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Western Press Review: Eastern Economies Need Strong Governments

  • Don Hill



Prague, 26 June 1997 (RFE/RL) - Market researchers in the United States refer sometimes to the results of research projects as "grandma" data. The term refers to findings so predictable that the reader responds, "My grandma could have told me that." The World Bank, in its 1997 World Development Report, announces the grandma data that corrupt or ineffective governments tend to stifle their countries' economic development. This and other economic news generates Western press commentary.

LONDON'S FINANCIAL TIMES: Private investors avoid countries where the state does not provide market framework

Reporting today on the World Bank survey, Andrew Balls comments: "The survey of development in 133 countries focuses on the role of the state, (which is) a shift of emphasis (from previous reports). Governments cannot provide growth, says the report. But they must provide an institutional framework to underpin the markets that do."

Balls writes: "Private investors steer clear of countries where the state fails to fulfill its core tasks. In Central and Eastern Europe, Latin America, and in Sub-Saharan Africa, 60 percent of companies surveyed reported that policy unpredictability seriously hampered business and investment. In the Commonwealth of Independent States, 80 percent of entrepreneurs voiced the complaint."

LONDON'S FINANCIAL TIMES: Expect reform, not magical solutions

The newspaper says today in an editorial, "The only thing as harmful as a bad government is no government at all. These two apparent opposites are in fact closely connected. Tyranny can easily finish in anarchy." The Times says: "These are the stark lessons to be drawn from this year's World Development Report."

The editorial concludes: "Evil governments will not magically become good nor foolish governments suddenly become wise. But opportunities for reform do arise. The report's most important implication is that the grotesquely incompetent must not be propped up. Sometimes it is necessary to wait for the opportunity to help a country determined to start afresh."

THE LONDON GUARDIAN: World Bank favors strong state rather than minimal government

The newspaper comments today that the World Bank's new emphasis on the role of effective government is "an astonishing volte-face (turnabout)." The newspaper says: "The World Bank in Washington has abandoned its long-running support for minimal government in favor of a new model based on a strong and vigorous state." The Guardian says the report "calls for a reinvigoration of public institutions" and contends that "an effective state is the cornerstone of successful economies (and is a) necessity for development." The newspaper notes: "Corruption and crime emerged as serious problems. The bank found that countries with high levels of corruption had low investment and growth."

THE WALL STREET JOURNAL: German Government Struggles Internally over EMU critieria

Domestic difficulties in Germany with pan-European significance draws commentary today in today's edition. The newspaper reports that the coalition government of German Chancellor Helmut Kohl is roiling over government maneuvering on the rules of European Monetary Union. In a news analysis, staff writer Matt Marshall says: "The enemy within is Edmund Stoiber, premier of Bavaria, and his many allies in an anti-fudging crusade supported across Germany's largest state. Bavarians have decided it's up to them to ensure that Bonn doesn't water down the criteria set for monetary union."

Marshall writes: "There are a number of criteria for EMU set by the Treaty on European Union -- commonly known as the Maastricht Treaty -- but the rallying cry in Bonn and Bavaria has become the one stipulating that the national budget deficit may not exceed 3 percent of gross domestic product. (German Finance Minister Theo) Weigel lost credibility with his bungled attempt to revalue the nation's gold reserve in a desperate effort to meet the 3 percent criterion."

INTERNATIONAL HERALD TRIBUNE: New threats escalate Germany's Budget Crisis

John Schmid writes in a news analysis today that Stoiber's announcement that he will fight even minor deviations from the EMU criteria amount to "his strongest threat yet." Schmid says: "Mr. Stoiber's comments could poison further the public mood in Germany against the euro, the proposed currency. And the challenge escalated Bonn's budget crisis, putting Finance Minister Theo Waigel under renewed pressure to take politically painful steps to meet the deficit target for the euro's 1999 launch." The writer says: "Mr. Stoiber's antagonism also represents a public defiance of the authority of Mr. Waigel, a (fellow) Bavarian who is chairman of the Christian Social Union."

LONDON'S FINANCIAL TIMES: Simplification of Russian tax code underway

From Moscow today, John Thornhill reports that Russian President Boris Yeltsin is having at least preliminary success in rewriting his country's inadequate tax code. Thornhill writes in a news analysis that Yeltsin "was quick to hail parliament's conditional approval of a desperately-needed tax code at its first reading last week." Thornhill says: "Simplification of the complex tax regime would help restore order to the country's shambolic public finances, Yeltsin claimed."

Thornhill writes: "The government could now plan its 1998 budget on sensible assumptions about the future revenue base. Arbitrary taxation, that great bugbear of corporate managers and foreign investors alike, would be eliminated. Many accountants also welcomed approval of the tax code but warned it is far from the panacea it seems."

The writer says: "Parliament still can table amendments before the code is enacted later this year. (And) although universal economic theory suggests the tax code should succeed, Russia particularities may yet pervert its effects."

NEW YORK TIMES: U.S. seeks to punish Croatia by blocking World Bank loan

Examining troubled Croatia, Steven Lee Myers wrote yesterday that the administration of President Franjo Tudjman has drawn heavy economic fire from U.S. officials. Myers said in a news analysis: "Signaling mounting frustration with President Franjo Tudjman of Croatia, the Clinton administration said Tuesday that the United States would try to block the World Bank from considering a 30-million-dollar loan for Croatia."

He wrote: "But the administration stopped short of opposing the loan outright, despite expressing anger over recent actions by Tudjman. And it appeared to be having difficulty winning support from other members of the World Bank's governing body to postpone the loan for long. The decision to seek a delay came amid growing sentiment in Congress that President Clinton has not done enough to punish the leaders of Croatia and Serbia and of ethnic factions in Bosnia for not carrying out their promises under the Dayton accords." Myers said: "The World Bank's executive directors had been scheduled to consider the loan Tuesday at a meeting at the bank's headquarters here, but the American director, Jan Piercy, used her powers to seek a delay until (today)."

LONDON'S FINANCIAL TIMES: Kazakhs, Russians in dispute over tariff issue

Charles Clover reports today from the Kazakh capital, Almaty, that Kazakhstan has begun to balk at maintaining tariffs that protect Russian industry at the expense of Kazakh consumers. In an analysis Clover writes: "Kazakhstan's move to halve tariffs on furniture and car imports may help Western exporters but seems certain to anger Russia." The writer says: "Kazakhstan has been a member of a customs union with Russia, Belarus and Krgyzstan since the union was founded in 1995." Clover says that member countries "have no tariffs on each other's goods, (but) are expected to implement a common tariff against goods coming from outside."
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