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Paraguay the Day After

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By Raul Ayala Diarte

With the images from Paraguay’s national elections this past Sunday fresh in our eyes – elections in which businessman Horacio Cartes of the Colorado Party rose to a clear victory by a wide margin – any doubts about the electoral and democratic process in Paraguay have been cleared. The country has now repeatedly held transparent electoral processes since the fall of the dictatorship in 1989.

Nearly 70 percent of the voting population participated in this election – one of the highest percentages in history – to elect a president, vice president, senators, deputies, governors and state boards, and parliamentarians for the Southern Common Market (Mercosur). The election was classified as exemplary by international observers from more than 12 organizations, among them the Organization of American States, the European Union, the Union of South American Nations, the Carter Center, and by the local and international press. What is more important is that the candidates accepted the results and there were no incidences to feed the morbid fascination of those that were anticipating problems in the electoral system.

These elections are historic because the world – and particularly the countries of Latin America – were watching everything with critical eyes. They are historic because for the first time we had an election where the Colorado Party (which was hegemonic for 60 years) was running as the opposition and retook power by winning the majority of seats in play (i.e. Senators, Deputies, and Governors) while the Liberal Party, the current governing party, could not even retain the seats it took in 2008.

The traditional parties that dominate Paraguayan politics, the Colorado Party and the Authentic Radical Liberal Party (PLRA), took more than 80 percent of all votes: Colorado taking 45.8 percent and PLRA 36.94 percent.

The coalition of parties of former President Fernando Lugo obtained 3.32 percent of the votes, amounting to 79,327 voters, which contributes to a better understanding of why Paraguayan society did not defend him during the impeachment trial that cost him the presidency in June 2012. Lugo has lost almost all of his support, as the figures demonstrate, although the coalition got better results in the Senate elections, obtaining five of the 45 seats available.

The Precursor

Like never before in its history, Paraguay became politically isolated by the majority of its South American neighbors. The cause of this isolation, as we know, was the impeachment via political trial of former President Lugo, which the majority of jurists and citizens in our country believe was carried out in the letter and spirit of our Constitution.

Nevertheless, for various leaders in the region motivated by political and ideological interests  – as Uruguayan President José Mújica openly recognized – the impeachment was seen as illegal and as a result caused a rupture in Paraguayan democracy.

Because of this “political” interpretation, regional organizations sanctioned and suspended Paraguay’s participation in key international organizations. The “only way” in which Paraguay could be reintegrated into regional institutions is through the clean election conducted on April 21st. It is important for Paraguay to maintain good relations with its neighboring countries since without international cooperation its landlocked location does not give it many other options for development. The electoral system certainly requires profound reforms to grant more equality to the candidates, but this electoral process played out without any major complications.

In Paraguay, the electoral processes have been characterized by a lack of concrete policy proposals. Nevertheless, this election was different due to civil society’s contribution in helping expand the proposals, perhaps not to the level of a well structured governing plan, but enough to qualify as a substantial improvement in content. To understand this better, it is important to highlight that in the 2008 elections where Fernando Lugo won, a government plan did not exist and the campaign relied on just six core themes. Six months after assuming office, Lugo himself created what was called Cerrito I, which was a plan for a better structured government.

To counter this trend and contribute to the electoral process and an informed vote, the Foundation for Development in Democracy (DENDE) and CERNECO – civil society organizations supported by CIPE, organized candidate debates broadcasted by all the open television channels in the country. The purpose was to allow Paraguayan citizens the opportunity to hear and contrast the candidates’ proposals on the issues that matter to them the most. This event was an innovation in the country, and perhaps the region, where all the television stations in the country – private, public, open, and cable – and more than 500 radio stations broadcasted the debates on March 17 and March 24.

According to estimates, over 3 million people from all over the country observed the debate and according to surveys, 71 percent of these people saw and heard the candidates’ proposals for the first time, demonstrating that the debate reached every corner of the country.

