Rapporteur May 2010

Volume 4 • Number 1

Rapporteur May

2010

Newsletter

of

The Centre

on

Asia

and

Globalisation

Public Roles OF THE Private Sector

Three Powerful Global Ideas U.N. ideas that changed the world

Can Energy & Health Be Governed?

It depends‌

Costly Catalysts for Reform Disasters as teachers

Rapporteur 40

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May

2010

CONTENTS REGULAR FEATURE 6 Scholars Without Borders

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ENERGY & CLIMATE 8 Can Energy Be Governed?

10 The Faulty Narrative 12 Reducing a Trust Deficit in the

Climate and Energy Debate:

Q&A with Navroz Dobash

15 Monitoring Energy Security

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17 You Have the Power to Conserve

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Rapporteur | May 2010

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Editor Sung Lee Contributors Teresita Cruz-del Rosario, Anthony Louis D'Agostino, Ashvin Dayal, Sumi Dhanarajan, Navroz Dubash, Ann Florini, Robert Klitgaard, Tommy Koh, Raul Lejano, Melissa Ong, Benjamin K. Sovacool, Tan Hui Yee, Kirsten Trott, Wu Wei Neng

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Design Sung Lee, Nadiah Jailani (Bob Associates Design Consultants) Cover Illustration Gregory Baldwin © 2010, CAG, LKYSPP, NUS. Rapporteur is published bi-annually.

ISSN 2010-1465

SPECIAL FEATURE ON PUBLIC ROLES OF THE PRIVATE SECTOR

Printed on recycled paper

19 Growing an Asian Agenda 22 Realities of New Frontiers 24 Collective Action Required: Q&A with Ashvin Dayal 28 How Banks Can Save the World?

GLOBAL GOVERNANCE 30 Shaping the Debate in Global Governance

The Centre on Asia and Globalisation is a leading international research centre based at the Lee Kuan Yew School of Public Policy, National University of Singapore. It partners with pre-eminent institutions to produce policy relevant knowledge on the impact of globalisation on Asia and Asia’s role in governing an integrated world.

It studies governance and decision making processes in four major areas: Global Governance; Energy & Climate; Poverty & Development; and Public Roles of the Private Sector.

Director Ann Florini PA to Director Esther Yeoh Senior Research Fellow Teresita Cruz-del Rosario

32 Three Powerful Global Ideas

Research Fellows Malavika Jain Bambawale, Toby Carroll, Melissa Ong Benjamin K. Sovacool (Assistant Professor)

35 Can Global Health Be Governed?

Research Assistants Starr Levesque, Ong Yanchun, Saleena Saleem

37 The Value of Networking

Consultant, Public Roles of the Private Sector Programme Sumi Dhanarajan Head, Programme on Social Innovation and Change Durreen Shahnaz

POVERTY & DEVELOPMENT

Executive Jasmin Kaur

40 Costly Catalysts for Reform

Business Development Manager Susan Margolin Director of Strategy and Research Impact Kirsten Trott

CAG NEWS

Director of External Relations and Special Projects Sung Lee

Rapporteur | May 2010

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Words from the Director As the name suggests, the Centre on Asia and Globalisation plays a leadership role in connecting Asia with global issues. As I write Europe’s role in the global economic crisis is becoming more complex and more entrenched and, in parallel, there is growing recognition of Asia’s key position in maintaining global stability. These events make the Centre’s vision – to be the global thought leader on Asia’s role in an integrated world - all the more relevant.

In keeping with that mission, this edition of Rapporteur focuses on an issue which is central to tackling some of the world’s biggest challenges but which is still nascent in Asia - understanding the impact and implications of the public roles of the private sector. This programme, simply titled Public Roles of the Private Sector (PROPS) is the first of its kind in the region and is one of four core research themes of the Centre. The programme is led by CAG Research Fellow Melissa Ong and consultant Sumi Dhanarajan, both of whom have extensive experience in this field. The aim of PROPS is to generate thought leadership on the impacts that companies in Asia have on the environment, human rights and sustainable development through their core business operations. Fundamental to the programme is strategic outreach to both the corporate and the public sector in order to facilitate best practice knowledge sharing, build capacity and shape policy. For instance, in September this year, the programme will lead a senior executive programme titled “Business Leadership for a Sustainable Southeast Asia”, targeting senior business leaders in the region. This course, conducted in conjunction with the University of Cambridge’s Sustainable Leadership programme, will be the first of its kind in Asia and a unique opportunity for business in Asia to keep step with their international colleagues in this area.

On global governance, the Centre’s flagship S.T. Lee Project is now in its final year. Having nearly completed 26 fully researched papers by 35 of the world’s leading and up-and-coming scholars from Asia, U.S. and Europe, the project will conclude in December 2010. In addition to its research publications, the project’s legacy is an epistemic community of global governance scholars spanning the regions but focused on Asia.

The debacle in Copenhagen in November of last year wasn’t what the world needed but it did present CAG researchers with insight into why energy and climate are so poorly governed relevant to the Centre’s ongoing research in the energy and climate governance fields. In keeping with its interest in these fields, the Centre recently hosted a very successful international roundtable with the CSIS and APEC, looking at the role of regional bodies in governance

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relating to on climate change and natural disaster response.

On an organisational front, the Centre has also been busy. Since October last year, we have some important additions to the Centre. I am pleased to welcome to the CAG family Malavika Jain Bambawale, Anthony Louis D’ Agostino, Starr Levesque and Kirsten Trott. Malavika and Anthony are great additions to the Centre’s research excellence in energy and climate, Starr will provide an invaluable research support to the business and human rights work of the Public Roles of the Private Sector team, and Kirsten has already been playing a significantly important role in setting the strategy for the organisation going forward and assisting researchers to increase their research impact.

With this newsletter, we must also, unfortunately, say farewell to Durreen Shahnaz, who initiated the Centre’s Programme on Social Innovation and Change, and Susie Margolin. Both are leaving soon to dedicate time to their passion - making social change. We wish them well, especially in their work building Asia’s only social stock exchange.

We wish them well.

Lastly, but by no means least, CAG now has a brand new enhanced virtual home in the world wide web – www. caglkyschool.com. We are hoping that our new virtual home will assist us in keeping all our stakeholders up to date on our activities and will serve as a reference point for matters pertaining to Asia’s role in an integrated world. We hope it becomes one of your favourites.

Rapporteur | May 2010

Ann Florini Director & Professor

Planting the Seed of Education Led by CAG’s Anthony Louis D’Agostino and Benjamin Sovacool, the LKY School community helped 200 PNG children from missing out on basic education. words Anthony Louis D’Agostino Anthony Louis D’Agostino

In Papua New Guinea, some schools are 2-days walking distance from the nearest road. However as long as a school is provided, teachers will teach and students will learn. In this context, the absence of an elementary school in Papua New Guinea’s Gaulis village, near the Highlands Highway linking Simbu and Eastern Highlands provinces, is all the less understandable, let alone acceptable.

Instead of learning to read and write, like 4-10 year olds the world over, children living in Gakruakama (Gaulis) and neighboring villages are spending their days in the streets.

Since many of their parents are illiterate, they have no means to acquire a basic education. Ruth Kega, who retired as a primary school inspector for the Department of Education after 34 years, expects to change this.

My fellow colleague Benjamin Sovacool and I met Ruth while conducting research on a World Bank program to bring solar panels to PNG school-

teachers. Ruth was invaluable in guiding us to off-road schools in desperate need of electricity. As we got to know her, she informed us of her fundraising campaign to start an elementary school for the 200 plus children in the Gaulis area. The nearby church will provide temporary classrooms until a permanent school is built, however funds are still required to build chalkboards and desks, pay teachers’ salaries, and purchase sundry needs like pens, paper and glue. As we parted ways with Ruth, she left us a copy of her grant proposal for the school, in which she estimated these costs at 20,773 kina (SG$10,227) including teacher salaries for the first year.

Touched by what Ruth was trying to achieve and confident in her ability to make it happen, we returned to Singapore eager to assist Ruth provide basic education to children who would otherwise be left behind. After sharing Ruth’s story with the Lee Kuan Yew School of Public Policy community of faculty,

Rapporteur | May 2010

staff, and students, we raised SG$6,020, greatly aided by the generosity of an anonymous faculty member who provided matching funds of SG$1,500.

Ruth was ecstatic to hear that people in Singapore wanted to help her turn the Gaulis Elementary School dream into a reality. Even though we exceeded our own fund raising expectations, Ruth is still SG$4,000+ short of what is needed to run the school for the first year.

If you are be interested in contributing to Ruth’s school or learning more about her proposal, please contact me at anthony@nus.edu.sg

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regular feature

Astana, Kazakhstan

Doha, Qatar Dubai, UAE Vientienne, Laos Pune, India

Hong Kong SAR, China

Manila, Philippines

Chiang Mai, Thailand Chiang Rai, Thailand

Scholars Without Borders

Tokyo, Japan

Kuala Lumpur, Malaysia

Port Moresby, Papua New Guinea

In the pursuit of knowledge, there are no boundaries for CAG researchers October 2009 - March 2010 Ann FLORINI Director Tallories, France Global Leadership Seminar, Tufts European Center Lausanne,Switzerland The Evian-FES Meeting, IMD International Campus Bellagio, Italy S.T. Lee Project on Global Governance: Global Health Governance Study Group Workshop Manila, Philippines Asian Development Bank Doha, Qatar World Economic Forum Global Redesign Initiative

Dubai, UAE World Economic Forum: Summit on the Global Agenda Washington DC,US Five-University Collaboration on East Asia Security Cooperation and Regional Governance, Princeton University New Orleans, US 2010 International Studies Association Annual Meeting Presentation Tokyo, Japan Meetings with the National Graduate Institute for Policy Studies, Asian Development Bank Institute and University of Tokyo London,UK Global Public Policy Network (GPPN) Meeting

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Anthony Louis D'AGOSTINO Research Associate

Malavika Jain BAMBAWALE Research Fellow

New Orleans, US 2010 International Studies Association Annual Meeting Presentation and Panel Chairing

Vientiane, Laos Research on the rural electrification projects as part of a multi-country comparison study, and Laos’ energy security issues

Port Moresby, Papua New Guinea Fieldwork evaluating the GEF-funded Teachers Solar Lighting Project

SaleenaSALEEM Research Assistant Brighton, UK University of Sussex Energy Group Conference: Energy transitions in an interdependent world: what and where are the future social science research agendas?

Rapporteur | May 2010

Toby CARROLL Research Fellow Edinburgh, Scotland British International Studies Association Annual Conference Presentation of paper “New approaches to opening markets: the Baku Tbilisi pipeline and the deployment of social and environmental risk mitigation”

regular feature

Edinburgh, Scotland

Gothenburg, Sweden

London, UK Brighton, UK

Potsdam, Germany Lausanne, Switzerland Tallories, France

Washington DC, US

St. Gallen, Switzerland

Bellagio, Italy

New Orleans, US

Benjamin K. SOVACOOL Research Fellow & Assistant Professor

Pune, India Renewable Energy Regulation India 2010 Conference

Washington DC, US Society for the Social Studies of Science (4S) Annual Meeting on Symbolic Convergence and the Hydrogen Economy

St. Gallen, Switzerland Understanding Strategic Choices for Renewable Energy Conference

Gothenburg, Sweden The Evian-FES Meeting, IMD International Campus Astana, Kazakhstan Seminar for the National School of Public Policy on Identifying International Energy Security Best Practices Hong Kong SAR, China Electric Vehicles Asia Conference

New Orleans, US 2010 International Studies Association Convention Potsdam, Germany Seventh Transatlantic Energy Governance Dialogue: Toward a Nuclear Power Renaissance? Challenges for Global Energy Governance Port Moresby, Papua New Guinea Presentation to the University of Papua New Guinea, Papua

New Guinea Institute of National Affairs, and National Research Institute on Optimal Public Policies for Renewable Energy and Energy Efficiency in Asia Edinburgh, Scotland British International Studies Association Annual Conference: Presentation on Exploring Polycentric Approaches to Energy and Environmental Governance

Melissa Ong Research Fellow Kuala Lumpur, Malaysia Meetings for field research on Public Roles of the Private Sector Kuala Lumpur, Malaysia Attend CSR Asia Summit and attend meetings for research

Rapporteur | May 2010

Kuala Lumpur, Malaysia Attend roundtable on business and human rights

Teresita Cruz-del Rosario Senior Research Fellow Chiang Rai, Thailand Multistakeholder Process for the Basin Development Plan, Mekong River Commission Manila, Philippines Meeting with Senior Officials at the Asian Development Bank Chiang Mai, Thailand Mekong NGO Forum Vientiane, Laos Research Mission under the Energy Security Initiative, MacArthur Foundation Grant

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cag research

Can Energy Be Governed?

Energy lies at the heart of the world’s most pressing global challenges. Yet at both the global and national levels, energy is poorly governed. What are the constraints? Ann Florini explains. words Ann Florini

The key role of energy in the global problematique is clear. Some two thirds of the greenhouse gas emissions that are causing climate change trace back to fossil fuel use. A renewed scramble for oil is raising fears of a new generation of geopolitical conflicts. Global economic instability correlates strong with energy price volatility.

Economic development is in significant part defined by the process of overcoming energy poverty, yet 1.6 billion people still lack access to even the most basic energy services.

