Author Archives: Ann Mette Sander Nielsen

Will There Ever Be a Resolution in Eastern Ukraine?

frozen-conflicts-donbas

CIPE’s Frozen Conflicts blog series looks at the current situation in seven breakaway regions of the former Soviet Union, with a particular focus on the economic dimension. To learn more about frozen conflicts and what can be done about them read CIPE’s Economic Reform Feature Service article on the subject.

In May 2014, not long after the EuroMadian demonstrations toppled Ukraine’s former President Yanukovych, pro-Russian separatists in two Eastern Ukrainian regions, Donetsk and Luhansk, held referenda – unrecognized by Kyiv and the West – and declared their independence as “people’s republics.”

According to a September report from the UN, an estimated 8,000 people have been killed and almost 18,000 wounded in the ensuing war in Eastern Ukraine – the area known as the Donbas – as the new government in Kyiv has tried to regain control over its territory. The UN High Commission on Refugees (UNHCR) estimates that the conflict has created 1.5 million internally displaced persons. While the Kremlin long denied its military involvement, the Russian business magazine Delovaya Zhizn revealed the number of Russian casualties: 2,000 dead, 3,200 wounded.

Of the three million who are left in the region, about two million are children and pensioners. This leaves only one million working-age adults to support them and do the fighting. For around two months, between the beginning of September and November 2015, fighting in Donbas subsided, and some Ukrainian news outlets were speculating that the war could be coming to an end. But just as some IDPs were starting to return to the region, reports of ceasefire violations emerged. In September, UN agencies and a number of humanitarian NGOs were expelled from Luhansk by the forces in control of the area.

While the military aspect of the situation has been extensively covered, less well known is how the occupied region is managing economically. At first, the Kyiv government paid social benefits to the separatist region, despite not receiving any of its tax revenues. But since November 2014, when Kyiv cut the region off, the separatist authorities have been supporting residents with pensions paid out in rubles. They claim that these funds derive from tax collections, not support from Moscow, but this assertion seems questionable given a sharp economic decline. Interestingly, in June 2015 the authorities paid out pensions in U.S. dollars.

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Vested Interests Continue to Drive Conflict in Nagorno-Karabakh

frozen-conflicts-nagorno-karabakh

CIPE’s Frozen Conflicts blog series looks at the current situation in seven breakaway regions of the former Soviet Union, with a particular focus on the economic dimension. To learn more about frozen conflicts and what can be done about them read CIPE’s Economic Reform Feature Service article on the subject.

Unlike the situation in most of the other post-Soviet breakaway regions, the conflict in Nagorno-Karabakh is far from frozen. Indeed, there are some recent signs that a fresh shooting war could be brewing. Regular exchanges of fire along the line separating Nagorno-Karabakh from Azerbaijan proper are threatening a ceasefire that has been in place since 1994. This year has seen the highest number of casualties since 1994, due to the increasingly advanced weaponry being deployed.

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Russia’s Quiet Annexation of South Ossetia

frozen-conflicts-south-ossetiaCIPE’s Frozen Conflicts blog series looks at the current situation in seven breakaway regions of the former Soviet Union, with a particular focus on the economic dimension. To learn more about frozen conflicts and what can be done about them read CIPE’s Economic Reform Feature Service article on the subject.

Often lost among coverage of Russia’s annexation of Ukraine’s Crimea, the ongoing crisis in Eastern Ukraine, and the general deterioration of the relationship between Russia and the West, is the quiet process through which the breakaway Georgian region of South Ossetia has been merged into Russia.

After Georgia declared its independence from the Soviet Union in 1991, Russian-backed separatists in South Ossetia in turn declared their own independence from Tbilisi. Fighting lasted until 1992, when Russia brokered a ceasefire agreement and placed peacekeeping troops in the region. South Ossetia voted for absorption by Russia, with no response from Moscow, while Georgia continued not to recognize the region’s independence. As a result, the conflict was frozen, and South Ossetia became a de facto state.

The situation remained such until August 2008 when, following several months of increasing tensions, Georgia and Russia fought a five-day, full-scale war in the region. That war marked a major turning point, as Russia decided to recognize South Ossetia as an independent state. The only other countries to do so were Nicaragua, Venezuela, and the Pacific island of Nauru.

