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Roundtable Meeting of Chief Justices and Ministers of Justice : Emerging Trends and Issues in Legal and Judicial Reform in Development Bank
Law and Development Programming at the Asian Development BankLet me turn to the Asian Development Bank. I like to think of the Bank's Law and Development programming both as a mirror and as a prism. It is a mirror in the sense that it reflects the emerging trends in legal and judicial reform in the Bank's DMCs about which I have been speaking. The Bank's programming generally - which involves loans for public and private sector projects, equity investments in private sector projects, and loans and grants for technical assistance - is evolved in consultation with the DMC governments concerned and has a long-term development focus. Programming evolves through a three-year programming cycle in each country, by which priorities are established and individual loan, investment and technical assistance projects are evolved. The Bank works through a channel of communication in each country which, in most cases, is the Ministry of Finance or the State Bank. Its work focuses on a limited number of sectors and on the development of long-term relationships with client ministries; traditional areas in which the Bank has worked include agriculture, such physical infrastructure sectors as power generation, roads, ports, telecommunications, water supply and sanitation, such social infrastructure sectors as education and health services, and such economic infrastructure sectors as banking. But I have said that the Bank's Law and Development programming is a prism as well as a mirror. It is a prism because it focuses attention in the Bank's ongoing programming dialogue with DMCs on those issues, policies and projects which the Bank's comparative experience throughout the region has demonstrated are most likely to contribute to economic development. The Bank brings its experience and its expertise - what is often called "international best practices" - to its programming dialogue with DMCs and to those DMC projects which it assists through loans, equity investments and technical assistance. I have noted that the Bank has been involved in modest levels of legal technical assistance since its earliest days, with a dramatic increase in such assistance only in more recent years. Traditionally, legal technical assistance by the Bank has been related to specific lending and investment projects, such as the adoption and implementation of water users association legislation where such associations are to be involved in implementation of an agricultural irrigation project or adoption of legislation for credit unions as part of a rural credit loan. The recent increase in what we have come to call Law and Development programming has seen a greater involvement by the Bank in systemic issues relating to DMC legal and judicial systems as a whole as they relate to such country's economic development, in addition to narrower, more traditional project-related technical assistance. Such expanded Law and Development programming is part of the Bank's broader Governance Policy and programming. The Bank's Governance Policy was adopted by our Board of Directors in August 1995 and is set forth in a Board paper entitled Governance: Sound Development Management. That policy will be discussed much more fully at our luncheon today by the Chief of the Bank's Strategy & Policy Office. For the moment, let me note that it focuses on transparency, predictability, participation and accountability as the key elements of the good governance which is necessary to ensure efficient and effective management of development projects. The Governance Board paper calls for "effective and efficient administration of law", noting that "[p]romoting development of the private sector in general, and that of the financial sector and securities market in particular, requires an especially strong legal underpinning". It also recognizes the importance of law and effective legal institutions in contributing to the broader effectiveness of government, in addition to its contribution to private sector economic development. The Bank's Law and Development programming is firmly grounded in a concern for economic development and reflects no political agenda on the part of the Bank. Article 36 of the Bank's Charter explicitly provides that "[o]nly economic considerations shall be relevant to [the Bank's] ... decisions" and that the Bank "shall not interfere in the political affairs of any member". The apolitical and technocratic nature of the Bank should not be surprising given the fact that 40 of its 56 member countries come from within the Asia-Pacific region, as do 8 of its 12 directors, and given the nature of the programming dialogue between the Bank and its DMCs which I have described. The Bank's Law and Development programming is accomplished primarily through technical assistance, or "TA" as it is known in the Bank. Most of you are likely to be familiar with the nature of TA: it involves grant or loan financing ranging from several hundred thousand to several million United States dollars in a typical case and is used to finance consultancy services and, generally, short-term training focused on a particular problem, project or opportunity. The range of subjects addressed is quite broad. Individual TAs can be narrowly focused or more broadly focused to address systemic issues within a legal or judicial system. Examples would be assistance in the creation of water users association legislation or credit union legislation, as I have previously noted; other examples would be assistance for law reforms relating to insolvency of state enterprises, customs administration, companies and partnership law, assistance in the internal reorganization of a ministry of justice and creation of a human resources development plan for that ministry, short-term training programs for government lawyers on complex "BOT" projects for the private development of infrastructure, assistance in the creation of in-country institutional capacity for the retraining and continuing legal education of government lawyers and judges, and financing for the creation of official English language translations of key economic legislation. In their presentations during the course of the day, my colleagues will be providing you with more detail about these and similar Law and Development