An urgent need for Gorvenments around the world: Capacity-building to design, negotiate and implement Private-Public Partnerships

As the world is facing enormous financial challenges, it has become clear that most large projects can only be implemented through joint sector partnerships, commonly referred to as PPPs (Private-Public Partnerships); even when projects are not classified as PPPs, often they are joint sector initiatives. For example, exploration for natural resources and concessions in general are joint sector activities. However, there is a problem: in most cases, the public sector is not prepared to play the role of the equal partner. Lack of expertise or (even worse) lack of understanding and appreciation for the expertise needed puts the public sector at a serious disadvantage and results in a deal which favors (unfairly) the private partner. A similar result is reached when corruption is involved, which is common in many countries.


One-sided PPPs are not sustainable, as it is a matter of time for their biases to become known to the public, a public which becomes more an more active against incompetent governments and unfair situations. An effort is needed worldwide to strengthen the capacity of public organizations to design, negotiate and implement PPPs, which are fair for both sides and protect the interests of the public. Such capacity is essential in Governments of countries, as well as local governments. Similar expertise is needed in Topeka (Kansas, USA), Athens (Greece) and Rangoon (Myanmar).

Holograms to reduce energy use substantially

I read that Forever 21's Hologram Fashion Show Comes to the U.S. This is a show which replaced live models with holograms. It was first presented in Vienna (Austria) in May and then in Brussels and London. Think about the energy which can be saved if 20-30% of the business trips around the world are replaced with holograms. Meeting my Chinese business colleagues could be done initially in a conference room which makes us all feel that we are in this same room, independently if some of the participants are being represented by their holograms. In the future, the technology could be improved and the same could done in the personal computer.

The problem of the West in implementing strategic projects

I read that Mr. Alexei Miller, the Managing Director of Gazprom, declared that “the South Stream pipeline will be operational by December 2015”. Whether this actually happens or not is debatable. However, the important observation which needs to be made relates to how various countries decide and implement projects of strategic importance. When it comes to countries like Russia and China, economics play an important role, but strategic investments are being pursued even if the economics are uncertain or they are not economically viable. Strategy always wins over economics.

In the West, whether a project is recognized as strategic or not, it has to be implemented by the private sector, which needs to be convinced that the project is economically and financially viable. Strategic considerations are not reflected in the balance sheet of the company. Hence, we have important projects which are stuck in the planning stage and may never be implemented. This is a major problem. Public sector participation is essential. Private Public Partnerships (PPP) is one option.

Apple Inc, as a model for western economies

A few days ago (August 24, 2011), Steve Jobs announced his resignation from the position of Apple's Chief Executive. Steve is probably the most legendary business leader of our times often compared to Thomas Edison. He has introduced products which created new industries and literally changed our lives. Most of people associate him with his recent successes (iPad and iPhone), but some of us who have used all his products remember him too for creating the personal computer industry with Apple II and the Macintosh in the early 1980s, setting the stage for future Apple products by developing creative software (through NeXT, Inc.), integrating music-computer-phone with iTunes and revolutionizing film production with Pixar Animation Studios.

In this write-up though, I want to focus on Apple, the organization, rather than Steve Jobs, the business genius. As western economies are struggling to deal with huge deficits and high unemployment, we can learn a lot from Apple as a model for economic revitalization. Let's see some of Apple's characteristics.

Apple has achieved sustainable and often explosive growth through innovation, which propelled it and kept it far ahead of its competitors. In a globalized and highly interconnected world, this is the only way western economies can stay ahead of the emerging economies, which recently have become strong competitors.

Another Apple trademark is its proprietary software/hardware and secrecy culture. While this may sound selfish and undemocratic, close control of Intellectual Property (IP) is an essential element for success. Look what is happening in renewable energy technologies. Venture capital in Silicon Valley is having second thoughts about investing in new technologies after witnessing their inventions fly so quickly to China and other countries.

However, Apple leaders are pragmatists too. The company realizes that you can not compete with low-cost manufacturing countries. So, if you look at the components of the iPhone, you see that Apple’s contribution is the product design, proprietary software, integration of the innovations of others and marketing. Other components are manufactured through an extensive network of suppliers; examples: the screen is mostly from Japan, the flash memory from South Korea, and the final product is assembled in China. So, one could protect certain strategic elements of the product, but needs to accept that we live in a globalized world and we need to have a global strategy.

Above all though, Apple has empowered the individual and put in his/her hands an amazing amount of power, access to information, ability to communicate with others easily and inexpensively, ability to establish and operate businesses with minimal costs, and in general encourage the individual to innovate. Countries need to unleash the creativity of their citizens, too. Empowered individuals will revitalize the lagging economies and create a sustainable growth with opportunities for all.

Finally, somebody with ...the courage to propose carbon tax!

"The European Commission is planning to propose an EU-wide carbon tax the first half of 2011"! This is a brave initiative which makes a lot of sense. Carbon taxes are easier to implement and monitor, and the only obstacle has been the bias against taxes in general and in favor of cap-and-trade, as if cap-and-trade is not eventually a carbon tax!


Finally, many industry experts and policy-makers are admitting that cap-and-trade has serious issues. The most recent confirmation comes from an analysis carried out by Resources for the Future (RFF), an environmental think tank; the findings of their analysis are documented in the report "Banking on Allowances: EPA's mixed record in managing emissions market transitions" which was published a few weeks ago. Key conclusions include:

• Regulatory changes (e.g., administrative rules, court decisions and new emission rules) have wiped out $3 billion in the value of utility-held emission allowances.
• Cap-and-trade programs have suffered from declining credibility and market support.

Not included in this report is the fact that potential efficiencies of cap-and-trade programs benefit only the emission traders, not the energy consumer.


So, my hope is that Europe follows through and adopts the carbon tax option. Others may follow.