The local web correspondent

I have an idea that I am going to present to the press and other media and just in case I can patent it or at least to avoid that someone else patents it am jolting it down here and I will publish somewhere on one of my many blogspots.

I believe that a newspaper that creates a special very local page for local communities such as condominiums, senior resident homes, companies and other and then appoints a member of that community as its local correspondent is placing itself in a privileged position to defend its interests in these difficult times. The local correspondent would work for free though special identifications and rewards like giving out some prizes to the best of them and raffling other prizes among them would help to stimulate them.

The local webpage where only members of the community can be registered will be a part of the medias overall page.

Alternatively communities themselves could set up their own page and negotiated their linkages.

"The local web correspondent" © Per Kurowski

"The community web correspondent" © Per Kurowski

Odious debt should not be granted relief while odious conditions remain.

I am a citizen from a country that I consider corrupt and that needs to change a lot before any new debt could do it any good.

In this respect I urge you not to give debt relief to corrupt governments as that will only allow those addicted to debt to be able to hit the bars again, in the same shameful ways as before.

If the concept of odious debt is applicable in the sense that some debts should not have to be repaid if contracted in an illegitimate way, castigating the creditor, then the same concept should clearly also apply to the granting of any debt relief, punishing the debtor.

The World or Mother Earth lacks representation

Wolfgang Münchau in “This gentlemen’s agreement fails Europe too”, Financial Times July 9, makes a good case for why Europe by splitting up the European representation in international institutions such as the International Monetary Fund (he argues that it is to preserve many plum jobs) ends up in fact with having no real representation at all.

I understand and agree with his point of view especially since it goes hand in hand with my opinion that since all the votes, and all the Executive Directors, and the Presidents, and so many of its staff are assigned on pure local considerations, it is the “international world”, the global order, or mother-earth itself, whatever you want to call it, that ends up being the most under represented party in these global institutions.

If we are going to be able to manage the global challenges it is urgent we look for means to break away from our parochial local chains. What about splitting at least 50% of the chairs at the Board among varied constituencies such as migrant workers, multinationals, media, educators, environmentalists, NGO’s, accountants, farmers, manufacturers, entrepreneurs, service providers like nurses or plumbers, and so on? Just beware, diversity is much more about life experiences and mindsets than about gender or race.

The only constituency that has currently a representation in IMF, in fact a 100% representation, is the constituency of central bankers and this need to be changed. Europe, if you must insist on naming the next managing director in the IMF then at least do the world the favour of appointing some finance knowledgeable person that has never worked for any central bank. That would provide us with much more needed diversity than just appointing another central banker based on the local consideration that he is from Asia, Africa or Latin America.

And this is no joke, incestuous groupthink is about the most dangerous limiting factor when it comes to impede clear thinking and effective actions.

The Basel Committee is just a mutual admiration club of firefighters trying to avoid bank crisis at any cost - even at the cost of growth.

A fairly reasonable petition to the European Executive Directors of the World Bank

For countries to develop... please... let them learn to bike... on their own

The following is extracted from my Voice and Noise. It reflects what I said to my colleagues at the World Bank Executive Board while discussing in 2004 the issue whether developing countries should be allowed to use more their own country systems.

Intro: Whether to let the countries learn and develop on their own in their own way and assisting them by freely giving some of the very scarce resources or whether to impose some conditions on how they are to manage these resources is one of the most difficult balancing acts of any development policy.

There must be thousands of examples of how development funds have been squandered to no avail by bad governments and crooked politicians, and certainly there are thousand of examples of how good-intentioned agencies have, in a quite similar and yet opposite way, squandered these scarce funds by imposing absolutely misplaced rules and conditions.

As I never believed that you could create good artists by having students practice painting by numbers, this little spot number 17 blue, and as those wanting to impose more and ever stricter conditions on the borrower were in the clear majority, my devil’s advocate instincts and my normal tendency of siding with the weaker inspired me to take a very strong position in favor of allowing for a more frequent use of the countries’ own systems... and so... please...

Let them bike

Friends, listening to your exhaustive list of concerns [about how the World Bank could best assist countries in their development] I was reminded of the moments when I had to teach my daughters how to ride their bikes: I heard their mother’s anxious calls in the background; I felt my own nervousness; nonetheless, I just knew I had to let them go.

One could find and read thousands of manuals about how to put a bike together safely; about all the safety implements a kid should wear, such as helmet and wrist-guards; about all the precautions he or she needs to take, not going downhill or out on the main road; but nowhere can you find even a single manual that clearly and exactly instructs you how to learn to ride a bike. Left leg up, right leg down! Or was it right leg up first?

We need to understand that development is a bit like learning how to ride a bike and, at the end of the day it is something that must be done on one’s own. In fact, no matter how much we could help in the preparations, we will not stand a chance to achieve lasting results if we are not willing or do not know how to let them go.

It is not easy to let go, I probably even closed my eyes for fractions of seconds after letting my girls roll away on their bikes, but I let them go and they know how to ride a bike now.

So, my colleagues, in these discussions, not as caring parents but as caring development partners, let us try to act accordingly, letting them go, always remembering that, at the end of the day, countries need to do it on their own. What else could ownership mean?

Of course, anyone might fall trying, but that is exactly the risk we need to be able to take if they are going to achieve real sustainable development results and, if they fall, there is probably nothing more to do than to help them rebuild their confidence so that they can just have another go at it.

Moreover, if you try to hold the bike while they ride it, the bike might not really behave like a bike, and so they might never get the hang of it. What we really should be concerned about is that they have what is most needed at the time of trying: sufficient confidence in themselves. In fact, what unwillingly might be the first victim of all our other secondary concerns is precisely that, their confidence.

So, my colleagues, let them go, again and again and again, learning to ride their bike, and as they believe a bike should be ridden.

I know it is not as easy as it sounds and in fact I would only give someone the freedom to try it on their own whenever he or she convinces me he or she is truly ready for it, in a sufficiently confident way.

.

The anti-corruption experts are but another sublime form of corruption.

I am opposed with passion to corruption, how could I not be, I come from Venezuela, and I fully support with all my heart the valiant work of all those anti-corruption warriors out there in the world. But, having said let me also unequivocally state that anyone who sells himself as an anti-corruption expert is in my opinion just engaged in another though perhaps more sublime version of corruption.

Corruption is about life and human weaknesses and should therefore always be fought by people and not by experts.

A B- donor?

Once again I heard in a development forum complains about the volatility of the commitments of donors. Would not rating the donor’s credibility be a good pro bono cause for the Credit Rating Agencies? Perhaps the tax deductibility allowed to funds collected by those donors could also be a function of those ratings.

Two brief comments on naming a new World Bank President

1. I would love for the world at large to be able to put forward their proposals for a new president at the World Bank but, having been an Executive Directors and having seen how so few of these EDs are truly allowed to speak out their own voice, I would also like to see that once they have received the list of candidates, they are isolated from any further interference from their capitals, and forced to reach a consensus between themselves as Executive Directors individually responsible for the Bank and the World.

2. If we are going to waste time just to haggle on who is going to be the next President of the World Bank, I would much rather have just about anyone named so that the Bank could go back and focus at the real issues. While an Executive Director of the World Bank (2002-2004), I calculated the cost of each of the EDs jointly debating an issue to cost around 80.000 US dollars per hour. Therefore I raised my voice quite noisily when the Board had to spend many hours discussing a salary increase of US$ 40.000 for our then president, Jim Wolfensohn, just so that he would earn as much as his counterpart at the IMF. Frankly, I do not know what I would have done with a Wolfowitz incident and now the follow up; I might have just gone berserk

The World Bank needs a president credible to the world (and to the USA).

