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.
Azerbaijani students attending a two-day seminar on entrepreneurship December 27-28 respond to the question, “who believes that they could start their own business?”
Forty percent of Azerbaijan’s population is under the age of 25, but less than a third of Azerbaijani youth are employed. This is partly due to economic policies that have restricted the private sector, particularly small and medium-sized businesses, leaving many young people to regard the government as their only path to employment. Topics such as free market economics, democratic governance, and entrepreneurship are largely absent from university curricula, and many young Azerbaijanis are not even aware that starting their own business is even a possibility, let alone a viable career option.
Since 2011, CIPE together with the Entrepreneurship Development Foundation (EDF) and its partner the Baku Education Information Center (BEIC) have trained 92 young Azerbaijanis on economics and business topics – and this number will be more than doubled as the training programs are scaled up in 2014-2015.
Participants, ranging in age from recent university graduates to mid-career professionals, attended weekly seminars over a ten-week span, tailored to the local context, based on CIPE’s Development Institute materials which were designed to improve young people’s understanding of the core democratic values underpinning entrepreneurship and the functions of a free market economy.
Freedom House has just released the country reports from the latest edition of its annual Freedom in the World survey, as well as Nations in Transit report – a comprehensive annual study of reform in the former Communist states of Europe and Eurasia.
According to the findings, the year 2007 was marked by a notable setback for global freedom and one of the regions where it was most pronounced is former Soviet Union. One of the key findings of the Nations in Transit report is that as oil and natural gas revenues surge in Russia and Central Asia, democratic institutions are more and more in trouble. The erosion of democratic governance has occurred not just in electoral practices, but also in the areas of civil society, independent media, and judicial independence.
The reason for that decline is growing reliance on natural resource exports. It erodes the institutions of democratic governance because massive inflows of export revenue go directly into the state’s coffers with little or no accountability and oversight. Not surprisingly, that generates corruption and cronyism undermining both democratic governance and free markets. Freedom House Director of Studies, Christopher Walker, comments:
“The resource curse is taking root. The growing authoritarianism in oil and natural gas-rich countries such as Russia, Kazakhstan and Azerbaijan is severely restricting the ability of democratic institutions to operate.”
This negative correlation between petroleum wealth and democracy is certainly not new, with the oil-rich and non-democratic Middle East being the prime example. But rising prices of oil and gas on the global markets add to the problem and allow authoritarian rule to thrive – or tighten – where the governments are in a possession of sufficient natural wealth to rest their power upon it.
As oil and gas prices continue to climb, all three post-Soviet resource-rich countries mentioned earlier received a “downward trend” assessment of their political rights and civil liberties. This was also the case in Freedom House’s rating a year ago and unfortunately this year may not be the last one when such trends continue.