Philippines: After the storm

Typhoon_Haiyan_2013_making_landfall
Typhoon Haiyan hitting the Philippines

Before last weekend, it was tempting to believe that the Philippines could take whatever nature threw at it – an earthquake just last month, around 20 typhoons this year, and still the archipelago always seemed to bounce back.

But then came Haiyan. A Category 5 typhoon, it brought winds of around 235 kilometres per hour, a tsunami-like storm surge and intense rain. Meteorologists believe it may be the strongest storm ever recorded. As Hurricane Katrina demonstrated in 2005, even wealthy countries like the United States struggle to cope with storms like this.

For the Philippines, a much poorer country, the challenges are greater still and are exacerbated by its geography: In this archipelago of more than 7,000 islands, Haiyan didn’t make landfall once but eight times, says the UN, hitting a succession of islands in the  central Visayas region. In the immediate aftermath of the storm, many islands were cut off, making it hard to determine the full scale of the calamity. The UN estimates the storm affected just under 10 million people, while the UNHCR says it displaced around 800,000. That agency says it has been receiving reports of “growing tension and trauma on the ground, especially among vulnerable women and children”.

In the aftermath of the storm, the Philippines’ experience of coping with the impact of typhoons and earthquakes will be vitally important. Also key are the lessons learned by the international community from previous disasters, notably the 2004 Asian tsunami and the 2010 Haiti earthquake.

High on that list is the need to ensure corruption doesn’t undermine relief and recovery efforts. At a time when people are dying, it might seem strange – heartless, even – to worry about corruption. But it matters. That’s because there are physical limits to the amount of humanitarian relief that can be delivered in a crisis like this. If corruption means shelter, food or medicine are being steered in the wrong direction, then they’re not going to people who desperately need them.

Regrettably, major disasters are prone to corruption. For one thing, they demand a rapid response, but at a time when the state’s services are usually overstretched. To save as many lives as possible, aid agencies may opt to act first and think later. Lack of information can mean too much assistance goes to some areas and too little to others, creating a risk of black markets.

Another problem lies in the nature of the humanitarian aid system, which consists of an enormous range of agencies, both public and private. As Peter Walker of Tufts University has written, aid agencies, especially those that rely on voluntary funding, are sometimes “drawn” to disasters as a way of raising their profile and to promote fundraising.  Flush with cash, they may spend “fast and furiously” leading, again, to resources going to the wrong places.

As our colleagues Hans Lundgren and Megan Kennedy-Chouane noted here on the blog after the Haiti earthquake, coordination of aid efforts is essential, especially, where possible, by the local authorities. That message is being repeated in the Philippines: As the BBC’s Mike Wooldridge wrote, “One danger to avoid, says [World Food Programme spokesman Greg Barrow], is throwing too much aid at an affected area too soon, in a way that makes it difficult for it to be absorbed … proper co-ordination is vital.” Of course, as Wooldridge, also points out, the need for coordination may need to be balanced against the need to act now: “Some chaos – at least in the early days of such a complex operation and with so many hungry people – may be inevitable.”

Unfortunately, the coordination effort will be hampered by the loss of local officials, according to The Guardian: “Local authorities are saying that so many of their officials have died, they’ve been bereaved, they are struggling to feed their own families, their vehicles are damaged.” That will only add to the pressure on the national government.

There are lessons, too, from previous disasters for people who are outside the humanitarian system but would like to help. One is to think carefully about what you donate: As Hans Lundgren and Megan Kennedy-Chouane pointed out, after the earthquake in Haiti, “Some items sent were not appropriate, including expired medication that had to be destroyed.” That message was echoed by former humanitarian aid worker Jessica Alexander, who wrote on Slate: “There is one simple way that people who want to help can help. Donate money – not teddy bears, not old shoes, not breast milk.”

Useful links

Curbing Corruption in Tsunami Relief Operations (OECD-ADB)

Policy Making After Disasters (OECD)

The tsunami: Some reflections and Tsunami reflections: Turning pledges into action (OECD Observer)

OECD International Network on the Financial Management of Large-scale Catastrophes

Disaster Risk Financing in Asia-Pacific (APEC) Economies

OECD work on risk management

Why should the Middle East and North Africa care about regulatory reform?

Click to read the report
Click to read the report

Today’s post is by Moritz Ader and Miriam Allam of the MENA-OECD Governance Programme, Public Governance and Territorial Development Directorate

On December 17 2010 in Sidi Bouzid, a Tunisian town of 40,000 inhabitants, twenty-six year old Mohamed Bouazizi decided on a radical protest against the local authorities who were stopping him selling fruits and vegetables in the streets because he didn’t have a trading licence.  With little prospects of getting a good job, and suffering from arbitrary constraints at the hands of officials, Bouazizi set fire to himself. His death due to severe burns has not only become known as a dramatic outcry against Ben Ali’s Tunisia, but also as the trigger of the civil uprisings that have been sweeping across countries in the Middle East and North Africa (MENA) region.