Only recently has it become clear that these seemingly disparate issues are a collective manifestation of a dysfunctional energy system. At both national and global levels, energy is still conceptualized and managed in terms of energy source, not in terms of the energy services those sources provide. Yet consumers of energy services have no particular interest in what sources of energy fuel their production, transportation, lighting, heating, air conditioning, or appliances. The old paradigm, focused around energy sources rather than energy services, serves

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to rigidify decision-making at a time when extraordinary flexibility and rapid change are essential.

At the global level, a host of inter-governmental organizations is tasked with addressing various pieces of the energy puzzle. Among these, the most conspicuous is the International Energy Agency (IEA). Created by oil consumers in the 1970s in response to the Organization of the Petroleum Exporting Countries (OPEC) price shocks and the Organization of Arab Petroleum Exporting Countries (OAPEC) embargoes, the IEA has succeeded in establishing and supervising a system of national oil stockpiles that have helped to prevent a recurrence. With a small but highly competent professional staff, it has become the primary source for the world’s energy statistics and is playing a key role in the climate debate.

But it is nowhere near the truly international organisation its name implies. The IEA was established by and for a small number of wealthy oil importing countries, under the aegis of the OECD. Its membership remains restricted to Organization for Economic Co-operation

Rapporteur | May 2010

energy & climate

and Development (OECD) member countries, even As is true for other global-scale problems, much though the surge in demand from such non-member depends on the capacity and willingness of the most countries as China and India are rapidly undermining powerful national governments to find ways to act colthe IEA’s ability to speak for, and coordinate responses lectively. Yet these governments have deeply flawed among, oil importers as a group. Although since the systems of national energy governance that will make early 1990s the agency’s mandate has expanded beyond such collective action all the more challenging. In many oil to include broader energy policy, several of its own ways, the situation has been getting worse. Over the past member governments, led by Germany, found the IEA’s two decades, an ideology of privatization has promised record on renewables so unsatisfactory that they recent- greater efficiencies and lower energy prices, but the failly established a new International Renewable Energy ure to accompany such privatization with appropriate Agency (IRENA), whose membership is open to all. regulation and enforcement has left many countries with Other key inter-governmental organisations face their poorly governed and often deeply corrupt energy sectors. own limits. The International Energy Forum, which grew Moreover, given the vast profits that can be earned in the out of a series of energy ministerials, is intended to provide current system, the struggle to bring about a significant a common forum for fossil fuel producers and consumers. energy transition is necessarily a major power struggle It has taken some useful steps that may help to stabilise – no pun intended –with deeply entrenched vested intermarkets, such as the Joint Oil Data Initiative to improve ests fighting change. data on oil, but it plays a relatively minor role. The Energy This fractured decision-making landscape was not Charter Treaty has failed in its effort to bring Russia into a planned. It has evolved piecemeal, with little coordinarule-based framework for governing international transit tion among its various parts. Market forces are not able via oil and gas pipelines. On the economic development to cope, in a world in which major externalities such as front, the World Bank’s funding for energy remains over- greenhouse gas emissions are not incorporated in prices, whelmingly dedicated to fossil fuels, despite limited efforts in which major energy sources such as oil are overwhelmto establish funding for low-carbon energy. ingly controlled by governments rather than private corNumerous networks and partnerships have emerged porations, and in which huge numbers of people are too in response to the gaps in global energy governance. poor to constitute a market. A better system of developExamples include the Renewable Energy and Energy ing and enforcing internationally agreed rules governing Efficiency Partnership, a UK initiative that has grown energy is essential. R into a multi-stakeholder body supporting renewables and efficiency in numerous countries. So far, however, Ann Florini is Professor and Director of the Centre on Asia such initiatives remain quite small. They will not, in the and Globalisation at the Lee Kuan Yew School of Public foreseeable future, operate on a scale that can foster a Policy and a Senior Fellow at the Brookings Institution. rapid transition away from fossil fuels or provide energy aflorini@nus.edu.sg services to billions of new consumers.

Frits Ahlefeldt

Rapporteur | May 2010

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cag research

The Faulty Narrative Does the current climate change narrative hinder the prospects of reaching a global deal? CAG and Singapore Civil Service Colleges investigate. words Wu Wei Neng

With the outcome of the United Nations Framework Convention on Climate Change’s (UNFCCC) December 2009 summit in Copenhagen broadly falling short of global expectations, it is timely to re-examine global negotiations and efforts to address climate change.

On 4 Mar 2010, the Centre on Asia and Globalisation (CAG) at the Lee Kuan Yew School of Public Policy in Singapore and the Centre for Public Economics at Singapore’s Civil Service College jointly hosted a seminar on “Re-framing the Climate Change Narrative”.

The event comprised lectures by Professor Arvind Subramanian1 and Mr Um Woochong2. It was followed by a lively dialogue on climate and energy issues, moderated by CAG Director Professor Ann Florini with an audience of academics, policy-makers, private sector executives and students.

The following is a summary of the speakers’ presentations.

Arvind Subramanian Professor Subramanian’s lecture built upon recent work on climate change with Nancy Birdsall and Aaditya Mattoo3. It featured a “developing country’s perspective” on the international climate negotiations.

The UNFCCC 15th Conference of the Parties in Copenhagen failed to achieve more than a broad political declaration – the Copenhagen Accord. Under the Accord, voluntary pledges, declared by developing and developed countries as of February 2010, fell short of expectations, setting the world on a warming trajectory of 3.9 degrees Celsius – still far below the target of 1.5 degrees Celsius advocated by many.

The lack of success in Copenhagen could be attributed to the “rhetoric of recrimination”, a bad narrative that has thus far fuelled a “blame game”, preventing a global agreement.

The United States (US), fuelled by its partisan politics and media, focused on total emissions and the contemplation of trade sanctions, and was hostile to the energy needs of developing countries. The European Union (EU), though more sensitive to the needs of developing countries, placed too much emphasis on the “magic wand of financial transfers”, in particular through carbon markets.

As for developing countries, they found both positions inequitable on moral grounds but were obsessed with the

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historical responsibility of developed countries’ past carbon emissions and with demanding reparations. This claim is not as strong as might be supposed, since the notion of the “right to pollute” can be offset by the developed countries’ lack of intent, and the idea that developing countries similarly need to take responsibility for their population growth.

Re-framing this “bad narrative” would thus require agreement on an equitable arrangement between developed and developing countries to share efforts. However, allocating this responsibility would be tricky. Mainstream research initiatives, such as those by Lord Nicholas Stern, the United Nations Development Programme and the World Bank, have suggested that developed countries should assume 80 percent of the effort (in terms of emissions reductions, financing and technology), while developing countries take on 20 percent. Professor Subramanian argued that this starting point – focusing on dividing the global carbon space and assigning emissions rights – is in itself flawed, as countries have a right to energy services, not the right to pollute. He proposed three key principles to design an alternative concept of equity and effort-sharing amongst countries: 1. Energy services, not emissions – people want to consume energy, not emissions, hence the development right is not to emissions but to consumers’ access to, and consumption of, direct energy-based services; 2. Historic basis for equity in energy services – access to energy services should be equivalent for all given levels of income and stage of development (for instance, the access of a household in Chennai to the services of air cooling or clean cooking facilities should be no different from their counterpart in Texas at a comparable level of income per capita); 3. Frontier (not historic) carbon efficiency – efficiency in terms of greenhouse gas emissions from the generation and provision of energy services must not be backward-looking – new and cleaner technologies can be utilised to provide the same energy services.

Based on these principles, an 80:20 effort-sharing arrangement – or anything close to it – would not be equitable

Rapporteur | May 2010

energy & climate

for developing countries, given the huge lack of energy services in these countries relative to the industrialised world. In any equitable business-as-usual scenario (allowing for natural technological improvements), China’s emissions would have to increase by 75 percent and India’s by 250 percent, while industrial countries’ emissions would have to decline by about 250 percent. Given the scale of demand for energy services, meeting these needs equitably would require “massive, unprecedented improvements in carbon efficiency and new technologies”.

Revolutionary price signals – Prof Subramanian cited the 1970s oil shocks that drove fuel prices up and resulted in energy efficiency improvements of three to four times in certain countries – were also necessary. This provided the linkage between technological revolution and global cooperation.

Ambitious emissions reductions, first by developed countries (and possibly China), would catalyse technological innovation and change, which could then be transferred to poorer countries to enable their own emissions reductions. It would be inequitable for poor countries to agree to emissions cuts that would reduce their own access to energy services.

Professor Subramanian said this, however, did not mean that developing countries had no responsibilities. He noted that many developing countries had gone into Copenhagen asking, “how little can we get away with?” and from that point of view, the Conference had been a success. However, for India, climate change would present a huge challenge in terms of climate, agriculture and migration impacts.

Developing countries could therefore facilitate ambitious emissions cuts by the rich world.

Certain options were pondered – which Professor Subramanian qualified were not necessarily his recommendations – such as an emerging market technology fund to buy existing proprietary technologies and incentivise new research and development; and greater global acceptance of modest carbon border taxes by developed countries, since legitimate concerns of competitive losses and carbon leakage hindered the EU and US from assuming greater emissions cuts. Developing countries could also pre-commit to future emissions reductions, linked to specific indicators and levels of technological progress.

Um Woo-chong Mr Um then examined the implications of climate change for Asia’s developmental prospects and outlined the Asian Development Bank’s (ADB) multiple efforts in the areas of climate change adaptation and mitigation. For the ADB, the Copenhagen outcome had implications for the nexus between climate change and sustainable development, it was hence important to avoid the “blame game” and see climate

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change as a developmental challenge, particularly in Asia.

With offices in over 20 countries, the ADB has been working, since the 1960s, to achieve its vision of an Asia-Pacific free of poverty.

According to the Stern Review, the world was already locked into one to two degrees Celsius of warming. Meanwhile, the International Energy Agency estimated that developing Asia’s share of world emissions would rise significantly. As illustration, China and India presently have relatively low access to services such as personal transport, with about 20 cars per 1000 people, compared to over 500 per 1000 in Western Europe and 750 per 1000 in the US. It is hence critical to ensure that Asia’s developmental path does not result in a vast global emissions increase.

Mr Um stated that the ADB’s climate change programme worked with country authorities to understand their energy plans and introduce more efficient options, such as cleaner coal-burning technology. In order to reduce methane emissions and promote climate-resilient developments across a range of policy areas, such as health and water systems, the ADB also encouraged sustainable transport and urban development, and livestock and solid waste management.

Upfront financing for such projects remained a significant barrier and the ADB aimed to address this through capacity building, the provision of finance, knowledge and partnerships, while strengthening country policy and governance as the foundation for its other initiatives. Financing through a variety of sources, both public and private, and innovative measures, including concessional loans and multilateral development banks’ climate investment funds (with the ADB as the implementing agency), were also mobilised.

Other schemes focused on providing upfront financing to circumvent the fact that most carbon credit projects paid only on project completion and credit delivery.

With the limited outcome at Copenhagen, the ADB also sought to focus on voluntary carbon markets and regional markets in the EU and US and was working with countries such as Belgium, Finland, the Republic of Korea and Sweden in this regard. It also mobilised venture capital and enhanced outreach to institutional investors through initiatives like the Asia Clean Energy Guarantee Facility, which aims to safeguard the intellectual property rights of investors seeking to manufacture clean technology products in Asia, and a pilot carbon finance initiative which aims to reduce emissions from deforestation and forest degradation, similar to the United Nations Clean Development Mechanism. R Wu Wei Neng is a Senior Researcher at the Centre for Public Economics and Centre for Governance and Leadership at the Civil Service College, Singapore. wu_wei_neng@cscollege.gov.sg

Professor Subramanian is a Senior Fellow at the Peterson Institute for International Economics and the Centre for Global Development, and a Senior Research Professor at the Johns Hopkins University.

Mr Um is Deputy Director-General of the Regional and Sustainable Development Department at the Asian Development Bank.

See for instance Nancy Birdsall and Arvind Subramanian. 2009. “Energy Needs and Efficiency, Not Emissions: Reframing the Climate Change Narrative.” Working Paper 187. Washington, D.C.: Centre for Global Development. http:// www.cgdev.org/content/publications/detail/1423191

Rapporteur | May 2010

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cag research

Reducing a Trust Deficit in the Climate and Energy Debate Sung Lee talks to Navroz Dubash, CoChair of the S.T. Lee Project on Global Energy Governance about what went wrong in Copenhagen, what it will take to get the permanent changes the world needs and how developing countries can build an international strategy without compromising their interests. as told to Sung Lee

On Copenhagen

Q

still have a coherent legal architecture for a climate regime coming out of Copenhagen.

Two weeks of wrangling and grandstanding at the United Nations Climate Change ConferHow do you implement it, ence in Copenhagen ended with not just in one country but the “Copenhagen Accord”. The in every country – rich and poor, Accord is viewed as a cover-up of energy importers and exporters what was near complete failure. – not just for the short-term but What went wrong? over decades?

Q

A

In the build up to Copenhagen, the parties failed to grapple with larger political obstacles that had been present since Bali. By the time they got to Copenhagen, it was too late to resolve these issues. Primary among these, was the question of maintaining “differentiation” between rich and poor countries in the legal architecture of the climate regime, which developing countries, particularly large industrialising ones, insisted upon.

This demand for “differentiation” is directly contradictory to demands for “comparability” which takes two forms: United States demands that China take on actions comparable to its own, and demands by industrialised countries that have ratified the Kyoto Protocol that the US take on actions comparable to their own. It was impossible to satisfy all these demands and

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A

A global climate agreement is necessary, both to protect against an inequitable outcome that unduly burdens poorer countries, and to ensure a consistent global framework for reasons of competitiveness. Increasingly, I feel that a global framework must find a way of effectively inducing national ownership and action in all countries. National politics must shift to take climate change more seriously.

