Russia-Belarus Oil Agreement

A little bit of news on an oil-supply agreement and some pipleline news. Not necessarily transit related, but infrastructure none the less.

Russia and Belarus reached an oil supply agreement in Moscow on Wednesday, ending the threat of disruptions in European deliveries that arose when a previous deal lapsed at the end of last year. Russia announced that the two sides had signed documents that covered the sale of Russian oil to Belarus and the piping of Russian oil through Belarus for other European customers.

Source

Press Release: Improved Logistics

The World Bank issued a press release on January 15th talking about the improved logistics of trade. This is good news and should encourage more investment in developing nations.

According to the study, logistics performance is heavily influenced by the quality of public sector institutions and the effective coordination of border clearance processes among all border management agencies. In this area, customs performs better than many other agencies, pointing to the need for border management reforms. In low performing countries, on average, half of the containers are physically inspected and one container out of seven at least twice.



Other areas for improvement include better transport policies, increasing competition in trade-related services such as trucking, freight forwarding and railways; and better trade-related infrastructure. For many low-income countries the most binding constraints are often in logistics services and international transit systems. Given they perform better on many other indicators, improving trade infrastructure is often reported to be a priority for middle-income countries.



The World Bank Group has a number of projects designed to improve trade logistics in developing countries. The US$250 million East Africa Trade and Transport Facilitation Project improved the corridor infrastructure and upgraded the main border crossing between Uganda and Kenya at Malaba, reducing border crossing times from three days to three hours. In Tunisia, a US$250 million operation is improving competitiveness by reducing trade costs and streamlining border clearance procedures. And in Afghanistan, the Bank is providing funding for a US$31.2 million project to modernize and computerize four major border crossings, increasing customs revenues from US$50 million when the project started in 2004 to over US$399 million in 2008.

Better transportation policies, tarriffs, and more funding of infrastructure seem to be working pretty well. What's interesting is that the release mentions that infrastructure is a middle-income country improvement. It would be interesting to see the impacts of transportation infrastructure in transition economies. Oh wait. I'm doing that.

Source, with graphs

Haiti Earthquake

So if you haven't heard about the earthquate in Haiti you're probably not reading this blog. NYT ran a piece today about how there is aid but it can't be distributed effectively due to infrastructure issues and communication system failures.

Everything thinks about infrastructure (roads/trains) in natural disasters because they are usually broken down in the events. What I think gets missed is that bad infrastructure planning, development, and funding is a huge issue daily for some nations.

Here's hoping the disaster in Haiti is being handled efficiently and with enough humanitarian aid and forces.

News: Gaidar dies.

"He began his career in a branch of the Soviet planning bureaucracy examining ways to revitalize the country’s creaking command economy.

But as finance minister he abandoned the idea of instituting gradual reforms of the type he had been studying. Instead, in charge of one of the great blank slates of economic history after the collapse of the Soviet Union, he decided to move quickly to liberalize prices and begin privatizing state industry."

Full article here

News: Asian railway integration gains momentum at UN-backed meetings

World Bank news about a railway that might go through Tajikistan and other Asia/Central Asia nations.

Asian railway integration gains momentum at UN-backed meetings

News: Corruption/Graft still Issue in Russia and China

The New York Times ran an article a few days ago about the corruption in Russia and China. Russia ranked 146th most corrupt out of 180 countries. China was in the 70's.

Less corruption is usually due to more oversight and government openness, but not always. More information and full article here.

News: Global Development Trends Monitor

"The fist issue of the Global Investment Trends Monitor (GITM) reports that global flows in foreign direct investment (FDI) rebounded during the second quarter of 2009. In the G20 economies, there was a 38% increase in such investment over the first quarter of 2009. As compared to the first quarter, UNCTAD´s Global FDI Quarterly Index rose from 70 to 115.

However, FDI flows remained much lower than during the corresponding period in 2008 -- the FDI quarterly index for the second quarter of 2009 was 45 points lower than it was a year ago. And initial indicators for the third quarter of 2009 show no signs of a further pickup.

Global FDI for 2009 as a whole is likely to be significantly lower than in 2008, despite the gradual improvement in the world business outlook, the Monitor estimates."

From the UN Conference on Trade and Development Source

News: Fall of the Berlin Wall

There is a lot of coverage happening stateside about the fall of the Berlin wall. The New York Times has quite a few articles on this, and the more interesting one is how the meaning of the fall is still contested.

While 1989 was a very important year, a lot of changes are still taking place. Some argue that it's the beginning of the end of the Cold War, and others point to the policy changes and political actions in 1990 and 1991. Regardless, Germany was once half a country in transition and the East still partially is.