My friend and as an Executive Director of the World Bank former colleague Otaviano Canuto is quoted in FT May 22 saying with respect to the appointment of the next president to substitute for Wolfowitz that the selection should be “based on the merits of a plurality of candidates regardless of nationality” and who could argue with that, though of course the problem of defining what are these “merits” remains.

The first and foremost merit that I believe a World Bank president must have besides the basics is to be able to generate enough credibility outside the small world of the World Bank. This is so since no matter how this multilateral twists and bends, the chances for most of the poor of this world to come out of their misery in a sustainable form lies in being able to connect with the real world. Also the World Bank itself is dependent on this connection if it is to strengthen its role as a global public-goods producer.

And so, unfortunately, we might be back to square one where the best we can hope for now, is for the United States to nominate a person that fully and truly represents the United States, and counts with the favourable opinion of Europe. By the way I would never view such a candidate as a foe but, if I did, I much more prefer to work with an impressive foe than with a diddling friend.

Let us not despair though; the time will come when the world will be ripe for Otaviano Canuto’s proposal, and much faster than what we can imagine.

Let us keep the eyes on the ball!

If we want good government results that have a chance of doing what is humanly good for humanity, in a shrinking world, that could only happen through more credible and better governed multinational institutions. But in this case, while rolling up or shirtsleeves to get going at it, we must also learn about how to prioritize our efforts.

Instead of beating the good guy on the head, just because he is more amenable to being beaten on the head, and start with a World Bank and that no matter Wolfowitz and some others, in relative terms, still stands out as a shining example of relative good governance in the world, we should all concentrate more on where good governance is much more lacking and much more needed, namely the United Nations.

May I humbly suggest we keep our eyes on the ball!

Per Kurowski
Chairman
The Voice and Noise Foundation for International Development and Global Strategic Action

And now it is for the World Bank to convince the world that it was more than about politics

Now when after so much procrastination, by all, Wolfowitz has finally resigned it is now the World Bank’s turn to convince the world that all this was indeed an institutional fight over what is right or wrong, and not some political bickering against an unpopular president.

Having had the privilege to act as an Executive Director of the World Bank (2002-2004), I am truly convinced of the high human quality of all its people but, given that out there, for instance in the world of blogs, there exist so many 100% professional haters who don’t care a iota for the World Bank as long as they get their sweet revenge on Bush or Wolfowitz, now the World Bank’s directors, staff and managers must act decisively on the fundamental governance issues, so as to distance themselves as much as possible from these loonies.

One of the first tasks has to be to review the whole concept of external assignments or secondments, since it beats me how it could have reached that point where someone could even have thought of this as a useful instrument for removing to a distant place a conflict of interest of the President, at the expense of the World Bank. Can you even think of a listed corporation trying to argue with the IRS about the deductibility of salaries paid in such a way?

As with this it should be clear that there was a serious problem even before Wolfowitz intervened pushing promotions and salary increases, something that the Executive Board also valiantly recognized, it is obvious that the institutional integrity teams, and all other, have some solid homework to do before they can re-launch the good governance and anti corruption initiative the world needs so much, and that unfortunately seems to have hit an iceberg, while still in port. I am certain that they will succeed.

The World Bank deserves more than a banal political row

The Ethics Committee proposed a solution to Mr. Wolfowitz’ “conflict of interest” that could have the poverty fighting World Bank paying out US$1.950.000 over the ten years of what could be his presidency (US$ 130.000 plus 50% benefits per year), while receiving absolutely no services at all. No matter how delicately you phrase it as a secondment, this sure must be a crazy and an unethical proposal. How come they did not just help her (or Wolfowitz) find another job for which the Bank did not have to pay? Should that have been so difficult?

Mr. Wolfowitz, who as President should know that something is not right just because an Ethics Committee proposes it; then went on influencing so as to raise the potential cost of this proposal for the Bank to US$2.700.000. For this Wolfowitz should resign; and most seem quite clear about that.

It is hard though for me to understand why there has been so little discussion about the Ethics Committee’s initial proposal. Although I was an Executive Director at the World Bank, 2002-2004, I came there from the private sector, and so I might not possess sufficient intimate knowledge of all the nuances of diplomatic affairs… (which could perhaps just be lucky me).

I sincerely believe that the overwhelmingly good staff, management, board members and presidents, present or past of the World Bank, as well as a world that needs a respected multilateral institution where global challenges can be discussed, they all deserve that this affair is handled correctly, on the basis of what is right or wrong, and not just as a banal political row, of a for or against Wolfowitz.

We need to make more of a world bank out of the World Bank

Sir of course the "World Bank has greater problems than Wolfowitz", as E.A.S. Sarma says, May 8, but if he as a Former Secretary of Economic Affairs of India really believes that "setting up an Independent People's Tribunal to place the policies and programmes of the World Bank under the scanner, is part of finding the path for their own development", then may I suggest he has himself a bigger problem, as so do those who like my country Venezuela believe they are better off outside the World Bank.

Lets face it, the World Bank, after 64 years of activities has an outstanding accumulated portfolio of $103bn which compared for instance just to the $62bn in remittances made only last year to their homelands by the Latin-American migrant workers is a drop in the ocean, much more so when the financial flows to the richest country of the world are such staggering amounts that we are better off not even mentioning them.

As I see it, the faster we split up the bank in two completely separate areas, one for the development issues of the poor, laggard or left behind countries, and one for the global world development issues, the better chances we have of making a big dent in the poverty and a truer world bank out of the World Bank. At the Word Bank's Executive Board instead of reshuffling the seats among countries, we need to assure the representation of international actors such as multinational corporations, migrant workers and international labour unions.

By the way, if I had the luck and honour to be left in that division of the World Bank in charge of helping the laggards catch up, I know exactly what I would do. I would put all my efforts to strengthen the confidence of the poor people in their own capacity, so that they dare to ride a bicycle on their own, instead of trying to make their misery more liveable, holding their bikes, or offering them scapegoats and excuses for their falls, such as the World Bank.

Growing difficulties to enjoy the booty

During the recent meetings of the World Bank, as a result of the current mess surrounding its president Mr. Wolfowitz, some issues were unfortunately relegated to the background.

One of them refers to the announcement of the Initiative for the Recovery of Stolen Assets, which, together with other agreements such as OECD’s against corruption, shows how the world progresses, very slowly but safely, on the path of better global governance.

The ease by which until now thieves managed to hide their loot is shameful; sometimes even under the noses of their victims. There is of course still a long way for an initiative like this to become an effective instrument ... but perhaps in less time than what the outlaws in the world suspect.

Parallel to official initiatives, the technological advances that allow access, archive and send information is converting civil society, citizens, whether we like it or not, into real-time investigators. It’s not they are searching, but when they do see a knowingly corrupt, and have their cell phone with camera in hand, they will take a photo of him in his moments of enjoyment, which will swell the truth-files until these explode.

In the same way, all those concealment of ill-gotten goods services, to which some corrupt countries have been dedicated are becoming more expensive; as that international community of civil societies develops and understands they have all better row in the same direction, if they are to have a chance for survival on an ever shrinking planet.

Finally and observing how in Canada an ordinary court recently began a trial on violations of human rights (the genocide in Rwanda), the day should not be far away when one of those millions of emigrants in the world who have been much forced to emigrate as a consequence of corrupt acts by their rulers, could successfully sue one he finds enjoying ill-gotten money in their new alternative country. The tests you would need to enter your claims, would all be sent to you on the web.

Does the above threaten the sovereignty of nations? Sadly yes! So therefore it is always much better for nations to free themselves, sovereignly, from their own corrupt.

