Author Archives: Rachel Grossman

Planting the Seeds of Democracy in the North Caucasus

Vladikavkaz Institute of Management alum Azmat Gagloyev preparing for a November 2011 presentation about his recognition at a national entrepreneurship competition. (Photo: Staff)

“Looking at the sheer numbers of young people in the world today, the world does, indeed, belong to youth,” says Ruth Dueck Mbega, Program Manager of Microfinance at the MasterCard Foundation, at a recent event.

Mbega also noted this simple fact: there are 81 million unemployed youth in developing countries. 81 million. Who are these young people? Where do they go? What are their prospects, for themselves, for their districts, cities, for their countries, and, ultimately, for our global community?

For CIPE, this is a serious concern every day, and not only on International Youth Day. That is why two of our three current projects in Russia focus on this issue – specifically on unemployed youth in the restive North Caucasus region.

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Realizations in Russia: 11 Sweater Buttons Later

When talking about governance, it is easy to forget that its impact is often experienced just as much through minor hold-ups and red tape as through the large-scale corruption, fraud, and abuse that usually makes headlines. In a recent pair of articles, The Guardian’s Moscow correspondent, Miriam Elder, has stirred up a surprisingly negative reaction by highlighting one such bureaucratic roadblock faced by everyday Russians.

The “The Hell of Russian Bureaucracy,”  a tongue-in-cheek expose on dry-cleaning in Russia, spotlights an everyday example of unnecessary red tape. In reviewing the details of the process, Elder sardonically laments the fact that the inspection of her clothing took more time than she spent actually wearing them.

Though perhaps overly dramatized, the article presents an amusing anecdote that will make anyone want to check the number of buttons on their sweaters. It also draws a clear link between bureaucratic practices by the state and the private sector. After examining five separate pieces of clothing, counting each button twice, filling out five separate forms, and stamping five separate forms, Elder had spent hours getting her clothing. The process took twice as long when she tried to retrieve it the next week.

This rant on bureaucracy was amusing for anyone with experience living life in Russia, but the dialogue it sparked opened the way to a deeper inspection, as just one day later, Dmitry Peskov, aide and spokesman to Vladimir Putin, responded to Elder’s article:

“I am sorry to hear about Miriam Elder’s experience at the dry cleaners, in which she lost her receipt and so had an hour of her time ‘stolen’ in providing the necessary personal details to retrieve her woollies. But I am also amazed that this anecdote can be passed off as any sort of insight into the state of Russia today.” He also wrote, according to Elder, that “cutting red tape was a high priority for the government,” but then, swerving the focus of the letter, concludes with: “Let me remind British readers of the thousands of hours that are ‘stolen’ from Russian citizens when they complete the UK’s visa application forms, which are a whopping 10 pages. The time, money, effort and inconvenience that Russians face in obtaining UK visas put Ms. Elder’s ordeal into perspective.”

In her response, Elder wonders why after having written about corruption, human rights abuses, the murder of journalists, and electoral fraud for the last five years it was this article that prompted the first and possibly only response from Putin’s office.

To understand this, let’s step back. Elder argues point blank that the Russian form of bureaucracy doesn’t work.

“Let’s say I stole some other woman’s clothes.” she writes, “Despite the forms and the stamps, the (double) passport check and notes, the woman would have no recourse. Court system? Busted. Police? Corrupt.” Elder goes further to point to this as the reason that so many in Moscow have turned against Putin – they are actually, she argues, turning against the system. That system, she says, began corroding in the Soviet era and continued to do so through the “flicker of hope that emerged with the fall of the Soviet Union,” which soon settled “back into a non-functioning corrupt bureaucratic nightmare that now has the added bonus of wheedling itself into the private sector.” As most connected to Russia in some way would acknowledge – “so much has changed – and so much has not.”

While Elder recognizes that her initial article was largely a “rant” meant mainly to express some of the frustration that comes from living in a culture where “even the most menial tasks are often infused with the paper-pushing, stamp-stamping and time-wasting so loved by Russia’s bureaucracy,” it instigated much more.

Though perhaps Eldar was overblown in describing it as “hell,” there is a clear link between bureaucracy and corruption that has been explored for a number of years. Stephan Dalziel, Executive director of the Russo-British Chamber of Commerce, writes that the “problem with such nonsensical rules is that they inevitably lead to corrupt practices.” The real danger of bureaucratic discretion, he says, is that, rather than going through an “exhaustive and possibly costly legal process to ensure that all rules have been followed to the letter, there will often be the temptation to bypass them by placing money in a brown envelope which benefits only the recipient.” Though many people put “bureaucracy” rather than “corruption” at the top of their list of problems doing business in Russia, these things are really “two sides of the same coin.”

This is an argument that has long since gained traction in the development community and is an idea that CIPE expands further in the conviction that democracies and market economies need to develop together and are deeply entwined. Dalziel concludes his article with the remark that “until it’s sorted out, any battle with corruption will be an uphill struggle.” CIPE recognizes this, too — the fact that the activities of a country’s business community through democratic representation are pivotal to monitoring and balancing bureaucratic agencies. Further, both oversight and public accountability should work in conjunction with each other. When they don’t, when there are informational deficiencies, a lack of technical skill, both representatives at the state level, and the public through the small and medium-sized businesses they exist within, adopt a haphazard method of oversight.