The success of this debate can be attributed to the fact that the four leading candidates all participated. This contrasts with what has happened in other countries in which candidates leading in the polls avoid debates, as is the case of Cristina Kirchner in Argentina and Nicolas Maduro in Venezuela.

What awaits the future government?

The new government will face multiple challenges as well as high expectations and necessary compromises.

With regards to the economy, the priority will be to utilize the country’s favorable natural resource advantages and the ability to produce food to feed 60 million people, an amount 10 times greater than the current population. It is also a priority to establish an industrialization process to generate employment, as well as to control the fiscal deficit.

Other pending topics include:

  • The fight against poverty and inequality
  • The fight against corruption, nepotism, the patronage system, and the quality of politics
  • Making institutions function so that they provide guarantees to citizens

An additional challenge will be to continue to eliminate practices carried down from the previous dictatorial government.

“When the people speak, politicians remain silent.” This phrase summarizes the respect given to popular will as it is reflected in the ballot boxes. ∎

This article originally appeared in Spanish on www.RevistaPerspectiva.com

Raul Ayala Diarte is the executive director of the Foundation for Development in Democracy (DENDE).

The Venezuelan Election

Nicolas Maduro soon after his narrow election win was announced. (Photo: Washington Post)

Nicolas Maduro soon after his narrow election win was announced. (Photo: Washington Post)

By Aurelio Concheso

On Sunday, April 14, Venezuelans went to the polls to elect a president to complete Hugo Chavez´s six-year term, following his death on March 5. The speed with which the election was called had to do with constitutional mandates, but even more with the ruling party’s hope that the pro-Chavez sentiment and bereavement of his followers, coupled with the blatant use of government resources, air time, and voter intimidation, which had become a rule of elections in the times of  Chavismo, would permit a comfortable triumph for his handpicked successor, Nicolas Maduro.

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A Different Way to Experience International Law

 

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Maksim Karliuk is a CIPE-Atlas Corps Think Tank LINKS  Fellow serving at the Cato Institute.

This year I had a great privilege to serve as a judge at the International Rounds of the Philip C. Jessup International Law Moot Court Competition – the world’s largest moot court competition, with participants from over 550 law schools in more than 80 countries. The Competition is a simulation of a fictional dispute between countries before the UN International Court of Justice. The best teams worldwide qualify for the International Rounds, which are held yearly in Washington, DC.

In 2009 I was among such participants, representing Belarus at the International Rounds as a member of the team from the Belarusian State University. It was a great experience that allowed me to broaden my knowledge, practice real application of international law, acquire important skills, and meet the best international law students and professionals from around the world.

This time I was on the other side, which was a completely different but still rewarding experience. It is indeed inspiring when you see incredibly capable, intelligent, and skillful individuals pleading their case in front of you. No less outstanding were the benches of judges I was privileged to be part of – legal professionals from all over the world.

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The Need to Prioritize Economic Development in Egypt

A market in Egypt (Photo: Wikimedia Commons)

A market in Egypt (Photo: Wikimedia Commons)

Sally Roshdy is a CIPE-Atlas Corps Think Tank LINKS  Fellow serving at the Project on Middle East Democracy (POMED) .

In Egypt, my home country, the rulers and the political elite are immersed in a struggle for power and have forgotten the simplest principles of good governance: to deliver economic opportunities to their citizens.

Given the current economic crisis in Egypt, a new approach that prioritizes economic development should be adopted. By supporting small enterprises, the government can build a stronger economy and empower people in need to be productive. This way, those in need of assistance are more than just aid recipients; they are contributors to the overall economic growth.

New and well-planned initiatives must be created to improve Egypt’s economic and social conditions. These initiatives should involve all three sectors – the government,  private sector, and civil society.  

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European Issues Discussed in America

maksim klaus

Maksim Karliuk is a CIPE-Atlas Corps Think Tank LINKS  Fellow serving at the Cato Institute.