One of the 4,292,466 shadow citizens of a shadow nation. (Insolently there are still records to be scrutinized)

Translated from El Universal

The World Bank, though in a hole, needs to dig deeper.

As a former Executive Director of the World Bank it is with much sadness that I have followed the Wolfowitz affair. It is clear that he should not have played a role in deciding the terms on which his girlfriend was seconded to the US state department and that he should now leave the Bank.

Having said that, I also find it important to question the appropriateness of the primary idea, put forward it seems by the Ethics Committee, since it does not seem to be correct either that the World Bank should be seconding anyone anywhere, even on reasonable and non interfered terms, as a tool to solve this type of conflict of interests, so as to allow someone to have his cake and eat it too.

In contrast while an Executive Director, we had to spend millions of dollars of the Board’s time just in order to debate a “measly” forty thousand dollar a year increase for the then World Bank president James Wolfensohn, just so that he would be able to earn as much as his counterpart in the IMF.

Now, after so much procrastination, by all parties, the only real solution for the World Bank, with or without Wolfowitz, lies in appointing a committee of true outsiders to dig deep and review all the World Bank’s current work related policies. The World Bank, when compared to other similar institutions, is very clean but of course, after 64 years of accumulating problem solving compromises, it should be time for a good scrubbing.

The world needs the World Bank to come out of all this smelling like roses, and the staff also deserve it.

Should Imus be banned from talking, or his listeners from listening?

The words we use are important to the extent they impact. When I see and listen to one of these commentator programs I do not care much for what words they use but much more whether they are trying to reinforce the good within us or if they are just out looking to exploit the bad that we all also carry inside. In this respect, having the impression that Imus geared himself to belonging to the latter group, I can’t really say that I object too much he is now suffering some of his own medicine.

Now, saying that reminds us that it is not only the speaking of the words that counts but also how we listen to them. The real difficult and perhaps unsolvable problem for a society might then be that instead of barring some radio or TV hosts, which in their disrespectful, vulgar and highly censurable ramblings might nevertheless be providing a needed input to some or something, it might perhaps be better served by barring from listening those in the audience that might not be able to adequately digest what is being said, and that end up supporting it providing bodies to the rating numbers.

Now, before someone bars me for suggesting some supremacy inspired censorship let me make absolutely clear that the only real censorship I really defend is self-censorship, and we should all be more aware of the much good that can come from it, not the least lower ratings for unworthy programs.

But, this is indeed a very difficult issue and all those that believe the contrary… well they are the only ones that we can with certainty say should be barred.

A wondrous world!

“The persistence of global imbalances brings with it an important financial stability issue—the problem of sustaining the financial flows needed to support the imbalances.”

From the Global Financial Stability Report by the International Monetary Fund, April 2007, page 15

What an opportunity we seem to have missed!

Daniel Smith in “Politicians cannot control Nigeria’s corruption crusade”, FT April 12, writes about Nigeria saying “its politics remains a stark scramble for power in which elites compete for domination of the state apparatus to reap the benefits of control over enormous oil revenues”, and so in fact little does the crusade againts corruption matter anyhow, especially while oil prices remain high. As is, the Nigerians now elect a government to whom hand over the oil revenues that in reality belongs to themselves, only to have to spend the next couple of years licking boots in order to get some of that same oil money back, while the elected government officials, arrogantly, not in need of other tax income, couldn’t care less about them.

It is only when you get to understand this that you really get a feeling for what a wonderful opportunity the world seems to have lost in Iraq. Can you imagine what having helped to channel the oil revenues directly to the Iraqi citizens in a transparent way could have done? That could really have been called democracy building, and the setting of a great example for the citizens of Nigeria, Venezuela and all the other oil cursed nations to follow.

The current analysis of the remittances takes the eyes away from much bigger issues

The press announces that “Migrants send home $62bn to Latin America and Caribbean” and the commentaries that generally follow evidence how much, by focusing the attention on the remittances as such and which could in fact be compared to the cash dividends of the corporate world, the development banks might be missing so much of the real story.

If these remittances represent 15% of what the migrants earn then the real underlying economic activity is worth more than $420bn, and a country such as El Salvador has just as much GNP produced by its emigrants abroad than the GDP produced in el Salvador; and who is to argue that someone from El Salvador is less El Salvadoran just because he works abroad.

This calculation does also evidence that way too much detailed and expensive attention has been given to the analysis of what channels are used for the remittances, and the costs of these transfers. Frankly, in my book, this amounts almost to a lack of respect for the migrants since indeed these transfers do certainly represent the least of their thousands of problems and hardships.

Let us hope the development agencies will soon start looking at the real issues, such as how to increase the earning potential of these millions of sacrificed migrants; such as helping in the development of temporary migrant worker programs that satisfy the interests and meet the concerns of all parties; and to study whether they migrants could be better off reinvesting their savings in their own and their children’s educations instead of perhaps only ending up providing temporary support to their ineffective national governments who most probably were the main cause of why they had to emigrate in the first place; and to the rate of that heart-drain by which they might start to forget their homeland and how to slow it down.

Now, while analyzing all these issues, let us please never forget that all these remittances are of a very private nature; no different from any money a son could send his mother in a developed country; and so we need all to be extremely respectful of that.

Let us not waste this opportunity to make a very significant reform at the World Bank

On the web of World Bank (WB) we can read an interview with Suzanne Rich Folsom, the Director of the World Bank's Department of Institutional Integrity (INT), on the theme of fraud and corruption. When questioned “What sanctions are imposed on those misusing WB’s funds?, she answers “when we find that a supplier has engaged in corruption in a project, we take actions to debar them – which means to make sure they can’t get any more contracts for a while. We also publicly debar – we list their names on our website. ‘Naming and shaming’ is a huge deterrent.” This sounds of course reasonable, especially considering that INT is not a court that could send anyone to jail.

Unfortunately, immediately thereafter, Folsom also has to say the following: “We’re often asked why we don’t publicly name WB staffs that are terminated for fraud and corruption as well. The WB’s rules don’t allow such disclosures…”, and this, no matter how you look at it, is of course something completely unacceptable and represents a truly ugly wart on the public face of what in so many respects is the best managed of all our international organizations.

Perhaps these days, when the World Bank’s President’s and a former staff names are publicly mentioned everywhere as having done something not correct, this could be the best opportunity ever for getting rid of whatever crazy disclosure rule stops the World Bank from living as it preaches,

Four Years and Counting in Iraq: Regarding "Lessons of War"

Regarding "Lessons of War"

The Post should be commended for not describing the extremely difficult way forward in simplistic terms. Having said that, the editorial should have given more attention to the role of oil, not because of its obvious energy significance but because it is an obstacle to good governance in Iraq.

The editorial said, "We may have underestimated the impoverishment brought about by misrule and sanctions and the brutalization born of totalitarian cruelty." But the sentence should have continued: ". . . that thrives especially well in countries cursed by large amounts of oil revenue flowing to a central government, eliminating any chance for a sustainable democracy."

Coming from Venezuela, where oil revenue is centralized, I know that loyalties to country, tribe and sect are all irrelevant compared with the unnatural loyalty that can be purchased by those in control of a checkbook fattened by oil. If the United States wants to achieve anything going forward, it had better find a way to distribute Iraq's oil revenue directly to the Iraqi people.

