International Policy Fellowship Program 2003

International Policy Fellowship Program 2003

Fellow’s Name: Algirdas Petkevicius

Fellow’s Field of Research: Social Responsibility of Global Governance Institutions

Fellow’s Topic: Social Responsibility and Policy Process in Global Governance Institution: the Policy Approach of the European Union and the World Bank

1. Fellowship Objectives and Content

The project is targeted at researching into the problems of social responsibility of the economic policies of the two powerful international organizations – the European Union and the World Bank. It is intended to demonstrate that these policies may be not only useful, but also harmful to the national economies of the member states. The reasons for which the economic harm can be caused by these policies are classified into two parts:

i) The decision making biases within the international organizations.

ii) The inability of the national governments to reject the biased policy demands of the international organizations, if and when such demands are presented.

For more information about the project, please open the link “Research Proposal” at http://www.policy.hu/petkevicius.

2. Fellowship Activities in March – July 2003

In March – July 2003, the fellowship focused on several activities: i) Purchase of literature and supplies; ii) Analysis of literature; iii) Collection of empirical cases; iv) Participation in conferences; v) Drafting of the intermediary research and policy papers. Each of these activities is reviewed below:

2.1. Purchase of literature and supplies

In February – March 2003, a number of books were ordered through amazon.com (they were received in portions by May 2003). The books are focused on several topics, such as New Institutionalism & New Institutional Economics, Bargaining Theories, Regional Development, International Organizations. Each of the topics has a predetermined purpose. Literature on New Institutionalism, New Institutional Economics, Bargaining power theories is aimed at finding a theoretical framework for the paper and for the policy recommendations. Literature on regional development is aimed at explaining why one of the major empirical examples of the EU – Lithuania policy dependency and the policy failure resulting from this dependency (irrational allocation of funds for regional development) can be considered a major policy failure without a justifiable explanation. Literature on international organizations is aimed at providing extra inputs to the empirical data basis. The full list of literature is attached in Annex I.

2.2. Analysis of literature

The analysis of literature in March – July has focused on the topics of regional development, functioning of international organizations, and finding the theoretical framework for the research paper.

In the field of regional development, the research paper aimed at analyzing the case when the EU aid of 14,000,000 euro was allocated for the objectives of non-agricultural designation in the four most agricultural regions of Lithuania. The irrationality of this decision focused on several facts, such as: i) the lack of absorption capacities in the selected regions; ii) the incorrect interpretation of the EU structural funds’ rules which the EU side claimed are applied to these aid schemes; iii) the absence of the justification for such an approach in the theoretical literature on regional development which asserts that investment naturally concentrates in the “growth poles” while over investment in the lagging regions is costly and should be preferred only in cases when the “growth poles” are already saturated with investment. These facts are supplemented by the empirical evidence on the sequence of EU-Lithuania negotiations over the content of the scheme. This evidence shows that the Lithuania’s position has fluctuated along with the EU.

In the field of the functioning of international organizations, a number of trends can be discerned. Some of the authors expose the problems of the World Bank and the IMF in dealing with crisis situations. The role of these two organizations in the South-East Asian crisis of the 90s exposes the vulnerability of these organizations to the economic and business interests of their major sponsor – the United States. As a result, the organizations tend to promote and enforce economically unsound policies. Other authors focus on the internal structure within the World Bank and assert that it is lacking efficiency. There being a clear division between the research wing and the policy wing in the World Bank, the first one promotes innovative ideas, but the second one tends to squeeze itself into traditional bureaucratic routines. Besides that, some other authors directly expose the inefficiency of the World Bank’s policies (see “The Illusive Quest for Growth” by W.Easterly). While less literature exists on the internal structures and works of the European Commission, this gap is filled with the fellow’s own knowledge. These readings shall be supplemented by the empirical analysis of the Lithuanian facts of cooperation with the World Bank.

