illustrate how best; practice is achieved and why ethical - mishaps take place; - Protect your image and boost your brand; - Ensure you are aware of ALL of the ethical issues that affect financial.

Who should read this report? Senior Executives working within retail banks, insurance companies and the investment community at the following levels: CEO, Chairman and Director, Heads of Internal Audit, Heads of Marketing, Ethics Officers, CSR Officers, Heads of Business Units, Compliance Officers, PR Officers, Head of Legal Department, Operational Risk Managers

Topics covered in the report include: - The Ethical Dimension to Selling Financial Services; - Case Studies; - Ethical Selling; - CSR and Sustainability Programmes; - Communicating Best Practice Ethics; - Design of Financial Products; - Reputational Risk in Financial Services
- Strategic Implications of the New Ethical Awareness.

From PR Newswire (press release), 15 April 2005

Romania, Bulgaria Sign EU Entry Pact

Bulgarians celebrated on the streets of the capital Monday - Romania and Bulgaria signed an accession treaty with the European Union Monday, paving the way to join the bloc in January 2007 in what they hailed as an "historic" step for their ex-communist nations. Flanked by a huge blue screen trumpeting "welcome," the two countries' leaders signed the accord at a ceremony on the sidelines of a meeting of EU foreign ministers in Luxembourg, which holds the bloc's rotating presidency. Both of the Balkan states, which were slow in starting reforms after the 1989 collapse of communism in the region, were left out of last year's EU enlargement from 15 to 25 countries, including eight ex-communist states. With a combined population of some 30 million, they would be the poorest countries in the bloc if they were to join tomorrow, with a pro capita GDP of less than 30 percent of the EU average.

Luxembourg Prime Minister Jean-Claude Juncker, whose country currently holds the EU presidency, lauded the Bulgarian and Romanian people's qualities. "Let us welcome the people of Bulgaria and Romania, these courageous people, these noble people, into the heart of our family," said Luxembourg Prime Minister Jean-Claude Juncker. "Their courage and their ability to get things done have never failed to impress us," he added.

Reforms still necessary - EU commission chief Jose Manuel Barroso underlined the need for continued efforts even as he welcomed Romania and Bulgaria into "the European family" at Monday's ceremony. But rest assured that we will also be working with you to overcome any difficulties as you make your final push between now and January 2007," he said. The two Balkan states joining the EU is contingent upon them carrying out reforms to fight corruption, strengthen border controls, beef up their justice and administration, and improve rules on state aid to industry. If they fail to fulfill the EU's requirements for entry, their membership could be delayed until 2008, according to the 860-page treaty signed Monday.

From Deutsche Welle, Germany, 25 April 2005


The Dubai Ethics Resource Center Teams Up with Five Local Colleges and Universities to Launch the 'Future Leader Program'

The Dubai Ethics Resource Center (DERC) and five colleges and universities have launched a joint program to foster personal responsibility and ethical leadership in college students. In a press conference held at the Chamber of Commerce and Industry, senior administrators from the Dubai Men's College, the Dubai Women's College, the Dubai University College, the Wollongong University in Dubai and Zayed University joined DERC officials in announcing the Future Leader Program, a multi-pronged educational and teaching skill development program that will empower students to identify and confront ethical challenges in the work environment, assist them in the development of ethical leadership attributes and strengthen the capacity of faculty members to design and deliver business ethics curricula. A memorandum of understanding governing the terms of the multilateral collaboration was signed in a public ceremony prior to the press conference.

Ms. Amna Al Jallaf, a member of the Dubai Chamber of Commerce and Industry (DCCI) Board who sits on the Executive Committee of DERC said that the Future Leader Program 'provides a vehicle for business and academia to contribute to the ethical development of the next generation of business leaders'. She explained that 'leaders from DCCI affiliated Business Groups participated in the identification of key ethical challenges that new graduates are likely to face in the work place, which will be used by faculty-led working groups in developing the program content'.

A major component of the program is the joint development of an online ethics resource center that will be accessible by students and faculty at participating institutions and can be made available to other colleges and universities in the UAE and the region. A Higher Colleges of Technology supplied online teaching and object-learning platform will be used to create ethics simulations, case studies and other reference material. Director of Dubai Women's College, Dr Howard Reed, says the platform will provide interactive learning opportunities for students about the ethical implications of the decisions they would make in business. "The online simulations have been carefully scripted to include situations familiar to students and business people in Dubai. Examples include conflict of interest and discrimination in the workplace. Dubai Women's College welcomes the collaboration with the Dubai Ethics Resource Centre and other tertiary institutions to produce these innovative tools to support independent learning.

The program is jointly supported by the DCCI, the Higher Colleges of Technology and Shell Exploration and Production International. Hussain Al Mahmoudi, External Affairs Manager at Shell explained: "this is yet a further demonstration of Shell commitment to the development of the UAE. We believe such a program is an excellent initiative which aims at training the future leaders on business Ethics. We would like to congratulate the DERC on moving and successfully implementing this program. The program tailors well with Shell's own internal programmes on adhering to its General Business Principles. Shell has been a founding member of the Executive Committee of DERC and has shown support throughout the establishment process."

A series of university seminars on business ethics were conducted throughout February and March of this year as a prelude to launching the program. Added Alex Zalami, DERC Executive Director: 'a writing group composed of faculty members from participating colleges and universities is scheduled to complete the first on-line ethics simulation in June and plans to develop additional material to launch the online resource center by the fall semester. In parallel, a group of faculty members from the various academic institutions are currently enrolled in an on-line train-the-trainer workshop to develop their skills in teaching business ethics. This summer, DERC will host a group of student interns who will complete the summer internship program with a week residency at leading local and regional businesses for on-site familiarization with best practices in business ethics and corporate governance'.

From AME Info, United Arab Emirates, 18 April 2005

Palestinian President Tackles Corruption

Gaza - Palestinian President Mahmoud Abbas removed three of the late Yasser Arafat's top commanders in attempts to control widespread corruption. This initiative follows US and Israeli urges to make changes to security forces. Hundreds of their men are leaving under a retirement plan announced earlier this month, under which officers have to retire at the age of 60. The Palestinian security apparatus has long been seen as weak and inefficient in reining in militants and maintaining law and order.

The reform is an attempt at streamlining nine security branches, which have been in competition with each other in the past. In carrying out his reforms, Abbas has to be careful not to alienate influential figures in the Fatah movement, which have played prominent roles in leading the security forces in the past. Abbas, also known as Abu Mazen, was named as chairman of the Palestine Liberation Organization (PLO) after Yasser Arafat died in November 2004. He won convincingly in the election for president of the Palestinian Authority in January 2005. The 69-year-old was the nominated candidate of the main Palestinian political faction Fatah, and the clear front-runner throughout the campaign. He was also the man favored by the international community and Israel to succeed Arafat.

From All Headlines News, by Danielle M. George, 23 April 2005


Battle Over Ethics Reform Continues On Capitol Hill

A new proposal which would require businesses and other groups to disclose how much money they spend on lobbyists to push legislation was debated in a Tennessee House subcommittee Tuesday. Representative Frank Buck's legislation would address the amount of money spent by outside interests to lobby state lawmakers. Buck said he is getting more confident legislation aimed at regulating lobbyists can become law. "I feel better today in all candor with you than I have in a long time, because I thought a vote earlier without public rage and anger I don't think we'd be where we are. I think we're getting better not worse," Buck said. Separate ethics legislation aimed at allegations surrounding Senator John Ford of Memphis also went before a House and Senate conference committee Tuesday. That proposal would ban lawmakers from taking so-called "consulting money" to influence state contracts. The conference committee's job will be to iron out the differences between Senate and House versions of the bill.

From WTVF, TN, 19 April 2005

Bush Administration Fails to Support Update of Code of Ethics for International Trade in Foods

WHO Recommended Nutrition, Food-Safety Updates - Consumer groups are chiding the Bush Administration for failing to support efforts by the World Health Organization (WHO) to update a 20-year-old Code of Ethics for International Trade in Foods. According to the International Association of Consumer Food Organizations (IACFO), that Code needs to be updated to include guidance on marketing junk food to kids and related nutrition issues. This week in Paris revisions to the Code were being considered by a committee of the Codex Alimentarius Commission (Codex) sponsored by the United Nations Food and Agriculture Organization. The WHO called on the committee to revise the Code to address marketing practices that affect nutrition and diet-related disease. The U.S. failed, though, to support the WHO recommendation.

"This 20-year-old Code of ethics needs to reflect current concerns about nutrition and diet-related disease, particularly the growing epidemic of childhood obesity worldwide," said Bruce Silverglade, director of legal affairs for the Center for Science in the Public Interest, who attended the meeting on behalf of IACFO. "The Bush Administration talks a lot about the obesity crisis, but fails to speak up when it counts," he said. The U.S.-based Food Products Association opposed revising the Code. The Code sets baseline standards that countries can apply to the marketing of food products. While not mandatory, most countries follow regulatory policies that are consistent with the Code. While European countries attending the Codex meeting generally supported revising the Code, some Latin American countries opposed such efforts, expressing fears that revisions could create new trade barriers. The U.S. government remained silent on the point. The Codex Secretariat stated it would be "awkward" to proceed in the absence of greater enthusiasm, and despite support from the chair of the Codex committee, the matter was dropped.

From Center for Science in the Public Interest (press release), D.C., 15 April 2005

Congress to Seek Shorter Leash for Global Lenders

The U.S. Congress is moving to demand tougher transparency and accountability measures from the five leading multilateral development banks that lend billions of dollars to developing nations. U.S. Senate Foreign Relations Committee Chairman Richard Lugar says those demands will come as part of legislation authorising renewed funding for the banks, whose work affects hundreds of millions of people around the world. The five Multilateral Development Banks (MDBs) are the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank, and the World Bank. Corruption has become a global issue as developing countries, watchdog groups and some economists complain that multilateral development banks (MDBs) are mishandling vast sums intended to alleviate poverty, yet taxpayers in the borrowing countries still have to repay the banks.

In the last fiscal year, the MDBs financed projects worth more than 35 billion dollars in the areas of public administration, transportation, health and education, among others. In exchange, the MDBs push borrowing countries to lift economic barriers and foster a worry-free environment for the operations of multinational corporations based in industrialised nations. The United States, the world's largest economy, contributes more than one billion dollars a year to the banks, with a majority of that money going to the World Bank's International Development Association, which lends to the very poorest countries at subsidised rates. Since 1960, the United States has provided more than 42 billion dollars in direct contributions to the MDBs. Congress has the authority to determine how much and under what conditions funding will be allocated to the banks. Lugar said his committee, at the request of the George W. Bush administration, is working to ensure that U.S. contributions are managed well and "that the mission of the MDBs is not undercut by corruption." Lugar was speaking on Thursday in the fourth hearing devoted to reviewing U.S. policy toward the MDBs.

The U.S. Congress says it is looking for ways to help anti-fraud efforts at those public lenders. As part of this effort, Lugar said he sent letters of inquiry on individual projects and policies to the various banks, while his aides have visited overseas projects and interviewed bank employees, non-governmental organisation representatives, academics and government officials. Other legislative bodies have conducted similar investigations. The British parliament has undertaken its own inquiry, while the Italian Senate issued an order last September requesting an investigation. "Corruption impedes development efforts in many ways," Lugar said. "Bribes can influence important bank decisions on projects and contractors. Misuse of funds can inflate project costs, deny needed assistance to the poor, and cause projects to fail." There have been numerous complaints about corruption inside the MDBs, and during earlier hearings, several speakers called for urgent reforms. Among the recommendations were changing the incentives at the MDBs so that staff would feel less pressure to approve loans, and focus more actively on supervision and auditing of their lending.

There were also calls for more transparency in MDB operations and a requirement that borrowers improve transparency within their governments. Among the measures that may be requested by Congress is for the MDBs to harmonise anti-corruption policies and compile shared "blacklists" of corrupt companies and individuals. As it now stands, a company that is barred from working with the World Bank can still enter into contracts with the other MDBs. The European Bank for Reconstruction and Development, which operates in 27 countries that were once part of the Soviet bloc, has never banned a firm or an individual despite rampant corruption in the region. At Thursday's hearing there were also calls for external audits of managerial and financial controls like those described in the so-called Sarbanes-Oxley legislation, named after two U.S. senators, for all publicly held companies in the United States. "The challenge of preventing waste, fraud, and corruption at the MDBs must be tackled with vigour," said Lugar.

Because of their enormous influence on the world and their constant demands for better governance from borrowing nations, many critics have said it was ironic that the MDBs themselves have yet to practice what they preach. "It is imperative that the policies and practices of the banks themselves reflect the values of transparency and respect for human rights that they expect from the rest of the world," said Tom Devine, legal director of the Washington-based Government Accountability Project (GAP). "That is because these practices can have life and death consequences," he added. Devine, whose organisation works to protect whistleblowers, charged at the hearing that witnesses to misconduct and abuse at the banks are afraid to come forward. "Our evidence demonstrates that their fears are well-founded.

The banks routinely victimise the messenger rather than hold accountable those who defraud donor countries and recipient countries alike," he said. Previously, the United States has passed bills requiring that the country use its voice and vote to implement transparency reforms and to prevent the targeting of whistleblowers. But U.S. Executive Director to the Asian Development Bank (ADB) Paul W. Speltz said at the hearing that the ADB has made "significant progress". He said the bank is opening its operations to outside scrutiny, strengthening its anti-corruption capability, and promoting good governance in borrowing countries. He said that in 2004, the Manila-based ADB established a new inspection mechanism to address the concerns of persons affected by ADB projects and that the 2005 ADB budget included a 12 percent increase in funding for it.

Both the ADB and the European Bank for Reconstruction and Development said that an increasing number of projects include strict anti-corruption safeguards, including a transport project in Nepal, the Sri Lanka tsunami rehabilitation project, and the Bangladesh independent anti-corruption commission project. The World Bank, the largest of the MDBs, also says it already has multiple layers of oversight mechanisms, including audits, an inspection panel that reviews complaints about Bank projects, and the institution's governing board, among others. But Devine charged that a great deal of rhetoric has been coming out of the institutions, with no substantial changes on the ground. He urged stepped up involvement by the U.S. Congress. "While there is no doubt that some light has been shone on corrupt practices, the banks are too eager to direct that light on client countries," Devine said. "Their anti-corruption claims are more rhetorical than real."

From, Africa, by Emad Mekay (Washington) of Inter Press Service, Johannesburg, 22 April 2005

Ethics Commission Sees Significant Rise in Complaints

In the last five fiscal years, complaints filed with the state Ethics Commission have increased 20 percent, according to the commission's 2004 annual report. Most of the complaints were made by private citizens and concerned municipal officials. But officials say the boosted numbers don't necessarily mean there's been an increase in corruption. In 2004, 78 percent of the ethics complaints dealt with municipal employees. Complaints against state employees accounted for 18 percent, and county employees and private entities split the remaining 4 percent. In the same year, 67 percent of complaints were filed by private citizens, 21 percent from anonymous sources, 9 percent were generated by the commission staff, media and state review, 2 percent were reported by the alleged offender and one percent by other law enforcement agencies. Commission spokeswoman Carol Carson said 40 percent of the complaints heard in her office come from 11 percent of the state's cities and towns. Among the towns that generated the most complaints were Abington, Stoughton, Rockland, Plymouth Bridgewater and Kingston. But Carson cautioned against interpreting a high number of complaints as an indicator of poor municipal ethics.

Of the 1005 complaints the commission reviewed in 2004, 42.5 percent either fell outside the commission's authority or were "clearly frivolous," according to the 2004 report. Another 22 percent merited only a private education letter for the alleged offender. Five percent were consolidated with existing cases and just 9 percent were assigned to one of the commission's four attorney-investigator teams for review. In all, 31 complaints ended in formal hearings or disposition agreements in 2004, generating $41,000 in fines and forfeitures.

Executive Director Peter Sturges said the overall trend in local government is toward closer compliance with conflict-of-interest law. "Today, Massachusetts public employees do a pretty good job. There will always be people who make mistakes or try to get away with something. Those people you read about, but they are actually a pretty small number. "At the municipal level, there is a lot of scrutiny of public employees. Most public employees try to do the right thing." A spokesman with the state attorney general's office said statistics on the prosecution of municipal corruption aren't kept at the state level.

From Brockton Enterprise, MA, by Tim Grace, 23 April 2005


Better Protection for Small Nations Urged

The Bank of Thailand governor yesterday called on the international community to protect smaller countries from economic crime and exploitation by bigger nations to ensure a just and fair society for all. Speaking at the 11th UN Congress on Crime Prevention and Criminal Justice, M.R. Pridiyathorn Devakula discussed the exploitation of consumers when products, deemed hazardous to public health in larger countries, were relocated for production and sale in less developed nations. He said tobaccos, cigarettes and medicines were clear samples. Authorities from any two nations could agree on whether such dubious practices constituted economic crime. But it was clear smaller countries were exploited by bigger ones with more economic clout and higher levels of technological advancement, he said.

M.R. Pridiyathorn also hoped an internationally neutral body such as the United Nations would look at the economic exploitation of smaller nations and impose the appropriate measures to prevent it since he did not foresee any elected leader, whose rise to office would have been supported by influential business sectors, making any such move. He said economic crimes did not receive much attention since their non-violent nature meant they did not generally have a direct and immediate impact on people's lives and property. However, such crimes were more difficult to solve because the authorities often had to fight interference from influential figures allied with the perpetrators.
"If the perpetrators are members of the government, swift and decisive action taken against them will make society confident in the government's policy on this issue and thus encourage law enforcement officers to fearlessly do the right thing," he said. Strong political will and the full commitment of the government was needed since economic and financial crimes were vicious, destructive enemies of the country, M.R. Pridiyathorn said. Crimes such as stock price manipulation, insider trading and tax evasion generated feelings of unfairness in society, he said, adding that this was especially true if white-collar perpetrators had a lot of influence or were close friends with politicians.

Meanwhile, all the participants agreed that financial crime, despite its non-violent nature, affected the global economy, the country's credibility and provided financial support to transnational organised crime, terrorism and corruption. To prevent and tackle the problems, authorities in these countries needed to exchange information, technology and technical training at the bilateral and multilateral levels. Cooperation in fighting crime also needed to be strengthened. The secretary-general of the Anti-Money Laundering Office, Pol Maj-Gen Preeraphan Prempooti, said Canada had proposed a measure to suppress ``identity theft'' and Thailand planned to add this offence to the existing eight types of economic crime. The proposal was submitted to the cabinet two months ago and is now being considered.

From Voice of America, by bhanravee Tansubhapol, 18 April 2005

United Nations Crime Conference to Focus on Responses to Threats Old and New

With hundreds of policy-makers gathered in Bangkok, Thailand, to devise ways to combat graft, United Nations Secretary-General Kofi Annan today urged an international meeting on criminal justice to stand firmly against organized crime and corruption by pushing for adoption and full implementation of core international treaties and protocols aimed at fighting those scourges.

In a message to the Eleventh UN Congress on Crime Prevention and Criminal Justice, meeting through 25 April, Mr. Annan described organized crime as one of the major threats to international peace and security in the new century, and renewed his plea for States to ratify and implement the UN convention against that scourge, as well as the treaty against corruption. He also called for support for the 13 universal counter-terrorism instruments, and mutual cooperation in strengthening domestic systems of criminal justice and rule of law. Promoting the rule of law must also include robust capacity-building mechanisms to help post-conflict societies, where organized crime and links to large-scale corruption hampered reconstruction, he said in his message, which was read out by the Congress' Secretary-General, Antonio Mario Costa, head of the UN Office of Drugs and Crime (UNODC). For that reason, Mr. Annan added, he intended to create a dedicated Rule of Law Assistance Unit, which would boost national efforts to re-establish the rule of law emerging from instability and war.

The eight-day gathering is expected to draw Heads of State and ministers from more than 100 countries, as well as 2,000 delegates from Member States and representatives of various non-governmental organizations (NGOs) and criminal justice professionals. The Congress will focus on transnational organized crime, economic and financial graft, corruption and terrorism. Its high-level segment will feature a special treaty signing event to allow political leaders to ratify relevant UN conventions. Ahead of the Congress, Mr. Costa said that organized crime and the corruption it breeds posed a threat of staggering proportions. The steady deterioration of civil society, as well as ongoing conflict in many parts of the world, offered criminals, terrorists and other predators with opportunities to expand "what is fast becoming a criminal super-state."

In his opening address today, Mr. Costa urged greater political and financial support for the instruments aimed at countering that phenomenon and invited the Congress to second Mr. Annan's call for implementation of the core anti-terrorism conventions. He also urged delegations to press ahead with the Congress' outcome document - "The Bangkok Declaration" - and to overcome differences about emerging threats such as cyber-crime and money laundering. The Congress' recommendations should leave no doubt about how to proceed, Mr. Costa said, stressing that in any case, "The threats are certainly there: if you fudge the answer I invite you to give, you will have to live with the consequences. Give yourselves the opportunity to invest in the two conventions you have worked so hard to hammer out."

Agreeing that the meeting had come at a "crucial moment" when new threats were emerging, the Congress' President, Suwat Lipatpanlop, Thailand's Minister of Justice, stressed the utmost importance of coming together to build a new security consensus, based on a better global regulatory framework, adequate compliance with that framework, improved cooperation among States and international agencies, and, above all, political willingness, commitment and determination to take appropriate measures at national and local levels.

From UN News Centre, 18 April 2005

U.N. Seeks International Response to Crime

Bangkok - The increasingly transnational nature of organized crime and terrorism, the growing sophistication of criminal groups in carrying out economic and financial crimes, and the innovative uses to which both criminals and law enforcement officials are putting the Internet, were among the topics discussed at the weeklong Eleventh U.N. Congress on Crime Prevention and Criminal Justice that ended Monday in Bangkok. Judicial officials joined legal and law-enforcement experts in proposing international strategies to cope with crimes that defy national borders and turn huge segments of humanity into potential victims.

In the Bangkok Declaration on Crime and Justice adopted Monday, member states vowed to increase cooperation in extradition, information sharing, mutual legal assistance and other areas, especially related to money laundering, drug trafficking, human trafficking and the financing of international terrorism. Antonio Maria Costa, executive director of the U.N. Office on Drugs and Crime, who was also secretary-general of the conference, called the meeting a "milestone" in that it acknowledged the international character of crime and the need for an international response. He also praised the declaration for its reference to "the importance of addressing root causes that make people vulnerable to becoming soldiers of death." "We are putting in place a global legal framework," said Jean-Paul Laborde, chief of the Terrorism Prevention Branch of the UNODC.

He said the political will exists to fight terror, but many countries need assistance in strengthening their criminal justice systems to enable them to apprehend and prosecute perpetrators. Still, delegates were unable to arrive at a precise definition of terrorism, and a comprehensive convention on international terrorism remained only in draft form. An unwillingness to finance the process was seen as the reason the United States and other developed countries resisted calls for new legal instruments. The final document merely encouraged states to ratify existing conventions, and called for "adequate voluntary contributions" from donor states to help developing countries improve their capacity to fight crime.

In a special session on corruption, many delegates were critical of governments that tolerate official corruption, highlighting its negative impact on economic and social development. A delegate from South Africa criticized "African countries whose wealth fills the vaults of banks in several world cities while their citizens experience abject poverty," and expressed concern that many countries had not ratified the U.N. Convention against Corruption.

The need to address the fundamental roots of corruption and criminal behavior was stressed in an ancillary session conducted by the Interreligious and International Federation for World Peace, alongside the main deliberations. The group stressed the positive role of educational, religious and civil society institutions as strategic partners in the war against corruption and crime. Dr. Thomas Walsh, secretary-general of the IIFWP, pointed out that faith-based groups had been highly effective in such areas as character education and prisoner rehabilitation. "Prevention of corruption requires of individuals enlightened choices, choices that place the interests of the larger good over self interest when faced with a conflict of interest," Walsh said, adding that "the capacity for ethical action and aversion to corruption can be nurtured and developed as surely as physical health can be nurtured and enhanced through daily effort." IIFWP was founded by the Rev. Sun Myung Moon, who also started News World Communications, the company that owns United Press International. Emilia Bouzonde de Terzano, of the International Prisoners Aid Association, agreed there is a strong need for grassroots efforts in character education. De Terzano works with the families of prisoners in Buenos Aires, and has attended every U.N. Crime Congress since 1975, but feels that the situation on the ground is growing worse. "The situation is really deteriorating," she said. "Day by day there are more and more delinquents."

Other non-governmental groups stressed the necessity of enlightened law enforcement and judicial systems that can strike a balance between security needs and human rights. Pedro David, vice president of the International Association for Social Defense, noted the need for restraint among police, military and intelligence forces, as well as judicial systems, in their treatment of suspects "to prevent states from turning into terrorist states." "The cynical and irrational strategy of terrorists leads to the faulty conclusion that all means are acceptable to combat terror," Christian Kuhn, of the International Commission of Catholic Prison Pastoral Care, told one such meeting. "This plays into the hands of terrorists and becomes a moral victory for them ... We have to keep to our own ways of life and maintain our standards of dignity. That makes us stronger and more resistant." Casting a long shadow over the discussion was the perceived disregard for prisoners' human rights in the U.S.-led global war on terror. "It's very hard to talk about this with Guantanamo in the background," a delegate from Spain complained.

In another session on the new phenomenon of cyber crime, Taehoon Lee of the Korean Institute of Criminology noted Internet-based crimes raised such law enforcement problems as determining jurisdiction and the search and seizure of electronic information. Criminals are using the Internet for a range of purposes including extortion, blackmail, and gaining information on potential victims, but crime fighters are also using the Internet to great effect, he pointed out. Hamish McCulloch, assistant director of the Interpol General Secretariat, explained how an online photo database of 3 million pictures assisted law enforcement personnel in identifying the victims of pedophile and child pornography rings.

Amanda Hubbard of the U.S. Department of Justice gave an example of how police were able to locate a kidnapper in a South American Internet café, tracking him by his Web-based e-mail account through cooperation with U.S. officials and an Internet service provider. The man was arrested and his victim freed. In a final news briefing Monday, Executive Secretary of the Congress Eduardo Vetere of the UNODC said his department was "extremely satisfied" with the results of the conference. Carlos Vasconcelos, a federal prosecutor from Brazil, was less optimistic. "Such conferences are not so productive," he said, "but at least they get people talking. The world has no choice but to keep talking."

From World Peace Herald, DC,by Kathleen Hwang of United Press International, 25 April 2005

USAID Works To Improve Education from Morocco to Philippines

Agency's Kunder says spending on education has skyrocketed recently. The U.S. Agency for International Development (USAID) is working in 28 countries from Morocco to the Philippines to improve the quality of education in a region that accounts for 64 percent of the world's population and two-thirds of its poor. USAID's assistant administrator for Asia and the Near East, James Kunder, said in testimony before the Senate Foreign Relations Committee April 19 that improving education is vital to increasing economic opportunities and reducing the conditions that spawn terrorism. "Understanding and responding to the drivers of terrorism in all the countries we work in requires a good knowledge of local conditions and putting in place programs that are directly relevant to those issues," Kunder said at a hearing titled "Combating Terrorism through Education: the Near East and South Asian Experience."
"Education alone is not 'the answer' but it is absolutely critical to success," he added.

The exponential rise in USAID spending on education in 13 countries from $99.5 million in fiscal year 2002 to nearly $274.5 million in fiscal year 2004, reflects the importance that the U.S. government places on dealing with the challenges from the region, Kunder said. The areas he referred to are Afghanistan, Bangladesh, Egypt, India, Iraq, Jordan, Lebanon, Morocco, Nepal, Pakistan, Sri Lanka, West Bank/Gaza, and Yemen. Kunder said the education challenges include lack of access to functioning schools, large numbers of out-of-school youths, high rates of absenteeism, dropping out and illiteracy, and low percentages of students who go on to secondary school from primary school. The USAID official said the United States is working to remediate the problem on multiple fronts. It is seeking to provide educational opportunities that will attract dropouts back to school and opening literacy centers, especially for women, who account for two-thirds of the illiterate in the Arab countries. He said the agency also is offering training for teachers to help them impart skills for critical thinking and democratic values. In addition, it is distributing the popular American children's educational television program Sesame Street in Egypt and Bangladesh, which he said emphasizes "learning to be tolerant, practicing good hygiene and getting a head start in school."

Kunder said USAID is working on strengthening school management and expanding the use of information technology. He described some of the partnerships between the public and private sectors to prepare students for jobs "the 21st century workforce demands." The programs are measurably successful, judging by the USAID model programs that have been adopted by the governments of the host countries, he said. Following are the prepared remarks of Kunder's testimony: TESTIMONY OF JAMES KUNDER, ASSISTANT ADMINISTRATOR FOR ASIA AND THE NEAR EAST U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT BEFORE THE SENATE FOREIGN RELATIONS COMMITTEE (April 19, 2005)

I welcome the opportunity to appear before you today to discuss the work of the U.S. Agency for International Development in Asia and the Near East on the theme of "Combating Terrorism through Education: The Near East and South Asian Experience." We appreciate the importance of education as a force for peace and progress, and welcome this opportunity to share the experiences of our ongoing education programs in these two critical sub-regions. USAID works in 28 countries in Asia and the Near East - from Morocco to the Philippines and as far north as Mongolia. The region is home to 64 percent of the world's population and two-thirds of the world's poor. Across the region, there are many religious and cultural traditions. Some of the countries working to address terrorist threats have Muslim majorities. Some do not such as Nepal and Sri Lanka. Understanding and responding to the drivers of terrorism in all the countries we work in requires a good knowledge of local conditions and putting in place programs that are directly relevant to those issues. Our field missions give USAID a capacity to act effectively to make appropriate education interventions. They do so within a framework of complementary investments which support stability, openness and economic opportunity. Education alone is not "the answer" but it is absolutely critical to success.

I am proud that our many investments have shown positive results in improving access, quality and the responsiveness of national education systems. This statement outlines some of the problems we face, some of the work we have done and notes accomplishments. There is an array of responses that can and do work. Oftentimes, in concert with host countries, other donors and the private sector, good ideas can be scaled up. In many settings, the resources are not there for the kind of robust response that is required to provide national level coverage. Given the current knowledge deficit in the Near East and South Asia regions, education is one of our highest priorities. USAID's program approach supports the 9111 Commission Report recommendation that "the US should reach out to young people and offer them knowledge and hope."

The current education challenges in the region are: the lack of access to functioning schools, low quality and irrelevant curriculum, a large number of out-of-school youths, high illiteracy rates, particularly for females, and unemployed youth without the necessary skills to find gainful employment. We have responded to these challenges by focusing our programs on increasing equitable access to education opportunities, improving the quality and relevance of education, improving literacy and strengthening workforce skills. We are monitoring the impact our programs - we have enrolled over 170,000 (56% girls) accelerated learning students in Afghanistan and 69,214 students are enrolled in literacy courses in Pakistan. We have printed and distributed 27 million textbooks in Afghanistan. We have recognized the important role of information technology in changing the way education is delivered and incorporated in our programs. We are encouraging the use of public-private partnerships and are collaborating closely with MEPI, Peace Corps, and other agencies to leverage our impact and to avoid duplication.

Since 2001, USAID's education portfolio in the Near East and South Asian region has dramatically expanded from 1 to 13 programs. The budget for education in the following 13 countries rose from $99.5 million in FY 2002 to nearly $274.5 million in FY 2004: Afghanistan, Bangladesh, Egypt, India, Iraq, Jordan, Lebanon, Morocco, Nepal, Pakistan, Sri Lanka, West Bank/Gaza, and Yemen. Four of the USAID Missions housing these programs-- Afghanistan, Pakistan, Yemen and Iraq - opened recently. We established them to handle priorities arising out of U.S. foreign policy goals and ongoing development challenges in the region. As noted in the 9/11 Commission Report, the Muslim world has fallen behind the West politically and economically for the past three centuries. Governments find it challenging to meet the population's daily needs, including education. This has created an environment where young Muslims lack the tools and opportunities to effect change in intolerant political regimes. This has also created an environment where disaffected groups can be more easily turned against elements of Western culture and institutions. Creating an environment of opportunity, tolerance, and greater openness to women and other marginalized groups must come from within Muslim societies themselves. The U.S. can help support the development of a more tolerant and open society by supporting quality education opportunities.

In response to the weakness of many national education systems, alternative schools have emerged, such as madrassahs, a small proportion of which spawn extremism. USAID, regional experts and researchers agree that providing access to quality education for children and out-of-school youth of vulnerable populations is one deterrent to radical or fundamentalist ideology which may lead to support for or participation in acts of terrorism. As stated in the National Strategy for Combating Terrorism, education programs diminish the underlying conditions that terrorists seek to exploit, particularly in rural, isolated areas. Access to a quality and relevant education provides children and youth with independent and critical thinking skills, leadership and life skills, and exposure to democratic values. Although the global commitment to "Education for All" have led to increased enrollments and general improvements in the quality of life, educational quality, and increased learning opportunities in the Near East and South Asia, many countries in the region continue to struggle to meet the population's education needs.

Current Education Challenges - Current education challenges in the regions include a lack of access to functioning schools, a large number of out-of-school youth, high absenteeism and drop out rates, low transition rates from primary to secondary school, and high illiteracy rates. High illiteracy rates, especially for women, are a critical problem facing the region. Key countries such as Iraq, Yemen, Afghanistan, Pakistan, Egypt and Morocco have 40-60% illiteracy rates and illiterate populations larger than 10 million. In the Arab states alone, women account for nearly two-thirds of the illiterate population. Another critical gender concern has to do with large numbers of disaffected youth, mainly boys, who may come to form the primary social base for radical Islamist movements. Without immediate alternatives, the current breakdown of conventional institutions of family, schools and community (compounded by increasing urbanization and bleak employment prospects) will continue to foster youth alienation, a sense of fatalism and lack of dignity. Unemployed and disenfranchised youth form a restive pool of recruits for extremist groups.

Compounding this problem is the curriculum, which is often outdated and irrelevant to socio-economic needs. Poorly qualified and trained teachers and school administrators are recurring problems. The lack of reliable systems to assess and monitor education imposes another obstacle to solving the problems. Finally, resources for education support fall short of the need. The Asia and Near East region has experienced a drastic demographic shift and now houses the largest generation of youth ever -- 368 million young people (age 15-24) in the 19 countries where USAID has a presence. The youth bulge puts enormous pressure on governments with limited capacity and resources to provide education and employment opportunities. The quality of education is low and too many students leave school without the skills and knowledge needed to find gainful employment.

The following section presents USAID's strategy for helping the nations in the Near East and South Asia overcome their education challenges. Driving this strategy is the recognized need to help nations in the region open access to information, create learning environments that encourage critical thinking skills and democratic practices, and provide education that will lead to gainful employment. Target populations include girls, women and disenfranchised youth.

USAID's Education Strategy - To prevail over these challenges, USAID's strategy for education programs is to provide learners the opportunity to gain the general skills and knowledge needed to function effectively in all aspects of life. This is done through programs that focus on: 1. Increasing equitable access to education opportunities: Targeting groups that have been marginalized in the education system, such as out-of-school youth, girls and disabled children, and those who have been impacted by conflict or disaster is of primary importance for ensuring equitable access to learning opportunities and the continuation of skills development. In post-conflict and post-disaster situations, transitioning children and youth into learning environments as soon as possible to normalize their lives is a priority. 2. Improving the quality of education and providing more relevant education opportunities: Improving the quality and relevance of education is a pivotal goal in that it encourages children to attend and to stay in school. It also offers the additional benefits of workforce development. This is particularly important in countries that lack relevant education materials, qualified teachers, and accountability for student learning in the school system. 3. Improving literacy and strengthening workforce skills: Education programs that improve literacy rates, develop curriculum, human capacities and livelihood skills, and aim to link skill development with employment opportunities; particularly in areas with high youth unemployment are another priority for the region.

Increasing Access to Quality Education: Achieving Results - In order to respond to the multifaceted educational challenges confronting the region, USAID supports a variety of education programs which include both formal and nonformal education efforts. Support for improving the formal basic education system spanning pre-primary to secondary school and which also encompasses literacy and training programs, are the primary focus of USAID's support. Increasingly, school-based efforts linked to employment, and higher education and university programs are also critical components of our overall approach to provide technical skills and expand cultural understanding in the region. To increase access to education opportunities, particularly for vulnerable populations, USAID supports scholarship programs, non-formal education activities, and school construction and rehabilitation. For example, in Pakistan, more than 2,873 literacy centers have opened and in a project co-funded by the Japanese, 130 schools are in the process of being rehabilitated to improve school access for children in Federally Administered Tribal Areas (FATA) and Frontier Regions (FR) which are remote and border Afghanistan. In Iraq we have rehabilitated over 2,400 schools. In Yemen we are working with the government on school construction and renovation, equipment and supplies for teachers and children and teacher training in remote areas. These have been promising strategies for attracting out-of-school youth to classrooms.

In key post-conflict programs, there is demonstrated success in school enrollments; for example, over 170,000 students (56% girls) are enrolled in accelerated learning classes in Afghanistan. These kinds of programs are highly-visible and well-received as they flexibly address immediate needs, and provide a full primary school cycle in three years. They also target those who have been historically neglected by the primary school system. In Pakistan and Yemen, helping to provide improved schooling systems in the most isolated communities and involving community members in the rehabilitation and management of schools have been successful. In Afghanistan, 10,000 students, largely out of school children and youth, will be trained in sustainable literacy, numeracy and life skills through the Afghan Literacy Initiative & Community Empowerment Program. The programs often combine literacy skills with relevant labor market needs.

Teacher training is one key area for quality improvement. USAID education programs work with teachers to provide both in-service and pre-service training that modernizes teaching methods so that they impart critical thinking and democratic values. Training often integrates content with introducing more active learning and child-centered methods. Over 15,000 teachers in Pakistan have received this type of training, as well as 33,000 teachers in Iraq. We have also printed and distributed 27 million primary and secondary textbooks in Afghanistan, and 8.7 million revised math and science books in Iraq. Finally, radio-based teacher training in Afghanistan has been received positively by teachers in 17 provinces. Integral to the success of an education programs is to make quality improvements and increase the relevance of the educational content to socio-economic realities. In Jordan USAID is enhancing the curriculum for a new Management and Information Stream track in secondary school to prepare youth for the workforce.

Preparing learners at an early age for education is important. USAID support will enable innovative "Sesame Street" series in Bangladesh and Egypt to reach large audiences in quest of this goal. As many as 4 million pre-school age children will watch Sisimpur in Bangladesh, which premiered on April 15. Alam Simsim reaches 86% of rural Egyptian children and 45% of their mothers. Program themes include learning to be tolerant, practicing good hygiene and getting a head start in school. Furthermore, early childhood development programs increase parent involvement in the child's education and school involvement. In Jordan, underprivileged families now have access to kindergartens, and in Pakistan 47,500 children and their parents have benefited from an early childhood project in the FATA district.

