Helping Business Find Its Voice in the Former Soviet Union

The Association for Foreign Investment and Cooperation in Armenia. (Photo: CIPE Partner)

Small business owners in the west Russian city of Primorsk faced a serious threat. A corrupt land privatization auction resulted in many local entrepreneurs losing their leases, which would force the closure of 2,000 businesses and the loss of many more jobs. Individual business owners had little chance of successfully standing up to the powerful interests who had arranged the sale.

After the Fall: 20 Years of Post-Soviet Reform

Fortunately, they didn’t need to act alone: a coalition of 11 local chambers of commerce and business associations representing 1,200 businesses was ready to fight for their rights. The coalition, which had organized as part of a long-term, USAID-funded CIPE program to organize small and medium businesses against corrupt practices in Russia, launched a large-scale publicity campaign, which led to criminal charges being filed against several individuals involved in the corrupt deal and the return of leases to business owners whose businesses were in jeopardy.

The case of the Primorsk coalition is just one example of how CIPE has assisted the private sector throughout the post-Soviet world to take an active role in the policymaking process by forming networks and coalitions of organizations dedicated to advancing democratic governance and market-oriented economic reform. These coalitions are able to identify issues which are of common concern to all business sectors, bring them to the attention of policymakers, and advocate for the implementation of needed reforms.

Throughout the former Soviet Union, coalitions have succeeded in bringing about reforms that have made it easier to open businesses, create jobs, and attract foreign investment while demonstrating the benefits the democratic process can deliver for ordinary citizens.

In Moldova, a network of business associations and chambers adopt an annual National Business Agenda (PDF), outlining the reforms the business community believes most important to improving the country’s economic situation. Following the onset of the global economic crisis, the government swiftly adopted many NBA proposals, including creation of a “one-stop-shop” for business registration and abolishing mandatory capital requirements for start-ups, making it easier to open a business.

In addition to individual legislative successes, many coalitions have established themselves as key drivers of policy is their countries, engaging in ongoing dialogue with public officials. Armenia’s Business Advocacy Network has created an unprecedented deepening of dialogue between the public and private sectors, resulting in the creation in 2011 of a permanent SME Council to ensure that legislation and regulation supports, rather than harms, the creation and growth of small business.

In Russia, the advocacy efforts of local coalitions led to the passage of legislation allowing independent organizations such as business associations to become accredited to review draft laws to determine whether they have the potential to facilitate corruption. And in Kyrgyzstan, members of the National Alliance of Business Associations – a local CIPE-supported coalition – hold seats on 13 newly-established Public Supervisory Councils, through which they add the voice of business to an ongoing dialogue between civil society and state officials.

While efforts such as these unquestionably benefit entrepreneurs by bringing about market-oriented economic reforms, the positive impact of these coalitions is not limited to small business owners. By bringing about reform through civic activism, these coalitions support the development of democratic institutions and processes and demonstrate to everyone the potential of democratic governance to expand opportunities and improve lives.

This post is part of a series on the fall of the Soviet Union, the 20 years of reforms that followed, and the challenges that lie ahead.

Read all of the blogs in this series:

20 Years of Corruption

Democracy in Ukraine: 20 Years Later

Helping Business Find its Voice in the Former Soviet Union

Entrepreneurial Development in Russia

Democracy and the role of the Private Sector

Twenty Years After the USSR, Still Waiting for Freedom

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