Author Archives: Elena Suhir

Business Associations Among Most Trusted Groups in Belarus

beroc associations

Business association representatives from around Belarus receive a certificate of completion following an Organizational Capacity Workshop.

Around the world, independent, voluntary business associations play a central role in defending the rights of businesses, advocating for policy reform that drives entrepreneurship and prosperity, and representing the voice and needs of small and medium-sized businesses. In Belarus, a new report focuses on how well business associations represent the needs of their members and the wider business community. This particular report is especially important because of all civil society organizations in Belarus, business associations have recently risen to the status of the most trusted civil society organizations, after the Church and the independent media.  Independent think tanks tie in third place together with business associations.

The Belarusian Economic Research and Outreach Center (BEROC), an independent think tank in Belarus, recently published its report entitled “Belarusian Business Associations: Problems and Potential Development” examining how well the Belarusian business associations serve the needs of their constituents. BEROC found that Belarusian entrepreneurs are generally satisfied with the work of business associations in their country. Business associations that were involved in this study ranged from small (35 members) to large (nearly 800 members), covering a representative sample of local business associations.  BEROC’s report illustrates that in many important areas, such as advocacy, assistance with business development, assistance with partnerships and networking, and educational programs, business associations and their members meet each other’s expectations.

BEROC found that the Belarusian business associations have been successful in providing services to their members. They have particularly distinguished themselves through providing a high quality of legislative advocacy to benefit their members as well as the wider business community, according to the report. This is the main reason Belarusian entrepreneurs join associations and an overwhelming 77 percent of them recommend to their friends to join an association too. Legislative advocacy refers to the ability of business associations to defend and promote the interests of their members and the wider small and medium-sized business community through a grassroots process of engaging stakeholders in constructive public-private dialogue with government to improve the laws that govern and protect business.

One of the weaker points, however, is the discrepancy in the important issue of “work with media.” Association members ranked “work with mass media” as the least important service (11th out of 11) required of associations, while associations themselves ranked this higher (8th out of 11). This difference is significant because associations often find it difficult to convey the extensive efforts that go into a successful advocacy campaign. Because work with the media is an essential element of successful advocacy, one conclusion that can be likely drawn from this is that much of the work done in this area by associations is underappreciated by their members. Associations need to raise awareness of the value they bring to their members and the wider entrepreneurship community through their work with the media to educate the press on the importance of entrepreneurship. This is a crucial element of legislative advocacy that drives results.

Elena Suhir is Senior Program Officer for Eastern Europe and Eurasia at CIPE.

What Makes an Entrepreneur Tick in Belarus?

Belarusian entrepreneurs discuss the topic "Are you ready to start a business?" on the talk show "Vybor" (Choice).

Belarusian entrepreneurs discuss the topic “Are you ready to start a business?” on the talk show “Vybor” (Choice). Eighty percent said “no.”

What drives someone to become an entrepreneur?  Are there any specific demographic, financial, personal, or educational characteristics that are common to entrepreneurs?  What makes for a successful entrepreneur, particularly in transitional economic environments?  What are the driving factors behind the perseverance of private entrepreneurship in a business climate that is not well-developed to welcome entrepreneurs?

The Belarusian Economic Research and Outreach Center (BEROC) surveyed 200 small business owners to identify the key characteristics of entrepreneurs in Belarus.  In a detailed report entitled Portrait of a Belarusian Entrepreneur, BEROC presents its findings, which may be somewhat unexpected to some.

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Twenty Years After the USSR, Still Waiting for Freedom

Markets have taken off faster than democracy in the former Soviet Union. (Photo: Staff)

More than 20 years after the fall of the Soviet Union, while the economic trends have seemingly been improving across the board, the democratic space has been persistently narrowing and huge challenges remain to establishing institutions that foster market-based democratic change.  Democracy eludes this region.  However, December 2011, the month that marks the 20-year anniversary of the fall of the USSR, may lay cornerstones for new trends and the foundation for new hopes.

Outside the Baltic countries (Estonia, Latvia and Lithuania), which are now members of the European Union, indicators measuring progress across the region in such crucial areas as media freedom (particularly Azerbaijan and Russia), including the internet, political competitiveness, rule of law, property rights, business freedom, and other basic freedoms have shown weak improvement, if not stagnation or outright decline, over recent years. Only Moldova has demonstrated a slight overall improvement in economic freedom in 2011. Freedom House rates seven of the countries that were once part of the Soviet Union as “Not Free” and five as “Partly Free.” None are rated as “Free.”

After the Fall: 20 Years of Post-Soviet Reform

Consistently with the ratings above, the Economist Intelligence Unit’s Democracy Index 2011 released this month, shows that countries in the Commonwealth of Independent States (CIS) have been backsliding over the last several years, and according tot his publication, authoritarian trends have become entrenched. This index rates 165 countries in areas such as electoral processes, functioning of government, political participation, political culture and civil liberties. Moldova had the highest democracy rating in the CIS, and is alone in the category of “Flawed Democracies.” Ukraine, Georgia, Kyrgyzstan and Armenia (in this order) ranked as “Hybrid Regimes.” The other countries of the former Soviet Union, namely Russia, Kazakhstan, Belarus, Azerbaijan, Tajikistan, Uzbekistan and Turkmenistan,  are in the “Authoritarian Regimes” category, with only Chad and North Korea scoring below Turkmenistan and Uzbekistan. Sadly, none of these countries place in the category “Full Democracies.”