Per Kurowski

Bethesda

Published in Washington Post

PS. Here my minimum minimorum suggestion on when exiting Iraq

World Bank and IMF Collaboration, the February 2007 Report

When I read the “Rome Declaration on Harmonization” February 2003, were the word harmonization was mentioned 19 times in 8 pages, I loudly protested since I felt that it sounded a lot like killing of the debates around many difficult development issues, agreeing on strategies in some smoke-free rooms in Washington, instead of bringing out all the inherent conflicts of risks and having them openly discussed in all the different capitals of the world, and hopefully among its citizens too. I cried out loud. “If ownership is to mean anything you must at least allow them to own the debate.”

Thankfully after many discussions (not with me though) the World Bank and the IMF have now in February come out with their “Report of the External Review Committee on Bank-Fund Collaboration” and thankfully harmonization is almost gone and the emphasis is almost completely on collaboration, which of course is a totally different issue.

Now in this Report of 58 ages the word “harmonization” appears only twice, and in the same paragraph, as follows:

5. Collaboration on fiscal issues: • There needs to be improved integration and harmonization of work on fiscal issues. As noted in the joint 2003 staff review of Bank–Fund Collaboration on Public Expenditure Issues, the key to an effective partnership on public finance management is not found in a formal division of roles, but in the harmonization of recommendations.

I have no qualms at all with that, although when they in the next paragraph state, In terms of ‘fiscal space’, there should be no suggestion that there is a trade-off between short-term stability and long-term growth. These are complementary, not competing, objectives, e.o.q, I would have included the caveat that this is true as long as you avoided too much short-term stability, since staying in bed, does not correlate much either with development.

We must build more McPrisons

We must build more McPrisons

Have you heard someone say that one country is 30% fairer than another? Of course not. Justice, situated on a continuum that goes from its total absence to Divine Justice, is very difficult to measure. Injustices are easier to identify and we all know that in most of our countries, prisons represent one of the worst.

To make the best possible use of scarce resources, it is important to be able to measure results and in this sense judicial reforms in many of our countries, sometimes financed with the help of multilateral entities, could advance faster by focusing on eliminating injustices. , for example by improving prison facilities, than by seeking justice by investing in courts.

In the first weeks of 2007 we have already been shocked with news about 16 prisoners killed in a fight in Venezuela and another 20 in El Salvador. Since the judges are very aware that the conditions in prisons are so shameful that they can even resemble those of a Nazi extermination camp, we sometimes wonder if the judges themselves should not be sued before the International Court of Justice. , for his crimes against humanity.

When we then observe how so many people who come from Central America are returned by the United States to their countries of origin, due to having committed some criminal act, even knowing that those countries do not have the necessary resources to face that problem and even less achieve the social rehabilitation of the prisoner, it is clear that we find ourselves immersed in a criminally vicious circle.

To get out of this centrifuge-of-terror, the United States should then help the countries of Central America to build and operate better prisons. Such collaboration could be effected by some states keeping prisoners in a prison in Central America, rather than in California, Virginia, or Maryland.

Today, in the U.S. There are about 2.2 million prisoners, many of whom are from Central America and each of them can cost their respective state between 30,000 to 20,000 dollars annually, depending on whether the prisons are public or are being operated by private companies. The above shows the immense win-win potential that exists in a proposal that, at the same time as managing to introduce modern prisons in Central America, makes it easier for the states of this country to achieve their fiscal balances.

The aforementioned prisons, which would be operated by specialized companies on the basis of strict quality certifications, such as ISO 9000 and supervised by independent organizations, could, once the investment has been amortized with the income from providing services to the United States, be transferred to the United States. governments of Central America.

In the same way that McDonald's-type franchises managed to transfer better service standards to many developing countries, McCárceles would help improve prison systems, educating specialized personnel and establishing points of comparison that stimulate the much-needed sense of the shame.

Translated by Goggle from an article in El Tiempo Latino of the Washington Post

It all originated here https://perkurowski.blogspot.com/2009/09/mcprison.html

Should not Higher Education be more of a joint venture?

Hearing so many young professionals in the USA describing their problems with debts they incurred while studying, I guess that soon some of them could be suing their Alma Maters for misrepresentation or plain failure in delivering the services offered.

Perhaps the incentive structure of the education system needs to be revised so that at least some of the higher education providers offer to collect a part of their fees through a profit participation scheme, like for instance by receiving a small percentage of the student’s future earned gross income that is above the level that the student could have been estimated to earn without further education, during his first 20 years of work.

How are then the universities going to pay for their professors now? Easy, that is what the financial markets are for. These participations in the future of our youngsters could be securitized and sold in the markets, perhaps even as a good investment for a professor’s retirement fund… of course, that is if the professor delivers on his promises.

For a university to show a willingness to invest in their own students, because they are sure of what they are giving them, might be a better marketing tool than outright grants and “we invest our money in your future” is my slogan. Also, for students, the question of what university offers to invests the most present dollars against the smallest percentage of their expected future earnings... should rank among the first when selecting an Alma Mater into which to invest their own future. 

PS. Dialoguing in 2023 with ChatGPT on this issue.

http://www.nasfaa.org/publications/2007/ghr5passed101807.html

Estudiantes ¡Alerta¡ Published March, 2007, El Universal, Caracas

PS. A tweet August 2018: “Instead of taking on debt, perhaps students should go for crowdfunding their study costs, offering to pay a percentage of their incomes during their first 15 after graduation years… perhaps even insurance companies would (should) like to invest in their future”... in a follow up tweet: Would the IRS be willing to certificate the incomes of these students for the investors?
If they did so, surely would the investors want their professors to have some, a lot, of skin in the game too?

PS. Many investments offer must be accompanied by warnings. Have you ever heard a University say: "Warning, the final financial compensations for the education you obtain with us, might not suffice to repay the debts you take on in order to study with us”?

PS. A tweet July 2019: "If anyone had sold investment plans with as little risk disclosure universities and professors do when selling investments in their education plans, and then the investments had soured, he would probably be trotting away to prison."

PS. A tweet July 2019: "Of those entire student debts some are suggesting should be condoned at taxpayers’ expense, how much should those colleges, universities and professors, who got all the money from those loans, have to absorb?"

PS. Nonetheless those who need to keep the by far larger stake in their future earnings, perhaps at least 75%, are the students. You would never ever want to share out so much that it creates incentives for them walking away from it all, one way or another.

PS. We need student debt service data, like default rates, for each university, so as to allow the market to help correct some education failures.

 

The Iraq Study Group Report’s as close at it gets silver bullet

The Iraq Study Group Report’s perhaps most important yet least discussed recommendation is “redistributing a portion of oil revenues directly to the population on a per capita basis” as it has “the potential to give all Iraqi citizens a stake in the nation’s chief natural resource” which could only foster a national identity and help stimulate the search for normality. Besides, given that the price of gas in Iraq is so low that you can fill your tank with less than two dollars, which of course is the source of much corruption, the sharing in the additional revenues that a price increase of gas would generate provides the political support for such difficult but necessary action.

We were told not to expect any silver bullet from the Report but in my opinion this revenue sharing program is a close to one as it gets. Implementing such a program in a transparent way, with the help of the World Bank, could also have far-reaching consequences for fighting all the other oil curses around the world.

What does recommendation number 28 really mean?

The Iraq Study Group Report suggests in recommendation number 2 to “Support the unity and territorial integrity of Iraq” which makes it somewhat difficult to understand the real meaning of number 28 when it says “Oil revenues should accrue to the central government and be shared on the basis of population”, since how do you share if there is only one central government? Now, if what they actually propose is that the oil income should be shared by the population directly on a per capita basis, this would indeed be a much welcomed proposition, given that we all know how impossible it is to construe a real democracy when oil revenues go directly to central government coffers and with it makes a mockery of any balance of power in the society. In the chaotic Iraq trusting the Iraqi people with their oil revenues is wiser than trusting any central government with it.