In the field of the theoretical framework, comparatively less progress has been achieved. However, the major theoretical writings on the Modern Institutional Economics, New Institutional Economics, Bargaining Power Theories and other relevant writings were reviewed. The key theoretical issue in the research paper is to find an appropriate theoretical explanation of the problems of social responsibility and these problems are presumed, in the research, to be of the institutional nature. Writings in the modern institutional economics assume the individual rationality of policy making actors. According to Furubotn and Richter, in the modern institutional economics “Individuals are assumed to seek their own interests as they perceive them and to minimize utility subject to the constraints established by the existing institutional structure…” This individual rationality is, however, hampered by the high transaction costs in policy making, which make an actor incompletely informed, as the acquisition of unlimited knowledge becomes too expensive. The more detailed explanations regarding the theoretical framework are presented in Annex II.

2.3. Collection of empirical cases

During the reporting period, a number of empirical cases were collected to support the evidence of the existence of policy dependency between the European Union and the Lithuanian Government. These cases are briefly described in Annex III. They are aimed at revealing whether the interference of other actors, such as powerful interest groups, may change the course of action (e.g. persuade the national government to negotiate with the EU rather than accept its demands). Most of the collected cases demonstrate both the “visible” and “invisible” dependency.

2.4. Legal Analysis

A number of legal acts reflecting the Lithuania’s cooperation with the European Union and the World Bank have been analysed, including, but not limited to the list indicated in Annex IV.

2.5. Participation in conferences

During the reporting period, the fellow participated in two Budapest workshops, as well as in the annual NISPAcee conference in Bucharest, in April 2003 (the duration – 5 days, including travel). The conference has focused on a number of issues of relevance to the research, such as public administration trends in the CEE region, issues of policy evaluation, decentralization. While the conference did not provide direct inputs to the research, it enabled to share the ideas with the colleagues from other CEE countries, to collect some empirical evidence from other CEE states.

2.6. Drafting of intermediary research and policy papers

The intermediary research paper was drafted in the English language and the intermediary policy paper was drafted in the Lithuanian language. Both papers are placed on the URL site http://www.policy.hu/petkevicius.

3. Conclusions, Directions of Future Work

In general, the research progressed in a satisfactory way. However, several limitations have applied. During the reported period, the collection of empirical cases focused on the EU, while cases related to the World Bank have been covered in a very general way only. At the same time, not all the literature has been familiarized with at this stage. These issues must be addressed during the period of August – September 2003. It is necessary to take into consideration that this is the initial stage of the project only and many more cases shall be added and the theoretical framework shall be refined at a later stage.

Annex I. The List of the Literature

The list of purchased literature:

George Soros on Globalization, by G.Soros.
Globalization and Its Discontents, By: Joseph E. Stiglitz.
The End of the Nation State: The Rise of Regional Economies, By: Kenichi Ohmae.
Policy-Making in the European Union (New European Union Series), By: Helen Wallace (Editor), William Wallace (Editor)
Alternatives to Economic Globalization, By: John Cavanagh, et al.
50 Years Is Enough: The Case Against the World Bank and the International Monetary Fund, By: Kevin Danaher (Editor).
Technocracy in the European Union (Political Dynamics of the Eu Series)
Urban and Regional Economics, by Philip McCann.
The Spatial Economy: Cities, Regions, and International Trade, By: Masahisa Fujita, et al.
The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics, By: William Easterly.
Frontiers of Development Economics: The Future in Perspective, By: Gerald M. Meier (Editor), et al.

The purchased literature shall complement the books already in my disposition (only titles & authors are indicated):

Bargaining Theory with Applications, by A.Muthoo.
Economic Behavior and Institutions : Principles of Neoinstitutional Economics, by E.Furubotn, R.Richter.
Political Bargaining: Theory, Practice and Process, by G.Doron, I.Senet.
Institutions in Economics : The Old and the New Institutionalism, by M.Rutherford.

Other books have been available and were referred to in the research paper as well.