Three years later, no day passes without reminding us of the challenges faced by countries in the region. Reform efforts have proved an unprecedented commitment towards more democratic policies and governance structures in some countries, whereas daily clashes amid rival demonstrations in others reveal the fragility of this process. Why should now be the time to think about such an apparently technical matter as regulatory reform? Would governments be better advised to directly tackle the most pressing challenges, such as fighting youth unemployment and increasing citizen participation? You might even wonder what “hides” behind the somewhat cumbersome term of “regulatory reform” and how it relates to the story of Mohamed Bouazizi.

“Regulation“ is one of these buzzwords you could not escape in debates on CNN, Le Monde or at the OECD about preventing a future global financial and economic crisis of the magnitude that hit countries worldwide in the recent past. The debate about both the desirable amount and design of regulation, however, has never been limited to new laws for Wall Street.

In fact, the call for efficient and effective regulations as part of the overall reform process ultimately relates to the current transition process in MENA as it questions the set of instruments by which the Tunisian government imposed requirements on citizens (and enterprises). From this perspective, regulations include laws, formal and informal orders issued by all levels of government or bodies to which the government has delegated regulatory powers. In turn, regulatory policy defines an explicit policy to ensure high-quality regulations based on a consistent “whole-of-government” approach. Admittedly, this might still appear as being too far away from the daily concerns of the man and woman on the street in the MENA region. It is not.

At this crucial moment in the MENA region, enhancing the regulatory environment should in fact be a top priority. By assessing the current regulatory environment against key principles, such as transparency, accountability and participation, the OECD actively supports MENA countries in their transition process towards more democratic and efficient governance systems. Here is how it works.

The OECD Framework for Regulatory Policy and Governance identifies three elements for regulatory reform that have been used to assess the progress of MENA countries in implementing regulatory policy: i) core policies, ii) systems, processes and tools, and iii) actors, institutions and capacities. One way to understand that this process is at the heart of their transition process is to imagine that reforming regulations is not much different from renovating a flat.

The crumbling plaster and the living room’s fusty furniture create a gloomy atmosphere rather than a cosy haven. Obviously, your flat badly needs refurbishment and a considerable facelift. This is what the OECD framework would call your core policy. In the context of regulatory reform, the call for greater transparency and citizen participation implies that the existing stock of regulation is managed. Of crucial importance for countries in the MENA region, outdated laws need to be consigned to the history books as heavy administrative burdens often serve as entry points for corruption. At the same time, a filter in the form of regulatory impact and risk assessments must ensure that future policies fit well with the stock of existing rules and support a more open and trustful relationship between citizens and the government.

In the flat, creating a more welcoming atmosphere ultimately depends upon your talent for choosing things (new chairs, paint) that complement each other nicely. A shopping list that clearly defines how your new furniture should look would help to make sure that the renovation proceeds in accordance with your ideas. In OECD’s words, effective regulatory reform depends on systems, processes and tools which support the underlying principles of regulating and governing.

Finally, as several entities are usually involved in renovation (you wouldn’t start repainting if you were going to change the electric wiring for instance), success ultimately depends on co-operation, co-ordination, communication and consultation between the individual parties. A clear definition of the functions and roles of actors, institutions and capacities marks the third and final element of OECD’s approach for assessing regulatory reform.

Regulatory Reform in the Middle East and North Africa: Implementing Regulatory Policy Principles to Foster Inclusive Growth is the first progress report that assesses the implementation of OECD regulatory policy principles in the MENA region. Including Bahrain, Egypt, Jordan, Lebanon, Mauritania, Morocco, the Palestinian Authority, and Tunisia, the report provides recommendations based on the 2009 Regional Charter for Regulatory Quality and the 2012 OECD Policy Recommendation of the Council on Regulatory Policy and Governance.

The review reveals that an explicit regulatory policy in the MENA region is still in its infancy. The countries involved do not have an explicit regulatory policy. Systematic regulatory systems, processes and tools, such as Regulatory Impact Assessments, are also new to most governments in the region. The review concludes that further efforts are necessary to institutionalise regulatory policy and governance, for instance by implementing regular performance assessments of regulations.

Improving the clarity and efficiency of regulations will benefit both citizens and enterprises and mark a crucial element in the transition process of MENA countries.

Useful links

MENA-OECD Governance Programme

Net losses: tax crime and fishing

Pirate treasure
Pirate treasure

Earlier this year, the Parkham Women’s Institute in the south of England invited Colin Darch to speak about piracy. To get into the spirit of things, the ladies came equipped with eye patches, parrots, cutlasses, shiver-me-timbers accents, and all the usual pirate paraphernalia.  Mr Darch came to talk about being hijacked off Somalia and held hostage for 47 days. But whether the word “piracy” conjures up visions of Somali speedboats and AK47s or peg legs and the skull and crossbones, fish are probably pretty far down the list of things that spring to mind when somebody mentions pirates.

