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"Power Sharing is Meaningless Without Wealth Sharing:" Peace Conversations with the RCSS

In August 2020, I had the privilege of speaking with members of the Restoration Council of Shan State (RCSS), one of the biggest ethnic armed organisations in peace talks with the Myanmar government.





Upon the invitation of the Centre for Peace and Conflict Studies, I had the privilege of sharing my experience in helping draft and negotiate the Annex on Revenue Generation and Wealth Sharing (Wealth Sharing Annex, an integral component of the Comprehensive Agreement on the Bangsamoro or CAB) with emerging young leaders and members of the Restoration Council of Shan State (RCSS) in a series of online seminars. The RCSS is one of the biggest ethnic armed organisations in peace talks with the Myanmar government.


One key reflection that emerged in our seminars was the crucial role of effective fiscal arrangements in any political structure. The grant of extensive powers to a new political entity would be rendered illusory if such powers are not supported by sufficient funding. In designing power sharing agreements, there should be a keen awareness of the close correspondence between powers granted and funding support. While the actual computation for this may have to wait for the implementation stage, it is important for the language of the agreement to clearly reflect the importance of sufficient funding for the success of the new political entity, as reflected in the language of the Wealth Sharing Annex pertaining to the (then) future Bangsmoro Government, as follows:


"V. Fund Transfers from Government

A. The Central Government shall provide a block grant to the Bangsamoro. This block grant shall be based on a formula, which shall be provided in the Bangsamoro Basic Law. This formula will take into account the cost of government functions to be devolved to the Bangsamoro and will ensure that the block grant will be no less than the last budget received by the ARMM immediately before the establishment of the Bangsamoro Transition Authority. The Basic Law shall also provide a system of automatic appropriation for and regular release of the block grant. The formula shall be subject to review by the Central Government and the Bangsamoro Government after ten (10) years, on the basis of need and actual revenue generated."


The Moro Islamic Liberation Front (MILF) and the Philippine Government agreed not only on the importance of sufficient funding from Central Government, but also jointly acknowledged the new political entity's power to create its own sources of revenue, as well as its right to a just share in revenues from natural resources. Indeed, an autonomous regional government's power to levy taxes, fees, and charges and its right to a share in revenues from natural resources are already granted by Article X of the Constitution. This acknowledgment is in the April 2012 Decision Points, the Framework Agreement on the Bangsamoro, and the Wealth Sharing Annex. The CAB envisions the Bangsamoro regional government to possess the power and responsibility to deliver basic services to its constituents and to administer matters that are within its competence and thus, the Wealth Sharing Annex provides mechanisms to ensure a stable and predictable cash flow from the block grant (automatically appropriated and regularly released), share in national taxation, share in income from natural resources, and revenue generation (taxes, fees, and charges). The Bangsamoro Government is also not precluded from receiving loans, grants, and donations.


The actual process of designing effective and equitable wealth sharing arrangements, of course, goes beyond the declaration of principles. Designing just such a fiscal scheme entailed months of research on our part in the Technical Working Group (TWG) on Wealth Sharing (composed of representatives from the MILF and the government). We needed to determine what was already permitted under the existing Autonomous Region in Muslim Mindanao (ARMM), how much revenue the current system was generating, how efficient the current wealth sharing mechanisms were, and what areas needed the most improvement. The scope of the research encompassed existing laws and practices on the exploration, development, and utilisation of natural resources, taxation, processes on the preparation of the government's yearly budget, and the national economic and development plans and forecasts, among others. In preparing the draft Wealth Sharing Annex, we aimed to design a revenue generation and wealth sharing scheme that will allow the future Bangsamoro autonomous region to be able to fully exercise it powers, as provided in the CAB, which is in harmony with the fiscal arrangements of the rest of the country. Because the Bangsamoro autonomous region would continue to be a part of the Philippines, its revenue generation and wealth sharing mechanisms had to be in harmony with the fiscal arrangements of the rest of the country. On the other hand, the revenue generation and wealth sharing mechanisms must make a real difference and must provide a marked improvement over the arrangements under the ARMM. For us in government, designing the fiscal scheme also entailed successive consultations with the Philippine government’s economic cluster to confirm our research, as well as to seek guidance on the feasibility of the mechanisms we were designing.


The TWG was also keenly aware of the rampant poverty in Mindanao, which is both a cause and a legacy of conflict. The TWG included mechanisms that will allow the future Bangsamoro autonomous region to bridge the economic gap that has kept its people in poverty for many decades, such as the provision of a Special Development Fund from the central government to the Bangsamoro for rehabilitation and development purposes. Finally, fiscal autonomy must be supported by fiscal responsibility, and the Wealth Sharing Annex contains provisions on the creation of specific institutions for fiscal administration, such as the Bangsamoro auditing body and the intergovernmental fiscal policy board.

In closing the seminars, I shared with the RCSS that a lot of peace process work is the unseen labor of legal due diligence and complete staff work. In my experience, doing research on the Wealth Sharing Annex took up a lot of weekends and weeknights - on top of actual time spent at the negotiation table. This sort of preparation is vital in peace negotiations, and the success of formal talks often hinge upon the soundness of the research. I am fortunate to have been part of this work.


You can access my presentation here.

2020-10-13A WS Annex Presentation
.pdf
Download PDF • 663KB

A good resource on fiscal arrangements for sub-central governments is Fiscal Federalism: A Comparative Introduction by George Anderson

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