Quality is also improved by strengthening involvement of the local communities in their schools (ex. training community school management committees) and making parents and students more responsible for their education (ex. developing school improvement plans). School management is improved at the local level, and experiences in various regions have influenced the way host country decision-makers view solutions for the education issues. Such initiatives are underway in Bangladesh, Pakistan, Egypt, Morocco, and Yemen. Also, in Jordan, merging Information Technology and curriculum reform has been successful. This program has also brought private sector involvement into the area of curricula reform so that it better provides students with an education that links to market demands and needs.

As mentioned earlier, the growing population of uneducated, unemployed youth is severely straining government efforts in all countries to provide adequate education and employment opportunities. USAID recognizes the importance of linking access to quality education to the 21st century workforce demands. In countries such as Pakistan, India, Jordan, Egypt and Morocco, USAID is linking education to the real needs of the job market, by giving students the adaptable and portable skills needed to confront the changing workplace, especially information and communication technology (ICT) training. Jordan is developing e-Learning curriculum modules and upgrading teachers' skills in support of teaching and learning to improve the transition of graduates from school to a work career.

USAID fosters cultural understanding, openness, tolerance and critical thinking with education exchange programs and scholarships. In Egypt, Jordan, and Lebanon, providing scholarship support to students from disadvantaged social and economic backgrounds to enroll in American education institutions have been successful. By the mid-1990s, more than 3,000 Jordanian students had won USAID scholarships to study at U.S. universities and the American University in Beirut. Many of them are leaders today. Five of Jordan's Cabinet ministers in 1987 and three ministers in the 2002 Cabinet had studied under these scholarships. Furthermore, in-country post-secondary education programs support institutions to meet international standards and educate young people and academic professionals so that they can participate in the global economy. We support linkages between American Universities and universities. These range from university linkage partnerships, such as the five US-Iraqi higher education partnerships currently underway, to supporting the establishment of the American University of Afghanistan, a private, independent university.

Finally, programs that model best practices in education on a small scale in order to demonstrate the positive effects of change has also proven successful. Pilot programs mobilize support from the public and from within the ranks of the local and national government officials who are charged with administering and delivering education services. Egypt's New School Program in Upper Egypt was a pilot that proved effective in increasing girls' enrollment. The lessons learnt are being used to "scale up" models of quality primary education with an emphasis on girls and learner-centered teaching methodologies. The models will be applied nationally through the new USAID-supported Education Reform Program. These positive experiences tend to galvanize support for broader change and have the potential to impact the educational system beyond the local environments in which the projects operate.

Measuring the Impact of Our Programs - Despite the growing security challenges, our education programs have brought about substantial and measurable results. USAID measures program impact and success in a variety of ways, commensurate with its diverse portfolio. One validation of our success happens when we see many of our "models" adopted and brought to scale by host countries, relying on local, other donor and private sector resources. Unfortunately, the capacity to do that across the region is constrained. Our recent education initiative has increased the US commitment to education but much more needs to be done. At the project level, USAID measures the impact of providing education and training opportunities to out of school youth and vulnerable populations through student enrollment. Access and equity measurements include the number of students completing primary and secondary school, and increases in the percentage of girls and women enrolled in USAID-funded schools, literacy, and life skills classes. Using baseline data as the starting point, gender disaggregated enrollment numbers in USAID schools are tracked on a quarterly basis by the implementing partners on the ground. USAID has enrolled over 170,000 students (56% girls) in our accelerated learning program in Afghanistan.

Many of our programs are aimed at non-formal education programs aimed at improving literacy, especially for women, and training opportunities for out-of-school youth. USAID gauges enrollment increases and differentiates between students participating in programs as opposed to completing the required courses. In Pakistan, 69,214 students are enrolled in USAID funded literacy courses and 17,850 have graduated from USAID's literacy centers. This process enables us to gauge not only enrollment increases and completion rates, but also dropout and repetition rates. Different measures are used to gauge non-traditional programs; success in measuring educational television programs is gauged by viewership: a 2003 study in Egypt concluded that Sesame Street (Alam Simsim) reaches 86% of rural Egyptian children under 8 years of age and 45% of their mothers. In Bangladesh, where Sisimpur aired on April 155 viewership will be regularly monitored and reported.

In response to the poor quality of educational facilities and the need to provide quality alternatives to radical madrassahs, USAID tracks numbers of schools constructed and rehabilitated, and nature of the effort. This process differentiates between USAID's work in building stand-alone schools as opposed to rehabilitating a single classroom in any given school. In Egypt, for example, since 1975, USAID has tracked the construction of more than 2,000 new schools and 4,000 classrooms; in Pakistan's Federally Administered Tribal Area (FATA), USAID will be tracking new school construction, the surveys and designs for 112 of which have been completed. In addition to infrastructure, USAID also provides students with textbooks and learning materials to increase retention and enrollment. USAID tracks both the production and dissemination of materials to ensure that numbers of textbooks delivered are commensurate with numbers printed; in Afghanistan we have thus far printed and distributed 27 million textbooks.

USAID's teacher training and curriculum development programs are aimed at promoting tolerance, building democratic values and fostering critical thinking in students and teachers. Measurements of educational quality include indicators of teacher quality, system efficiency, and learner achievements. Learner achievement can be measured by the number of basic education students who acquire critical thinking and problem-solving skills by administering pre- and post-achievement tests. In Pakistan, teaching methodologies improved by 97% (based on classroom observation by experts), and student attendance is 10% higher, on average, in participating schools. Monitoring data suggest that teachers are using materials effectively 95% of the time. USAID tracks enrollment and successful completion of teachers in training classes in both in-service and pre-service programs. In innovative teacher training programs, such as the radio-based teacher training program for Afghanistan primary school teachers, teacher training is tracked by numbers of teachers enrolled in the class; currently 10,000 primary school teachers have enrolled for this radio based teacher training. USAID measures and tracks progress in this area through enrollment and completion numbers and qualitative assessments that include interviews, questionnaires, and classroom observation. In Morocco indicators such as percent of target beneficiaries employed post intervention, percent of graduates with portable and adaptable skills, and replication of school-to-work modules in areas beyond the immediate target are used to monitor learning improvements.

Finally, another indicator of impact is the adoption by Ministries of Education of USAID supported efforts for countrywide expansion. This has happened in Jordan with early childhood education programs, and in Egypt with modeling quality schools including using learner centered teaching. By supporting public participation in education through NGO development and community-elected trustee boards, USAID's education programs encourage democratic activities. To measure the impact of these programs, USAID tracks community satisfaction with the performance of USAID-supported community-based organizations and the number of decisions made and implemented at the community level. By improving the quality of education, and making it more accessible and relevant to the workforce, USAID's education interventions improve the employability of youth, lay an important foundation of support for economic growth and development of democratic institutions, and ensure a more equitable distribution of education.

Adjusting Education Programs - USAID has adjusted its education strategies to create a healthier learning environment for children, youth and adults in the Near East and South Asia on the basis of feedback from the most successful programs in the region. USAID recognizes that Information Technology (IT) is one way to change the way that students learn and teachers teach. There are now more efforts to link IT to schools and curriculum. Internet access is limited in the Arabic speaking world, resulting in a knowledge gap that negatively impacts both economic and political development, making Arab populations less competitive in the world economy. By providing future leaders and adults with increased access to the Internet, these students are exposed to many more ideas and increases cultural understanding. Teachers can use IT in the classroom to encourage critical thought and democratic values. Technology also helps to reach larger audiences, as in the radio-based training for teachers in Afghanistan and Sesame Street episodes in Egypt and Bangladesh.

ANE has also learned that public-private partnerships are important to support education programs. USAID/ANE has committed $10 million to a regional Education and Employment Alliance which involves Egypt, Morocco, Pakistan, India, Indonesia and Philippines to increase private sector participation in education. Activities mainly include working with local and multinational organization to provide resources to upgrade schools and provide technology inputs for schools. These activities aim to give children and youth a higher quality basic education and an education that leads to livelihood skills and gainful employment. As of January 2005, outreach activities continue with multinational companies, including Cisco, GE, Intel, Lucent, Microsoft, Nokia, Pearson, Unocal, and First Data Western Union. USAID has also been more directly working with host governments to make comprehensive reforms to education systems. Holistic changes have a broader impact in that they reach all levels from the students and parents, to administrators at the local and national levels. This systemic approach for improving education with Ministries of Education will lead to long-term improvements that can be sustained.

Finally, USAID continues to refine programs to reach the most vulnerable populations. Those who have been marginalized from the education systems are primary targets for our programs. In the Near East and South Asia regions, illiterate adults, out-of-school youth, and marginalized children are the most vulnerable to the messages of terrorists. For this reason, USAID works closely with the State Department on the Broader Middle East and North Africa initiative.

Collaborating with MEPI - Under the Middle East Partnership Initiative (MEPI), managed by the State Department, USAID administers a variety of activities across the MEPI pillar areas of economic reform, political reform, education reform, and women's empowerment. The MEPI education pillar supports education systems that enable all people, especially girls, to acquire the knowledge and skills necessary to compete in today's economy and improve the quality of their lives and that of their families. MEPI and USAID have similar education goals: Access, Quality, and Skills Development which makes coordination between USAID and MEPI programs both essential, and synergistic. USAID has collaborated with MEPI in a variety of projects to jointly fund programs to establish U.S.-Middle East university partnerships to strengthen programs in such areas as education, business/economics, journalism, and information and communications technology.

In FY 2003, USAID/Egypt completed the integration of the MEPI strategy into a new program design that was launched in 2004 to support the Egypt's Governments' education reform initiatives. USAID also began implementing its first MEPI book project by distributing supplementary reading materials to 3000 classrooms in Alexandria. In Jordan, MEPI is funding e-Learning modules for the English as a Second Language and Civics for the Jordan Education Initiative and the USAID mission monitors and manages some or this entire program in country. In Morocco, MEPI's literacy initiatives complement current USAID efforts to improve the quality of schools. The literacy program consists of two parts: a ten-month basic literacy training program for 2000 women that also includes health and nutrition literacy; and a six-month "post" literacy training program for a selected number of participants (approximately 80), that teaches simple business skills as a basis for income generation activities. The program also includes assistance and coaching for the creation and initial management of small businesses. In Yemen, USAID works closely with MEPI and the Public Diplomacy Office of the U.S. Embassy to design and implement an in Internet communication and collaborative learning network for 20 high schools through Yemen with each other and with schools in the U.S. With the development of a new education strategy, the USAID education team ensured that its new strategy aligned with MEPI pillars. Additionally, the education team participates in strategy and planning meetings and provides technical comments and assistance for the review of MEPI education proposals.

USAID is also working with the MEPI office to support key tenets of the G8 partnership with countries of the Broader Middle East and North Africa (BMENA). Several initiatives have developed under this partnership, one of which is on improving literacy in the region. USAID is providing policy and programmatic direction for this BMENA literacy initiative and coordinating its efforts directly with MEPI and the US Department of Education. In conclusion, I would like to reassure the Committee that education will continue to be a high priority in the region. While our current education approach responds to the overall goal of moderating radical intolerance and anti-Western ideologies, we also recognize that education needs to be complemented by a multi-sectoral strategy that fosters sociopolitical stability and economic growth. To build upon our current successes and take our existing programs to scale, we have launched a public-private partnership initiative focusing on creating training opportunities for youth employment in the workforce. While we will continue to monitor developments to ensure that we are ahead of the curve in addressing emerging issues, we will not rest on the laurels of our successes - it is far too important to the well being of our nation.

From All American Patriots (press release), Sweden, 20 April 2005

UN Forum Ends With Agreement On Measures To Provide Clean Water, Basic Sanitation And Housing

The key United Nations forum considering ways to integrate the three dimensions of sustainable development - economic growth, social development and environmental protection - wrapped up its 2005 session with agreement on set of practical policy options intended to boost global efforts to provide clean water, basic sanitation and decent housing.

The thirteenth "" session of the Commission on Sustainable Development ("" CSD) reached agreement early Saturday morning on a slate of policy measures aimed at speeding up implementation of water, sanitation and human settlements goals, ending its high-level segment and first-ever policy session, and opened its next one, which will focus on energy. Under the terms of the outcome document, which will be submitted to the UN Economic and Social Council ("" ECOSOC) for review at its annual session in July, the Commission emphasized the need for a substantial increase in resources from all sources if developing countries were to achieve the internationally agreed development targets.

The text recognizes that Governments have the primary role in promoting improved access to safe drinking water, basic sanitation and adequate shelter, through improved governance at all levels and appropriate enabling environments and regulatory frameworks, with the active involvement of all stakeholders. At the same time, efforts by Governments to achieve the agreed goals and targets should be supported by the international community through a conducive international policy environment, including good global governance, a universal, rule-based, open, non-discriminatory and equitable multilateral trading system; mobilization and transfer of financial resources; debt relief, including debt cancellation, where appropriate; public-public and public-private partnerships; technical cooperation and capacity-building; and technology transfers.

The Commission's first policy session following the 2002 Johannesburg World Summit on Sustainable Development ("" WSSD) refocused international attention on the "" UN Millennium Declaration, which contains two development targets that relate directly to water and human settlements - namely to halve by 2015 the proportion of people unable to reach or afford safe drinking water, and, by 2020, to have significantly improved the lives of at least 100 million slum dwellers.

From (press release), New Zealand, 26 April 2005


Team to Monitor Civil Servants Performance

The Government has set up an eleven-person team to monitor the performance of civil servants who will be put on contracts starting July 1. A Minister of State in the Office of the President, Mr William ole Ntimama named the team that is expected to weed out non-performers. The Performance Contracting Steering Committee shall, among other things "co-ordinate the process of performance contracting in the public service," said the Minister in a Kenya Gazette notice dated April 8. The committee comprises senior civil servants and will be chaired by the head of the Directorate of Personnel Management, Mr Simon Njau.

Other members are the Permanent Secretary in the Ministry of Finance, Mr Joseph Kinyua, the PS in the Ministry of Planning, Mr David Nalo and Investment Secretary Esther Koimet, among others. Also in the team are the secretary of the Public Sector Reform and Development, Ms Joyce Nyamweya-Nyakeya, Solicitor-General Wanjuki Muchemi, and the chairman of State Corporations Advisory Committee, Mr David Namu. Others are the secretary of State Corporations Advisory Committee, Richard wa Mwenje, the Inspector-General (corporations), the secretary of the Public Service Commission (PSC), and the PS in the Ministry of Local Government, Mr Zakary Ogongo. A secretariat will be set up in the Office of the President at Harambee House.

The Government has pushed on with the programme that is expected to affect nearly 200,000 workers despite strong opposition from the civil servants. Teachers are, however, excluded. Only last week, President Kibaki said the retention of Civil Servants in public offices would largely depend on their performance and service delivery to the public. "The performance contracts will enable us to identify those officers who cannot maintain the required standards and to weed them out," said Kibaki.

From, Africa, by Eliud Miring' uh of The East African Standard, Nairobi, 12 April 2005

Civil Servants Deserve Better Treatment - Chief

Accra - Nana Kwabena Angu II, the Apintohene of Wassa West District of the Western Region, on Saturday called on the government to recognize the role of civil and public servants in national development. He urged the government to desist from the "piecemeal approach" towards improving the service conditions of civil servants and ensure that it tackled civil servants problems in a "realistic" manner. The Apintohene stated this in a commendation letter to Prof Daniel Mireku-Gyimah on his appointment as the Vice Chancellor of University of Mines at Tarkwa. ''Governments have, over the years, focused on the private sector, which it describes as the engine of growth, to the neglect of the civil and public services." Nana Angu II argued that the civil and public service ''serves as wheel power to propel the engine to its preferred destination.'' He said it's most regrettable for officers in the ministries to use old typewriters and other equipments that have been discarded years ago. ''Poor or lack of logistics, bad working environment, unmotivated staffs, poor remunerations and deprivation of basic working tools have been the lot of the civil and public services.'' Nana Angu called for systematic upgrading of skills of officers, provision of logistics and other equipment to ensure that the civil and public servants deliver.

From GhanaWeb, Ghana, 9 April 2005

Will Civil Servants Change?

President Kibaki yesterday laid it on the table when he asked public officers to shape up or ship out. Launching the contract-based performance scheme for civil servants in Nairobi, the Head of State raised a raft of issues regarding civil service's operations that tug at people's hearts. Civil service as we know it today operates through a bureaucracy that is exceedingly irritating, and it has, among its officers, some of the most lethargic workers in Kenya, who are averse to change. Unlike in the early years of independence when civil service was defined by excellent performance and efficient service delivery, what we currently have is an outfit marked by arrogance, sloth and sleaze.
And examples are not difficult to come by. The business of applying for a national identity card, a birth certificate or searching for a company name can be a nightmare. In the minds of the public, these and many other services never come easy - one has to bribe to get them. This is not the kind of civil service that can be relied on to spearhead economic recovery, promote the rule of law and lead the fight against corruption.

Often in the past, Cabinet ministers, including Prof Peter Anyang' Nyong'o, have complained that part of the problem afflicting the current administration is that it inherited wholesale a civil service from the previous administration. That civil service had been politicised to the extent that appointments were never made on merit and good performance was never rewarded. Many people are currently occupying positions they never deserved. Making a difference with that kind of outfit is certainly a difficult task. This is why President Kibaki's concern is germane and more importantly, his warning that non-performers will be shamed and shown the doors. Experience from the past, however, shows that giving directives is one thing and realising them is another. Changing the civil service requires transforming the mindsets of the workers and inculcating a radically different work culture. The challenge for this administration is how it will use the performance benchmarks to punish or reward public servants.

From, Africa, by The Nation, Nairobi, 8 April 2005

Civil Servants Condemn Proposed Mass Retrenchment

Association of Senior Civil Servants of Nigeria has condemned the proposed mass retrenchment in the federal civil service. The association has also advised Lagos State government not to emulate such step, saying it could be an impediment to speedy economic development. In his paper at a one-day seminar organised by its Lagos branch, secretary general of the association, Mr. Solomon Onaighinon noted that government should come up with ideas that will improve the productivity of its workforce. He said Lagos State should come up with a comprehensive training programme that could widen the scope of knowledge of civil servants in order to increase their productivity. "We expect Lagos State government to mount its own seminar for the state civil servants where both management and staff can interact and come up with solutions to the issue of increased productivity. "It is not enough for management to rely on hardline disciplinary measures as a way of relating with staff since the civil service is not a military service," Mr. Onaighinon stressed.

From, Africa, by Daily Champion, Lagos, 1 April 2005

Labour Takes Civil Service Reform to Confab

Seeks new economic and political orientation - Two major things which organised labour app-ears to be much interested in at the going political conference are restructuring of the economy and development of a new character for the political parties. To labour representatives, the achievement of these, will restore sanity into the socio-political system. Nigeria Labour Congress delegate, S.O.Z. Ejiofor, who unveiled this, said the economic crisis plaguing the country, has its root in the character of the military regimes that ruled the country from 1987 to 1999. He therefore sought for a new orientation in the political and economic spheres to break away from the past. The starting point, according to Ejiofor, is to redefine the economic objectives, and adopt strategic factors for achieving them. The new economic reform, he stated, must have provisions for sustained and expanded employment creation.

Ejiofor, who is also the General Secretary, Amalgamated Recreational and Civil Service Technical Union, canvassed for a return to the real tradition of civil service, where employees are assured of job security. Similarly, he sought for employment protection in the private sector, where retrenchment is gradually peaking. "Today, over 70,000 Federal civil service employees out of 168,000 are imminently threatened with premature retirement (retrenchment). This is real. Retrenchment is avoidable, it is wasteful and it is economically, socially and political indefensible. This conference should please, please, intervene now." Ejiofor noted in his intervention at the confab. He focused on economy, public service physical of pensioners, human rights, culture and sports, decay in social and physical, infrastructure, railways and the polity. Conscious development of an indigenous entrepreneurial class, according to Ejiofor, especially in the real sector, as opposed to the business class in the "bazaar sector" and the diversification of the economy should form part of the reform objectives.

Weak State and Multinational Enterprises: Labour said the first strategy to ensure the realisation of these new economic objectives, is the transform the Nigerian state to a genuinely democratic state, at all levels, making it development oriented, transparent and accountable. "The concept that the Nigerian state should not be directly involved in the economy is not realisable at the present stage of the country's development. Also the advocacy that the Nigerian state should concentrate on regulatory functions undermines existing realities. A weak state cannot regulate multi-national enterprises. More so in situation were corruption is endemic."

Even with this, Ejiofor still believe that for Nigeria to succeed, it must promote and internalise an appropriate industrial culture. He said that the absence of appropriate industrial culture substantially inhibits industrialisation and accounts for the malfunctioning of most public agencies and indigenous enterprises. Neo-feudal and the debased primordial cultures and practices are obstacles to the development of industrial culture, notes Ejiofor. Like the economy, labour said the transformation of political parties to institutions driven by ideas and issues and anchored on definable ideological ideals are necessary if an envisaged new Nigeria must emerge. Only well focused and ideas driven parties that can midwife good governance that is consistently committed to the well being of the citizenry. Ejiofor said that such can only be a product of an economy in which growth, translate to balanced development.

Public Service - Labour is pushing for a re-enactment of an efficient and highly functional public service, devoid of the trauma employees are facing currently either as a result of insecurity of tenure of employment or under utilisation. He argued that a public service population in federal sector including armed focus and police, 36 states and 768 local government of about 2,267,492 cannot be said to be over bloated in a country of over 120 million people. The workers movement would therefore want the delegates to the confab to agree that retrenching public servants is not a defined and cost effective policy at this stage of national development.

Similarly Ejiofor pointed out the agonies the public sector workers go through on retirement. He said that the life of public sector pensioners characterised by misery and neglect, is not a product of budgetary constrains. He rather situate it within the contests of a clear absence of recognition of their past services and rights of pensioners to dignified old age. "If there is the will, there exist practical solutions to the lingering problems of non-payment of pensioners as and when due.

Decay in social infrastructure - Labour exonerates workers in the decay of state owned infrastructures,especially in the energy and educational sectors. To the movement, said Ejiofor, the present malfunctioning of NEPA and decay in the educational infrastructures and in other sectors are by products of failed states, in particular from 1987. The decay is as a result of the inability of the Nigerian Nation to appreciate the role of teachers and lecturers in socio-economic development of the country. This class of workers, Ejiofor stated has been economically and social disabled over the years. "Dialectically failed states are not expected to leave a legacy of efficient and functional social and physical infrastructures."

On railway, Ejiofor suggested a new nationwide railway network to provide catalyst for economic development and national integration. He said, this could be achieved if there exist the appropriate political will within five to ten years. The labour activist blamed the current crises in sports administration and coordination to the absence of National Sports Commission. He requested for the restoration of NSC and implementation of Dr Samuel Ogbemudia committee reports on sports and culture.

The Polity First - Ejiofor said that the character of political parties largely determines the way and manner political powers are acquired and the nature of governance. The current political crisis in the country, from labour perspective, is anchored on absence of parties driven by issues, and identifiable ideological content, noting that they are mere machines for election purpose and advancing personal interest. This labour asserted, explains while it has been difficult for the existing parties to either midwife good governance or defend democracy. "Nigerian political parties therefore must undergo far-reaching transformation to ensure that there leadership and membership have shared ideological interests; they provide credible enough uphold the principles of party supremacy; they evolve organisational strength to mobilise its members and the populace in defense of democracy."

The submission of labour is clear. According to Ejiofor, the critical and frank expressions on various subjects by confab delegates, were exercises which political parties, if well focus, ought to have engaged in to enable them formulate appropriate policies and programmes for governance. "That they have not done so, but rather concentrate on self serving issues and manipulation of electoral process, largely account for the problems, of governance in the on going civilian dispensation. Put the polity right, other things will follow including the economy" labour concluded.

From, Africa, by Chris Nwachuku of This Day, Lagos, 1 April 2005

Leave Politics, Buturo Warns Civil Servants

Civil servants must stay away from partisan politics, state minister for information Nsaba Buturo said yesterday. He said the act was punishable by either imprisonment for a year or a fine of sh200,000 or both. "Public servants should remember that they are not permitted by law to be members of, campaign for or hold office in political parties," Buturo told the weekly Cabinet press briefing, which witnessed the first live broadcast on UTV. Education and sports minister Geraldine Namirembe Bitamazire addressed the press on the recasting of government sponsorship at public universities. Buturo said live broadcasts of the briefing were to enable the public to get first hand information. The signal is beamed on the UTV satellite and is received in Africa, Europe and the Middle East. Buturo said government officials acting under the pretext of supporting the NRM were abusing the democratic rights restored by the Movement government. He said the Governm-ent would blacklist road construction firms that do shoddy work.

"The Government has decided to act tough on people who get contracts and do shoddy work. People who do this work are criminals who do not deserve to get resources collected from the public," said Buturo. He said solutions to problems in Kampala would be addressed after Parliament considers the Government's proposal to bring the city under the central government. He denied allegations that the arrest of two opposition MPs including Forum for Democratic Change strongman Reag-an Okumu, was political.

From, Africa by Jude Etyang of New Vision, Kampala, 22 April 2005

World Bank Votes N72bn for Civil Service Reforms

In line with Federal Government's on-going reform programme, World Bank has set aside an initial N72 billion for use as pay-off for the estimated 80 per cent of the nation's workforce to be laid off in the next two weeks. The sum of N300 billion was estimated by Federal Government as the total cost for the list of severance and resettlement of staff to be affected by the retrenchment exercise under the reform programme. THISDAY checks revealed that a committee chaired by the Head of Service of the Federation, Alhaji Mohammed Yayale, has already concluded compilation of the affected workers in the nation's civil service.

Workers to benefit from World Bank severance package are to receive their gratuity, one year pension to be paid enbloc, ten per cent total emolument as voluntary incentive and reparation allowance. For instance, in the Ministry of Information, over 2,500 staff have been pencilled down for the exercise including the permanent secretary who is said to have attained the statutory age of 60 years. THISDAY gathered that only two directors might remain in the ministry after the exercise. Some of the criteria for the downsizing exercise include attainment of 60 years or 35 years in service. Others include those who have remained on one grade level for eight years, workers who failed promotion examinations three times as well as those whose academic qualifications are deficient in addition to "those who could not be skilled over the years." "All officers S.75 (equivalent of junior secondary school certificate) and those with First School Leaving Certificate (FSLC) are also to go," said the source. Also, those recruited without proper authorisation including those whose schedule of duties were contracted out or monetised are to be affected in the exercise.

Meanwhile, This day also gathered that the long awaited 50 London cabs meant for the Federal Capital Territory (FCT) might arrive Abuja in a month's time while they might commence operation in two months time. In addition, Peugeot Nigeria will supply 200 units. In a change of policy, the FCT administration has decided that the first option for the cabs would be government drivers who were laid off recently through the downsizing exercise. The decision was reached as a way of empowering those laid off to live good economic private life after years in the civil service. Among incentives being considered by the FCT is a micro-credit system whereby the beneficiaries would be aided financially to acquire the cars and pay back with little interest.

From, Africa, by Andy Edugo and Kingsley Nwezeh of This Day, Lagos, 19 April 2005


Civil Servants to Attend Mandatory Courses Every Year

Putrajaya - The 850,000 civil servants in the country will have to attend mandatory courses every year to enhance their efficiency and competency. The courses, to equip the civil servants with the right attitude, skills and knowledge, are also meant to inculcate the lifelong learning culture among government employees. For this purpose, government ministries and departments are now required to set aside at least 1% of their yearly allocation for the annual training. Every ministry secretary-general or department head must also make sure that staff at all levels attend the courses for at least seven days annually. These are among the measures implemented under a new human resources training policy announced by Public Services Department director-general Tan Sri Jamaluddin Ahmad Damanhuri last week.
"Considering the importance of human resources development in the public sector, the policy calls for every civil servant to equip himself with the right attitude, skills and knowledge via a planned programme based on the upgrading of competency and lifelong learning," he said in a circular announcing the decision.

The policy is to ensure "value-added services" from civil servants, to help them advance in their career, increase productivity and improve work quality. The policy, said Jamaluddin, would also call for a public sector training committee to be set up at the central level. This committee will be chaired by him; and a human resources development panel, by the ministry's secretary-general or department heads. It will review the policy from time to time, consider the need to set up or expand public training institutes, and oversee the quality of its programmes. Jamaluddin said the policy would set the training structure - pre-placement, basic, middle, advanced and transitional - for all government staff at five different stages of their career. "Training at pre-placement level is given to all newly-appointed staff, while basic-level training is for civil servants who have served up to three years. "The mid-career training programme will involve enhancing the competency of personnel who have served between three and 10 years, while advanced level training will be for those with 10 years of service. "Training at the transitional level is for those who will retire in two years," he said. Jamaluddin said the PSD would oversee courses such as pre-service training, short programmes for advanced management staff, local and foreign courses of more than three months, and those sponsored by foreign bodies.

"All ministry secretary-generals and heads of departments will be given the power to decide on the planning and identification of training needs in their respective agencies, decide on the courses and the candidates, and ensure that all money spent for the purpose is in order. "They must also make sure that candidates submit a report of their courses upon completion, and that all participation is noted in the employee's service record," he said. The policy also states that candidates who have returned from training overseas can only be considered for other courses at least a year after their return. Participation in courses overseas for periods of three to four days is not encouraged.
Cuepacs president Nordin Abdul Hamid said the policy was part of the Government's bid to improve the Assessment of Efficiency Level test (PTK), which had become a controversy of sorts among civil servants. "The Government has informed us of this move in one of its roadshows explaining the PTK to civil servants. It is part of the Government's efforts to enhance competency. "Previously, training differed from one department to another, depending on need," he said.

From Malaysia Star, Malaysia, by Sim Leoi Leoi, 10 April 2005

180,000 Workers to Get 5-Day Workweek

Employees of public organizations will enjoy a five-day workweek from July. The government has decided to allow employees of public organizations to join the shortened 40-hour workweek system. Around 180,000 workers such as assistants, job counselors, street cleaners and nutritionists at schools and public organizations along with 910,000 public workers will benefit from the system. The government began to implement the reduced workweek system gradually from last year, which non-government workplaces with 1,000 or more employees adopted first in July 2004. The government put off the implementation of the system for public officials by one year to July this year. Instead, public officials were given Saturday off every other week from last July. Workplaces with 300 to 999 employees are scheduled to join the five-day workweek on July 1. The number of workers benefiting from the system from this year reached 697,678 at 1,390 companies.

From Korea Times, South Korea by Moon Gwang-lip, 12 April 2005

Three-phase Pay Hike for Bangladesh Civil Servants in the Offing

Dhaka - Prime Minister Khaleda Zia's government has announced plans to implement the new pay scale for public servants in three phases from next month. Finance and Planning Minister M Saifur Rahman was quoted by various national dailies as saying that the first phase, which would include arrears from January 2005, would start in May. "People are eagerly awaiting the new pay scale. So, we will go for its implementation from next month. And the government staff and pensioners in a single chunk will get the total amount in arrears from January, the month the new pay scale comes into effect," Rahman was quoted by the Daily Star , as saying. A recent meeting between the Bangladesh Government and the International Monetary Fund (IMF) mission covered issues including the new pay structure, monetary expansion, exchange rate and export-import programme, Saifur said. He termed the discussions satisfactory except for a few differences.

From Keralanext, India, 9 April 2005

Don't Accept Any Gifts, Civil Servants Told

Putrajaya: Civil servants are not allowed to accept any gifts from the public, Chief Secretary to the Government Tan Sri Samsudin Osman said. He said the acceptance of gifts by civil servants could later lead to rampant corrupt practice within the civil service. "At first, it may be members of public who present gifts to us. "But if the practice is not stopped, it can in turn lead to certain civil servants asking for gifts in exchange for certain services to the public. "Thus, they should stop accepting gifts," he said at the launch of the inter-departmental nasyid competition held in conjunction with Maal Hijrah here yesterday. Under the Public Officers (Conduct and Discipline) Regulations, 1993, an officer is not allowed to give any present to, or receive any present from, any party if such present is connected either directly or indirectly with his official duties. If the circumstances make it difficult for an officer to refuse a present or token of value, the present may be formally accepted, but the officer must submit a written report to his department head containing a full description and estimated value of the present and the circumstances under which it was received. Upon receipt of the report, the department head must either permit the officer to retain the present or return the present himself to the giver. Samsudin also advised civil servants to stay away from other practices that could lead to corruption.

"The Government will continue its efforts to eradicate graft in the public sector through programmes and activities outlined under the National Integrity Plan," he said. He also told the civil servants to be courteous to the public and cultivate the value of giving their "best possible service." Cuepacs president Nordin Abdul Hamid, when contacted, said that while civil servants were reminded not to accept gifts, the public also should not tempt them. "The public knows that we are supposed to carry out our duties at no cost to them, so they shouldn't offer us anything in return for our service. "After all, we are paid to carry out our duties," he said. Nordin said if anyone truly wanted to reward a particular civil servant for his excellent service, he should inform the department head and go through the proper channels. "We don't want the public to have a bad perception of civil servants. We, too, must live up to the standards of our stake-holders and the community," he said. "The fact that a reminder is being issued by the Chief Secretary to the Government means that something must be happening. "All civil servants must take note of this and make sure that they carry out their responsibilities in an ethical way," he said.

From Malaysia Star, Malaysia, 7 April 2005

Public Service Slow to Share

About 95 per cent of public sector agencies have investigated shared services, but few are doing it properly, according to an Accenture report. Government agencies are focused on the cost-cutting benefits of shared services practices rather than using the framework to become more client-centred, outcome-oriented and accountable, it says. A report by Accenture defines true shared services as the consolidation of administrative or support functions, such as HR, finance, IT and procurement, from several departments or agencies into a "single, standalone organisational entity whose only mission is to provide services as efficiently and effectively as possible". Jack Percy, Accenture managing partner for government in Australia and Southeast Asia says many governments had centralised services instead of creating a shared services model. "A lot of people say they are doing shared services, but really they are centralising," he says. Having a governance framework, documented scope of services and service level agreements in place differentiates the two models, Percy says.

Mark Howard, Accenture's global program director for government finance and performance management (F&PM), says only a small number of government agencies have these three things in place. One-quarter of organisations that have implemented shared services have no performance targets of any kind in place, the report says. It found 66 per cent of respondents use shared services or are in the process of implementing it for some functions. The global survey found Australian and Canadian governments were the most active in shared services. It is the area most readily understood to benefit from shared services and in which the framework has been adopted, Howard says. "With IT, most of the features are already there for shared services, such as the concept of reporting service levels," he says. Percy says: "The main difference for IT organisations in governments is not being accustomed to a governance model."

At the state level, in particular NSW, Queensland and Western Australia, are furthest along the shared services path, compared to the federal Government. He says the government's unsuccessful outsourcing program had "left a bad taste" and had hampered moves towards shared services. But he says, with some structural changes, such as the creation of the Department of Human Services, a cluster of agencies might look at establishing shared services across an organisation. "Also if budgetary pressures continue to increase management may look at shared services," Howard says. Howard believes governments will move to a true shared services model within the next five to 10 years.

From Australian IT, Australia, by Kelly Mills, 11 April 2005

Strengthening Human Resource Management

The manual system of maintaining personnel files of the civil servants may soon be history. The Royal Civil Service Commission has developed a new computer software known as the Zhiyog system which will maintain computerised bio-data of all employees of the Bhutanese civil service. Information such as the date of recruitment and selection, promotion time, transfers, sanction increments, leave records, gratuity, pay fixation and training will be maintained in the Zhiyog system. The government agencies based in Thimphu will install the Zhiyog system into their computers from April 14. Installation for the other 19 dzongkhags will be done from May 3rd to 22.

On April 9, 21 participants including Human Resource officers (HROs), Data managers and IT staff from the health ministry and nine dzongkhags attended a three day training on the use of Zhiyog system at the Royal institute of Management in Thimphu. "As you all are aware without timely and accurate information we cannot have an efficient and effective Human Resource Management," said the head of management and information service division (MISD) of Royal Civil Service Commission, Monira. "This system will not only give the accurate information of the civil servants in the dzongkhags but also facilitate monitoring and evaluation of the performance of civil servants on a regular basis," she added. The RCSC has trained 110 people from dzongkhags, ministries and agencies on how to use the Zhiyog system. The Zhiyog system was developed by the RCSC in 2001 with the financial assistance from DANIDA and the United Nations Development programme (UNDP). "With the new Zhiyog system the personal files of a civil servant should be available with correct and up to date information," said Lobzang Tenzin, the Human Resource Officer (HRO) of Mongar Dzongkhag.

From Kuensel, Buhutan's National Newspaper, Bhutan, 15 April 2005

PM Asks Civil Servants To Be Sensitive to Winds of Change

New Delhi - Focussing on the need to reorient the civil services, Prime Minister Manmohan Singh today asked IAS probationers to be "sensitive" to the winds of change and take bold decisions to help build India of our dreams. Addressing IAS probationers, he said an important responsibility of the civil services was to ensure that citizens do not fear arbitrary governments. Asking the upcoming bureaucrats to be "sensitive to the winds of change," he said they should be "flexible to assume that you do not have the monopoly of the system all the time". Terming it as a challenge for all, Singh said "our system needs to develop appraisal skills which reward creativity of those who take the initiative and not those who do nothing". India, he said, needed people who have the capacity and courage to take "bold decisions". "Our system must recognise the difference between honest mistakes made while discharging duties and willful attempt to misuse public office. This is a challenge for all of us," he said.

Emphasising the importance of maintaining communal harmony, he said what happened in Gujarat has caused a scar on the body politic. "Such things should never happen in future". He stressed that the system of governance must address the primary task of developing the economic and social potential to enable the country get rid of poverty, ignorance and disease in the shortest possible time. The Prime Minister also highlighted the need to ensure that government expenditure was wisely incurred and spending processes did not give rise to corruption. Noting that they represented the most elite services in the country, Singh said "our country needs top class civil servants. "You are thus nation builders in the truest sense of the term. Make good use of the opportunities you have and keep the values in mind while working so that we can build the India of our dreams," he said.

From Hindu, India, 19 April 2005


Civil Servants in Joint Pay Plea

Civil servants threatened to strike over pensions in March. Two unions representing more than 350,000 civil servants are to submit a joint pay claim for the first time. More than 200 departments and agencies negotiate deals separately at present but the Public and Commercial Services union and Prospect say this is unfair. They also want a £13,500 minimum wage for all of their workers - from office clerks to health and safety inspectors. They are due to hand their submission to the Treasury and Downing Street at 1230 BST. The unions believe having more than 200 separate sets of negotiations is "grossly inefficient and unfair". The current system results in workers in different departments doing the same jobs for different wages, they claim. And the unions are also concerned over the growing pay disparity between women and men. They say the gender gap has grown by 3% over the past year - with women being paid overall 25% less than men. The BBC's labour affairs correspondent, Stephen Cape, says the unions will seek talks with all major political parties. The move comes just weeks after more than one million civil servants threatened to walk out over government plans to raise the pension age from 60 to 65. That strike was prevented after the government agreed a last-minute compromise.

