Tag Archives: democratic governance

Key Minister Resigns in Ukraine, Casts Doubt on Economic Reform Progress

Photo credit: Lithuania Ministry of Foreign Affairs, Flickr https://www.flickr.com/photos/mfa_lithuania/20063595149

Photo credit: Lithuania Ministry of Foreign Affairs, Flickr

By Eric Hontz and Marc Schleifer

In a stunning announcement in Kyiv on February 3, Ukraine’s Minister of Economic Development and Trade Aivaras Abromavicius submitted his resignation to President Poroshenko). The Lithuanian-born Abromavicius cited several factors contributing to his resignation, including pressure to appoint questionable individuals to his team or to key positions in state-owned enterprises. In particular, he named Igor Kononenko, considered a Poroshenko ally in parliament. President Poroshenko has reportedly urged Minister Abromavicius to stay on, and has promised that the National Anti-Corruption Bureau would investigate his claims against Kononeko.

A public statement signed by10 ambassadors to Ukraine, including from the United States, the United Kingdom, Germany, and France, released hours after the resignation, emphasized deep disappointment and noted the importance of Ukraine’s leaders setting aside parochial differences and the necessity of putting the vested interests that have hindered progress for decades in the past. Minister Abromavicius had gotten several key elements of deregulation and economic reform moving during his time in the Ministry. He and his staff were encouraged by the International Monetary Fund, the European Union, and other leaders to institute far reaching reforms, including the transparent privatization of thousands of state-owned enterprises that weigh down Ukraine’s budget. Specifically, Minister Abromavicius sought to undertake reforms in state-owned enterprises to ensure transparency, impose corporate governance standards, and enlist professional managers in an effort to restrain rent seeking and back-channel arrangements that enriched a politically-chosen few, while depriving Ukraine of valuable budget income and distorting local economies. In his resignation letter, Minister Abromavicius noted that losses in state-owned enterprises were 100 billion hryvnias less in 2015 than in 2014.

At the same time, for the past several months, many of CIPE’s partners in the small and medium-sized enterprise (SME) sector in Ukraine have complained of the slow pace of reform, particularly in terms of fighting corruption and installing a clean judiciary, among other factors. The business community had been broadly supportive of the Minister’s agenda but felt that more could be done. Minister Abromavicius and his staff hold decades of experience in investment banking and asset management, yet the highly-qualified team still hit road blocks to reform so great that they have been forced to resign.

The resignation shines a light on challenges facing this important Ministry for Ukraine’s reform effort. Abromavicius is the second Economic Development Minster to step down following the EuroMaidan two years ago; his predecessor, Pavlo Sheremeta, lasted just six months, from February to August of 2014. In the past year, the Ministry has been restructured several times and has faced numerous staff layoffs. Moreover, a range of key deputy ministers also announced that they would leave, including Yulia Klymenko, who covered SME issues and entrepreneurship development. Many of CIPE’s partners have stressed that the Economic Development and Trade Ministry’s Department of Entrepreneurship Development and Regulatory Policycould have done more to support SMEs, such as approving a national plan for SME development.

The resignation has also touched off a storm of political intrigue and turmoil in Ukraine, as former Georgian President, now Governor of Ukraine’s Odesa region, Mikheil Saakashvili  voiced his support for Minister Abromavicius, saying that he too has clashed with corrupt forces in Ukraine. There is now open speculation in Kyiv on a range of topics including how Saakashvili might be aiming to create a new political party; he is growing his own popularity by traveling around the country hosting anti-corruption fora and criticizing the government Prime Minister Yatseniuk. Some say Saakashvili has an eye on becoming the country’s Prime Minister; that he has the support of Sheremeta, and wants to recruit Abromavicius to join him for a run in rumored snap parliamentary elections later this year. Even before Abromavicius stepped down, the “Samopomoch” party pulled one of its members of the government, Agriculture Minister Aleksei Pavlenko. Last year, another Deputy Economic Development Minister, Alexander Borovik, who had extensive private sector experience, left his post to join Saakashvili’s team, but has now reportedly joined the “Power of the People” party, a new economically-liberal bloc. This kind of political speculation is a further blow for the country’s stability, at a time when its economy is slowly starting to turn around, but it is still dealing with an ongoing military conflict with Russia in the East.

Minister Abromavicius’ resignation brings up uncomfortable questions for both the international donor community and the Ukrainian people, serving to highlight the difficulty of enacting meaningful, market-oriented economic reform and reducing corruption in Ukraine, Eurasia, and emerging markets more generally. The European Union, the United States and Ukrainians themselves have invested immeasurable time and energy in supporting reforms, some of which have been painful and burdensome for the average households (and therefore deeply unpopular).

What happens next with economic reform in Ukraine will likely influence the economic and political trajectory of Ukraine, as well as its neighbors Moldova and Georgia – which also aspire to make difficult reforms – in the next several years. Importantly, if Ukraine were to backtrack or stall on reforms, it could prove difficult for other countries in the region to follow through on investments toward reform, and would thus embolden entrenched interests and anti-reform voices in the region.

Eric Hontz is a Program Officer for Eurasia and Marc Schleifer is Regional Director for Eurasia and South Asia. 

The Debate Over Term Limits in Bolivia is About More Than President Morales

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On February 21, Bolivians will head to the polls to cast a yes or no vote on whether the constitutional two-term limit for presidents and vice presidents should be amended. The outcome will decide whether Bolivia’s current president Evo Morales will be permitted to run for office again if he so chooses.