Before coming to the U.S. for the Think Tank LINKS Fellowship, I presumed I would only be engaged with U.S.-based affairs (including political, economic, and regulatory issues). This was dictated by my general interest in these issues, but also by my desire to study how things work in practice in the United States so I could bring back practical lessons to my home country.

However, since my Think Tank LINKS fellowship started in January, I have found myself going almost exclusively to conferences, presentations, and panel discussions on European affairs. Many of the events feature prominent European and American speakers. The latest events I attended were with Madeleine Albright at Georgetown University Mortara Center for International Studies, where the former U.S. Secretary of State presented her new book, Prague Winter; the EU crisis discussion featuring former president of the Czech Republic Václav Klaus at the Cato Institute; a talk on the Transition in Central and Eastern Europe at the Woodrow Wilson Center for Scholars; and a presentation of a book on the Economics and Culture of Transition in Central Europe by the former Minister of Finance of Hungary Lajos Bokros. On its way is a talk on Portugal and the Euro Area with Portuguese Minister of State and Finance Vítor Gaspar at the Brookings Institution.

There is always an opportunity to engage in discussions at these events by publicly asking questions, or by having personal conversations with the speakers and many professionals that attend the events. I was happy to personally discuss one of my current research interests regarding the Eurasian economic integration process with Václav Klaus (hopefully) without any politically sensitive constraints. Klaus is generally very critical of integration processes which go beyond establishing free trade. In this respect he is a pronounced critic of the EU. In his view the Eurasian integration, which has seen the creation of the Customs Union and a Common Economic Space between Belarus, Kazakhstan and Russia, and heads to create the Eurasian Economic Union, is no different.

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Anatomy of a Reform: Implementing the Presumption of Innocence in Moldovan Tax Administration

Participants at a roundtable on the National Business Agenda Monitoring Report, held on December 4th, 2012 in Chișinău, Moldova.

Participants at a roundtable on the National Business Agenda Monitoring Report, held on December 4th, 2012 in Chișinău, Moldova.

In a distant corner of Eastern Europe, Moldova’s economy is struggling amidst Europe’s recent recession. The economy grew at a rate of just 0.5% in 2012 and The Economist predicts that the economy will grow at an annualized rate of 3.3% between 2013 and 2017.

Such a growth rate is not sufficient to lift Europe’s poorest country, in terms of price-adjusted GDP per capita, out of poverty. The government’s regulatory policies are oriented towards attracting foreign investment and appeasing European donors instead of promoting local business development and capacity building.

Although for this reason Moldova has shot up the World Bank’s “Doing Business” rankings, the business community complains that the business environment is worsening. Moldova’s business community needs tax and customs reforms for the country to prosper.  The fragmentation of the business community has stymied previous appeals to the government, which has accused the business community of incompetence.

CIPE and its Moldovan partner, the Institute for Development and Social Initiatives, a leading think tank, are striving to foster public-private dialogue to improve the business environment by strengthening the institutions of the Moldovan business community. Through the National Business Agenda mechanism, business associations from around Moldova have formed a national coalition to advocate for vital reforms to the tax code and customs regulations. One crucial reform they are advocating for is establishing the presumption of innocence in tax disputes — which could have important effects on the ability of Moldovan businesses to grow and prosper.

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The State of Entrepreneurship in Bolivia

Most of Bolivia's entrepreneurs are self-employed in non-technology-intensive fields.

Most of Bolivia’s entrepreneurs are self-employed in non-technology-intensive fields.

Sergio Daga is a CIPE-Atlas Corps Think Tank LINKS  Fellow serving at the Heritage Foundation. 

The latest Global Entrepreneurship Monitor Report for Bolivia, published in 2010 and led by Marco Antonio Fernandez C. from the Catholic University of Bolivia, shows interesting findings that shed light on the state of entrepreneurship in Bolivia today. In a survey of individuals between 18 and 64 years old in the three biggest cities of the country, nearly 76 percent said they believe they have the skills required to be an entrepreneur, over 53 percent foresee opportunities to start a business, and only 28 percent are afraid of failure.

