Businesses in Eastern Ukraine Threatened by Instability

(Photo: Kyiv Post)

(Photo: Kyiv Post)

When protesters first took to the streets in Ukraine’s largest cities in 2013, economic concerns were at the top of the agenda. As the geopolitical situation in eastern Ukraine has heated up, economic prospects in the contested regions of the country have only gotten worse. Yet average Ukrainians are still working for a more prosperous and democratic future.

Since the Maidan protests, the business climate in the Donbass, the easternmost, coal-mining region of the country, has taken a turn for the worse. Amid the turmoil, local businesses – in particular small and medium-sized firms – have suffered.  Many have been shaken down for so-called “donations,” and in some cases have been looted and ransacked.

A recent article in the local press has documented fines, bribery, and other abuses committed against local businesses by police departments and government officials. Many people have even left the region, heading either for Western Ukraine or even Russia. The owners of small businesses have left their homes and their enterprises behind. They are unsure when they can return, or whether they will find their businesses in the same condition.

As one CIPE partner in the Donbass noted, “Public sector bribes have grown by several times what they were prior to the strife, and not one Grivna [the Ukrainian currency] is going to the budget.” He confirmed that many business owners and heads of banks in the region are being forced to leave their businesses. “Because of roadblocks and military activities, there are just no opportunities to run a business,” he laments.

The pro-European, Kiev-based protests that led to the ouster of former President Viktor Yanukovich made Ukraine a hot topic in international news. Yet in many ways, the situation that set international media ablaze in early February is really a much older story.

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Wheelbarrows Explain Rent-Seeking in Sudan

al-sadeq-wheelbarrow

When government regulations establish a privileged position for certain companies or individuals it often creates opportunities for rent-seeking — an abstract economic concept perfectly illustrated by the plight of Khartoum’s 20,000 wheelbarrow users.

Typically, rent-seeking involves firms like regulated power monopolies leveraging their privileged position in a marketplace to extract excess profits by suppressing competition. Rent-seeking doesn’t generate wealth, it just redistributes it to those with more power and influence. The company benefits, and often the government officials involved benefit, but the rest of society loses out.

The regulations that enable rent-seeking are usually deeply entrenched and difficult to dismantle – for no reason other than the fact that someone, somewhere is benefiting from them.

The BBC recently examined a peculiar, yet classic, example of how such nonsensical regulations hamper entrepreneurship and economic growth: wheelbarrow fees in Sudan. According to the report, local Sudanese in Khartoum are not allowed to own their own wheelbarrows. Instead, they are forced to rent them from contractors who have made a deal with the local government.

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The Fragile States Index 2013: A Snapshot of Global Stability

fragile-states

The year 2013 proved to be politically dynamic, with many countries seeing political strife or even regime change — among other crises, Ukrainians took the streets to demand more political and economic freedoms and closer ties with the West and the civil war in Syria raged on. The Fragile States Index (FSI) attempts to measure the factors driving such upheaval on a country-by-country basis.

Created by The Fund for Peace and published by Foreign Policy, for ten years the FSI has tried to put into perspective the relative stability of nations and rank them accordingly. The index develops an aggregate total score for each country by taking in a host of different social, political, economic factors: demographic pressure, the quantity of refugees and internally displaced persons, group grievances, human flight and brain drain, the unevenness of economic development, poverty and economic decline, state legitimacy, public services, human rights and the rule of law, the security apparatus, factionalized elites, and external intervention.

According the FSI, the lower the score, the more stable the country. This year’s index is lead by Finland in 178th place, receiving the lowest total score of 18.7, with relative newcomer South Sudan ranking 1st with an aggregate 112.9 (the United States is close to the top, occupying 159th place with a score of 35.4).

One conclusion established by the FSI is that states rarely fundamentally change from year to year. For instance, 9 out of 10 of 2013’s most fragile states still occupy the lowest spots. That being said, the FSI is useful for determining significant and surprising developments and trends. This year’s notable changes and scores included:

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Living Democracy

Democracy is about more than just formal institutions.