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Fighting Informality in Albania

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With reports showing a steady increase of the level of informality in Albania and recent World Bank reports that Albania’s informal sector is estimated to make up as much as 40 to 50 percent of the country’s economy, the issue of informality is integral to Albania’s development. Now especially, as the European Union has granted Albania conditional EU candidate status. The gesture indicates both a challenge and an opportunity – formal accession negotiations will not begin until Albania addresses several key priorities, particularly reforming the country’s finances and reducing corruption.

Over the last decade, the number of businesses around the world operating in the shadows has grown. Men and women who stand at cash registers and add up their profits at the end of the day are increasingly doing so outside the jurisdiction of the state. Profits derived from the informal economy represent a significant share of the global economy, both in terms of currency and workforce labor, accounting for between 25 and 40 percent of annual output.

In developing countries with large informal sectors, thousands of entrepreneurs are locked out of the formal legal economy by a maze of regulations, burdensome procedures, high tax rates, and other barriers. These entrepreneurs can neither thrive personally nor contribute to their economy. Further, these entrepreneurs, and their employees alike, lack legal protection, access to credit, and have no legal ground to push back against corruption.

Thus the concerted effort to reduce informality has taken a front and center role in Albania. Recognizing how the informal sector is a breeding ground for corruption, one of the country’s leading think tanks, the Albanian Center for Economic Research (ACER), began working on the issue with a group of reform-minded business organizations.

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Carrots Before Sticks: Celebrating International Anti-Corruption Day with Successful Anti-Corruption Approaches

On Wednesday the world celebrated the International Anti-Corruption Day, designated in 2003 by the United Nations (UN) General Assembly when it adopted the UN Convention against Corruption. Recognizing the importance of fighting corruption in that way was a major step in a growing global effort to remove the taboo around addressing corruption in the international discourse on development. Indeed, the new expectation of governments and businesses alike is to face corruption head on everywhere it cripples democracies and markets.

This year’s theme for the International Anti-Corruption Day is breaking the corruption chain. CIPE’s work with private sector organizations in countries around the world reflects precisely that objective. In many environments where corruption has become entrenched, is very hard for an individual or a company to stand up against abuses such as bribery or extortion. Furthermore, it is hard for businesses to make a credible commitment to integrity without sufficient knowledge on how to build proper management systems to prevent corruption in daily operations. These limitations can be overcome through better anti-corruption compliance and collective action. These private sector-led approaches have the power to break corruption chains and make a real difference.

Earlier this year my colleague Frank Brown and I presented CIPE’s experiences from Russia, Kenya, Ukraine, and Thailand at the Society of Corporate Compliance and Ethics Institute in Las Vegas. To celebrate the International Anti-Corruption Day, we captured key takeaways from our presentation in CIPE’s latest Economic Reform Feature Service article:

Article at a glance:

  • Corruption is primarily an institutional issue and combating it requires proactively preventing corrupt practices through supply- and demand-side reforms.
  • Collective action and anti-corruption compliance are practical approaches that reform-minded businesses can use to build a critical mass of companies committed to operating with integrity.

Companies in emerging markets can greatly benefit from improving their anti-corruption practices, which makes them more attractive business partners in global value chains.

Read the whole article here.

Anna Kompanek is Director for Multiregional Programs at CIPE.

The Role of the Presidential Debate in Macri’s Argentina Election Victory

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This post has been updated on December 17, 2015.

What a difference a month can make!  During Argentina’s first presidential candidate debate in October, Daniel Scioli, the Peronist government party candidate, appeared to be a shoo-in with voters. A month later at the November debate held at the University of Buenos Aires Law School the tables were completely turned. Mauricio Macri, representing the opposition voice of market friendly change had now become the favorite to win the election. What happened?

The role of the presidential debates—the first in Argentine history (see my previous post on the first debate which talks about this CIPE supported initiative)—is difficult to quantify. What we can see is that Scioli paid a heavy political price for not participating in October’s debate. The other candidates made constant references during the debate to the empty podium that referenced his absence. The press also excoriated Scioli’s last minute decision to not participate.

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Argentina: Observing the Ballotage

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Mauricio Macri, nuevo presidente de Argentina (Foto EFE)

By Mario Felix Lleonart

Originally published on his blog Cubano Confesante.

I was brought by God’s winds to the epicenter of a democratic battle: the Argentina ballotage (runoff), the second round of an election for the presidency of the Republic between two candidates.

I landed on Sunday, November 15 in Buenos Aires, exactly at the moment of the first presidential debate in the history of Argentina. During an incredibly intense week, for the first time in my forty years I observed the effervescent passion of a nation that today can settle the future of their country through ballot boxes.

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