Author Archives: Jorge Godoy Coy

Promoting policy debate in Argentina

One of Agenda for the President memos (Image: www.cippec.org)

Think tanks play a significant role in democracies around the world. They provide insightful analysis about pressing issues and recommend feasible policy interventions. This is precisely what CIPE partner Center for the Implementation of Public Policies Promoting Equity and Growth (CIPPEC) in Argentina has been doing in the last decade. Yet CIPPEC’s work also bridges the world of ideas with the world of policy and politics. With its Agenda for the President initiative, CIPPEC has sought to improve the quality of policy debate during this busy electoral year in Argentina. A general election is scheduled for October 2011 and numerous sub-national elections have been carried out throughout the year.

Like in many other countries, Argentinean policy discussions during election season tend to be vague and insubstantial. Remaining vague sometimes is part of a candidate’s campaign strategy. However, voters and investors alike need to hear more from candidates about what their general statements of promoting growth or improving education really mean. CIPPEC’s Agenda for the President gets to that task by developing a series of policy memos on 15 key issues including monetary and fiscal policy, education, transparency, and global integration. The memos identify policy issues that CIPPEC believes should be the priority of the President elected in the October elections and the new government.

In this Feature Service article, CIPPEC’s Executive Director Fernando Straface explains what drove Argentina’s leading think tank to play an active role in this election season through its Agenda for the President initiative. Straface highlights that, regardless of the election results, the issues presented in CIPPEC memos aim at spurring a meaningful debate throughout the months leading to October’s election and present a policy roadmap for the next President. The 15 policy memos CIPPEC produced can be found here.

Article at a Glance

  • Political discussions in Argentina have traditionally focused on candidates’ personal attributes rather than on key policy issues.
  • CIPPEC has been working to engage presidential
    candidates, key political actors, private sector, civil society
    organizations, and journalists in substantive policy debate
    ahead of the October 2011 elections.
  • CIPPEC is using its 15 Memos to the President on
    issues ranging from social policy to good governance to
    spur discussion and build conditions for the first-ever
    presidential debate in Argentina.

You can read the full article at:
http://www.cipe.org/publications/fs/pdf/083111.pdf

Looking for local governance stories

A local district council office in Kerala State, India. (Photo: Jason Diceman via Flickr)

Do you know of a well-intentioned legal framework in your country that seeks to increase accountability, achieve greater representation or encourage efficient service delivery, but lacks effective enforcement by local governments?

Are you familiar with local government practices that contradict laws on the books?

Do you know of civil society organizations, including business associations, conducting policy advocacy campaigns for ensuring effective enforcement of the laws or leading other efforts to improve local governance?

Do you have a knack for writing and for producing investigative economic journalism pieces?

If you answered yes to any of those questions and are a talented journalist or practitioner, CIPE and Global Integrity invite you to share with us your local governance stories. We are interested in stories focused on the role of both non-governmental actors and governments in promoting better enforcement of laws and regulations on the books.

Your story could describe, for example, how or why local governments fail to implement laws or regulations that reduce cumbersome business procedures, and how that under-performance affects entrepreneurs. Your story could also describe efforts by non-governmental organizations to identify public procurement practices at the city or municipal level that diverge from legal mandates, thereby increasing the risk of corruption. Your story could describe a policy advocacy campaign led by a civil society organization to ensure that laws are effectively enforced.

Local governance should be the focus of your story. It is in cities and municipalities where citizens have their first and closest interaction with government officials. Similarly, local governments tend to be responsible for the provision of services, infrastructure, quality of life, and other forms of support that both local and foreign-owned firms need to effectively participate in the market. As a result, well-governed cities and municipalities that enforce laws effectively create growth opportunities for business and geographical areas that increase productivity. Businesses that grow thanks to productivity gains stemming from well-governed local governments help create jobs and growth, while also alleviating poverty.

Your story should be no more than 1,000 words. Selected stories will be incorporated into a local governance publication that CIPE and Global Integrity are planning to publish. Authors will be compensated if their stories make it into the publication. Please visit Global Integrity’s Blog to learn more about this call for stories and how to submit your contribution.

Is Colombia’s corruption a fiscal time bomb?