Annex II. The theoretical framework

There is a lot of literature on the issue of the rationality of decision – making. To mention just a few findings, Kickert, Klijn and Koppenjan distinguish three steering models: conventional, multi-actor, and network based. According to them, the conventional model focuses on the relation between the agent and objects of steering and indicates that failure is a result of ineffective steering instruments, resistance from implementing bodies, lack of information, lack of control, incorrect assumptions on the causal relationships between means and ends. Thus this model suggests that policy may be improved by clarifying policy objectives, reducing the number of participants in decision making, increased monitoring and control. The multi actor model suggests that the failure may arise when the government does not provide sufficient information for local actors, both private and public. Thus the major improvement, which can be made, is more local discretion. The model is, however, criticized for inconsistency – while local actors are expected to be more autonomous, they are supposed to get more attention from the central government. Finally, the network model is based on the networks of actors, none of which possesses the right to determine policy outcome. Therefore, interaction is necessary, and a policy failure is believed to originate from the lack of collective action.[1]

The complete autonomy of the state is not seen as a good solution and pressures from the interest groups are recognized to be of great significance in determining policy goals, if the network approach is taken as the basis. However, while in case of complete government’s autonomy the major reason of policy failure may be the lack of qualifications, information, or too cumbersome procedures, in case of ‘embedded autonomy’ (network based approach), one of the key issues (besides others) becomes whether the civil servants are able to resist tendencies of self-interest.[2] Evans, referring to Weber, says that the state is only able to regulate economy effectively if the bureaucrats see corporate (societal) goals as best matching their personal self-interest.[3] This match can be achieved, according to Evans, by introducing competitive examinations and the system of promotion based on merit, creation of the feeling of work prestige. In some cases, as Evans suggests, islands of efficiency with all these features may be created to manage vitally important sectors of economy, if it appears to be impossible to follow such principles in the entire civil service.

However, even if there are all the mentioned features, does it mean that the civil servants shall be able to depart from their self-interest? As Moe suggests, this will still not happen. According to him, “…democratic governance gives rise to two major forces that cause the structure of public bureaucracy to depart from technical rationality. Firstly, those currently in a position to exercise public authority often face uncertainty about their own grip on political power in the years ahead, and this prompts them to form structures that insulate their achievement from politics. Secondly, opponents also have a say in structural design and, to the degree they do, impose structures that subvert effective performance and enhance their own control”.[4] These and other factors still create instability, and the private sector’s role in defining policy objectives (or simply speaking – rent seeking behaviour of both civil servants, private consultants, interest groups, etc., may increase).

Moe thinks that all governmental actors are primarily concerned with their own problems and pursue their own interests. Politicians are interested in re-election and therefore try to get as much funds as possible for their districts, civil servants are interested in maintaining control over certain activities even if this is not an efficient approach, in order to maintain their jobs. Finally, there being little certainty about the future of public agencies, each civil servant and politician may be willing to ingratiate himself with the private structures, in order to get benefits after some problem occurs in his career. Issues of corruption and bribery should also be taken into consideration, especially when civil service work is badly paid.

Generally, however, if this approach is followed, not only the politicians and civil servants, but also the interest groups that have a stake in decision making are likely to promote self-interested approaches to policies, especially when material allocations are on the agenda. In this regard, policymaking may be regarded ‘a clash of personal interests’.

The Modern Institutional Economics also takes the point of view that an individual within a public organization is to seek his own interests. According to Furubotn and Richter, the modern institutional economics asserts methodological individualism and individual rationality. The modern institutional economics, according to the authors, presumes an entirely new role of individual decision makers. People are different and have different goals, objectives, rationale, ideas. Thus the organization per se is no longer perceived as the main focus of the analysis. Rather the views and behaviours of the individual actors give the raise to the phenomena being studied.

While the individual rationality is accepted as one of the determinants of the policy outcome, two trends may be distinguished – one taken by the traditional neoclassical view asserting perfect individual rationality and another taken by the modern institutional economics – imperfect individual rationality, presuming the incompleteness of the decision makers’ knowledge and information. The latter trend suggests that a transaction cost in the policy making process may be too high to make a decision maker “completely informed” and thus an individual often makes his choice without a sufficient rationality.

