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July 22, 2004 Meeting Minutes

 

 

Background

 

A meeting to discuss the subject of strengthening Real Property Rights in Latin America and the Caribbean was held on July 22 of this year, in Washington, D.C. It was attended by 27 high-level and very experienced professionals in the area of Real Property Rights who participated in representation of a wide variety of public and private institutions as well as government and international organizations, along with a number of independent consultants. Another eight similarly qualified individuals who were invited but unable to attend expressed their strong interest in follow-up with the Alliance. The event was facilitated by Rafael E. Diez, international consultant.

 

The meeting was organized by USAID’s Latin American and Caribbean Division and Chemonics International, Inc., as part of the work carried out by the U.S. Government to assist the countries of Latin America and the Caribbean to strengthen Real Property Rights, in compliance with the agreement signed by the Presidents of the various countries of the Region during the Presidential Summit held in Monterrey, Mexico in January of this year. During that Summit, the Presidents agreed that, in order to achieve sustainable socioeconomic development and reduce poverty in Latin America and the Caribbean, all aspects of Real Property Rights would need to be strengthened, particularly the use of real property as collateral to secure credit.

 

The Presidential Summit yielded an agreement, reflected in the Declaration of Nuevo León, that stipulates that efforts aimed at strengthening Real Property Rights must seek to ensure that all laws, regulations and related processes are enforceable, efficient, transparent, comprehensive and equitable so that they will benefit all individuals involved without discrimination. The Agreement also provides that concrete strengthening actions are to be carried out and that the results obtained are to be reported at the Presidential Summit scheduled to take place in Argentina in November 2005.

 

The meeting was termed Alliance for Accountability on Property Rights in English and Alianza para Contribuir al Fortalecimiento de los Derechos de Propiedad in Spanish. The Property Rights discussed during the meeting referred to rights involving real property.

 

Objectives of the Meeting

 

As indicated in the Letter of Invitation, the following objectives were established for the meeting:

 

a.    Discuss ideas for establishing standards, indicators, and benchmarks corresponding to the five  principles agreed upon by Presidents with a view toward strengthening the laws, regulations and legal instruments governing Real Property Rights, and, in addition, contribute to the development of a tool that will assist countries in monitoring the achievements recorded as a result of strengthening activities;

b.    In collaboration with the participants, exchange ideas for carrying out activities and providing technical assistance aimed at strengthening Real Property Rights;

c.    Exchange ideas and information for identifying and carrying out activities by leveraging the investments and intellectual resources available in initiatives currently underway.

 

Format of the Meeting

 

Discussions during the meeting were organized around the following format:

 

1.      Overview of the concept of the Alliance, with appropriate participant feedback.

2.      Review and discussion of the draft Blueprint for Strengthening Property Rights, with appropriate participant feedback.

3.      Overview of future Alliance plans as part of the topic “Toward Argentina 2005”, with appropriate participant feedback.

 

An explanation of each of the above elements is provided below:

 

Overview of the concept of the Alliance, with appropriate participant feedback

 

Jolyne Sanjak and the consultants involved in organizing the event explained that the Alliance is a concept originally developed by USAID/LAC as a means to initiate and maintain an ongoing discussion on Real Property Rights with a view toward assisting countries in Latin America and the Caribbean to generate ideas and take concrete steps – complementary to those already underway under existing projects – that will enable them to comply with the commitment undertaken by their Presidents with regard to Real Property Rights at the Special Presidential Summit held in Monterrey, Mexico, in January 2004.

 

They also explained that the meeting represented the commencement of the work of the Alliance and that for the time being the Alliance was simply a group of highly-qualified and experienced individuals with a passion for the issue of Real Property Rights. These individuals were invited to discuss issues related to the topic, provide comments, suggest ideas, disseminate information on the need for reform, and exert influence in their countries aimed at ensuring that appropriate individuals and institutions will take steps and carry out activities aimed at strengthening Real Property Rights. In this regard, the participants were reminded that the Special Presidential Summit held in Monterrey concluded that such strengthening was necessary to contribute to sustainable socioeconomic development and the reduction of poverty in the countries of Latin America and the Caribbean.

 

The organizers expressed their hope that, with the support of the participants, the Alliance would evolve and grow to the point of becoming a major catalyst with the potential to help motivate debate and carry out activities in the countries of Latin America and the Caribbean to better enable the latter to report concrete results from their efforts to strengthen Real Property Rights at the Presidential Summit to be held in November 2005 in Argentina.