From BBC News, UK, 7 April 2005

Ministers and Senior Public Servants in Line for Pay Rise

Government ministers and top public servants are in line for an early pay rise following the announcement yesterday of a new review of higher remuneration in the public sector, writes Chris Dooley, Industry and Employment Correspondent. The review, the first of its kind since the Buckley report was completed in September 2000, will examine whether pay rates at the top of the public sector have kept pace with executive salaries in private companies. The Government has invited it to issue interim recommendations by June this year if it is satisfied that "serious anomalies or inequities exist". This means that those covered by the review could be set to receive significant pay increases by the summer.
Ministers, judges, civil servants from assistant secretary-level upwards and hospital consultants are among those covered by the terms of reference. Top local authority and health service executives, the commissioner ranks in the Garda Siochana, senior members of the Defence Forces and the chief executive officers of non-commercial State-sponsored bodies are also included.

The new review, to be chaired by C&C Group chairman Tony O'Brien, is not due to issue a final report until 2007. Some of those covered by the Buckley report in 2000, including the Taoiseach and Chief Justice, were given pay rises of more than 20 per cent. News of the latest review coincided with an announcement by the Government yesterday that the minimum wage is to increase by 65 cent to €7.65 an hour. In a statement last night, the Department of Finance said the interim report was being sought because by 2007 it will have been seven years since completion of the Buckley report. TDs received a 19 per cent increase under the 2000 Buckley review, but they are now included in the benchmarking process that sets pay rates for the public service at large. As a result they will not be covered by the new review. The benchmarking process is also due to be completed in 2007.

Other major beneficiaries of the Buckley report in 2000 included the Tanaiste, whose salary was increased by more than 20 per cent to 120,000 Pounds (€152,400) and Cabinet ministers, who got a similar percentage increase to 110,000 Pounds (€139,700). The salaries of the Taoiseach and Chief Justice were both increased to 140,000 Pounds (€177,800). Impact, the State's biggest public-sector union with 54,000 members, said the review was overdue. The union's general secretary, Peter McLoone, said the pay review was fair to staff and the taxpayer. "It ensures that we continue to recruit and retain our share of the brightest and best in the public service, where they do an incredibly important and difficult job under intense public scrutiny."

From Irish Times, Ireland, 12 April 2005

Labour Would Speed Up Public Service Reform

Labour's election manifesto does not set out a new direction for the party's third term. Instead, it continues - and in many ways accelerates - the modernisation of health and education services that has been set in train in recent years. As he bids for a third and final term in office, Mr Blair's central message yesterday was that he wants to make the public service reforms of recent years "irreversible". However, the manifesto projects this ambition in language that seeks to unite, rather than divide, the "modernisers" and "consolidators" in Labour's ranks. For those who crave greater diversity in public services - such as the introduction of market mechanisms to improve state education and health - the manifesto has one clear message: there will be no limits to what could be achieved in the next four years.

In the NHS, existing plans are set to see the private sector provide almost £2bn a year's worth of diagnostics and treatment to NHS patients, while the market for primary care services is also being opened up. The manifesto makes clear this trend is to be continued: "Whenever NHS patients need new capacity for their healthcare, we will ensure that it is provided from whatever source." It emphasises that the voluntary sector could play a bigger role in provision of such services, saying the sector should be considered "on equal terms". But while this is good news for those on Labour's "modernising" wing, there is nothing here to upset those who worried that reform may go against more traditional Labour principles.

The manifesto, for example, sets no minimum target for the level of private sector procurement to be achieved in the NHS. And it emphasises the principle that the NHS should be free at the point of use. "The language is new Labour," says one senior Labour strategist. "But not unremittingly so, to the point where it might cause internal disputes." But while the manifesto sets out a clear agenda on some micro issues facing Labour in a third term, it is vague on many macro ones. For example, it suggests the promotion of "new" independent and voluntary providers for employment programmes, particularly in its drive to reduce the numbers on incapacity benefit. It also says that both the independent and voluntary sectors will be offered "greater opportunities" to deliver offender services. But on pensions - arguably the biggest domestic challenge facing a third-term Labour government - the document is lightweight. Labour says it will "forge a national consensus" on reform, after a report later this year by the independent Pensions Commission.

The manifesto appeared to rule out one of the most radical reforms to the state pension system, saying that the government had already "begun to lay the foundations for the pension system of tomorrow" by introducing the state second pension. That seems to imply that the second tier of state pension provision will remain in any revamped system. On three other big issues that would dominate a third Labour term - the future of local government finance, nuclear power, and road pricing - the manifesto says nothing new on priorities. Gordon Brown yesterday endorsed the reform drive with a warmth and enthusiasm that was marked. He talked about creating an "empowering, not a dependency creating, welfare state"; one that was "not monolithic, top down or impersonal but personal to all". But the idea that Mr Blair has won a victory over the chancellor is exaggerated. Allies of both the prime minister and chancellor said last night that there was no dispute in writing thedocument.

Mr Blair's allies said they had controlled some of their more dramatic language. "Sometimes in the past we raised choice to the point that it seemed an end not a means," said one. "We have reined back a bit from that." Mr Brown's allies, meanwhile, said while he saw the manifesto draft late in the day, he had no complaints, and he had always accepted the need to have diverse providers of NHS services. Mr Brown has always resented the suggestion that he is opposed to reform of the public sector. His complaint has been that some of Mr Blair's allies sought to get greater definition for their reform drive by portraying the chancellor as anti-modernisation. In the chancellor's view, what has happened in the past few weeks is that those people in Mr Blair's circle seeking co-operation with him have seen off those seeking to get greater definition through antagonism. This is the backdrop to the powerful display of unity between the prime minister and chancellor that was at the heart of the manifesto launch, and is set to dominate this campaign.

From BBC News, UK, by James Blitz, 14 April 2005

Public Service Job Cuts Planned

Details have emerged of the Scottish Executive's plan to shed about 800 jobs as part of the £745m efficiency drive launched last year. Most of them will be in NHS support services, largely because of the introduction of more computers. Posts will also go in the fire service, Scottish Natural Heritage, Caledonian MacBrayne and the Forestry Commission. The changes will be implemented over 2007-8 when 1,051 posts will go and 265 new positions will be created.

Offered redeployment - The plans were revealed in technical notes published during the Easter holidays. An executive spokeswoman said the losses would be achieved through redeployment and natural wastage. She stressed that so far only one redundancy - at Caledonian MacBrayne - had been identified. All other staff would be offered redeployment. The executive confirmed the proposals would lead to the axing of 604 jobs in the NHS and 65 posts through reform of EU Common Agricultural Policy. The technical notes suggest 45 jobs could go at the Crown Office and Procurator Fiscal Service, while 36 may be shed at Scottish Natural Heritage. Reforms to fire service control rooms could also lead to the loss of 128 jobs over a two-year period.

The Scottish Environment Protection Agency (Sepa) may lose 25 jobs, while 20 may be cut in the Forestry Commission, 14 in the Scottish Public Pensions Agency and up to 25 at VisitScotland. Sepa denied that it had plans to make any staff redundant. Chief executive Campbell Gemmell said: "Sepa's workload continues to expand and our staffing increases accordingly to ensure that we can fulfil our responsibilities. "Sepa is committed to meeting the objectives of the Scottish Executive's Efficient Government initiative. "By changing what we do and how we do it, we aim to produce savings that are important for providing the public and regulated operators with value for money."

From BBC News, UK, 14 April 2005

Unions Want Action on Civil Service Gender Pay Gap

The gender pay gap in the civil service has grown to 25%, union leaders revealed today as they lodged a wage claim on behalf of 500,000 workers in Government departments and agencies. The difference in pay between men and women had increased by 3% over the past year, described by unions as "alarming." The Public and Commercial Services union (PCS) and Prospect said they wanted a move towards a new minimum wage of 13,500 Pounds compared with the current lowest paid job of £10,800.

The unions said there should be one national pay deal to replace the 200 different sets of civil service pay negotiations. Mark Serwotka, general secretary of the PCS said: "The government and the political parties say they want to do things more efficiently, yet millions of pounds of taxpayer's money is wasted each year in the grossly inefficient charade of over 200 different sets of civil service pay negotiations. "Added to this you have the Treasury effectively deciding government department's pay through capping pay rises. "It is alarming that the gender pay gap in the civil service has increased over the last year to 25%. The government recognises the need for greater pay coherence, but with pay inequality getting worse and people increasingly receiving below the cost of living increases it is time for real progress on achieving pay coherence, by agreeing a plan of action."

Paul Noon, general secretary of Prospect said: "Government has rightly stressed its professional skills agenda but these will be empty words without positive action to improve its own pay rates for specialists. "There is already a shortage of key skills in science and engineering and the closure of university physics and chemistry departments shows this is set to get worse. "Many long serving staff are being forced to accept increases below the rate of inflation at a time when earnings across the economy are rising by 4.5%. "This short-termism dismays professionals and makes a nonsense of the Chancellor's claim that science is the engine of growth for the British economy." Copies of the pay claim were delivered to the Treasury and to 10 Downing Street today.

From Scotsman, UK, by Alan Jones, 7 April 2005

Overcoming Resistance to Remote Working in the Civil Service

Thousands of civil servants are destined for remote working if the chancellor of the exchequer's intended cuts to public sector jobs are to be fulfilled. But the idea of packing workers off to set up at home is proving less than popular with government mandarins. A poll of 85 public sector bodies - including 54 central government organisations - by London consultancy Governetz and home offices firm Henley Offices, has found that the take-up of home working varies widely, with some reporting as much as 13% and others just 1%. This is despite the fact that encouraging more flexible and home working and making better use of conferencing technology are being seen by government as essential parts of the cost-cutting agenda. It's not because of a lack of demand, it appears. Some organisations reported being unable to cope with the sheer numbers of employees who wanted to take up remote working options. While flexible working arrangements were normally formally defined, the majority of employees worked "only occasionally" from home. Another issue was a lack of central co-ordination of flexible working projects.

The Governetz findings echo a survey by the Office of Central Government published in February 2004 that found the adoption of flexible working practices in central government since 2000 had been much slower than anticipated. The main barriers to change were managers and employees fearing a loss of control, particularly of the work environment, and bosses not knowing how to manage workers based at home, it concluded. The infrastructure for the various different forms of flexible and home working is, by and large, in place, argued Governetz chief executive David Werran. The difficulty is a management and HR one - shifting entrenched perceptions, fear of the unknown, managing and mplementing change and educating managers and staff so that all sides can buy into the process. "The 39 departments that make up Whitehall are slow and cumbersome, sometimes the smaller agencies will move much more quickly. In theory it is all there. Now it is up to the enthusiasm of the individual managers," Werran said.

"A lot of people find it very hard to work from home, they feel they are losing out by being at home. So you need a reasonably senior manager to deal with it." Civil service unions are all behind flexible working as a concept, but also express concern that sometimes the process is not being as well managed or implemented as it could be. "Where there is reluctance it is perhaps because it is not being sold to the staff in the right way," said Alex Flynn of the Public and Commercial Services Union. It is vital, therefore, that organisations provide the right support, whether financial - such as paying for a phone line, IT connections, extra insurance and so on - or managerial, so as to ensure workers do not feel isolated or left off the career ladder, he added.

From, UK, 4 April 2005

Bureaucrats See Civil Service As A Business - Putin

Moscow - President Vladimir Putin said he wants to see improvements in the efficiency of the state administration. "Our bureaucrats are still largely a secluded and deliberately haughty caste, which regards civil service as a kind of business," Putin said in his Monday state of the nation address. "Party and corporate bureaucrats are no better than civil servants in this respect," he said. "Our number one task is to raise the efficiency of the state administration, ensure bureaucrats' strict compliance with the law, and give civil services of high quality to the people," he said. "The unscrupulous part of our bureaucracy, both federal and local, has learned to take advantage of stability, of the favorable atmosphere and the possibility of growth instead of working for the public's benefit," he said.

From Interfax, Russia, 25 April 2005


University to Train Civil Servants

Just because the future is known only to God, that does not preclude searching for it. Toward this end, and in line with the Dutch saying "Learn to look beyond your nose," Yemen held its second successful "Future Search" workshop last week. The venue on this occasion was Taiz, where Sana'a University held a distance workshop under the theme "Toward Modernizing the Civil Service." The workshop was sponsored through Sana'a University under a multi-million euro package of support from the Netherlands Programme for Strengthening Institutional Capacity in Education and Training (NPT).This programme currently funds some 12.6 million euros for full-circle institutional capacity development at six public universities around the country. This workshop launches a program which will oversee development of training leading to an Executive Master's Degree in Public Administration, geared exclusively toward Yemen civil servants at the mid-to-high levels of the bureaucracy.

The project envisions extensive cooperation and coordination between the Ministry of Civil Service and Insurance, the National Institutes for Administrative Sciences and Sana'a University's Department of Political Science through its Public Administration Unit. The "Future Search" framework has proved successful in the past where it was utilized by the Higher Education Project. It's been used toward development of strategy for a Master Plan to install IT capacity, including administrative systems for Yemen's public universities and three community colleges. On this occasion, Dr. Yahya Motaher of Sana'a University, Project Coordinator for the MPA project, along with his Dutch counterpart, Dr. Sander Dankelman of the Dutch Institute of Public Administration (ROI) organized the program to include maximum participation of a wide range of specialists and stakeholders to help in the development plan. To help, organizers called in a renowned expert Dr. Han Rakels, a specialist in the Future Search framework to facilitate the discussions. In addition, two senior specialists from the ROI, Marc van den Muyzenberg and Angela Kwok, along with two professors from the University of Leiden, Prof. Frank de Zwart and Prof. Frits van der Meer complemented the participation.

According to the chief architect of the project, Drs. Han Blom, the program envisions becoming linked to a merit-based system for the Civil Service. As an indication of the importance placed on these discussions by the Ministry of Higher Education and Scientific Research and the Ministry of Civil Service and Insurance, the Yemen government also sent very high level participation in the four-day workshop. The participants included all the deputy ministers of the Civil Service Ministry, senior officials and select technocrats from across the public sector and education leaders from Sana'a University and NIAS, among others. The Minister of Civil Service, Mr. Hamoud Al-Soofi, opened the workshop emphasizing the crucial need to develop focused training linked to "the defined needs" of Yemen's civil administration. He also stressed the need to ensure effective coordination between his ministry, NIAS and Sana'a University, and pledged full support for the effort.

From Yemen Times, Yemen, by Aziz A. Alhadi for the Yemen Times, 3 April 2005

Panel to Examine Appointment of Senior Civil Servants

A public commission will examine which senior civil service positions should be defined as "positions of trust" which do not require a tender, as opposed to those that will remain professional appointments, Justice Minister Tzipi Livni announced Monday. Livni said that her decision was made after reaching a compromise between Likud MKs Gideon Sa'ar and Gilad Ardan who that authored the bill, and its opponents in the Labor Party. The panel, half of whose members are academics in the field of political science, will make decisions regarding the nature of each top positions that the original bill sought to turn into 'political' appointments. A preliminary reading of the new bill is expected take place at the next Knesset session.

The Ministerial Legislative Committee passed the Political Appointments Bill last month with the support of most Likud ministers. Under the bill, many positions would turn into "positions of trust", which would not require the holding of public tenders. Such a law would allow ministers to bring in an increased number of private appointees. Among the positions of trust included in the bill are Finance Ministry Accountant General, Finance Ministry Wages Director, Interior Ministry's Population Registry Chief, the head of the National Security Council and others.

From Ha'aretz, Israel, by Yuval Yoaz, 18 April 2005

Ministers Face Ban on Interfering in Political Appointments

Attorney General Menachem Mazuz and Civil Service Commissioner Shmuel Hollander are set to ban ministers and members of their bureaus from interfering in professional appointments in their ministries. Mazuz and Hollander decided Tuesday to accept recommendations to impose a "blanket ban on involvement on the part of the political echelon in a ministry in a professional appointment, be it senior or junior." Mazuz and Hollander found that political appointments have been made in numerous government ministries. The officials found that the appointments were made against standard operating procedures, often due to political alignments or promises to members of party central committees. The two emphasize that a minister and members of the minister's bureau may not get involved in ministerial staff appointments. Mazuz and Hollander decided to accept the recommendations presented in a report by a special joint committee of the Justice Ministry and Civil Service Commission.

The panel was established following a State Comptroller's report last August that raised suspicions of criminal offenses in appointments Tzachi Hanegbi made as environment minister. Police are still investigating the suspicions against Hanegbi, who stepped down as public security minister following the revelations. Hanegbi now serves as a minister without portfolio. The panel has also proposed limiting the opportunities to make temporary appointments as such posts are often filled with political cronies. The committee also proposed setting up a special unit in the Civil Service Commission to ensure that appointments are made according to correct procedures. Mazuz and Hollander found that the political echelons attempt to influence ministerial appointments in order to ensure long-term political influence, as well as to ensure jobs for close associates.

From Ha'aretz, Israel, by Yuval Yoaz, 26 April 2005


Bush Ends Civil Service Protections

Hundreds of thousands of federal workers made a deal when they signed up with Uncle Sam. They would do good work, even rewarding, satisfying work. It wouldn't make them rich, but they would get stability, the federal holidays, transit subsidies, Cadillac health care, the flextime allowing every other Friday off, regular raises and a fat pension. Until now. President Bush and his Texas comrades have succeeded in doing what no one else could in 120 years of civil service. They have ended the deal. New personnel regulations at the Department of Homeland Security and the Department of Defense will dramatically change the way 860,000 workers there are paid, promoted, demoted and disciplined. The plan is to spread the changes throughout all federal government. No more automatic raises. No more pass-fail evaluations. No more Job for Life.

It will take effect in 2009 ... While the pay-for-performance changes won't take effect until 2009, workers are getting anxious. They don't know what their life will look like. And knowing what life would look like, after all, was always the point. "In the beginning, it was good," says Joyce Raeford, who got into government work nearly 20 years ago, working in the day-care center on the Army base where her husband was stationed. Now a widow in her late 50s, Raeford is making about $19 an hour as a lead education aide at one of the child development centers at Fort Belvoir in Virginia. She works 8 to 5, Monday through Friday. The work is fine, and she is still proud of teaching "my babies." But? "Change is scary," says Raeford. "Coming to work one day, and not having a job for sure, that you could be gone with a wave of the hand?" She shakes her head. " It seems unthinkable to many that the government, a model, progressive, benevolent employer, could come to resemble the private sector, with its layoffs and loss of loyalty to long-term employees.

In the spring of 1973, Colleen Kelley was getting ready to graduate from Drexel University with an accounting degree. She was figuring she'd join one of the big public accounting firms or go into private industry. "And the IRS came to campus," she recalls. "I really would not have thought to look at the federal government. But they talked about their training program on tax law and the career opportunities, and the salary grade in the GS system. They showed us the promotion opportunities, and the health insurance and the retirement." She became a revenue agent, auditing corporate tax returns. She went to graduate school at night. She specialized in making sure that companies with foreign subsidiaries had not improperly shifted their income offshore, where it would be taxed at a lower rate. "I really liked what I was doing," she says, and though she would hear the siren call of higher salaries and bonuses, caution always prevailed. "When I weighed that against the system I knew and understood, and that if I did what I was supposed to do, if I excelled, well, I valued" more the deal with the government.

Kelley did eventually go outside, but not to one of the big accounting firms. She is now president of the National Treasury Employees Union, which represents more than 150,000 employees in 30 governmental agencies, and is one of the leaders of an effort to ask the courts to stop implementation of the new personnel rules. She hears her members' worries every day. "They signed up for the long haul," says Kelley. "So many of them have 10 or 15 years [to go until retirement], and there is no question it was their intent to have a career and retire from the federal government, from a work environment that had rules that provided balance and fairness. And now there are a lot of questions about the future." Although there are 15 GS levels (with 10 steps within each one), there are really only two categories of workers: professionals and support staff. What they share is a preference for an orderly life. The federal system, with its rigid personnel rules, can breed a culture where workers prefer being told what to do, rather than taking individual initiative.

... Planning started in 2001 - In the aftermath of Sept. 11, 2001, President Bush argued that the old work rules and regulations hampered government's ability to respond quickly to crises. He easily won congressional approval to change the system. In January 2003, the bipartisan National Commission on the Public Service, chaired by Paul Volcker, called for the abolishment of the general schedule. The new rules will replace the half-century-old GS schedule with a pay-for-performance system, as recommended in 2003 by a bipartisan commission on public service, and will also limit the unions' ability to intervene on behalf of their members. "We think those flexibilities make it possible for agencies to better focus on results and to hold the people and managers accountable," Clay Johnson, deputy director for management at the Office for Management and Budget, said at a briefing to unveil the new rules.

From The News Journal, DE, by Ann Gerhart of The Washington Post, 10 April 2005

First International Compliance Awards Honors Those Dedicated to Advancing the Compliance Profession

Last night, the International Corporate Compliance Professionals Awards Dinner, held at Sheraton New Orleans, recognized individuals and organizations that have made considerable contributions to the compliance profession. The inception of the Awards Dinner, held by the Society of Corporate Compliance and Ethics (SCCE), Health Care Compliance Association (HCCA), Healthcare Compliance Certification Board (HCCB), and Open Compliance and Ethics Group (OCEG), happens in conjunction with the rapidly growing and changing role of the compliance profession. The compliance officer position can be found in almost every industry, in public and private companies, and in nonprofit organizations. Compliance professionals develop and oversee corporate compliance programs to ensure that their organizations comply with regulations.

Award Recipients - nternational Compliance Professionals Award recipients are leaders in the compliance field, showcasing professional integrity and strengthening the industry. Award recipients include: - Australian Compliance Institute, whose mission is to lead organizations in the development of integrity and trust and to add value to members through the promotion of more effective and efficient compliance in Australia. - United States Sentencing Commission for the role that it has played in the development of the foundational elements in every U.S. compliance program. - E. I. Du Pont de Nemours and Company, Inc. and their Chief Compliance Counsel Marjorie Doyle, for the innovative approach the company uses to effectively train employees and to communicate their global compliance message; and to honor the work of Marjorie Doyle in promoting the compliance profession. - Joseph Murphy, Esquire, for his many contributions to the compliance profession and for his assistance in developing the HCCA Code of Ethics. - Quinnipiac University and Assistant Professor of Management Angela S. Mattie, J.D., M.P.H, for their contributions to the compliance profession. Quinnipiac University's Health Care Compliance Certificate Program provides qualified students with a sound academic foundation and the skills required to function as health care compliance professionals. - Lynn Brewer, Founding Chairman of The Integrity Institute, Inc., for her role in promoting organizational integrity and developing methods that measure integrity in communications, compensation, compliance, corporate citizenship, culture, earnings, governance, leadership, risk and stakeholder perceptions.

"Compliance and ethics are the foundation of our civil society. This award recognizes that the principles of compliance and ethics transcend time and national boundaries," said Mike Lotzof, CEO, Australian Compliance Institute (ACI), who accepted the Award on behalf of ACI. U.S. Sentencing Commissioner Michael Horowitz, said, "I am proud to accept this award on behalf of the Commission and the Commission staff." "We are so proud to have the opportunity to acknowledge the important work being done in compliance," said Al Josephs, 2004/2005 President of HCCA. "As the profession is growing in importance and stature, it's fitting to honor those who are paving the way and setting a good example," said Odell Guyton, 2005/2006 HCCA President and SCCE Co-Chair.

From (Pressemitteilung), Germany, 20 April 2005


United Nations Weighs Ethics Unit to Protect Whistle-blowers

United Nations - The United Nations is considering creating a high-level ethics office to encourage employees to come forward with allegations of misconduct or mismanagement against their bosses, officials said on Friday. The idea is part of a plan promised by Secretary-General Kofi Annan 10 months ago to strengthen protections for whistle-blowers after a survey found U.N. staffers believed little was being done to root out unethical behavior and that workers who exposed wrongdoing risked reprisals. A proposed new whistle-blower policy was drawn up and distributed to staff for comment as part of a broad U.N. reform initiative launched following a steady drumbeat of wrongdoing accusations against top U.N. officials in recent months. Many of those have been linked to the $67 billion oil-for-food program for Iraq, which was shut down in 2003 and is the target of numerous investigations. Among them, Annan was himself faulted by outside investigators for conducting a perfunctory inquiry into a possible conflict of interest in the award of an oil-for-food contract to a firm that employed his son.

The new ethics unit would provide staff a layer of protection over and above that of the Office of Internal Oversight Services, the U.N. internal watchdog unit now responsible for whistle-blower protection. That unit has itself come under fire in recent months for management misconduct including allegations of favoritism in hiring, sexual harassment and misuse of oil-for-food program administrative funds. The main U.N. bureaucracy has nearly 15,000 employees worldwide and a $1.8 billion annual budget. That does not include $4 billion for peacekeeping forces and 20,000 staffers who work in U.N. programs and funds.

The whistle-blower proposal would create an ethics unit in Annan's executive office to hear reports of reprisals or threats against staff reporting mismanagement or wrongdoing and to discipline those found responsible. The unit would report annually to the U.N. General Assembly on all the cases it handled and the actions it took. A new whistle-blower review panel would watch over the ethics unit and suggest improvements. "All staff members can make whistle-blower reports in good faith without fear of retaliation," according to the proposed new policy. "Anyone who engages in reprisals against those who make whistle-blower reports or cooperate in whistle-blower cases will be subject to charges of misconduct."

From Reuters India, India, by Irwin Arieff, 8 April 2005


E-governance to Improve Performance in Pakistan - Leghari

Karachi - Federal Minister for IT and Telecom Awais Ahmed Khan Leghari has said the government will outsource its IT and e-governance requirements worth $50 to 100 million to private sector in next 18 months. He was addressing a seminar on "Enhancing productivity for the textile sector through use of IT", organised by IT solution providers Arwen Technology Ltd (ATL) here on Saturday. He said the government was working on a major plan to adopt e-governance in its departments to improve their working and would outsource huge amount of IT work to private sector in near future to attract more IT solution provider companies in the country.

He said leading international IT solution providers like Microsoft and IBM could team up for these projects and must register with the government. "There is a certain criteria and local companies can go for collaboration with foreign companies if they feel short of resources and expertise," he added. He further said the government was also expecting other leading world players to participate in this task. He informed that the first meeting of National E-government Council (NEGC) would be held under the chairmanship of Prime Minister Shaukat Aziz on April 23 at Islamabad to give approval to a five-year plan of e-governance. He said that all the government departments would be given targets to implement e-governance.

"The government will also urge private sector, especially the textile sector, to take up IT solutions to enhance their productivity, improve efficiency, cut cost by plugging leakages and satisfy their buyers," Leghari maintained. He said that the government is working to create a much better tax-incentive environment to gear up the growth of IT sector and attract leading companies in Pakistan. "We have recommended a tax cut of 5 per cent for IT solution providers in the forthcoming budget," he added. The minister was optimistic that the IT sector will grow much more rapidly in next two years.

Commenting on the training of manpower in IT sector, the minister said that the government would use its research and development fund worth Rs2 billion for human resource training in textile sector. Appreciating the entry of Arwen Technology Ltd (ATL) in textile sector, the minister said that the company was doing a job for the government, adding, "textile sector must use this technology to upgrade its product quality, standards and processes to world level." Earlier, Chief Executive Officer ATL Atiq Rehman said that his company provided total solution to the textile industry for increasing productivity, efficiency, cost reduction while the return is much higher.

From Pakistan Times, Pakistan, 18 April 2005

West Bengal District First in Rural E-governance

West Bengal is all set to implement the country's first rural e-governance pilot project in a southern district of the state. The project to be launched in Bardhaman will bring every village council there under its network. The project is being launched by West Bengal State Wide Area Network (WBSWAN), which was started in August 2001 for providing a computer networking backbone carrying voice, video and data over Internet across the state to facilitate e-governance. "An administrative approval of Rs.40.96 million ($935,000) for this pilot project has been received from the government's Department of Information Technology (DIT)," West Bengal IT principal secretary G.D. Gautama told IANS Saturday. "This amount would be released as grants-in-aid to Webel Technology Limited (WTL), the state-designated State Wide Area Network implementing agency," he said.

The pilot project, once implemented, would connect six subdivisions to district headquarters, subdivisional headquarters to 31 blocks and the blocks to 277 gram panchayats through a Public Telephone Network (PSTN) dial up connection. According to Gautama, Bardhaman is an ideal choice for the project because it offers a large industrial, agricultural and mining base and has the highest population density of 985 people per square km, enabling a wide cross section of people to access the services. "The district headquarters at Bardhaman in south Bengal is being provided connectivity by WBSWAN from the centre at Kolkata," he said.

"This is for the first time in the country where all the gram panchayats of a district are being brought under the network," Gautama said. The Indian Institute of Technology, Kharagpur, is assisting WTL on the project. Meanwhile, the state's State Wide Area Network (SWAN) expansion plan also received a central grant of over Rs.660 million. "DIT has conveyed administrative approval of Rs.669.3 million through WTL for the entire SWAN project in the state," Gautama said. "The readily available secured government network would attract the attention of business houses to the districts while the infrastructure would support value-added services through Community Information Centres (CIC)," he said. The WBSWAN was launched in 2001 to provide connectivity of data, voice and video communication facilities to all 18 West Bengal districts. It was extended to eight commercially important subdivisions in 2003. West Bengal is now firmly entrenched on the IT expansion map of India with its capital city Kolkata emerging as one of the fastest growing IT hubs for MNCs.

From, India, 23 April 2005


Website Self-Service Can Save Taxpayers £1.2 Billion

Local authorities could achieve government targets and save £1.2billion of taxpayers money by 2007, if their websites were able to answer routine questions from the public automatically online. This is the view of Transversal, whose eCustomer Service solutions are being used to answer millions of questions on public sector websites including The British Army and The Metropolitan Police. 829,000 recruitment questions were answered automatically online using eService for just one of Transversal's public sector customers in 2004 - an annual saving of £7 million compared to answering questions by email, or nearly £14 million if resolved by phone, according to Transversal. The amount of phone calls to public sector departments and call centres has risen sharply, from 67 million in 2000 to 95 million in 2003 . Yet despite the billions already spent on eGovernment, too many local authority web sites are still unable to provide basic answers online, frustrating citizens searching for information and unnecessarily increasing public service costs. This view is backed by the Society of Information Technology Management (SOCITM) , which represents public sector ICT managers. Following research and usability testing of 468 council websites SOCITM stated that a significant slice of the annual 2.5 per cent efficiency gain could come from transferring face-to-face and phone contact to self-service via the web. Local government has been set this efficiency target by the Treasury and is equivalent to £1.2 billion over three years.

SOCITM's research found that only 10 per cent of councils had A-Z content lists of sufficient standard and only 13 per cent had internal search engines that picked up common terms such as public transport, council tax, committee meetings and Freedom of Information. By handling large numbers of routine questions, self-service applications can significantly cut down on phone calls and emails that need to be handled by public sector staff and call centres. The private sector experience of self-service is that organisations can reduce contact volumes by more than 60%. SOCITM's findings mirror a study carried out by Transversal in 2004, which found that nearly three quarters (73 per cent) of citizens hadn't noticed the impact of investment made in e-Government and that 50 per cent of respondents were unhappy with current levels of customer service. "E-Government offers councils an unprecedented opportunity to reduce costs while actually improving services to citizens," commented Davin Yap, CEO, Transversal. "While local government is moving in the right direction there seems to be a gulf between what is offered and what citizens actually want - clear, easy to access and jargon free information. Failure to provide this will drive people to expensive channels such as contact centres and council offices - negating the £1.2 billion efficiency gains promised."

From Managing Information, UK, 15 April 2005

We Will Harness Power of IT and Continue E-gov Work, Says Blair

Prime minister promises continued investment in local government IT - Days before Tony Blair went to Buckingham Palace to ask the Queen to dissolve parliament, the government launched a new strategy to transform the delivery of public service around IT. The announcement must have been music to the ears of public sector IT managers. Just a week earlier, Chris Guest, president of council IT managers association Socitm, voiced his fears that local authority IT spending could dry up as the 2005 e-government deadline passed and as budgets were squeezed as a result of the government's efficiency review. Richard Steel, head of IT at Newham Council in East London, was typical of many local authority IT directors when he insisted that Westminster and Whitehall should not give the impression that the job of e-government is already done. As if answering this call, Blair said in the introduction to Connecting the UK: the Digital Strategy, 'While we can rightly celebrate progress, we cannot, and should not, think the job is done. We must harness the power of IT to modernise public services so they are as personalised, efficient and responsive as the most successful companies.' With this came the promise that the Cabinet Office E-Government Unit and the new council of government chief information officers would create a 'vision of public service delivery transformed by modern technology and a strategy for achieving that vision'.

Blair said, 'The challenge for government is to ensure that we seize the opportunities offered by the widespread availability of high-speed networks and the growing acceptance of electronic services in people's daily lives. 'Some services enabled by modern technologies have had a profound impact that was not foreseen: the budget airline industry is now a social phenomenon reaching almost all parts of society, but would not have been possible without the internet. People will adopt new technologies when the value proposition to them as individuals and families is strong enough. 'We must be open and quick to seize the opportunities that present themselves. Rising to this challenge will be an important task for the e-government unit as it draws up a strategy for the use of ICT in transforming public service.'

But there is a difference between putting commercial and government services online. Retailers and airlines, for instance, want to attract the affluent customers, who are already likely to have access to the internet at work or at home. For government services the opposite is true: key client groups for social services, for example, are the least likely to have web access. For this reason, the document looked at ways of overcoming the 'digital divide,' encouraging the leasing of laptops to family homes through schools and making it easier for businesses to sell old PCs to all employees, not just those that already use IT on a regular basis. While vision is one thing, local e-government minister Phil Hope offered some practical measures that could ensure IT spending is the beneficiary, rather than the victim, of spending cuts under the efficiency drive that all parties in the general election are promising. Hope said the local authority spending watchdog, the Audit Commission, would in future perform a comprehensive performance assessment on councils that gives weight to effective use of IT to improve efficiency. 'Not only delivery and corporate management and leadership [will be examined], there will be criteria for use of resources, including IT. They will have to identify how they use IT,' he said. Jos Creese, head of IT service at Hampshire County Council, welcomed the pledges. Having IT feature in the auditing of efficiency gains would help prevent financial departments from sidelining IT or even cutting IT budgets, he said, but warned, that delivering IT-enabled efficiency gains would be hard.

From, UK, by Lindsay Clarke

Global Alliance to Hold IT 'security day' in London

The first UK fruit of an alliance of three major international IT security organisations formed earlier this year will be a "security day" in London on 10 May. The US-based groups represent three areas of IT security. The Information Systems Security Association (ISSA) covers IT security professionals, the Information Systems Audit and Control Association (Isaca) rep- resents IT auditors, and Asis International has its roots in physical security. The first UK joint meeting of the organisations on 10 May will cover e-crime, BS7799 and ISO 17799 standards, e-government security and e-governance. The international boards of the three organisations took the first steps towards forming their alliance last February, spurred by the increase in and growing complexity of risks to business from hacking, viruses and other IT-related threats.

The alliance aims to: - Develop risk models that better qualify and quantify enterprise-wide security risks and the potential impact on business; - Raise management awareness of existing and emerging risks; - Promote a common security management voice to legislators and government agencies; - Work together to define the qualification, certification and training requirements for security roles, including chief information security officer. Informal talks between the UK boards of the organisations have already started, said Louis Gamon, regional director of ISSA EMEA. He added that formal talks to move the alliance forward through joint events and information sharing will be held on 1 June. More information from

From, UK, 20 April 2005

E-government for Everyone

Now that our capacity for e-government is about to make a huge leap forward, the government has been reminded that e-government is about improving public access to online services, rather than excluding those who don't have the necessary internet know-how. The construction of Ireland's e-government infrastructure is about to reach an important milestone next month as the Public Services Broker (PSB) goes into operation. The PSB is a computer infrastructure project, which will allow government departments to interact both with one another and with the public. The PSB will allow government departments to link up their disparate computer systems, giving citizens an integrated and efficient point of access to government services. Seamus O'Farrell of, the agency charged with delivery of the PSB, says that the system won't transform government overnight, but will introduce some key improvements to Ireland's e-government capacity.

From the date of its launch, the system will include a single process for the identification and authentication of members of the public and will also include a single payment mechanism for transactions. Citizens will no longer need to prove their identity each time they deal with a government office, such as the Department of Agriculture, passport office or the local authority's motor tax office. The launch of the PSB should help to shore up Ireland's eroded standing as a world leader in e-government. Last month Cap Gemini, in a report commissioned by the European Commission, placed Ireland fourth in the EU in terms of the sophistication of its online e-government offerings. In 2003 Ireland was placed joint second with Denmark and back in 2001 Ireland was ranked number one.

Evidence of Ireland's relative decline has also been shown in other studies; Accenture's sixth annual e-government survey, which was released earlier this month, shows that Ireland is ranked in joint eleventh place internationally, along with Belgium and Japan. This means that Ireland held the place it enjoyed in 2003, but has slipped one place since 2002. But Accenture partner Ian Slattery says that our fall in the rankings needs to be placed into context, since the criteria of the survey has changed since last year and that it's difficult to compare the surveys. This year's survey, for example, examined e-government in a broader sense than previous studies, which looked at the range and quality of e-government services. In terms of the quantity and quality of e-government projects, Ireland has plenty to crow about. The Revenue Online Service (ROS) processed the tax returns of 157,000 self-employed people at Halloween last year, accounting for 53 percent of the total number of people who filed. Elsewhere, the Department of Social and Family Affairs recently won the Innovation through Technology Award from Inside Government magazine for its Integrating and eEnabling Services project. This service makes it possible to register a child's birth, assign a Personal Public Service Number (PPSN) and set up child benefit payments in a single procedure.

Shay Fitzmaurice, the managing editor of the Public Sector Times, says that the standard of e-government projects has risen hugely in recent years, as demonstrated by the entries to his publication's e-government awards. He points to the Land Registry Office as an example of the transformative powers of e-government. It used to take years for land transfer transactions to be completed, but with 80 percent of its business transferred online, the Land Registry now completes 3,300 business transactions per day via its website. But that's not where Ireland's e-government challenges lie. Accenture's Slattery points out that Ireland stumbled on the third strand of the e-government survey, which looked at e-government in terms of its ability to provide good customer service. In order to score highly in this area, governments must do more than simply put their services online. Although 50 percent of the population of Ireland are regular internet users, only 60 percent of those have ever visited a government website. Coercing people who lack ICT skills into an automated system is not good e-government practice, according to Slattery. In order for e-government to be accepted and successful, it needs to work with people on their own terms. In this context, e-government would mean that people could make a phone call to a civil servant, who would have all of their information to hand, using a PC that's connected to the PSB. People should also be able to have face-to-face meetings with civil servants when they feel that it is necessary.

"I'd be concerned if Ireland was slipping down the rankings and there was no plan to improve, but there is a programme in place," said Slattery. The fact that the PSB is designed to facilitate phone and face-to-face contact is one good omen for the customer service aspect of e-government, as is the fact that the government plans to provide integrated contact centres to the public. In the long term however, e-government will mean that the public will increasingly interact with the government through a computer network. To this end the government has been introducing initiatives that will encourage people to go online, such as free computers in public libraries and publicly funded computer training for the elderly. Such initiatives will certainly make e-government a more realistic prospect for everyone.

