Good governance at all levels

Transcription

1 Karel De Gucht European Commissioner for Trade Good governance at all levels IV. United Nations Conference on the Least Developed Countries Istanbul, Turkey, 11 May 2011

2 The debate on good governance starts from a wonderful paradox: in these days of open markets and globalisation, politics and economics are as entwined and mutually supportive as ever. Free markets need strong governments to be profitable, and governments depend on markets for their strength. Better governance leads to higher incomes and growth, but the causality runs in both directions. Fast growth provides opportunities to improve institutions, and doing so is necessary to sustain high growth. The challenge for LDC's is massive: overall costs of corruption are estimated at about $148 billion, which even exceeds any aid effort spent by the developing world. Good governance relates to governments (a stable economic and political framework, a reliable judiciary, transparency of rules and institutions) and to businesses (their ethical standards, corporate, social and environmental responsibility, subscription to transparency codes). Where we can, the EU will help and support such developments, also if it means reminding our own companies doing business in Africa of their responsibilities. But from the outside, we can only do so much. The primary responsibility will always remain with LDC governments themselves. I would like to highlight three things in this discussion about how we can push forward better governance: politics, raw materials and trade. 1. Politics For starters, good governance implies political openness. An open economy only thrives on a certain openmindedness as well. Whatever international ranking you take, they show remarkable similarities: on the Mo Ibrahim Index of African Governance the same countries score well as in the World Bank Doing Business Report or Freedom House's Freedom in the World index. That is not new, but it is a lesson many African governments seem to be unlearning. The Ibrahim Index notes that, on the back of a global rise in demand and high prices in raw materials, economic indicators are going in the right direction, while the political process in some countries is going the other way: 'Strikingly, in the Sustainable Economic Opportunity and Human Development categories, all significant movements are positive. Gender issues also show some progress.' But 'Participation and Human Rights makes for less encouraging reading. 30 of Africa s 53 states have declined in Participation and Human Rights performance over the past five Years. African citizens are generally less physically secure and politically enfranchised than they were in 2005.' The Freedom in the World index 2010 said the same thing: 'Sub-Saharan Africa suffered the largest setbacks world wide, with 15 countries registering declines and 4 securing gains.' This is a very worrying trend. Some countries are threatening to saw off the branch they're sitting on. How do we deal with that as international community? Recently Wold Bank President Robert Zoellick gave a very encouraging speech, directly and rightly linking the corruption and lack of transparency of the toppled regimes in North Africa to the despair they brought on their young and eager generations. 2

3 Drawing the lessons from the international community's errors in the past, he too finds that we should not shy away from things that used to be seen as being too political: actively supporting the fight against corruption and secretive elements in politics and businesses, including by supporting and networking amongst engaged citizens. One concrete example: 'In Africa,' he said, they 'are catalyzing the formation of incountry 'contract watch' coalitions of civil society, government, and the private sector to advocate for transparency and to monitor the award and implementation of contracts - including concessions for extractive industries.' Because 'in one way or the other, a modernized multilateralism needs to recognize that investments in civil society and social accountability will be as important to development as investments in infrastructure, firms, factories, or farms.' The fight for better more open governance needs a holistic approach: from grassroots to the very top, using both carrots and sticks, from the local to the global. But we should not underestimate the difficulty in doing so: trying to make friends with some citizens will make you enemies among some governments. In 2009, in Ghana, President Obama said: 'Africa doesn t need strongmen, it needs strong institutions,' and therefore 'We have a responsibility to support those who act responsibly and to isolate those who don t.' I honestly believe that is an idea whose time has come. And there is work to do, for there are plenty of 'those who don't' feel they have a responsability: The latest Open budget survey by the International Budget Partneship, an advocacy group, found that of the 94 countries surveyed world wide, 74 failed to meet basic standards of budget transparency, many of them African countries. The 24 countries assessed that are dependent on oil and gas revenues had an average score of just 26 out of 100. The 32 aid-dependent countries surveyed had an average score of 30 out of 100, which is 14 points worse than countries not dependent on foreign aid. Its shows once again that we, as development partners, have a responsibility that goes beyond delivering aid and opening up for trade. 2. Resources It also highlights once again that the case for transparency is nowhere more important than in natural resources a quintessential public good, but one from which all too often the general public does not benefit. It is also a sector in which emerging and developing market play a huge role. Over half of our imports from African ACP countries are fuels and mining products worth some 31 billion in All too often, developing economies' reliance on raw materials has proved to be a stumbling block for their development. Yet today, many more of them are finding ways in which to avert the determinism of the so-called resource curse. More and more governments are working successfully on ways to turn the logic around; to go from conflict to cooperation; to use transparency and governance to make their economy more sustainable and make revenues benefit the population at large. 3

4 International rules and targeted initiatives have proven to be conducive to solutions in tackling these complex issues, like: - Kimberley Process; - the Extractive Industry Transparency Initiative (EITI); - the American Dodd Franks Bill. Global advocacy campaigns like the 'Publish what you pay' initiative can and should keep up the pressure on all those involved world wide. The European Commission is considering the issue of transparency in the extractive industries within the wider context of EU-financial regulatory reform. In June of last year, the Commission agreed to expand cooperation with the African Union Commission to improve governance and transparency in mining activities. Also in June 2010, the Council urged the EU and Member States to enhance support for the EITI. In February this year the Commission issued a Communication on commodities and raw materials in this context, which also discusses the issue of transparency in the extractive industry. As announced in this Communication, the Commission is analysing the issue on 'conflict minerals'. This Communication calls for 'developing a bilateral co-operation with African countries in the area of raw materials, based on promoting governance, investment and geological knowledge and skills'. And we will continue to cooperate in exploring how we can realistically support accountability in this key sector. The European Parliament has also been very supportive of these initiatives. Already last year, for instance, we had a debate on trade and Corporate Social Responsibility. The European Parliament is now seeking expertise from industry to evaluate the current situation in Africa on questions affecting the availability and price of raw materials. The European Commission is also actively involved in the OECD's 'Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-affected and High-risk Areas'. It offers voluntary due diligence guidelines for minerals extracted in conflict areas. It provides companies acting throughout the supply chain with a framework for riskbased due diligence and a model supply chain, in order to avoid sourcing conflict minerals. Finally, the work of the UN Global Compact is also a framework of voluntary commitments for business across the world, which we support and value to pursue sustainable development and growth in a positive manner. So in raw materials issues as well, adcovacy, transparency and democracy are part of the solution to a very complex but hugely important problem. 3. Trade Finally, a short note on trade and trade policy. Because I believe that openness to trade and enthusiastic engagement with trade partners is a crucial element for keeping governance good. Good for business, but good for their citizens as well. In principle, many of the reforms that we describe as 'good governance' can be undertaken in a strictly domestic context. In practice however both in developing countries and elsewhere trade agreements usually play a crucial role as a driving force, egging on governments to make the necessary changes, keeping them up to 4

5 date of what economic and political partners world wide need and have to offer, making them learn from best practices elsewhere. There is so much more to trade than low tariffs. Symbolically, tariffs are aligned with borders and in the developing world, tariffs are still way too high. Stepping away from borders and tackling what lies behind them is as important to economic prosperity as ever. Trade works when backed by functioning institutions that allow goods to travel from A to B without undue hindrance or efficiency losses. An open mind to the world implies an open mind to your own society as well. Trade like politics is essentially a two-way process. And that is the only way to make progress towards better government. 5