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The Asian Development Bank – “Governing” the Pacific?


The Asian Development Bank (ADB) in adopting a policy of governance in October 1995, claims to be the first international financial institution to have a board-approved official position on ‘good governance’.

‘Good governance’ is a serious contender for a prize for the best example of Orwellian doublespeak. It has nothing to do with democratisation, humanitarianism or support for peoples’ rights. It is a euphemism for a limited state designed to service the market and undermine popular mandates. The term is explicitly linked to the kinds of structural adjustment measures promoted by the ADB – measures for which there is little popular support and which are rapidly increasing economic inequalities.

It is a mystery as to where the ADB claims to derive any authority to determine what is good or bad governance. However it is perfectly clear what the institution means by “good governance”.

The ADB’s concept of ‘good governance’ “focusses essentially on the ingredients for effective management”. Its policy document, “Governance: Sound Development Management” says “the common features that stand out in respect of the high-performing economies are stability in broad policy directions, flexibility in responding to market signals, and discipline in sticking with measures necessary for meeting long-term objectives despite short-term difficulties, all hallmarks of sound development management, i.e., good governance.”

Building upon the World Bank’s approach, the ADB has identified four basic elements of good governance: accountability (of the public sector for delivering specific results), predictability (of legal frameworks for private sector development), transparency and participation (of key stakeholders).

Jane Kelsey, Professor of Law at the University of Auckland, defines ‘good governance’ as “shorthand for a limited government” whose role is “to facilitate markets, Western-style rule of law, individual liberty, private property rights, and passive forms of electoral democracy.”

As well as extensive operations throughout Asia, the ADB operates in 12 Pacific Developing Member Countries (PDMCs). These are the Cook Islands, Fiji Islands, Kiribati, Federated States of Micronesia, Republic of the Marshall Islands, Nauru, Papua New Guinea (PNG), Samoa, Solomon Islands, Tuvalu, Tonga and Vanuatu. It also has operations in East Timor, which is not yet formally an ADB member country.

Annually the ADB approves between US $100 million and $150 million in loans and $15 million in technical assistance grants for the Pacific region, It has also influenced the direction of the Pacific Islands Forum (formerly known as the South Pacific Forum).

This body represents 14 Pacific Island governments (Australia and New Zealand are also members), and plays a key political role in getting assent and commitment on economic, financial and trade policy measures. The Forum has increasingly focussed on promoting the economic agenda already being pushed by the ADB, the World Bank, International Monetary Fund, APEC and the World Trade Organisation.

At the first South Pacific Forum Economic Ministers Meeting (FEMM) in Cairns in July 1997, the structural adjustment model was formally adopted in an action plan which covered economic reform, public accountability, investment and tariff policies, and multilateral trade issues. The FEMM stated that “private sector development is central to ensuring sustained economic growth, and that governments should provide a policy environment to encourage this.”

In its 1999 report, “Pursuing Economic Reform in the Pacific”, the ADB praised the FEMM Action Plan for being based on “market-friendly policies widely accepted as economically sensible, albeit politically difficult to implement.”

In its 2001 strategy document, “A Pacific Strategy for the New Millennium”, the ADB lists its areas of emphasis relating to governance in the initial phase of the reform programmes since 1995.

These are: supporting legislative reform of the role of parliament and the public sector; strengthening good governance institutions; introducing fiscal discipline and output focused budgeting; downsizing the civil service and strengthening its professionalism; promoting more open and growth-orientated economic policies and; encouraging privatisation and a larger role for the private sector.

It states: “A core good governance agenda of economic policy, public sector and governance reform has already been agreed to broadly. The Pacific countries have already agreed in principle to this agenda through the Pacific Islands Forum. ADB has appropriately fostered and supported this agenda, which forms the basis of most of the reform programmes currently being financed by ADB in 10 of the 12 PDMCs”.

The ADB co-sponsored the first Pacific Regional Conference on Governance for Parliamentarians in Nadi, Fiji, in March 2000. The Pacific Islands Forum has also adopted eight principles of public accountability developed at the 1997 FEMM, and the October 2000 Biketawa Declaration on good governance.

Governance and economic reforms featured prominently on agenda at the ADB’s 35th Annual Meeting in Shanghai in mid-May.

The economic reforms, trade and investment liberalisation, with their ‘good governance’ focus continue to be advanced in the region by bilateral aid donors such as the government overseas aid programmes of the European Union, Australia (AusAID) and New Zealand (NZODA).

There is increasing coordination among the various multilateral and bilateral donors in the region. Australia in particular makes a significant contribution to the ADB”s Asian Development Fund.

The World Bank also lends about $50 million annually to the Pacific (Fiji Islands, PNG, Samoa, Solomon Islands, Tonga and Vanuatu), with governance one of its focuses. AusAID argues that aid plays a vital role in encouraging “good governance and in promoting sound economic policies”.

This supposedly entails across-the-board intervention to promote the “competent management of a country’s resources in a manner that is open, transparent, accountable, equitable and responsive to people’s needs and which enables all people to contribute to and benefit from development.”

