Author Archives: Kurt Hagemann

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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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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Kenya’s Democratic Experiment in Devolution

A member of one of Kenya's new county assemblies sets up an office in an open-air market outside of Nairobi. (Photo: VOA News)

A member of one of Kenya’s new county assemblies sets up an office in an open-air market outside of Nairobi. (Photo: VOA News)

One way to improve democratic governance is to devolve more responsibilities to local and regional governments — but only if those governments have the capacity take on such responsibilities and a willingness to listen to input from their constituents. This is the challenge Kenya faces as it implements the devolution outlined in its new constitution.

On April 9th, Chief Executive Officer of CIPE partner in Kenya Institute of Economic Affairs (IEA) Kwame Owino gave a presentation at the National Endowment for Democracy on the status of the country’s constitutional reforms. Owino explained the contentious transition that has been occurring in Kenya since the March 2013 elections, which transferred some key powers from the central government to 47 newly-created counties.

Owino cited many roadblocks in the way of quick, successful decentralization, including power struggles between newly-established governors and county senators, a highly centralized government bureaucracy reluctant in some cases to relinquish power after an institutional life of 50 years, and an economy weakened by poor policies and widespread corruption.

To address the uncertainty regarding the strength of the devolution movement, Owino stated that accountability was the answer, arguing that Kenyan civil society organizations had a place as “protectors of devolution,” and that they must put pressure on the government to stay the course of decentralization. For devolution to succeed, the constitution needs to be followed exactly, and not be avoided or ignored as it is in many instances to maintain some of the employment and power institutionalized in the old bureaucracy.  

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