Despite relatively high GDP growth reflected through official statistics in many CIS countries, unemployment, informality in business practices, elite cronyism, and debilitating corruption plague the region.  Many young, educated adults leave to find jobs and start businesses elsewhere in the world. Capital flight is at its record high. Capital flight from Russia, for example, has been reported to soar year, after year after year, with net capital outflows of $55.6 billion over the past eight months. Ikea, among several other Western businesses, has closed its doors in Russia after complaining of corruption and a difficult business climate.  Of all 12 countries, only Georgia makes it into the top 50 in the Forbes list of best countries to do business.

CIPE’s programs across the region, from Moldova to Kyrgyzstan to Georgia to Russia, have supported the independent pro-democracy voices of the entrepreneurship community to lead in economic and political reform. CIPE has worked closely with business associations of small- and medium-size businesses across Eurasia to address key problems that prevent a market economy and a democracy from taking root. CIPE and its partners have worked to lower the administrative barriers to entrepreneurship, reduce corruption, improve understanding of the true nature of market-based economy and political democracy, and increase appreciation for entrepreneurship.

By working with coalitions of likeminded pro-reform thought leaders to help foster entrepreneurial development, CIPE’s partners in the region have helped to strengthen the united voice of business through grassroots advocacy. These programs have brought about successes, often beyond expectations, in the improvement of understanding of these important principles and unprecedented support for market democratic values.

CIPE has also worked with economic journalists and editors of media outlets to help them understand basic economic concepts so that they can report more responsibly and accurately on business-related issues, and by doing so, help increase public understanding of these concepts as well. To help prepare the business community for a constructive public-private dialogue, CIPE has worked with business associations, independent analytical centers and think tanks, as well as other NGOs to develop a long-term vision for economic and democratic reform. Programs such as these are small steps, but they help garner support for long-term sustainable reform.

The history of the CIS countries has yet to be written. On one hand there is talk of bringing the former Soviet countries back into a Eurasian Union, building on the current Customs Union between Russia, Belarus and Kazakhstan. Russia’s admission into the WTO this month will play a significant role in its relationship with its neighbors, potential Eurasian Union members. However, this month has also witnessed unprecedented anti-government protests erupt in Russia and Kazakhstan. Apathy and indifference may give way to civil society’s demand for transparency, accountability, and the rule of law.  These are essential pillars of a democracy and may yet plant roots in the former Soviet Union.

This post concludes our series on the 20th anniversary of the breakup of the Soviet Union. Links to the rest of the posts in the series can be found here.

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

Emerging from violence in Kyrgyzstan

"Chaos or order? You Choose!" A campaign billboard for the Social Democratic Party of Kyrgyzstan (SPDK). (Photo: CIPE)

Kyrgyzstan heads to the polls on October 10 to elect its first democratic Parliament since the uprising in April that overthrew authoritarian president Kurmanbek Bakiev, followed by summer violence in the southern region of the country. Deep-seated economic troubles fomented both violent events this year. It was arguably blatant mismanagement, nepotism, and flawed privatization that led to the overthrow of the government in April 2010.

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Kyrgyzstan’s Window of Opportunity

Kyrgyzstan’s self-named Interim Government of People’s Trust set the dates for the Constitutional Referendum and the Election only 2 weeks after taking power. The Interim Government’s Chairman Omurbek Tekebaev, who is also Chairman of the political party “Atameken,” and a likely presidential contender, scheduled the referendum on the new Constitution for June 27, 2010 and parliamentary elections for October 10, 2010. This gives the Interim Government six months to do a lot of important work to lay the groundwork for a democratic government. Few countries get their second chance to try again so soon after failing the previous time. Kyrgyzstan has this window of opportunity.

The Interim Government has committed to undertaking substantial constitutional reforms and economic policy changes to institute a market-based democratic government. The newly established Constitutional Council will work hard to institute a parliamentary government system in time for the elections and the newly established Coordination Council for Collaboration between Business and Government will undertake key economic policy changes, ensuring that they get adopted prior to the elections. This quick take to action illustrates that at least one lesson was learned in Kyrgyzstan since the previous revolution almost exactly five years ago.

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What matters in privatization is PROCESS – lessons not yet learned by Kyrgyzstan

Since 2008, President Bakiev has embarked on a privatization mission. Lessons from around the world and most recently other former Soviet countries, including Russia, Kazakhstan, and others, clearly illustrate that privatization is not an end to itself. Rather the process of privatization is the key to successful transition from a centralized to a market economy. With this goal in mind, Kyrgyz civil society, with the business community at its helm, continues to sound alarms over speedy privatization that ensues in Kyrgyzstan with little transparency and much public skepticism. Opaqueness in the privatization process, combined with drastic increases in utility costs, undermines the public’s trust in the government and leads to a potential further consolidation of economic power in the hands of the elite. Kyrgyz civil society is rightly concerned regarding today’s decisions that damage tomorrow’s economic prosperity.

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Civil Society’s Role in Fighting Corruption in Kazakhstan

Anti-Corruption Conference in Astana

Anti-Corruption Conference in Astana

Two weeks ago I attended an international conference on fighting corruption and promoting good governance in Eastern Europe and Central Asia that took place in Astana, Kazakhstan and was co-organized by the OECD and the Financial Police of Kazakhstan. This was a particularly significant event because it was the first conference of this kind in the post-Soviet space since the fall of the Berlin Wall.

Over 150 delegates from over 40 countries from as far away as Latin America to as nearby as Kyrgyzstan included high-level dignitaries and anti-corruption specialists who descended onto a seemingly empty, but posh capital city of Astana for several days. It is difficult not to think of fighting corruption and improving good governance as two of the most fundamentally critical pillars for increasing widereaching national economic prosperity and developing sound, transparent and accountable democratic institutions. Disappointingly, however, civil society was notably absent from this event.

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