Construction in Bogota, Colombia. (Photo: Flickr user LaSillaVacia)

Standard and Poor’s upgraded Colombia’s foreign denominated debt rating to investment grade last week. The rating agency’s decision boosts market confidence in Colombia amid responsible macroeconomic management. Good macroeconomic management should come hand in hand with eradicating corruption practices in public and private transactions, as the ongoing corruption scandals in Bogota and across the country belie. Otherwise, the continued pilfering of public monies threatens to become a fiscal burden and an obstacle for conducting business.

S&P’s decision, expected by Colombian policymakers and long-internalized by markets as a result of the agency’s 2010 upward outlook for Colombia, reflects the relative sound macroecnomic environment of the Andean country. Credit agencies downgraded Colombia’s rating twelve years ago after the country underwent a banking and mortgage crisis. Increased insecurity and alleged inability of the government to control its territory also contributed to the downgrade. But unlike Argentina, Ecuador, and Venezuela, Colombia has had a historical responsible macroeconomic management, a solid independent Central Bank, and a credible commitment to service its obligations.

The upgrade comes despite delayed implementation of pending macroeconomic reforms. Legislation strengthening fiscal sustainability and discipline is pending approval in Colombia’s Congress. It includes an overhaul of the mining and hydrocarbons royalty management framework, which will create counter-cyclical stabilization funds, the adoption of a fiscal rule, and the adoption of stringent fiscal sustainability legislation whereby mandated government expenditures should be commensurate with income and debt capacity of the central government. S&Ps’ decision certainly boosts market confidence, serves the Colombia‘s government goal of luring investors to the country, and allows local businesses to access foreign credit in better conditions. Nevertheless, much needs to be done for business confidence to increase.

Land in Bogotá and you will understand why. Colombia’s capital city, home to 20 percent of the country’s population and the economic and financial hub of a region that contributed 14 percent to Colombia’s exports and 44.5 percent of the value of Colombian imports in 2009, has been struck by corruption in contracts for construction and adaptation of  8.5 miles of dedicated bus lanes in Calle 26 for Transmilenio, a world model bus rapid transit system.

The choking traffic road building started in late 2008 and was expected to end in mid 2010 but contractors were unable to meet deadlines and the city is paralyzed. Calle 26 is one of the main avenues connecting Bogotá with its airport, which also under renovation. The two-headed boogieman of corrupt businesspeople and public officials is to blame.

In a joint venture with other contractors, including a Mexican firm (Condux), cash-strapped Nule Group won the $170 million (COP 318.3 billion) public tender for the construction of Transmilenio’s Calle 26 dedicated bus lanes. Although the Group suspected they were not going to get the contract, their representatives approached the head of the district agency in charge of the tender –The Urban Development Institute of Bogota, IDU- to solicit awarding them the tender, which eventually occurred. One of the companies the Group used as front for competing in the tender had its registration cancelled before participating in the bid. That would have provided sufficient evidence for not granting Nule Group the contract in the first place. The Nule Group had also bribed the city’s comptroller so he would turn a blind eye to this and other red flags. From the $45.5 million (COP 85 billion) advance the group received to start the construction, equivalent to 10 percent of the value of the tender, the Group paid commissions to IDU’s chief.

The companies also use advances to finance other delayed construction projects throughout the country, particularly the concession awarded to the group by the national government for the construction of the road connecting Bogotá with the town of Girardot in the east of Colombia which will connect Colombia’s capital with the port of Buenaventura in the pacific coast. The advance from the Transmilenio contract allowed the Group to bribe IDU officials and Bogotá’s comptroller, according to testimonies by the Group’s representatives given to Colombian authorities from Miami where they now reside. Using contact advances to pay bribes appears to be a normal cost to infrastructure projects in Colombia, according to different accounts from corrupt and probe contractors. Would be investors seeking business opportunities need to make significant time investment in due diligence investigations.