From, Irelandm by Ciaran Buckley, 22 April 2005

Europe Setting the Pace in E-business - We're All Switched On

Europe is creating a thriving e-business environment by driving broadband growth and investing in public and private Internet initiatives, according to a new report. The Economist Intelligence Unit (EIU) released its sixth annual ranking of the "e-readiness" of 65 countries, rating them on factors such as Internet access, mobile penetration, innovation and investment. Seven of the countries in the top ten are in Europe, with Denmark ranked number one thanks to its high rate of connectivity and solid technical infrastructure, the EIU said. Other European front-runners were Sweden at number three, followed by Switzerland, and the UK. Finland tied with Hong Kong in sixth place, and they were followed by the Netherlands and Norway.

Strong e-government initiatives and broadband development helped boost the European contenders, according to Denis McCauley, director of global technology research at the EIU. Switzerland moved up from its tenth-place spot in 2004 thanks to Internet growth and a strong education base, McCauley said. The EIU revised its criteria for the rankings this year, adding more weight to broadband penetration and average years of schooling, thus improving Switzerland's score, McCauley said. The U.S. took number two, advancing from its sixth-place position last year, because of broadband and mobile connectivity progress, McCauley said. The nation also continued to score high in the areas of entrepreneurship and e-business services, he said. Hong Kong led the Asia-Pacific contenders at number six, followed by Singapore at 11 and South Korea at 18. The development of e-business services and a positive legal and policy environment helped boost Hong Kong, the EIU said. While South Korea remains the most developed broadband market in the world, factors such as Internet security counted against it, the researcher said. China and India, well known for their IT growth, came in near the bottom of the chart, EIU said. China stood at 54 in the rankings while India came in at 49.

Looking ahead, McCauley predicted that new EU members Estonia and Slovenia, currently at numbers 26 and 27 respectively, would continue to make gains based on the amount of public and private funding going into their Internet development. He also predicted that South Korea would make a quick comeback in non-technical areas like policy and education. The EIU e-readiness report reviews over 100 criteria in categories such as supporting e-services, legal and policy environments and technical infrastructure.

From, UK, by Scarlet Puritt of IDG news Service, 20 April 2005

Italian Models Appreciated Abroad - MIT-RGS Agreement

Rome - The Italian e-Government model is appreciated abroad. Three are always more developing countries' Public Administrations which want to use the digital technologies developed by the Italian government, revealed Innovation and Technology Minister Lucio Stanca at 'Euromed ICT', the conference for European Mediterranean countries on IT, promoted by the European Commission in Dundalk (Ireland). Minister Stanca said that "more countries are joining the 16, of which Italy is advancing the e-Government Initiative for Development realized by the Technical Unit of the ministries by partnership such as UN, the World Bank, the InterAmerican Development Bank and the Development Gateway Foundation of Washington. The new international fronts opened thanks to the agreements started with the State Accounting Department and the collaboration with the Territorial Agency of the Economy Ministry. With these international initiatives Italy united the efforts which were previously run individually by several international organisms.

The world is increasingly adopting the 'good governance' way, i.e. that of democracy, and as a consequence new Information and Communication Technologies (ICT) are being used. General State Accountat Vittorio Grilli and Chief of the Innovation and Technology Department of Cabinet Mario Pelosi, signed an agreement which made the collaboration between Accountancy and the Ministry for Innovation and Technology within the e-Government Technical Unit for Development projects official. The structure involved Accountancy as partner in e-Accounting projects not only as the Italian institutional referrer on these issues but also for the prior experience in cooperation projects, as in Lithuania.

Currently the collaboration between Stanca's ministry and the Accountancy is being realized with projects in Nigeria, Jordan and Albania. In Nigeria the contribution to Accountancy was fundamental for the start of the project and favoured the construction of a bilateral relationship with the Nigerian counterpart: the Office of the Accountant General of the Federation (OAGF). The project, just started, will last six months and has a pilot phase scheduled: the data will be collected by posts located in the 5 ministries, to then be sent and consolidated in the OAGF headquarters. The action was financed by the grant program of the Italian government and the Development Gateway Foundation for a value of 400,000 USD. The Technical Unit was implemented also to favour economic support of the World Bank to Nigeria to guarantee the progression of e-Accounting and e-Statistics projects, currently being accomplished in the same country in collaboration with ISTAT.

The General Accountancy experts gave their support to the Technical e-Government Unit for Development of Minister Stanca in the preliminary definition of the e-Accounting project in Jordan. The official start was in Amman under the signatures of Jordanian Finance Minister Mohammad Abu Hammour, Minister Stanca and UNDP-UN Representative Christine McNab. The project is accomplished in collaboration with UNDP via a trust fund of 488,000 USD, opened by the Italian government and will be concluded by December 2005. In Albania the General Accountancy experts with those of the Technical e-Government Unit for Development took part in the definition of the specifications regarding the upgrading of the Albanian Public Accountancy System towards more modern European and international standards. Soon the Albanian electronic accountancy project will enter its operative phase. The Italian Foreign Affairs Ministry invested 930,000 USD in the UNDP trust fund for this. The Territorial Agency was selected by the Mozambican Government as technical consultant for the electronic cadastre project (e-Land Registry and Land Information Management System) realized by the Technical e-Government Unit for Development of Stanca's ministry. The project, sponsored by the grant program set up.

From Agenzia Giornalistica Italia, Italy, 11 April 2005

E-government on Agenda of Most European Cities

E-government is now a permanent agenda item of local councils in European cities, a survey compiled by Deloitte and the Eurocities Knowledge Society Forum reveals. Some 80pc of participating cities have developed an e-government policy, including the delivery of services electronically.

The survey, which was unveiled at a major Eurocities conference in Tallinn, Estonia, investigated the status of e-citizenship and e-government within European cities focusing on four key challenges: re-engineering of local public administration; e-learning and inclusion; e-security and e-democracy; and community building. A total of 102 European cities from 23 European countries, including 18 cities in new EU member states, participated in the survey. According to the survey, cities recognise the need to focus on cost reduction and efficiency, by analysing the real needs of citizens and businesses and computerising simple and frequently used services. The survey shows the demands of citizens and businesses represent the most important drivers for improvement of electronic services. The increasing focus of cities on the demands of their citizens demonstrates that cities are adopting a more 'outside-in' approach to e-government, as opposed to focusing on issues such as cost reduction and responding to legislative requirements only.

In 2003, primary reasons for implementing e-government were cost reduction and responding to legislation. E-government now finds itself increasingly on the agenda of local councils. Most cities have programmes, projects or taskforces defined or in place, and some had even created specific senior positions for e-government. The current focus of cities is to meet demands of citizens and businesses, with 79pc of survey participants citing this as their most important driver of change. Respondents to the survey believe that e-government could reduce external (user) costs by simplifying complicated procedures, typically involving the business community, such as licence and planning applications and tax reporting. Following the satisfaction of the demands of citizens and businesses, the streamlining of internal processes (61pc), the increase of productivity (59pc), the improvement of performance (59pc) and cost reduction (50pc) are seen as the most important drivers of change. Outsourcing did not appear to be popular among participants, despite some of their stated objectives. Cities outsourcing e-services or considering outsourcing them were mostly those respondents whose services were at an advanced level.

On the topic of re-engineering local public administration, the survey showed that the implementation of e-government was being driven by citizens' demands, internal efficiency, effectiveness and productivity. The response to citizens' demands is a positive shift. It indicates that cities are adopting a more responsive 'outside-in' approach towards e-government. Lifelong learning remained a political issue, the survey found. In most respondent cities (70pc) this was a topic on the political agenda with involvement from a wide constituency of interested and motivated parties. Different approaches have been adopted with a third of cities having a written e-learning strategy, a large number of strategies addressing specific target groups and having a dedicated organisation and resource for e-learning. The initiatives to provide life-long learning opportunities concentrated more on promoting e-learning (67pc) than providing it in the homes (37pc) or to the community (50pc).

Analysis of the e-security survey data indicates certain security precautions are in place with 88pc of participants deploying antivirus software and in excess of 70pc using firewalls. More than 90pc of respondents were in agreement with elected representatives being contactable by email; citizens receiving electronic communications on policy matters and elected representatives to modernise their working practices. However, 57pc of participants didn't expect online consultation to raise public expectations and could lead to frustration. Some 43pc had no view on whether all European citizens should be able to vote online and 53pc suggested that elected representatives couldn't cope with the number of emails they receive. Chris Newby, a Liverpool councilor and chairman of the Eurocities Knowledge Society Forum, commented: The [eCitizenship for All] survey is a clear example of the unprecedented efforts that cities are undertaking to achieve good governance within the context of public sector modernisation. "The survey shows that e-citizenship is becoming a meaningful agent of transformation embedded in the culture of the public sector. Its potential goes far beyond early achievements."

From, Ireland, by John Kennedy, 22 April 2005


Qatar Providing Top Class E-services

Doha - Qatar is now among the top select group of countries that have developed a comprehensive infrastructure for its e-services with the latest in cyber technologies being implemented, Abdulamir Mryhij, ebusiness Practice Manager, GBM-Qatar, said here recently. "In the e-services domain, Qatar is definitely one of the top group of countries for the number of e-services provided", Abdulamir said. He was speaking at a news conference to announce GBM-Qatar sponsorship of the upcoming e-government symposium to be held on April 12.

"The symposium is aimed at creating awareness on the services provided by government website ( to the public, businesses and visitors", said GBM-Qatar General Manager, Thierry Louesse. "The focus will be on how the website provides faster, more convenient, and less costly services and transactions in a secure and private environment using straightforward instructions in both Arabic and English", he said. Thierry noted that GBM along with IBM and its business partners have developed so far ten of the on-line governmental services available. These include, Qatari employment, residence permits, visit visas, driving licence renewals, vehicle registration, Zakat contributions, electricity and water bill payments and the recently launched birth certificate.

The portal is bringing Qatar's goal significantly closer to be the regional leader in harnessing the power of today's technology in the way it delivers services to its constituents and provides support to its employees, said Louesse. Abdulamir Mryhij, GBM-Qatar, e-business Practice Manager explained that Qatar started with e-services, which is needed to provide services online and Public Key Infrastructure (PKI), which is needed for security while establishing its infrastructure. Abdulamir said these are important elements to get people engaged in using the e-services provided. However, among the challenges that Qatar as any other country has to face in establishing an e-services infrastructure, is to get all government institutions to adopt the initiative at a faster pace, he said.

From Peninsula On-line, Qatar, 8 April 2005

Lecture on 'E-government to E-governance' Held at KOM

Muscat - Yahya bin Saud bin Mansour Al Sulaimi, minister of education, inaugurated a lecture titled 'e-government to e-governance' at Knowledge Oasis Muscat yesterday. This lecture, the first in the 'MECIT Series of Lectures on Digital Society', is organised by the Middle East College of Information Technology (MECIT) and was delivered by Prof. Matthias P. Finger, an internationally well-known scholar in the area of e-governance. Most countries are now trying to drastically reform the way their governments function. The first stage of reform began in the 80s and was largely in the context of transition to free market economies. The second phase of the reform process, which began in the 1990s, was triggered by the Information and Communication Technology (ICT). As of now, government reform has become a global phenomenon, mostly enabled by ICT and known under the buzzword e-governance.

The emergence of extra-governmental centres of power and private actors engaging in policy formulation, the increasing privatisation, and citizen-oriented government services, are all signs of this change. However, the terms 'government' and 'governance' are often used interchangeably, to the extent that many governments are merely engaged in digitisation or automation of their processes. There was a need to bring about conceptual clarity with regard to the immense transformational potential of e-governance with a multi-pronged approach whereby anything from an overall societal preparedness to employing appropriate technology solutions are addressed holistically. In the above background, the current lecture is intended as an eye-opener to the decision makers in governments regarding the ongoing global debate and consolidations on the emerging dimensions of the concept of e-governance as compared to a relatively static concept of e-government.

The objective of the lecture is to confront the audience with the overall concept of state transformation with a slight focus on the paradigm shift from government to governance by offering an understanding of the possibilities and limits of ICT in governance. MECIT, which is organising the lectures, was set up in 2002 within Knowledge Oasis and has about 1,200 students pursuing various degree programmes in information technology. Recently, the college tied up with the Interactive University, which is the consortium of Scottish Universities and Scottish Enterprise to provide Scottish degree programme in the Sultanate. MECIT tied up with Chair Management of Network Industries (Chair-MIR) at the Swiss Federal Institute of Technology, Susanne (known as EPFL), to conduct the lectures on various concepts of digital society. Professor Mathias is the head of the Chair-MIR, which runs an international Masters Programme in e-governance and has many international publications to his credit. He was also a visiting professor in many global universities.

From Times of Oman, Oman, 18 April 2005

Stage Set for Switchover to E-Governance

Riyadh - The Kingdom is on course for switch over to e-governance, Telecommunications and Information Technology Minister Muhammad Jameel Mulla said yesterday. He was speaking at a press conference after inaugurating GITEX Saudi Arabia 2005 at the Riyadh Exhibition Center. The five-day exhibition attracted 500 companies from 15 countries; there were more than 5,000 visitors on the first day with 80,000 being targeted. "We have a structured organization for the implementation of e-government," the minister said, adding that there was a special committee comprising the ministers of finance and communications and information technology and the governor of Communications and Information Technology Commission (CITC) to supervise the implementation programs. He pointed out that there were several subcommittees working under the ministerial committee to streamline the programs envisaged by the government. "We have already started a pilot project between the ministries of finance and the communications and information technology which will indicate teething troubles and what could be done in the implementation programs in other ministries." Although Voice Operated Internet Protocol (VoIP) is illegal in the Kingdom, the minister indicated that the government will make it legal in order to keep pace with technology. Referring to IT parks, he said his ministry had been assisting projects in Riyadh, Dammam and Jeddah.

Among IT players at the show were such international vendors as Samsung, Epson, Acer, Toshiba and Samsung as well as key IT firms including Jeraisy, Hoshan, Modern Electronics and Jarir Bookstore. "The show provides an ideal platform for exhibitors to launch the latest technology and services into the largest market in the Middle East," said Muhammad Al-Hussaini, deputy general manager of the Riyadh Exhibition Center. He added that the Kingdom is the region's No. 1 market for sales of computers and IT applications. Annual sales of computers, worth up to $800 million a year, projected an average growth of about 15 percent in units during the past two years. The Saudi market for application software exceeded $600 million in 2003 and is growing 10 percent annually. "The increased use of Internet in the Kingdom by both businesses and consumers, the increased use of e-commerce, lower subscription fees for Internet services and the introduction of computers in thousands of Saudi schools are creating great opportunities for hardware and software suppliers," Al-Hussaini said.

From Arab News, Saudi Arabia. by Mohammed Rasooldeen, 24 April 2005


Virginia Launches Integrated E-Gov Web Application

The Commonwealth of Virginia has launched an e-government solution that allows local government users to simultaneously query multiple state databases. It is projected to significantly reduce case processing time, associated worker costs and paper files for users while improving access, security and citizen satisfaction. The new application, Human Services Interface (HSI), was built by MITEM Corporation, a provider of integration software solutions and business applications. HSI, a Web-based query application, was initially created for social workers in Virginia localities to verify citizen eligibility for services. It is the first enterprise interoperability solution to be hosted by the Virginia Information Technologies Agency (VITA) under Virginia's "G2G Enterprise Services Interface" (GESI) initiative, to provide a vehicle for local governments to efficiently retrieve data from multiple state systems.

A request for assistance to VITA from the g2g-Virginia group, a consortium of human services and IT professionals from thirty local governments, led to HSI's development and implementation. "We project time savings of 30 to 50 minutes per case reviewed through the use of this significant new application," noted Branka Al-Hamdy, IT Strategic Planning for Arlington County and chairperson of g2g-va. "This will lead to annual state-wide savings for local users of 500,000 -720,000 hours in case worker time, or $15-19 million dollars per year, and $1-1.8 million in annual paper and ink savings. Just as importantly, HSI allows localities to reengineer processing, allowing for even greater benefits, not just in saving of worker time, but also in better customer service."

Previously, a citizen application for food stamps, unemployment, or other services required a local social worker to verify eligibility by checking and then compiling records from agencies such as Department of Motor Vehicles, Virginia Employment Commission, and Department of Social Services. Now, that same local worker will make one online request. HSI formats the query to comply with a variety of legacy systems and uses extensive business logic to search appropriate data fields across departments, producing a single integrated report and reducing review time by up to 90 percent. HSI also makes it easier to detect fraud or erroneous data. A search might reveal two social security numbers related to a single person, prompting an investigation. "Our goal at VITA is to make the Commonwealth the model of information technology in government," said Lem Stewart, CIO of the Commonwealth. "We continually strive to improve service and savings benefits for our citizens and customers. HSI helps us achieve that vision by improving services to the citizens of Virginia and saving taxpayers money." HSI is built on MITEM's integration engine, MitemView. This platform integrates with legacy applications, middleware technology, application serves, web services, and myriad vendor-specific interfaces.

From Public CIO, CA, 12 April 2005


Citizens Not Using E-gov, Prefer Telephone

Despite having invested billions of euros moving services and information resources online, governments around the world are still struggling to meet citizens' growing expectations for better customer service, according to the results of a report from IT consulting firm Accenture.

The study was a leadership assessment of the overall service maturity of 22 national governments in North America, Europe and Asia based on the breadth and depth of the e-government services they offer, as well as leadership assessments along several key categories. The company also surveyed 9,000 adults in the same 22 countries to uncover their perceptions and customer experiences interacting with their government online, in person or via phone. The study found that while e-government offerings across the board are well advanced, with an average service maturity breadth of 91 per cent, all countries have room for improvement to realise the broader goal of leadership in customer service. In fact the overall average customer service maturity score - which measures four key aspects of service delivery, including how well governments are delivering service across multiple channels - was just 39 per cent. Only Canada has an overall customer service maturity score of more than 50 per cent.

The citizen survey found that while most citizens prefer a number of different methods of communicating with governments, they continue to rely on more traditional, offline channels. Despite the relative internet savvy and familiarity with online government in some countries, the telephone continues to be the predominant means citizens use to communicate with government. Over the past 12 months, 57 per cent of respondents had used the telephone to interact with government, as opposed to only 22 per cent who had used the internet. Yet despite its popularity, the telephone is consistently ranked as the least easy form of communication across all countries surveyed.

All countries experienced a drop from previous years' overall e-government maturity scores, which measured the level to which a government has developed an online presence. For the fifth consecutive year, Canada ranked first out of the 22 countries surveyed in maturity, followed by the United States, Denmark, Singapore and Australia. Countries that fared worse this year tended to be those with an emphasis on solely the e-government aspects of their service delivery programmes. A look at e-government programmes across the globe shows that continued incremental improvements in this area are unlikely to yield significant boosts to maturity.

The study also found that while most citizens are eager to embrace a new generation of services, governments' are falling short on their ability to deliver them. For example, a majority of citizens (55 per cent) believe government is being effective when it acts as a single, seamless entity that can remember all of the details of a citizen's previous contact. However, an average of only 24 per cent of citizens across all countries reported the government actually being able to do so. In the United Kingdom, which scored highest in this category, only 38 per cent said the government remembered all details of a previous contact. Even in Canada, which ranked number one in overall maturity ratings this year, 70 per cent of the respondents claimed that the government had forgotten at least some details of their previous transactions.

From, Netherlands, by John Tilak, 7 April 2005

Cisco Systems to Sponsor 2005 Wireless and Mobile WorldExpo

The largest global event for enterprise solutions is May 18-19 in Toronto. WowGao Inc. is pleased to announce the signing of Cisco Systems as one of its sponsors for the 2005 Wireless and Mobile WorldExpo ( the largest global event for enterprise solutions. Cisco Systems Inc. is the worldwide leader in networking for the Internet. Today, networks are an essential part of business, education, government and home communications, and Cisco Internet Protocol-based (IP) networking solutions are the foundation of these networks. Cisco hardware, software, and service offerings are used to create Internet solutions that allow individuals, companies, and countries to increase productivity, improve customer satisfaction and strengthen competitive advantage.

The 2005 Wireless & Mobile WorldExpo, May 18-19 in Toronto, is the global meeting place for the enterprise marekt of the wireless and mobile industry. It attracts more than 200 leading enterprise solution vendors, media outlets, and professional associations, and over 2,000 professional delegates, making it an unrivalled platform for generating new businesses and exchanging ideas. Those interesting in attending can now register at, using promotion code PRWB to receive free expo passes and discounts on conference passes before tickets are sold out.

About WowGao: WowGao Inc. is a fast growing event management company that produces high quality, internationally renowned conferences and expositions that address the latest innovations and developments in the information technology industry. WowGao has successfully hosted highly acclaimed international events such as "The 2003 Ultimate Leading Edge IT Conferences & Expo," "The 2004 Wireless & Mobile WorldExpo," and "The 2004 e-Financial World Expo." WowGao is hosting three highly anticipated international events in 2005: "The 2005 Wireless & Mobile WorldExpo," "The 2005 e-Financial World Expo," and "The e-Gov Forum & Expo." For more information, please visit Event details can be found at Contact: Ronnie Sant, Media Associate, WowGao Inc., e-mail protected from spam bots, Tel: 416-292-0038 ext. 812, Fax: 416-292-2364.

From, Netherlands, by John Tilak, 7 April 2005

United Nations E-governance Panel Focuses on Spam, Web Governance

A United Nations-sponsored panel meeting in Geneva examining internet-related issues has successfully wrapped up its third session with a call for adequate measures for protect existing web governance arrangements, as well as fighting issues of key public concern, such as spam, network security and cyber-crime. The Working Group on Internet Governance (WGIG), which opened on Monday, looked at possible recommendations for future action in the area of internet governance, and discussed, among other thing, issues related to the administration of internet names and addresses and the root server system. Participants agreed that spam - unsolicited or 'junk' e-mail - while not yet officially on the international agenda, must be discussed as a matter of priority. The focus was on how to deal with it and protect the internet, as well as on the need for a multi-faceted approach, involving all interested parties. Proposals put forward ranged from drafting model legislation to more informal models of collaboration.

Continuing its preparations for the second phase of the World Summit on the Information Society (WSIS) later this year in Tunis, Tunisia, the 40-member Working Group also addressed two other public policy areas - issues relevant to the internet but which have a much wider impact, and issues related to internet governance and development. Working Group chairperson Nitin Desai opened the consultations by pointing out that their main aim was to assess strengths, weaknesses and opportunities. Based on this assessment, there would be a need to look at the changes that may be required. The Working Group should therefore clarify areas that governments were expected to decide on in November at the Tunis Summit, and discuss the roles of the various actors involved in governance arrangements.

Yoshio Utsumi, secretary-general of the International Telecommunication Union (ITU), in his capacity as WSIS secretary-general, reiterated the main tasks that the Working Group needed to address - to find a working definition of internet governance, to identify public policy issues and to define roles and responsibilities of all actors. Some participants at the open consultations wanted Internet governance arrangements to be rooted in the United Nations framework, which in their view would give legitimacy to the system. Others stressed the importance of private sector leadership, which they saw as more suited to deal with the issue due to the nature of the internet.

From, France, 21 April 2005

India, Nepad in Talks Over Satellite Network

The Indian government has presented an ambitious proposal to the New Partnership for Africa's Development (Nepad) secretariat for a satellite-based tele-medicine and tele-education network for Africa. In terms of the proposal, presented by visiting Indian Deputy Foreign Minister Rao Inderjit Singh to the Nepad secretariat earlier this month, the first three years of the service will be free of charge. Indian President Abdul Kalam first sketched out the satellite service project at the opening of the Pan African Parliament in Midrand last year. India has now asked Nepad to manage Africa's involvement in the project and to propose Africans to help manage the project. Nepad already has an initiative for tele-education - the e-Schools initiative - which involves 15 countries including SA, Cameroon, Ghana, Algeria, Kenya, Uganda and Mozambique. But a year after plans for this were launched, a pilot project has yet to be put in place.

The proposed Indian network will primarily provide internet, tele- education, tele-medicine, videoconferencing and voice-over internet protocol services. It will also support government e-governance projects, as well as enter-tainment, resource mapping and meteorological services. Such systems have considerable potential to deliver education and heath care to rural and resource-poor areas with the advantage of offering large cost and time savings. Nearly four years after its launch, Nepad is under growing political pressure to prove that it can come up with tangible projects to improve people's lives. The Indian proposal would see all 53 African countries connected onto the network through satellite, fibre optic and wireless links. The plan is to do this within a budget of $50m for the installation, initial operation and maintenance for a period of three years. African governments will have to pay for the service after the setup period. India has asked African countries to nominate a joint CE, to work alongside the Indian CEO, as well as 10 of the 20 members of the team to study the project in greater depth. A questionnaire, which requests African governments to nominates hospitals, universities and schools, has already been sent to the Nepad secretariat.

From, Africa , by Jonathan Katzenellenbogen of Business Day, Johannesburg, 20 April 2005

IT Briefing: PolarLake 'e-Government Integration' Solution

Today's drive towards e-Government is critical to meeting citizen and business expectations of access to public sector information and services. To deliver improved services, government and public sector agencies must share information with each other, directly with the public and with other business organisations. This brings with it a requirement for more efficient ways of integrating systems together.

Traditional approaches to integration, typically described as Enterprise Application Integration (EAI), have proven expensive and slow to implement. By moving to XML and Web Services (as mandated by e-GIF standards) organisations can greatly reduce development and implementation costs and respond more quickly to changing business requirements. The size and scale of these benefits can be dramatic, with customers reporting savings of between 25% and 75% on development times as well as significant reductions in time-to-market and cost of ownership.

PolarLake supports local government's drive to meet Priority Outcomes, such as submitting a planning application online or Booking sports and leisure facilities over the web, and the integration challenge surrounding the National Land and Property Gazetteer. PolarLake Interchange is a standards-based software solution capable of handling the complexity and changing integration requirements faced by the UK public sector. It provides the flexibility required to deal with multiple and dynamic message formats and business processes, and is a product specifically built to address the issues associated with XML and Web Services-based processing and integration. PolarLake Interchange is a proven product deployed in business critical UK government projects. Based upon open standards, it addresses in a single consolidated integrated solution:

(a) User access through portals, (b) Integration of internal systems such as ERP and CRM, (c) Interchange of information with outside agencies, such as the Government Gateway and neighbouring local authorities. The Critical Success Factors for e-Government
The business drivers relating to local authorities and the e-Government initiative have been well documented. The "IT Trends in Local Government 2003 Report", issued by SOCITM, outlined six Critical Success Factors: - Funding; -Changing the Culture; -Making Partnership Work; -Initiative Overload; -Back and Front Office Integration; -Technical Issues.

PolarLake can positively influence three of these Critical Success Factors: Funding - By "doing more for less" PolarLake increases the value within the available budget by reducing the cost of integration projects. Back and Front Office Integration - "Linking 'back office' to 'front office' is the key to the successful delivery of e-Government... It is going to be difficult to achieve". (IT Trends in Local Government Report, 2003).
PolarLake provides full integration capabilities, whilst enabling the organisation to automate and manage business processes spanning multiple technologies and departments.
Technical Issues - The shortage of skills and expertise in the use of proprietary technologies is often at the root of the issues associated with integration. As PolarLake is based entirely on widely used standards, and not proprietary technology, it reduces the dependence on these skills and associated risks.

PolarLake Interchange provides the means to: -Drive down the cost of integration; -Deliver integration projects more quickly; -Automate and manage the business processes behind effective service delivery. This is accomplished in large part due to its four key characteristics: -Standards-based: including XML, Web Services, BPEL, Java?; -Light Footprint: Flexible to change and less costly to maintain and deliver follow-on projects; -Ubiquitous: By utilising standards such as JMS and JDBC, PolarLake Interchange is able to integrate into a broad range of technologies and systems; -Incremental: Can be implemented in "bite size chunks" (either in terms of discrete departments or business processes such as providing a service or making a payment) and scaled up over time to address the largest integration problems.

PolarLake is involved in a number of large-scale projects with Criminal Justice IT in the UK, and is part of the nationwide reference architecture for integration projects in this area. Also, the company has strong partnerships with systems integrators such as Sun Microsystems™ and Accenture. Related links: To learn more about PolarLake's e-Government Integration solutions visit our website.

From, UK, 17 April 2005

Jury Is Still Out On E-government

Study finds that focus on online delivery may not be the best way to serve the public. The way long-term public IT projects are deployed by government departments such as the Inland Revenue and the NHS should fundamentally change, and not simply focus on public online services, according to a major new survey by Accenture. The consulting giant found that in response to pressures to deliver greater public-sector value, better policy outcomes and more targeted and effective citizen services, the 'time had come' for a 'major reinvention of government service delivery'. While it said that e-government was 'well advanced' in terms of the number of online services, there was a long way to go before widespread public adoption. Instead it should be part of a 'much broader service-delivery agenda' to achieve its full potential. Despite investing billions in external management and IT consultants to move services such as taxation online, the UK public was found to prefer the telephone to the internet, with only 17% receiving regular online contact over the past year.

The Revenue's online-filing system and the NHS National Programme for IT have been the government's flagship public-facing technology projects over the past few years. Marty Cole, group chief executive of Accenture's government operating group, said: 'Governments cannot afford to invest all their effort and resources in developing the online channel alone to keep pace with citizens demands.' He said that the entire government organisation must become focused on delivering services to citizens in ways that are 'tailored to their needs and circumstances' and should make use of different 'channels of interaction'. For the first time the Accenture study went beyond measuring the extent to which governments offer services online, and investigated their success in delivering 'true customer service' - the value they bring to their citizens through multiple channels. The firm's sixth study found countries such as Canada, the US and Denmark had made greater progress in the ways government interacted with citizens, businesses and each other.

From Accountancy Age, UK, by James Bennett, Management Consultancy, 18 April 2005

E-government Shortfall

Despite massive investments, global e-government initiatives are still hard-pressed to meet citizens' growing expectations for better customer service, and government officials believe they are approaching the saturation point for online services. Yet such fears fail to recognize the potential for incremental improvements, according to Accenture's Group Chief Executive - Government Operating Group Martin Cole.

Accenture's 2005 "Leadership in Customer Service: New Expectations, New Experiences," study surveyed 9000 adults in 22 countries to find all countries experienced a drop from previous years' overall e-government maturity scores, based solely on evaluations of countries' e-government programs. Canada received top billing out of the 22 countries surveyed in maturity for the fifth year in a row, followed by the United States, Denmark, Singapore and then Australia. But Accenture was at pains to point out that leadership in this case shouldn't necessarily be taken to mean superlative performance, and that in the bigger picture, even the world leaders have clear room for improvement. "Those countries that fared worse this year tended to be those with an emphasis on solely the e-government aspects of their service delivery programs. A look at e-government programs across the globe shows that continued incremental improvements in this area are unlikely to yield significant boosts to maturity. To advance now, governments will need to focus on a much broader vision," the report warns.

Governments average a doleful 39 percent on measures of how well they are delivering services across multiple channels, with only Canada scoring more than 50 percent. Accenture says it expected this "less-than-stellar showing", having put countries through a more rigorous scrutiny of their practices beyond e-government than ever before. It also sees this as a more accurate picture of the amount of improvement countries need to make in terms of delivering service that leads to outcomes that matter for their stakeholders. "That leaves a lot of room for improvement," says Cole says, pointing out that while most governments have put what they can online, far fewer are actually redesigning how they deliver services to meet the more sophisticated needs of customers. This year Accenture decided to extend its survey beyond e-government, attempting to measure each country's leadership in delivering true customer services.

"This year's research shows that governments cannot afford to invest all of their effort and resources in developing the online channel alone to keep pace with citizens demands," Cole says. "The entire government organization must become focused on delivering services to citizens that are tailored to their needs and circumstances, and are coordinated across the various channels of interaction." Accenture says while the overall maturity rankings suggest no government has evolved to a full manifestation of leadership in customer service, there are a number of new and ambitious initiatives that will go a long way toward transforming customer service in governments around the globe. "Some breakthrough initiatives that will move governments in this direction already have emerged. Starting with their service delivery strategies, a number of countries this year are beginning to take a new approach that should position them well for future leadership in customer service."

The report cites the Australian Government's Business Entry Point Transaction Manager, or BEP Transaction Manager ( as an example of how some governments have acted as a single entity to ensure the right information is available to their customers at the right time. The report describes BRP as "a striking example of citizen centered, proactive, cross-governmental service." It notes that by helping businesses find, manage and complete government forms and transactions online without having to understand how government organizations or individual agencies work, the BEP Transaction Manager dramatically improves businesses' ability to navigate the maze of government structure.

From CIO Magazine, Australia, by Sue Bushell, April 18, 2005

Canada Again Leads in E-government

For the fifth year running, market researchers at Accenture have placed Canada at the top of its list of customer service maturity. The survey, called Leadership in Customer Service: New Expectations, New Experiences, lists e-government service delivery in 22 countries. This year, Canada is followed by the United States, Denmark, Singapore and Australia.

The study, Accenture's sixth annual report on government service delivery, differs from the previous five by including leadership in delivering true customer service - the value brought to citizens through multiple channels. The study focused on two components. The first was a leadership assessment of the overall service maturity of 22 national governments in North America, Europe and Asia, and the second was a survey of 9,000 adults in the same 22 countries to uncover their perceptions and customer experiences interacting with their government on-line. Accenture - a global management consulting, technology services and outsourcing company - noted that governments around the world have invested billions of dollars moving services and information resources on-line, but are still struggling to meet citizens' growing expectations for better customer service. Accenture says it focused on four aspects of service delivery: a citizen-centred perspective, cohesive multi-channel services, fluid cross-government services, and communications and education.

The study found that while e-government offerings across the board are well advanced, with an average service maturity breadth of 91 per cent, all countries have room for improvement. The overall average customer service maturity score - which measures four aspects of service delivery, including how well governments are delivering service across multiple channels - was just 39 per cent. Only Canada has an overall customer service maturity score of more than 50 per cent. "Canada continues to set the bar in government service delivery for the rest of the world," Accenture's Alden Cuddihey said in a statement. But, he added, "despite being a leader, there are still lessons to be learned from the rest of the world, areas for advancement, and opportunities to reach even more Canadians through e-government services. "

While most citizens prefer a number of different methods of communicating with governments, the survey found that they continue to rely on more traditional, off-line channels. Even though some countries are Internet-savvy and familiar with on-line government, the telephone continues to be the predominant means citizens use to communicate with government agencies. Over the past 12 months, 57 per cent of respondents had used the telephone to interact with government, as opposed to only 22 per cent who had used the Internet. But if the telephone is still the most popular medium, it is ranked as the least easy form of communication across all countries surveyed.

"This year's research shows that governments cannot afford to invest all of their effort and resources in developing the on-line channel alone to keep pace with citizen demands," Accenture's Marty Cole said. "The entire government organization must become focused on delivering services to citizens that are tailored to their needs and circumstances." In fact, all countries experienced a drop from previous years' overall e-government maturity scores, which measured the level to which a government has developed an on-line presence and were solely based on the Accenture researchers' evaluations of countries' e-government programs. Countries that fared worse this year tended to be those with an emphasis solely on the e-government aspects of their service delivery programs. Governments that continued incremental improvements in e-government proved unlikely to yield significant boosts to maturity.

The study also stated that that while most people are willing to embrace a new generation of services, governments are failing to deliver them properly. For example, a majority of citizens (55 per cent) believe government is being effective when it acts as a single, seamless entity that can remember all of the details of a citizen's previous contact. However, an average of only 24 per cent of citizens across all countries reported the government actually being able to do so. For Canada, 70 per cent of the respondents claimed that the government had forgotten at least some details of their previous transactions. In Britain, only 38 per cent said the government remembered all details of a previous contact. That score was the highest in the survey.

To conduct the study, Accenture researchers attempted to fulfill service needs that might typically be provided by a national government in 22 countries. They assessed Web sites of national government agencies to determine the breadth of services, and the cohesiveness across multiple channels, as well as the extent and sophistication of governments' efforts at outreach and education. In total, the researchers investigated 177 national government services across 12 major service sectors. The 22 governments included Australia, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Malaysia, Mexico, the Netherlands, Norway, Portugal, Singapore, South Africa, Spain, Sweden, the United Kingdom and the United States. The research was conducted in January.

From Globe and Mail, Canada, by Jack Kapica, 7 April 2005

US, Switzerland and Slovakia the Biggest Gainers in Economist Intelligence Unit's Sixth Annual E-Readiness Rankings

Key findings: - Denmark retains the top spot among 65 countries, edging out the resurgent United States; - Switzerland, Slovakia and the US register the biggest gains in rank from 2004; - Hong Kong assumes the lead among Asia-Pacific's digital tigers; - Heavier model emphasis on broadband leads to major score increases for top 20 countries; - Developing countries are held back by an infrastructure deficit, but many are making progress.

For perhaps the first time since the technology bubble burst, the global economy is beginning to feel comfortable in a digital skin. Spending on information and communications technology (ICT) is growing again with some buoyancy in developed markets. In emerging markets, expansion of connectivity -- Individuals' and organisations' access to voice and data communications -- continues on a rapid ascent. Broadband Internet access, meanwhile, is beginning to reach critical mass in several countries and is becoming a catalyst for other improvements in the digital economy. The 2005 edition of the Economist Intelligence Unit's e-readiness rankings, produced in co-operation with IBM's Institute for Business Value, reflects the increasing importance of broadband to countries' digital development. As a result, the world's most developed broadband markets have registered significant score increases over 2004, although only some have moved up in the rankings.

Since 2000, the Economist Intelligence Unit has published an annual e-readiness ranking of the world's largest economies. A country's "e-readiness" is a measure of its e-business environment, a collection of factors that indicate how amenable a market is to Internet-based opportunities. Our ranking methodology has undergone significant modification in 2005: many criteria have been reweighted to reflect their increasing importance in determining e-readiness, such as broadband access and mobile penetration. New metrics have also been added, such as innovation and the penetration of public-access wireless "hotspots."

The Economist Intelligence Unit developed the criteria for the e-readiness rankings with the IBM Institute for Business Value. "The e-readiness rankings are very dynamic," says George Pohle, Global Leader, IBM Institute for Business Value. "Leadership requires continued focus, strategic planning and targeted investment, but that is only the beginning. The hard work is in using the leadership to complete a blend of public and private initiatives that yield meaningful improvements for private citizens, businesses and government. That is where the return on these investments are ultimately being achieved."

Among the main conclusions of this year's rankings: Europe dominates. West European countries take seven of the top ten spots in this year's rankings, and the Nordics occupy four of them. Denmark (in 1st place), Sweden (3rd), Finland (6th) and Norway (9th) remain best in class in key areas of connectivity, such as mobile penetration and Internet use. The first two are also standard-setters in e-government implementation. Broadband development has also helped Switzerland rise to 4th place, and the Netherlands to keep its 8th spot.