Although this isn't directly CIS related, the question begs to be asked: Would the transition states of the CIS have done better in the last 20 years if they were truely able to depend on an more democratic and economically stable second half? Since this isn't the reality it's hard to say, but I can only imagine that the economic reforms that the World Bank has done (they claim it's successful) would have taken quicker and been more effective if there was some local understanding and knowledge in that field.

At any rate the wall fell, Germany reunited, and the dissolution of the USSR would take place in the years to follow.

News: Emergency loans to Belarus

More emergency funds make the IMF loan to Belarus total $2.23 Billion. This is almost purely economic stimulus money to keep things afloat, but I have to wonder if this money would be better used for other things. Either way $2.23 Billion is nothing to sneeze at. The impacts to funding infrastructure projects will likely be seen in a few years after all the economic issues level out, or get worse. Money is going into keeping the economy stable, but with no long term investments in public goods, there's going to be a severe lack of functional infrastructure whether it's education or roads:

“The International Monetary Fund (IMF) on Wednesday granted Belarus access to $700 million worth of emergency funds, bringing a crisis-easing loan package to $2.23 billion. The IMF executive board said Minsk's economic performance had warranted the disbursement of about $699.5 million, part of a $3.63 billion package….” [Agence France Presse/Factiva]

Reuters adds that “….IMF Deputy Managing Director Takatoshi Kato said the country had made ‘good progress’ in adjusting its policies to weather the global financial crisis…. ‘Exchange rate adjustment has helped reduce external vulnerabilities, with the present exchange regime providing a buffer against external shocks,’ Kato said. ‘The adjustment has been supported by a tight fiscal policy, with revenue shortfalls offset by spending cuts, and by an interest rate policy that has kept market rates high in real terms,’ he added….” [Reuters/Factiva]

Bloomberg writes that “…Belarus’ trade deficit widened more than 77 percent in the first half of the year to $3.95 billion from a $2.23 billion shortfall in the same period in 2008, according the National Statistics Committee. Exports to Russia, the country’s main trading partner, plummeted to $2.96 billion from $5.57 billion in the first six months of last year…. ‘Securing sufficient financial resources from the international community is essential for Belarus’ reform efforts,’ Kato said….” [Bloomberg]

News: Corruption in Russia, not really news

With the World Bank reform talks centering around the issues of corruption, this piece in the LA times about bribing traffic cops is relevant. If passengers are having these issues, it can only be imagined the problems commercial truckers and other road-based commercial transactions are having.

Article is by by Megan K. Stack and was originally published in August of this year.

"Before we start to look for trash in the eye of the traffic policeman, we should look into our own eyes," he says. "When I am asked, 'When will the corruption stop?' I always say that it will only stop when we stop paying bribes."

And, of course, he's right. But here's what I say, nevertheless: Pay the bribe! Because once I fumbled naively onto the path of the righteous and, my friends, it is a trail of sorrows.

If you pay the bribe, it may cost you $40, $60, maybe $100, plus 15 minutes and a few curses muttered under the breath.

If you don't pay the bribe, you have to go to traffic court. And it takes months to get a court date, and meanwhile you don't have a license, even if it's your American license.

And if you need to, for example, get that license back because you are leaving for a vacation in the United States and you want to drive while you're there, then you may (let's pretend this is hypothetical) have to hunt down the man in the bowels of the traffic bureaucracy who is powerful enough to get that license back. And that bribe will be plenty steep; lots more than you'd have paid on the side of the road. Hypothetically.

You travel to some sad sagging building where stray dogs howl at the doors and pay what you have to pay. At least that's over, you think."

Full Article is here

News: World Bank Reform

As of October 16th, the World Bank is discussing solutions to a lot of the general issues that are out there in the world. The most relevant thus far is the discussion on how to deal with corruption which can greatly impact what is actually spent on developing public goods. In many parts of the world, including Eastern Europe and Central Asia, bribes and favoritism are a way of life and a way of climbing the social ladder. Here is the overview, directly from their site:

The World Bank Group has been working on issues related to governance and anticorruption—in areas such as public sector performance, public financial management, civil service reform, decentralization, transparency and accountability—for more than a decade. Since 2007, the Bank’s new strategy, Strengthening World Bank Group Engagement on Governance and Anticorruption (GAC), is enabling a more systematic and central approach to making GAC an element of Bank operations across sectors and countries. Commitment and championship of this agenda emanates from the senior levels of the Bank’s management—including the president, managing directors, and the high-level GAC Council.

The strategy identifies governance and anticorruption issues as critical to improving development outcomes such as better delivery of services in health, education, roads, water, and electricity, better management of natural resource revenues, and more efficient investment in infrastructure. For instance: support for better and more transparent management of public finances narrows the scope for resource misallocations or leakages; assistance to strengthen local governments enables them to be more responsive to citizen needs; and support for oversight bodies and transparency mechanisms strengthens the accountability of public officials for delivery of services.
Source: World Bank