Other current and former public officials participated in this corruption network. Germán Olano, a former legislator, and Senator Ivan Moreno the brother of Bogotá’s mayor Samuel Moreno, have been identified by the Nule Group as intermediaries between contractors and public officials. In exchange, they received substantial commissions. Colombia’s inspector general forced the removal of Bogotá’s comptroller and banned his participation in government positions and public procurement for twenty years for being unable to explain a rocket increase in his assets; Mr. Olano’s penalty was twelve years. Ivan and Samuel Moreno are under investigation.

Other similar corruption rings of contractors offering and paying kickbacks and public officials extorting and receiving bribes have been uncovered in the departments of Antioquia, Cundinamarca, Valle, Cauca, Risaralda, Chocó, and Atlántico. The infrastructure contracts under scrutiny in these regions of Colombia, including those of Bogotá, are almost half the budgetary additions made to the national budget to confront the effects of rain and floods that damaged infrastructure throughout the country in late 2010 and early 2011.

There are many reasons behind rampant corruption in infrastructure projects in Colombia. Some argue it all starts with political campaign financing where contractors buy off candidates. Others mention the leniency by which procurement framework is put to practice where illiquid bidders receive contracts, national and sub-national government agencies open tenders where key technical and project design details are unclear or missing, contractors and awarding agencies are able to renegotiate contract terms shortly after contract awarding, and additions that end up doubling the original price of the tender are allowed.

What is true nonetheless is that corruption can paralyze a city. It also imposes fiscal pressures to public finances at sub-national and national levels. The macroeconomic policy decisiveness that rightly differentiates Colombia from its neighbors, evidenced by S&Ps’ upward rating, should be accompanied by a similar determination to fight against corruption throughout the country when the risk of a massive waste of resources resulting from this malady is high… and evident.

In Venezuela, inclement weather dispossesses incoming Assembly

Floods in Venezuela (Photo: AFP/Getty Images)

Inclement weather conditions throughout December have had a heavy impact on Venezuela. Torrential rains and mudslides have left over 130,000 people homeless and hundreds dead. The rains have also caused extensive damage to infrastructure: 250 roads are notdrivable, dams have been broken, and several bridges have been closed. Governmental response to the crisis included a rather unconventional type of emergency response. President Hugo Chávez asked the outgoing Assembly to grant him special legislative powers for him to be able to deal with the crisis legislating by decree for an 18-month period. The President argued that enabling him to legislate would allow him to correct the environmental damages caused by “capitalism’s irrationality.” In a lame duck session held on December 17, the outgoing Assembly approved the Enabling Law.

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Dirty dancing? Ecopetrol exploring partnership with PDVSA

A recent front cover story from The Economist (“Leviathan,” Aug. 7-13 2010) details the creeping advances of state capitalism. Though the article broadly declares the trend toward state-owned enterprises is a threat to democratic governance and long-term economic growth, it does acknowledge the reality that not all state-owned enterprises are the same. Colombia’s Ecopetrol and Venezuela’s PDVSA, for example, are at opposite ends of the spectrum when it comes to corporate governance and their relationships with their respective governments. There’s now a chance they could end up dancing together as business partners.

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Beyond the next Uribe – Colombia’s presidential campaign

Over a month ago, on February 26th Colombia’s Constitutional Court concluded a two-year debate on whether President Álvaro Uribe could run for a third term. The Court’s ruling finally jumpstarted Colombia’s presidential campaign. Candidates that served with Uribe in his eight-year presidency introduce themselves as the next Uribe. Non-uribistas candidates are presenting fresh alternatives focusing on the shattered institutions Uribe is leaving behind while maintaining incremental approaches in some current successful security policies.

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Iraq’s upcoming elections – candidates focus on economic issues

On March 7, Iraqis will cast their vote during the country’s second parliamentary election. The Independent High Electoral Commission certified 306 political entities of which 251 decided to form coalitions. 6,529 candidates endorsed by 86 political entities or coalitions are running for 325 seats in the Council of Representatives. Six coalitions are major players. The election season has faced sectarian divisions and the banning of Sunni candidates will continue to generate debates. Security threats have also affected the campaign: ongoing violence has targeted candidates and some have been assassinated. Suicide bombings have increased as elections approach, potentially affecting voter turnout.  Despite the high level of fragmentation and major security concerns, coalition’s candidates have highlighted the need to focus on economic issues.

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