The international arena can help make this happen by keeping the issue visible in the public eye. Equally, citizens in each country have to figure out how effective action on climate change can be made viable within their political system. This is most urgent in major emitting countries, particularly industrialised ones, which bear responsibility for the bulk of emissions currently in the earth’s atmosphere.

Rapporteur | May 2010

Q

What do you regard as “politics of the common good” in addressing climate change and energy challenges?

A

There are many efforts to construct a positive narrative around clean energy as a positive economic opportunity for jobs and growth. This forms the core of “politics of the common good”.

If this were to stick, then transitioning out of fossil fuels would be undertaken out of enlightened self-interest, not as a weighty obligation. The problem is, while there is likely some basis for this narrative, no country has really squarely placed its bets on this outcome. Instead, they are hedging against the possibility that a clean energy future is more elusive or costly than boosters argue. Countries have an incentive to prepare for a clean energy future, but also to negotiate for minimal carbon constraints. In the short run, there may not be a way out of the zero-sum nature of the climate mitigation problem, given uncertainties about future technologies. An under-explored area is the considerable potential for making just about every economy more efficient. This would truly be a win-win situation. The next few years should be about retrofitting industrialised countries to be more lean, including re-thinking consumption choices such

energy & climate

as large cars, and ensuring that rapidly growing developing countries put in place the most efficient infrastructure possible.

On Developed vs. Developing Countries

Q

Do you think that the state has to play a strategic role in guiding fundamental changes and that without a strong state, it would be too easy for the costs of tackling climate change to fall disproportionately on the poorest?

There is a substantial trust deficit at the moment, overcoming it will require a more productive global narrative and trust-generating measures, in the form of meaningful national actions on all sides.

CAG PHOTO

A

Yes, the state does have a role, but state involvement is no guarantor of equity. Activists concerned with climate equity point out that under any proposed set of mitigation proposals lies an implicit, if not explicit, allocation of emission rights. On the international stage, reducing emissions from an existing baseline implicitly grandfather rights to historic polluters. At a sub-national scale, a similar dynamic unfolds.

In most countries that have attempted to set a cap, the price of obtaining that cap seems to be that polluters get to continue polluting for free, at least in the short to medium-term. The struggle for respectable amounts of adaptation funds at the global scale also suggests that the poor will bear a disproportionate burden of adjustment. So, the state has to be the instrument through which fairness is sought, but pressures from below are necessary if the state is to actually react in the right manner.

Q

What is to be expected from Asia as the global community calls for stronger action on climate change? How should Asian countries respond, both now and beyond 2012, into the Kyoto Protocol’s second commitment period?

A

Asia contains several fast-growing and large economies, not least

Q

Do you think that developing countries will have to accept the reality that the global climate regime is increasingly coming down to an unfair choice between global equity and climate effectiveness – with developing countries calling for developed countries to make the first move and developed countries asking developing countries to share the burden since they too are now major emitters? What can be done to avoid this vicious cycle of rhetoric and ineffective measures?

A China and India. The spotlight will certainly shift to this part of the world, and to some extent has already done so. The challenge is both a substantive and marketing one. Substantively, Asia has to show it can lead the world in squeezing more productivity out of each unit of energy and also be at the forefront of a transition to a lower fossil fuel dependent economy and society. Asia has the advantages of rapid growth, skilled labour, relatively healthy economies, and far less lock-in to fossil fuel intensive infrastructure than the West. From a marketing point of view, Asian economies have to do a much better job at communicating.

India, for example, has a relatively efficient economy, a point that is not well-known worldwide.

Indeed, this has been the nature of the choice for some time. Developing countries argue that even the weak Kyoto Protocol targets have not been met, largely, but not only due to US intransigence. They argue for industrialised countries to free up “development space” for their expansion. Industrialised countries argue that whatever they do to reduce emissions will be swamped by the collective growth of the developing world and discount the “development space” metaphor. To avoid endlessly replicating this vicious cycle, each country may need to retreat for a period into national actions and actually start on turning their own economies toward a low-carbon trajectory, at least through energy efficiency measures. There is a substantial trust deficit at the moment, overcoming it will require a more productive global narrative and trust-generating measures, in the form of meaningful national actions on all sides. While industrialised countries should lead the way, due to their historical role in causing the problems, it is developing countries that have more to lose from a perpetuation of the current stalemate. » Continued on Next Page

Navroz Dubash

is regarded as a leading scholar in the field of Global Energy Governance, specifically on the political economy of

energy liberalisation and reform with particular attention to the exclusion of social and environmental concerns. He is presently Senior Fellow at the Centre for Policy Research in India and concurrently co-chairs the Global Energy Governance Study Group of the S.T. Lee Project on Global Governance - an initiative of the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy.

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On India

Q

The issue of climate change is extremely pertinent to a country like India, given that the estimated negative impact (water scarcity, flooding, and so on) will be most detrimental to India’s poorest citizens. Additionally, the short-term global efforts to negotiate reduced greenhouse gas emissions could have a substantial impact on the Indian economy. What is your assessment on the current Indian government’s approach?

an agreement that could constrain future development options. India’s dilemma is that we are simultaneously a relatively large emitter (although we emit less than a fifth the emissions of each of the two largest emitters, the US and China) and a desperately poor country that still needs substantial amounts of energy for development and growth. Given current technologies, there is no way for India to provide electricity to the half of its population that does not have it, nor sustain current growth rates. We can and should do better with the energy we have, but it is not plausible for India to place an upper limit on its emissions in the

international strategy for climate effectiveness and equity without compromising the country’s interests?

A

India’s international strategy should be built around the idea of co-benefits. We could offer to take on policies and measures that deliver these co-benefits, conditional on the industrialised world doing its fair share, and certainly much more than it has been doing.

On Global Governance

Q

What is “global” about global energy governance? Or is global energy nothing more than the sum of the national energy problems of all countries?

A

A

The Indian government’s approach has, in some ways, shifted quite a bit in the past few months, particularly in packaging and presentation. Most productively, the government now leads with the statement that a legally binding global agreement is in India’s interest, and that it takes the climate change problem seriously.

At the same time, the government is justifiably wary of being locked into

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short or medium-term. As a result, the core of India’s domestic strategy is to pursue co-benefits – policies that yield developmental and climate benefits. I agree with this strategy, but feel that it can and should be implemented more sincerely, creatively and urgently.

Q

How can a developing country like India, on the foundation of creative domestic policies, build an

Rapporteur | May 2010

There are considerable interactive effects across countries that make global energy governance a truly global challenge. For one, there are technological externalities – differential development and diffusion of technologies across countries. Often under-rated are the effects of replication of energy governance institutions across countries. At this time of growing concern over possible future shortages in key fuels, such as oil and gas, there are coordination challenges involved in keeping markets functioning smoothly and avoiding costly competition to tie up energy resources in supplier countries through commercial deals or equity positions. Above all, there is the climate change externality to contend with. Despite all these complexities, the institutions of global energy governance are fragmented and fairly weak. However, it is unlikely that strong singular institutions of energy governance will emerge at the global level. Instead, we need to explore more creative options that better coordinate and align national institutions of energy governance. R

energy & climate

Monitoring Energy Security With energy security being one of the most important strategic issues facing Southeast Asia’s policy landscape today, LKY School launches a two year project to monitor the context of the issues and their impact on Asia’s poor. words Anthony Louis D'Agostino

Energy security is a priority of increasing urgency for Southeast Asian decision-makers. As the global economy continues its climb out of recession, satisfying the demand for available, accessible, environmentally acceptable, and affordable energy supplies will remain a precondition for sustaining economic development and lifting out of poverty the 45 percent share of the region’s population subsisting on less than US$ 2 a day. As forecasts project a regional annual demand growth of 2.5 percent (reaching 65 percent above current energy consumption levels by 2030), securing an adequate supply that meets all these criteria will grow more difficult as resource competition with China and India heightens and global oil production takes an expected downturn.

The threats to energy security are manifold and range from poor planning, to a lack of energy diversification, to climatic and weather-related events. For example, the Philippines’ nationwide electricity breakdown this past February-March, which led to weeks of plant failures and rotating blackouts, was instigated by El Niño-induced droughts, curbing the country’s hydroelectric capacity. The longevity of the outages was exacerbated by human error, with critics identifying historical under-investment in the sector, improper facility maintenance, and delayed emergency response measures as causal factors.

Some threats to energy security, such as building reserve capacity sufficient to buffer demand spikes, can be avoided by taking precautionary measures. Others, such as the terrorist attack threat on oil tankers in the Straits of Malacca issued in March, are less avoidable. In such cases, protocols like coordinated security patrols and cross-country collaboration must be implemented in advance.

Collectively, these impediments to energy security

cause more than just inconvenience. They result in higher transportation and electricity costs that at the micro-level can drive households into poverty. Since the poor pay a disproportionate share of their income on energy-related expenses, they are most impacted by these price hikes, whether from tariff reforms or commodity market bubbles. Energy insecurity can also force firms unable to pass on extra costs to their customers into bankruptcy. At an acute level, supply disruptions may expose millions of households to extreme temperatures for extended periods, as in the January 2009 Russia-Ukraine natural gas dispute, rendering the poor and the elderly most vulnerable. Threats like these interrupt economic activity in the short run and may lead to social unrest if left unresolved.

Recognising the necessity of secure energy access for social welfare and regional development, energy security is one of the three components of the recently initiated Asian Trends Monitoring project undertaken by the Lee Kuan Yew School of Public Policy. Alongside researchers examining the region’s trade and investment facilitation, and health systems, the project was developed to disseminate information and analyses on key sectors in the ASEAN (The Association of Southeast Asian Nations) region to inform interested stakeholders, including government officials, multilaterals, the donor community, investors, and civil society. Co-funded by the Rockefeller Foundation, New York and Singapore’s Centre for Strategic Futures, the Asian Trends Monitoring project will span two years and produce near-monthly bulletins addressing contemporary issues in the three sectors, with a special focus on pro-poor development.

Each bulletin will also examine the cross-sectoral links that connect the three topics to current policy-making

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practices. For example, the respiratory health impacts resultant from cooking with biomass fuel – the only energy source available for a large percentage of the region’s population – are well-documented and understood. Less known, however, are the policies in practice, and under consideration, for transitioning these households up the energy ladder to safer alternatives and how best this can be achieved.

This project commences at an opportune moment.

The region’s engagement with Asian and Western powers alike has grown in the past year with new opportunities for security agreements, investment opportunities, and technology transfer, all highlighting the region’s importance, both financially and geopolitically. At the same time, ASEAN countries are on the precipice of making large-scale infrastructure additions that have long-term ramifications. To minimise the potential environmental, social, and economic risks entailed by these multi-billion

dollar decisions requires a full-bodied policy discussion and options evaluation.

Topics to be profiled in forthcoming bulletins cover the range of issues in energy studies. The most prominent will be reserves-to-production ratios of conventional hydrocarbons, barriers to large-scale electrification, pricing and affordability of transportation fuels and electricity, the market potential for renewable power sources and alternative fuels, and the conditions that influence energy poverty. R Anthony D’Agostino is a Research Associate at the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy and is the lead researcher for the energy security portion of the Asian Trends Monitoring project. anthony@nus.edu.sg Asian Trends Monitoring project - www.asiantrendsmonitoring.com

Available Now

www.routledge.c om

Presents

Routledge Handbook of Energy Security

by Benjamin K. Sovacool Research Fellow & Assistant Professor Centre on Asia and Globalisation Lee Kuan Yew School of Public Policy

This Handbook examines the subject of energy security: its definition, dimensions, ways to measure and index it, and the complicating factors that are often overlooked

16

Rapporteur | May 2010

energy & climate

You Have the Power to Conserve Household energy efficiency gains can do much to alleviate many of the energy challenges currently faced by China—but they will not occur automatically, and without changes in public policy. words Benjamin K. Sovacool

Like many countries in the developing world, China faces a series of fundamental dilemmas related to energy and electricity use.

Growing consumption of energy fuels and services bolsters the Chinese economy, but also exposes it to volatile prices and potential disruptions in supply. Providing electricity to rural villages alleviates energy poverty, but can also exacerbate environmental degradation and climate change. From 2005 to 2009, the average price of retail electricity more than doubled in China, and for some particular regions, the National Development and Reform Commission (NDRC) has increased electricity prices from the equivalent of US 1.7 cents per kWh to more than US 4 cents per kWh. The energy policy and energy efficiency challenges are particularly stark for many individual provinces within China. In December 2007 and January 2008, for example, seventeen provinces in announced shortfalls in electricity supply due to a combination of rapidly rising industrial demand for electricity, severe weather, interruptions in shipments of coal, and the rising price of crude oil. Many of these provinces curtailed electricity use by initiating rolling brownouts with grave consequences for economic development.

To better understand the challenges to promoting energy efficiency in China—one of the best, cheapest, and quickest options to responding to increases in energy demand—the author and two colleagues collected data from a survey distributed to 600 Chinese households. The

results of our survey reveal four troubling trends.

First, our survey suggests that general awareness and knowledge about electricity is low. More than 40 percent of households did not remember their monthly electricity bill size. Only 2 percent of those surveyed reported receiving information and brochures on energy saving and energy efficiency, or could describe ways to actually improve efficiency and reduce electricity use. About one-third of respondents said they did not realize appliances still consumed electricity when turned off but plugged in. Roughly half (45 percent) of respondents reported that they have never thought about conserving electricity or energy efficiency before, and 10 percent of respondents (perhaps oddly) stated that they knew how to save electricity but decide not to.