Currently, small- and medium-sized businesses, crossing sectors, creating a broad base of support and cohesion, are advocating together to hold elected officials to higher standards, and perhaps more importantly, coming together to recognize the need to redefine laws. This development – coming together to redefine laws, and – by and large – systems – is what is both becoming internationally recognized as key, and actually happening. So when Miriam Elder wonders why her post about dry-cleaning in Russia warranted a response from Putin’s office? Perhaps that’s why. The topic is simple, seemingly unimportant, but in reality, is a very clear reflection of the state and the system that is beginning to come undone.

It’s anecdotal and simple, but 11 sweater buttons later, I’m reminded in a very real and accessible way how the private sector, existing within the system, functions as a mirror for the state —counting each button down the front of a cheap sweater, not yet wholly able to view the sweater (or business process in general) holistically, but getting a lot closer, button by button.

Swerving to work in Ukraine

Photo: www.anaga.ru/travel/moscowtrans.htm

Now that winter is approaching and it is no longer convenient to walk the mile and a half to work each morning, I find myself hesitating at the bus stop, wondering if maybe today the bus could get me to work on time – or at least pick me up at all despite having too many passengers already.

I hesitate, but no longer wait for the bus (never mind that it only sometimes stops for me anyway). I also hesitate to enter Washington, DC’s Metro with any heavy baggage, knowing that when I emerge, I have more than a 50/50 chance that I’ll need to walk up the series broken escalator steps. Nearly every day I fondly recall my days in Ukraine – where, though life in many ways may still be very difficult, public transportation works.

James Greene, President of Effective Engagement Strategies and Former NATO Representative in Kyiv, Ukraine, recently spoke at the Kennan Institute in the Woodrow Wilson Center on, “Ukraine at Twenty: How Strong is the Young State? How Resilient Society?” Having just returned to Washington the night before, he opened his presentation with a few amusing remarks about the state of public transportation here as compared to Ukraine; Metro escalators that work!

I chuckled and thought that he was just trying to be funny in referencing the non-functionality of the DC Metro escalators, but by the end of his presentation, I realized there was a full anecdote here, an anecdote that I can agree with on both a personal level as a Returned Peace Corps Volunteer from Ukraine and on a professional level as part of CIPE Eurasia’s staff. The point is this: The route is there and the vehicle goes – quickly, efficiently and reliably.

The premise of the event was to look at Ukraine from a holistic perspective after twenty years of independence. Greene laid out 4 elements key to Ukraine’s ongoing transition: resources, organization, institutional capacity, and external allies. These elements are all connected and necessary for the modern nation-state and are of special importance in Ukraine – a country at the border between the different political systems of Europe and Eurasia.

Currently, Ukraine seems to follow both systems in both directions, and is wrought with what Greene referred to as “a negative diseconomy on talent” that affects the business community on all levels. Yet, Ukraine has both the resources and the organizational capacity to move more decisively toward reforms. Its people are overtly pro-democratic, but their capacity is neither effectively organized nor is it used. Ukraine’s greatest asset is the people – their diversity, knowledge, and creativity. What is missing is making sure that the people feel that they have a stake in reforms. Only when the people recognize their voice and their role can they help to shape their institutions.

What’s the problem, then, in creating this link between the popular support for democratic and market reforms and actual systemic outcomes? According to Greene, a significant part of it is an attitude of the established business class. Many large businesses are frustrated with government corruption but are tightly bound by a shared interest in preserving the status quo, bearing little to no responsibility for the effect that institutionalized corruption has on the state.

Institutionalized corruption has had a particularly dire effect on smaller businesses, able to operate only by navigating complex bureaucratic road blocks (although just like the drivers of Ukrainian marshrutkas they are accustomed to moving, rain or shine, through any condition). The challenge is to remove those road blocks and to start the process now without waiting for the next great political leader.

The focus should be instead on the SMEs and civil society – the grassroots reformers. The international community should engage them and provide with the right tools to advance concrete reform solutions. Civil society has, in many ways, come together and we should continue to support the people in their enterprises: from locally-owned transportation to agriculture. These are the individuals who are coming together and are ready to move.

When I lament that I can’t find decent public transportation here in Washington (most mornings), I am back in Ukraine on a locally-owned and operated marshrutka that’s going way over the speed limit. It’s so crowded that the bus is actually swaying and swerving from side to side. I hold onto the person next to me or the railings above my head, if I can. It’s definitely a ride on a marshrutka (which I fondly referred to a marshrutka-surfing), but I always got to where I needed to go and always on time. People called out, got on, other people made room, people called out again, people made room again, and people got off at any, designated or undesignated, spot along the route. Though it is perhaps a bit disorganized and a little off-balance, local businesses make it work, and, frankly, all of this sounds a lot like democracy to me.