The only thing left to do in Iraq

The recently published Iraq Study Group Report says “There are proposals to redistribute a portion of oil revenues directly to the population on a per capita basis. These proposals have the potential to give all Iraqi citizens a stake in the nation’s chief natural resource”.

Since we all know that when oil revenues go directly to government coffers this makes it more difficult for society to reach a fair balance of powers among all its participants, these proposals also carried within them the best chances for construing an effective and lasting democracy.

Unfortunately some will seems to be lacking since the report also includes some really poor objections as “Oil revenues have been incorporated into state budget projections for the next several years. There is no institution in Iraq at present that could properly implement such a distribution system. It would take substantial time to establish, and would have to be based on a well-developed state census and income tax system, which Iraq currently lacks.”

In fact, compared with most of all the other challenges that faces Iraq today, to develop a fair and transparent per capita oil revenue sharing system, should be relatively easy and I believe that the World Bank has the required capabilities to successfully complete such mission.

And besides, after helping to free the Iraqi people from those who oppressed it, is not helping them to gain access to their own resources the only thing left to do?

A victory for Hugo Chavez?

Last Sunday’s presidential elections in Venezuela have been hailed as a victory for Hugo Chavez. Far from it!

In the previous election in 2000 all the votes of the opposition against Chavez added up to 2.5 million while in this election, certified by the Chavez influenced, the home based opposition against this self proclaimed world leader almost doubled as it came in with more than 4.3 million votes, and that does not include of course all those who did not manage to pass all the electoral obstacles.

Another fact that perhaps also should be reminded to the international Chavez adoring community, is that not one single of these 4.3 million voters is represented in Venezuela’s 167-loyal-to-Chavez-and-zero-against congress.

Iraq needs mercenaries for peace

As Venezuelans know so well, it is impossible to build a real democracy upon abundant oil. Democracy is about creating a level playing field, and, therefore, if you want a real chance at democracy in an oil-rich land like Iraq, you need first to distribute their oil revenues equally among all their citizens. For Iraq, distributing their oil revenues upfront, in cash, would carry a special significance since not only would it help to solve the problem of their oil being located only in some parts of the country, but it would also foster an additional bond of national identity among all the Iraqis, be they Sunnis, Shiites, or Kurds. The possibility for each citizen to receive perhaps a couple of thousand dollars a year would promote interest in reaching normality. The World Bank could be the perfect candidate to help implement a very transparent sharing of the oil revenues for Iraq.

In a world where so frequently mercenaries are used for wars, why don’t we help Iraq contract their own citizens, using their own money, to be mercenaries for peace?

To the last penny

I was heading a delegation in Tanzania, which at least was thought to be important, when we were seated around some modest tables to hear a report on the use of a donation that for 7,614,873.60 TZS (approximately $8,000) had been given to a very humble school for its total renovation. Its Head Teacher, for about ten minutes that seemed immensely long for us due to the litany of figures, explained to us in great detail how the money was used, down to the last penny. We thanked him and left. 

After a while, reflecting on what we had witnessed, I realized that more than an accountability, the act represented an important reminder for all of us that when accepting responsibility for management, this should always be based on the principle of “to the last penny” and cannot, as is so often, taking it lightly rounded up “to the last trillion”. I was very sorry that I had not thanked the Head Teacher more effusively for his report. 

I say all this because the "La Negra" program offered by Manuel Rosales and which consists of giving the 2,500,000 poorest families a direct participation of 20% in the income that we obtain from the liquidation of our oil, would necessarily create the need to report every penny of 100%, so that the promised 20% can be set aside and delivered to those for whom every penny counts, without a doubt. 

Since the State cannot be allowed to compensate the income that it delivers with La Negra with greater public debt, which could lead us to where the rope breaks, the program also implies the need to create a Supreme Audit Entity so that autonomous, report to society everything related to our public indebtedness, down to the last penny. 

Likewise, with 2,500,000 families directly interested in the results of oil activity, it will also be necessary to consider creating what I have always requested, an office of the type of oil Ombudsman so that, on behalf of society, it can monitor everything that PDVSA and the Ministry of Energy are brought up and defend us, to the last penny. 

There are those who accuse the "La Negra" program of being populist, but the truth is that if executed correctly, it would transform the political-economic realities of our country, producing a modern participatory democracy, so we all have an interest in the daring it now and in the guarding it thereafter.

Translated from El Universal

An ättestupa for the baby boomers?

If countries were open-ended investment trusts, then if the average lifespan was eighty years, a newborn baby should have eighty shares, a fifty-six-year-old consultant (like me) should have only twenty-four shares, and anyone over eighty should count his blessings and be happy with the one he’s got left. From this perspective, our current democracy is a complete farce. I say this after having read the truly hair-raising World Development Report 2007 from the World Bank titled Development and the Next Generation. It so clearly evidences our failings as a society and the fact that most of those coming after us are giving up on participation and hope, with damned good reasons.

The report covers ages 12 to 24, but in From Schooling Access to Learning Outcomes – An Unfinished Agenda presented by the Independent Evaluation Group of the World Bank (IEG) we also read that many even younger students in poor countries (maybe in some rich countries too) can go through a complete primary education without actually learning how to read, which evidences systemic corruption on a massive scale and that completely shames initiatives such as Education for All. Having schools deliver on the absolutely bare minimum expectations could be a truly worthy and concrete goal in the current anticorruption drive of Mr. Paul Wolfowitz, the President of the World Bank. Normally it takes decades to be able to evaluate the programs of the World Bank, but, in this case, it could actually be done by the end of next semester.

It is said that in Scandinavia, a long time ago, when the older people felt that they stood in the way of the young, they threw themselves off steep cliffs known as an ättestupa. These days it could seem like quite the opposite, if we consider how our democracies might have been captured by us baby boomers. We need to revise urgently how our society deals with the next generations, before they throw us down an ättestupa—for damned good reasons!

Where is the “Worst and Best List” in the development debate?

Alan Beatti of the Financial Times in The Great Unknown, July 7, debates lucidly the Development Debate and to that effect enlists the opinions of some of the most prominent Development Talkers. What again is left out from the debate, perhaps as it is another inconvenient truth, is the fact that just a little bit more of real accountability for the actions of the developers could go a long way to stimulate better thinking and better implementing.

The following is an extract of my Voice and Noise where I recount part of my experience as an Executive Director at the World Bank.

"The standard feature of any evaluation and monitoring system we know of, is the use of some sort of distribution function, be it the normal bell-shaped curve or any other type. It somehow indicates the extremes; for instance, the worst 5% of the organization’s performance and the best 5%.

Any board, if it wants to be effective, cannot spend a lot of its time in the grayish middle area of the function, but has to concentrate its attention on the extremes of the curve, weeding out poor performance and learning from bad experiences, so as to avoid being dragged down into mediocrity, while guaranteeing the promotion of the best and learning from its successes, so as to advance the organization’s goals.

These distribution curves are totally absent in the evaluation brought forward for the Board to consider . . . it behooves us to make certain that they are adequately introduced. On a daily basis, the needy people of our constituencies are harshly evaluated by life in very cruel terms, so we might as well ask ourselves whether we should not be a little stricter in our assessments, living up to the accountability we so much preach to others."

Lacking the worst and best lists, budgets are allocated more on a per capita or on a per program basis than on the basis of what is working and what not. What private organization could function or survive this way?

Lacking the worst and best lists, scarce resources are further diluted. The possibility of concentrating the use of resources on a few countries and on a few programs to get some issues completely right in a sustainable way is almost non-existent. What private organization could function or survive this way?