When broken down into types of households, only onefifth of households with children reported an intention to save electricity or promote energy efficiency. Of those from the entire sample that did report an interest in saving electricity, cost was the prevailing factor (accounting for more than 90 percent of responses) rather than environmental protection or other reasons.

Second, the survey results show about 38 percent of the respondents who live in urban areas say that local regulators, namely property managers, do not permit the installation of solar water heaters. These officials believe that solar water heaters are subject to significant leakage and seepage of water which can damage and destroy roofs and homes. One-quarter of our own survey respondents

Rapporteur | May 2010

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cag research

said much of the same thing, that a majority of solar water consumers believe that there are systematic errors among heaters on the market are of poor quality and that compa- both manufacturers (i.e., they lie to the government) and nies do not test their products or offer decent warranties. the government (i.e., they mismanage the program and are Further complicating the matter, many sellers of solar wa- incompetent) in the supervision of the labeling process. ter heaters remove the labels from them, making it all but The energy efficiency policies in place must also swim impossible to distinguish well manufactured items from upstream against other incentives for consumer goods, dodgy ones. As one measure manufacturing, appliance of how serious the problem purchasing, and electricof deficient solar water heatity generation. These other 2 percent of those surveyed reported receiving ing technologies is, there are Chinese policies, especially about 100 brands of solar NDRC subsidies for new information and brochures on energy saving water heaters sold in Liaonelectric appliances, may be and energy efficiency, or could describe ways to ing Province but no more working at cross purposes to than 30 brands are officially energy efficiency goals. actually improve efficiency and reduce electricity registered and certified.

These four problems use. About one-third of respondents said Third, data from our sursuggest that government vey suggests that about half policies and programs need they did not realize appliances still consumed (44 percent) of the electricaugmented and modified. ity consumed in households Additional subsidies and electricity when turned off but plugged in. went to electric appliances in rebates can help households Roughly half (45 percent) of respondents 2008. The NDRC subsidizes find the capital needed to new purchases of televisions, invest in energy efficient reported that they have never thought about refrigerators, washing malights and appliances. Inconserving electricity or energy efficiency chines, air conditioners, and candescent lamps and other computers as a way to ininefficient devices could before, and 10 percent of respondents crease economic growth. In be taxed, phased out, or 2008, for example, buyers of banned.

Targeted incen(perhaps oddly) stated that they knew how to appliances were eligible for a tives could be designed to save electricity but decide not to.

10 percent discount for new force stores to stock and sell appliances if they were used more energy efficient prodto offset older models, and ucts. Rigorous performance the Chinese economic stimulus package had more than ¥2 standards should be established for solar water heaters and billion in incentives, rebates, and subsidies for home ap- government regulators need to find ways to ensure these pliances. Because of these factors, more than 90 percent standards are enforced. Education programs need to overof respondents indicated that the more convenience appli- come resistance and lack of consumer awareness relating ances can offer, the more units they will purchase (and the to electricity consumption and energy efficiency labels. more energy households will consume).

In essence, household energy efficiency gains can do Fourth, our study highlights some serious concerns with much to alleviate many of the energy challenges currently the energy efficiency labeling and product identification faced by China—but they will not occur automatically, program being managed by the government. Only 35 per- and without changes in public policy. R cent of our sample believed that the energy efficiency labels Benjamin K. Sovacool is a Research Fellow and Assistant accurately described how the products would perform, and 25 percent indicated they did not care about the label at all Professor at the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy. bsovacool@nus.edu.sg when selecting products. The explanation is that Chinese

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Rapporteur | May 2010

global governance

Special Feature

Public Roles OF THE Private Sector

22

Realities of New Frontiers

24

Q&A with Ashvin Dayal Rockefeller Foundation

Growing an Asian agenda and understanding its implications

Beyond the charitable space

28

Rapporteur  |  May 2010

Access to medicines

How Banks can Save the World?

Through a social licence

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special feature

Growing an Asian Agenda on the Public Roles of the Private Sector words Melissa Ong & Sumi Dhanarajan

Businesses invariably have public impacts.

CAG’s Public Roles of the Private Sector programme seeks to understand the implications.

rovision of goods and services of a public nature.

Business operations that have human rights and environmental impacts. Corporate influence over government policies. The private sector’s activities have a clear public dimension to them. That this dimension exists is neither a new phenomenon nor is it specific to any particular part of the world. It does however play out differently in different contexts.

When the Public Roles of the Private Sector (PROPS) programme launched in 2007, it was against a backdrop of a growing interest in corporate social responsibility (CSR) in Asia. International campaigners were beginning to target Asian-based companies for poor environmental and human rights practices. Governments were starting to react to the implications of such reputational challenges upon trade and investment. Pressure was being placed on Asian business partners of multinational companies to abide by codes of conduct.

Yet, despite these trends, there is insufficient substantive research and policy analysis on the subject coming out of the region. Little is still understood about what amounts to a “public” role for a company; what rights, duties and responsibilities accrue to it; how the role defines the social contract between business and society, and how Asian perspectives and approaches affect the terms of engagement. Questions continue to be asked: is this public role limited to philanthropy or is it more about operating in a socially and environmentally responsible manner? Is there a role for the state in enforcing responsible business practices or should its role be to simply encourage voluntary approaches?

Given that this is still a fairly nascent agenda in Asia, the PROPS programme – the first of its kind in the region – intends to generate thought leadership in this field through cutting-edge research and indepth studies of the issue as well as strategic outreach to both the corporate and the public sector in order to shape policy and practice. To achieve this goal, the programme concentrates on three main themes:

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Rapporteur | May 2010

public roles of the private sector

3

Corporate Social Responsibility: practices and impact; Business and Human Rights in the ASEAN region; and Business Leadership on Sustainability in Southeast Asia.

1

Corporate Social Responsibility in SE Asia: practices and impacts Through a series of country case-studies, we explore what Southeast Asian companies are doing in the area of CSR, and attempt to establish the significance of this trend as it unfolds in Asia. The studies – the first of which are on Singapore, Malaysia and Indonesia - examine whether and to what extent the largest companies in these countries are discussing or implementing CSR, as well as government policies and civil society action in this area. In doing so, it outlines the context in which businesses operate, the relationships between the private sector, civil society and government, and its impact on the evolution of CSR in Asia.

2

Business and Human Rights in the ASEAN region Our first research project under this theme, Access to remedies for corporate-related human rights impacts in Southeast Asia: The role of non-judicial grievance mechanisms in dispute resolution and provision of redress is a collaboration with the Corporate Social Responsibility Initiative at the Kennedy School of Government, Harvard University. The research maps and examines the effectiveness of non-judicial grievance mechanisms in resolving disputes between companies and communities, and in providing redress to victims of corporate-related human rights abuse. We study a range of processes – for example, community-based mediative processes, corporate operationallevel complaints procedures, multi-stakeholder dispute resolution mechanisms, national-level adjudication and environmental/ social impact assessment mechanisms in four sectors: palm oil and logging, construction and property development, mining and electronics manufacturing. Countries we study include Malaysia, Indonesia, Thailand, Philippines and Singapore. Research findings will be made available on BASESWiki, an open source online database for stakeholders and companies that showcases learning and information on non-judicial grievance mechanisms.

Business Leadership on Sustainability in Southeast Asia We have developed a senior executive programme entitled Business Leadership for a Sustainable Southeast Asia. It aims at nurturing a cohort of progressive and action oriented leaders to champion a smart sustainability agenda for the region. The focus on business leadership speaks to the region’s need for the private sector to build capabilities for integrating sustainability matters into business models and to play a key strategic role in delivering collective solutions on environmental sustainability, climate change and poverty. Developed in collaboration with the University of Cambridge’s Programme for Sustainability Leadership, the first programme in September 2010 focuses on Business Leadership on Climate Change. It will benefit those who realise that sustainability will grow in prominence as a core business concern and who recognise the clear first-mover advantages of addressing this trend early.

The programme is also open to a select group of government and civil society emerging leaders who want to better engage the private sector on sustainability and who are seeking to develop public policy interventions that unleash innovation and optimise best practice.

Corporations to the Rescue?: Business Responsibilities in the Age of Crises In the aftermath of a few coinciding crises – financial, health, security and climate – we launched this seminar series in October 2009.

It provided an opportunity for practitioners and scholars to present their view on the altering roles of business in the face of global crises and to gauge a response from an array of stakeholders. Each of the seven seminars held has explored the roles that businesses plays in finding effective solutions to collective problems such as health, human rights, poverty, security and conflict, climate change, the financial crises and food security with speakers representing corporations, NGOs, academia and think-tanks. R Melissa Ong heads the Public Roles of the Private Sector programme at the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy. Sumi Dhanarajan is a consultant to the programme and leads the Access to Remedies research and Business Leadership for a Sustainable Southeast Asia Programme.

Melissa: mong@nus.edu.sg Sumi: sdhanarajan@nus.edu.sg

Rapporteur | May 2010

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special feature

Realities of New Frontiers With developing country markets presenting a lifeline to the pharmaceutical industry, access to medicines concerns become more critical to profitability. Sumi Dhanarajan explains why. words Sumi Dhanarajan

It has been a challenging decade for the pharmaceutical industry. With high numbers of patent expiries, pipelines drying up and intensifying competition from generics, branded pharmaceuticals have been haemorrhaging value.

At the same time, traditional markets are becoming saturated.

Stark realities in industrialised countries – such as the impacts of ageing populations on tax-based social healthcare and employer-funded models – are leading governments towards regulatory regimes that demand more economical, value-based and transparent drug pricing.

Under these circumstances, emerging markets present a new frontier.

Originally attractive for their offerings of low-cost production, consumers in developing countries now present a viable market to multinational corporations.

The pharmaceutical industry has been eyeing this trend for a while. A recent study predicts that 17 “pharmerging” countries – including India, Indonesia, Pakistan, Thailand and Vietnam – will “in aggregate expand by US$ 90 billion during 2009-2013”. 1 However, many emerging economies are still developing countries where a large portion of the population is poor, and those who are not, remain vulnerable to falling below the poverty line in times of crises. Healthcare is financed largely out-of pocket – up to 60 percent in Asia – and many countries shoulder a “triple disease burden” of “old” diseases like tuberculosis and malaria, new infectious diseases like Influenza A (H1N1), and a “silent pandemic” 2 in the form of noncommunicable diseases such as diabetes and cancer. The challenges around access to medicines remain critical and, indeed, relevant to the industry’s business model.

Philanthropic approaches to the problem have achieved little systemic change. Drug donations by companies have been criticised as being mostly unsustainable. Often, the medicines are unsuitable for patients, unfamiliar to local prescribers, do not match national clinical guidelines or are near expiry. As supplies can be unpredictable, they have the potential to create chaos in the market as they prevent accurate quantification of needs and affect forward-planning.

They also have an overarching negative effect of undermining

22

market competition – even generics cannot compete with free medicines. Price discounts have, to an extent, been more effective though limited by their focus on specific high-profile diseases and least developed countries (LDCs)3.

The access to medicines movement has posed three key demands of the pharmaceutical industry: 1. Pricing schemes that systematically address challenges around affordability and that are transparent; 2. Investment in research and development (R&D) that is relevant to the diseases affecting developing countries as well as into medicines suitable for resource-poor contexts (for example, heat-stable formulations or fixed combination drugs); and 3. A flexible approach towards intellectual property (IP) rights and support for developing country governments’ use of related public health safeguards, in recognition of the role generics play in vastly reducing medicine prices.

Leading companies are starting to understand how integrating these concerns into core business practices may well hold the answer to sustainable long-term profitability in emerging markets. Reliance on the traditional blockbuster model that targets the elite is proving unfeasible and short-sighted.

For starters, it limits the size of the consumer base. More importantly, the model’s dependence upon aggressive defence of patents and high profit margins, in order to generate the allimportant US$ 1 billion per annum, detracts companies from serving target markets effectively by providing products that are relevant, affordable and accessible. Many argue that the perverse incentives created by the model have discouraged innovation. Finally, developing country governments are beginning to prioritise healthcare and are seeking cost-efficient outcomes as well as the means to effectively manage disease burdens. In these countries, building access to medicine concerns into the core business models becomes vital to securing the social license to operate.

Rapporteur | May 2010

public roles of the private sector

At the end of 2008, one company attempted to beat a new country governments continue to go head-to-head with Big path. The chief executive officer of GlaxoSmithKline (GSK) Pharma in battles over compulsory licensing4 and patent unveiled a four-point plan that included a commitment to legislation that protect public health5. There is a serious cap prices for patented medicines in LDCs at 25 percent of questioning of whether IP rights are actually an effective the price in the developed world. In middle-income countries, incentive for drug development, especially with regards to prices would more closely reflect a country’s ability to pay medicines relevant to diseases in developing countries, given (for example, GSK cut the current dearth of the price of its cervical R&D into these diseases. cancer vaccine, Cervarix, New models are Reliance on the traditional blockbuster model being tested UNITAID’s by 60 percent in the that targets the elite is proving unfeasible patent pool for AIDS Philippines and gained medicines, for example, a 14-fold increase in and short-sighted. For starters, it limits the allows generic compavolume sales). Further, it size of the consumer base. More importantly, nies to make cheaper proposed the establishversions of patented ment of an LDC patent the model’s dependence upon aggressive medicines by creating pool for neglected tropidefence of patents and high profit margins, cal diseases and donated a common space for detracts companies from serving target markets patent holders to li13,500 compounds for malaria vaccines into it. cense their technology effectively by providing products that are Slowly, other comin exchange for royalrelevant, affordable and accessible. panies are following ties. Ultimately, genersuit.