America resurgent. The US has recovered the number two position after falling back in the previous year. Not only has the US seen broadband adoption surge forward, but the country remains a global leader in secure Internet server penetration and ICT spending. Hong Kong leads in Asia-Pacific. Moving up to 6th place, Hong Kong has overtaken Singapore (11th) as the top Asian performer in the rankings, thanks to innovative development of e-business services, a positive legal and policy environment and advances in mobile services. South Korea (18th) remains the world's most developed broadband access market, but refinements to our model have revealed weaknesses in that country's e-readiness armour, such as in Internet security.

Emerging markets have some e-readiness elements in place. All the components of a digital economy -- infrastructure, security, transparency, innovation and skills -- must be properly interlaced to ensure adequate e-readiness. These are still in deficit in most emerging markets, but a few are world-class or near to it in selected areas, the best examples being Estonia (26th), Slovenia (27th) and the Czech Republic (29th) with their strong development of e-government services. India (49th) and China (54th) remain on the lower rungs of the e-readiness ladder, but are making growing contributions to the global digital economy on the strength of a strong ICT skills base (India) and a prodigious ICT manufacturing sector (China).

Economist Intelligence Unit e-readiness rankings, 2005

rank (of 65) 2004 rank Country score (of 10)* 2004 score

1 1 Denmark 8.74 8.28
2 6 US 8.73 8.04
3 3 Sweden 8.64 8.25
4 10 Switzerland 8.62 7.96
5 2 UK 8.54 8.27
6 (tie) 9 Hong Kong 8.32 7.97
6 (tie) 5 Finland 8.32 8.08
8 8 Netherlands 8.28 8.00
9 4 Norway 8.27 8.11
10 12 Australia 8.22 7.88
11 7 Singapore 8.18 8.02
12 (tie) 11 Canada 8.03 7.92
12 (tie) 13 Germany 8.03 7.83
14 12 Austria 8.01 7.68
15 16 Ireland 7.98 7.45
16 19 New Zealand 7.82 7.33
17 17 Belgium 7.71 7.41
18 14 S. Korea 7.66 7.73
19 18 France 7.61 7.34
20 22 Israel 7.45 7.06
21 25 Japan 7.42 6.86
22 20 Taiwan 7.13 7.32
23 21 Spain 7.08 7.20
24 23 Italy 6.95 7.05
25 24 Portugal 6.90 7.01
26 26 Estonia 6.32 6.54
27 31 Slovenia 6.22 6.06
28 27 (tie) Greece 6.19 6.47
29 27 (tie) Czech Republic6.09 6.47
30 30 Hungary 6.07 6.22
31 29 Chile 5.97 6.35
32 (tie) 36 Poland 5.53 5.41
32 (tie) 32 South Africa 5.53 5.79
34 39 (tie) Slovakia 5.51 5.33
35 33 Malaysia 5.43 5.61
36 39 (tie) Mexico 5.21 5.33
37 34 Latvia 5.11 5.60
38 35 Brazil 5.07 5.56
39 37 Argentina 5.05 5.38
40 38 Lithuania 5.04 5.35
41 n/a Jamaica** 4.82 n/a
42 42 Bulgaria 4.68 4.71
43 45 Turkey 4.58 4.51
44 43 Thailand 4.56 4.69
45 44 Venezuela 4.53 4.53
46 48 Saudi Arabia 4.38 4.38
47 50 Romania 4.19 4.23
48 41 Colombia 4.18 4.76
49 46 India 4.17 4.45
50 47 Peru 4.07 4.44
51 49 Philippines 4.03 4.35
52 55 Russia 3.98 3.74
53 51 Egypt 3.90 4.08
54 52 (tie) China 3.85 3.96
55 56 Ecuador 3.83 3.70
56 52 (tie) Sri Lanka 3.80 3.96
57 54 Ukraine 3.51 3.79
58 58 Nigeria 3.46 3.44
59 57 Iran 3.08 3.68
60 59 Indonesia 3.07 3.39
61 60 Vietnam 3.06 3.35
62 63 Kazakhstan 2.97 2.60
63 61 Algeria 2.94 2.63
64 62 Pakistan 2.93 2.61
65 64 Azerbaijan 2.72 2.43

From CRM Today, 22 April 2005


Government Wins Over Donors

Though no money was pledged at Monday's donor consultative meeting at Safari Park Hotel, the Government emerged the winner. Sources now say the Government went into the meeting with the single purpose of convincing the donors that it was still credible. Smarting from heavy criticism levelled against by outgoing British envoy Sir Edward Clay, the Government succeeded in coming up with a donor supported anti-corruption strategy. "The donor community does not have any reason to doubt the Government's commitment to fight graft," says Raphael Mwai of the Kenya Private Sector alliance (Kepsa). Mwai says the donors should now be confident that the Government would account for every cent received not only from the donors but also from taxes.

Though the corruption issue dominated the meeting, the Government took the opportunity to drum up donors' support for key areas like the budget and aid harmonisation. It also took the opportunity to introduce the proposed external aid policy to the donor community. Through the policy, the Government pledges to harmonise the external aid framework and to work to get the country out of aid dependency in the next two decades. The policy, drafted by the Ministry of Finance with the help of the Kenya Institute of Policy Research and Analysis (Kipra), gives the Government power to reject aid if the conditions are unfavorable. For the first time, the policy gives Parliament the power to dictate the level of country's indebtedness.

Currently, the Finance minister in consultation with the Central Bank has the powers to put a ceiling on external and domestic borrowing. The new policy proposes to give Parliament power to place a ceiling on borrowing based on the level of national wealth or GDP. "Time has come when the Government should conceive, own and implement developmental strategies through a national consensus supported by the donor community," says Finance minister David Mwiraria. Mwiraria. He sounded optimistic after the meeting and reaffirmed that the days when donors used to dictate aid terms were over. He was supported by outgoing World Bank Country Director, Mr Makhtar Diop, who co-chaired the high-level meeting. The minister, who presented the aid policy document, says donor funds received since independence had been ineffective. However, the draft document reveals the country has a serious aid absorptive capacity problem. It blames poor utilisation of the funds for the numerous stalled donor-funded projects that dot the countryside. "Despite this development assistance, its effectiveness, in terms of meeting the development goals is questionable.

"Whereas gross Overseas Development Assistance (ODA) inflows increased from an annual average of US$582 million (Sh44 billion) in the 1970s, $673 million in the 1980s to above $1 billion (Sh80 billion) in the late 1990s, this has not been translated into better economic performance," says the minister. Despite the huge injection of donor funds, GDP growth declined from an annual average of about 6-7 per cent in the first decade of independence to below 2 per cent two years ago. The overall national estimated levels of poverty increased from an average of 40 per cent in the 1970s to the current high levels of 56 per cent. "The ineffectiveness of aid to reduce poverty levels may be attributed to existing weak institutional and policy framework," says the minister. "This resulted in dismal completion rates of donor funded projects and especially those which would have had direct impact on the poor," he says. However, when the relations between the Government and the donor community and especially the World Bank and the International Monetary Fund (IMF) soured in mid 1990s, more money was pumped through the civil society. The document revealed that over the 1998-2004 period, donors channelled Sh40 billion through NGOs. This means that since 1998, Sh10 billion from the donor community was channelled through the civil society annually. The amount is almost equal to what came in through Government agencies. Though the Government admits that the organisations had superior aid utilisation networks at the grassroots, accountability was a big problem.

"Unlike the Government which is accountable to the public, the majority of the NGOs have been reluctant to expose their financial statements to the public," the statement says. Sources say most of the NGOs are answerable directly to their foreign-based supporters, some of whom do not have the interest of the communities at heart. The NGOs have also been at the frontline in criticising the Government over corruption and embezzlement of public funds. Should the Government win the confidence of donors, some NGOs would be forced to wind up. In the new aid policy, the Government plans to create a powerful external resources oversight committee. It will comprise representatives of line ministries, civil society, the private sector and academia and will review the management and flow of ODA. "It will advise on the way forward in reducing reliance on ODA based on the prevailing macro-economic underpinnings," the report says. The external resources technical evaluation committee will evaluate the importance and significance of all ODA and recommend whether negotiations should proceed or not.

From, Africa, by Benson Kathuri of The East African Standard, Nairobi, 18 April 2005

IMF Approves $3.9 Billion Zambia Debt Relief

The International Monetary Fund (IMF) said on Saturday it had approved a $3.9 billion debt relief plan for Zambia, lifting a crippling debt burden on the impoverished southern African country, reports Reuters (04/09). The IMF board approved the debt relief deal on Friday under the World Bank's Highly Indebted Poor Countries (HIPC) initiative, aimed at reducing crippling debt loads shouldered by developing nations. The government in Lusaka has said the debt relief package would enable it to shift funds currently earmarked for debt servicing to the battle against poverty. Zambia has said it spends an average of $123 million annually to service its foreign debt. Its total debt is estimated at $6.8 billion - equal to about 170 percent of gross domestic product.

The IMF said the debt relief would be backdated to 2001 and would run through to 2020. The World Bank's lending arm, the International Development Association, would provide $885.2 million debt relief out of the $3.9 billion debt cancellation. Zambia's Finance Minister Peter Magande said Zambia would proceed to negotiate for debt write-off from the Paris Club group of industrialized lenders in May. "Our credit rating has improved as a result of our attaining the HIPC completion point and the government will only be borrowing money to support private sector production and development," Magande said. "Most tax revenue will now be directed to community projects and development of infrastructure instead of debt servicing. This will help to reduce poverty." Zambia has also said it would improve roads, especially in the rural areas, promote tourism and agriculture - two key areas with potential for growth in a country heavily dependent on copper mining.

Xinhua (China, 04/09) further notes that according to Magande, the debt relief will cut Zambia's debt service payment from $233 million to $137 million in 2006, and from $262 million to $121 million in 2007. Between 2008 and 2019, the country's debt service payment will be cut from an average of $280 million per year to $120 million. Agence France Presse (04/09) explains the IMF suspended Zambia from its programs in 2002 and withheld aid amounting to $100 million after the country overspent on its budget after awarding wage increases in the public sector. Trade unions have said the funds that will be realized from the debt waiver should be used to pay public service workers who had seen their wages frozen at the behest of the IMF and World Bank. Xinhua (04/11) adds that civil servants in Zambia will get a wage hike following the agreement by the IMF and the World Bank, the official newspaper Times of Zambia reported Monday. Magande was quoted as saying on Sunday that the salary increment will be above the 17.8 percent inflation rate.

The Post of Zambia (04/11) meanwhile notes Magande said only economic growth and diversification would solve Zambia's problems and that HIPC completion was just one of the means to resolve the country's development hurdles. "It is anticipated that Zambia will receive high private sector investment which should increase growth for the country," Magande said. "Reaching HIPC is also expected to increase aid from cooperating partners." He said the way forward would be to move away from mining, improving efficiency in the delivery of service and managing domestic debt. The Post of Zambia (04/09) further writes that the United Nations resident coordinator in Zambia Aeneus Chuma said that while HIPC was useful and commendable, it was not a solution. Chuma observed that ultimately, the responsibility for long-term development remained with the people of Zambia themselves. He noted that while cooperating partners had a role to play, they could only compliment and not supplant national development efforts. Chuma called for continued work in the realization of the Millennium Development Goals. Chuma also said countries such as Zambia needed comprehensive debt cancellation, increase in official development assistance and a fairer trading system to allow the countries to invest in industry and trade their way out of underdevelopment.

In related news, Xinhua (04/08) reports that the Zambian government has introduced a new law on the management of public finances, replacing an old one which was considered not effective in guaranteeing transparency, secretary to the Treasury in the Ministry of Finance and National Planning Situmbeko Musokotwane said. The public finance act of 2004 which has replaced the finance, control and management act of 1969 has new features such as the punishment of controlling officers who fail to manage finances properly in their departments. The new law will also see the introduction of new financial regulations expected to be ready by September this year as well as the establishment of audit committees in various government departments. It has also given the secretary of treasury power to appoint controlling officers unlike in the past when the minister of finance was responsible for the appointments.

From (press release), Spain, 12 April 2005

Government Outlines Be Austerity Measures to IMF

Johannesburg (IRIN) - Comoran authorities are hoping that a series of belt-tightening measures will strengthen the economy and boost investor confidence. In a letter of intent to the International Monetary Fund (IMF) dated 2 February, the government said it was determined to reform fiscal policy, mainly by reining in state expenditure and overhauling the tax system. The Indian Ocean archipelago has endured two decades of internal strife, resulting in a serious deterioration of public services and large drop in donor support. Although a December 2001 agreement made the islands of Moheli, Anjouan and Grande Comore more autonomous and politically more stable, almost 60 percent of the country's 800,000 people still live below the poverty line and have limited access to clean water and electricity. Sluggish economic performance was largely attributed to a collapse in international vanilla prices - from an average of US $251 per kilogram in 2003 to about US $50 per kilogram at present - while Gross Domestic Product (GDP) had been well below population growth in recent years.

Inflation, which had been very low in the first half of 2004, picked up in the second half of the year in response to the worldwide spike in the cost of oil. According to government forecasts inflation is expected to hover around a yearly average of 4.3 percent. Performance in the external sector was mixed in 2004, with the impact of the drop in vanilla prices counterbalanced to some extent by travel receipts and remittances from Comorians living abroad, which rose sharply following the opening up of a new direct flight between France and Moroni, the Comoran capital. One of the key concerns raised in the letter to the IMF was the accumulation of arrears in servicing external debt, projected at US $6.1 million in 2004; outstanding external debt at the end of last year stood at US $290 million.

Authorities said an agreement between the Union government and the autonomous islands to transfer shared revenues to a special account at the Central Bank of the Comoros would anchor fiscal policy in 2005. "Strictly adhering to these agreements will be critical for achieving our programmes' macroeconomic objectives," finance officials remarked. There was also a decision to import only one shipment of rice in 2005 instead of the usual two, and to discontinue the surtax of 50 Comoran Francs per kg of rice on the islands of Moheli and Grande Comore. The tax was introduced to finance the launch of the new university last year, but had weighed heavily on the most vulnerable segments of society. The harmonisation of custom tariffs between the Union and the autonomous islands was also expected to increase revenue during 2005 by about 0.4 percent of GDP. The 2005 budget limits primary expenditure to 14.4 percent of GDP compared with 16.3 percent in 2004. The bulk of savings will come from a 1.6 percent cut in the wage bill, brought about by not renewing the contracts of temporary personnel hired over the last two years, and applying a freeze on new hiring, except in the social sector.

From Reuters AlertNet, UK, 18 April 2005


Financial Stability Threatened by Deposit Cap System

Claiming the financial system has stabilized, Tatsuya Ito, state minister in charge of financial policy, recently said the lifting of the freeze on the introduction of a refund cap would make the financial system more stable. I'm not so sure. In April 2002, the government introduced a cap on the refund available in the event of bank failure for time deposits only. For all other types of yen-denominated deposits, though, the government continued the full guarantee. But from this month, the government reimposed a refund limit at 10 million yen in principal and accrued interest for all types of yen-denominated deposits. Recently, the Financial Services Agency, through its administrative measures, effectively drove UFJ Holdings Inc. into a corner, and the bank eventually decided to merge with Mitsubishi Tokyo Financial Group Inc. As a result, a megabank is to be created. When the number of major banks drops from the current four to three, the financial system likely will become more monopolistic and inflexible. Judging from the current circumstances, the reimposition of the refund cap may make the financial system more unstable instead of healthier.

In comparison with other major nations, Japan has fewer financial institutions, including credit unions, credit associations and agricultural cooperatives, in relative terms to the size of its economy. The number is 50 percent lower than that of the United States and 20 percent lower than in Germany. Even though it is said the number of banks in the nation is excessive, in reality there is a shortage. In my view, six to seven major banks are needed at the very minimum. If the major banks are overly consolidated, the financial system will face a significant decline in flexibility. If one bank suffers from massive nonperforming loans, the financial system will be shaken. It then would be difficult for the banks to share the burden of major loan projects, thereby limiting the prospects for corporate borrowers to expand their businesses. In the case of regional banks, similar problems are likely to arise if they unwillingly resort to mergers to cope with the reimposition of the refund cap.
With the full-scale reimposition of the cap, the structure of deposits at banks, including credit unions, credit associations and agriculture cooperatives, has become highly unusual.

According to Bank of Japan statistics, time deposits, which normally account for nearly 70 percent of overall bank deposits, have plunged to about 40 percent, while the proportion of demand deposits, from which depositors can withdraw funds at any time, has increased to about 60 percent. This is because the number of settlement deposits has reached about half of overall bank deposits. Settlement deposits, which pay zero interest and carry a full government guarantee, were introduced by the FSA as a way of coping with the reimposition of the payoff system. Depositors have turned to settlement deposits in droves with the aim of securing their money. As a result, nearly 90 percent of deposits at regional banks are virtually protected by the government's safeguard scheme. However, if the amount of demand deposits further rises, banks would have much fewer stable deposits, and there would be a high risk of rapid withdrawals of funds. As a result, banks would become fearful of lending to corporate borrowers. Such a situation would have a negative impact on economic growth. Furthermore, when the economy recovers, interest rates will increase, causing depositors to shift from settlement deposits to others bearing interest. In such a situation, depositors likely would switch to the major banks.

There is concern that unexpected confusion may occur as the financial market increasingly has become monopolistic and inflexible. The cap on deposits originates from the deposit insurance system established in the United States in 1934, which allows banks to maintain their lending capacities by limiting the amount of refunds in the event of bank failure. But currently in Japan, nearly 90 percent of deposits are virtually protected, and there are growing concerns over the stability of the financial system. The market has shown that the refund cap system is not suitable to this country. The government should devise a different system in line with the nation's circumstances so that the reimposition of the refund cap will not increase uncertainty over the financial system. Kikuchi is a professor at Bunkyo Gakuin University, specializing in the Japanese economy and financial and public finance affairs.

From Daily Yomiuri, Japan, by Hidehiro Kikuchi, 19 April 2005

Finance Ministry Bolsters Free Economic Zones

Capitalizing on its geographical advantage and superb logistics and industrial infrastructure, Korea is poised to reinvent itself as the economic nerve center of Northeast Asia. At the core of the plan is a trio of free economic zones in Incheon, Busan-Jinhae and Gwangyang, complete with ports, industrial towns, tourist attractions and financial institutions. This year, the Ministry of Finance and Economy pledged to attract $5 billion in investment for the three free economic zones to spur the goal of becoming a financial and logistics hub of Northeast Asia. Financial assistance is available for the construction of facilities such as hospitals and schools to make life more convenient for foreigners. They will also be able to build leisure and sports complexes and high-rise buildings inside the zones in a bid to create a better investment and living environment.

In a report to President Roh Moo-hyun at the start of this year, the Ministry of Finance and Economy underscored the importance of the economic zones that could serve as attractive bait in wooing overseas investors. The government believes developing zones will advance the nation's position as Northeast Asia, with a population of 1.5 billion and accounting for nearly 20 percent of global gross domestic production, is emerging as one of three major trade blocks that fuel global economic growth. The global competition for developing similar zones has recently intensified, with Korea pitted against strong neighboring contenders like Singapore, Hong Kong and Shanghai. However, the ministry believes Korea has many advantages such as geographical location, abundance of skilled human resources and a strong IT infrastructure.

"I'm confident that the free economic zones have the edge over those in other nations," Finance Minister Han Duck-soo told reporters earlier the month after his trip to the free economic zone in Incheon. Enticed by tax breaks and other incentives offered to foreign investors, a growing number of well-known multinational companies have begun investing in the zones. Most free trade zones in the world offer similar duty incentives but Korea stands apart by paying greater attention to providing competitive living conditions and an efficient business environment, the ministry officials said.

Role of FEZs - Free economic zones were established as part of Korea's survival strategies to cope with rising competition with other countries in the global economy. With neighboring China growing fast as a global manufacturing hub, Korea, Asia's third-largest economy, has encountered limits in its manufacturing-driven economic growth. Free economic zones, which will be featured with globally competitive businesses and pleasant living conditions, have tasks to develop the nation's knowledge-based new growth engines, replacing manufacturing businesses, mainly by attracting foreign direct investment. Developing the zones is also one of the nation's key strategies to prepare for the era of Northeast Asia, featuring Korea, Japan and China. The region has been emerging as a global economic powerhouse with a population of 1.5 billion, four times the population of Europe, accounting for nearly 20 percent of global gross domestic production. At the same time, the completion of the zones project also means Korea will have more international-styled cities. Songdo City under construction in the Incheon zone is a model case for building a global city. Songdo is aimed at becoming a corporate hub in the Incheon zone, a bilingual English-Korean city where international schools and hospitals for foreigners are located and where international companies can obtain relief from taxes and bureaucratic red tape.

Legal framework - The Planning Office of the Free Economic Zone under the Ministry of Finance and Economy took small but meaningful steps recently by revising the Free Economic Zone Law. Under the revised Free Economic Zone Law, foreign-invested hospitals will be allowed to treat local patients. To cultivate a more attractive residential environment in the zones, the government will go ahead this year to build foreign schools and hospitals. The foreign hospitals issue had been a source of contention between the government, which supports the move, and those in the medical profession and civic groups who opposed the idea. Opponents were worried that the fees at a foreign hospital would inflate expenses for the nation's health care system. Civic groups voiced concern about a further polarization of medical services depending on wealth.

The government argued that the benefits outweigh possible negative effects. To promote the further development of the free economic zones, "We're willing to help the government resolving all the legal issues," new Uri leader Moon Hee-sang said last week. In addition to being an attraction for foreign investors, the government believes foreign hospitals could help improve the quality of health care in Korea. It also believes foreign hospitals will help attract biotech companies, one of the nation's potential growth industries.

Future success of the FEZs - The success of the free economic zones greatly depends on whether Korea is able to promptly improve and supplement laws and regulations according to foreigners' expectations, the ministry officials said. The recent revision of the law also would guarantee more independence and autonomy for economic zone authorities. Under the revised law, the commissioners of zone authorities will be guaranteed more autonomy over personnel appointment and office operations. The authorities will also not be subject to applying standard qualifications when hiring pubic officials but have a more free hand to employ suitable workers, such as those with international business experience. The revision also includes easing of construction-related regulations to allow construction of taller buildings and golf courses within the zones.

To ensure the success of economic zones, what is more important is to remove negative factors that are deeply rooted in Korea, including excessive regulations, soaring labor costs, labor strikes, political instability, expensive land prices, high tax rates and anti-business sentiment. The central government will fully support the construction of infrastructure in the zones and boldly ease regulations in areas related to living conditions such as education and health care centers. Han said that without world-class international schools and hospitals, foreigners would not invest in the zones.

Promote FEZs - The government is in talks with a number of highly recognized foreign medical institutions about setting up operations in Korea's free economic zones, according to the planning office. The economic zone planning office has been aggressively promoting the three areas to find potential foreign investors. The planning office held a separate briefing session to promote the zones, complete with video presentations and question-and-answer sessions at the 16th World Real Estate Fair, held in Cannes, France last month. Korean officials also held separate talks with about 20 companies which have expressed interest in investing in here at one of the world's two most authoritative real estate events. In March, the government hosted an investor relations session for members of the American Chamber of Commerce in Korea to encourage more U.S. companies to invest in the nation's free economic zones. "The IR session will provide a good opportunity for U.S. firms to better understand Korea's FEZs and be acquainted with the various merits of investing in the zones," Cho Sung-ik, deputy minister for the ministry's economic zones planning office, said during a speech at the Millennium Seoul Hilton in central Seoul.

In cooperation with the three zone authorities in Incheon, Busan-Jinhae and Gwangyang, the planning office organized the session to publicize a wide range of benefits and incentives, including tax breaks, foreign language services and the establishment of foreign education and medical institutions for U.S. companies and investors. The government will continue to support the construction of the necessary infrastructure to host the regional headquarters of the world's top 500 corporations, Cho said. By 2008, they will become the world's premier cosmopolitan cities where people of all nationalities come and interact, outpacing rivals such as Hong Kong and Singapore, he said. The government set up foreign investment ombudsman's offices in each economic zone to assist foreign companies and their employees, and public documents will be published in English, the deputy minister noted.

A number of foreign companies have already expressed keen interest in investing in the zones, the ministry officials said. They expect more global firms to follow suit as they are attracted to Korea's advanced information technology and telecommunication infrastructure and highly educated and skilled work force. A joint IR session for the European Union Chamber of Commerce in Korea and Japan Club member companies is scheduled for the second half of 2005 as part of efforts to attract more investment.

Busan-Jinhae FEZ (BJFEZ) - In October last year, the government selected the cities of Busan, Gwangyang and Incheon as special zones and eased various restrictions on labor and taxes for companies that wanted to start businesses in those areas. In these special zones, foreign-invested companies and their employees can enjoy exceptional benefits and incentives compared with the rest of the country, including tax breaks, expanded foreign-exchange circulation, language services, labor flexibility, relaxation of greater-Seoul restrictions, and establishment of foreign education and medical centers. The Busan-Jinhae FEZ (BJFEZ) aims to become a center for telecommunications and high-technology industries and maritime logistics. The BJFEZ has been encouraged by the Organisation for Economic Cooperation and Development Territorial Development Policy Committee's recent review of Busan.

In its evaluation from July 2003 through December 2004, the global organization gave Busan high marks and said the city had vast potential to develop further. It also said Busan would steer Korea's economic growth as a manufacturing center. The BJFEZ has also kicked off various initiatives to induce foreign direct investment since the start of the year. One of them is to develop a new international city within the zone, complete with a business/convention center and living and leisure facilities. Officials said a master plan is being drawn up by a consortium led by the Korea Development Bank and will be completed by early June.

Busan, Korea's second-largest city at the southeastern tip, and neighboring Jinhae hope to attract more than $15.5 billion in foreign investment by 2020, emerging as a Northeast Asian logistics hub surpassing Shanghai, Hong Kong and Kobe. At the center of developing the Busan-Jinhae belt into a logistics hub is the construction of a new port and distribution park with 30 berths, to be completed in 2011. To attract global logistics companies, Busan-Jinhae will fix rents at about 4,000 won per 3.3 square meter, about one-tenth of rents in Shanghai.

Gwangyang FEZ - The Gwangyang FEZ is expected to emerge as an international maritime logistics center and an industrial cluster for petrochemicals and steel. Gwangyang has expanded its container port from eight to 12 berths. The expansion, which was completed on last October at a cost of more than 640 billion won, is part of the Korean government's effort to create an outstanding national free economic zone triangle along with Incheon and Busan. By 2011, the government intends to pour 6.6 trillion won into the area to construct an ultramodern 33-berth international trading port. Due to its location in the center of Northeast Asia's shipping network, experts predict that Gwangyang, traditionally the nation's center for modern steel production, will soon emerge as one of the principal trade container transshipment ports in the world. The area has ideal docking conditions for large containerships such as deep water, stable water temperature and natural breakwater provided by the surrounding Yeosu peninsula.

With more infrastructure projects under way, Baek Ok-in, commissioner of the Gwangyang Bay Area Free Economic Zone Authority, said the zone that includes Gwangyang and surrounding areas was ready to make a great leap to become a center of logistics and new materials industry, as well as tourism and leisure. In describing this year's plans, Baek said efforts will be made to turn the 14 memoranda of understanding signed last year, including one with German medical equipment maker Drager Group, into actual investments. SembCorp Logistics Ltd., a Singapore-based transportation firm, also has expressed intention to invest more than $10 million at the port. He added special efforts will be made to attract world-class logistics companies, such as the U.K.'s Henrybeth and Netherlands' Conelder Co., so the region will be equipped to provide quality port services. This year, the free economic zone is aiming to attract $200 million in foreign direct investment. By 2020, it plans to raise $12 billion in foreign investment.

Incheon FEZ - The Incheon free economic zone (IFEZ), the first zone to be designated, is equipped with ideal infrastructure and geographical conditions sufficient to serve as a hub city of Northeast Asian business. Incheon International Airport and Incheon Port are the gateways to the zone. Fifty-one cities with more than 1 million residents each are within a 3 1/2-hour flight to the airport. The city of Incheon designated 2005 as the "Year of Investing in Incheon." Along with the slogan "Buy Incheon," the designation reflects the region's resolve to put spurs to efforts to attract foreign direct investment. The development of the IFEZ is the centerpiece of such efforts. Plans this year include breaking ground for the construction of a 65-floor landmark building in relation to the development of Songdo International City and laying the foundations for creating IT clusters in cooperation with the Ministry of Information and Communication. Also, the IFEZ is set to kick off preliminary preparations to turn the area into a "ubiquitous City." The U-City project, which will be supervised by a consortium consisting of such companies as KT Corp. and Samsung SDS is aimed at maximizing the region's business and living environment. A final blueprint is scheduled to be announced in June.

Lee Hwan-kyun, commissioner of the IFEZ Authority, went on an investor relations trip to the United States in January. His itinerary included a visit to the Gale Co. The New Jersey-based developer is spearheading the creation of Songdo International City in Incheon by 2020. The city is to serve as a base for international companies serving North Asia. POSCO, the nation's leading steelmaker, is the local partner. Lee also visited Angelo Gordon, an investment company, to discuss a plan for establishing a venture cluster as part of developing a digital entertainment cluster in Songdo.

From Korea Herald (subscription), South Korea, 18 April 2005

Tax Burden Estimated at Record High

Stoking yet more criticism toward the government's tax policy amid a slow economy, the per-capita tax burden for Koreans is expected to have grown to a record-high of 3.16 million won ($3,090) in 2004. This amount is up 2.3 percent compared to 2003 when the average Korean paid slightly over 3 million won in taxes, according to estimations from the Ministry of Finance and Economy and the Ministry of Government Administration and Home Affairs. In total, the government collected 151.9 trillion won of taxes last year, which took up 19.5 percent of the 778.4 trillion won of the country's gross domestic product.

In 2003, taxes per-capita stood higher at slightly over 3 million won so that the aggregate amount accounted for more than one-fifth of the GDP. Responding to protests that the taxes are exceedingly heavy considering the fragile domestic demand that is weighing down on the economy, the Finance Ministry argued that compared to 2003, taxes actually shrank to take up less of a percentage of the GDP. Exact figures will be available late next month when provincial governments close their books for 2004. "But the data is expected to be in line with the central government estimations," said an official of the Ministry of Government Administration. Still struggling to recover from a credit-bubble that burst in 2002, the Korean economy grew at a lower-than-expected pace of 4.6 percent last year. Weak consumer spending and tepid corporate investment were cited as the main culprits of the decelerationg growth.

This year, although strong exports are helping to fuel a recovery, the government expects the economy to make a similarly weak performance due to soaring crude oil prices and a strong local currency that is threatening the competitiveness of local goods abroad. Shipments abroad make up about two-fifths of the nation's economy. Noting the damp consumer sentiment, experts had voiced concerns about the increasing tax burden on the public. A report from Samsung Economic Research Institute last year said that Korean taxpayers are burdened with as much taxes as the United States, the world's top economy. Korea ranked eleventh in individual tax burden, surpassing Japan, which showed that taxes make up about 17 percent of GDP. The report also said that according to the International Tax Comparison Index in 2000, Koreans suffer from heavier taxation when compared to economies in the same size bracket. The tax load coupled with debt from the credit bubble weighed down the ability of consumer spending to lift the domestic economy, the report said.

From Korea Herald (subscription), South Korea, 18 April 2005

Thailand Plans to Lift Public Spending

Bangkok - Thailand's government will increase spending 8.8 percent to a record in the next financial year to help the economy, Finance Minister Somkid Jatusripitak said Monday. Spending will rise to 1.36 trillion baht, or $34.5 billion, in the year starting Oct. 1 from 1.25 trillion baht this year, Somkid told reporters in Bangkok. Officials from the Finance Ministry, the central bank and government agencies met Monday to discuss next year's budget. The government expects economic expansion to slow to as little as 4.75 percent this year from 6.1 percent in 2004 because of slowing export growth, worsening drought, falling tourist arrivals and high fuel prices. Somkid said he expected the economy to expand 5.5 percent to 6.5 percent in calendar year 2006.

"Growth in the first half of this year has slowed down significantly," he said. "Higher spending will help economic growth to rebound next year." Prime Minister Thaksin Shinawatra has pledged to bolster economic growth by spending on new subways, water pipelines and other public works projects. The government will spend 2.35 trillion baht on infrastructure projects over the next five years, the Finance Ministry said on March 14. Somkid has forecast that Thailand's inflation rate will be 3.5 percent this year.

Indonesian power projects - Indonesia plans to offer on Tuesday $1.1 billion worth of projects for the construction of a coal-fired power plant and two gas pipelines on the island of Java, an official from the Energy Ministry said. The government wants to build a 450-megawatt power generation plant and a gas pipeline linking Semarang city in Central Java to Cirebon in West Java, and another pipeline between Semarang and Gresik in East Java, Yogo Pratomo, the director general of electricity, said in Jakarta. "We're planning to offer another 10" power projects, he said in an interview.

Indonesia faces electricity blackouts because the state utility Perusahaan Listrik Negara lacks the funds to build power plants. The company needs $16 billion over 10 years to help avoid shortages and more than half the investment is likely to come from foreign investors, Eddie Widiono, president director, said in December. The power plant in Java, PLTU Banten, is estimated at $500 million while the pipelines may cost 6 trillion rupiah, or $620 million, Yogo said. The Indonesian government had planned to start inviting bids on March 30 for the power plant and pipelines. Sumitomo Corp. and Mitsui & Co. have said they may bid to build the pipelines that will channel natural gas to households and industries, Tubagus Haryono, chairman of the Indonesian oil refining regulator, said on March 17.

From International Herald Tribune, France, by Anuchit Nguyen of Bloomberg News, 26 April 2005


Russian Finance Minister Bemoans "Stupid" Economic Policies

The Russian government is guilty of committing economic policy blunders, Finance Minister Alexei Kudrin said on Monday, April 18, taking the blame for failing to convince the Cabinet to take a more sensible course. "The government is making stupid mistakes," Kudrin told the Russian Gazette (Rossiiskaya Gazeta) daily in an interview. "I am responsible -just as all government members are. That means I was not able to convince the government to do the right thing." Kudrin gave his assessment after losing a budget battle to Prime Minister Mikhail Fradkov, who wants to double public sector pay and pensions by 2008 to drive economic growth. Kudrin reluctantly backed a decision to raise the cut-off level at which windfall oil revenues flow into a fiscal stabilization fund to $27 a barrel from next year from the current $20, despite misgivings that pumping up spending may stoke inflation. He agreed to do this to help avoid a budget deficit of $18 billion which threatens Russia as early as next year. The stabilization fund was established last year to prevent the inflationary boom from petrodollars pouring into the Russian economy. The cash was to be set aside for foreign debt repayment.

"Economic policy is now drifting toward the increasing role of the state, reducing liberalization in certain sectors and weakening financial policy," Kudrin told the newspaper. "For the second year running we are not reducing inflation - even though we could. We need to take timely steps to remove factors which support price growth. But we are taking steps in the opposite direction, preserving inflation." Inflation spiked at the beginning of 2005 after totaling 11.7 percent in 2004, and the government now expects it to stay in double digits for the rest of the year. Kudrin and Economy Minister German Gref, a fellow Cabinet liberal, have long been at loggerheads with Fradkov, but despite their ill-tempered relationship there is as yet no sign that either might quit the government.

From MOSNEWS, Russia, 18 April 2005

Czech Euro Bonds Find Eager Buyers Abroad

But rising public debts have analysts worried - The Czech government celebrated what looks to be a Pyrrhic victory after again oversubscribing its recent euro-bond issue, as economists warned that the growing public debt could have serious repercussions. Despite the current shaky political scene and the worsening public finance deficit, foreign investors' demand for government-issued euro bonds exceeded the actual offer. It took mere hours to sell out 1 billion euros ($1.3 billion/33.2 billion Kc) of bonds March 11. The 15-year euro bonds were purchased by investors from Germany (35 percent), Benelux countries (25 percent), Austria (9 percent) and Finland (8 percent). Other investors came from as far afield as Asia.

The second Czech euro-bond issue attracted high interest despite having terms that were less lucrative than in the first euro-bond issue in June 2004. Then, 1.5 billion euros in bonds were sold at 4.6 percent interest, and the yield for investors was 0.2 percent higher than comparable bonds issued by other EU countries. This time, euro bonds worth 1 billion euros were sold at 4.1 percent and their yield against usual EU bonds was higher only by around 0.1 percent. For European investors, Czech euro bonds are attractive because the government has made only two issues so far; therefore, they are quite rare, said Ceska sporitelna analyst Lubos Mokras. This generally means a more stable investment.

A quick fix - Expanding the pool of creditors, however, is not the solution to fix the country's deteriorating public finance sector, and further growth of the public finance deficit could bring about economic collapse to this country, warned Miroslav Sevcik, director of the Prague-based Liberal Institute. The country's public debt reached 1 trillion Kc in 2004, or 41 percent of gross domestic product (GDP). The Maastricht criteria for adopting the single European currency set the ceiling on the ratio of public debt to GDP at 60 percent. As a result, the Czech Republic is still considered solvent in the eyes of foreign investors.

Deputy Finance Minister Tomas Prouza said the government was able to borrow money on foreign markets under more advantageous terms than other new member states in the region including Slovakia, Hungary and Poland. The reason is that not only does the Czech Republic have a relatively low ratio of public finance deficit to GDP, but it also entered the euro-bond market later than other neighboring states, thus its euro-bond issues are still rare and valued. "Investors trust the Czech Republic the most and perceive the risk as the lowest," Prouza insisted. Moreover, when borrowing abroad, the government no longer needs to rely on domestic players, and has more advantageous terms nearing those enjoyed by the euro zone states, said Eduard Janota, deputy finance minister. "We would never be able to sell 15-year bonds to local investors under terms as advantageous as the 15-year euro bonds. ... We saved up to 1.5 billion Kc," Janota said. The success of the first two offers has prompted the government consider other euro-bond issues in the future, Janota admitted. He said the government could come up with one more euro-bond issue this year and at least one for next year. The Finance Ministry can still issue another 500 million euros in bonds this year. To issue more bonds it would need parliamentary approval.

Growing deficit - In contrast to the first euro-bond issue in June 2004, in which the government sold 10-year bonds worth 1.5 billion euros, longer-term 15-year bonds were put up for sale in the recent euro-bond issue. By raising the share of long-term bonds at the expense of short-term bonds and treasury bills, the state wants to take advantage of low interest rates and reduce the costs of repaying its growing debt. "The government will show a slower growth in debt because it is switching to long-term loans that it will not pay off for many years," said Raiffeisenbank analyst Helena Horska.