 

The concept of the Alliance as thus conceived was understood and accepted by most participants, although some expressed doubt as to its future, inasmuch as it was a fluid concept, lacking in organizational and physical structure and with members who participated on a voluntary basis. The organizers reminded the participants that the Alliance was a nascent initiative, that they expected it to grow and consolidate, and that its form and structure will eventually evolve to appropriate levels over time. Some participants suggested that the Alliance be given a legal institutional existence and that efforts be made for governments of the Region to accept it and provide financing for its activities.

 

In any case, it was clearly established that the Alliance was conceived for the purpose of generating discussion, taking action, identifying possible sources of financing for its initiatives, and serving as a catalyst to enable the countries of Latin America and the Caribbean to initiate further ongoing efforts aimed at strengthening Real Property Rights and report on their achievements in this regard at the upcoming Presidential Summit to be held in Argentina in November 2005.

 

Review and discussion of the draft Blueprint for Strengthening Property Rights, with appropriate participant feedback

 

The draft Blueprint for Strengthening Property Rights was developed by the Alliance’s two independent consultants, Kevin Barthel and Nuria de la Peña, under the supervision of Jolyne Sanjak, as a proposed management tool to help the governments of the countries of Latin America and the Caribbean to (a) determine the degree of development of Real Property Rights in the various countries of the Region; (b) follow up on the progress achieved as a result of this strengthening process; and (c) follow up on the impact generated. At the time of the meeting, the matrix was available in draft form only.

 

The draft Blueprint for Strengthening Real Property Rights, as presented, is a matrix whose vertical axis contains the five Principles that, as determined at the Special Presidential Summit held in Monterrey, should be taken into account in strengthening the laws, regulations and other instruments related to Real Property Rights. These principles are as follows: Enforceability (of laws, regulations, etc.), Efficiency, Transparency, Comprehensiveness and Equity. The horizontal axis of the matrix consists of five columns referring to the Stages of the Process involved in Real Property Rights: Cadastre; Tenancy; Registry; Use, Possession and Disposition of Real Property; and Use of Real Property as collateral for credit transactions. At the point where each of the horizontal levels (Principles) intersects with each of the columns (Steps of the Process) can be found the major standards, indicators and benchmarks that the Systems of Real Property Rights of the various countries need to have in place in order to be considered appropriate. The idea is that, the closer the various elements of those systems are to the major standards, indicators and benchmarks listed in the matrix, the stronger will be the Real Property Rights of all individuals and institutions.

 

Kevin Barthel indicated that a sound system of Real Property Rights should rest on four pillars: Cadastre, Tenancy, Registry, and Use of Real Property in transactions such as collateral for credit. In this regard, he stated that the matrix went further than what to date has been the norm in titling and registration projects being implemented in the countries either with their own funds or multilateral funding, as such projects were limited to the production and delivery of titles to real property and did not go far enough to create the enabling conditions that will allow these titles of ownership to be used as collateral to secure loans. Referring to the Steps of the Process of Real Property Rights, the consultants reiterated their view that systems of Real Property Rights should cover everything from the Cadastre[1] up to the stage in which the real property can be used as collateral to secure a loan. In this regard, Jolyne Sanjak and the consultants clarified that they strongly favor a holistic approach in which all processes are interrelated.

 

In order to illustrate its content and to provide a better understanding of the proposed tool, the consultants demonstrated the matrix using only one row as an example. Kevin Barthel explained the important standards, indicators and benchmarks of the Stages of the Process of Real Property Rights involving Cadastre, Tenancy and Registry for the first Principle (Enforceability). Nuria de la Peña provided a similar explanation for the columns corresponding to Use, Possession and Disposition of Real Property and Use of Real Property as Collateral.

 

Although the time allowed for the presentations was limited, it was sufficient to enable the participants to obtain an understanding of the intent of the matrix and to appreciate its potential as a tool for determining the degree of development of each country in the area of Real Property Rights, following up on the results achieved as a result of strengthening efforts, and following up on the impacts generated. Participants voiced both positive observations as well as concerns with regard to specific characteristics of the matrix, but were in agreement with regard to the need to launch a process of legal reform in most countries with a view toward improving laws, regulations and other legal instruments so that real property can be used as collateral to secure loans.