Sanofi-Aventis ics remain the current recently announced front-runner in terms that it was halving the price of its diabetes drug, Lantus, of delivering affordable medicines. Formulating policies and cancer treatment, Taxotere, in Indonesia and the that enable generic competition whilst capturing most Philippines. Japanese firm, Eisai dropped its price for value from the branded pharmaceutical industry will reAricept, an Alzheimer’s treatment in six Asian countries. quire creative, dynamic approaches that emphasise the Other companies are experimenting with base-of-pyramid collective imperative. R models that seek to boost sales. Novartis’ Arogya Parivar model sells medicines in smaller, more affordable pack Sumi Dhanarajan is a consultant to the Public Roles of sizes. The jury is still out on whether or not these new ap- the Private Sector programme at the Centre on Asia and Globalisation, Lee Kuan Yew School of Public Policy. proaches deliver systemic change, and whether companies sdhanarajan@nus.edu.sg are adopting a “serve” rather than “capture” market strategy, but at least the issue of access to medicines is no longer Special thanks to Kamal Kishore Parida of Responsible being viewed at arm’s length.

Research, author of a forthcoming report, "Pharma and More needs to be done on the issue of IP rights – the sacred cow of the pharmaceutical industry. Developing Healthcare industry: Issues for Responsible Investors".

Notes

1 2 3 4.

5.

IMS, ‘Pharmerging Shake-UP: New Imperatives in a Redefined World’ (2010), accessed at http://www.healthcarepackaging.com/archives/2010/03/emerging_economies_represent_p.php The World Economic Forum’s 2010 Global Risks Report uses this phrase to describe the rapid overtaking of infectious diseases by chronic diseases as the world’s biggest killers.

Oxfam International, ‘Investing for life: Meeting poor people’s needs for access to medicines through responsible business practices’, Oxfam Briefing Paper 109, November 2007.

For example, the Thai government’s confrontations with Abbott Labs over the heat-stable formulation of antiretroviral therapy, Kaletra.

For example, the Novartis’ challenge of section 3(d) of India’s patent law in 2008 viz its cancer drug, Glivec.

Rapporteur | May 2010

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special feature

Collective Action Required Sumi Dhanarajan talks to Ashvin Dayal, The Rockefeller Foundation’s Managing Director for Asia, about how interactions between poor people and business extend far beyond the charitable space. as told to Sumi Dhanarajan

Frits Ahlefeldt

Q

Despite being home to some of the most dynamic economies in the world, the fight against poverty still remains a critical challenge in Asia. How are Asian companies responding to this challenge?

A

Most companies that are either deliberately or indirectly responding to social challenges in the region are not necessarily framing these in terms of “poverty alleviation”. They see their impact more in relation to, for example, addressing environmental degradation or providing access to social services for the poor. There is not a huge awareness of just how great a connection there can be between poverty and business. The other dimension is that many Asian businesses tend to perceive whole countries as either poor or not poor. There tends to be a less nuanced understanding of the existence of inequality and poverty in middle-income nations. This poses a challenge because the notion of what comprises the “market” has traditionally been constrained to those living above the poverty line and the approach to those below, if any, gets relegated to a charitable response.

Having said that, the really exciting development is that we increasingly see some leading businesses beginning to take a more sophisticated approach to

24

low-income markets by applying their business models to people living with low-incomes through the provision of affordable products and services. This approach can help drive new opportunities for development.

Q

Can you give examples of companies that are addressing the challenge in the way you have described?

A

Social enterprises are flourishing across Asia. Many of these deliberately apply business strategies to achieving social outcomes. Some of these approaches are getting mainstreamed and aggregated to a point where we can see the transformative potential at the level of an entire sector. One interesting example, which we (The Rockefeller Foundation) are studying, is the field of low-income housing in India. After decades of stagnation, we are seeing a combination of smarter government regulation, innovations in mortgage financing, and more cost-effective construction to the point where slum-dwelling families in Mumbai, earning under US$ 200 per month, can now realise the dream of owning their own apartment. It may not be the absolute poorest in those slums who will have the capacity to

Rapporteur | May 2010

be the first buyers, but there is a huge market to be tapped. Over time, the cost structures will push even further down, unleashing enormous long-term returns in terms of human development and income security.

Q

In the time that you have worked on these issues, what changes have you seen in the way the private sector interacts with poverty alleviation goals?

A

In the last 10 years, I have seen corporations begin to understand the need to integrate poverty concerns into their core business operations. Some large transnational corporations are definitely taking steps to move beyond the traditional notion of corporate social responsibility (CSR) and are looking more at how their day-to-day operations affect poor people, whether as workers, farmers, suppliers, consumers or citizens. They have started looking at, for example, their supplychains and identifying where there may be negative impacts upon poor people and are trying to find ways to change their approaches to mitigate the problem. Oxfam, for example, teamed up with Unilever Indonesia in 2005 to study its “poverty footprint”. They investigated how their company’s supply-chain practices – pay-

public roles of the private sector ments for products, technological support – impacted on smallholder farmers, as well as their impact on poverty through their consumer products, right through to the macro impact of their presence in the country upon the overall economy. This was an influential study that brought a whole new set of issues into focus.1 Now, we see a different dynamic beginning to percolate. A lot of innovation in terms of low-income market development is being driven by the small and medium enterprise (SME) sector, with these businesses entering the marketplace with a social objective in mind. The seminal report released last year by Monitor, Emerging Markets, Emerging Models, identified seven basic models that social enterprises are developing in India that can sustainably provide basic services and products to poor people at scale.2 Add to this mix, an emerging set of financial services leaders who are pursuing innovative ways of attracting capital to such enterprises, and this becomes an exciting space to watch. Recently, I spent time with a new company called “1298”. This company provides a private ambulance service of a high standard to all segments of society, including poor communities in slum areas in Mumbai. In such a big city, this kind of service has the potential to generate a significant positive social and humanitarian impact. Cross-subsidies allow for the service to be free or highly subsidised for the poorest. The external financing for this company initially came from a socially oriented venture capital fund, Acumen.

Q

Are there potential pitfalls associated with this social enterprise movement? What kinds of problems should we be guarding against?

A

There is always a risk that these enterprises claim to have positive social and environmental impacts when there are none, or worse still, there are unintended negative ones. I am less worried about this because there are some very serious efforts underway to generate new tools and robust metrics that ensure a degree of accountability.

We are working with a diverse group of global partners to develop a standard for measuring and reporting the social impact of business – the Impact Re-

What we do not want is for governments to come in too heavy-handed and stifle the creative energy that drives these enterprises. This is a fast-changing agenda [that] governments need to get on top of. porting and Investment Standards (IRIS). In the same way that general accounting rules ensure accountability for the for-profit sector, IRIS will enable us to communicate more effectively the social returns that these businesses generate, and importantly, to compare the relative success of different businesses and funds to solve social and environmental challenges. From a development practitioners’ perspective, we still need to understand more clearly, “How does it all add up?” This is really important on a number of levels as governments need to be able to make informed judgements on when, and how far to step back and allow the private sector into what is traditionally the public sector’s space. They can only do this when there is clear information and measurement of impact. Another key challenge is how to take successful social enterprises to scale. By this, I do not necessarily mean that all SMEs need to become large corporations – that is neither likely nor desirable. To achieve the kind of poverty impact that would shift the needle at a macro level in any given country requires much larger flows of private capital. For this, we need to move beyond the bespoke socially oriented investment funds that are critical for demonstrating what is possible, to creating architecture and infrastructure that provide a low-transaction cost vehicle for larger investors to enter this space.

Q

Your organisation has been focusing on growing an agenda on “impact investing”. Can you tell us more about what you are doing, especially in Asia?

A

We have a global initiative that is aimed at harnessing the power of impact investing. This supports a number of inter-related streams that together seek to catalyse what we see as a potentially multi-billion-dollar industry. While

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there has been a welcomed growth in the social enterprise sector, our initiative is concentrating on creating an enabling environment for the investor community to participate. We are investing in the creation of new platforms, such as the Global Impact Investment Network (that is leading the IRIS standards project among other activities), helping to launch a new system for rating the social impact of investments, and have worked right here in Singapore with the CAG at the Lee Kuan Yew School of Public Policy on testing and assessing some of these tools in an Asian context. We have also entered into a new partnership with the Impact Investment Exchange in Asia, a new venture aiming to create an impact investment exchange to mobilise capital.

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What do you see governments doing in terms of promoting or at least creating an enabling environment for the social enterprise movement to flourish?

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It is difficult for governments to know what is happening because of this lack of comprehensive analysis on the development impact of the private sector.

Without a line of sight on whether social entrepreneurship and impact investing are delivering positive impact, they are unable to make appropriate decisions on creating the right incentives or regulatory frameworks, or reforming existing ones to stimulate the private sector. We know from the evolution of similar innovations that getting policies right will be crucial.

What we do not want is for governments to come in too heavy-handed and stifle the creative energy that drives these enterprises. This is a fast-changing agenda that governments need to get on top of.

Some are beginning to experiment with interesting partnerships. For example, in India, we are involved in a pilot initiative that is seeking to bring government, the private sector and non-governmental organisations (NGOs) together to explore how the expanding mobile phone tower network can be used as an anchor for the expansion of rural energy supply. This requires regulatory support, private sector engagement based on a clear business case, and NGO participation to structure arrangements to ensure benefits flow into those communities.

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Going back to mainstream companies in Asia and their response to poverty. Poverty is multi-faceted and eradicating income poverty is only one part of the picture. How are Asian companies dealing with human rights challenges within their operations?

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This is where a lot more needs to be done through partnerships between government and business. We continue

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India has been a hotbed for social entrepreneurship innovation given its characteristics – a large well-developed market and established private sector, alongside massive poverty challenges.

Many Southeast Asian countries have similar characteristics. The Rockefeller Foundation supports a major programme called the Asian Cities Climate Change Resilience Network. Through this, we are exploring new opportunities to promote SME-scale businesses to provide social and environmental products and services that enable vulnerable urban communities to adapt to the impacts of climate change. In Indonesia, for example, there is already quite a lot happening in related sectors that we feel could be harnessed more systematically.

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to face a dynamic where there is a perceived tension between human rights, development and growth. The most severe cases tend to be in extractive sectors where we also often see the resource issue overlap with more complex local dynamics regarding the rights of local, often indigenous communities. I think we are slowly getting to a point where notions of sustainability and human rights are coming together. For example, we are seeing new partnerships between local communities, companies and government to protect forest areas through Reducing Emissions from Deforestation and Degradation (REDD) projects, which, if successful, can have a positive impact on the rights of local communities.

Q

Many of your examples on social entrepreneurship are drawn from the Indian context. What is happening in Southeast Asia?

Can you share any final thoughts on key areas you would like to see more research into, with regards to how Asia’s private sector engages with the poverty reduction agenda?

A

I think we need to adopt more of a “prospecting” mentality towards some of the most compelling future development trends. For example, what role can businesses play in promoting adaptation and resilience in urban areas that are growing rapidly, and who face increasingly complex climate related challenges? I would like to stress again the need to see more work done around aggregating and linking this work to public policy.

If we want to both unleash and harness the potential of the private sector for achieving national poverty reduction and development goals, governments will need to play an increasingly sophisticated and intelligent role as these efforts scale up. R

Clay, J. (2005) “Exploring the Links Between International Business and Poverty Reduction: A Case Study of Unilever in Indonesia. Oxfam GB, Novib Oxfam Netherlands and Unilever.”

Karamchandani, A., Kubzansky, M. & Frandano, P. (2009) “Emerging Markets, Emerging Models: Market-Based Solutions to the Challenges of Global Poverty. Monitor Group.”

Ashvin Dayal

is The Rockefeller Foundation’s Managing Director for Asia based in Bangkok. Ashvin oversees a portfolio of work related to urban climate change resilience, transforming health systems, expanding opportunities for urban development and helping to build a new field of impact investing. He was the featured speaker at the Centre on Asia and Globalisation’s Corporation to the Rescue? Seminar series on 7 April 2010, held in partnership with UBS Singapore. His interviewer, Sumi Dhanarajan is a consultant to the Public Roles of the Private Sector programme at the Centre on Asia and Globalisation. sdhanarajan@nus.edu.sg

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Save the World!

How Banks Can Save the World?

Banks which had, just a few months ago, been bailed out with public funds are now paying their staff millions in bonuses. This had outraged many, but not Dr Sanjeev Khagram, an International Associate of CAG. words Tan Hui Yee

As far as Sanjeev Khagram is concerned, people are missing US$5 trillion for a global deal on climate change,” he adds.

In other words, the wrangling over carbon emission the wood for the trees. The big worry is not so much how fat cuts and the transfer of green technology witnessed at the bonuses can get, but how lax lending practices could harm Copenhagen climate summit recently could have been easthe world.

If banks do not follow socially responsible lending ily resolved if the countries were willing to spend just half practices, it could result in even more crisis and also broader of what they mustered in a heartbeat to fight the financial meltdown. problems down the road.