Most economists, including CSOB chief analyst Petr Dufek, agreed the fast pace of growth of Czech public finance debt was dangerous. "Reforms should be implemented as soon as possible in order to avoid economic collapse," Dufek said. Public debt is expected to grow from 1 trillion Kc in 2004 to more than 1.1 trillion Kc this year as the government continues to overspend its income. The public deficit has more than tripled since 1998, when the Social Democrats (CSSD) took over the government. Meanwhile, the government deficit, which includes debts of health insurers, off-budget funds and local budget debts, should grow by 50 billion-90 billion Kc and reach up to 680 billion Kc by the end of this year. In order to finance the growing deficits, the state plans to issue bonds worth up to 120 billion Kc this year. Treasury bills worth another 202 billion Kc are to be issued in 2005, as well.

From Prague Post, Czech Republic, by Frantisek Bouc, 7 April 2005

IMF Demands Cuts in Spending

Washington D.C. - Serbian Finance Minister Mladjan Dinkic announced that the International Monetary Fund feels that Serbia must cut its public spending immediately. "If we plan on making the budget deficit this year 1.4 percent of the collective gross product, officials of the IMF think that we must make more accommodations in order to reach the decrease in salary-balance deficits with the international community." Dinkic said. Dinkic said that talks with the IMF are very stressful, because very important deals are being discussed. "We are discussing the wiping away of a debt of 700 million dollars, finalizing a three-year arrangement made with the IMF, and we have set very ambitious goals. The IMF thinks that we have a realistic chance of increasing exports by 25 percent this year, which is not an easy task." Dinkic said. He added that the IMF "has commended the Serbian government for its efforts in the restructuring and privatization of the public sector."

From B92, Yugoslavia, 18 April 2005

Reform of EU Fiscal Fules Doesn't Let Countries Off Easy

The Greek finance minister on Tuesday challenged the notion that a recent reform of the European Union's public spending regulations will make life easier for countries with big public deficits. Finance Minister George Alogoskoufis, in an interview with AFP, contested criticism of the reform, arguing that recently approved revisions to the Stability and Growth Pact would only give more flexibility to countries that just barely and temporarily overshoot an EU deficit limit of three percent of output. Chronic violators of the rules would still be taken to task, he insisted.

"The reform makes little difference for countries that are way above the three percent with a high level of public debt like Greece," he said. "If you are near the limit of three percent and have a temporary deviation, then the reform of the stability pact will make some difference," he added. EU governments agreed last month to water down provisions of their 1997 stability pact, much to the horror of the European Central Bank (ECB) and some private economists. But Alogoskoufis downplayed such reactions, saying: "I think there has been a kind of overreaction to the changes that have taken place in the Stability and Growth Pact. "I will not make any comment regarding the ECB but I think the perception that we have destroyed the credibility of the pact by making it flexible is not the correct perception," he added. After a new centre-right government came to power last year, Athens revised its deficit figures sharply higher, reporting a shortfall of 6.1 percent of output for 2004.

Greece expects to get its deficit down to 3.5 percent this year and 2.8 percent by 2006 and has won praise from the EU's executive commission, which has the job of policing deficits in the EU. He said that even with the looser public finance rules Greece would have had to take painful measures to make up for the "spending spree" ahead of the 2004 Olympics in Athens. The country last month unveiled plans to improve its public finances through higher indirect taxes, namely in the form of a one percent increase in value added taxes. "The main reason for Greece having to take tax measures and other drastic measures is the size of the deficit that has to be corrected," Alogoskoufis said, adding: "It is not a question of fairness." "We had such an imbalance, with a deficit slightly over six percent last year and now we have to go to three percent," he said. EU finance ministers, impressed with Greece's new-found budgetary rigor, agreed on Tuesday to call off excessive deficit procedures against the country.

From EUbusiness (press release), UK, 12 April 2005

Czech Republic to 'Graduate' From World Bank Borrowing

The Czech Republic has announced its intention to 'graduate' from borrower status with the International Bank for Reconstruction and Development. The Czech Republic will transition from being a recipient of Bank financial and technical assistance to being an important partner and provider of development assistance. "After 15 years of economic, social, and political transition, the Czech Republic is a country with an advanced and growing economy, a member of the European Union, integrating in the global economy, and striving to reestablish its position among the world's most developed economies," said Czech Finance Minister Bohuslav Sobotka. Czechoslovakia was one of the founding countries of the World Bank and the IMF, but, in 1954, the then-ruling communist regime withdrew the country's membership in the World Bank. Membership then resumed in 1990. Following the dissolution of Czechoslovakia in 1993, the Czech Republic joined the World Bank as one of the two successor states.

"The Czech Republic has made remarkable progress over the past decade and a half and is now well placed to share its experience of successful transition with other countries," said Shigeo Katsu, World Bank Vice President for the Europe and Central Asia region. In the early 1990s, World Bank support focused on key structural reforms and the modernization of the country's energy and telecommunications sectors. In addition, through Global Environment Facility (GEF) grants, the Czech Republic successfully reduced production of ozone-depleting substances, better protected biodiversity, and improved energy efficiency use, including district heating. From 1998 onward, the Bank engaged with the Czech Republic primarily through knowledge partnerships focused on institutional reforms.

To this end, World Bank advice and analytic activities conducted in collaboration with the Czechs supported capital and financial market reform, enterprise restructuring and fiscal management improvement. In addition, joint efforts to assess corporate governance and its importance in underpinning the transformation to a market economy had a profound impact on the Czech reform process. "We have enjoyed and appreciated the collaborative relationship that we have had with the World Bank since our renewed membership. Even though the period of our borrowing from the IBRD was brief, the loans played an important role in the early transition stage of the Czechoslovak, and, later on, the Czech economy. The ensuing dialogue on economic policies in recent years also had an enduring impact on the economy," remarked Mr. Sobotka.

Recently, the Czech Republic worked with the World Bank and IMF to pilot a system for diagnosing financial sector vulnerability, within the framework of the International Financial Architecture. "The Czech Republic played an important role in pioneering most of the country-based work on the international financial architecture, allowing the Bank to 'learn while doing' and providing rich best practice lessons for other countries to apply," explained Mr. Katsu. Work undertaken in the Czech Republic in this context includes a Financial Sector Assessment, Reports on Observance of Standards and Codes, a pilot assessment of bank failure resolution mechanisms in the context of the Global Bank Insolvency Initiative, and a series of pilot financial sector corporate governance assessments.

In another partnering activity, the Czech Republic and the World Bank Group organized a Forum on governance for Public Private Partnerships (PPP) in February 2004 in Prague. At the Forum, 10 governments as well as participants from several European institutions agreed to set up a Prague Public Private Partnership Platform. The so called "Five Ps" initiative is facilitating networking and capacity building among PPP experts and stakeholders in Central and South Eastern Europe. A donor to the International Development Association, or IDA, since 1993, the Czech Republic is committed to gradually increasing development assistance and enhancing its role as a partner in development, both through multilateral vehicles and bilaterally. The Czech Government has recently committed to increasing its contribution to the IDA14 replenishment by 30 percent. Its history as a GEF donor is similarly established and is expected to continue.

From Harold Doan and Associates, CA, 18 April 2005

Inflation Set to Hit 4 Percent, BoG Warns

The economy is at a crucial juncture, according to Bank of Greece (BoG) Governor Nicholas Garganas, who presented the central bank's annual report yesterday highlighting unemployment as the economy's biggest problem while predicting slowing growth and rising inflation for this year. Garganas said the rate of growth would "still remain high" at around 3 percent in 2005. His forecast, however, may come as a disappointment to the government, whose Economy and Finance Ministry has predicted a much higher, 3.9 percent growth rate. The BoG figure would represent a marked drop in the growth rate from 4.2 percent last year. As for the inflation rate, Garganas again went against the government's forecasters by predicting that it would average 4 percent this year, a 1.1 percent increase from 2004. The government officially expects a 3 percent inflation rate for this year.

The head of the central bank identified unemployment as the key problem facing the Greek economy and recommended the removal of obstacles that bar the entry of young people and women into the labor market. He said that Greeks, on average, stop working when they are 59.5 years old and that this creates more problems for Greece than any other European country since it has a declining population. According to BoG figures, the government will be paying out an extra 10 percent for pensions by 2060 - meaning that such payments will amount to a quarter of the country's GDP. "Under these conditions, no economy could function since it will not be possible to face the increased expenditure just through public finance measures," said Garganas.

From Agenzia Giornalistica Italia, Italy, 4 April 2005


US to Grant $5.0 Million to Support Yemeni Commercial Judiciary

SANA'A - The United States will extend a $5.0 million grant to the Yemeni Ministry of Justice for the development of the country's commercial justice system. According to justice minister Adnan Al-Jafri, the ministry is increasingly interested in the development of Yemen's commercial justice and public finance courts in line with the latest achievements and innovations in the filed of information and communication technologies. The ministry will invest $3 million to upgrade the existing IT systems of the commercial courts, connect them via a centralized network and develop a database. The ministry will also provide the courts with Internet access and conduct training and qualification courses for 75 judges and 150 assistant judges. The remaining funds will be invested in development of the public finance courts, upgrade of their IT systems and provision of vocational training for their staff.

From Yemen Observer, Yemen, by Observer Staff, 17 April 2005


Income Tax Threshold in Jamaica to Be Increased

Kingston - Jamaican Minister of Finance and Planning, Dr. Omar Davies announced Thursday that the government had taken a decision to increase the income tax threshold to just over $169,104, effective July 1, this year. This will be moved to $193,440 in January 2006, and $275,000 effective January 2007. Thereafter, the threshold will be indexed to inflation, as proposed by the Matalon Committee in its recent report. Dr. Davies made the announcement when he opened the 2005/06 Budget Debate in the House of Representatives. "I have been told by several accountants that introducing the new threshold in the middle of the year will create difficulty for them but the Cabinet, on the insistence of the Prime Minister, decided that immediate action should be taken, particularly in light of the concessions made by public sector workers to the fiscal targets under the Memorandum of Understanding (MOU)," he told the House.

The two increases in the threshold for the fiscal year 2005/06 would result in the loss in revenue of $1.4 billion, Dr. Davies said, adding that on the other hand, 54,600 taxpayers would benefit in July, and an additional 12,100 when the new threshold came into effect in January 2006. In addition, the Minister informed that as of July 1, pensioners under 65 years old would have tax-free income of $240,000, while those over 65 years old would have tax free income of $259,000. Also, as of January 1, 2006, the tax free allowances for the two groups will be $238,000 and $283,000, respectively.

Meanwhile, as it relates to transfer tax on estates at death, he told the House that government intended to, as of June 1, simplify the system as follows: estates valued less than $100,000 (no transfer tax payable); estates valued over $100,000 (7.5 per cent on the value in excess of $100,000). This change, he said, not only represented a major benefit for many middle and low level income persons, but would result in the "cleaning of the system". Currently, the transfer tax payable on estates at death is structured as follows: The first $10,000 - exempt; the next $10,000 - 7.5 per cent; the next $40,000 - 10 per cent; the next $50,000 - 12.5 per cent; over $50,000 - 15 per cent. This structure, the Finance Minister said, was not only complicated but had resulted in many persons not seeking to probate estates because of the total cost involved in legal fees and associated taxes.

Turning to property tax, Dr. Davies said the Matalon Committee had proposed the removal of the property tax caps, which had led to an overly complicated system. He said the government accepted the proposal in principle, and would implement, with effect in this fiscal year, a flat tax of $600 on the first $300,000 of valuation; and a rate of 0.5 per cent on the amount in excess of $300,000. This is expected to yield $280 million for the Parochial Revenue Fund and will therefore not accrue to the Consolidated Fund. The Minister noted that even with this additional amount, the collection from property tax would not be adequate to meet the costs of garbage collection and street lighting. Therefore, there was still the need for the Consolidated Fund to provide support for these services.

From Caribbean Net News, Cayman Islands, 17 April 2005

Timid, Yes, But Only the Conservatives Know How to Balance the Books

In markets, there is something rather charming about the influence that old men can have. The thought strikes me because everywhere I go in the City people are suddenly more worried about the economy than they have been since the liberation of Baghdad. The evidence that they cite is always the same: a piece Paul Volcker, the 77-year-old former chairman of the US Federal Reserve, wrote recently for the Washington Post: "Altogether, the circumstances seem to me as dangerous and as intractable as any I can remember, and I can remember quite a lot," he said. "We are skating on thin ice." If you want to make market prophecies, it helps if you look the part and Mr Volcker benefits from being more than six feet tall, despite the burdens of age. He ran America's central bank for President Reagan and recently investigated the oil-for-food scandal at the United Nations. But what is currently furrowing Gandalf's brow is the huge imbalances in the world economy, in particular America's current account and government deficits.

Volcker is an even more revered figure than his successor, Alan Greenspan, who is widely criticised for cutting interest so dramatically in the wake of September 11. Greenspan, say his detractors, has simply moved a bubble in the stock market to the debt markets. By contrast, Volcker has a heroic reputation as a hawk who raised interest rates in the 1980s in order to squeeze inflation out of the system, despite the curses of manufacturers and Congress. President Reagan himself seemed to appreciate the bitter Volcker medicine, but his treasury secretary, Don Regan, did not.

Although the situation in Britain today is not identical to that in America, there are close parallels. The United States is running enormous fiscal and current account deficits. You might think it precocious of me to quibble with Mr Volcker, but I am not sure he is right about the current account deficit. It is essentially caused by a deficit in trade and I don't think that matters very much. First, the data on trade are incredibly unreliable, so if you add up each country's trade deficit, you discover the world is running a trade deficit with itself. Second, the ultimate point of all economic activity is consumption. America's trade deficit might actually be a sign of a healthy economy. But even if Mr Volcker is right, we can take comfort in Britain from the fact that our overall current account deficit is less than half America's, at about two and a half per cent of GDP, thanks to the big surpluses earned on our service exports, such as media and finance, plus investment income received from abroad. America's equivalent inflows are much smaller and do not offset its deficit in goods trade to the same extent. What we do share with the United States is a big fiscal deficit of more than three per cent of GDP. This is much more serious. For the government is the biggest participant in markets. Governments have large financing needs, both in terms of taxation and borrowing. They therefore set the tone. And a panic over the government's ability to finance itself can pretty soon erupt into a generalised loss of confidence.

Mr Volcker says: "America cannot go on spending more than it earns for ever. I don't know whether the change will come with a bang or with a whimper, whether sooner or later. But as things stand, it is more likely than not that it will be financial crises rather than policy foresight that will force change." For America, also read the British Government. Last week's public finance figures from the Office for National Statistics were hardly noticed. But they revealed another deterioration. Treasury officials were delighted that the Government's total net borrowing was £34.5 billion in 2003-04, only £100 million more than forecast in the Budget in March. But that estimate was the seventh effort from the Chancellor, and coming within a whisker of it is hardly a great achievement. There are already signs that both consumers and businesses sense this bulging deficit hanging over their heads and are preparing themselves for a post-election slowdown, made worse by tax rises. Sales of new cars to private individuals are at their lowest for more than a decade. A survey of house prices from Hometrack, published this morning, shows another drop. Retail sales fell in March. Job vacancies are down. Unemployment has crept up for three months in a row. And inflation - though still low by historical standards - is at a seven-year high. The economy may be slowing, but the Bank of England has a legal duty to control inflation and another interest rate rise after the election is a near certainty. Ah yes, the election.

According to the Institute of Fiscal Studies, the difference between the three main parties is minute and taxes may have to rise, whoever is in power. The Government currently collects about 38 per cent of GDP in taxation and by 2008 that will rise to 42.1 per cent under Labour, 41.5 per cent under the Conservatives or 42.2 per cent under the Liberal Democrats. Behind the scenes, many Conservatives are angry at the timidity of the party's approach to economic reform, which they believe has neutered the election strategy. They are right about that. But the fact remains that the Conservatives are the only ones to realise the importance of slowing the growth of public spending. And one part of the Conservative programme that has received far too little attention is the promise to allocate £8 billion to reducing the national debt. Shadow chancellor Oliver Letwin is no Paul Volcker. But, in his desire to balance the budget and reduce borrowing, he has much in common with the old wizard. The Tories may lose this election, but, if the Volcker view is correct, a fiscal crisis will propel them into office next time.

From, UK, by George Trefgarne, 24 April 2005


Finding Consensus On Global Economy - Finance Chiefs Agree on Need for Change

A serious danger looms over the otherwise robust global economy, and the tough measures needed to reduce it are clear. On that score, there was almost unanimous agreement among the dark-suited policymakers from around the globe who converged on Washington this weekend for the spring meetings of the International Monetary Fund and World Bank. One after another, in public declarations and private conversations, officials from the world's leading finance ministries and central banks concurred that financial turmoil triggered by a plunge in the U.S. dollar could erupt sometime in the future unless strong steps are taken to shrink "global imbalances" - the massive U.S. trade deficit, and the corresponding trade surpluses of other countries, especially Asian ones. The result "could be disruptive and very damaging to the world economy," warned Sultan Bin Nasser Al-Suwaidi, governor of the United Arab Emirates Central Bank.

So what are these powerful people doing to prevent this dire threat from materializing? Not much, many of them admitted. As Raghuram Rajan, the IMF's economic counsellor, put it: "Their attitudes toward the needed policy changes seem much like St. Augustine's - "'Lord, give me chastity ... but not just yet.' " That is not for lack of a broad consensus on the needed changes. At a high-level IMF meeting Saturday, participants from rich and poor countries alike issued formal statements repeating, in one form or another, what Swiss Finance Minister Hans-Rudolf Merz called "the well-known mantra": The U.S. budget deficit must be sharply curtailed; that would dampen the over-consumption by Americans that draws in a flood of goods from overseas. The sluggish economies of Europe and Japan must be revived with growth-inducing reforms; that would enable them to pick up the slack and import more when U.S. consumers finally become less free-spending. And Asian economies, particularly China, must let their currencies rise; that would eliminate an unfair competitive edge their exporters enjoy against products made elsewhere.

The Bush administration declared itself fully behind that set of prescriptions, including the part about Washington's budgetary responsibilities. Following a meeting Saturday of top officials from the Group of Seven major industrial nations, Treasury Secretary John W. Snow said, "Deficits matter, they are unwelcome, and must come down," and he reiterated the U.S. commitment to President Bush's goal of cutting the budget gap to less than 2 percent of gross domestic product by 2009, from about 3.5 percent of GDP now. "I'd underscore, this isn't just words," Snow said, referring to the G-7's call for "vigorous action" to address global imbalances. "It's an action plan." Such stirring rhetoric, however, is belied by recent developments in major economies. In the United States, figures released this month show that the budget deficit for the current fiscal year is running close to last year's record $412 billion, a problem that will only worsen when Congress approves $80 billion in emergency spending for the wars in Iraq and Afghanistan. More important, the willingness of Congress to enact the spending cuts proposed by Bush has come under fresh doubt following rebellions by Republican lawmakers against reductions in Medicaid and farm subsidies. And in the latest sign of Washington's eagerness to reduce taxes rather than raise them, the House just voted to repeal the estate tax permanently.

Across the Atlantic, a slowdown in continental Europe has prompted economists to slash their forecasts for the zone of countries using the euro currency; the IMF predicts growth at an anemic 1.6 percent this year. With unemployment in those nations averaging nearly 9 percent, hope that the European Central Bank might respond by lowering interest rates was dashed when Jean-Claude Trichet, the bank's president, told reporters after the G-7 meetings, "A decrease of rates is not an option" because of worries about inflation. Meanwhile, European politicians have announced moves in the past few days that are arousing despair among economists who believe the continent will achieve dynamic growth only by lifting the heavy hand of government protection from labor, product and capital markets.

In Germany, the government - responding to widespread concern about low-cost eastern European workers invading the German market - has proposed a plan that includes setting a minimum wage equal to the lowest wages negotiated by unions and employers' associations. Separately, the European Union's executive body retreated from a proposal to open up the continent's service markets to greater cross-border competition. "The problem is not complacency," said a senior European policymaker who attended the G-7 meeting and agreed, on condition of anonymity, to discuss the sentiments expressed behind the scenes about global imbalances. "It is not a lack of recognition that we have a real risk. But the problem is delivery. We have to fight against the difficulty of running modern democracies." The dangers of failing to act were spelled out in IMF reports issued on the eve of the meeting.

The U.S. trade deficit, at a bit more than $660 billion last year based on the broadest measure, has risen to about 5.7 percent of GDP - a far higher proportion of the economy than at any time in history. IMF projections show that if the trade gap continues to expand as currently anticipated, the collective indebtedness of the United States to other nations will mount steeply over the next half-decade. That is because as U.S. consumers buy imported cars, clothes and electronic goods, the dollars they pay end up in the hands of foreigners who effectively lend those greenbacks to the United States by investing in U.S. Treasury bonds and other securities. By 2010, the net indebtedness of the United States will roughly double as a proportion of the economy, to 50 percent of GDP, according to the IMF. That doesn't have to spell disaster, because as some private economists contend, foreigners may well be willing to continue lending to the United States far into the future - as they have up to now - given the dearth of good alternatives. But the higher U.S. indebtedness rises, the greater the chance that foreigners might get worried that the United States' burden is getting out of hand, prompting them to dump the Treasury bonds they have accumulated.

Part of the reason that scenario has not galvanized policymakers to take more-ambitious preventive measures, according to some attendees at the weekend meetings, is that the global economy has been expanding briskly and shows scant sign of faltering. The IMF projected global growth at 4.3 percent this year and 4.4 percent in 2006, down from last year's 5.1 percent pace but still plenty healthy. "In private, there is agreement that there has to be multilateral movement [on imbalances], but the fire is not under them," said one senior international official who attended the meetings. "Until such time as that happens, there may be more willingness to procrastinate."

From Washington Post by Paul Blustein, 17 April 2005

Mexico, Russia to Increase Domestic Borrowing as Rates Rise

Mexico, Russia and Brazil will sell more debt in domestic markets and reduce borrowing in U.S. dollars in response to higher international interest. Finance ministers from all three countries said at meetings with International Monetary Fund officials over the weekend they will seek to expand their own capital markets, boosting public and private borrowing in local currencies, to lessen the effect of rising borrowing costs abroad. "To be able to meet most of the financing needs of both public and private sectors in your own country is becoming crucial," Mexican Finance Minister Francisco Gil Diaz said in an April 16 interview in Washington. "This move is going to accelerate - not only in Mexico but in many other large emerging economies." Gil Diaz made the remarks after emerging market bonds slumped last week on concern global growth is slowing and higher rates in the U.S. will hurt demand for riskier assets. The average extra yield investors demand to buy developing country debt instead of U.S. Treasuries grew to 4.1 percentage points, the widest gap since November, according to JPMorgan Chase & Co. The yield spread widened 0.73 percentage point last week, more than during any five-day period since May 2004.

Brazilian bonds, the most widely traded emerging market securities, led the declines. The country's benchmark bond due in 2040 fell 4.2 cents over the past week to 110.6 cents on the dollar, pushing up the yield to 9.91 percent. Mexico's bond due in 2015 fell 0.7 cent on the dollar to 103.6 cents, raising the yield to 6.13 percent.

Growing Economies - Developing nations including Brazil and Mexico have stepped up borrowing on domestic markets as their economies expand. The IMF last week boosted its forecast for economic growth in Latin America's two largest economies, saying Brazil and Mexico would grow 3.7 percent this year. Brazil's economy grew 5.2 percent in 2004, the fastest pace in a decade, and Mexico's grew 4.4 percent. "Our dependence on foreign debt has been coming down very fast and it's one of the reasons why the country is in much better shape today to absorb foreign market volatility," Brazilian Finance Minister Antonio Palocci told reporters April 15 in Washington. About 60 percent of Brazil's $450 billion debt, the largest amount among developing nations, is tied to the local currency and domestic interest rates, and that portion may increase to as much as 90 percent in coming years, Palocci said.

'Start to Hurt' - Christian Stracke, head of emerging markets fixed-income research at New York-based CreditSights Inc., said Brazil still must contend with higher borrowing costs overseas. By early February, Brazil's government had raised $3.4 billion of the planned $6 billion in financing on international markets this year. Declines in Brazilian bonds since last month resulted in an increase in the country's borrowing costs of at least 1 percentage point, according to estimates by CreditSights. "No matter how well a country like Brazil is doing, the sheer size of their total debt is so high that at a certain point, higher rates and higher borrowing costs will start to hurt," Stracke said. In Latin America in particular, debt levels are so high that a sudden pullout of international capital would be dangerous for the economies, Anoop Singh, the IMF's director for the Western Hemisphere, told reporters in Washington on April 15. "Despite remarkable progress in Latin America, a shock on rates could have a negative impact," Singh said. Higher borrowing costs and lower demand for emerging market bonds led Uruguay to postpone on April 14 a planned $300 million bond offering. In March, Uruguay said it would need to borrow $500 million in international markets to help close its budget gap.

'Closed' Markets - "I can't think of another deal that has been pulled out like Uruguay's in recent memory," said Siobhan Manning-Morden, emerging-market analysts with Wachovia Corp. in New York. "The question is how long the markets will be closed" for new emerging market issues. The Philippine government will wait for emerging market bond yields to stabilize before raising $1.5 billion on international markets, National Treasurer Omar Cruz said in an interview on April 15. The U.S. benchmark 4 percent note due in February 2015 last week surged about 1 3/4, or $17.50 per $1,000 face amount, to 98 1/16 in New York, according to bond broker Cantor Fitzgerald LP. The yield fell 0.23 percentage point to 4.24 percent, and touched 4.23 percent, the lowest since Feb. 24. The drop was the most since the week ended Aug. 6.

Demand for U.S. Treasuries gained as minutes of the U.S. Federal Reserve's March 22 meeting showed policy makers aren't ready to boost rates in higher increments. The 10-year note yield is up from last year's low of 3.68 percent. In a Bloomberg News survey conducted on April 7, the median forecast of 61 economists was for the note to reach 5 percent by the end of the year. The Fed has boosted the benchmark lending rate seven times since last June to 2.75 percent.

Trade Surplus - Palocci, Brazil's finance minister, said his country has reduced its international debt and boosted its trade surplus enough since President Luiz Inacio Lula da Silva took office in January 2003 to withstand higher yields overseas and a pullout of international investment. Mexico has reduced its net foreign debt to about $80 billion, or 11 percent of gross domestic product at the end of 2004, from 32.4 percent in 1995 by replacing it with peso securities. Mexico's net international debt as a share of GDP is at its lowest in 32 years and is the fifth lowest among all developing economies, according to JPMorgan. Petroleos Mexicanos, Mexico's state-owned oil monopoly, sold 15 billion pesos ($1.3 billion) of bonds in February, tapping into demand from the nation's pension funds to help lower its borrowing costs. About half of the company's total debt is in pesos. Mexico's Gil Diaz said the country's 2005 borrowing needs were already met and Brazil's Palocci said the country didn't plan to issue bonds in international markets in coming months. Other countries, such as Venezuela, opted to repurchase short- term debt and refinance at lower rates and with longer maturities.

Venezuela, Russia - Venezuela "won't be going to the markets to raise funds to amortize debt or do swaps," Armando Leon, a director for Venezuela's central bank, said in an interview April 17. "This allows the operations to be less pressured. When you have debt maturing, the markets understand it and tend to pressure for higher rates." Earlier this month, Venezuela, the world's fifth-largest supplier of oil, sold $1 billion of bonds on domestic markets, avoiding the higher borrowing costs abroad to raise funds from local banks flush with cash. In Russia, the government is seeking to repay foreign debts ahead of time to save money. Andrei Illarionov, an aide to President Vladimir Putin, said in an interview April 6 that Russia may pay back its entire $110 billion of foreign debt as soon as 2007 as record oil prices swell government revenue. The debt decreased from $119.7 billion in early 2004, according to the Finance Ministry. Russia defaulted on $40 billion of domestic bonds in August 1998. "We want to facilitate and invest in the expansion of our own financial markets," Finance Minister Alexei Kudrin told reporters in Washington on April 15. "We are interested in covering our debts fast."

From Bloomberg, 18 April 2005

Asia, Africa Need New Strategy for Cooperation

The conjuncture of rapid structural transformation in a growing number of economies of Asia, the adoption of reforms to revive Africa's economic prospects, and the expected leveling - off in demand and income growth in the advanced economies provides a propitious setting for renewed efforts to strengthen Afro-Asian economic cooperation. Emerging complementarities between the economies of the two regions, buttressed by macro-economic reforms of the recent past, have contributed to a rapid growth in trade, investment and financial flows between them. The expansion in inter-regional trade has, potentially, far reaching consequences not only for these two regions but for the world economy as a whole. It signals, for example, a rupture in the center-periphery pattern of trade that has historically defined developing countries relations with the North. These shifts are also likely to affect the quality of trade relations: intra-developing trade is more likely to reflect equality and mutuality of interests, unlike the rancor and dependence that characterizes North-South trade relations.

As regards OECD economies, the New Strategy will need to take into account demographic trends and consequences of an aging population, declining savings (and long-term investment) and stagnation in demand due in part to a saturation of consumption and stagnation in income growth. The New Strategy must therefore address the implications of shifts in the loci of dynamism and growth away from developed to other regions of the world. Deepening Afro-Asian ties, however, will require sustained political efforts. One of the lessons deriving from earlier measures to increase economic cooperation and promote integration, no less within regions as between them, suggests that in the absence of a high degree of political commitment and support, such efforts are unlikely to secure the full benefits of mutual cooperation. At the same time, given the considerable heterogeneity within and between the two regions, efforts towards enhancing cooperation must necessarily embody multiple approaches. In this regard, strengthening intra-regional cooperation will itself have spillover effects towards strengthening inter-regional ties via the provision of more secure and larger trade and investment markets.

The several existing structures designed to promote sub-regional, regional and even inter-regional arrangements will be required to play a leading role in providing form and content to a New Strategy for Enhancing Trade, Investment and Technical Cooperation (New Strategy). Likewise, beyond the important catalytic role of Governments, civil society will have to play a greater role than heretofore. New partnerships embracing business, industry, centers of learning and research and other non-governmental structures will, to a much greater extent than before, be expected to drive the process of cooperation. A tri-partite framework of cooperation involving inter-governmental forums, sub-regional organizations and people to people and civil society interaction should be formalized to the extent possible and structured to permit its growth. The forthcoming Asian-African Summit in Jakarta therefore has a central role in designing and establishing such a framework within which the New Strategy can be nurtured.

An important component of such a framework must be the establishment of follow-up arrangements to service the technical and policy-making organs of the New Partnership, to monitor progress in the implementation of the decisions and to help coordinate the work of existing institutional structures and private-public partnerships in support of the New Strategy. Such an effort would require political guidance and leadership on an on-going basis and for which a standing bureau of the conference could be established to meet periodically, including at heads of states levels, to monitor progress and take appropriate decisions. The follow-up structures could consist of one or more of the regional organizations and new ones to be created such as, for example, An Afro-Asian Trade and Investment Chamber.

Priority areas critical for the success of the New Strategy include: Policies and measures regarding international trade and the harnessing of comparative advantages between the two regions; the role of a revived Global System of Trade Preferences; cooperation in the field of commodities, investment and transfer of technology and special measures for the least developed countries. Likewise, sharing of expertise and knowledge, learning from best practices concerning agricultural, industrial and commercial policies, and related measures covering FDI and its promotion, transfer of technology and competition policy should be expected to form a key component of the New Strategy. In this respect, the role of non-governmental actors in promoting learning and sharing of experiences must be highlighted. Access to the resources at the disposal of the private sector and related associations such as Chambers of Commerce, Business and Industry associations and Export and Investment promotion agencies would complement the traditional Government to Government mode in the delivery of technical assistance.

The establishment of a network of relations between Asian and African Universities and centers of research could play a leading role in training, increasing exchanges of students and faculty, building technical capacities and sharing of knowledge in a wide range of development policies and areas. Given the similarities of development experiences, provision of technical assistance between Asia and Africa is likely to be more productive, cost-effective and better adapted to each other's need than support from the traditional providers of such assistance. However, this will not take place spontaneously or at levels warranted by needs or demand. The transfer of technical knowledge and assistance among them must be supported by, as necessary, contributions from Governments and private entities and for which consideration may be given to the establishment of an Afro-Asian Technical Assistance Pool to be managed and administered by one or more of the existing institutions of cooperation in the two regions.

From Jakarta Post, Indonesia, by Yash Tandon and Chandra Kant Patel, Geneva, 15 April 2005

G7 Issues Upbeat Growth Outlook, Pledges Action on Trade Imbalances

Despite last week's sudden plunge in stock prices, top economic policymakers from the world's richest countries expressed confidence Saturday that the global economy remains on track for "solid growth" this year, while acknowledging that high oil prices are generating economic "headwinds," reports The Washington Post. The upbeat joint statement by finance ministers and central bank governors from the Group of Seven major industrialized nations broke little new ground, but their meeting in Washington provided an opportune moment to issue soothing words about the outlook. In its communiqué, the G7 pledged "vigorous action" to deal with "global imbalances" -- a reference to the massive US trade deficit and corresponding trade surpluses of other nations, especially the export-driven economies of Asia. But the statement mostly reiterated past calls for countries to take measures that should help shrink the trade gap, including a reduction of the US budget deficit and "structural reforms" in Europe and Japan to help speed growth.

The G7 conspicuously refrained from commenting directly on one politically charged issue related to the trade deficit - China's decade-old practice of keeping its currency, the yuan, pegged to the US dollar at a rate of about 8.3 yuan per dollar. The G7 communiqué included only the language that has been contained in every such statement for the past year. "More flexibility in exchange rates is desirable for major countries or economic areas that lack such flexibility," the statement said. Senior Treasury officials, briefing reporters on condition of anonymity because of the sensitivity of the issue, maintained that no importance should be attached to the communiqué's lack of a specific reference to China or the timing of a change in currency policy. But they dodged questions about whether there was unanimity in the G7 on the matter.

The Associated Press further reports that concern that rising oil prices could harm the global economy also dominated weekend meetings. The news agency writes that oil prices are expected to remain high - and volatile - given tight supplies and rising demand, especially in rapidly developing countries like China. Finance officials from the world's seven richest countries on Saturday signaled their resolve to deal with the energy situation and reassure financial markets that they are on top of the matter. However, they urged producers to increase energy supplies and said countries should conserve more. The G7 countries endorsed more timely and accurate information about the oil market, which officials said could help control price fluctuations and make companies more willing to expand production. For now, energy prices are expected to slow economic growth modestly this year in the United States and elsewhere. "The outlook continues to point to solid growth for 2005," the finance officials said in their statement.

Reuters also adds the G7 welcomed progress toward clearer data on global crude oil inventories to help tame wild price swings and avoid being caught off guard by future demand fluctuations. A global effort launched in 2001 to improve oil data, called the Joint Oil Data Initiative, is underway but barely half of the 93 participant nations submit regular data, the IMF said earlier this month. The database could see public use later this year and include information from China, India and OPEC nations. Global oil markets focus on official weekly stock data released from the world's largest oil consumer, the United States, and on monthly stock data on 26 industrialized nations that submit information to the IEA. But data on non-OECD members like China and most OPEC members is lacking, the IMF has said. The G7 and IMF want more universal rules to peg how countries measure their reserves.

In related news, Reuters notes that world financial leaders on Saturday heaped more pressure on Argentina to change course and negotiate with the bondholders who rejected its massive debt swap offer in February. But Argentina thumbed its nose at any suggestion that it should reopen the swap and repeated it will not give a second change to the 24 percent of creditors who refused its debt exchange deal, which shaved 70 percent off investor holdings. Still, the Latin American country is being pushed to court the disconcerted creditors as it seeks to restart a suspended IMF loan program and lay to rest its 2002 sovereign default. Finance chiefs from the Group of Seven industrialized countries said engagement with Argentina's holdout creditors should be a prerequisite for any new IMF loans to the country. The IMF has not asked Argentina to reopen talks with its holdout creditors, who still hold nearly $20 billion in defaulted bonds, but has urged the government to develop a "realistic strategy" to deal with them.

From (press release), Spain, 18 April 2005

Major Finance Ministers Say World Economy Performing Well

Finance ministers and central bank governors from the world's richest nations concluded a two-day meeting in Washington Saturday saying vigorous action is needed to remedy global economic imbalances. Their statement came one day ahead of a meeting of World Bank and International Monetary Fund officials that is expected to address such topics as debt relief for poor nations. Unlike previous meetings of the finance ministers of the major industrialized countries - the Group of Seven - this one was quiet on the inside and outside. The ministers made no public remarks and their meeting attracted few protesters. At the end of the meeting, the ministers from Japan, America and western Europe, including Alan Greenspan, the head of the U.S. central bank and Jean-Claude Trichet, the head of the European Central Bank, did issue a written statement calling for vigorous action to improve the economy, but the ministers did not commit themselves to specific policy measures.

Despite this week's sharp decline in U.S. stock markets because of worry the economy may be slowing down, the group of seven ministers say the global expansion remains robust. The statement describes the 37 percent rise in oil prices over the past year as a headwind that can be countered by more efficient policies. They say that the United States needs to reduce its budget deficit and Japan and Europe need to reduce structural rigidities that hold down economic growth. In a veiled reference to China, the statement says that strong economies with big trade surpluses should have more flexible exchange rates. Though the value of the U.S. dollar has been declining against other major currencies in the past two years, China maintains its currency at a fixed rate to the dollar - 8.3 yuan to a dollar. U.S. policymakers want China to raise the value of the yuan, which they believe would stem the flood of Chinese goods into the U.S. market and give U.S. exporters more opportunities in China. Immediately following the end of the meeting of finance ministers, the officials from Europe, America and Japan went into a larger meeting of the International Monetary Fund's policy making committee. That latter group includes major oil exporting nations, and key developing countries from Africa, Asia and Latin America. The multiple gatherings of finance officials continue through Sunday.

From Chosun Ilbo, South Korea, 17 April 2005

UN Will Host Finance Ministers, Development Decision Makers, at Headquarters, 18 April

A full day of discussion at the United Nations next Monday constitutes an important opportunity for finance ministers to consider foreign aid outlays in a multilateral and inter-institutional context, prior to the summit taking place at the United Nations in September, United Nations officials say.

In a note prepared for the 18 April meeting of finance and development ministers, central bankers, executive directors of the Bretton Woods institutions, leaders from the major international trade institutions and delegations belonging to the United Nations Economic and Social Council ( ECOSOC ), United Nations Secretary-General Kofi Annan repeated his call for rapid increases in official development assistance ( ODA ) and measures to front load aid, as a means to meet the Millennium Development Goals set at the year 2000 Millennium Summit. The full range of areas covered by the 2002 International Conference on Financing for Development - trade, aid, investment, debt, international financial systemics and mobilization of resources in the developing countries - will be under discussion during Monday's plenary meeting and at late morning informal round-table discussions.

Opening remarks will be delivered beginning at 9:30 a.m. on 18 April by UN Secretary-General Kofi Annan and by Ambassador Munir Akram ( Pakistan ), the President of ECOSOC. The 54-member United Nations body will be hosting finance ministers flying in from Washington, D.C., at the conclusion of the 16-17 April International Monetary Fund ( IMF )/World Bank spring meeting, including Development Committee Chairman Trevor Manuel, the Finance Minister of South Africa. The Chair of the International Finance and Monetary Committee will be represented by Augustin Carstens, the Deputy Managing Director of the IMF. Besides Mr. Manuel and Mr. Carstens, Mary Whelan, Chair of the Trade and Development Board of the United Nations Conference on Trade and Development ( UNCTAD ), will address the morning session, following the United Nations speakers. The World Trade Organization ( WTO ) will also participate in the meeting.