 

One participant stated quite clearly the issue of legal reform, referring to: “… the need to create a legal structure that will generate legal security not only for property but also for the market.” Some participants, however, saw no need for legal reforms in some of the countries of the Region but rather favored steps to improve credit mechanisms and credit availability and enhance the functioning of the Judicial Branch. Others suggested that, before laws can be reformed, it will be necessary to seek a political consensus, and accordingly the matrix should include a longitudinal variable focusing on that particular issue, or at least identify the steps needed to be taken to reach a consensus in that regard. The consultant on legal issues clarified that such steps would necessarily have to be based on economic analyses.

 

The participants also mentioned the possibility that the matrix might not be appropriate for the situation prevailing in some countries in which, by law, property is nonattachable, as is the case with Bolivia’s small rural landowners and Native Communal Lands (Tierras Comunitarias de Origen) and Peru’s Campesino Communities and Native Communities. Jolyne Sanjak indicated that the intent of the Blueprint was to include in the plan all legal elements and mechanisms necessary to enable all persons, both natural and corporate, to benefit from good government regarding various different rights  related to real property, including the option to use property as collateral to secure credit. In other words, the matrix will contemplate various types of property rights and will illustrate what is necessary for the applicable processes to be effective. That is to say that in certain cases, there may exist legal restrictions and, consequently, there are a few components of the matrix that would not be applicable. However, other components of the matrix would still be considered important and relevant. The idea is that all types of real property can fit conceptually inside the framework of the Blueprint, including cases that were questioned by the participants.

 

Some participants questioned the complexity of the matrix and accordingly the fact that it will be of little use to high-level decision-makers in the area of Real Property Rights in the various countries of the Region. On a parallel note, others reported that they were satisfied with the degree of complexity of the matrix and wanted an even more comprehensive diagnostic tool.  Two participants suggested the possibility of using the United Nations Human Development Index (HDI), while others suggested simplifying the matrix and making the methodology more flexible so as to fit the situation prevailing in individual countries. In addition, there were suggestions to omit the quantitative indicators and work instead with the baseline and progress indicators. Other participants felt that, in order to be useful, the matrix will need to include political, cultural and social variables, including citizenship and elements required to reach a consensus. One participant suggested that the matrix be complemented by other, simpler instruments focusing on other levels of users, such as executive decision-makers.

 

Some participants provided suggestions to consolidate some of the stages of the process with others, rather than depicting them separately, each it is own box, while others expressed doubt as to whether certain stages could be effectively integrated with others – for example, Cadastre with Registry – as this would create requirements involving standardization of procedures, software, etc. One participant suggested that the sequence of some of the columns be changed. Others suggested the inclusion of variables that would make it possible to include all beneficiaries as opposed to only the privileged few. The consultants indicated their agreement with this latter suggestion and affirmed that this issue falls under the Principle of Comprehensiveness in the matrix.

 

In short, the discussion of the Blueprint led to the conclusion that the matrix can be useful for: determining the degree of development existing in a given country with respect to Real Property Rights, following up on results achieved, and following up on the impacts generated as a result of strengthening efforts. In order for it to be of use to the various potential users, however, the Blueprint needs to be revised to become simpler and at the same time more meaningful within a flexible methodology. It will require the adoption of more meaningful indicators as well. In this regard, an agreement was reached to prepare an Executive Summary focusing on decision-makers, a new, improved version of the Blueprint for practical application, and a diagnostic manual to serve as a user guide for the Blueprint which will elaborate on the information provided in the matrix and emphasize in detail the changes necessary to achieve the most effective results in a country. In addition, there is a clear need to field-test all of the tools of the Blueprint as soon as possible.

 

The discussion of the legal aspects of the matrix led to the conclusion that legal reform is necessary in most countries of the Region, but that such reform must be well thought out and avoid reforming anything that is currently functioning properly. An additional conclusion was that any legal reform must clearly distinguish between the need to change laws and the need to take steps to assure the proper functioning of the Judicial Branch. In response to an opinion that it would be appropriate to have a “mortgage model” to serve as a parameter in the various countries, the legal consultant indicated that such a “mortgage model” would not be appropriate; rather, steps should be taken to ensure that all necessary legal functions are operating properly in conjunction with the best standards available.