Unfortunately, many deem the health of banks far more “This is an imperative,” says Dr Khagram, 41, the Wyss Visitimportant than the health of the planet. ing Scholar at Harvard University and international associate Financial institutions oil the wheels of the economy. at the Centre on Asia and Globalisation. He was in Singapore to conduct a seminar organised by the centre as part of its long- “Where banks and financial institutions don’t invest, there running project to develop new insights on global governance. can be a dramatically negative impact on broader social environmental goals. And where they do invest, there can be a Speaking to The Sunday Times separately, he wastes no potentially positive impact.” time stressing that banks “still rule the world”.

But as the popular saying goes: With great power comes “When you look at the global 500 (ranking of companies), great responsibility.

60 banks more or less are in there and have been so for a “Like all business, banks have a social licence to operate. number of years… Despite the financial crisis, there hasn’t been much shift in the number of large banks that are part And that social licence means they have to contribute in some way to society.” of the global 500.”

In the past, banks were deemed to have done their part He concedes that the massive government bailouts for society and the economy when they generated profits. played a part in the rebounds of the likes of Goldman Sachs and AIG. But the bailouts themselves showed just how much But that is no longer sufficient, he says. clout the banks wield.

The lead author of the United Nations SecretaryThe statistics he cites are sobering.

General’s report on the global downturn’s impact on the A good estimate of how much governments have spent world’s poor knows just how much is at stake here. With in responding to the global financial crisis through bailouts, millions of people kept below the poverty line by the crisis, fiscal stimulus and otherwise is US$10 trillion (SG$14 tril- banks these days should be assessed by how much their lion) over the last two years or so, he says. lending activities lead to desirable outcomes for society and the environment, he says.

“The best climate experts estimate that it would take

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“Like all business, banks have a social licence to operate. And that social licence means they have to contribute in some way to society.”

TO BE THE Instead of relying on typical philanthropic activities to do good, banks should integrate them into their business.

One simple way is for banks to make potential borrowers systematically review the social and environmental risks of their projects before agreeing to underwrite them. Banks could also extend cheaper loans to companies that agree to rigorous environmental controls.

Once companies realize that there are financial benefits to be gleaned from reducing pollution or treating their workers well, for example, they will naturally fall in line, Dr Khagram reasons.

This approach is good for the banks’ bottom lines too.

“Suppose you have a large hydroelectric product that is dependent on a certain hydrological model of the river, a model mapping the water flow. Banks are brought in and they provide funding for this public-private partnership project.

“Now, given climate change, we know changes in hydrology are happening all the time, and they’re going to be much more severe. If the banks don’t pay attention to, in a systematic way, whether or not the project has been built with real consideration about what the future hydrological model is going to be, they’re going to be in a high-risk situation.”

If the flow of a river changes, the project would not be able to generate the amount of electricity predicted. This would jeopardize the future earnings of the funding bank.

There is already some precedent to the practice Dr Khagram is suggesting.

In 2003, a number of banks launched the Equator Principles, a set of voluntary guidelines for the finance sector to ensure that the major projects it funds are developed in a socially and environmentally responsible way. These have been adopted by more than 60 financial institutions, including Barclays,

Citigroup and the HSBC Group.

The guidelines, which were updated in 2006, require companies borrowing from participating banks to look into issues like community health and the impact of the project on indigenous peoples.

Dr Khagram suggests that governments could nudge banks into socially responsible lending by extending cheaper credit to such banks when needed.

Meanwhile, civil society can play its part too, by helping to police the bad hats and highlighting the good lenders.

In this way, a virtuous circle is created.

Rather than just patching up the loopholes that created the recent financial meltdown, the world could chart new and socially responsible ways to make money.

He is optimistic about its prospects, given how inventive the banking sector can be.

“What led to the current global financial crisis is that the financial sector is incredibly creative, (devising) instruments like collateralised debt obligations and all these exotic ways of making money.

“We want to support that financial sector innovation in every way. Imagine 10 percent of that creativity being used to create new financial sector instruments for broader social and environmental goals.”

There is no doubt that banks “can continue to make lots and lots of money, and their executives can make lots of money,” he says.

The champagne can still flow, if bankers put their minds to the right causes.

And banks, which rule the world, can still save the world. R This article was written by Tan Hui Yee and first published in The Sunday Times on 27 December 2009. Sanjeev Khagram is the Wyss Visiting Scholar at Harvard University and an International Associate at the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy.

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GLOBAL THOUGHT LEADER ON ASIA'S ROLE IN AN INTEGRATED WORLD

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Shaping the Debate in Global Governance The S.T. Lee Project on Global Governance, launched in 2008 and widely recognised as the leading Asiabased initiative addressing the growing crisis in global governance, is now gearing towards the final stage of the Project. Ann Florini, co-chair of the Project, updates what has been done and what’s ahead.

words Ann Florini

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global governance

In January 2008, the Centre on Asia and Globalisation (CAG) and the Lee Kuan Yew School of Public Policy launched the three-year S.T. Lee Project on Global Governance. Since then, the project has brought together scholars from Asia, Europe, and North America to investigate how basic questions about sovereignty and institutional diversity in world affairs are being addressed in two key issue areas: global health governance, and global energy governance. This project will conclude in December 2010 with numerous publications, leaving behind an established network of scholars spanning the regions.

The S.T. Lee Project began with preliminary work on issues of sovereignty and world order, commissioning a number of think-pieces to address these issues and convening a workshop in December 2008 to develop an intellectual framework for the research into the more specific topics of energy and health. The project has continued to discuss ideas related to the framework through a variety of channels. Specifically, in December 2009 it convened a small workshop to develop the intellectual basis for the World Economic Forum’s Singapore Hearing, part of the Forum’s Global Redesign Initiative. In both 2009 and 2010, it organized panels at the annual convention of the International Studies Association (ISA) that brought Asian and Western scholars together.

However, the S.T. Lee Project has primarily focused on carrying out original research related to global energy governance and global health governance. It has convened transnational study groups in both arenas. The two study groups have each held a series of authors’ workshops and the resulting papers are currently being prepared for publication.

Governing Global Energy Energy governance was selected as a key theme because it cuts across the most profound issues of international order, and because it so clearly requires new approaches. Modern civilization is built upon unsustainable patterns of energy consumption. Climate change is the most prominent and perhaps most intractable of energy-related dilemmas, with energy accounting for some two-thirds of greenhouse gas emissions, but the East-West dialogue on climate change is mired by unhelpful finger-pointing.

Beyond climate, global energy policy raises profound questions of security, development, environmental degradation, even human rights. There is no comprehensive system of institutions in place to deal with these issues or even have a broad discussion, in part because energy security concerns are often tightly bound up with national security and thus sovereignty concerns.

The energy study group explores what institutional mechanisms exist, how energy policy is understood in different countries, and what governance mechanisms can be reformed or developed to address the many dilemmas of energy policy.

Governing Global Health In contrast, global health governance suffers from what may be an excess of institutions and mechanisms. Over

the past several years, global health has risen rapidly on the agenda of global issues. Apart from traditional government's inter-governmental organisations' actions, non-state actors, from foundations to pharmaceutical corporations to NGOs, are actively experimenting with alternative ways to tackle health challenges.

However, these initiatives are often driven by competing interests and values, uncoordinated at best and mutually undermining at worst. The result is a cacophony of actors, largely unregulated, rarely transparent, and often acting at cross purposes.

Despite all the new resources, domestic capacity to handle pandemics is weak or non-existent in most regions, leaving all parts of the world vulnerable to the next big outbreak. Even the most obvious global governance steps, such as a reliable and comprehensive global reporting system, have yet to be taken. These institutional gaps and lack of strategic coherence reflect not just the difficulties of global collective action, but also important tensions between the norms, principles and ethics driving various global governance efforts. A rising Asia brings to the table a new set of increasingly influential players with their own values and approaches to managing global issues, particularly on the notion of sovereignty.

What’s ahead The final energy and health study group workshops will be held in May and June respectively. A key objective of the project, to create an epistemic community of researchers spanning North America, Europe, and Asia, has now been achieved. Two important questions facing the project will be discussed at the upcoming study group workshops: 1. how to keep that community connected and building on what has been created and 2. what impact should the project have beyond publication of significant research in world leading publications?

To assist with the question of impact, experts with policy backgrounds have been invited to attend the workshops to inform participants about the approaches of policy makers and advise on effective ways disseminate the findings. This information and evaluation should enrich study group recommendations, reflecting the interest and concerns of decision makers in Asia and the West.

The project is also in discussions with the Princeton Five University East Asia Initiative. The proposal being discussed - that the Project’s final wrap up conference is held in China in partnership with the Initiative’s December meeting - would broaden and enrich the current epistemic communities. This and other options are currently being investigated to ensure this cutting edge study of global governance in relation to two of the world’s most pressing issues has life beyond the time frame of the project. R Ann Florini is Professor and Director of the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy and a Senior Fellow at the Brookings Institution. aflorini@nus.edu.sg

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Three Powerful Global Ideas Tommy Koh, Singapore’s Permanent Representative to the United Nations from 1968 to 1971 and again from 1974 to 1984, discusses three U.N. ideas that revolutionalised the world at the Singapore launch of the book “U.N. Ideas that Changed the World”, hosted by CAG. words Tommy Koh

The United Nations (U.N.) is a vast and complex system of global governance. It is like a confederation of states. The most conspicuous part of the U.N., namely, the U.N. General Assembly, the U.N. Security Council and the U.N. Secretary-General, are based in New York. The U.N. in New York, however, does not have control or jurisdiction over some other members of the family, such as, the World Bank and the International Monetary Fund in Washington, DC, the International Court of Justice at The Hague, the World Trade Organization in Geneva, the International Maritime Organization (IMO) in London, the International Civil Aviation Organization in Montreal, the U.N. Environment Programme in Nairobi, and so on. Members of the public are hence understandably confused by what the U.N. is, who the members of the U.N. family are, what they do and how well or badly they do their work.

There is also the mistaken impression that the U.N. SecretaryGeneral is omnipotent and able to solve all the pressing problems of the world, which raises unrealistic expectations.

Although the annual meeting of the U.N. General Assembly continues to attract the attendance of the world’s political leaders, the U.N. does not enjoy good press in many Member States. I do not know whether Singaporeans have been polled on their perceptions of, and attitudes towards the U.N., but I suspect that the results would indicate that most Singaporeans are unaware of the U.N. and its work. Those who are aware, regard the U.N. as indispensable to the world, but not very effective in fulfilling the vision of

the founding fathers and the aspirations of humankind.

The great utility of this book, U.N. Ideas That Changed The World, is that it tries to balance the account by reminding the world that, over the past 65 years, the U.N. has germinated a number of ideas that have changed the world. The book has identified nine revolutionary ideas.

Let me, in the limited time allocated, briefly discuss three of them.

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Gender Equity For thousands of years, women have been treated as second-class human beings.

Even in 1945, when the U.N. was founded, women did not have the right to vote in 21 of the 51 Member States. The U.N. has brought about a revolution in the status of women. The first step was the U.N. Charter, which forbids discrimination on the basis of sex. The second step was taken in 1947, in the establishment of a Commission on the Status of Women. The third step was the adoption of the Universal Declaration of Human Rights in 1948, which, inter alia, reinforced the Charter’s prohibition against discrimination on the basis of sex and prescribed that men and women are “entitled to equal rights as to marriage, during marriage and at its dissolution”. The fourth step was the adoption, in 1952, of the Convention on Political Rights of Women. The fifth step was the adoption, in 1967, by the General Assembly of the Declaration on the Elimination of Discrimination against Women (DEDAW). The sixth and most important step was the adoption of the landmark Convention on the Elimination of All

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Forms of Discrimination against Women (CEDAW) in protection agencies. The second step was taken in 1982, with 1981. CEDAW is now the central and most comprehensive the adoption of the U.N. Convention on the Law of the Sea. document in international efforts to advance the status of The Convention, inter alia, contained a strong chapter on women. Singapore is a the protection of the party to this Convention, marine environment, Words and ideas have consequences. alongside almost all the empowered the IMO other countries of the to make laws to protect Therefore, one should not underestimate the world. the marine environment value of the U.N. as the world’s “talk shop”.

Why is CEDAW so from ship-based polluThrough talking and listening, giving and important to women in tion as well as the concept their struggle for equalof sustainable fishery. taking, the U.N. has forged ideas that have ity with men? The book’s The third step was taken changed the world. authors identified the in 1987, with the estabfollowing four reasons: lishment of the World Commission on Environment and Development, chaired by 1. It recognised the centrality of non-discrimination; the remarkable Dr Gro Brundtland of Norway. The Com2. It included private acts in the definition of discriminamission’s report, Our Common Future, introduced, for the tion; first time, the concept of “sustainable development”. The 3. It identified prejudices, customary practices, and fourth step was the establishment of the Intergovernmental stereotyped roles for men and women as things to be Panel on Climate Change (IPCC) in 1988. The IPCC’s four abolished; and assessment reports have succeeded in elevating the danger of 4. It established equality not in form but in real terms. global warming and climate change to the top of our global I agree with the authors that one of the U.N. ideas which agenda. The fifth step was taken in 1992 at the Earth Sumhas changed the world is the idea that women are entitled to mit in Rio de Janeiro. The Earth Summit gave birth to the equal rights with men. Today, the status of women in Singa- Convention on Biological Diversity and the U.N. Framepore is that of near complete equality with men. Women in work Convention on Climate Change. some parts of the world are not so fortunate and still suffer After 1992, the concept of sustainable development has from both formal and de facto discrimination. The U.N.’s been accepted as the organising framework for efforts to work is therefore not yet done. We must continue to work reconcile our quest for development with the imperative against the practice of aborting female foetuses because of a to live in harmony with nature. It is a difficult journey, one preference for boys and oppose the practice of forcing young that is currently playing out in complex negotiations under girls into marriages and mutilating their genitals. We must the aegis of the U.N. Framework Convention on Climate also continue to fight against the trafficking of women and Change, to conclude a legally binding agreement to succeed girls for prostitution and intensify our efforts to end all forms the Kyoto Protocol. The negotiations are challenged by the of violence against women – whether in armed conflict or in need to reconcile competing national interests and to agree a domestic setting – a problem faced by all countries of the on equitable burden sharing. world. In addition, we must continue to work for the rights of women to education, employment and to lead dignified Human Development and empowered lives.

