Tuesday, March 31, 2009

Hiaitus Over...

Spent the weekend preparing a presentation on urban development in Ghana which I managed to finish on time and deliver on Monday. Follow up questions ensued at the conference today. It's now over and I have begun to review what has been going on in the world - with the G20 and elsewhere, including the torrent of news generated by Russia and President Obama's visit to Europe. Everyone else on this blog was also gone - our MENA contributor to Canada, another from Azerbaijan in Ukraine and the third in Central Asia figuring out US State Department forms.

So much for the excuses...we are back and I want to talk about the long, slow-motion train wreck of land tenure reform in Ghana coupled with the explosion of urban slums and why this is happening, Russian needs, dreams and demands and IMF lending practices.

If anyone noticed, by the way, the end of any independence movement in Chechnya died with the assassination of the last opposition leader in Dubai (the whereabouts of his brother is unknown - a circumstance he is likely to maintain).

Friday, March 27, 2009

Exclusivity Letters

Letters of exclusivity are an annoyance that I only think about when I receive one. Does anyone find the requirement to sign exclusivity agreements on bids anti-competitive and hardly something that should be required by donors who insist on promotion of market principles in their economic development interventions?

In the private sector, these agreements are called options. If a firm wants someone and wishes to exclude other firms then they should pay for the privilege. The fact that the donor - USAID for example - instructs bidders to obtain exclusivity letters (of dubious enforceability, but that is another matter)is at odds with its mission.

Consultants required to sign these agreements should be paid for their exclusivity. If the firm wins the bid, the agreement can state that the exclusivity fee will be applied to the compensation and the firm has lost nothing. If the firm does not win, well welcome to the market. Otherwise, consultants should be free to attach their names to multiple bids.

Thursday, March 26, 2009

Japan, Ukraine and the IMF

The iron lady of Ukraine and current Prime Minister, Yulia Tymoshenko, has asked Japan for financial help to reconstruct pipelines, infrastructure and the like. Japan. With an economy that is tanking. Japan, unsurprisingly, directed her to the IMF to which it has recently contributed a cool $100 million(adjusted for deflation, I guess).

OK. Aside from how this request to Japan makes the current Ukrainian government look, sending them to the IMF is, well, almost a non-starter, considering in the board game "International Aid" if the player lands on "go to IMF, do not pass go" it is a recipe for social trouble. Not something Ukraine needs at the moment. Not that I have much against the IMF, it is just that they seem to be in some "Dr. Who" time warp with financial requirements which appear largely designed to foment social unrest and revolution.

The IMF recently demanded as a requirement for the next tranche of funding to Ukraine that it show a budget with a deficit of no more that 3%. In this economic climate that is not only impossible, but counterproductive. France, for example, is projecting a 5.6% deficit. Germany appears to be ok, but that is unlikely to last. Italy has exceeded the EU mandated 3% deficit. England, well...

Of course, none of the above are asking the IMF for assistance. The IMF standards, at this point, do not reflect reality, as the unlucky Romanians are about to find out. The next tranche to Ukraine will likely be disbursed based on smoke and mirrors - and the social cost will be high.

Having said that - what was the Prime Minister thinking in asking Japan?


Ok...received a complaint. There is a limit to the size of comments and some people have a lot to say. We are looking into that and may go to a 3rd party comment system.

Update: What limit? There does not appear to be a size limit. Let us know if otherwise.

Second update: The little envelope with the arrow is for emails - not commnents - and has a limit. To send a comments, click on the comment tag.

On the whole, I'd rather be in...


Via AFOE is an interesting article on what school children are learning in Serbia about the conflict between the Serbs, Croats and, in particular, the Kosovars. The future result of this selective history may well be tragic; but the situation is not unsurprising in a country that continues to celebrate a major defeat at the hands of the Ottomans. What is happening is tragic since it sows the seeds of future conflict. Serbian children are being taught to hate. And hate not just Kosovars, but ultimately Western Europe which has in partnership with the US, in their view, attacked them for trying to preserve their territorial integrity. They see themselves as victims.

