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Support to Economic and State Reform in Transition Countries

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Support to Economic and State Reform in Transition Countries nVolumee XIII •w No.3 • Summers 2006 Capacity Building Funds - Support to Economic and State Reform in Transition Countries Kalman Mizsei, UNDP Assistant Administrator and Director for the Regional Bureau for Europe and the CIS, Lene Jespersen, UNDP Deputy Resident Representative in Bulgaria Challenges to State PA in CEE Reform – context Capacity Building Funds / 1 Sometimes nations are given a his- Announcements torical opportunity to improve in Master in European Integration and a radical and fast fashion the way Regionalism / 10 their economy and institutions work. MTEC Scholarships in Public When the political opportunity for Administration / 10 Study Programmes in Czech Republic / 11 radical systemic change arises, in the news 3/2006 NISPAcee early days of reform timing – seizing Study Programmes in Maastricht / 12 the moment of opportunity - is the School of Public Administration, essence. The challenges of construct- Strasbourg / 12 ing effective governance systems in PA on Internet Central and South Eastern Europe Interesting Web Sites / 13 during the past decade and a half – the period of transition from social- Review of Activities ism - have been momentous. In some Calendar of Events / 14 of these states popular movements Recent Publications / 16 – either revolutionary or evolution- Recent Projects / 17 ary – opened up the way to radical Recent Conferences reform. In others the emergence of Public Administration in the 21st Century / 18 a strong reform minded leader with a legitimate mandate offers an unu- NISPAcee Events sual opportunity. In this region many 14th NISPAcee Annual Conference / 19 countries are completely new as NISPAcee Announcements results of the disintegration of previ- th ous – failed – socialist countries such 15 NISPAcee Annual Conference 2007 / 26 as Yugoslavia and the Soviet Union. Occasional Papers Series / 27 Translations into CEE National Languages / 2729 [continued on page 2] > NISPAcee Membership / 28 Public Administration in CEE >[continued from page 1] and the CIS’s experience in victories, picking the lower hang- cooperation with George Soros ing fruits, are therefore a must and his Open Society Institute in order to garner the necessary Most new countries were born in network shows that CBFs can support for the later, more criti- conflict without any experience be a very useful tool to achieve cal reforms. with running an independent great progress simultaneously state machinery while many of in the way the economy as well Serbia: them inherited bad bureaucratic as state institutions work. It also With the change of regime in Yu- traditions from their socialist highlights a number of issues goslavia in October 000 the state past without much capacity to that need to be clarified in order administrative system faced a full collapse. This was a result both of reshape them. In these rare mo- to maximize the success of CBFs the severe economic situation and ments of “extraordinary politics ” including a broad buy-in from Capacity Building Funds (CBFs) the total degradation of the state a critical mass of likeminded in general caused by the Milose- can become a useful joint donor donors. vic regime. A repercussion of this platform to address this need Whereas many of these issues situation was the flight of capable for radical reforms in an effec- people both out of state adminis- tive and concentrated manner might seem to be specific to the region, failed states, bad and cor- tration to the non-governmental while also helping governments sector and out of the country to rupt bureaucracies, excessively to attract top-notch specialists to the West. A democratically elected address burning economic and statist former economic poli- government was established for other policy issues in order to cies leading to disaster are well the first time in January 00, how- reach quick tangible results. This known elsewhere too. Thus the ever the new government lacked note also presents examples of experience presented in this note capacity to perform even the most basic tasks, let alone develop previous CBFs implemented in has high relevance to internation- al development overall. strategies for reform. To address Georgia and Serbia, which serve this emergency situation the new as valuable lessons for the future Systemic issues government of Serbia requested application of CBFs in situations the donor community to help with of “extraordinary politics”. UNDP In countries with long demo- capacity building efforts. Regional Bureau for Europe cratic tradition, change of govern- As a response to the request men- ment usually implies professional tioned above, at the initiative of continuity of civil service, but in George Soros, OSI, UNDP and the The expression “extraordinary poli- failed or institutionally very weak Federal and Serbian Governments tics” comes from Leszek Balcerowicz, took the initiative to develop the the architect of the Polish radical states transition to democracy re- reforms of 990. Mr. Balcerowicz is quires discontinuity with the old Capacity Building Fund (CBF), currently the Governor of the Polish practices of weak public admin- to act as a short to medium term National Bank. The expression in this istration inhibiting normal ab- facility to pool and co-ordinate note refers to states either after demo- multi-donor support to various sorption of qualified people into cratic revolutions or emergence of economic and social reforms democracy from popular movements, the civil service. Therefore, in and as a catalyst to institutional states with new, reform-minded strong reality the new government has reform. With broad support from and capable leadership, or states com- to rely on weak state structures national government institutions ing out of conflict or state failure and a dysfunctional, inefficient and the donor community CBF Core types of assistance provided through the CBF could include: In- bureaucracy. Reform of public was established in March 00. terim policy advice on specific issues; administration thus becomes key Transitional HR and staffing facilities: to overcoming inherited systemic facility for providing government with weaknesses. However, public Two basic conditions for the the human resources necessary to reform process to be successful design and implement economic and administration reform (PAR) is governance reforms and to steer the a highly political and complex are paramount: the adoption of transition process; Specific and gen- issue, and risky for the govern- a credible reform strategy that eral training (and coaching) for civil ment in question as it challenges addresses indeed vital areas for servants; Support for structural public existing vested interests. Costs change together with a very prac- administration reform; and Institution tical strategy on how to achieve building, including most prominently of state reform are usually borne the establishment of a professional toward the beginning of the initial as well as longer term civil service. UNDP experience shows process while the benefits only improvements in the economy different approaches to the establish- become apparent much later, as well as in the efficiency of the ment of the CBFs as well as their often long after the implementing state’s functioning. Without fulfill- purpose which can be specific in ment of these two conditions last- 2 some aspects to each country context politicians have left office. Early as demonstrated in this note ing progress is unlikely; critical Public Administration in CEE mass will not be achieved and capacity deficiencies of the coun- Georgia: initial improvements will erode try. It is essential to include both later, in the period of “normal” The Rose Revolution in Georgia the short-term needs that may be – as opposed to extraordinary in 003 gave the new President, addressed through more direct - politics. Mikheil Saakashvili, and his international support, as well government, a clear mandate as the medium and longer-term Thinking about organizational for change. The challenges were and incentive structures should daunting. Corruption riddled gaps that require more institution be the at the heart of the reform the economy; energy shortages building type of efforts. A good process, not an afterthought, disrupted commerce and left articulation of the capacity needs as has often been the case in homes dark and unheated for is particularly important in the Central and Eastern Europe.3 At much of the year; infrastructure transition context where public the same time “the challenge for was in disrepair, with most roads expectations are often extremely barely passable. Tax avoidance a new government is to lift the high. Capacity assessments must was routine, depriving the state of ability of the country to absorb examine carefully what these ex- the means to provide even basic pectations are and the strategies aid productively when donor social services. Wage and pen- required for reform. resources are most likely to be sion arrears accumulated under available. Because the greatest the ousted regime were stagger- One must bear in mind that capacity constraints to imple- ing. GDP per head was less than institutions are not entities on menting reforms are institutional $,000, and more than half of the their own: people constitute the – human and organizational population lived below the mini- institutions, and most of them (at – early institutional strengthening mum subsistence level (around least at the beginning) are some will not only provide long-term $30 per
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