Concerns on Financing for Development - The Secretary-General's note brings up the need for effective macroeconomic coordination among countries, given that massive global imbalances have not yet been corrected by the sharp decline in the United States dollar. Moreover, the potentially destabilizing effects of these imbalances are causing developing countries to build up costly reserves as a form of self-insurance. The problem was exacerbated when the IMF's Contignent Credit Line was allowed to lapse. Concern is also expressed in the note from the Secretary-General about progress on bringing developing countries into decision-making positions at the Bretton Woods institutions ( the World Bank and IMF ), and norm-setting agencies such as the Basle Committee and the Financial Stability Forum. There is good news that ODA is growing, according to new data released this week by the Organization for Economic Cooperation and Development ( OECD ). But ODA needs to be stepped up in order to meet the Millennium Development Goals, according to the UN Secretary-General. The same point was driven home by the World Bank's Global Monitoring Report, issued 12 April. Also endorsed is the need for "development-friendly liberalization" of international trade, through successful conclusion of the Doha negotiations.

Input to September Summit - At the conclusion of the meeting, ECOSOC President Akram will issue a summary of the proceedings. The results of the 18 April meeting will be forwarded to the High-level Dialogue of the General Assembly on Financing for Development, which will take place in New York in late June. Discussion of the Millennium Development Goals at the June ECOSOC meeting, in turn, is considered to be a critical input to decision-making at the September summit at the United Nations, which constitutes a review of the year 2000 Millennium Declaration.

Reporters without United Nations press credentials who wish to attend the 18 April ECOSOC meeting from 9:30 a.m. to 10:30 a.m., or from 2:45 p.m. on, should fax a letter of assignment to 1-212-963-4642, and follow up with a call to the UN Media Accreditation Unit at 1-212-963-7164. For more information, contact Tim Wall of the Development Section of the UN Department of Public Information, at 1-212-963-5851, or at If you have questions regarding information in these press release contact the company listed below. Please do not contact us as we are unable to assist you with your inquiry. We disclaim any content contained in this press release.

From (press release), 16 April 2005

World Bank President Appeals to Rich Countries to Help Educate 100 Million Child

Washington - World Bank President, James Wolfensohn, today appealed to rich countries to honor their overdue promises to help educate more than a hundred million children out-of-school in the world's poorest countries, despite overwhelming evidence that teaching children how to read, write, and count, can blunt the spread of AIDS, boost economic growth, and break the cycle of poverty that haunts the lives of too many of the world's children. "Today, we see that the rich world is not even close to meeting its commitment to children in developing countries," said World Bank President James Wolfensohn. "In a world tragically short of magic solutions, primary education remains one of the most dramatic development solutions available. And progress on education-as with many other development challenges-is possible when political will and resources come together."

Wolfensohn said girls in particular could greatly benefit from education, and yet millions of them continued to languish outside the school system. Girls make up almost 60 percent of the youngsters out of school, despite 2005 being the year the world agreed to remove the gender barriers preventing more girls going to primary and secondary school. At the Millennium Summit in 2000, world leaders agreed to remove the gender barriers preventing more girls going to primary and secondary school by 2005, and said every boy and girl should have the chance to get a quality primary school education by 2015, as part of the Millennium Development Goals. They later built on that promise by vowing at various international summits over the recent years that no country would be blunted in its achievement of universal primary education because of a lack of money and support.

Progress is possible - According to Wolfensohn, the chances of getting every boy into school by 2015 are more promising than for some time. For example, gross enrollments have jumped dramatically in Sub Saharan Africa from 78% in 1997 to 95% in 2002, an historically unprecedented surge that had resulted in 17 million more children in school in 2002. While the factors contributing to this trend vary from country to country, generally they include more economic growth, the hiring of more teachers, and better policies including the elimination of school fees. Given the high repetition rates in this region, the gross enrollment rate would need to be well over 100% to indicate that all children are in school. While progress has been made in some countries, there is no room for complacency. Over 40 million primary school aged children in Sub-Saharan Africa and 36 million in South Asia, are not even enrolled in school.

Pledge to the World's Children - However, what was especially frustrating, Wolfensohn said, was that the development community could do so much more to help poor countries educate their children by 2015if world leaders were to make good on the very public pledges they had to finance the credible education expansion plans of developing countries seriously committed to achieving universal primary education by 2015. Wolfensohn said it was essential that the additional education aid that donor countries had long promised had to be provided in a coordinated and predictable manner to avoid "kids being in school one year and then being thrown out the next." While poor countries themselves must make a firm commitment to education and develop credible education plans, he said, rich countries had to do more to help reach this goal. The Bank's President said that the development community had a tried and tested means for helping poor countries speed up efforts to get their children into school, called the Fast Track Initiative, which the world's finance and development ministers asked the Bank set up in 2002, and which already has been showing results. But financial and political support to FTI needs to be stepped up substantially.

The Education for All - Fast Track Initiative - The World Bank, along with other leading donors, launched the Fast Track Initiative (FTI) in 2002 to help an initial handful of countries get more primary school-aged children into classrooms. Currently there are 13 countries in FTI; Burkina Faso, Ethiopia, Gambia, Ghana, Guinea, Guyana, Honduras, Mauritania, Mozambique, Nicaragua, Niger, Vietnam and Yemen. Built on a new-style development compact, the FTI required donor countries to provide increased aid in a coordinated and predictable manner, while poor countries agreed to make primary education a national priority and draw up educations plans that would get them to the 2015 target of primary education for all children. This global compact for education is now open to all low-income countries endeavoring to accelerate progress toward universal primary education.

Established in 2002, Fast Track Initiative has been recognized for having played a significant role in promoting better donor coordination and faster results. It has put into place two funds including the Catalytic Fund, which provides short term financial help to close the education financing gaps for poor countries with too few donors, and the Education Program Development Fund, which provides technical support enabling countries to develop sound education strategies. "The Fast Track Initiative has already been recognized for promoting better donor coordination and getting more kids into school, so why is this tried and true program still being starved of the large-scale money and support it needs to reach its achievable goal of helping every child to go to school by 2015?" Wolfensohn asked. "Looking at the millions of children standing outside of the classroom, it is clear that bold action is urgently needed."

Donor Commitments - President Wolfensohn said a number of donors should be recognized for their efforts to increase ODA for education, particularly the Netherlands, Norway, and France. The Netherlands has demonstrated both political leadership and financial commitment as the largest donor to the Fast Track Initiative, having pledged $243 million through 2007. Moreover, there are countries poised to make new contributions including Norway, Sweden and Canada. And Spain has recently become the 7th donor to the FTI's Catalytic Fund, pledging $6.5 million dollars.

But the Catalytic Fund commitments total only about US$300 million over 2004-2007, with $28.5 disbursed to date. Pledges, for this period, have been made by the following seven donors: Belgium (US$ 5.2 million) , Italy (US$ 5million), the Netherlands (US$ 243 million), Norway (US$ 20 million), Sweden (US$ 5.3 million), the UK (US$ 16 million) and Spain (US$ 6.5 million). "The upcoming G8 meeting provides an opportunity for the donors to keep their promises to encourage countries to invest in education,"Wolfensohn said. "I'm worried that if we don't get the extra financing at the G-8 meeting in the early summer and then the UN Millennial Summit in September, we're just not going to achieve the Millennium Development Goals by 2015."

Financing Needs - External aid for the countries within the Fast Track Initiative increased from about $300 to $350 million in 2004, closed the financing gap in Mauritania, Guyana, Gambia, Honduras and Nicaragua. But more country financing gaps could be closed in 2006 and beyond with additional continuing commitments from donors. If the compact expands to help as many as 25 new countries, including large countries such as Ethiopia, Madagascar and Pakistan, over the next year, bringing the total countries receiving support to 38, there will be a need for ODA of $2.3 billion a year for many years to help these countries achieve the goal of universal primary education.

Wolfensohn said that aid spent effectively does have real impact. In Nicaragua, $3.5 million from the Fast Track Initiative, enabled an additional 70,000 six year olds go to school, improvement of teacher facilities and the number of children receiving a daily meal in school rose from 200,000 in 2004 to 800,000 in 2005. In Gambia, $4 million enabled the government to purchase thousands of text books for grades 1-4 resulting in a better quality of education in poor rural areas. In Yemen, $10 million is being used to increase the quality of education and the enrollment of girls in rural areas, where only 30% attend school. Already, 14,000 teachers have been trained, 86 new schools are being built and female teachers are being hired.

From Harold Doan and Associates, CA , 18 April 2005


Private, Public ICT Partnerships Best for Government

Johannesburg - ICT industry experts agree that private and public partnerships and bringing down the cost of technologies will help African governments to enhance service delivery to their citizens. Local and African delegates at the 2005 ICT in Government Conference in Vanderbijlpark last week all shared the same vision for the private and public sector to work together to enhance government service delivery through cost effective IT technologies, technology convergence, and comparing strategies. They also agreed that while the variety of technology innovations and solutions has grown, none of them could be 'all things to all people'.

Private, public partnerships - Microsoft SA MD Gordon Frazer said the public and the private sector needed to work together, to maximise the use of technology in government, for the benefit of citizens, as well as enhancing economic growth. "The idea is to build information technology (IT) as a means to ensure digital economic success, co-operation between private and public sector, and to improve productivity and service delivery, locally and globally," said Frazer. IT companies had a choice - to either innovate or stagnate, said Frazer. "The obvious would be to innovate, move forward and create a healthy competitive environment." He added: "There's a need to build a healthy knowledge economy through fostering innovation, protecting intellectual property rights, IT training and education, removal of trade barriers, and digital inclusion."

Telkom's role in government service delivery - Telkom CEO Sizwe Nxasana, said: "From Telkom's point if view, we are looking at convergence of IT solutions, formulating partnerships and transformation, to help the government provide better service delivery to its citizens, as well as offering services to African governments at large." Telkom chief sales and marketing officer, Nombulelo Moholi said Telkom has already geared up for convergence in terms of implementing new technologies. Asked about Telkom's "slow" service delivery and satisfying customer needs, Moholi admitted the telecoms giant is facing challenges regarding customer loyalty and quick service delivery, but she added that they are making daily improvements. She added: "It doesn't make sense for new companies to involve Telkom late in the conception of their projects and expect to get a quick response, as installing new lines requires digging up infrastructures to accommodate new buildings." "We advice everyone to involve us early in their projects, thus giving us ample time to respond to their needs as quickly as possible, by the time they are ready to do business."

Boosting Africa's ICT skills - NEPAD e-Africa programme commissioner Peter Kinyanjui told delegates to the conference: "African countries need to accelerate roll-out of their ICT infrastructures and skills development through initiatives like the NEPAD e-Schools, in order to bridge the digital divide." "African governments, the corporate sector, development agencies and civil society organisations, need to partner to enhance education through learnerships, skills developments and teacher training, added Kinyanjui. Kinyanjui urged African governments to act faster. "We are tired of pilot projects that never go beyond the pilot stage. Now is the time for demonstration projects that are cost effective and can improve ICT skills in the African population." Kinyanjui said "a partnership model is what African governments need, as ICT is not cheap". "Collectively a lot can be achieved by implementing NEPAD e-Schools. Therefore in partnership with African governments we have developed the Information Society Partnership for Africa's Development (ISPAD)." ISPAD is made of 15 partners, including HP, Microsoft, Oracle, and others, and aims to offer an end-to-end technology solution to develop the NEPAD e-Schools, which will provide advanced training to both learners and teachers.

Kinyanjui said that with 60 000 schools participating in the e-Schools initiative throughout Africa, NEPAD could not drive the process alone and needed African governments to help. In support of skills development and training locally, ISETT SETA CEO Oupa Mopaki said they are happy with the development strategy in the latest ICT Empowerment Sharter, as the document addressed their concerns. "The issues regarding skills development and training are well reflected in the ICT charter document," said Mopaki. "In terms of equity representation, we hope that the new National Skills Development Strategy (NSDS) will empower or meet equity targets, in terms of numbers," said Mopaki. He however admitted that this will create a big challenge for ICT companies to reflect and meet this targets," Director of research and consulting at ForgeAhead, Pierre Venter, said in his closing remarks: "What this conference has taught us is that there is a need for private and public sector partnerships, to compare notes and strategies, as well as inter-governmental initiatives to meet and solve challenges facing government's service delivery."

From ITWeb, South Africa by Itumeleng Mogaki, 18 April 2005

Kenya Says to Speed Up Privatisation with New Law

Nairobi - The Kenya government said on Monday it would speed up its long-delayed privatisation programme, hoping to complete the sell of key state-owned companies between 2005 and 2007. "Given the importance of privatisation to growth, governance and increasing efficiency and competitiveness of Kenya's economy, the government is committed to initiating the reforms as soon as possible," the government said in a paper prepared for donors attending a two-day meeting in Nairobi. "The government intends to fast track some of the key public enterprises."

Kenya's privatisation programme has been delayed after President Mwai Kibaki's government, which took office in late 2002, said it would enact new laws to ensure the process is transparent. A law, which is awaiting final approval by parliament, proposes the establishment of a Privatisation Commission, which will spearhead the process. Kenya's privatisation programme under former President Daniel arap Moi was dogged with accusations of corruption with influential politicians and top government officials accused of selling companies cheaply to their friends and cronies. The programme which begun in 1992 had raised 10.4 billion Kenya shillings by December 2002. Most of the companies privatised were small with the government baulking at selling the large strategic firms. This year, the government is preparing the fixed line telephone company Telkom Kenya, the state-run electricity generating company Kengen and the National Bank of Kenya for privatisation.

From Reuters South Africa, South Africa, 11 April 2005

World Bank Gives $77m for Railway Privatisation

The World Bank offered $77m (sh136b) to prepare for the privatisation of Uganda and Kenya railways, the International Railway Journal has revealed. The January-February journal reported that $28m (sh50b) out of $77m, would cater for staff layoffs in the two countries. "Another $6m (sh10.4b) will finance technical assistance and cross-border improvements. About $35m (sh61b) will cushion the railways and the concessionaire against risks," the journal read. Uganda Railways Corporation (URC) employees last week went on strike after the corporation board declined to sign an agreement consolidating their allowances with the basic salary. During a meeting last week, privatisation state minister, Prof. Peter Kasenene failed to reach a compromise with the workers on terminal benefits. According to a tentative plan by the Privatisation Unit, a new concessionaire will take over URC management by December 31.

From, Africa, by Chris Kiwawulo of New Vision, Kampala, 9 April 2005

Urso, Italy to Sieze Privatization Opportunity in Libya

Rome - As the embargo is being dropped, Italy is in the frontline of countries vying to get a share of Libya's wealth. Which is why Deputy Minister of Productive Activities in charge of foreign trade, Adolfo Urso, is currently on an official visit to Tripoli along with representatives from over 250 Italian medium and small-sized firms. Their first stop is Tripoli's International Exhibition, followed by a workshop arranged by Simest, a company dealing with foreign trade. During his two days' stay, Mr Urso will meet with Libya's PM Shukri Ghanem, Finance Minister Elkheir and Deputy Foreign Minister Siala. "Libya is about to launch a major development and privatization plan", said Mr Urso, "so the time to invest is pretty much now. Italian firms have already invested in Libya to a satisfying degree, turning our country into Libya's main commercial partner". Figures show that last year 39.1pct of Libya's exports were destined to the Italian market, and 27.7pct of its imports came from Italy.

Mr Urso's visit has been saluted by Finance Minister Elkheir, who is pushing for more joint venture to be set up. In his address, Mr Elkheir pointed out that there are already "more than 360 privatization projects currently under way in Libya. More than 1/3rd of these are destined to medium and small-sized firms operating in industry, agriculture, fishing, tourism and telecommunications". Mr Urso has pinpointed four key-sectors in which joint-ventures can be developed, adding that Simest has extended its 66m euro venture capital fund to Libya. "First of all, there's telecommunications", he said. "The Libyan government is currently seeking to expand its mobile phone network and to renovate its landline phone connections. Italian IC firms such as Marconi and Pirelli stand a remarkable chance of being entrusted with these works. Electricity production and supply is another crucial sector.

A number of Italian firms backed by the EU are in touch with Libyan authorities hoping to be entrusted with a project which aims at connecting the electricity network in North Africa with that of European and non-European countries in the Mediterranean area. A number of plants are expected to be built in Libya, including an undersea cable connecting the country with Italy. Shipbuilding is another opportunity, with Italian firms traditionally providing Libya with ships. Finally, air transport is another sector to watch out for". Some 50 Italian firms are currently operating in Libya, mostly in relation with oil production. Eni, in particular, has been there since 1959, and is Italy's main investor in the country. It is in control of 13pct of the yearly production of oil in Libya. Eni's presence is set to increase after a number of deals were signed providing for the creation of a 600-km-long undersea gas pipeline transferring some 8 billion cubic metres of gas per year from Libya to Sicily. Eni expects to blow 5.5 billion dollars on the project.

From Agenzia Giornalistica Italia, Italy, 6 April 2005

Privatization Earns Morocco 7.55 billion Euros in 11 Years

Abdelaziz Talbi, the director of public enterprises at the privatization and finance ministry, announced in a press conference, held recently in Casablanca, that 66 Moroccan companies were fully or partly privatized between 1993 and 2005. Talbi explained that the move earned the Moroccan government with an overall sum of MAD75.5 Billions (about 7.55 billion euros) and helped attract direct foreign investments to Morocco. He also reported that these figures place Morocco in the first spot, in this respect, among Arab countries and in the third place among African states, based on 2004 terms. Talbi added that these privatization transactions also positively affected the local financial market, allowing growth of capital at the Casablanca stock exchange, from MAD5 billion to MAD206 billion, between 1989 and 2004. Maghreb Arabe Presse reports that among the privatized companies, mentioned by Talbi, were Ittissalat Al Maghrib (Morocco Telecom) and Regie des Tabacs (The tobacco distribution company).

From Al-Bawaba, Jordan, 3 April 2005


Private Sector Key to Growth, Poverty Reduction: Asian Development Bank

New Delhi - Increased contribution from the private sector is key to economic growth and poverty reduction, Asian Development Bank (ADB) Vice-President Geert van der Linden said Monday at a conference. The three-day conference at the ADB headquarters in Manila has senior government officials from Malaysia, Nepal, Sri Lanka, Thailand, and Vietnam participating alongside academics from China, Indonesia, South Korea, as well as a representative from the Federation of Indian Chambers of Commerce and Industry (FICCI). "Throughout Asia and the Pacific, private sector development and increasing the contribution of the private sector to the economy is key to economic growth and poverty reduction," said van der Linden, according to an ADB statement.

"ADB's Asian Development Outlook, released earlier this month, shows that gross domestic product in developing Asia grew by well over seven percent last year, the highest rate since the 1997 financial crisis. A major driver behind the high rate of growth was a marked revival of business investment." He, however, noted that many studies had shown that private investors regarded high tax rates, regulatory and administrative requirements, corruption, and insufficient infrastructure, finance and skills as significant investment barriers. "The Millennium Development Goals and increasing globalisation pose significant challenges for economies in Asia and the Pacific," Malaysian minister Dato Mustapa said in his keynote speech. "The key challenge is how to focus government-led efforts in creating a conducive business environment."

The conference is looking at private sector development strategies as processes and examining how planning and executing them could be effective in accelerating reform by increasing accountability and focusing on results. It provides an opportunity for exchange of good practices, challenges and lessons learned among countries from all over the region. As an institution committed to poverty reduction, ADB actively pursues private sector development. "Working with both the public and private sector, ADB has developed the expertise, and a range of instruments and approaches, to assist governments in achieving an environment in which the private sector can grow and prosper," van der Linden said. ADB's involvement in both public and private sector operations uniquely positions itself to leverage private funds for large investment needs, and to promote partnerships between private and public sector players. Helping to mitigate investment risks through guarantee instruments, ADB is proposing to publish a good practice reference guide for taking a strategic approach to private sector development.

From Webindia123, India, 18 April 2005

Public-private Rules to Change

The federal government will revise rules governing public-private partnerships (PPPs) to make it easier for business to participate in managing and designing key national infrastructure projects. Parliamentary Secretary for Finance and Administration Sharman Stone plans to abolish limits on the sorts of activities for which the government can enter into the partnerships. The procedures for assessing benefits and risk would also be simplified, The Australian Financial Review reported. The move would open up the federal government's $17 billion procurement market to more direct engagement from business in major contracts. "We have got to establish value for money," Ms Stone said.
"What we are trying to do is level the playing field so a PPPs can be considered without extra layers of bureaucracy." Business groups identified lack of investment in infrastructure as a major brake on growth and have called on the federal government to use PPPs to overcome capacity constraints, the newspaper reported.

From Daily Telegraph, Australia, 19 April 2005

PM against Excessive Privatisation of Health Care

Prime Minister Manmohan Singh on Wednesday cautioned against "excessive privatisation" in the health care sector saying it could be dangerous for the country as it would lead to creation of two worlds. "With excessive privatisation, we are in the danger of creating two worlds, one which is getting high-class medical care and the other not. We must never allow to happen this," he said while delivering the convocation address at the Post Graduate Institute of Medical Education and Research (PGIMER). Singh, however, said he was not against the involvement of the private sector in the health care.

The Prime Minister stressed the need for further strengthening public institutions and said modern medical research should reach to interiors of rural areas. "A not so uncommon perception among the lay public is that institutes running on public money end up being ivory towers. To a limited extent, this perception is not correct," he said. Noting that nations do not become great only by virtue of progress, he said, "nations become great only when the large mass of people are allowed to eat at the table of economic success." "That is possible only if we have a population that is healthy, both physically and mentally. We cannot aspire to become a super-power someday if our population remains unhealthy," he said.

Expressing displeasure over "our failure" to provide comprehensive health care to all citizens, the Prime Minister said the government's mission was to deliver healthcare at grassroots level. Suggesting multi-sectoral approaches and multi-pronged attacks on the health problems, he said, "in this era of super-specialisation in all disciplines it was crucial that we should not get over-compartmentalised." Singh said there was a need to devise "imaginative ways and means" to tackle both the diseases of our past (TB and malaria) and future (diabetes, hypertension and coronary artery diseases). Asserting that it was essential for the country to invest in the development of knowledge, Singh said "the challenge before the country is to operate on the frontiers of knowledge." "Our educational system must be forward-looking and meet the need of the 21st century," he said adding, "we will be a shinning example in new knowledge economy."

From Hindustan Times, India, by Press Trust of India, 13 April 2005

Anti-privatisation Stir in Sri Lanka

Colombo - Trade unions led by the JVP (People's Liberation Front) have been leading an agitation against privatisation, vowing to bring the administration down if it goes ahead with the sale of state ventures. President Chandrika Kumaratunga has openly lashed out at the unions. "Democracy does not mean the opinion of a handful," Ms Kumaratunga said in a statement posted on her website since Saturday. "My government in the future will go ahead with decisions in the strictest meaning of democracy and that the government's effort so far to obtain 100% consent of everyone has proved unsuccessful." Diplomatic sources said that the government was forced to carry out reforms in the energy sector in order to win foreign funding for investment and keep tariffs down. Ms Kumaratunga said electricity charges could be substantially reduced if proposed restructuring took effect.

From Financial Express, India, 3 April 2005

Is Privatization Panacea for All Ills?

The underlying factor is the frustration that user's experience given the awful quality of the services. One feels helpless and unable to do anything about the same. There is a general belief that privatization may be the answer. This is the tragedy of the Indian intelligentsia that engages in juvenile debates about the same. A brief history is required and it would become amply clear that privatization is another name for imperialism and how harmful it is for the country. It all started back around 15th century when the Europeans wanted a share of the wealth that passed through Africa and Asia. Since Spaniards had a formidable navy, they were the first ones to "explore the world". It was Gold and Glory that got them to conquer the foreign lands. They destroyed the local economies and gave a second-class status to the natives. It is futile to prolong the narrative, which is out of scope here. Fast forward to British rule in India and contemporary historians describe it as the dark period in the history of nation that was described as the "Golden kingdom".

After the World War II, there was a realignment of the former colonies under their rule. It was not that Indians had so far discovered the "moral strength" to overcome British. The fact was that there was widespread mutiny in Indian army; hence, the British were forced to leave. As I mentioned, they set up institutions like World Bank and International Monetary Fund (IMF), which remains a front for these neoliberals. With this brief history in mind, it is important enough to discuss the various factors behind the reason for "globalization". It has brought in hordes of Multinational Corporations (MNC), which seek to invest in the "foreign countries". These MNC remain a front for these Governments who dictate the foreign policy by proxy. Since they control the media on a widespread scale, it is obvious that they carry out their propaganda through the same. Therefore, these debates that globalization is bringing about "Social and cultural revolution" is all crap.

Fact is the South Asian meltdown amply proved the fragility of the World Bank and IMF dictated policies. Why this didn't happen in India at that time? This was because India was isolated far more than it is today. In other words, institutions like World Trade Organization remain another front for extension of their hegemony. Routinely we are lectured on the benefits of increased FDI in the India industrial sector. To propagate these myths, industry has formed an association, which remains pro government irrespective of the government at the centre. I mean, haven't you noticed after the budget presentation as to how these heads keep on gushing about the "dynamic budget"? The reality on the ground is vastly different from the statistics. Inflation may be around 5% but then, there are different ways to calculate the same. Irrespective of the same, anyone would testify that prices are increasing.

Is this sufficient enough for our country? I have my doubts and apprehensions because one needs to learn from History. If we fail in that, there is no unfortunate nation. Without going in further details, the hike in the Foreign Direct Investment is an ill planned step, which is retrogressive in nature. It is like giving away the family silver in times of happiness. The primary complaints have been with the quality of services. No one in this country wants to complain for shoddy services. BSNL and MTNL have got away with almost everything when they were in a monopoly. Everything changed AFTER they were forced to show results. The customer care centers sprung up in every city. The roll out of the mobile services. I mean look at the amazing progress that they have made. Yet, it is difficult to shake of the lethargy of 50+ years, which has percolated down to their genes.

The fact is that I strongly favor the control of our assets in our own hands. I do not need anyone with dubious record lecturing me to open up my resources in the name of increased profits. How the money is repatriated out of this country is well known. Would these people pay at par with the developed countries? There have been reports of discrimination on the same. What is the argument that increased privatization leads to better quality of services? For example, Sify is a NASDAQ listed company with wide ranging interests. Yet, there are confirmed Sify haters on line given the increased number of complaints against them. It is a different matter altogether that they refuse to heed to complaints or act on them to improve on the same.

Isn't that surprising that MTNL's CDMA services got thumbs up from satisfied customers? What happened to the biggies? Arguably, the quality survey may be flawed in its assumptions, yet it is a pointer towards the fact that there is a lot that needs to be done. This is a worrying trend; all the talk about BSNL and MTNL merger. Make it slow step, as the governments are loath to do. Increasingly there is a talk in the media about synergisms between these two companies for "operational reasons". Whatever the heck they do, it is clearly a step closer towards integrating both the companies and finally selling them off en bloc. If private sectors is so good and are like angels with wings, why doesn't VSNL deal with Airtel to open up their local loop for competition? Why is that BSNL is being pointed at? Let Airtel take the lead and invite competition on its own networks. I would appreciate it more then. Yet, all in the name of 128 kbps or less that is marketed as "broadband".

In the foregoing account, I believe that national security remains paramount. Any debate needs to be structured and based on facts. It is easy to dismiss the idea that privatization would in any way affect India. Yet, I strongly feel that those people need to woken up from their slumber. The nation's assets should remain in the hands of Indians. I had earlier argued that privatization has only benefited the foreign companies. If they wanted, these companies could have invested in building up Research and Development in India. It has not happened and one of the biggest tragedies of Indian Telecom. The fact remains that it points towards the myopic ideas of the decision-making bodies in the governance who have not weighed in national interests before formulating those policies.

From TechWhack, India, 6 April 2005


PPPs Not Yet A Success, Says Law Firm

The Government has more to do before public private partnerships can be judged a success, according to a leading law firm. Timothy Bouchier-Hayes, a partner in McCann FitzGerald said that the flow of PPP deals had not yet met expectations. "There have been many successful PPPs such as the local housing projects in Dublin and in road developments, but there has been no new education PPP for three years and no progress in construction of community nursing units for two years," he said. Bouchier-Hayes, speaking today at the Irish Public Private Partnerships Policy Forum, also said that while several important Acts had been passed to help the progress of PPPs, the Critical Infrastructure Bill had yet to be enacted. "Enactment of this Bill is vitally important to allow speedy planning and development of all infrastructure projects - not just PPPs."

On the positive side, he said that the success of many of the PPPs had proven critics of the risk transfer model wrong. "It had been anticipated by some that private sector greed and public sector intransigence would scupper PPPs. The reality though is that there has been willingness by the private and public sectors to develop model contracts that have delivered projects of benefit to both parties," he said. Bouchier-Hayes said the flexibility promised in the recently introduced new EU procurement rules would not be fulfilled because it would add to the cost for companies as they have to invest greater resources in the early stage of the process at a time when their involvement is not guaranteed.

From Business World, Ireland, 13 April 2005

Partnerships between State, Private Sector

Bill to be tabled in the next few days - Less than a month after Public Works Minister Giorgos Souflias announced plans to effectively privatize Greece's national highway network, the Economy Ministry has drafted a bill on future partnerships between the public sector and private investors to build and maintain major public works. The bill, the text of which was obtained by Kathimerini, is expected to be made public and tabled in Parliament within the next few days. It allows for public-private partnerships mainly in the field of road building, but also in other infrastructure works, including airports, harbors, hospitals and schools. Most of the projects are expected to be within the budget range of 150-200 million euros, while more expensive works will be arranged through special contracts that will require ratification by Parliament. The private investors will be expected to undertake all or most of the risk in every project, while the state will be obliged to fast-track procedures for issuing the necessary construction permits. This process will take a maximum of 60 days. All environmental impact studies - a delicate issue on whose absence many major public works have been successfully challenged in court - will be completed before the concession is assigned.

The government hopes through the new system of partnerships to achieve greater speed and quality in the construction of public works, and at the same time to set aside funds that can be used for politically sensitive sectors, such as health and education. A similar drive had been initiated by the previous, Socialist government last year, with the then economy minister Nikos Christodoulakis tabling the relevant draft legislation in Parliament in February 2004, shortly before the national elections, which PASOK lost. However, the bill was never pushed through.

The current bill, drawn up by Economy Minister Giorgos Alogoskoufis, enjoys the backing of Souflias, who, on March 10, announced an ambitious plan to expand the country's highway network by 50 percent through partnerships with the private sector. According to Souflias, the self-financing system would mean the state contributing only 2 million euros - half of which will derive from EU funding - to the estimated 7-billion-euro budget of the works, which would involve over 750 kilometers of new highways being built over the next five years. The deal will also see Greece's entire standing highway network being handed over for 30 years to private contractors, who will be responsible for road maintenance while receiving all tolls paid by motorists.

From Kathimerini, Greece, 4 April 2005

Time for A Debate on Privatisation

In an attempt to reduce Greece's fiscal deficit, the Karamanlis government has embarked on a new wave of privatisations that could raise as much as 1.6 billion euros. The government plans to sell part of its shareholding in the Post Savings Bank, in Olympic Airways, Eleftherios Venizelos Airport and the lotto company, OPAP. In order to minimise political opposition and cost, the government has been selling off state shares in instalments. In the case of OPAP, it has already sold a part of its shareholding and now plans to sell another package of state-owned shares to the public. This, according to the Greek Finance Minister, could reduce the government's shareholding to below 50 per cent. In the case of the Postal Bank, the government has decided to list it on the Athens Stock Exchange, putting for sale 35 per cent of the company. Similar plans exist for the new airport, with the government set to sell off a large chunk of its shareholding, currently at 55 per cent.

In Cyprus, in stark contrast, the selling off of state enterprises remains anathema, despite a pressing need to reduce the fiscal deficit as well as the public debt. This government is not even willing to consider selling off a part of its shareholding in state enterprises. The previous government had toyed with the idea, but met with the opposition of all the political parties. In the end, all that it sold off was a relatively small package of shares in Cyprus Airways, because the airline was listed on the Cyprus Stock Exchange and the government was obliged to reduce its holding.

Now we are back to square one. With the communist party AKEL - a strong supporter of state ownership - in government, there will be no privatisations, not even on a small scale. President Papadopoulos has also vowed to keep big public enterprises under state ownership, ignoring the benefits for the economy of even a restricted privatisation plan. The sad thing is that there is not even debate on the issue, the government fully adopting AKEL's dogmatic position that the sale of public assets is intrinsically bad. And the reason it is bad (though nobody will admit this) is that it would limit the powers of the parties to interfere in these organisations, as they had been doing, with disastrous effect, in Cyprus Airways.

Strangely, the Commerce and Industry Ministry is currently working on establishing a Cyprus Investment Promotion Agency, in the hope of attracting foreign capital. It is doubtful such an agency will be successful because there are very few incentives for foreign investors in Cyprus - labour costs are high and the domestic market is tiny. Now if the government was prepared to sell off a part of CyTA, the EAC, marinas or the airports it would attract foreign investment, because investment in such organisations offer real opportunities for a high return. But first, the government must get over its hang-up about keeping everything under state ownership.

From Cyprus Mail, Cyprus, 5 April 2005

Will Russia Announce a Privatization Amnesty?

Moscow - The government has prepared amendments to the Civil Code reducing the statute of limitations for privatization deals from ten to three years, Economic Development and Trade Minister German Gref said. "If not in the spring session [of the State Duma], then in the autumn session, the bill will be surely adopted," said Oganes Oganyan, chairman of the Federation Council committee for economic policy. Many Russian businesspeople expect the adoption of these amendments to signify a virtual privatization amnesty in the country. However, this is not quite so, but in any case the authorities have prepared a whole action plan rather than just this amendment. President Putin raised the idea of reducing the statute of limitations at a recent meeting with the country's top businesspeople. During the talk, Putin clearly demonstrated his desire to support Russian business and after warm words, some businessmen decided that the President was ready to announce a privatization amnesty.

Privatization in Russia was carried out in two stages. During the second stage, top state-run enterprises were sold at the loans-for-shares auctions, which generated the largest number of claims. In fact, at these auctions entrepreneurs acquired the country's key enterprises for a song, and, moreover, were given the possibility to paying back the state only in subsequent years. This procedure was extremely opaque and deeply unpleasant for most Russians. Therefore, the issue of a possible review of the results of privatization has been a constant issue ever since: for example, in December last year, the Audit Chamber of Russia placed on its Website an analytical report, "Analysis of the Processes of State Property Privatization in Russia, 1993-2003." The auditors investigated the circumstances of privatization and gave the following diagnosis: "the flawed legislative base, under-developed privatization institutions and procedures, and the lack of external control created possibilities for numerous violations in the process of particular privatizations." The document also included a long list of enterprises under suspicion.

Hardly surprisingly, after reading the Audit Chamber's heavyweight report, major Russian businesses got nervous. The auditors intended to submit their report to State Duma deputies for consideration, as a result of which a decision could be taken on reviewing the results of privatization as a whole, while participants in many transactions of the time could draw specific conclusions for themselves. After the Yukos case, this threat took on real proportions for businesspeople. However, it seems unlikely that the authorities indeed intended to take such radical measures. Possibly, at that time, the country was more in need of a political assessment of privatization. In the final account, businesspeople are not the only; ordinary people need to know that the authorities have the situation under control and are not indifferent to how, in whose favor and at whose expense the country's property was re-distributed. Moreover, according to public surveys in December 2004, most Russians consider it necessary to review the results of the country's privatization, although they do not hope to gain anything from it. For this reason, from the standpoint of domestic policy, a privatization amnesty is hardly possible, because this decision would not be fair to the feelings of more than half of the country's population.

From the legal standpoint, the President's proposal does not suggest that he promised any amnesty. Charges such as abuse of office, mercenary interest, collusive crime and fraud can still be brought under the Criminal Code of Russia. However, many episodes from the privatization period fall into these categories. Parliamentarians are now clarifying the situation. Oganyan stressed that the new bill would not be retroactive and would not apply tothe privatization deals, under which claims are being considered today. He also referred to the Audit Chamber report: "I believe this report can be taken as the basis to define the list of enterprises whose privatization the state can challenge before the law on reducing the statute of limitations from ten to three years comes into effect." But it would also be reckless to completely ignore the feelings and problems of entrepreneurs, because the country's economy depends on their sentiments. The Yukos saga has shown that tough measures, even if they are fair, harm the country's business and investment climate. The fall of economic growth rates in Russia last year is a real indication of that.

The authorities are obviously looking for ways to remedy the situation and an entire series of measures might be taken. Putin's recent meeting with entrepreneurs fits into such a program. The authorities' latest initiatives in this area include the government's new draft law "On Competition Protection," which, according to Putin, "is designed to fight the diktat of monopolies and help open up markets, including regional ones, to many thousands of new Russian entrepreneurs." Another major project is a review of tax control and administration procedures. The Finance Ministry has already agreed that tax administration has not always been up to the mark recently. As Deputy Finance Minister Sergei Shatalov said, "We have agreed some proposals with business to protect taxpayers." There are plans to introduce the possibility for taxpayers to discuss the results of tax audits with independent experts. A special approach will apply to tax authorities' large claims (over $100 million). For this purpose, special structures will be set up inside tax bodies to include highly qualified specialists who will re-examine tax audit certificates. Tax claims will be presented only when the specialists have approved these documents.

Moreover, the presidential administration has prepared a bill stipulating the possibility for tax officials to write off penalties extra-judicially. According to some sources, it is also possible that soon the liberalization of legislation on the placement of Russian securities on foreign stock exchanges may top the agenda. The Central Bank is currently discussing the possibility of issuing permissions for the export of capital to be spent on working in privatization programs abroad. Another area is to simplify the procedure of issuing licenses to start-up enterprises. The government is already working on this issue.

From RIA Novosti, Russia, by Yana Yurova, 13 April 2005

Putin Promises Further Liberalization, Privatization of 8,000 Enterprises

Speaking at the opening ceremony of the Hanover trade fair on Sunday, April 10, Russia's President Vladimir Putin promised to further liberalize the Russian economy and to privatize 8,000 state enterprises and 3,500 joint stock companies. Putin said that by 2007 Russia will be ready for full foreign exchange liberalization and for a lifting of all limits on financial operations. "These decisions are already made, everything that was planned has been put into operation and functioning," the Russian president said, adding that Russia plans to join the World Trade Organization on standard terms.