Sydney-based AIDWATCH notes that AusAID’s direct and indirect expenditure on promoting ‘good governance’ in recent years has exceeded the estimated total direct and indirect expenditure on health and the total for infrastructure. As members of the Pacific Islands Forum, and with extensive trade, investment and economic interests in the Pacific Islands, the governments of Australia and New Zealand play key roles in maintaining pressure on the region to implement neoliberal reforms.

As well as being a key element of the structural adjustment programme, good governance – or rather lack of it – has been frequently used as a convenient explanation for economic crises and a way to blame governments rather than the policies set by the reform programmes.

Another excuse is lack of local “ownership” of the reform agenda. Introducing the ADB”s new Pacific strategy at last year”s ADB Annual Meeting in Hawaii, Basudev Dahal, Director of ADB”s Office of Pacific Operations, said: “The challenge is to deepen the commitment of government and civil society to the reform programmes.”

“Wider NGO involvement and consequent stronger ownership of Pacific developing member country governments” development strategies and reform agenda has become a priority”, claims the ADB. Yet its “new” Pacific strategy offers more of the same. “Emphasis will continue on implementing fiscal discipline, strengthening revenue management, promoting an export orientation, and encouraging private investment”.

It promises to promote “privatisation of state-owned enterprises, private sector participation in infrastructure development, liberalisation of investment and trade regimes, and greater competition.”

While its economic reform programmes have meant cuts to public services like health and education, the ADB envisions a greater role for NGOs in service delivery – not in setting the policy agenda. Through engaging selected NGOs in “dialogue” and “consultations” the ADB seeks to legitimise its economic reforms.

To be critical of the ‘good governance’ agenda of multilateral financial institutions is not to ignore issues of corruption and conflict that exist in some countries in the region.

To advance the argument that a solution to these problems can be tackled by accepting the ADB”s ‘good governance’ misunderstands the concept. Throughout the Pacific local communities and movements like the Tongan Human Rights and Democracy Movement are organising to expose and challenge domestic problems in government, and issues of democratic rights.

The ADB boldly claims that “with the adoption of a strong governance reform agenda by the new Government in late 1999, and supported by multilateral and bilateral development institutions, PNG has quickly managed to substantially reverse its fast-declining economic performance, and subsequently improve its access to international finance.”

Yet it was precisely the structural adjustment programmes, privatisations and sale of state-owned assets driven by the ADB, World Bank, IMF and backed by the Australian government which sparked last year”s mobilisations in PNG. Last June, four young Papua New Guineans were shot dead by police and many others injured after an anti-privatisation rally in Port Moresby. Where was the ADB”s celebrated “strong governance reform agenda” then?

Despite all of the good governance sloganeering by the ADB and other vehicles pushing the neoliberal agenda in the region, Pacific peoples still have little or no input into the development of macroeconomic policies affecting them. What consultations there have been with communities and NGOs about the economic reforms have been little more than cosmetic exercises.

In February, the Pacific Network on Globalisation (PANG), a network of NGOs and individuals concerned with globalisation and the Pacific, challenged Pacific Island governments about the lack of public consultation and parliamentary debate over two regional trade agreements which had been opened for signature at the Pacific Islands Forum Leaders Summit in Nauru last August. (See my October 2001 ZNet commentary “Prising Open The Pacific”)

According to the ADB”s 1999 “Reforms in the Pacific – an assessment of the ADB”s assistance for reform programmes in the Pacific”, its reforms had led to the slashing of public sector employment – by 57% in the Cook Islands between March 1996- October 1998, by 37% in the Federated States of Micronesia between 1996-January 1999, and 33% in the Marshall Islands between October 1995 – March 1999.

At a Public Service International Oceania regional conference in Auckland in March 2002, delegates of public sector trade unions from throughout the Pacific said that radical restructuring of the state sector has had disastrous effects. Most said that as a consequence of privatisation, deregulation and globalisation, living standards had lowered, and employment rights had been eroded through individual contracts. As a result of job losses through restructuring, emigration has soared in several Pacific Island countries.

Convenor of PSI Oceania, Paul Slape, of the Australian Services Union, said: “In many smaller Pacific nations, government has been the main employer. Without the private infrastructure in place, restructuring is simply leading to high unemployment and the erosion of labour standards. It is undermining communities and breaking down social cohesion”.

While a kitset economic model is being imposed on the Pacific, and while all Pacific countries are governed by Western systems of governance, director of the Pacific Concerns Resource Centre, Motarilavoa Hilda Lini, from Vanuatu, argues that indigenous models of governance remain highly relevant.

“Governance in the indigenous concept is linked to a belief system that supervises and monitors peaceful coexistence of everyone and everything that share the multi-dimensional natural world that we live in….Individual rights and freedom are practiced within the parameters of collectivity.

Any disturbance to peace is frowned upon and collective responsibility for peace restoration is a crucial task….Truth and justice are prerequisites for good governance, social security, economic self-reliance and political stability.”

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