Y2K: World Bank Y2K Survey (fwd)

[Roberto Verzola <rverzola@phil.gn.apc.org>]

From: Richard.Stapells@bmo.com
To: INTERNET-BOBOLSEN * <bobolsen@tao.ca>
Subject: The Year 2000 Bug Is a Menace, No Doubt
Date: Thu, 28 Jan 1999 10:27:41 -0600

The Year 2000 Bug Is a Menace, No Doubt About It

Jan 27, 1999 - International Herald Tribune
By: James P. Bond, coordinator of year 2000
    operational initiatives at the World Bank


It is a startling fact that by next Jan. 1 most developing countries
will not have fixed their year 2000 computer problems. These threaten
them, along with neighbors and trading partners, with damaging
consequences.

A World Bank survey of 139 developing countries found that only 35
percent have a national plan to make systems Y2K-compliant. Last
month, officials from 120 countries gathered at the United Nations to
discuss the problem and agreed that their governments would assign it
the "highest priority."

Having a national plan is only the first step. Carrying out such plans
is costly. Wealthy countries and large companies have the funds and
skilled people to immunize computers and operating software from the
millennium bug. Many developing countries do not.

Or they see the threat as vague and distant. Yet many developing
countries have regional sharing arrangements under which, for example,
they rely on a neighbor's electrical supply which uses computer
microchips and software that may not be Y2K-compliant.

Middle Eastern countries depend on computer-managed desalinization
plants for water. Oil drilling rigs around the world use embedded chip
systems, some of them buried on the ocean floor. Food and fuel
distribution networks, health care, education and road, air and
maritime links could be severely affected.

Emerging markets already weakened by capital flight could see their
recovery delayed as investors steer clear of companies which are not
Y2K-compliant. A worldwide interbank working group is conducting
assessments of Y2K progress in six key sectors, with a view to
guidance in making investment decisions. Many mutual funds are already
avoiding companies that do not have millennium bug action under way.

It is in emerging markets that the capacity to fix the bug is weakest.
One private-sector study found that companies in the worst affected
East Asian crisis countries have cut computer spending by more than 20
percent.

At the same time, these and other developing countries risk being
further undermined by a brain drain as high salaries and relaxed visa
restrictions in wealthier countries siphon off qualified computer
experts just when their skills are most needed at home.

The lack of interest in this issue is surprising. The millennium bug,
living mysteriously and unseen within the microchips and software of
the world's computer systems, could trigger a global catastrophe. The
problem is technical. Most of us are reluctant to acknowledge how much
we depend on technology, so political leaders have only recently been
persuaded to take action.

Even if we can succeed in overcoming this resistance to accepting the
problem as serious, the challenge still looms large. It is already too
late for most developing countries to carry out enough Y2K
preparations to avoid disruption.

Instead they should urgently devise contingency plans, identifying
critical sectors and systems water, power, food, health care,
telecommunications, transport, finance and trading and checking the
bugs in them, while preparing backup plans should these systems fail
on Jan. 1.

Estimates of what it will cost to fix the millennium bug worldwide
vary greatly, but we can get some idea by analyzing what major players
have earmarked for the task. Chase Manhattan Corp. is spending $363
million, and DuPont Co. $400 million, while the U.S. Education
Department's projected Y2K costs are $45.5 million

The World Bank, the OECD and a handful of donor countries such as
Britain, the United States, Canada and Italy, together with other
multilateral development banks and international private-sector
organizations, have undertaken an effort to raise Y2K awareness and
mobilize technical assistance and funds to help developing countries.

These efforts are extremely modest, given the enormity of the task and
the global impact of a failure to act. It is now obvious that next
Jan. 1 will unleash a chain of problems that will touch everyone on
the planet, with the most damaging effects hitting the least prepared,
namely, governments and businesses providing services to the world's
poor.

Efforts by the World Bank, the United Nations and others can support
some Y2K fixing, but their most important effect should be a wake-up
call to national and local governments, companies and international
organizations to get involved in preemptive action now.

Developing countries must devise contingency plans for those vital
systems that are not yet Y2K-immune.

The writer, coordinator of year 2000 operational initiatives at the
World Bank, contributed this comment to the International Herald
Tribune.