I am absolutely sure that Robert Calderisi, William Easterly, Joseph Stiglitz, Andrew Charlton, Jeffrey Sachs and even the raconteur Alan Beattie are all great professionals and are all doing a splendid role verbalizing development issues but, except for passing some exams and delivering some papers in time, has anyone of them really been in a position of “either you deliver or you get out?” I wonder, not because I have anything against them, on the contrary, I wonder because it is our duty to wonder whether that might be part of the Problem, most especially since because of the Problem people are dying and the world is getting to be a nastier place. 

Friends, can we really afford not to step up our requirements that World Bank, IMF, and UNDP really deliver?

The world needs more than a theme park of anticorruption efforts

My comments on Strengthening the World Bank Group's Work in Governance and Anticorruption

Dear Friends,

Recently Moisés Naím in an article, Bad Medicine, in Foreign Policy (March–April 2005), suggested that the world might have become too fixated on battling corruption. Of course, blaming corruption for all evil is stupid, and Naím’s article is a good aide-mémoire on that, but the alternative of turning a blind eye on corruption sounds so much worse! Therefore, we very much welcome the World Bank’s efforts to do more and better. The Naím article also cited Daniel Kaufmann as saying, “The last 10 years have been deeply disappointing . . . Much was done, but not much was accomplished. What we are doing is not working,” but this has to be interpreted as a clamor for better strategies and not as a capitulation.

Given our current global problems, a corrupt world—a world where everyone is looking for his or her short-term gratification—is just an unsustainable world, and so it is imperative that the many difficulties that come up while fighting corruption should only strengthen our will to fight it. That it has to be done intelligently is obvious. Also, while doing so, we need to heed Naím’s warning that “before we engage the enemy, we should take the equivalent of the Hippocratic oath, and promise first to do no harm,” That goes without saying.

I can in many ways demonstrate the importance I have given to the issue of fighting corruption, in any of its manifestations, not the least during the two years when I was an Executive Director of the Bank, and when, as an example, I requested that some major documents relevant to the issue should be discussed at a full Board meeting, with the presence in person of the Bank’s president. The fast-track procedure that had been envisaged in my mind belittled its importance.

In this respect, I am very grateful for this opportunity that allows me once again to voice my opinion publicly on the issue of fighting corruption and the World Bank’s role in this struggle. I will do my utmost to try to keep it as brief and concise as possible. Likewise, I shall use as a reference the discussion document presented as part of this consultation process.

1. First and foremost, corruption, in all its manifestations, has its origin in those frailties that affect all human beings. In this respect, any attempt to classify the world in terms of the corrupted and the not corrupted is in itself corruption. Accepting this fact, with humility, is an absolute prerequisite if we are going to reach the necessary enlightenment to move forward and upward as a civilization. In fact, what we now observe in many of the supposedly corruption-free developed countries may in fact just be some better-camouflaged and more resistant strains of the same virus. In this respect, we urge the World Bank to eliminate from all its documentation any holier-than-thou manifestations, explicit or implicit, since these serve no useful purpose. That the Bank should listen to its shareholders and look for guidance goes without saying. However, to qualify some shareholders as having “significant experience in assuring sound governance policy and practices,” (1) in this context, is not helpful since in its anticorruption efforts the Bank will do its best when it works to help all shareholders, and not some specially singled out. This, of course, has nothing to do with limiting the possibilities of the World Bank to speak out in very clear terms against any particular outrageous manifestations of corruption. Indeed, we believe it should, much more forthrightly than it has in the past.

2. The fight against corruption, like so many other aspects of life, lies on a continuum where it is impossible to ascertain validly and precisely just how much has been achieved. The Bank should refrain from trying to categorize achievements in these matters, and most especially its own, since the resulting flag-waving contains many elements that bear uncomfortably close resemblance to corruption. For instance, a phrase like “The World Bank has come a long way on governance and anticorruption in a brief period” (8) is a no-no, not only because the distance traveled in that short time might be almost insignificant relative to the distance we need to travel, but also because it is disrespectful of all the efforts that must have been made earlier. In many of our developed and developing countries, one of the most disgraceful manifestations of corruption occurs when governments and politicians use taxpayer money to advance their own image. Thus, the Bank needs to set an example and refrain itself as much as possible from doing just that.

3. Corruption has many faces. Unfortunately, we tend to single out just some of them by placing them in a display case that contains the typical products of “administrative corruption—such as petty bribes to utility officials.” (11) Likewise, we highlight those that have “deep political roots—such as state capture and procurement corruption” (11). Selecting these and remaining silent about so many other forms of corruption is, again, to corrupt the debate. It is somehow like buying some cheap souvenirs as evidence of “having-been-there.” In my own country, Venezuela, the single worst corruption taking place is so large and so encompassing that most people do not even see it. I refer to the fact that the domestic price of gasoline is kept, in terms of United States currency, below 4 cents per liter, below 15 cents per gallon. That artificially low price transfers about 10 billion dollars per year as regressive subsidies from those that do not buy gasoline to those that do. In the same vein, the way much public indebtedness is contracted all over the world in order to support consumption and then it is justified on the dubious grounds that the debt level is considered to be sustainable, when the grim reality is that it will have to be repaid by future generations. This is a massive corruption to which we have just conveniently decided to turn a blind eye. The challenges in front of us, in issues such as global warming, do indeed require the World Bank to step up its efforts to find adequate mechanisms for cutting down carbon usage. It must do so in noncorrupt ways and that minimize the number of free riders, as far as possible. Therefore, in this respect, we cannot afford to let the Bank limit its concept of corruption, or its anticorruption efforts, until they become merely the equivalent of a theme park with a couple of fun-and-games distractions.

4. Many expressions of corruption are hideous and then again many seem almost harmless. However, where to draw the line that differentiates them, we must decide by personal conscience and by public law. And we must do so without releasing external forces of an inquisitorial nature, witch hunting that could be even more corrupt than the corruption it is fighting. In this respect, we should be a bit concerned when reading about an explicit call for fighting corruption “as assessed by staff professional judgment.” Staff members, of course, like all the rest of us human beings, do make implicit judgments all the time, but this should not confer on us any formal attributes of judges. A conscious effort should be made at all times to be very descriptive and open and clear about what the Bank’s terms-of-engagement are. We must leave as little as possible open to nontransparent judgments.

5. Notwithstanding all that has been said and that reflects how hard it is to get a solid handle on the issue of corruption, these difficulties are further compounded by the fact that fighting it still requires being able to draw some very clear lines. In this respect, we need to warn that when it is said that the Bank, through “Country Governance and Corruption Assessment,” (23) “calibrates the level of attention to governance and corruption to the assessed levels of risk which these issues present to effective poverty reduction” (24), we could be instructing the Bank to enter into a formal and quantitative approach that, by trying to measure corruption in relative terms, entails a moral hazard that could in fact make the fight against corruption more difficult.

6. Paradoxically we must also remember that corruption is about breaking societal norms and, though most people might not be able to specify exactly where that line should be drawn, most frequently they still have quite an accurate idea of when they or others are crossing that line. Therefore when the document mentions that “A more explicit anticorruption focus in fiduciary approaches is to be adopted,” (33) we need also to warn about the possibility of then drawing lines in such a way that it would permit actions that until that moment had been quite correctly prohibited though not in an explicit way. This is, by the way, exactly what many of us coming from developing countries believe might have happened when we observe very strange and almost inexplicable consequences of laws that regulate lobbying activity. We urge the Bank to dare help the world draw up and enforce lines. However, let us be very clear about it, that doing so carries with it huge difficulties and responsibilities.