Annex III. The Empirical Cases

Cases in the field of the EU structural policy, regional policy, governance reforms & other selected fields

Phase	Policy Area	Description of the Case	International Organization’s position	Media/Interest groups’ positions	Executive Government’s (Ministry’s) position; also whether it was the same between the unit directly in charge, senior executives, Government office, other ministries	Policy Makers’ positions	Policy Outcome	Brief Analytical Review on the Role of an International Organization in the given Case
Inclusion of the question into political agenda	Regional Policy	Introduction of partners’ (social and economical) participation in programming of the EU support	Partners should be involved and have a say in deciding where the EU money should be spent	Media and interest groups strongly supported the idea partners’ participation in the process	Partners should have a role but not that active, their role should be limited to planing stage only and their opinion should not be decisive	On the general supports the idea of widening the process, but Policy Makers’ position is not formulated in one or another way, because executive authorities accepted partners’ into the process	Partners are made formal members of the various bodies in which discussions and decisions are taken	EU closely supervised how the partnership will be implemented via negotiations process – which partners will be invited to the process, that is their role, etc. Various requests and reports were made. EC Delegation constantly reports on the progress, follows all partnership arrangements.
	Governance reform	Introduction of strategic planing into Civil Service	Clearly supported the idea, but influenced via general reports/studies.	Passive	Reluctant at the beginning. Institution directly in charge of the question pushed through the question. More appreciated by senior managers than middle and lover level managers.	Firstly position was undefined, lately strongly supported	Strategic planning elements introduced in public administration	Term Administrative Capacities was not known until EC regular reports on Lithuania’s progress towards membership. Modernization of administration or ability to implement all the obligations of the acquis is one of the key elements in all EC’s reports. The new Twining mechanism was invented to modernize public administration, but the procedures, internal organization of the processes is entirely responsibility of national authorities
	Regional policy	Establishing a division line between the Cohesion Fund and Structural Funds financing as percentage of the total financing	Unilateral position in establishing the share of funding for the Cohesion fund as a share from the total financing available. Increasing allocation for the Cohesion fund EU ease absorption of the money.	Non-existing because of the nature of the case	Dividing money between the Structural Funds and Cohesion Fund, much bigger allocation shall be given to structural funds, because Cohesion Fund projects decided in Brussels	Non-existing because of not being involved in the negotiations process and not understanding the rules.	Percentage for the Cohesion Fund financing as of total financing is established by the EU.	Candidate countries were put against the fact- take it or leave it. No discussions were allowed in this case.
	Financial Control	Introduction/strengthening of public internal financial control	The efficiency of the financial management and control of national budget income and spending appears to remain relatively weak; basic accounting systems and practices have not reached acceptable standards	Financial management and control should be increased very much	Government and all its bodies acknowledged the need to improve financial management and internal audit in public sector though limited experience and knowledge about it	Financial management and control should be strengthen. Personal liability of the civil servants should be introduced	Basic legislation adopted, core structures established and operational	EU have played (and still play) a very active role in establishing all necessary structures, procedures, rules in the public sector.
	Financial control	Lithuania should strengthen the fight against fraud and designate a contact point for co-operation with OLAF	Designate a contact point for the protection of the Communities’ financial interests and start co-operating effectively with OLAF through this contact point	On the general supportive to EU position, otherwise very passive	Supporting the EU position, national authorities disagreed on the institution which should be appointed as a national contact point with OLAF, 3 different options occurred	On the general supportive to EU position, otherwise very passive	A contact point with OLAF was appointed, EU position	Using its powers over pre-accession funds and where several complaints and investigations were started, EU quickly got an answer from national authorities about the appointment of the contact point, eventhough national authorities needed to select one from 3 candidates.
Adoption of the decision	Regional Policy	Establishment of institutional structure for the management of EU funds	Structures should be in place as required by legislation. Though position on which institution should be prescribed which title was not expressed	Non-existent at that time	Position of the national authorities were fully lead by lead institution – MoFinance, Central Government’s and other ministries’ position was non-existent at that time	Position was formulated by leading institution and accepted by policy makers	Institutional framework established, institutions appointed	EU participated in this case as invisible adviser. Having the right only to ask for the nomination of the institutions, they also played a role in advising informally a best possible institutional set-up.
	Public Procurement	Complete alignment of the public procurement legislation and ensure its effective implementation, in particular by further strengthening the Public Procurement Agency, and establishing an information system for the monitoring of procurements.	Public procurement legislation presents a number of important shortcomings which will need to be amended, to ensure full alignment with the acquis.	There was a clearly articulated position – public procurement should be more clear and misuse of public funds should be abolished	Central Authorities supported quick alignment of the public procurement legislation, eventhough Public Procurement Office tried to stick to the old rules, neglecting shortcoming. Central Government acted via European Law Department which gave its opinion on EU requirements	Shortcomings of the public procurement legislation should be abolished	EU position was followed	EC was very keen on the issue, therefore was very active through their own (PHARE) experts which worked in Public procurement office.