The state will transfer to private hands 3,500 joint stock companies and 8,000 state unitary enterprises, Putin said. He also promised to continue restructuring of natural monopolies (such as Gazprom and power grid monopoly Unified Energy System) and the banking sector, paying special attention to the competitiveness of Russian credit organizations. The Russian president stressed the intention of the country's government to create as comfortable conditions as possible for the development of small and medium-sized business. Putin said that Russia's private sector should expand by creating a competitive environment in education, the social sphere and in the housing and utilities sector. The head of the Russian state promised to cut the number of administrative barriers, to order and simplify tax procedures and to create the necessary conditions for both domestic and foreign private investments. Putin noted that one of the most important levers of modernizing Russia's economy is active participation in international and regional integration processes.

From MOSNEWS, Russia, 11 April 2005

Lack of Will Slows Down Eastern Europe's Privatization

Advertising The fragile state of governments in new EU member states is emerging as a major obstacle to the region finishing off the privatization process launched following the fall of communism 16 years ago. Despite several big sell-offs in sectors such as airlines, finance and utilities that are still to be completed, the current political weakness of governments - in particular in the Czech Republic, Poland and Hungary - combined with the widespread unpopularity of privatization, appears to have pushed the issue onto the back burner in many nations. "Political weakness is a a major hindrance to privatization," said Lars Christensen, emerging markets analyst with Danske Bank in Copenhagen. At the same time, signs of softer equity markets have also helped to dampen the enthusiasm among governments for pressing on with privatizations when the return might be lower than what they had hoped for.

Last week Poland called off holding a tender for an adviser for the privatization of key insurer PZU, raising doubts as to when Warsaw will proceed with what was seen as one of the biggest sell-offs this year. Poland is already in the grip of moves towards a national election, which could mean that highly-charged political issues such as restructuring the country's coal mining sector, along with its huge financial burden of liabilities and debt, are now likely to handed over to the country's new government. This leaves the Czech government's sale last week of its 51 percent stake in Cesky Telekom as likely to be one of the key sell-offs for the year.

NO FORWARD MOVEMENT - "There are some sell-offs but privatization is not really going forward," Christensen said. "There is no real popular support for privatization." Even then Prague's sale of the holding to Spain's Telefonica for US$3.59 billion was held as Prime Minister Stanislav Gross' ruling coalition faced collapse. Further underscoring the political uncertainty facing the nation, Gross's minority left-center government went on to survive a parliamentary vote of no-confidence only after several deputies including the bloc of communist representatives abstained from voting. "The political cycle has been by no means helpful," said Michael Dybula, emerging markets strategist with BNP Paribas in Warsaw. However, political pressures are not the only forces acting against governments moving ahead with privatizations. Last week Hungary's state privatization body announced that it had again failed in sell off the nation's flag carrier Malev because, according to Hungarian press reports, of the reluctance of bidders to takeover the loss-making airline's debt.

FEW CANDIDATES - Analysts point out however that a decade after the round of sell-offs across Central and Eastern Europe (CEE) as governments embarked on dismantling their nations' command economies, the number of candidates that can be lined up for privatization has shrunk considerably, with the state share of the economy having dropped significantly in recent years. Moreover, the scale of the privatization which took place across the region in the early years following the fall of communism means that the companies now on the sell-off list are often in highly politically sensitive areas. "It is harder to privatize now than it was five or 10 years ago," Christensen said. This is despite the pressure on many CEE governments to knock their public finances into shape in the hope of merging their currencies with the euro, possibly by the turn of the decade. Selling off the remaining utilities presents more risk of a political backlash for governments than the privatizations that have already taken place in sectors such as telecoms, banking and manufacturing.

UTILITY SECTOR - "Everybody is paying an electricity bill so it is a sensitive question," Dybula said. Selling off utilities also raises complicated issues such as how a privatized utilities sector should be regulated. But with the numbers of mergers and acquisitions across the CEE increasing sharply, the competitive pressures unleashed by nations such as Poland, the Czech Republic, Slovakia and Hungary signing up for EU membership last year may have resulted in companies already starting to move into a new phase of consolidation.
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From Taipei Times, Taiwan, 8 April 2005

Russia's "Privatization Amnesty" Law Is Ready - Minister

Russian authorities have prepared amendments to current legislation promised by President Putin during his recent meeting with businessmen. The amendments will put privatization deals made more than three years ago beyond the reach of criminal inquiry, Economy Minister German Gref said on Wednesday, April 6. "After negative trends emerged on the market last year ... this step had to be taken, of course," said Gref, who was meeting with U.S. investors at a conference organized by the U.S. Chamber of Commerce in Russia. "All the necessary changes (to legislation) have been prepared and will soon be submitted to the State Duma for approval." The minister was quoted by Reuters.

After passing through the Duma, the new law has to be approved by the Federation Council and signed into law by Putin. It will then come into force after official publication in the official state newspaper, Rossiiskaya Gazeta (Russian Newspaper). Business confidence in Russia has been hammered by the partial re-nationalization of Yukos Oil Company and the trial of its ex-CEO Mikhail Khodorkovsky on fraud and tax evasion charges linked to the 1994 privatization of a fertilizer company. A number of tax claims involving other Russian companies that followed the Yukos case have also scared investors and hampered economic growth.

From MOSNEWS, Russia, 7 April 2005

Disagreements Emerge over Land Privatization

Government decides to refrain from looking into which leases were obtained illegally - Parliament is currently considering a draft law on the privatization of agricultural land, which the government says will help the development of the land market and will bring great economic profit to the country. Parliamentarians are divided over the draft, however, some MPs arguing that it is not in the interests of the country and will have a negative impact on local farmers who do not have enough money to buy land. The land privatization process began 10 years ago, since when 55 percent of agricultural land has been sold to private owners. Now the government is planning to privatize 465,000 hectares of land currently being leased.

According to the draft the privatization of agricultural land will take three forms. It is expected that about 300 thousand hectares will be sold directly to the farmers currently leasing it. Around 165,000 hectares will be sold through a closed auction in which only the local population will have right to participate. Thirdly, any land remaining unsold will be privatized at open auctions in which anybody can participate. Today there are around 40,000 land leasers in the country, of whom the majority - 30-35,000 - work only small plots of land of 1-10 hectares. The best agricultural land is farmed generally by those who had good relations with the Shevardnadze administration or some other privileges - often former governors or majoritarian MPs and their relatives.

The idea of redistributing land in a fair and just way became prevalent immediately after the Rose Revolution but Khvalindeli Dghe reports that today this idea has been rejected and the government has decided not to look through leasing agreements to find out illegal leasers who would then be investigated by law enforcement agents. Only if individual Georgians take claims against what they believe are illegal leasers to court, and their accusations are upheld, will the land be divided and sold at auction. Land leasers will be able to buy the land they rent for ten times the annual rent: the cost of buying the land must be paid off over nine years. Profitable agricultural land is normally leased for GEL 50-60 per hectare, and State Minister for Economic Reform Kakha Bendukidze says that according to his preliminary calculations, the land privatization process should bring about GEL 40 million over the next nine years, as reported by Khvalindeli Dghe.

MPs opposed to the draft law, however, state that according to the regulations it lays out, foreigners will be able to buy a large part of the land, and that the majority of Georgian peasants will not be able to buy the lands they are currently leasing. This will, they warn, lead to inevitable unrest in the countryside, reports Rezonansi. One issue that has caused great debate is the regulations regarding agricultural land near to Georgia's borders. Khvalindeli Dge reports that the border line is defined by 500 meters and the border zone by five kilometers. The government thinks that it is possible to privatize about 50-60,000 hectares of land within the five kilometers border zone, but critics of the plan say this will make it difficult to defend the country's border. Some government members have countered this argument by saying that private landowners will provide for better defense of their land.

From, Georgia, by M. Alkhazashvili, 12 April 2005

Yushchenko Wants Analysis of Previous Deals

President Viktor Yushchenko on Monday ordered the new head of Ukraine's privatization agency to analyze all past deals, complaining that the previous government awarded enterprises based on political connections. "Everything that could have been handed out, (agency managers) handed out like Catherine the Great doled out land to her lovers," Yushchenko said. He named Valentyna Semenyuk, a Socialist, to head the State Property Fund, and ordered her to carry out an urgent analysis of its work over the past years. He argued that under the cover of privatization "objects of strategic importance were simply distributed" without any significant gains to the state.

Yushchenko again cited the privatization of Ukraine's biggest steel mill as an example of the corruption that he says flourished under former President Leonid Kuchma. The steel mill was bought last year by Investment Metallurgical Union, a consortium largely owned by Kuchma's son-in-law, Viktor Pinchuk, and tycoon Rinat Akhmetov, for about US$800 million (euro624 million), despite reportedly higher offers from bidders from the United States and Russia. ushchenko's government has said that several dozen other shady privatization deals are being investigated and could be overturned.

From BusinessWeek, 18 April 2005

Privatisation Is Way Forward, Says Walsh

Former Aer Lingus boss Willie Walsh has no doubts about the need for private ownership as the way forward for the Irish economy. Having attempted to buy the national airline before he quit as chief executive, Mr Walsh's support for the sale of Aer Lingus yesterday came as no surprise. But he was not alone in his stance at the Irish Management Institute conference, that addressed the issue of privatisation, state ownership and regulation of markets, as part of its two-day conference called Crouching Tiger, Hidden Opportunity. Communications Minister, Martin Cullen, took the conference by surprise when he called for the sale of up to 90% of the national airline. However, it is understood that the cabinet are in favour of selling off a 51% stake of Aer Lingus into private hands.

The five speakers were virtually unanimous in their view that the State ownership should be kept to a minimum. Brendan Tuohy, secretary general at the Department of Communications, side-stepped the question without totally taking the counter view. Given the two issues involved, Mr Tuohy suggested market liberalisation with the State sector also involved. Noting the success of Ireland's deregulation policies, he pointed out that the telecoms market was liberated five years ahead of EU requirements. In that context, Mr Tuohy suggested that distribution networks such as the ESB transmission system could stay under State control.

Mr Tuohy made it clear the State was not under any pressure to sell, but he recognised there was a "dominance issue" in both the case of the ESB and Bord Gais. In that context the possibility of the State buying back Eircom's infrastructure in order to open up the market faster for broadband and other services was raised in the question and answer session. Eircom chief executive Dr Phil Nolan, who totally backed the privatisation position, said that option was there at any time because the company was publicly-quoted. John Fingleton, chairman of the Irish Competition Authority, was adamant on the question of over-regulation. "Get the State off our backs," he said. Mr Fingleton also disagreed with Mr Cullen's view that the second terminal should be controlled by the Dublin Aviation Authority. "A competitive environment will deliver the goods," he said.

From (subscription), Ireland, by Brian O'Mahony, 21 April 2005

PM: Georgia Welcomes Russian Investments

Georgian Prime Minister Zurab Nogaideli said, in an interview with the news agency Interfax on April 25, that Georgia will take no steps that would restrict the participation of Russian capital in the privatization or investment processes underway in Georgia. "On the contrary, we will welcome Russian companies to the Georgian market," Nogaideli said. He said that the boosting of Russian capital in Georgia can "facilitate the settlement of bilateral problems." The Georgian Prime Minister also stressed that Russian companies are already participating, and will further participate, in the privatization process. "So, I think, economic relations with Russia are developing positively," he added. Zurab Nogaideli also added that trade turnover between Georgia and Russia has increased by 90% since 2003 and has reached an annual mark of USD 362 million. "Russia is Georgia's largest trade partner," he added.

From Civil Georgia, Georgia, 26 April 2005

U.N. Sets Rules for Kosovo Privatization

The United Nations mission in Kosovo set new rules Friday for the privatization process, pledging a faster sell-off of the province's socially owned companies. Soren Jessen-Petersen, the province's chief U.N. administrator, said the move would speed up privatization and secure employment opportunities in the economically troubled Kosovo, where unemployment runs at over 50 percent. In the past, the Kosovo Trust Agency, a U.N.-run office charged with selling hundreds of enterprises - a term used for enterprises owned by the workers and managers under the system set up during communist-era Yugoslavia - was tasked to determine the owner and the status of each enterprise. That was a lengthy and complicated process that brought privatization nearly to a halt.

With the new rules, the agency can make clear and final ownership determinations after a sale of assets. "Now with this change ... we no longer have to establish ownership before the sale of the socially owned enterprise," Jessen-Petersen said. A special court will continue to adjudicate in ownership disputes. However, it will no longer prevent the sell-off of the companies. Privatization is among the most sensitive issues in Kosovo, which was put under U.N. protection in June 1999 following a NATO air war that pushed Serb forces out of the province after they cracked down on ethnic Albanians seeking independence. The process of privatization is complex in part because it is unclear whether Kosovo will become independent or remain part of Serbia-Montenegro, the successor state of Yugoslavia. Serbia's authorities have fiercely opposed the process of privatization. Many of the companies are overwhelmingly inefficient and often dilapidated after years of neglect and ethnic conflict in the province.

From BusinessWeek, 22 April 2005

Ukraine Court Reverses Own Ruling on Illegal Privatization of Steel Giant

On Thursday, April 21, a regional Kiev court upheld last year's privatization of Ukraine's largest steel producer Krivorozhstal. The court in effect reversed its own ruling made on Feb. 17 which considered the privatization illegal. The latest court ruling was made after a claim from the Investment-Metallurgical Union consortium headed by Donetsk-based businessmen Rinat Akhmetov and Viktor Pinchuk, the son-in-law of Ukraine's former President Leonid Kuchma. Krivorozhstal was sold at a privatization auction to Investment-Metallurgical Union for $800 million, despite the fact that other bidders, such as Russia's Severstal and U.S. Steel, offered much larger sums. It was believed that the consortium was allowed to win the auction because of its close connection with Kuchma.

After President Viktor Yushchenko came to power he called the privatization of Krivorozhstal a theft and promised to return the enterprise to the state for further re-privatization. A group of lawyers contested the sale in a Kiev court, which made a ruling on Feb. 17 to halt the privatization. Now that ruling has been reversed and the fate of Ukraine's largest industrial enterprise is hovering with no clear understanding of what will happen next.

From MOSNEWS, Russia, 22 April 2005


"Iran's Privatization Organization Claims Early Success"

London - State Privatization Organization has managed to offer 100% shares of state companies listed in the privatization project for the year to March 2005, said deputy head of the organization on Monday. Seyyed Mehdi Haqdaei told ISNA that the achievement come at a time when the stock market was facing serious upheavals. "As the year drew to a close, the situation of the stock market deteriorated, but the organization managed to fulfill its commitments," he said, adding that once the final decision about Article 44 of the Constitution is announced, the organization would be able to cede rls 50-60 trln (nearly $5.6-6.8 bln) worth of shares in the next 11 months. He said the Privatization Organization has to deposit rls15 trln (nearly $1.7 bln) with the State Treasury from sale of shares until March 2006.

Experts believe that offering shares on the stock market is one thing and having them sold to the public is another.
Although the Privatization Organization has managed to offer state companies' shares, it has failed to sell them due to various reasons, including unstable prices and bad market conditions. Experts say frequent fluctuations in share prices of state companies are signs of an ailing economy, stressing the need to exercise extra care in the capital market. "This is a very young capital market which has to be taken care of more effectively to prevent it from reacting so strongly to every minor development," said Deputy Minister of Economic Affairs and Finance Heydar Mostakhdemin-Hosseini, who heads the Board of Directors of Iran's Stock Exchange, last week. A veteran Tehran Stock Exchange (TSE) broker said earlier that the stock market would experience relative stability in the year to March 2006 provided political issues do not have a negative impact on the market. Nassrollah Barzani told ISNA that foreign threats and results of the ongoing talks between Iran and the EU big trio would largely influence the stock market, expressing hope that the impact would be in favor of indices and not against them.

From IranMania News, Iran, 12 April 2005

Iran's Central Bank's Privatization Opposed

London - A lawmaker said that Central Bank of Iran (CBI) should not be subject to privatization since it is in charge of formulating macroeconomic policies, criticizing calls for the CBI independence. Nasser Ashouri, a member of the Parliament's Economic Commission, told ISNA that the CBI could not be allowed to act independently of the government, stressing that the idea is naive. "We should not rush into such important decisions," he said, adding, however, that the initiative needs to be studied further. The lawmaker said poor expert studies would entail the destructive consequence of such decisions. "It is possible to privatize all the banks except the CBI," he said, adding that the CBI has to remain under state control, if it were to be held responsible for its performance.

Banking experts say the independence of Central Bank of Iran could help bring about economic stability and preserve the value of the national currency. Ahmad Mojtahed, who heads the Banking and Monetary Research Institute, said last week that the initiative seeks mainly to help the CBI overcome pressures by various state organizations over the next five years, when the key fourth five-year development plan is in force. The CBI governor would only be held answerable to the chief executive as per a recent government decision which is part of preparations to make CBI an independent entity. Minister of Economic Affairs and Finance Safdar Hosseini said earlier steps are underway to turn Central Bank of Iran into an independent entity.

From IranMania News, Iran, 11 April 2005

Iran's 'Privatization Bill' Ready Next Month

London - The government will complete its much-publicized Privatization Bill for submission to the Seventh Parliament by mid-May, said deputy minister of economic affairs and finance on Saturday. Heydar Mostakhdemin Hosseini told ISNA that the bill deals chiefly with issues related to the privatization goals and relevant responsibilities delegated to state organizations involved in the initiative. "The bill also addresses other key issues such as overseeing procedures and economic rules that have to follow privatization," he said, adding that the 29-articled bill aims at boosting the share of private and cooperative sectors in economic activities. The official said the Privatization Bill, once it becomes a law, could help improve the productivity rate at both the levels of human and financial resources. "This bill gives high priority to competition and economic growth," he said, stressing that the bill has drawn up mechanisms on how to reduce the financial commitments of the government.

The Privatization Bill would be the Khatami administration's first serious economic initiative in the year to March 2006. This is while the Parliament already has the customs affairs and stock market bills at hand for ratification. The Parliament failed to look into the customs affairs and stock market bills in the last Iranian year due merely to its prolonged study of the budget bill. The Khatami administration would reportedly spend the last few months of its second and last term trying only to pave the way for the incoming government to implement the key fourth five-year development plan (2005-2010).

From IranMania News, Iran, 10 April 2005

Neutralization, Not Privatization

The government, under the baton of the finance minister, is now involved in a frenzy of privatization. The entire world is one big business, and the humanity of every person is defined according to one of the three sectors to which he belongs: 1. sellers; 2. buyers; and 3. those who lack buying power. The government is slowly but surely privatizing almost everything that moves or doesn't move in the Israeli economy - medicine, the media, seaports and airports, factories, shipyards, welfare services, airlines, highways, parks, beaches. All this in the name of efficiency, proper economics, rehabilitating the economy, market forces, the global village and the rosy future awaiting us when we are all privatized into very small units.

The reasons that serve to justify the policy of unbridled privatization also serve the government when justifying an opposite policy when it comes to research-oriented universities. According to the tune being heard from the finance minister, the minister of education and senior government officials, that same policy of "proper economics" and the market forces also require an aggressive process of nationalizing the universities, rather than privatizing them. In the name of "efficiency" and "rehabilitation," the government is now attempting to dictate from above the manner of administration and the academic content of these institutions. Although these days we are finally sensing some public resistance to the higher education policy of the State of Israel, as opposed to what some of the leaders of the struggle think or declare, the government has no intention at all of privatizing the universities, and the same may be true of the academic colleges. A private research-oriented institution worthy of its name is intolerable in the political philosophy prevailing today in Israel.

A number of cabinet members and politicians understand something that not all the members of the academic community understand: In this country's present political situation, almost the only centers where there is independent political and economic thought and a culture of skepticism, are the universities. True spiritual freedom is liable to be seen by the "rulers" as a threat to their continued rule. For example, Benjamin Netanyahu, formerly Israel's prime minister and today the finance minister, said (Haaretz, November 22, 1996): "I think that what we have in the country is an entirely different thing. We have academic and media institutions that are committed to the prevailing uniformity of thought, 'unithinking,' and they are simply making copies of themselves. They are turning out more and more generations of young people with the same monotonous way of thinking. I intend to change that."

We can therefore assume that the intention "to change that" is the main reason why the present government sees a need for a major tightening of government supervision of the universities. It may be possible to suffocate the free human spirit that is liable to flourish in the colleges, by means of various economic steps, under the banner of privatization. Scientific research, on the other hand, is very hard to privatize, to the chagrin of the government. The time required for the ripening of the economic fruits of basic research is too long for private investors. Therefore, when it comes to the universities where such research is conducted, the government is engaging in an aggressive economic policy that is exactly the opposite of its privatization slogans. It desires to neutralize these institutions from any influence that is not governmental, by removing all leadership authority from the academic faculty - not only with respect to administrative matters, but with respect to academic matters as well.

The government's great privatization tsunami is its avoidance of responsibility for providing rights and material services to the ordinary citizen, which he has coming to him because he is a human being. At the same time, and flowing in the opposite direction, he is facing an equally strong stream, manifested in the attempt by the government to take over ownership of the spiritual assets of the country. In effect, when it comes to running the universities, it is interested in increasing its involvement. Far more than it is economic policy, the attitude of the State of Israel toward the research-oriented universities is a cultural revolution. The spiritual and economic damage caused by this revolution will not soon be evident to everyone, but its destructive effect on all of society will surely come. Those with sharp eyes can already detect the first signs.

From Ha'aretz, Israel, by Elia Leibowitz, 3 April 2005


Political Face-Off: A Closer Look at Social Security Privatization

In the current debate over President Bush's Social Security proposal, the most common critique of his plan focuses on the enormous transitional costs of creating private accounts. According to this line of thought, privatization would not only fail to address the expected revenue shortfalls facing Social Security, it would actually put the system in an even shakier fiscal position. Allowing workers to divert 4 percent of their Social Security taxes into private accounts would starve the Social Security Trust Fund, require $2 trillion in government borrowing, and hasten the system's insolvency.

However, many critics who oppose privatization because of the cost of transitioning to the new system still believe that in theory privatization could strengthen Social Security because the stock market generally earns a higher rate of return than the government securities currently held by the Trust Fund. This argument seems reasonable, but it ignores the large administrative costs required by private accounts. Under today's system, Social Security is one of the most efficiently managed government programs: the administrative costs are less than 1% of annual revenues, and yet the checks still arrive like clockwork every month.

In contrast, managing private accounts for more than one hundred million taxpaying workers would require the creation of a massive federal bureaucracy. A Treasury Department working group in the late 1990s concluded that even a bare-bones scheme for creating individual accounts would incur significant administrative costs. With the range of investment choices for private accounts limited to a dozen firms offering broad-based index funds, account statements that are mailed only once a year, and phone inquiries that are not toll free, the plan would still have an annual cost of $20-$30 per account. That's an annual cost exceeding $5 billion a year, which is larger than half the current IRS budget and would require hiring tens of thousands of new government workers.

A plan for private accounts with services similar to 401(k)s (although not including loans) would cost two to three times as much as the bare-bones scheme, and thus be prohibitively expensive. Consequently, the administrative costs of managing private accounts would cancel-out almost any gains obtained by investing in the stock market as opposed to government securities. The privatization scheme pushed by President Bush also assumes a very high annual rate of return on stocks, roughly 6.5% to 7.0% after inflation for the next 75 years. Since profits grow at the same rate as the economy in the long run, the economy would need to grow at a very strong pace over the coming decades to achieve this rate of return. But isn't the retirement of the Baby Boomers and the coinciding decline in economic growth the reason why we need to privatize Social Security in the first place? President Bush and the privatizers are trying to have it both ways: an impending economic slowdown requires the creation of private accounts, but somehow the stock market will continue to grow at its present rate for the next seven to eight decades.

From Vanguard Online (subscription), MA, by Adam Langley, 6 April 2005

The Average American Loses under Bush Privatization Plan

Consider this: A 29-year-old averaging $40,000 per year would receive an annual Social Security benefit of $21,970 under the current system. If President Bush succeeds in privatizing Social Security, that benefit would decrease 27 percent to $15,988. Those figures are from a Social Security calculator U.S. Sen. Chuck Schumer has unveiled on his Web site for Americans to see how the plan could affect their future benefits. The calculator uses economic assumptions from the Congressional Budget Office, based on one's year of birth and average annual salary.

"Retirees are against Social Security privatization," said Schumer, a New York Democrat who is leading his party's efforts to let Americans know the truth about the president's privatization plans. "Baby boomers are against privatization. And what we are now seeing is that young people - the group that the president hoped to woo with privatization - have also turned against this risky scheme. The more young Americans hear about Bush's privatization plan, the less they support it." The cornerstone to Bush's plan is allowing younger workers to open private personal retirement accounts. Schumer and others opposed to the plan worry that diverting those payroll taxes to private accounts will not only jeopardize benefits to future retirees by relying on how well an individual "plays" the stock market, but also will decrease the amount of benefits available to current retirees, forcing the government to borrow more money to pay promised benefits.

"It's simple math," Schumer said, "You can't use the same dollars for two different things." Young people are not the only group who'll see decreased benefits. In fact, at least 8 million people in New York City and Long Island under age 55 are set to lose under the risky privatization plan, Schumer said. Other losers include: • at least 700,000 Central New Yorkers; • at least 760,000 Capital Region residents; • at least 712,00 people in Erie County ; • at least 576,000 Monroe County residents.

From New York Teacher, NY, by Senator Schumer, 14 April 2005

AFL-CIO Protests Social Security Privatization

On March 31 the AFL-CIO organized a "national day of action" to protest the President's plans on partially privatizing Social Security, a program that nationally has received a resounding "no way" from a majority of citizens. The President continues to insist the program is broken and his fix is the way to travel. The AFL-CIO pointed their protests at Charles Schwab stock brokerage firm for obvious reasons. Stock brokerage firms of course have everything to gain through the President's plan. Kenneth Boehm, Chairman of the National Legal and Policy Center (NLPC), stood on the sidelines and encouraged Schwab and other brokerage firms to stand up against union protests. The NLPC is a self-proclaimed guardian against union corruption. In a nutshell, Boehm told Schwab not to give in to union protests. His premise was that unions have historically stolen from retirement funds and unions have been the cause of corruption within their rank-and-file. He told the brokerage firm, "it was time to stand up against the bullying" of organized labor." A remarkable statement coming from an industry that stands to gain much from privatization of Social Security. It is laughable statement at the very least.

Historically, it has not been unions stealing from employee retirement plans. One needs only to look at social history books to realize the first thing to be tossed out the window when industries are in their death throng is retirement plans. It is a definitive signature of collapse. Mr. Boehm of course must have been talking about unions of the 1800s. Or, he simply was speaking like a man with paper lips. Good research will tell you that employees lost their retirement plans in the Singer (sewing machines) shutdown in the late 1970s. The Studebaker Automobile Plant shutdown left between 4 to 6 thousand employees with 15 cents on the dollar of their retirement plans (an agreement between management and union officials. Today, many employees claim to have had their retirement benefits or plans pinched by the likes of General Electric, General Motors, the old Bell Telephone, IBM, NCR, and others.

Unions are quickly blamed for industry woes, mismanagement, poor sales, and high wages. Management never wants to take a fall for their ineptitude. It's much easier to blame an external source. Management never wants to admit that the exuberant wages given to their CEOs and other upper echelon administrators is part of the problem. They choose not to discuss their lack of marketing foresight or consumer trends as a reason for failure. After all, those darn unions fought for fair wages and benefits so their families could live comfortably. I assure you, however, that no union member makes the amount of money a CEO makes. Blaming unions for a company's mishandling of money is like blaming the congregation for the preacher's sins.

From, by Stan Grimes, 8 April 2005

Privatization Brings Big Savings to Michigan's State Universities

Budget pressure in recent years has forced Michigan's public institutions of higher education toward cost savings and contracting out of services, according to news reports and a recent survey by the Mackinac Center for Public Policy. In fiscal 2005, for which the state government approved an effective "no change" in funding for Michigan's 15 public universities, those institutions have been working overtime to balance their budgets. This has led them to increase contracting out to the private sector for services. In May 2004, for example, Western Michigan University (WMU) signed a contract with Commercial Sanitation Management Services Inc. to handle custodial needs in its 22 residence halls. The contract is projected to save the university $1.5 million annually.

$1.1 Million Below Union - Before choosing Commercial Sanitation, WMU received bids from five private firms and from the union that represented the 60 custodial workers WMU had employed prior to its decision to privatize. Commercial Sanitation submitted the lowest bid--approximately $1.1 million less than the union's. Similar evidence of cost savings and institutional efficiency appeared in a survey of the state's public universities conducted by the Mackinac Center for Public Policy last summer. Of the 15 schools, 10 took part in the survey. Four universities--Central Michigan University, Grand Valley State University, Saginaw Valley State University, and Wayne State University--did not respond, and Western Michigan University declined to participate because of ongoing contract talks.

According to the survey results, the most commonly outsourced services among the responding universities were garbage and sanitation services (90 percent of the schools outsourced these services), bookstore operations (80 percent), vending operations (70 percent), and legal services (70 percent). Other outsourced services included maintenance (50 percent), utilities (50 percent), food services (40 percent), busing (30 percent), laundry (30 percent), and custodial services (30 percent).

Need for Firms' Expertise - Almost all of the university officials interviewed for the Mackinac Center study said expertise was their main reason for outsourcing. "What we are is an educational institution; that's where we have our expertise," said David W. Barthelmes, vice chancellor for administration at the University of Michigan-Flint. Gary Reffitt, director of purchasing and communications at Eastern Michigan University, echoed Barthelmes, telling the Mackinac Center, "Universities are starting to realize they're in the education business, not the bookselling or food or laundry business."

Cost savings and efficiency also rated high among universities' reasons for privatizing. Ferris State University's (FSU) vice president for administration and finance, Dr. Richard P. Duffett, reported going from losses of $85,000 per year to profits of $85,000 per year on the school's vending services once the university partnered with Consolidated Vendors Corporation of Norton Shores, Michigan in August 2003. Some school administrators also cited equipment needs and capabilities as driving their schools to outsource. FSU contracted with Automated Apartment Laundries to purchase and replace the school's old laundry equipment when it hired the company to provide laundry services beginning in August 2003. Duffett said of outsourcing, "I think we [universities] have taken advantage wherever we can ... to serve both students, faculty, and staff. [There's] been a lot of good, hard work done."

Advantages of Consortium - Officials of the universities have adopted a creative solution to their budget problems through creation of the "Higher Education Purchasing Consortium," which the schools formed with the state of Michigan in August 2003 to gain leverage when negotiating contracts with private firms. Michael Boulus, executive director of the Presidents' Council, State Universities of Michigan, said of the consortium, "[The] overarching goal is for universities to work creatively to keep costs down." All 15 public universities in Michigan are part of the consortium. Each university participates only in the contracts it chooses. One example of the consortium's work was a recent contract for electrical power. In February 2004, the State Department of Management and Budget, Michigan State University, Western Michigan University, and the University of Michigan-Flint signed a contract with Consumers Energy through the consortium. The agreement is expected to save each signer 7 percent on electricity, or approximately $730,000 for the three universities combined. The universities also have used the strength-in-numbers approach to manage their rising costs of health care and insurance, forming the Michigan Universities Coalition on Health (MUCH) and Michigan Universities Self-Insurance Corporation (MUSIC).

Room for Improvement - Despite the progress made so far in response to the state's current budget crisis, there is still room for improvement in state university spending, said Michael LaFaive, director of fiscal policy at the Mackinac Center. "Institutions that contract out for important services should remember a few basic items to optimize results," LaFaive said. "Maintain an open bidding process; include multiple vendors; give appropriately detailed specifications for the desired service; and engage in periodic, competitive rebidding. If schools don't get these minimal aspects right they may risk giving privatization a bad name." LaFaive said contracting that saves money and focuses the schools on education will be good both for Michigan citizens and state university budgets.

From Hawaii Reporter, HI, by Laura J. Davis, 6 April 2005

GPO Seeks Public-Private Partnership

The U.S. Government Printing Office (GPO) offers a wide variety of publications to the public through its Documents Sales programs. These publications include books and pamphlets on starting a business, cooking gadgets, U.S. Census Bureau information, federal benefits for veterans, gardening, aviation, art, the space program, and U.S. history. In the future, these publications may be distributed and made available through bookstores, newsstands, airport kiosks, and other businesses. On April 4, 2005, the GPO announced that it is seeking private sector vendors to partner in expanding access and sales of government information. The request for information (RFI) seeks innovative ideas for transforming the current sales operation ( Responses are due May 4, 2005.

The announcement states: "The GPO is currently evaluating the functions related to its Sales and Agency Distribution Programs and is seeking alternative revenue sharing models that could be provided by the private sector. GPO is interested in increasing public awareness of its products, enhancing customer access for broader dissemination, expanding distribution channels, and utilizing advanced technologies for the sale, production and distribution of print and tangible publications to the public." GPO's primary mission is to ensure public access to government information. The agency is responsible for the production and distribution of information products and services for all three branches of the federal government.

Bruce James, the Public Printer, stated the aim of the program: "Our goal is to increase awareness of government publications by making them available in a commercial mainstream setting, expand distribution channels and use the latest technology, while achieving significant cost reductions. This is a prime example of how the government and the private sector can partner to provide to provide the public greater flexibility in accessing publications found within our sales program."

Last year, the GPO and the 9/11 Commission partnered with W. W. Norton & Company to print and sell the commission's report. Norton sold the report through bookstores around the world. The public obtained copies of the 571-page document without having to wait for the GPO to fill an order and without the inconvenience and expense of downloading and printing a long document. In this partnership, all parties won - the GPO distributed the report to the public with no wait, Norton earned revenue, and the public had immediate access to the printed report. According to Bob Wietrak of Barnes & Noble, the report was "flying out of the stores" several days after it went on sale (USA Today, July 26, 2004). Currently, there are more than 3,000 publications available from the GPO at an average price of $25. Ninety-five percent of these documents are available online and can be downloaded and printed through GPO Access ( The GPO is moving away from offset print and large inventories of print products and is heading toward print-on-demand (POD). The need for inventory adds substantially to GPO's costs. Elimination of inventory will reduce costs while increasing the availability of publications and sales. GPO now has more than 1,600 titles in its POD files.

Judith Russell, Superintendent of Documents, oversees the sales operation. She pointed out that GPO "has many titles that are of broad public interest, but the general public would not necessarily come to GPO." The public may not be aware of the broad range of titles published by the GPO that are of interest. Integrating GPO titles with other similar titles will increase visibility of government activities and publications, create opportunities for private sellers, and increase revenue to offset GPO costs. The lack of awareness of government publications dampens sales and prevents people from learning about their government and its activities. The private sector could make a difference and increase awareness and learning by marketing and distributing GPO products and services to booksellers and others. The GPO is not in a position to actively market its products and services. People aware of online access to publications or the sales program know how to obtain needed documents. People not aware of the GPO's dissemination services remain uninformed. The private sector has the opportunity to increase awareness, create a new revenue stream, and help keep the American people informed.

Since federal government information is in the public domain, private companies can access and acquire information, add value to it, and sell it. The U.S. Census Bureau's population database is an example of a resource used by hundreds of private companies and individuals to create value for paying customers. The RFI represents an important opportunity. The RFI states: "Operating as a Government agency, the GPO has been limited in its ability to aggressively promote its information products and services … The GPO has not effectively participated in channels that would help increase visibility and distribution of its offerings to new markets … It is no longer economically feasible for GPO to continue to operate its Sales and Agency Distribution Programs using its traditional methods. Therefore, GPO is seeking alternative models for its Sales and Agency Distribution Programs that could be provided by innovative relationships with the private sector." Generally, private industry has not been involved in the distribution of government publications. While the plan envisaged by the GPO and noted in the RFI will not give industry a monopoly, it does represent an important opening for private business to participate in the distribution and sale of government information. The plan does not preclude the public from downloading and printing needed or wanted documents. The marketing, distribution, and sale of the 9/11 report demonstrated that the market for government information exists and that partnerships can be beneficial to all.

From, by Miriam A. Drake, 11 April 2005

Privatization Question Spurs Faculty Debate

Academic Senate Rejects Motion To Research Option as Possible Way Control Student Rising Fees - With state support on the decline and increasing competition in higher education, some public universities are scrambling to explore privatizing their campuses to stay on par with private universities. But the idea of turning to private funds to sustain a traditionally "public" education has stirred debate at UC Berkeley, where some faculty fear the line between the public and private university is being blurred. While some faculty are open to exploring the possibility, a motion at Monday's Academic Senate meeting to create a committee to research the effects of privatization was defeated 25-18. But professor emeritus Charles Schwartz, who sponsored the resolution partly in response to UCLA Chancellor Albert Carnesale's "outrageous" statements last year recommending doubling or tripling student fees, said he wanted to establish the committee to examine what he said was the increasingly privatized direction in which the university is moving.

"The proposal was meant to be a wake-up call," said Schwartz, who expressed concern that UC is starting to look more and more like its private counterparts. "I'm afraid undergraduate students are going to get squeezed more and more to pay for other parts of the university's operations. Research might be wonderful stuff, for instance, but why should undergraduate students have to subsidize it?" Schwartz emphasized that he and the proposal's 10 co-sponsors were not advocating privatization but trying to pave the way toward public awareness and strategic thinking. "I'm very surprised at the outcome," said law professor I. Michael Heyman, who co-sponsored the resolution. "This motion didn't seek to get a decision one way or the other. It just thought to get a more deeply considered picture of where the university is and where it's heading." Still, some university officials are quick to steer clear of the term altogether, fearing that shining the spotlight on privatization on campus could place the university in an unfavorable light and cause the campus community to misinterpret the university's intentions.

Last fall, UC Berkeley Chancellor Robert Birgeneau sent a clear message that he had no intention of leading UC Berkeley toward privatization. "I state unambiguously and unequivocally that if Berkeley wants a chancellor who will lead in the privatization direction, it should find someone else, and I'll go back to the lab," he said in his first address to the Academic Senate in October. But some university officials are not shying away from resembling private competitors. Boalt Hall School of Law Dean Christopher Edley, for example, is pushing for private donations and more autonomy from the university. Edley has argued that in order to stay competitive with private schools, Boalt needs more control over the school's funds and direction, but he is quick to note that governance and the public mission will not take a back seat to gaining funds.

Turning toward privatization is easier for professional schools than entire campuses, since professional programs have a smaller scope and focus to begin with, said Lara Couturier, associate project director of the Futures Project, a five-year project that found that market forces are increasing competition among top-tier schools, making privatization an increasingly attractive option. "It's not harmful for institutions to be more entrepreneurial, but the question is, are they being entrepreneurial with the public mission at heart," Couturier said. The risk of compromising the public mission for the sake of a climbing up national rankings is not as threatening as first thought, according to the project. The project's findings pointed to rising tuition costs, limited financial aid, lack of accountability and the rising rate of corporate funding versus government funding as the four primary weaknesses in public higher education. "When everything comes together we have a snowball effect that is pushing higher education in a different direction," Couturier said. But despite the trend of fudging the lines between private and public, it is crucial for public universities to stick to their mission of serving the public. "If we want to continue to have a system that strives for that mission, public ties are critical to ensuring that future," Couturier said.

From Daily Californian, CA, by Traci Kawaguchi and Jane Yang, 27 April 2005