The Global Entrepreneurship Monitor (GEM), an initiative founded and sponsored by Babson College (US), Universidad del Desarrollo (Chile), and Universiti Tun Abdul Razak (Malaysia), has completed 13 annual surveys of the entrepreneurial attitudes, activities, and aspirations of individuals around the world. Its latest edition covered 69 countries that represent 74 percent of the world’s population and 87 percent of the world’s GDP. One of  GEM’s unique characteristics is that they conduct specific in-depth country studies about entrepreneurs in mainly developing countries.

A striking indicator for Bolivia is the Total Early-Stage Entrepreneurship Activity (TEA) rate, which shows the rate of individuals in the working-age population who are actively involved in business start-ups, either in the phase preceding the birth of the firm (nascent entrepreneurs), or the phase spanning three and a half years after the birth of the firm (owners or managers of new firms). The TEA rate for Bolivia was almost 39 percent and this rate is the second highest among the 59 countries who participated in the TEA research in 2010.

According to the same report, the motivations for starting a business stem mostly from opportunity (measured as the desire to increase revenues), and not necessarily to gain independence (measured as the desire to become their own bosses). Additionally, aspirations for growth (which translates to creating jobs) among Bolivian entrepreneurs are significantly low. Only 65 percent of the early-stage entrepreneurs planned to create one job, and only 4 percent of them aspired to create more than 20 jobs in the next five years. When the already established entrepreneurs were asked about their growth outlook, it was even worse – not even half of a percent of the respondents said that they aspire to create more than 20 jobs in the next five years.

Lack of innovation and creativity is another problem.  Out of the early-state entrepreneurs, less than 1 percent answered they incorporated new technologies or innovative ideas into their ventures. Furthermore, a vast majority of the early-stage entrepreneurs indicated they are in the service sector, offered no new products, and faced high competition due to the homogeneity of their offerings.

Finally, the report also painted a picture of an average Bolivian entrepreneur:  a male between the age from 25 to 34 with only a primary education, and a monthly family income between $145 to $290 USD. They call themselves independent, but actually belong to the informal economy (paying no taxes and receiving no social benefits) and their main motivation is to generate more revenue, not profit.

Although “attitudes and perceptions to become an entrepreneur are quite favorable within Bolivians” (GEM Report Bolivia, 2010), the truth is that the vast majority of Bolivian entrepreneurs have low aspiration to increase production and to create jobs. Entrepreneurs are not innovating nor advancing the use of technology into their products and services. As a result they face higher competition and lower prices for their products.

In another study, conducted by the International Finance Corporation (IFC), already established firms in Bolivia (independently of their size) were asked what real obstacles they think undermine the potential of entrepreneurship in their country.  The top answers on the list were unfair competition formal entrepreneurs face because of the informal market, political instability in terms of predictability of public policies, and the unprepared and unskilled labor force.

As CIPE has pointed out building entrepreneurial economies requires many steps, including:

 “building market institutions; removing barriers to starting, operating, and growing a business; reforming educational systems; and creating a broader awareness and understanding of what entrepreneurship means as well as appreciation for its contribution to the development of democratic societies. As simple as the recipe for entrepreneurship-driven development may be, the implementation of necessary reforms is a much more complex matter. Only when the right institutional climate is in place can small business success stories become more commonplace. Entrepreneurial economies sustain growth through the rule of law and a functioning democracy. Institutional change takes time, effort, determination, and, above all, dedicated reformers.”

Will there ever be such reformers in Bolivia? My organization, Políticas Públicas para la Libertad, is working to make this happen.

CIPE Atlas Corps Think Tank LINKS Fellowship brings talented young professionals with strong research backgrounds to shadow researchers and experts at leading U.S. think tanks for six month. Sergio Daga is part of the inaugural class, serving at the Heritage Foundation as Visiting Senior Policy Analyst for the Index of Economic Freedom in Latin America.