	Governance reform	Civil service system should be reformed. The question of stability of civil service is a prerequisite increasing administrative capacities. The older civil service legislation is completely outdated .	EU strongly advised to create a framework for stable civil service.	Position is negative and very narrow, concentrating on social guarantees of the civil servants. Negative approach in general – service is too big	Central Government position – creation of flexible civil service. Flexibility is needed because many changes are required in many policy areas, abolishment of certain institutions were envisaged. Also attempts to make flexible remuneration and recruitment systems were made in order to attract and maintain highly qualified personnel.	Acknowledging the need to reform civil service, policy makers were trapped between media’s/population’s negative position towards doing something good for the administration and obligations towards EU	Policy decision was delayed for 2 years. New Civil Service Act was prepared mainly by EU experts in 1997, but adopted only in the second half of 1999. Position of the Central Government prevailed in the Law.	Using all formal tools (reporting of Lithuania’s progress, Joint Committee Meetings, etc) EU tried to convince to adopt the law on Civil Service, despite the fact that its content changed a lot between ’97 and ’99.
	Energy	Administration procedures of the additional financing foreseen to finance closure of Nuclear Power Plant	Role of the EU institutions in administering this additional allocation should be strong (central)	Non-existing due to limited knowledge and involvement	Undefined due to the extraordinary character of the case – no precedents with this kind of questions. Amounts involved are quite substantial – no clear responsibility or rules of the games were established.	Non-existing due to limited knowledge and involvement	Money will be kept and managed by EU authorities (EBRD)	Played an active role, proposed several scenarios which were very similar and all meant that resource management rules will be established by the EU. As the question were dealt very quickly and national authorities did not have time to prepare their position, no obstacles occurred.
	Regional Policy	Creation of IT monitoring database for EU co-funded projects	There should be SOME monitoring database for monitoring EU supported projects. Informally suggested to have single IT database	Non-existing	Leading institution in charge of the co-ordination of the preparations for structural funds is of a opinion that there should be single IT monitoring database for all sectors. Sectoral ministries tried to create their own monitoring (sub)systems.	Non-existing	There will be one (single) IT monitoring database for the all assistance	International organization tried to be aside of the decision, though explicitly indicated shortcomings in several countries which did not follow single database solution
	Agriculture	Direct payments to the farmers should be equal in new and old member states	Direct payments to the farmers should be lower in the new member-states	Strong position that new and old member states should have the same assistance rate	Strong position that new and old member states should have the same assistance.	Strong position that new and old member states should have the same assistance rate	Direct payments will be phasing-in, in 7 years will reach current level of the EU member states. New member-states could add some assistance from their own budgets	EU defending its position proposed to the new member-states to finance direct payments from the allocations foreseen to finance investments via structural operations.
	Energy	Closure of the Ignalina Nuclear Power Plant	Certain block of NPP should be closed by 2005	Nuclear power plant should not be closed	NPP should be closed at the latest possible date or additional substantial financing form EU should be foreseen also long term commitments should be made	NPP should not be closed	Decision on closure at 2005 was adopted. Long term financing commitments were made.	EU was active both at the experts level (via various studies, reports, examinations) and political level (accession negotiations, bilateral meeting, etc). Position was very strong –take it or leave it.
Implementation of the decision	Regional policy	Implementation of EU regional policy, its geographical coverage/segmentation. Firstly it was proposed and accepted that LTU will comprise several regions, lately this approach was changed into single region approach	Lithuania is a single region for the EU structural funds purposes	None	Undefined due to limited experience/knowledge in the subject. Firstly EU position was followed which was lately acknowledged as wrong.	Lithuania is not a homogeneous country	EU position was adopted	EU position was not coherent. Firstly it indicated that LTU will comprise several regions. Lately position was changed – LTU regarded as single region. Different opinions were given by different bodies inside the EU
	Customs	Establishment of Customs posts on the border	Position was based on initial agreements with national authorities It was also based EU funded experts’ reports	Interest groups had an opposite position to the EC position	Central Government position was strongly influenced by interest groups. The body directly in charge of the question supported EU position	Position was not officially expressed by policy makers but various positions existed inside.	IO position was followed	IO supported the decision attained in discussions with national authorities. Lately then attained decision was questioned by the interest groups, IO strongly defended original decision.
	Regional policy	Establishment of the separate priority for the rural affairs in the programming document according which structural funds will be distributed	There should be a separate priority axis for the agriculture/rural policy	Segregated – in general not very active position	Leading ministry, central Government, line ministries except MoAgriculture did not want to have a separate priority for agriculture	Diverse (different committees of the Parliament had different opinion) but opinion were not decisive	Separate Priority axis for rural affairs established	EU used its implicit power to persuade national authorities that negotiations with the Commission will be extremely difficult if there will be no separate priority rural affairs.
	Regional policy	Reduce a minimum value for the project from 10 million EUR to 5 million EUR	Legal requirements establish a 10 million minimum limit for the Cohesion fund projects, which should be strived in most f the cases	The minimum project value should be reduced	The minimum project value should be reduced till 5 million at least	Generally supported the idea of minimizing value of the project to be eligible for funding	The strict rule of minimum 10 million project value will not be applied entirely – each case will be examined separately	EU authorities tried to be flexible seeing examples of implementation of pre-accession assistance program.
	Regional policy	Increase of an advance payment from 7% to 16% from the structural funds	Reluctant	Non-existing due to limited knowledge on the subject matter	Advance payment from the structural funds should be increased in order to ease absorption of the funds and ease the budget constrains	Non-existing due to limited knowledge on the subject matter	Advance payment will be increased from 7 to 16 per cent	I t seems to be consequence of the package deal – leaving uncompromised position in several cases this one was traded.