Until 1990, the most popular yardstick used by economists to measure and compare the progress of countries was Sustainable Development their per capita incomes. All our eyes were focused on Since the beginning of the Industrial Revolution, human so- our country’s per capita income and how we ranked on cieties, especially in the West, have been pursuing the goals that index. In 1990, the U.N. Development Programme of economic development and raising the material stand- (UNDP) launched its first annual Human Development ards of human welfare, without due regard for the natural Report, the creation of two brilliant Asian economists, Dr world. Forests have made way for agriculture and human Amartya Sen of India and Dr Mahbub ul Haq of Pakistan. settlements. Natural resources, both living and non-living, They built an index containing, in addition to per capita have been exploited or consumed to the point of exhaustion. income, achievements in education, health, gender equity, Fossil fuels have been burnt recklessly, giving rise to accu- social equality and so on. Their concept of development mulations of greenhouse gases in our atmosphere, which was thus more comprehensive and meaningful than the threaten to change our climate system. As a result of man’s single dimension of per capita income. Its publication activities, the world faces, simultaneously, two crises: the was greeted with howls of protest by Member States who crisis of global warming and climate change, and the crisis of demanded that the UNDP stop publishing such a provocathe unsustainable loss of biological diversity. tive report. To his credit, the then UNDP Administrator, At the initiative of Sweden, the U.N. convened the William Draper, stood firmly behind it. landmark U.N. Conference on the Human Environment The UNDP has also published a number of regional (Stockholm Conference) in 1972. This was the first step tak- Human Development Reports. The most amazing were en by the U.N. to raise awareness and motivate governments the four for the Arab region, prepared by Arab scholars to establish ministries of the environment or environmental and economists. The concept of human development is

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still controversial. However, I think, it is safe to say that it is now the ambition of every country to do well both on the index of per capita income and on human development. The revolutionary concept of human development was probably the driving force behind the U.N. Millennium Declaration adopted by the world’s leaders in 2000.

The Declaration has been translated into the Millennium Development Goals and Targets. The targets include, reducing by half, by 2015, the number of people without access to clean water and modern sanitation. Singapore has been working hard, by itself and with the Asia Pacific Water Forum, to help other Asian countries achieve these targets. The happy news is that the countries of Northeast and Southeast Asia have already achieved the target on water but, sadly, not on sanitation.

In conclusion, words and ideas have consequences.

Therefore, one should not underestimate the value of the

U.N. as the world’s “talk shop”. Through talking and listening, giving and taking, the U.N. has forged ideas that have changed the world. Gender equity, sustainable development and human development are ultimately about people improving the ways in which we live and the environment in which we live in. We now live in a new world that is globalised, environmentally challenged, unequal and multicultural. To meet these needs, we need new ideas about global governance, development and nature, diversity and harmony, growth and equity. For this, we look to the U.N. for a new generation of revolutionary ideas for the new world. R Tommy Koh is currently Ambassador-At-Large at the Ministry of Foreign Affairs, Singapore; Special Adviser of the Institute of Policy Studies and Chairman of the National Heritage Board. He is on secondment from the Faculty of Law of the National University of Singapore.

CAG launches the Hong Siew Ching Globalising Good Speaker & Seminar Series CAG plays a leadership role in connecting Asia with global issues. In keeping with that role, on 13 April, CAG inaugurated the Hong Siew Ching Globalising Good Speaker & Seminar Series in the form of a book launch. The Book, U.N. Ideas That Changed The World, is the latest addition to the library of books making up the United Nations' Intellectual History Project. The book’s authors Sir Richard Jolly and Tom Weiss discussed the book, looking both retrospectively at the pivotal ideas the U.N. has generated and fostered, and prospectively at the U.N.’s ongoing ability to confront the leading social, economic, and environmental challenges of

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the 21st century. Guest of Honour, Professor Tommy Koh addressed an audience of ambassadors, government officials, business and civil society members sharing his unique insight into the workings of the U.N. This event, the first of the Hong Siew Ching Globalising Good Speaker & Seminar was made possible by the generous donation of Mr Tay Liam Wee to the Lee Kuan Yew School of Public Policy. The series, in honour of Mr Tay’s late mother, will reflect the Centre’s position as a thought leader on global governance featuring leading scholars who connect Asia to global debates on pressing international issues.

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Can Global Health Be Governed?

Global health governance suffers from what may be an excess of institutions and mechanisms.

Tikki Pang, co-chair of CAG’s S.T. Lee Project on Global Health Governance, explains. words Tikki Pang

Can global health be governed?

It depends.

If you're a cynic or a sceptic, you would say 'no'-it's too messy, too fragmented, too political and too driven by different, often conflicting, agendas. Let things be, let a thousand flowers bloom, it'll sort itself out in time as so often happens with complex scenarios.

You may also be of the view that health development aid in general is misguided and the current model is the wrong one to adopt, is the small scale, "bottom-up" integrated approach of the Millennium Villages initiative in Africa, spearheaded by Jeff Sachs, really the right way to go? However, and regardless of initial reports of success, this innovative approach must ultimately be scaled-up and made sustainable for an entire country.

This will not be easy.

So, if you're an optimist you would say 'maybe it's worth a try', especially if you believe that good global health governance can ultimately improve the health of all

people, especially those living in the developing world.

I am an optimist and I think global health can be governed if several challenges are addressed: acknowledging the diversity of actors; avoiding a purely "top-down" approach; agreeing on shared values; developing effective, inclusive and equitable procedures; a commitment to accountability and results-based monitoring and evaluation; and going beyond the confines of the health sector. Not a small order.

The world of global health has witnessed dramatic changes. Since its establishment more than 60 years ago, the pre-eminence of the World Health Organization (WHO) as the major global public health agency has been challenged and questioned. WHO needs to acknowledge the increasing role and importance of other, non-state players and consider providing an inclusive platform for effective dialogue while maintaining its legitimate leadership role. The increasing role of new state players in global health, for example China and India, also needs to be taken into account.

Paradoxically, the world today, characterised by global integration, is also seeing examples of local

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disintegration at the national level, dures and mechanisms which is based on especially in low-income countries and transparency, inclusiveness, broad par"fragile states" in the developing world. ticipation, and equity. The International The challenges facing global health Health Partnership (IHP+), hosted by and its governance, must be seen from WHO, is one potential mechanism that both the bird's eye view of the global places country ownership and participahealth system, and from the narrower tion at the center of attempts to harmoperspective of countries, especially in nize and align health development aid. the developing world which are strug- In turn, measures of effectiveness are degling to deliver effective healthcare pendent on quality data and information to its populations. Sustainability and and independent, robust monitoring and effectiveness of global health govern- evaluation of global health activities. ance depends, in the first instance on Finally, health is not an island and strengthening national health systems global health governance needs to be which are "the essential link between cognizant of the importance of existing global knowledge and best practices, governance mechanisms, in other critiand local health needs and impact" cal sectors such as information technol(Frenk, 2010). The fragility and pre- ogy, biotechnology, agriculture, ecology, carious state of these health systems in energy, education, climate science, and the developing world is probably one water supply and sanitation (Conway & of the main reasons that the targets Waage, 2010). Effective linkages need set for the health-related Millennium to be developed with these sectors to Development Goals are unlikely to be ensure a holistic, integrated approach. met by 2015.

On a global level, the cross-cutting In a world still characterised by challenges and common themes around the haves and the have-nots, a commit- the Millennium Development Goals ment to shared values of equity, ethical have led to the establishment of wellbehaviour, human rights and social meaning global health initiatives in the justice is also paramount. Principles for search of effective solutions-but the more effective global health governance bird's eye view of health governance is have been clearly articulated in the "the privilege of those who can fly" (MacParis Declaration on Aid Effectiveness farlane et al, 2000). Perhaps the high which includes ownership, alignment, flyers need to look at other birds and harmonization, managing for results and also to look down at the ground and mutual accountability of global health consider the plight and the voices of initiatives, which totalled US$22 billion those struggling to deliver basic health in 2007. The field is about to become care under difficult circumstances. R even more complicated with the recent announcement of the Obama adminis- Tikki Pang is the Director of Research tration's Global Health Initiative, pro- Policy & Cooperation at the World Health jected to add US$63 billion over the next Organization (WHO). He is also a Co6 years. Arguably, this massive amount of Chair of the S.T Lee Project on Global resources will have important repercus- Health Governance. sions and implications for health systems Disclaimer: the views presented in this in developing countries. article represent the personal views of the The effective implementation of the author and does not reflect an official poParis principles thus becomes even more urgent and will need effective proce- sition of the World Health Organization

Notes

• • •

Conway G, Waage J. “Science and Innovation for Development, UK Collaborative on Development Sciences (UKCDS)”, London, January 2010.

Frenk J. 2010. “The global health system: strengthening national health systems as the next step for global progress”. PLoS Med 7(1): e 1000089. doi:10.1371/journal.pmed.1000089.

Macfarlane S, Racelis M, Muli-Musiime F. 2000. “Public health in developing countries”. Lancet 356: 841-46.

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ENERGY & CLIMATE

POVERTY & DEVELOPMENT

PUBLIC ROLES OF THE

PRIVATE SECTOR

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The Value of Networking

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Due to the diminishing effectiveness of classic state-centered or marketcentered modes of governance, informal networks are being used to solve collective action problems, such as climate change. CAG’s new Faculty Associate Raul Lejano explains.

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words Raul Lejano

Stories abound. There is the one about the United States' vation, in part because they do not straitjacket exchanges intransigence over signing the Kyoto (or post-Kyoto) Ac- between actors to classical modes of institutional life cord while, as we write, about 600 of its cities are volun- (think Max Weber's iron cage), but mainly because of the tarily signing on to an inter-city alliance to comply with specific configurations of social relationships that make Kyoto. Then, there is another about the loose, shifting up some of these networks. They are effective because coterie of non-governmental organisations, development they are in practice, “light on their feet”. agencies, and tourism interests forging a common bond The work is proceeding on two fronts. I am finishing around a global sea turtle network. At the same time, and up several articles that propose a formal model of collecnot surprisingly, there tive action that helps is a whole swarm (but a explain why network good pestilence, mind ties allow new soluJust as narratives are a primary cognitive you) of emergent littions to prisoners' scheme for linking and making sense erature on the magic of dilemma problems. these so-called network The model is gameof otherwise diverse human actions, in modes of organisation. theoretic in method institutional life, narratives can be employed to If Manuel Castells is but non-utilitarian link and make sense of the actors themselves. right, then the network in substance (at least, is transforming the not individual utility foundations of governmaximisation). A parance in the 21st century. allel effort, involving purely qualitative theory, argues There is, of course, nothing magical about them. If why, and when, networks can be transformative, persistour understanding of networks is right (and, at its core, ent, and innovative. It is this latter endeavour that makes they are simply boundary-spanning constellations of up our new book. actors bound by not-completely-formalised-but-oftenIn our book, we do two things: we use empirical work social ties), then they are everywhere. If Bruno Latour to show how social relationships are structured to form is right, I, my laptop and the ant reconnoitering it are a effective networks, and we conceptualise how studying network. Networks precede governance. Furthermore, networks through textual analysis allow us to evaluate there are many more networks that really do not get these constellations of relationships. The latter approach anywhere, or do not do anything ostensible, than there is not as radical as it sounds, Paul Ricoeur has argued that are that succeed. Therefore, if there is a magic to be had, we can, and should, understand actions as text. We can it is not to be found in the network as an organisational extend this homology by looking at a specific genre of form. Perhaps, as one (refreshingly illiterate) political text, which is narrative, and relate it to a specific genre of action, which is the network. scientist proclaimed at a recent conference, these are all Just as narratives are a primary cognitive scheme for just a bunch of words in the dictionary. linking and making sense of otherwise diverse human In a forthcoming book1, we offer a theoretical and empirical account of why networks work when they do, actions, in institutional life, narratives can be employed and why they do not. Networks precede governance – this to link and make sense of the actors themselves. Maybe is why they persist. The network form also allows for, but it is by no accident that metaphor and polysemy are so does not enable, institutional transformation and inno- important in public policy.

Rapporteur | May 2010

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cag research

discovered new insights through the lenses of various It is surprising to find some (but not all) elements theorists. Max Weber, Pierre Bourdieu, Carol Gilligan, of narratology lending to our analysis of networks – a fortunate outcome of the book project. Upon reflection, Edmund Husserl, and not to forget, Émile Durkheim it makes sense. Policy theorists like Donald Schön and – these should be standard fare for public policy scholMartin Rein have long talked about how effective col- ars. As a general method for Ph.D. and other graduate laborations require the formation of coherent meta- students, and as a powerful approach to generating new ideas about institutions, I have learned to systematically narratives. Planners like John Forester have formalised storytelling as a policy instrument. There is, in political apply critical theory to social phenomena, including network phenomena. I find that this has led me to a semiscience, an emerging notion that a new, discursive kind phenomenological approach. of institutionalism is taking shape. I, among others, have The bottom line is, we need new modes of describing in the past droned on about the textual nature of public policy.2 The idea that networks work like narratives, institutional life beyond Mancur Olsen, Douglass North, and these wonderful thinkers. however, is a new find.

