Initial Progress and the Ascent Ahead Our Difficult Climb: Initial Progress and the Ascent Ahead Core Course on Governance and Anticorruption PRMPS & WBIGP Presented by: Sanjay Pradhan Director Public Sector Governance Presented to: February 14, 2005 The World Bank

Overview Possible Paths … A promising start … Tremendous increase in awareness Explosion of activity, cutting-edge diagnostics Major programs launched, with some early successes … but we are also facing formidable challenges To have major impact, need to tackle deeper issues

Explosion of activities: Examples of major programs launched across countries Latvia (anticorruption) Ukraine (tax admin) Russia (Customs/Treasury) Albania (public admin.) Kyrgyz Republic (governance reform) Jordan (civil society) Cambodia (PE; forestry) Ghana (PE accountability) Philippines (transport) Guatemala (WBI Core) Indonesia (local governance) Gabon (Water/Electricity) Colombia (diagnostics & civil society) Bangladesh (civil society) Uganda (PRSC; education) Pakistan (devolution) India – Andra Pradesh (power; e-gov); Karnataka (right to info) Bolivia: (public admin.) Tanzania (PSR) Ethiopia (decentralization)

But on average, no evidence of significant improvement on control of corruption … Good Source: ICRG, 1994-2002. Subject to margins of error, as it is based on only one source. Poor

The challenge of politics: Some programs that have stalled – and why… The challenge of politics: No political ‘buy-in’ – despite plethora of diagnostics and pressure from civil society: Bangladesh Difficulties in sustainability when there is no political traction: Georgia judiciary Opposition from powerful vested interests in Cabinet & bureaucracy: India, Karnataka – right to information

Lessons learnt, broader implications … a long way to go … Excellent at diagnostics Good at technical solutions and design Good at addressing the ‘surface’ manifestations These appear to be working when the underlying environment is conducive: Committed leadership Coalition for reform Capacity Overcome vested interests against reform Enhance ‘demand’ pressures for reform Reverse the “culture” of corruption in the public sector Tackle political drivers of corruption (e.g., party financing) Within WB, mainstream across sectors and countries But, struggling to address ‘deeper’ underlying issues

The way forward … a long journey … CORRUPTION ¥ 25? Years

¥ CORRUPTION The way forward … shortening the journey Years Shrinking the time horizon Strengthening the “demand” for reform Improving the “supply” of reform CORRUPTION ¥ 25? Years

¥ CORRUPTION The way forward … shortening the journey Years Shrinking the time horizon World Bank Lending AAA Partners (e.g. TI, bilaterals) Partnerships Strengthening the “demand” for reform Improving the “supply” of reform CORRUPTION ¥ 25? Years

¥ CORRUPTION The way forward … shortening the journey Years Shrinking the time horizon 10? New New approaches World Bank Lending AAA CORRUPTION Strengthening the “demand” for reform Partnerships Improving the “supply” of reform Partners (e.g. TI, bilaterals) ¥ 25? Years

The Way Forward: Strengthening the “Demand” for Reform Media – Philippines Center for Investigative Journalism (PCIJ) Bank provided assistance through its ASEM grant facility for training on investigative journalism. PCIJ would provide training. PCIJ investigations instrumental in impeachment trial of then President Estrada and his resignation. Enhance domestic pressures for reform Assist civil society in monitoring governance reforms: Slovakia Procurement, Indonesia KDP Support CSOs & FBOs that mobilize citizens in favor of government performance: PAC, Bangalore Help SMEs to organize & mobilize against capture by large vested interests: ECA Strategically support responsible media on anticorruption: Philippines Center for Investigative Journalism Strengthen international pressure for reform Use international arena to re-energize the agenda: GOVNET Say “no” when warranted: Kenya, Coordinated action by OECD-DAC for high-risk countries Use the international platform and indicators to highlight good and bad governance countries: TI, CPIA, KKZ Strengthen global initiatives: OECD Convention, Anti-Money Laundering OECD Convention – Anti-Money Laundering The Bank program, developed jointly with the Fund and in collaboration with the Financial Action Task Force (FATF), the regional FATF Style Bodies (FSRBs) and the UN Counter Terrorism Committee focuses on: Comprehensive assessments of client countries’ compliance with the FATF 40+8 Recommendations, using a global methodology endorsed by the Bank/Fund Boards in September 2002 and adopted by the FATF in October 2002. A pilot program of country assessments is now underway in 22 developing countries as part of our Financial Sector Assessment Program (FSAP). The assessments, which help developing countries to recognize and focus on legal and institutional vulnerabilities, are followed up with the delivery of targeted technical assistance (TA) supplied either by the Bank/Fund or by other providers of TA, in particular, the G7. In response to the FATF request last month, JDW assured the FATF President that the Bank would respond on a priority basis to countries seeking assistance to combat the financing of terrorism. The first team of Bank/Fund experts are going to Mauritius next week following the authorities request for assistance to enhance their capacity to detect and deter terrorist financing. To help donors and providers of TA avoid duplication and prioritize the delivery of TA, the Bank developed a global coordination Database that is available to TA providers through the World Bank’s web site. Country requests for TA are collected by the FSRBs (or if the country does not belong to an FSRB the Bank takes responsibility for collecting the requests) and posted on the Database. The Database permits the G7, as well as other TA providers, to view developing country requests for TA on one easily accessible template. In addition to individualized country TA, the Bank in partnership with the Fund, the FATF and the FSRBs, organized two major technically based workshops covering 30 countries in the ECA and LAC regions. Additional workshops are underway for EAP,SAR, and Africa. To reach high level country policy makers in every region the Bank initiated a Global Learning Dialogue Series using video conferences for 42 developing countries in FY03. Additional video conferences and sub regional workshops are planned for FY04 along with the publication of an electronic Country Reference Guide that provides practical steps for implementing the FATF 40 plus 8 Recommendations. The Bank helped the UN-Counter Terrorism Committee to develop a data base (similar to the Bank Database) which they can use to track requests for technical assistance in countering the financing of terrorism. CORRUPTION

The Way Forward: Enhancing the “Supply” of Reform Better understand and manage political economy of reforms: Political stakeholder analysis (EAP), education reform LAC Build leadership capacity, change management ethos: Leadership/ethos pilots, LICUS Support AC efforts that improve service delivery that citizens can observe: e-government, India Help reformist governments overcome obstacles Help tackle political drivers of corruption Address issue of party finance disclosure & regulation: DFID, TI, OECD DAC, national NGOs Work with media & Parliaments on corruption: Indonesia Target reforms that can indirectly reduce political corruption: public procurement, Bangladesh Rebuild ethos of public service Innovative pilots to re-inculcate commitment to public service: Ceara, Brazil Support CSOs/FBOs working towards a transformation of values/ethics in the public sector: Global Integrity Alliance Encourage better corporate governance & codes of conduct: TI business principles for countering bribery

Strengthen staff fortitude and incentives to say “no” when warranted The way forward … Internal incentives World Bank Strengthen staff fortitude and incentives to say “no” when warranted Deepen and enhance leadership and ownership of anticorruption agenda across sectors – beyond PREM

Q&A and Discussion