Cases in the field of financial control methodology

Policy Area	Description of the Case	Executive Government’s (Ministry’s) position; also whether it was the same between the unit directly in charge, senior executives, Government office, other ministries	Media/Interest groups’ positions	Policy Makers’ positions	International Organization’s position	Policy Outcome	Brief Analytical Review on the Role of an International Organization in the given Case
Public sector internal audit training	To ensure continuous training process in order to strengthen administrative capacities of the public sector internal auditors	To support administrative capacities of the public sector internal auditors	Positive	Positive	To support continuous training process in order to strengthen administrative capacities of the public sector internal auditors	The continuous public sector internal audit training programme has been prepared, training modules created, responsible institution set up	The adequate proposals have been provided by the Finish experts under the Phare project “Strengthening the internal financial control” to ensure continuous training process and strengthening administrative capacities of the public sector internal auditors
Public sector internal financial control legal basis	To adopt the law on Internal control and internal audit	To consolidate and to harmonize the existing legal base	Positive	Positive	To support continuous strengthening of the administrative capacities of the public sector internal auditors	The law on Internal control and internal audit adopted	The adequate proposals have been provided by the OECD / SIGMA peers to consolidate and harmonize the existing legislation on internal financial control
Public sector internal audit reorganization	To strengthen the internal audit system by enlarging the internal audit units	To abolish one man internal audit units	Neutral	Positive	To strengthen the internal audit system by enlarging the internal audit units	The provisions of the law of internal control and internal audit adopted	The adequate proposals have been provided by the OECD / SIGMA peers to consolidate the efforts of the existing internal audit units
Public sector internal audit manuals	The template methodology to be prepared for further work of the internal auditors	To prepare the internal audit methodology template to be used by the overall internal audit units in the public sector for the preparation of their manuals	Neutral	Positive	The public sector internal audit general methodology should be strengthened	The Standard internal audit methodology based on the international standards adopted	The adequate proposals have been provided by the Italian experts under the Phare project “Budget management and financial control” to ensure that the general standards for internal audit are in place
Positions of the public sector financial controllers	The financial control function of the public institutions should be strengthened	To ensure that the overall control function in the public institutions is effective	Neutral	Positive	The adequate financial control function should be ensured in the public sector institutions	The provisions adopted in the Law on Internal control and internal audit due to establishment of the adequate financial control function	The adequate proposals have been provided by the European Commission representatives to ensure that the best EU practice on financial control has been met

Annex IV. The List of Legal Acts Analysed

National (Republic of Lithuania)

1. Regional Development Act, 21.07.2000.

2. Cabinet decree No. 543 of May 14, 2001 “On the Approval of the Order of Composition and Implementation of the State and Municipal Budgets of the Republic of Lithuania”.