7. In fighting corruption we always need to be aware that ineffectively wasting scarce resources is just another form of corruption. For instance in the extremely important issue of environmental protection, currently a lot of resources are wastefully spent on inefficient, stopgap measures, like hybrid cars, instead of developing the efficient and sustainable long-term solutions we all need. Similarly, in fighting corruption, the Bank also needs to be careful not to waste resources on microlevel enforcements, just for show, instead of helping to develop the sustainable and effective anticorruption tools the whole world needs.

8. With regards to the Bank’s own direct role and responsibility in the anticorruption fight, we would like to ask questions about or comment upon the following:

a. What should the consequences be for Bank staff if they are conclusively found out to have participated directly in an act of corruption? In the same way as it should be of the highest priority to protect Bank staff adequately from all risks related to their work, including of course all those that could be derived from fighting corruption, it is also important, for the credibility of the Bank, that these protections do not unduly isolate the Bank’s staff from the necessary accountability. The operational guidelines in this area need to be very transparently disclosed since the current situation of having a public list of professionals barred from engaging with the Bank on the basis of some fraudulent and corrupt actions, named and shamed, while not one single Bank staff name appears on any list, is obviously incompatible with the role the World Bank wants to play.

b. “Reputational risk” (23) as currently presented is irrelevant to this public debate and should be deleted. Of course there are risks for the Bank’s reputation, basically in anything it does. That is just how it is, but discussing its avoidance sounds quite similar to an investor banker expressing to his clients his concerns about how to minimize his own reputational risk, were they to lose all the money he manages for them.

c. The “reputational risk” that we find really relevant though, is greatest when the Bank’s own good reputation could risk being seen as camouflaging acts of corruption of others. In this respect, I recommend that in the public documentation of all projects financed, there should appear a simple one-page Public Notice that lays out the most important risks for corruption in the operation, what is being done to diminish them, and, much more importantly, what the World Bank cannot and should not be expected to do. That note should then be placed on the Web in order to enlist the civic-minded civilians in the fight.

9. Many of the specific suggested actions in the document point in a correct direction, but in order to help make the most out of them, we would like to make the following comments:

a. Of course, the World must strive to give noncriminals shelter from criminal pursuit when they cross a border. However, it likewise needs to avoid allowing criminals impunity while protecting the noncriminals. We are not exactly sure about the role of the Bank in this issue but, in its role of promoting global applicable knowledge, we absolutely agree that in the “restitution of assets to countries plundered by corrupt leaders,” “it has an important advocacy role to play.” (40)

b. The Bank should help to make the most of the new information technologies in terms of advancing the general transparency of governments. But, to do so effectively, the best way to move forward is to develop a series of good-practices and how-to-do-it standards and then to make them available to everyone, not only to the usual suspects. In this respect we very much would commend all efforts aimed at a “common framework specifically for diagnosing corruption at the sector level.” There could be no more effective start against corruption than knowing specifically how it works, something that is also quite correctly being brought up when mentioning the value of IFC gaining “experience and familiarity with industry practices” (38).

c. In the case of innovative Global Partnerships such as the Extractive Industry Transparency Initiative, we can just speculate on how much more results and credibility they could deliver if they could be developed and tested in rich countries, instead of having to make their very brave debuts in the most difficult places and circumstances.

d. Corruption—it takes two to tango—and so with respect to the role that the World Bank should play in generating global conscience about the need of joining together when fighting it, and fighting it on all fronts, the sky is the limit. For instance the Bank should be willing to accept playing an Independent Evaluation Unit role with regard to initiatives like the OECD’s Anti-Bribery convention.

e. The document calls for more actions enlisting the Private Sector in the fight and building up on some very valuable initiatives that bear resemblance to the Equator Principles methodology used by IFC with respect to the environment. We much applaud them, but we need to remind them that the true sustainable worth of these programs lies in their absolute fiduciary honesty. Therefore, it is vital to maintain the strictest of safeguards and always make sure that independent civil society ombudsmen are sufficiently empowered to make very sure that these programs are not captured by other agendas.

e. The document asks, “Can civil society be used as an instrument for ensuring accountability and minimizing risk in Bank projects? Are there individual or institutional ‘champions’ of good governance—whether within government or among local civil society—whose efforts can be supported by Bank analysis advice or operations? especially through lending?” (21). To these questions, we have to answer, “Of course! Is there any other way?”

10. As most anticorruption efforts are closely related to the societies’ general law-enforcement capabilities, starting with the investigative (38), we also need to remind ourselves of the importance of not imposing demands that exceed a government’s capability. Doing so could lead to a further erosion of its credibility, or, even worse, to opening up new growth opportunities for all those forces who generally participate in illegal and illicit markets. In this respect, an enforceability assessment needs to be a part of any anticorruption initiative.

11. Also the World Bank should look into how corruption is sanctioned, and whether resources for fighting it exist in a way that truly helps the society to advance. In many of our countries, one of the main hurdles in the fight against corruption is the lack of resources needed to be able to sanction the faults, like prisons that could be deemed human. This is a very real problem, unfortunately much ignored until now by the World Bank and others, not least the governments involved. Given some recent experiences, most notably how criminal bands like the Central Americans’ mara salvatrucha were born in prison facilities in the USA, and that is making it so much more difficult to fight poverty, we cannot afford to ignore the problem of how inadequate sanctioning facilities might even make the problems worse.

Friends, let me end by assuring you that these opinions are, as far as possible, not intended to preach a puritan unachievable perfection. They are given only in the sincere hope that they could help stimulate those small efforts needed to be just a little bit better, and which, at the end of the day, is what can move us all forward toward a better future. If some of the observations have fallen into the category of being obnoxiously self-evident, excuse me, but in this issue of corruption it is not that easy to separate the extremely important from the absolutely vital.

Yours sincerely
Per Kurowski
A former ED 2002-2004
Now just a private citizen

So you might all understand Chavez better!

I would just like to introduce here a small piece of information quite frequently ignored and that could help to shed some light on who this Hugo Chavez is and whether he is a good president and a good leader for Venezuela.

At this moment, almost eight years into Chavez’s XXI Century Socialism, gasoline is being sold in Venezuela at 3.7 cents of dollar per liter or less than 15 dollar cents per gallon.

With this marvel of a public policy Chavez, besides stimulating a runaway consumption of gasoline with all its environmental consequences, based on the international cash-opportunity cost manages to transfer a regressive subsidy of about 10 billion dollars, or about 10% of Venezuela GDP, or about 100% of the GDP of a country like Bolivia, from the poor who do not buy gasoline, to those that love to guzzle it up.

For comparison the gasoline price in an oil country that seems to been doing things right is 52 times higher and in the USA of Mr. Bush, Chavez´ sworn enemy, and the Cuba of Castro, Chavez´ best buddy, the price is only about 25 times higher. Even in the land that has inspired the term of oil-Saudism the price is seven times as high.

Now you try to draw your own conclusions of what Chavez is all about! Are you clear now?

Now so to also help you understand the current opposition groups that are against Chavez, let me inform you that they do not mention this issue either. Are you clearer yet?

A dissonant harmonization

The IMF has a compact agenda and is governed by an as homogeneous group of power agents you can get – Central Bank bankers – while the World Bank is much more split up, on all fronts. In this respect there can be no doubt whatsoever about who will have to shut up the most, if collaboration between IMF and the World Bank starts morphing into a silencing harmonization.

Imposing too strict harmonization safeguards on all those bright and dedicated professionals who work in the Bank and in the Fund, and dare to be creative, risks silencing the voice of those the world needs the most.