And yet, most of the “pirates” on the high seas today are involved in pirate fishing, or illegal, unreported and unregulated (IUU) fishing as it is known. As we said in the Insights book on fisheries While Stocks Last? these pirates are neither the vicious thugs portrayed by Robert Louis Stevenson nor the seductive rascals so beloved of Hollywood. All they have in common with the heroes of swashbuckling romances are ruthless, unscrupulous masters, and harsh and dangerous working conditions with more chance of getting killed than of getting rich. The International Transport Workers’ Federation gives numerous horrifying examples from fishers’ contracts. Chinese fishers from Yongchuan County in Sichuan province not only had to pay $470 to secure a place on a boat, they had to agree to have their appendix removed before going to sea and to pay $47 for the operation themselves. And remember, these are the ones who had a contract.

Fish piracy takes several forms. The “illegal” in IUU fishing is when vessels violate the laws of a fishery. “Unreported” is fishing that is undocumented or misreported to the relevant national authority or regional fisheries organisation. “Unregulated” fishing describes fishing by vessels without nationality, or vessels flying the flag of a country that isn’t a member of the regional organisation governing that fishing area or species. This is particularly attractive since many of the states offering flags of convenience are also tax havens. If you click on the unambiguously named www.flagsofconvenience.com, you’ll see how easy it is to move vessels from one register to another, even for a few months. The fact that some of the countries proposing flags are completely landlocked doesn’t seem to stop them having extensive fleets.

IUU fishing is also big business, but like any illegal activity it is hard to know exactly how much it is worth. According to some estimates, a quarter of the fish taken from the Antarctic fishing area could be IUU catches. The media regularly report scams involving millions of euros worth of fish, such as the six Scottish trawlermen convicted in 2010 of landing 15 million euros worth of illegal herring and mackerel over a three-year period.

Pirate fishing destroys the livelihood of other fishers and threatens the existence of fish species. Combating it is hard because the penalties for those caught are low compared with potential gains, and even catching them is difficult given the vast areas of ocean to be covered, the limited means of anti-piracy authorities, and the complicity of some states and customers, like the wholesalers those Scottish fishers sold their “black landings” to.

The method used in this case was “forensic accounting”, that revealed unexplained discrepancies between actual and declared incomes. Again, you probably never think of accountancy and tax inspectors when you think of the fight against piracy, but it’s a battle that’s been going on for centuries. Rudyard Kipling’s “Gentlemen” were being hunted down by King George’s tax men in the eighteenth century for smuggling brandy, tobacco and other illegal cargoes. Their modern counterparts are not just stealing fish, they’re also involved in people trafficking and drug running.

Tackling tax crime is one way of combating IUU and associated criminal activities. A report to the Third OECD Forum on Tax and Crime  taking place in Istanbul on 7-8 November discusses the extent of the problem, the form it takes and what can be done about it. Offences include the evasion of import and export duties on fish and fish products transported across national borders; fraudulent claims for VAT repayments; failure to account for income tax on the profits from fishing activity; and evasion of income tax and social security contributions and false claims for social security benefits by fishers and their families.

The complexity of the fisheries sector and the number of participants means that a broad range of actions need to be taken at various levels, ranging from technical training for local tax people to international cooperation such as sharing of information. Such recommendations may sound vague, but in preparing the report, the discussions between specialists from tax administrations, customs administrations, fisheries authorities and law enforcement “already yielded significant benefits through the sharing of experiences and analyses, highlighting further areas for research and, in a number of cases, leading to specific international co-operation in tackling actual cases of tax crime and illegal, unreported and unregulated fishing”.

The authors give concrete examples. For instance a large cash withdrawal made from a bank to pay a cash bonus to the crew of a fishing vessel was analysed by tax officials using the money laundering model found in the 2009 OECD Money Laundering Awareness Handbook for Tax Examiners and Tax Auditors (the very name strikes fear into the heart of the most ruthless pirate). The case also involved the sale of a fishing quota, which was illegal in itself. The sale was made via a company registered in an offshore jurisdiction through a bank account in an onshore financial centre. This led to a “multilateral tax compliance action” being undertaken by three countries, which demonstrated that each of the three had a different picture of the facts underlying the case. By working together, each country was able to apply its laws based on a clear understanding of the real transaction.

And if you’re wondering what happened after that misunderstanding at the Women’s Institute, the BBC has more.

Useful links

Evading the net: tax crime in the fisheries sector

OECD Forum on Tax and Crime

OECD work on fisheries