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OSCE: Economic Forum Stresses Transparency, Good Governance

The ninth annual economic forum of the Organization for Security and Cooperation in Europe, or OSCE, began yesterday (15 May) in Prague. RFE/RL correspondent Alexandra Poolos attended the opening session of the four-day conference, which this year is focusing on the issues of transparency and good governance. Here is her report.

Prague, 16 May 2001 (RFE/RL) -- Top decision-makers from 55 OSCE participating states are meeting this week in Prague to discuss the impact of transparency and good governance on security and stability in the OSCE area.

The current chairman of the OSCE, Romanian Foreign Minister Mircea Geoana, opened the forum yesterday.

Geoana said transparency is crucial for the development of stable, sustainable economies and to help avoid financial disparities, poverty, and unemployment, all of which can threaten European security. He said the absence of transparency and good governance could pose serious threats to stability on the national level and could also generate security problems on the regional level. Maintaining stability in the OSCE region, he added, all comes down to economic good health:

"One of the greatest threats to security and stability in the OSCE region is the economic divide. Social and economic disparities, poverty, and unemployment threaten our security and undermine our values. We need to boost economic development, promote social cohesion and make a real positive difference in the day-to-day life of individuals. Good governance and transparency are central to developing stable and sustainable economies. Good governance is an attribute of democracy. It lies at the heart of those fundamental OSCE principles that inspire our efforts for security and prosperity of states and individuals alike."

The OSCE is the world's largest regional security organization, with its 55 participating states hailing from Europe, Central Asia, and North America. The organization, which maintains missions in the Balkans, the Caucasus, and Central Asia, is best known for its conflict-resolution roles in the world's troubled regions.

Addressing the issue of OSCE countries in transition, Geoana said yesterday that public administration reform should be a top priority:

"Dysfunctional, unresponsive, and nontransparent institutions generate incoherent and inefficient governmental polices and open the way for corruption and abuses, underdevelopment, economic and social polarization. They not only endanger the economic security of the country in question, but they also threaten the stability of the OSCE region as a whole."

Johannes Lin, vice president of the World Bank, gave the keynote address at the opening session. Lin shared what he called important lessons the World Bank has learned while working in the OSCE region:

"It is now recognized that problems -- such as political instability, ethnic fragmentation, weak law enforcement, and restrictions on basic civil liberties -- prevent governments from making the institutional and policy reforms that are necessary to improve governance. Second, it is clear that misgovernance -- for example, distorted fiscal policies, unregulated banks, poorly defined property rights, [and] discretionary business regulations -- can benefit a few privileged groups at the expense of society at large."

Lin said that what hinders good governance is not a lack of understanding of the policies and reforms that will encourage transparency. Instead, he said, it is often the case that those in power resist reforms because they have a vested interest in maintaining the status quo. He said these leaders maintain a lack of transparency because it means they will benefit both politically and economically.

Lin said the World Bank has focused on developing transparency in countries that receive institutional funds:

"We also made fiscal transparency a key goal of our adjustment operations. In Russia, for example, we focus on the development of a treasury system providing the basis for timely audits of fiscal accounts. Similar programs have been developed in Hungary and Kazakhstan and are under discussion in other countries in the region."

Lin said World Bank funds are being used in some nations to target corruption reform:

"Six countries in the region -- Bosnia and Herzegovina, Kazakhstan, Kyrgyzstan, Poland, Romania, and Slovakia -- received assistance in the current fiscal year for diagnosing problems of corruption and developing strategies for reform."

Lin also emphasized that ethnic conflict is one of the greatest hindrances to economic development in many countries in transition:

"There's also clear evidence of the severely negative impact of ethnic fragmentation and ethnic tension on economic development. On one hand, ethnically fragmented countries and regions within countries tend to provide poor quality public goods, such as education. On the other hand, institutions that guarantee minority rights and provide opportunities to resolve conflicts have been shown to offset the side effects of polarized societies."

Lin said that countries with transparent institutions usually benefit from high income growth and national wealth, an independent legal framework, and a strong civil society and free media.

The OSCE forum continues through the end of the week. During this time, delegates hope to assess the economic and environmental activities in member states and discuss future actions. Special working groups will meet throughout the week to discuss issues such as the role of the media in promoting transparency, supporting small and medium-sized businesses, and improving border controls to fight drug trafficking.