B for the budget, D for the critics

By KEN OHASHI

Since the FY 02/03 budget was announced on July 8, many have criticized it for a  "sharp cut" in development expenditures. How could Nepal get out of the current economic slump by cutting public investment? Is this government really committed to poverty reduction? I think these criticisms do not really inform the public, nor do they contribute to a constructive policy debate.

First of all, was the development budget cut sharply? It is far from clear. Yes, the proposed development expenditures of Rs 39 billion is much lower than the original FY 02/03 budget allocation of Rs 51 billion. But, the actual development expenditures for FY 01/02 turned out to be only around Rs 33 billion. So, where is the cut?

Those who are familiar with the budget of His Majesty’s Government (HMG) all know that the development budget figures have been always wishful figures. (See the comparison of the budget figure and the actual spending below.) I have been told that high development budgets served some political objectives. It has never been clear to me whom such inflated figures are meant to please. Surely the public is not so gullible to be fooled by perpetually unrealistic spending plans. At any rate, unless this year’s figure is also inflated to similar degrees, it makes little sense to compare the new figure of Rs 39 billion with the Rs 51 billion that proved meaningless. There are indications that this year’s development budget, which reduced the number of projects by 175, is more realistic. It has been reported that as the budget was being finalized many of Prime Minister Deuba’s cabinet colleagues bitterly complained that with such an austere development budget, they could not win the elections. (To his credit, the Prime Minister is said to have retorted that there must be different ways to fight elections.)

The criticism of the "cut" in the development budget is hollow in more fundamental ways. First, is there any evidence that increasing development expenditures would accelerate the process of development? Empirical evidence on Nepal does not support such a link. Given the very weak administration of many development projects and rampant corruption and waste, this is not surprising. The problem in Nepal is not in the quantity of development spending, but rather its quality. Critics have not helped to focus the budget debate on this core issue.

Second, it is fine to criticize the government for cutting the development budget, but unless the critics are willing to offer an alternative, they do not contribute to policy debate. We all know that the available resources are limited. So, increasing development expenditures will necessarily mean cutting something else. What would the critics of this budget propose to cut? Security expenditures? The number of teachers, health workers, or other civil servants? Easy cuts have been already made. Any further cuts will be painful. But, unless they are willing to specify where such pains should fall, insisting on more development expenditures will not be helpful.

So, do I like this budget? I had wished for a more stringent budget, because I worry that the revenue projections are on the optimistic side, and that the regular expenditures may turn out to be higher. But, I recognized that the budget formulators faced intense political pressures. As in the past, it is likely that there will not be enough money to fund all development expenditures adequately. In the past, the Ministry of Finance managed this by controlling the "release" of budget. In other words, what one saw in the budget was not really what was actually allocated to each program or project. This year again, the MOF will have to do the same thing. It is premature, though, to write off this budget as business as usual. There has been an important innovation in this "release" process.

The FY 02/03 budget has classified a small number of development projects as priority (or "P1") projects. They are to get funding before lesser priority projects are funded. The 100 or so P1 projects will amount to only about Rs 1 7 billion. This is much more consistent with a realistic budget ceiling. If this approach is implemented properly, the limited development budget will be focused much more effectively on high priority projects. I think this is a realistic way to deal with a difficult and uncertain budget situation, in the face of intense resistance to dropping low priority projects.

The FY 02/03 Budget also includes some reform measures that address the quality issue. It reaffirms the HMG commitment to beginning the process of handing over public primary schools to community management, along with block grants equivalent to the existing school budgets. Of the target of 1000 schools to be handed over in FY 02/03, the first batch of at least 100 is to be handed over by end of August. It also reaffirms the HMG commitment to handing over at least 20 sub-health posts each in 10 districts to communities by October. These measures should begin to improve the quality of two essential services.

So, I would give the FY 02/03 Budget a grade of B. With effective implementation of what has been proposed, however, this Budget can end the year with a higher grade of A.

(The author is the World Bank Country Director for Nepal. The views expressed in this article are his personal and do not necessarily reflect those of the World Bank Group)

Of minds and malady

By BINOD RIJAL

Who is stronger- Gandhi or the man who assassinated him? Adolf Hitler or Albert Schweitzer? The world’s weightlifting champion or the woman who lifted a car off her son (and broke her own back in the process)?

Ten people with ten different heads may have ten different answers to that one.

And why? Simply by the virtue of how their conceptual framework have built in a system of dichotomous beliefs.

By definition, dichotomous thinking requires less thinking because it helps you cop out when you confront a situation that really calls for creative thinking if you are to make fully human responses.

The rush to dichotomize keeps you from really seeing or hearing the people you are judging, because in your mind you have just shoved them into some bin labelled "bad," "enemy" or "reject", and decided that there is no profit in paying any attention to them.

Consequently, you forgo being open and creative and having to use your intellectual equipment in dialogue with yourself or anyone else.

Dichotomous thinking, therefore, is the basis of non-understanding between people, fighting and warring, stereotyping and social injustice.