Democracy is about more than just formal institutions. (Photo: Wikimedia Commons)

Narayan Adhikari is a CIPE-Atlas Corps Think Tank LINKS Fellow at the Accountability Lab

Living in the U.S. for the past six months has been a thrilling experience for me. I have lived in a social entrepreneurship-themed group house, traveled to different cities, gone hiking at Sky Meadows Park, attended events/conferences, and made countless friends. I also interacted with local Nepalese communities and enjoyed festivals and happy hours. Although living in Washington DC has proven itself quite expensive compared to Kathmandu, I have been able to live within my means as a fellow. DC is a very lively and cultural city, and I appreciate that there is always so much going on. After living here for six months I am amazed by the many things I haven’t yet discovered.

Working directly with my friends and colleagues at my host organization, Accountability Lab, in DC, and being a part of the OpenGov Hub (OGH) has been remarkable. OGH, a community of independent organizations working the transparency field, is a great place for collaboration, networking, and learning. As a Think Tank LINKS fellow, I have had access to valuable opportunities and space to expand my knowledge. The monthly webinars and meetings with CIPE and Atlas Corps fellows were especially rewarding and really added value to our learning experience.

While it is always hard to focus on one experience when you have so many things to talk about, I am focusing on my experience with democracy. My quest for knowledge about the true meaning of democracy continued until I was not able to find a solid answer within myself. Often, in countries where democracy is in transition or a far off hope, citizens have difficulty understanding it and are often confused about the difference between democracy in theory and democracy in daily living.

My question was very simple: I wanted to see how people from developed nations like the U.S. live their daily lives in a democratic society without being abstract or theoretical. In theory, democracy is about human rights, freedom of information, freedom of association, and the rule of law. Although what it is written in textbooks and literature is true, all of these concepts cannot exist without smaller fundamental elements of society associated with culture, values, and norms at the individual level.

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The Gathering

gathering1

With all due respect to CIPE’s other partners, surely the coolest workspace in the CIPE family today is located in Saida, Lebanon. The innovative space, called El Moltaqa (“The Gathering”), is the new home of the Development of People and Nature Association (DPNA). El Moltaqa is not merely an office for DPNA’s dedicated staff, it is a focal point for civic engagement in the community.

In its first decade of existence, DPNA has become a highly-respected convening authority for a range of local stakeholders from the private sector, civil society, public officials from the local and national levels, young activists, and others representing the diverse fabric of Lebanese society.

Unfortunately, that fabric is frayed due to a highly volatile geopolitical situation, which makes a place like El Moltaqa all the more vital. It is a sanctuary where people from every religion, sect, ethnicity, and political persuasion can feel safe. Through a rich array of cultural and educational offerings, El Moltaqa provides the community with a place to engage respectfully in democratic dialogue and debate about the most important issues of the day.

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Supporting Democracy through… Tourism?

For vacationers looking for more than some sun and relaxation, there is an endless array of creative travel options, from dining tours to ecotourism, service projects to extreme sports. But what about the savvy headline reader who wants to make sure her hard-earned vacation fund supports a country that serves its citizens? Call it “democracy tourism.”

With so much choice for consumers, the world’s ministries of tourism need to work that much harder to attract foreign visitors. As a traveler, you’ve got the power! While looking for great food, wine, music, or beach destinations, world travelers can also make a statement with their dollars by choosing a country that is moving towards democracy.

A little intellectual for vacation research? Perhaps. But you can travel guilt-free, knowing the locals you meet on your trip live in a society that is working for them. Here are five destinations that satisfy both the avid traveler and the conscious world citizen.

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Call for Applications: Think Tank LINKS Fellowship!

How can young people go beyond protesting on the streets to demand for change? For the past two years CIPE and Atlas Corps have supported energetic advocates from Ukraine, Libya, Egypt, and other countries in transition to become effective policy-leaders in their communities through the Think Tank LINKS Fellowship program. And we’re inviting young researchers from around the world again to apply to this opportunity to gain new leadership and research skills!

Think Tank LINKS Fellows will shadow researchers and experts at leading U.S. think tanks for 6 months (January to July 2015), and will gain valuable insights and skills to improve their advocacy and leadership skills.

This is a fantastic opportunity that you don’t want to miss!

Watch the promotional video about the fellowship to learn more, or read about fellows’ experiences on CIPE’s blog.

The deadline is August 15, 2014 so don’t wait until the last minute to apply!