 

One issue pending further discussion is whether the matrix should include legal elements to support property rights for tradeable real property only or whether its scope should be expanded to support as well property rights for formalized nontradeable real property, as in the case with groups of indigenous people in some countries. Jolyne Sanjak and the consultants clarified their intent to develop the tools to reflect all types of extant property rights, with some elements universally applicable while others will not be. A willingness to continue to get suggestions on this issue were welcomed.

 

Overview of the future plans of the Alliance as part of the topic “Toward Argentina 2005,” with appropriate participant feedback

 

Jolyne Sanjak conducted a presentation in which she indicated that the discussion of the topic of Property Rights had already been incorporated into action plans from the Presidential Summits held in Santiago de Chile (1998), Canada (2001), and Mexico (2004)  In her analysis, she concluded that in order to achieve sustainable development and a reduction of poverty, as well as to promote trade, investment and financing in the countries of Latin America and the Caribbean, it will be necessary to build sound systems of Real Property Rights in all of their various stages, from Cadastre to Use of Real Property to Secure Credit Transactions.

 

Ms. Sanjak explained that the Alliance was initially conceptualized precisely on that basis, i.e., to serve as a catalyst to launch a discussion and undertake steps to strengthen systems of Property Rights in the countries of Latin America and the Caribbean. In this regard, some participants agreed that the Alliance could facilitate appropriate policy dialogue. Another suggestion was that we might use the OAS to help accomplish Alliance objectives. Others stated that the Inter-American Convention on International Private Law (CIDIP) should be approached with a view toward (a) including the subject of Real Property Rights in its next meeting; (b) promoting a “mortgage model” and seeking consensus at the regional level; and (3) increasing investments and participation by banks.

 

The presentation served to summarize the discussions that had taken place in the meeting up to that point, including comments provided by USAID’s Assistant Administrator for Latin America and the Caribbean, Ms. Karen Harbert, and provided an opportunity to discuss the future of the Alliance and the activities to be carried out under its sponsorship or with its assistance.

 

With a view toward the future, Ms. Sanjak outlined possible activities that the Alliance might support or carry out in conjunction with other activities or projects being implemented by governments or institutions in the field of Real Property Rights in the various countries. Although the outline presented was not complete and was intended for illustrative purpose only, it provided a good idea of what the countries of Latin America and the Caribbean might do to record concrete results in the area of Real Property Rights, for presentation at the Presidential Summit in Argentina in November of 2005.

 

Conclusions

 

The meeting met with the expected degree of success, in that invitee participation in discussions was excellent and speaker presentations generated responses that may help modify and improve the material presented.

 

There were differences of opinion among participants regarding the content and structure of the draft Blueprint for Strengthening Property Rights, above all as regards the Stages of the Process of Real Property Rights. Participants were unanimous, however, with regard to the need to carry out the legal reforms necessary to strengthen areas involving Real Property Rights until such time as individuals can utilize property as collateral to secure credit.

 

The concept of the Alliance was clearly understood and accepted with enthusiasm and high expectations; in order to ensure its permanence as a viable medium, however, it needs to be consolidated and complemented by concrete activities that will enable it to grow and achieve its objectives.

 

It was also agreed that the Blueprint will be improved with a view toward making it a tool with varying levels of complexity to serve the differing needs of potential users including the various countries of the Region, which logically have differing characteristics and are currently at different levels of development with respect to their systems of Real Property Rights.

 

It was agreed that such improvement of the Blueprint would, at this stage, involve preparing (a) an executive summary containing both a graphic and written depiction of the level of development of Real Property Rights and the impacts achieved as a result of efforts to strengthen those rights in specific countries; (b) a new, improved version of the Blueprint; and (c) a diagnostic manual to serve as a users guide for the Blueprint elaboration in members countries.

 

Improvement of the draft Blueprint will be the responsibility of contract consultants who will take into account the comments made at the meeting and that will continue to be received from the participants of the Alliance on an ongoing basis. The new version will be field-tested in selected countries based on existing real, technical and legal information. In the process, a series of consensuses might be reached with authorities and users. The work of field-testing the Blueprint will in addition facilitate the identification of concrete activities that the countries involved will need to undertake in order to strengthen their systems of Real Property Rights.

 

The identification of concrete activities will lead to the preparation of proposals that could be implemented upon the identification of sources of financing, a task in which the Alliance might provide support. The results achieved as a result of the implementation of concrete activities will be presented at the Presidential Summit to be held in Argentina in November 2005.

 



[1] In some countries known as saneamiento físico y legal, or physical and legal regularization of real property.

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