3. Cabinet decree No. 478 of April 26, 2001 “On the Approval of the Order of Planning, Concretizing, Using, Accounting and Controlling State Investment Earmarked for Capital Investment”.

4. Cabinet decree No. 476 of April 26, 2001 “On the Concept of County Governance Reform, Directions of County Territorial Reform, and Action Plan for Submission of Directions of County Territorial Reform to the Society”.

5. Cabinet decree No. 379 of April 5, 2001 “On The Approval of the Order of Evaluation of Implementation of Programs managed by Managers of State Budget Allocations of the Republic of Lithuania”.

6. Cabinet decree No. 127 of February 27, 2000 “On Internal Audit of State Enterprises and Agencies”.

1. Commission Regulation No. 448/2001 of 2.03.2001 “laying down detailed rules for the implementation of Council Regulation No. 1260/1999 as regards the procedure for making financial corrections to assistance granted under the Structural Funds”.

2. Commission Regulation No. 438/2001 of 2.03.2001 “laying down detailed rules for the implementation of Council Regulation No. 1260/1999 as regards management and control systems for assistance granted under the Structural Funds”.

3. Commission Regulation No. 1685/2000 of 28.07.2000 “laying down detailed rules for the implementation of Council Regulation No. 1260/1999 as regards eligibility of expenditure of operations co-financed by the Structural Funds.

4. Commission Regulation No. 1159/2000 of 30.05.2000 “on information and publicity measures to be carried out by the Member States concerning assistance from the Structural Funds”.

5. Council Regulation No. 1268/1999 of 21.06.1999 “on Community support for pre-accession measures for agriculture and rural development in the applicant countries of central and eastern Europe in the pre-accession period”.

6. Council Regulation No. 1267/1999 of 21.06.1999 “establishing an Instrument for Structural Policies for Pre Accession”.

7. Council Regulation No. 1264/1999 of 21.06.1999 “amending Regulation No. 1164/94 establishing a Cohesion Fund”.

8. Council Regulation No. 1260/1999 of 21.06.1999 “laying down general provisions on the Structural Funds”.

9. Commission Regulation No. 2064/97 of 15.10.1997 “establishing detailed arrangements for the implementation of Council Regulation No. 4253/88 as regards the financial control by Member States of operations co-financed by the Structural Funds”.

World Bank:

A number of Lithuania – World Bank treaties (agreements) on loans and their conditions were included into the spectrum of the analysis.

Draft Legal Acts:

1. Draft Operational Guide for PHARE 2000 ESC Funds, drafted in 2001 by the twinning partners of the PHARE Special Preparatory Program, in cooperation with the Lithuanian Ministry of Interior and the Lithuanian Ministry of Finance.

2. Management and Control Systems Audit Manual for the Structural Funds / Financial Controls in the Member States, European Commission, DG “Financial Control”, 12.05.1999.

3. National Development Plan for 2001-2003, draft, the Lithuanian Ministry of Public Administration Reforms and Local Authorities, 2000.

4. National Development Plan for 2000-2002, draft, the Lithuanian Ministry of Public Administration Reforms and Local Authorities, 2000.

5. Work Procedures Manual for the SAPARD Programme, draft, the National Fund Department, the Lithuanian Ministry of Finance, 2001.

[1] This passage is based on Kickert, Klijn, Koppenjan, 1997.

[2] While it is not necessarily and not always true, it is often considered that autonomous government is better insulated from the private groups’ influence, and the insulation disallows the government to become the agent, and the private sector – the principal. However, it must also be recognised that in this case the government may misuse public funds for other reasons.