TAs. While most of such TAs to date have been financed by the Bank on a grant basis, DMCs are beginning to borrow from the Bank for larger, longer-term and more capital intensive Law and Development programs. While TAs may be the most visible part of the Bank's Law and Development programming, legal and regulatory issues are at times addressed in the covenants to specific project loans and in the conditions established by programs loans. Most of the Bank's lending is to specific projects, such as a road, port, power plant or an education or health care program. A portion of the Bank's lending, however, is program lending. Program loans are designed to support policy change in a particular sector; there are Industrial Sector program loans, Agriculture Sector program loans, Financial Sector program loans and Capital Market program loans. Disbursements under program loans are dependent upon satisfactory progress made by a DMC in achieving a specific policy reform and implementation agenda - or program - agreed between the Bank and the government. Disbursements under a program loan are available to DMCs to finance imports, with the domestic currency proceeds of the sale of such imported goods generally being used to support the reforms to which the program is dedicated. Program loans can be a powerful instrument in encouraging reforms, including legal reforms, and reflects the role of the Bank as a prism and as a catalyst in the reform process. Let me identify the principal areas of the Bank's Law and Development programming. The Bank's principal focus is on working with DMCs seeking to develop or liberalize market economies, with particular attention to:
The Bank recognizes the need to approach legal reform from a systemic perspective, focusing on the ability of governments to implement new or revised laws and regulations, the ability of the courts to enforce such laws and, in particular, on the skills and experience of lawyers in government and in the judiciary charged with the creation, administration and enforcement of such laws and regulations. As my colleagues make more detailed presentations on particular areas of activity or projected activity by the Bank in its Law and Development programming, I think you will perceive a growing preference of the Bank for working with DMCs to build local institutional capacity in-country for retraining and continuing legal education of government lawyers, judges, court administrators and other legal professionals. This will not be to the exclusion of a large number of activities, particularly TAs, devoted to specific, project-related issues and to specific law reforms, but it will be an area of particular concern, attention and programming. Bank assistance is only a small part of the process. The resources devoted by the Bank to Law and Development programming are only a portion - and ultimately a small portion - of the resources which need to be invested to ensure that legal and judicial reforms are viable and become effective. The Bank as a prism often encourages governments to recognize problems and to begin the process of devoting more significant budgetary and capital expenditure resources to addressing such problems over time. In the area of retraining and continuing legal education for government lawyers and judges this is, in most of our DMCs, a sorely neglected area despite the fact that it is directly related to governments' efforts to achieve their economic development objectives. As economies become more market-oriented and liberalize, government lawyers and judges are being called upon to advise on, deal with and adjudicate matters far removed from the substantive subjects of their legal education and practice experience and in the process are finding that analytic skills, drafting skills and negotiating skills are increasingly important to their work. The Bank expects to see DMC contributions to the costs of TAs, an increasing willingness of DMCs to borrow from the Bank to finance longer-term and more capital intensive Law and Development programs, and a clear commitment of budgetary resources to ensure the long-term viability of reforms supported by the Bank's TA activities. Let me, finally, focus on two other aspects of the Bank's Law and Development programming. The first is a commitment to encouraging greater communication within the region about legal and judicial reforms and about law and development programming. This Roundtable Meeting is one example of that effort. Another example is the Bank's Law and Development publications program, which includes such publications as 'LAW AND DEVELOPMENT AT THE ASIAN DEVELOPMENT BANK, LAW AND DEVELOPMENT: AN ASIAN BIBLIOGRAPHY', the 'LAW AND DEVELOPMENT BULLETIN' and a series of seminar publications. The 'LAW AND DEVELOPMENT BULLETIN' is, I think, particularly noteworthy; it is a semi-annual publication of the Office of the General Counsel and lists, for each DMC in which the Bank has lending, investment and TA operations, all of the Bank's recently completed, current and proposed legal technical assistance operations and, to the extent known to us, the comparable operations of other donors in those countries, such as the World Bank, EBRD, UNDP, USAID, GTZ and OECF. The Bank has also created the LAW-DEV Internet forum which, via e-mail, links approximately 500 government officials, donor agency personnel, academics and others from more than 40 countries and provides a vehicle for the informal exchange of information about law and development policies, TAs, research and teaching. The second of these final points is the Bank's interest in encouraging research on the relationship between law and economic development. It is a neglected area of scholarly endeavor, and the Bank-financed HIID study to which I earlier referred - a six-country comparative study by lawyers and economists of the role of law and legal institutions in Asian economic development between 1960 and 1995 - should be a significant contribution to the literature and help to better inform DMC legal policies and donor technical assistance. Many of these subjects will be elaborated in the further presentations by my colleagues during the course of the day and in the Panel discussions chaired by Professor Sidel. Let us now move to the first of those further presentations. Legal Frameworks for Private Sector Development in the Asia Pacific Region.
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