However, the real personal damage of dichotomous thinking is that it keeps you, as a single individual, from growing and becoming a more fully alive and creative human being.

Understandably enough, a fixed and rigid dichotomy is really a barrier to productive thinking, exploration and investigation, and the more barriers you erect within yourself, the more you restrict your individual ability.

Axiomatically then, all the dichotomy that you use to place people and ideas immediately into rigid categories are impediments to your own growth and development as a human being.

When, next time, you compartmentalise others, you do the same thing to yourself.

Every time you divide the world on any level and say, "That’s the end of it, that’s just the way it is," you are also subdividing yourself and consequently limiting your own ability to be open to new and growth-producing experiences.

But, most importantly, when you divide the people or ideas of the world into rigid categories, you are viewing the world not as it is but as you see it, now and forever.

You are blinding yourself to its wonders, to the excitement of all its open questions. Before long, you will have suspended your natural curiosity and openness about the world, you will have stopped thinking.

Rather than questioning, seeking and exploring, you will fall ever deeper into the compulsion to dichotomize according to set patterns, and your mental and emotional growth will be inhibited.

And this, at the end, becomes the root cause of all human maladies. Almost all wars and squabbles will not have taken place or still can be avoided if men quit poisoning their psyche and understand the futility of their dichotomous thinking.

And the day this does happen, we no longer have to look up in the sky at the hovering nimbus and cower beneath for the fear of having a nuclear rain.

Terrorism’s new victims and possible recruits

By ARTHER C HELTON

The preoccupation of the United States and other governments with the war on terrorism is constricting the hopes of refugees. For example, many Western governments have increased restrictions on political asylum. Such a harsh approach poses its own risks because, ultimately, indifference to refugees compromises safety and security around the world.

There are now nearly 20 million refugees worldwide who have left their home countries out of well-founded fear of persecution. This is the classic definition of a refugee. Think of the tens of thousands of Central Americans who were granted protected status in the United States after fleeing civil wars in the 1980s, or the hundreds of thousands of South Vietnamese who came to the US after the North won the war.

Less visible but just as important are the estimated 25 million people displaced within their countries because of armed conflict and serious human rights abuses. Both types of displaced people too often end up warehoused for years in the broken communities called refugee camps.

Take Ifo refugee camp in northeastern Kenya, where on a sweltering day recently I visited with Somali leaders in the course of researching a book. I mentioned to the elders that Ifo looked more like a town than the emergency encampment I had first visited in 1993. They objected and patiently described the plight of the nearly 130,000 camp inhabitants and the variety of ways in which Ifo is anything but a normal town.

Violence is so pervasive that residents are afraid to leave their homes at night. Women who forage for firewood are routinely raped. Refugees are confined to camp, forbidden to become part of Kenyan society but prevented by chaos in Somalia from going home.

Western indifference to this misery and corrosive instability can carry a terrible price. As the world has seen in Bosnia, Rwanda, the West Bank and elsewhere, refugees can become a dangerous, radicalized force. Rather than turning away from refugees, we should seek to solve their need for permanent homes and confront the causes of displacement in their home countries.

During the Cold War, refugees were trophies for one side, embarrassments for the other. Both sides encouraged defectors. As the ideological confrontation receded, Western governments adopted policies to deter refugees from coming to the West and to contain them near their home countries. This restrictionism is spreading, particularly in light of new concerns about terrorism.

New background checks and security measures have slowed resettlement of even accepted refugees in the United States. The costs associated with security measures will surely make our refugee program increasingly vulnerable in future budget negotiations.

Although President Bush established a 2002 admissions ceiling of 70,000 refugees from around the world (mainly from camps), fewer than 20,000 have arrived with only two months remaining in the fiscal year. The new antagonism toward refugees is also reflected in debates in Britain, France, Germany and Spain over tightening immigration and restricting asylum. Even such a traditionally liberal and welcoming country as Denmark has now enacted laws limiting haven for asylum seekers.

During the Cold War, international interventions were avoided in situations like the abortive Hungarian revolution—which led to a refugee outflow in 1956—on the grounds that this could invite retaliation and escalation. By the 1990s, however, the hands-off policy was clashing with images of humanitarian catastrophes unfolding gruesomely on the evening news. Public opinion shifted strongly toward action, and the West launched audacious initiatives in the former Yugoslavia, northern Iraq, East Timor, Haiti and Somalia.

The results were decidedly mixed and produced some hard lessons. The international effort to help Afghanistan recover from two decades of war is better organized than previous efforts, even though it still may fail.

The military campaign against al-Qaida and its Taliban hosts displaced hundreds of thousands of Afghans. A million more refugees who previously fled the Taliban have returned to that devastated country and need help to re-establish themselves. Possible pre-emptive military action in Iraq, the Philippines and elsewhere would cause great additional displacements. The causes of displacement and the misery of exile must be addressed earlier and more effectively.

Unless the rest of the world grasps the need of refugees for more than a fenced camp, the radicalism of the hopeless will continue to nurture terror and cause instability.

(By special arrangement with LA Times and The Washington Post)