Hong Kong's Policy Freeze-Up

Hong Kong's political system is becoming increasingly dysfunctional, with one of Beijing's most loyal acolytes criticizing the performance of a key component, the Executive Council (Exco), supposedly the territory's top policy-making body.

The critic is Tsang Yok-sing, currently President the of the Legislative Council but previously head of the Democratic Alliance for the Betterment of Hong Kong (DAB), the main pro-Beijing political party. Tsang is the polite and smiling face of Beijing's United Front but has loyally hewed to the party's every twist and turn since the Cultural Revolution.

Tsang accurately if surprisingly pointed to the fact that in colonial times the Executive Council had a significant role in policy-making and if the governor overrode it he was required to give his reasons in writing.

Now Exco has become a mix of official members (ministers) plus a motley collection of individuals, some chosen for no good reason other than being friends of the Chief Executive. It gives little sense of making policy or believing in collective responsibility. Policies are actually made by senior bureaucrats with Exco appearing as little more than a talking shop.

The body's irrelevance was underscored by the government itself last week when a regular meeting was cancelled on the grounds that there was nothing to discuss -- this at a time when Hong Kong faces important decisions on environment, land, housing and other issues, not to mention political reform due before legislative elections in 2016 and chief executive election in 2017.

The real reason for the failure to hold the meeting was yet another embarrassment caused by sleazy relationships between power holders, bureaucrat or politician, and businessmen. The council saw the reluctant resignation of one of its members, Barry Cheung following the failure of the Hong Kong Mercantile Exchange, a commodity trading platform of which he was founder and chairman, and arrests of some persons connected to it. Only a few months ago another Exco member was suspended pending an investigation by the Independent Commission Against Corruption (ICAC).

Cheung has for some time been one of several business figures who are forever being appointed to government panels and posts. For example he was recently reappointed as head of the Urban Renewal Authority, a hugely powerful post at the interface of public and private sectors and a key player in the property development business. He was also a member of various advisory bodies including Commission on Strategic Development and the Long Term Housing Strategy Commission. Cheung was also chief executive C.Y. Leung's campaign manager in his successful bid for power last year.

Cheung had a reputation for flamboyance more than business acumen. One recent business role was his chairmanship of Rusal, the troubled Hong Kong-listed giant Russian aluminum company that is currently the subject of a battle for control between two oligarchs, Viktor Vekselberg and Oleg Deripaska. Cheung remained on the Rusal board until last week. Rusal did not seem a very savory company for a figure entrusted with senior public duties in Hong Kong but Cheung clearly had friends in the right places.

Who those friends were is not so clear. One newspaper report says he was not so much a friend of C.Y. Leung but of his number two, Carrie Lam, now Chief Secretary and formerly Secretary for Development. He must clearly have had influence to get a commodity exchange license at all, given his limited experience and resources. The Mercantile Exchange was the only license granted since the government-controlled Hong Kong Exchanges and Clearing acquired a stock trading monopoly in 1986. The only other licensed commodity exchange was the Chinese Gold and Silver Exchange which has been in existence since 1910.

But Hong Kong's civil service is increasingly associated with sleaze and insider relationships. Former Chief Executive Donald Tsang, a lifelong bureaucrat, left office under a thunderstorm of news about favors received from businessmen. His deputy and would-be successor was found to have created a massive illegal structure at his home -- for which his wife was given the blame.

The former head of the ICAC is now himself under investigation for lavish giving of gifts to mainland officials. It does not help that the ICAC head is a top bureaucrat and thus very much part of the system rather than an outsider of independent mind and interests.

There is a widespread impression that top bureaucrats are above the laws they are supposed to enforce and that they engage in mutual self-protection. In a recent case, where more than 30 people died in a ferry sinking, the captains of the vessels involved have been charged but the officials who, whether out of corruption or laziness, were responsible for the vessels not being properly surveyed and equipped have been exempted from criminal action. This makes a mockery of Hong Kong's claims to fair administration of justice.

The connection between this sense of impunity in the bureaucracy and the dysfunction of Exco is not incidental. It stems in large measure from a lack of political leadership. Hong Kong's first chief executive after the handover, Tung Chee-hwa was a well-meaning person from a famous business family but lacked leadership and governance skills. Donald Tsang, a lifelong civil servant, typified the weaknesses as much as abilities of the top bureaucrats. C.Y. Leung has scant experience either in government or politics and though he started with a fund of public goodwill has proved incapable so far of driving change.

Exco meanwhile is evidently lacking in coherence, is probably too big to be useful and increasingly looks like a rubber stamp even though a few members have reputations for independent thinking.

Since the 1997 handover there has been increasing rhetorical emphasis on "executive-led" government, suggesting that this is purposeful and effective. But the reality is that the executive is weak, policy departments often operate at cross-purposes as well as going their own ways, and Exco itself is barely visible.

There is scant link between Exco and Legco so that even though the pro-government parties have a majority in Legco they often show little respect for the decisions of either Exco or the bureaucrats. At bottom is lack of sense of legitimacy. The chief executive is elected by a tiny franchise. That need not be fatal in itself, as the last colonial governor found by engaging the public in some seemingly radical policies, but it does require Leung to have a better grasp of what he wants and how to carry people along with him.

The Legco has more legitimacy despite its warped franchise but its role is limited to lawmaking and investigations and it has been bogged down by procedural issues, filibustering by radicals and lack of expertise on the part of legislators. Exco has almost no legitimacy as its non-official members are random choices of the chief executive.

The net result of all this is that decisions are not made at all by bureaucrats who dislike controversy of any sort, or are made for the wrong reasons -- usually connected to insider interests or a desire to, as they think, please Beijing -- which in most cases cares little as it has far bigger issues to worry about than decisions only affecting Hong Kong.

As the territory moves to develop its electoral process to the full democratization promised by 2017 it will have to find an improved way of making Exco a coherent part of the government and improve the linkages between executive and legislature. Only then will the bureaucracy become a real servant of political leadership and the public rather than a self-satisfied and self-protecting priestly caste.