Unfortunately, the UN exercise in nation building in Kosovo has not improved the atmosphere and could ultimately re-ignite the conflict, particularly if Russia would like to improve its leverage over Germany and France. Russia, after all, pointed to the precedent of Kosovo (wrongly, in my view) during its invasion of Georgia for which only France offered verbal support.

Kosovo, for its part, has been repeatedly instructed by the UN and the international donor community that it must mind the rights of minorities (read, Serbs). The Kosovars could care less in private.

Development funds have poured into Kosovo and always contain proscriptions against violating minority rights. These proscriptions are unlikely to work in the long term because the Kosovars are oblivious to such rules and don't trust the Serbian government in Belgrade - mostly however, they don't care. Serbs are poorly treated in Kosovo regardless if this was their home for generations. One side of a street populated by Serbs - in the only European country with posted speed limits for tanks - are clearly less well off than the opposite side. Serbs don't cross the street.

Perhaps donors need to retool their approach. The well-meaning goals are nice but they need to accept reality and understand that their funds will simply not change societal attitudes for a generation. Or the next. The students in the article are the most susceptible to the type of social propaganda described and perpetuation of ethnic hatred. Land reform, governance, justice reform and other similar interventions won't change that environment.

To avoid the perpetual cycle of hate in the Balkans, donors need to do something more, at less cost, than the current interventions. What hasn't worked?

We have some ideas - coming soon.

Disclaimer - before I am unmercifully attacked (wait until I discuss Armenia) - I am not pro-Kosovo but I know what the Milosevic regime brought down on innocent people largely for their religious beliefs. All Serbians and all Kosovars are not anything. The hot war is over and the region needs peace, if not reconciliation. The parties need to grow up.

Wednesday, March 25, 2009

Chess with Russia

According to UNIAN (via AFP in Moscow - no link) Russia cancelled scheduled talks with Ukraine in light of the agreement reached by Ukraine with the EU to upgrade its gas distribution system. President Medvedev and Prime Minister Putin - in a now familiar double-team announcement, basically told the EU that Ukraine and its gas (which flows to Europe) is their responsibility. Putin ill-disguised threat of 'reviewing' Russia's relationship with the EU unless they are included in discussing this turn of events is also now becoming very familiar. Of course, the South Stream pipeline project has nothing to do with this and Russia also respects the independence of its neighbors.

What remains to be seen is whether the EU actually can fund the rehabilitation of the pipelines and, more importantly, whether the Germans and French are willing to provide this type of development aid in the face of Russian threats. Russia has a window of opportunity really flex its energy muscle - and events like this clearly upset the Kremlin. If the EU doesn't follow through and Vice President Biden's rejection of spheres of influence is ignored by the 'reset button' - Ukraine can look forward to a lot less maneuvering room with its resurgent neighbor.

I'm off to Moscow at the end of May and will get some additional views on the on-going issues between Russia's near-abroad and Russia. By that time, of course, President Yuschenko will be in the process of being impeached.

Tuesday, March 24, 2009

For everything there is a first time...

This is the first post on the first day of this blog.

As the sidebar says, we will concentrate on international development and policy issues. Ideas will be tossed around, critiqued, dumped or praised. We will be using some development terms, but will do our best to avoid the useless acronyms invented to drive us all crazy and abbreviate sentences.

The contributors to this blog have one thing in common - and that is the frustration of watching development assistance vanish into the multiple black holes in emerging economies. This is not always the fault of donors - one only needs to glance at the lucky recipient governments to understand what happens at the other end of the money trail.

Most of the time, the posts here will be on technical subjects. Most of the time. But we might go off on a tangent and discuss political decisions and policies that are backward and in our opinion - just plain stupid. We also don't always agree among ourselves, so you might see some fireworks from time to time.

Ultimately, we hope to provide a useful dialogue that actually promotes, well, results.

Finally, all of us work for a living. This blog ain't gonna pay the rent or, more importantly, keep good wine on the table. So, if at times it appears to be a bit thin, we are working. Just sayin'...

If you don't like what we propose or say, keep your criticism polite and rational. Tone is important. Snark is appreciated up to a point. Don't make it a habit and we won't - and we are very, very good at it.

Wish us luck.