I find scholarly environments too protective of orFor one, networks require that multiple actors, with divergent frameworks of understanding, come together thodoxy to generate powerful new descriptives, especially in the world of United States academia where in a meaning system. The following passage on linguistics original thought is at a low point (it is perhaps of no is illustrative: surprise that only one of the scholars I cited in the pre"Ways of knowing, as understood herein, shift with such entry through the sheer interaction of the new vious paragraph is American). As society goes, so goes academia, perhaps the contingency theorists were right, element with the old ones. Some of these interactions may lie entirely outside the control of whoever is doing our students should realise that if they do not start genthe positing. There is something Saussurean here where, erating radical, new, and progressive institutional ideas within a system of differences with no positive elements, themselves, no one else will. R the meaning of an element (a word like 'dusk') is established only in relation to its position vis-à-vis all the other Raul Lejano is a Faculty Associate of the Centre on Asia and Globalisation and a Visiting Professor at the Lee Kuan Yew words (like 'twilight')."3 For more than a decade now, I have been studying School of Public Policy. He is also an Associate professor how decisions in the public sphere have been taken over in the Department of Planning, Policy, and Design at the by strong logics of domination and how, in parallel, we University of California, Irvine. Raul's research is about might institutionalise new norms (yes, of justice, differ- new directions in policy analysis, for example, integrative ence, and authenticity, but not just – regional cuisine, approaches that increase dimensionality, which he develskinny ties, J.D. Salinger, kampong chicken – these are ops in the book, "Frameworks for Policy Analysis: Merging norms too) into public life.

Text and Context" (Routledge, 2006).

I began with a game-theoretic bent but have since raul.lejano@nus.edu.sg

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Lejano, R., Ingram, H. and M. Ingram (due October 2010), Environmental Governance in a Network Age, MIT Press, Cambridge, Mass.

Lejano, R. (2006), Frameworks for Policy Analysis: Merging Text and Context, Routledge, New York.

Lejano, Raul (2008), "The phenomenon of collective action: Modeling institutions as structures of care," Public Administration Review May/June:491-504.

Lejano, R. and H. Ingram (2009), "Collaborative networks and new ways of knowing," Environmental Science and Policy 12:653-662.

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Rapporteur | May 2010

poverty & development

Delusions of Development

The World Bank and the post Washington Consensus

Available Now

www.amazon.co .uk

in Southeast Asia

About the book

by Toby Carroll

DELUSIONS OF DEVELOPMENT presents a timely analysis of

contemporary

World

Bank practice in Southeast Asia. a

The

new

book

presents

framework

understanding

the

for World

Bank's work and applies this framework to case studies drawn from Indonesia, the Philippines,

Cambodia

and

Vietnam. The book, which is

part

Critical

of

Palgrave's

Studies

of

the

Asia Pacific series, is due out in October 2010.

About the author Dr Toby Carroll is a Research Fellow at the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy

Rapporteur  |  May 2010

39

cag research

Costly Catalysts for Reform Great disasters can lead to great reforms. From underneath the immense rubble of human tragedy lies the potential for a collective resurgence. words Tess Cruz-del Rosario and Robert Klitgaard

Analysts-on-the-quick are already comparing the recent disasters. “Chile was ready for the quake, Haiti wasn’t,” writes Frank Bajak of the Associated Press. Although the Chile earthquake was 500 times stronger than Haiti’s, with hundreds of immediate aftershocks, Chile is getting the relief effort well under way, long before the donor community can step in with yet another humanitarian response.

What made Chile an almost earthquake-proof nation?

Did Chile just get lucky?

“Strong building codes, robust emergency response and a long history of handling seismic catastrophes,” argues Bajak. Plus loads of human capital. “On a per capita basis,” Bajak quotes Brian Tucker of GeoHazard says in the same article, “Chile has more world-renowned seismologists and earthquake engineers than anywhere else.”

But more than building codes and an abundance of expertise is the quality of a country’s governance to respond to disasters. Not just government response, but an entire collective effort that includes the business community, the media, and organized citizenry.

Imagine, however, a scenario of hope for Haiti, one that might look like this.

2015 in Port-au-Prince. A major conference is about to begin, celebrating Haiti’s progress since the earthquake of 2010. Alphonse Michel, Minister of Public Works,

40

Transport, and Communications is talking to Bonaventure Ouvert, a Haitian journalist.

“After the earthquake of 2010, more than our buildings had collapsed,” says Michel. “Our economy was in ruins.

There was almost no civil service. Our morale was devastated. Everyone assumed that Haiti would just drop deeper into our historic pattern of corruption and instability.”

“Our government has learned how to work through partnerships. In reconstruction, and in activities ranging from social services to free zones to agriculture, we use a variety of public-private-nonprofit partnerships, all of them ethically led and fully accountable.”

At the same time, across the globe in Indonesia, Minister Ismaili Hadad of Trade and Investment talks to Maria Suntoro, bureau chief of the CNN in Southeast Asia.

“The December 2004 tsunami destroyed nearly everything in Banda Aceh, but we resurrected its economy.

We entered into a peace pact with the rebels, gave them concessions, converted them into stakeholders. Eleven years after the tsunami, the donors involved in reconstruction have left the province with a lasting imprint of peace and prosperity. “ How? Wouldn’t it be wonderful if the two largest civilian disasters in modern history ended so well? What will it take?

In Haiti, some important ingredients are already in place. The country has an excellent economic strategy, developed last year with the help of Oxford economist Paul Collier. It has worldwide support including Bill and Hillary Clinton. Haiti has preferred access to U.S. markets.

What Haiti lacks, however, is a realistic strategy to control corruption. Accusations of corruption fly freely— and indeed Haiti is rated as one of the most corrupt countries in the world.

The good news is that around the world, there are many anti-corruption success stories. Fry “big fish.” Mobilize citizens and business groups to make government more transparent. Use the same tricks in fighting organized crime.

Rapporteur | May 2010

poverty & development

Disasters as Teachers Indonesia provides relevant lessons. In October 2004, fresh from his victory at the polls, President Bambang Susilo Yudhoyono immediately tackled the Aceh separatist problem. When the December 2004 tsunami struck Banda Aceh, it killed over 200,000 people and left millions more homeless.

President Yudhoyono and his chief negotiator, Jusuf Kalla, wasted no time. They set in motion a peace process. They gave concessions, among them, a distribution of revenues from natural resources. They allowed the rebels full participation in the political process.

Drawing the rebels into the electoral process was a masterstroke. The rebel movement was de-fanged. Hence the groundwork for peace was firmly established.

At the same time, President Yudhoyono gave the national fight against corruption high priority. He empowered the anti-corruption agency to go after high-level perpetrators of corruption from all parties and all sectors.

Six years after the tsunami, Banda Aceh is at peace, the province rebuilt.

Politics and Corruption in Haiti Haiti is a tiny country compared with Indonesia, and there is no secessionist movement. But Haitian politics is fractious and unstable. “It’s what I’d call a perfect storm for high corruption risk,” says Roslyn Hees, author of Preventing Corruption in Humanitarian Operations.

“I want this to be a new country,” President René Préval declared. “I want it to be totally different.”

How might he lead Haiti in the direction of good governance?

First, convene leaders from government, business, and civil society to develop a strategy for governance.

Together they would work through a formula: Corruption equals Monopoly plus Discretion minus Accountability.

To control corruption, monopoly must be reduced, competition expanded, official discretion limited if not altogether eliminated. A cost-benefit analysis of various anti-corruption initiatives would complete the exercise.

And finally, the Haitian leaders would consider the politics of reform. In the next six to twelve months, leaders must build momentum and popular support. Citizens and business people must tell the government what’s working and what’s not.

How Donors Can Help The international community can help. In the reconstruction, donors should work through real partnerships rather than through permanent enclaves or receivership arrangements. Once again, the experience of Indonesia might provide inspiration.

In Banda Aceh, the global donor community created what Dr Marcus Mietzner of Australian National University called a “Woodstock effect”, a kind of development aid love fest that brought together a multitude of donors of all hues, sizes and shapes. From the European Union to the Scientology Church, the province received a huge influx of money and aid workers.

But development and humanitarian assistance went beyond reconstruction.

The European Union, for example, linked the reconstruction effort to the peace process. No peace, no money.

Then, the creation of the Badan Rehabilatasi dan Rekonstruksi (BRR) managed donor assistance. It was an all-inclusive Aceh-based agency composed of provincial and central government agencies and civil society groups. In 2005, at the peak of the reconstruction effort, the BRR managed development assistance from 55 countries including 900 NGOs, 800 national and international organizations, and 8000 foreign workers and volunteers.

Haiti might go further. Donors might want to consider supporting a Haiti Leadership Academy. It would build on Haiti’s vision of governance featuring public-private partnerships, bottom-up participation, and accountability. It would meet urgent shortterm needs for skills in reconstruction and in managing free zones. But its long-term goal would be to educate the next generation of Haiti’s leaders.

Let us hope that, like Banda Aceh, Haiti will testify that great disasters can lead to great reforms. From underneath the immense rubble of human tragedy lies the potential for a collective resurgence. R Robert Klitgaard is the author of a new report "Addressing Corruption in Haiti", a professor at Claremont Graduate University and former professor at Harvard Kennedy School of Government. He has been an adviser and researcher in 30 countries, including Haiti during President Aristide’s first term.

Teresita Cruz-del Rosario is a Senior Research Fellow at the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy. tdelrosario@nus.edu.sg

Rapporteur | May 2010

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CAG News

CAG Calendar

May – Sept 2010

Global Energy Governance Study Group Workshop

Date Venue

26-27 May 2010 Lee Kuan Yew School of Public Policy

CAG-Civil Service College Special Lecture “Obama and Asia: American Power and the Rise of China” John Ikenberry, Professor of Politics and International Affairs, Princeton University

Date Venue

4 June 2010 Civil Service College

Global Health Governance Study Group Workshop

Date Venue

28-29 June, 2010 Lee Kuan Yew School of Public Policy

Date Venue

14-17 September, 2010 Lee Kuan Yew School of Public Policy

Date Venue

23-26 September, 2010 Singapore

S.T. Lee Project on Global Governance

S.T. Lee Project on Global Governance Business Leadership for a Sustainable Southeast Asia A Senior Executive Programme XVII Annual Meeting of the Group of Fifty (G-50)

New Faces at CAG Malavika Jain BAMBAWALE sppmjb@nus.edu.sg Malavika is a Research Fellow at CAG and her area of study is energy security, sustainable development and energy governance. Malavika is a former consultant with McKinsey & Company, where she managed assignments in the area of climate change. Prior to working on energy and sustainability, she was involved with McKinsey’s Strategy Practice and issues related with the globalisation of Asian companies.

Anthony Louis D'AGOSTINO anthony@nus.edu.sg Anthony D'Agostino is a Research Associate at CAG. His primary research is with the Rockefeller Foundation’s Trend Monitoring in Asia project, monitoring developments in the energy sector across ASEAN countries. Prior to joining CAG, Anthony worked with the Institute of Water Policy at the LKY School. He has worked with the Greenhouse Gas Protocol at the World Resources Institute and at UN Environment Programme – the Regional Office for Asia and the Pacific.

Starr LEVESQUE starr@nus.edu.sg Starr Levesque is a Research Assistant at the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy.

Starr previously worked for the American Chamber of Commerce, Singapore, conducting research on geographical location trends of Global 500 companies. Starr’s previous experience also includes teaching orphans in Vietnam, university students in Japan, and business English programmess in Taiwan, as well as volunteer work with refugees in the U.S. and Malaysia.

Susan MARGOLIN s.margolin@nus.edu.sg Susie Margolin is the Business Development Manager at CAG. Susie’s career spans over eleven years in the non-profit, public, and private sectors. Throughout her career, she has consulted to non-profits on strategic issues, organizational effectiveness, impact evaluation, and fundraising. In Asia, Susie developed an expertise in launching new products in emerging markets. In Kabul, she worked as Director of Business Development for one of Afghanistan’s first private TV stations and telecom companies.

As Commercial Brand Manager for Diageo, she launched Baileys Irish Cream as a premium brand in Vietnam.

Kirsten TROTT ktrott@nus.edu.sg Kirsten Trott is the Director of Strategy and Research Impact at CAG. Kirsten is an experienced lawyer, consultant and executive manager, specialising in putting policy into practice. Prior to joining CAG, Kirsten was the Chief Executive Officer of the Code Compliance Monitoring Committee and Kirsten also spent 5 years as a whistleblowing lawyer and later Deputy Director at the London based Public Concern at Work. Kirsten gained practical experience in stakeholder engagement in Asia as International Policy Executive (North East Asia) for the Law Society of England and Wales. In lobbying for access to Asian legal services markets on behalf of UK lawyers, she worked closely with practitioners and governments on all sides.

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Rapporteur | April 2010

CAG News

XVII Annual Meeting 23-26 September 2010, Singapore

In collaboration with

Gathering of the most prestigious network of Latin American business leaders Further Info:

slee@nus.edu.sg

Rapporteur  |  April 2010

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Rapporteur | May 2010