Transcript Effectiveness of Aid as Leverage for Transforming a Country

Effectiveness of Aid as Leverage
for Transforming a Country
Kae Yanagisawa
UNDP
Tajikistan
After independence
1991
1992
1994
1997
2000
Independence
Break out of the Civil War
Placement of UNMOT
Peace agreement
General election
Replacement of UNMOT by UNTOP
Relations with donors
1. CG meetings
1996 and 2001 in Tokyo, 1998 in Paris
2003 and 2004 in Dushanbe
2. PRSP and NDS
2002 First PRSP
2004 Millennium Development Project
2005 Second PRSP
Presentation of MDG based NDS
Moving Mountains:
The UN Appeal for Tajikistan
Uzbekistan
After independence
1991
1996
Independence
Restrictive trade and forex policy
Off-track with IMF
Staff Monitored Program of IMF
2003 Acceptance of Article 8 of IMF
2004
General election: bicameral
parliament and multiple party system
2002
Behind the Scene
 Liberalization of foreign exchange
accompanied by tight monetary policy
and administrative barrier to trade
 Multiple party system
approved/created by the President,
denial of registration of opposition
parties
Relations with Donors: IFI
IMF
2001 Withdrawal of international staff
Monitoring according to Article 4
WB
2005 Interim “Welfare Improvement
Strategy Paper”
2006 No new loans will be provided,
stay engaged
Relations with Donors: IFI
EBRD
2003 Annual meeting in Tashkent
Monitoring of 7 benchmarks
2004 Limited provision of loans
2005 Stay engaged
ADB
The largest provider of finance
Relations with Donors: US
Swing between “strategic partnership” and
human right concern
2002 Sharp increase in assistance
2003 The Congress prohibited direct
support to government
2005 Withdrawal of Peace Corps
( Withdrawal of AF base)
Relations with Donors: UN
2005 Security officer was ousted
2006 UNHCR will be expelled soon
HDR/2005: Most accommodating among
donors(?)
Underlying motivations: unmet
expectations
 Donors
Transformation from communist regime
and centrally-planned economy to
democratic and market-oriented ones
through SA approach
 FSU Republics
Compensation for the loss of transfer
from the central government
What makes differences?
Uzbekistan
Tajikistan
26 million
6 million
Natural
Oil, gas, nonresources
ferrous metals
Major exports Cotton, gold
Unexplored
water
Cotton, labor
Population
SelfSelf-sufficient in
sufficiency
food and energy
GDP in 2003
107
(1989=100)
62
Economic reform of Uzbekistan
Share of
administered prices
Private sector share
in GDP
Asset share of state
owned banks
FDI flows per capita
Uzbekistan
Kazakhstan
53%
(26/27)
45%
(25/27)
96%
(26/27)
$3
(27/27)
0%
(1/27)
65%
(12/27)
5%
(11/27)
$152
(7/27)
Economic factors impeding reform in
Uzbekistan
1.
Trust in state control/distrust in private
sector
2.
Flow as LDC vs. Stock as MIC
3.
Lack of “development” perspective
Political system of Uzbekistan
President
Presidential office
Government
Court
Industries
Parliament
Analogy
CCP
State Council
Court
Ministries
Industries
People’s
Congress
State-People relations
State
Authoritarian
Dictatorship
Oppressive
Order
Obedience
Services
Passiveness
People
Paternalistic
Against
Trust, expectations
Private
Public
Services
Risks of authoritarian states
 Abuse of power over people
 Monopoly of power and wealth within a
limited elite group:
“Marriage between unchecked power and
illicit wealth”
 Unwillingness of changing status quo as far
as it serves the interests of the elites
Possible risks of Uzbekistan
 Economic poverty and political oppression
- people are living at a subsistence level
- no legal way of expressing opposition
violence, insurgence of Moslem power
Andijon Incident
 Lagging behind globalization, loss of
opportunities
 Degradation of Soviet legacy
- infrastructure
- human resources
Options
1.
Overthrow the government?
2.
Empowerment of civil society?
democracy vs. reform
Japanese approach
 Emotional, based on personal relations
 Silent and stable donor
Counterbalance to Western approach?
Personal
interest
Keep
status quo
Governmen Rent
t officials
seeking
Business
Rent
people
seeking
Farmers
Rent
seeking
People
Informal
economy
Conservati
ve
Reformist
Elite group
Stick to
National
Soviet way interest
Maximizing
profit
Maximizing
profit
State
protection
Conclusion
Step-by-step but steady transformation through
 Working with motivated people
 Without good governance but effective public
administration that eventually serve the
interest of the people
 Removal of state interference in private
sector activities (taxation, legal system)
Thank you