The following are the three observations I sent in reply to the IMF and World Bank's public request of comments on the proposed improvements to Bank-Fund collaboration. Though the issue has a quite innocuous ring to it, “of course they should collaborate,” to me it goes very much to the heart of how to handle the world of tomorrow in a world where relations and interdependency of countries are intensifying, day by day.

The first comment relates to the overriding issue of world governance, the second to what I refer to as the biodiversity of ideas, and the last to give an example of a specific area where previous collaboration might have had some negative consequences. (As this is no new issue to me and as I have been an Executive Director at the World Bank and recently finalized a book, Voice and Noise, I also appended some very specific and relevant extracts from it.)


1. How should we try to achieve Good Governance for our World, from the center or through participation?
“The Bank and the Fund share the same goal of raising living standards in their member countries, but their approaches to this goal are complementary, with the IMF focusing on ensuring the stability of the international financial system and the World Bank concentrating on long-term economic development and reduction of poverty.”

Clearly the differences in the two approaches, which are indeed complementary in the long term, provide room for many conflicting positions on how best to balance the different objectives in the short term. In this sense, what is really at stake when discussing “collaboration,” or “harmonization,” as it has also been called, is whether international financial organizations should try to settle all their many differences in-house and present a common front, or whether they should spell out their differences and let the countries decide for themselves.

As so many of the local and global issues have by nature no clear and absolute answers, their debate could naturally provoke local or global confusion, and inaction, at a moment when both individual countries and the world at large is in deep need of responsible decision making, and this could speak for more collaboration. But, if one were to consider the possibility that the Bank and the Fund, by harmonizing their differences, could in effect be killing the debate, in a sort of collusion of intellects, then this could also make a mockery of all those many recent discussions about the need to ascertain stronger “ownership” by the individual countries of their own decisions.

There is no clear solution to the above, but I for one have a feeling that if the World and individual countries cannot simply get their act together in a participatory way, then we are simply heading toward a one-centered world in a sort of End of History Empire, or into a Cold War II scenario, something that is perhaps even more worrying when the probable need for a new standoff between sides could seriously interfere with the need of solving urgent mutual global problems, such as the destruction of the environment.

As neither of the previous alternatives carries much appeal to me, I sincerely wish to keep alive, for as long as possible, the dream of our world being able to handle the challenges among all of us, and in that sense I would not favor killing the debate but instead being even more forthright about the difficulties, about the pro and cons, and allowing and stimulating the participation of all.

Yes there comes a moment where we as a world cannot afford destructive pariahs, who will have to be controlled, therefore diminishing the bio-diversity of governments, and perhaps also that way, little by little, leading us into the same end results listed above but, given a choice between being dominated or being co-opted, I must much prefer the second.

In a nutshell, collaboration between the Bank and the Fund, beyond fairly basic needs, does not go in the direction of world democracy and, if we are not willing to defend democracy on a world scale, our strength to promote it for individual nations is much reduced.

2. The need for a biodiversity of ideas
One of the most dangerous parts of the collaboration between the Bank and the Fund is that as it will occur between two already “serious consensus-grinding machines,” it could only further the reduction of the much needed biodiversity of ideas.

Frankly, and to be a bit blunt about it, to think that limiting the discussions on how to balance stability with the development movement to an internal Bank and Fund pre analysis, as if they are the anointed sole bearers of truths, is too arrogant.

In the same way as the next world-saving medicine might find its origins in a little organism in a tropical forest with a large biodiversity, so could the next world-saving idea be found in the poorest of the poorest underdeveloped nations. Do not shut them out or tell them what to do, but invite them instead to the debate. It behooves us all.

At a moment when the world is in need of a renaissance of ideas, do not slap it with some consensual dogmas.

3. An example of a doubtful harmonization

I hereby permit myself to quote in length the following self-explicatory note from my Voice and Noise.

The Financial Sector Assessment Handbook—a postscript

In September 2005, the World Bank and The International Monetary Fund published the Financial Sector Assessment Handbook and as I read it, it is a perfect example of what I mean by excessive harmonization, so I need to make a special comment here.

You might have already read extensively in the chapter “BASEL—Regulating for what?” about my strong belief that the world is giving too much emphasis to how to avoid crises potentially occurring in the financial sector, as opposed to how that sector is performing its role intermediating credits, generating growth, and distributing opportunities for access to capital. Yes, bank crises are setbacks, but, if in their wake they leave continuous step-by-step advances in development, we might still prefer that to a financial sector that receives a perfect bill of health but does little for the rest of the economy. In fact, such avoidance of a crisis is most probably just a temporary mirage. Developing is balancing various risks, not looking to eliminate one.

Well, in this handbook, which is more than 450 pages long, only a very few pages, perhaps fewer than ten, salute the flag of assessing and helping the banks perform their true function in development, the WB’s basic agenda. Instead, most of this handbook centers on how to supervise banks and minimize the risk of bank failures, the IMF’s basic agenda. Chapter Four contains most of the little there is about development, and “4.6.4 Development Obstacles Imposed by Unwarranted Prudential Regulation,” gives us sixteen complete lines about how entry or start-up regulation and uneven supervisory practices can hamper competitiveness and create “undue reliance on tools that are likely to disadvantage small new firms (such as excessive mandatory collateralization requirements for bank loans).” If I have ever seen what amounts to mere flag-waving, this is it, but, on the other hand, I must admit that these flag-wavers are at least quite transparent. Under the interesting subtitle “The Demand-Side Reviews and the Effect of Finance on the Real Sector,” we can read, “development assessments are interested in the users and the extent to which the financial services they receive (including from abroad) are adequate to their needs. Development assessments must express a general view on this issue, though in many countries, especially low-income countries, detailed quantification may be beyond the scope of the assessment. Friends, I rest my case. It is quite obvious that on this vital issue, WB has been harmoniously silenced.

Pssst… just between us, I feel that what’s valid for us is equally valid for the IMF. The Fund could also benefit from the clarity of not having to harmonize with someone who has other institutional objectives. End of quote.

PS. The Malan Report It states: "Good examples of collaboration involve the Financial Sector Assessment Program (FSAP)". So as you can see they did not listen one iota to what I said.

PS. As an ED I had stated much of this at the Board or the World Bank

My Voice and Noise on the Millennium Development Goals

We must aim higher!

The first of the MDGs has us trying to reduce in half by 2015 the proportion of people living on less than one dollar a day and of their suffering hunger and its intentions are good, and the world needs to support it by reaching a high economic growth, much more equitably distributed around the world, though where can we find the World’s Gini coefficient?

Nonetheless, I feel that we should always remind ourselves to consider that goal an absolute minimum—not only because of humane and civilized motivations, but also because a person earning a dollar a day and not having hunger, does really have very little to do in making a world that is increasingly more interconnected become more sustainable or politically viable.

No! As, instructed by a Chinese proverb, we need to aim to the stars since even if we don’t reach them we will at least reach much higher than if we aim at something on our level. In this sense, I believe we need to review all our current efforts, as if the income goal was at least 10 dollars a day or, if it makes you feel better … 9.99.

There should be life beyond 2015

Yes I agree that the MDGs are undoubtedly useful to focus and to call to arms all those willing to fight for a better future. Nonetheless I have currently the uneasy feeling that the year 2015, more than the general timeline it should represent, is turning more into a finishing line, after which all the runners might lie down to catch their breath. Hey, we have even heard about proposals of borrowing against aid commitments after 2015, to spend it all before 2015! Colleagues, when I look around the table I imagine that most of us will have grandchildren come January 2016, and it might behoove us to think of life after 2015.

The Private Sector’s MDGs

How I would like to see a group of leading hands-on entrepreneurs from the private sector develop what they believe should be the MDGs, and compare their ideas with what we currently have. We might be up for some surprises!