Recent polling (10/26, 11/4) indicates that the vote will be close, with the intention to vote yes ranging from 46-49 percent and no from 39-45 percent, with 9-11 percent undecided. The current Bolivian constitution, approved in 2009 when Evo Morales was already president, establishes that presidents are limited to two terms (i.e. one reelection). President Morales was first elected in 2005. He was re-elected in 2009 and then was granted permission to run a third time in 2014 on the grounds that he had only served one term under the new constitution.

Why does it matter if citizens in Bolivia vote to approve a constitutional change that would pave the way for President Morales to run for a fourth term?

In an op-ed published in October 28, 2015 in Los Tiempos newspaper, Bolivian economist Roberto Laserna reminds his fellow citizens that the February 21, 2016 referendum only indirectly questions the permanency of president Morales. Ultimately, the vote will weaken legal certainty and stability of the rules of the game – i.e. democracy and rule of law. Read the translated text of the article below.

Brent Ruth is a Program Officer for Latin America & the Caribbean at CIPE.

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Kickstarting Economic Growth in Afghanistan’s Provinces

Participants at the Nangarhar PBA launch event.

Participants at the Nangarhar PBA launch event.

A year after the impasse over the 2014 presidential election was resolved, Afghanistan finds itself at a critical juncture in its economic development. Given the dramatic reduction in foreign military presence over the past several years and the decrease in development assistance from the international donor community, concerns are mounting that Afghanistan’s economy will be unable to sustain itself.

A recent study published by the Stockholm International Peace Research Institute (SIPRI) and the International Council of Swedish Industry (NIR) draws attention to the problem. “In its current state,” the report notes, “the Afghan private sector is not the engine of economic growth or instrument of social inclusion it has the potential to be. Popular dissatisfaction with unequal access to economic resources, flawed public services and goods, the adverse security situation, and predatory government activity undermine an effective and sustainable private sector.”

President Ashraf Ghani and the National Unity Government have laid out a wide range of proposals to kickstart economic development, but security conditions and political infighting have made it difficult to implement many of these reforms.  Nevertheless, hope for progress and success remains.  The Swedish report, while painting a grim picture of the current outlook, provides a concrete set of recommendations to Afghan government policymakers, the international donor community, and other key stakeholders, for incentivizing private sector growth and boosting economic development, thereby improving prospects for peace and stability.

Chief among these recommendations is the need for the Afghan private sector to play a greater role in the policy making process.  On October 28, over a hundred leaders of the Afghan business community, civil society, and media, as well as prominent provincial and national government figures, convened in Jalalabad for the official launch of the report of the Nangarhar Provincial Business Agenda.

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What’s the Role of the Private Sector in Democracy and Development?

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Today is the International Day of Democracy, when the world celebrates the importance of democracy and democratic governance. But the role of the private sector in building democracies that deliver prosperity and opportunity to all citizens is often overlooked. That is why the contribution made by private sector participants at the 8th Ministerial Conference of the Community of Democracies (COD) is particularly noteworthy.

The Community of Democracies was founded in 2000 as an intergovernmental coalition specifically focused on promoting democracy and democratic ideals (at the time, only 68 of 189 UN member states were democracies; today the number has risen to 84). This year’s Ministerial, which took place on July 22-24 in El Salvador, gathered representatives of civil societyparliamentsthe private sector, and youth in the capital of San Salvador. The leading theme for El Salvador’s 2013-2015 presidency of the organization was “Democracy and Development.” About 800 participants from more than 70 countries attended.

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Democracy that Delivers through Better Governance

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Major global trends are changing the way we approach international assistance and policy reform. Private sector-led growth has produced enormous opportunities, even as market freedom and access to opportunity remain uneven. Political upheaval has raised hopes for democratic freedoms, yet freedom too often is undermined by poor governance.

Governance reforms must adjust to these shifting circumstances. As a rule, effective reforms tap the power of free markets and the strength of citizen engagement. Each country requires distinctive sets of solutions that reflect local capabilities and needs. These solutions take shape through policy coalitions forged by local partners. Often, they benefit from international experience in convening dialogue and mobilizing support.

Strategies for Policy Reform illustrates CIPE’s approach to improving governance in cooperation with local entrepreneurial leaders. This international case collection shares program experiences and results achieved across CIPE’s four focus areas: Enterprise Ecosystems, Business Advocacy, Democratic Governance, and Anti-corruption & Ethics.

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Fixing Tunisia’s Economy Requires Reform, Not More Foreign Investment

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In light of the recent terror attacks in Tunis and Sousse, which have debilitated the tourism industry and sent investors scurrying to reconsider their options and assets in the country, it is more important than ever to look at the intersection between economic growth and transparent democratic institutions in Tunisia.

President Obama and Tunisian President Béji Caïd Essebsi, meeting during Essebsi’s May visit to the United States, published this article about consolidating democratic gains in Tunisia and spurring responsible economic growth. The discourse would benefit from a deeper understanding of the legal and regulatory issues that stifle job growth in that country.

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The New Middle East: An Uncertain Future

Map of Middle East Region

By Bahaa Eddin Al Dahoudi, CIPE-Atlas Corps Think Tank LINKS Fellow

What future awaits the Middle East? This question remains pivotal following the outbreak of the Arab revolutions four years ago. It keeps popping up as regional developments arise, especially with the decline of democracy and presence of revolutionary forces in many Arab countries. The region’s resort to military tools is increasing due to the rise of terrorism, violence, and political polarization, a decline of charismatic leaders, and a lack of support for institutional structures and democratic transitions. In a Middle East where “there is no winner,” two vital questions emerge: Is the Arab revolution the reason behind the chaos and collapses? And, what are the future scenarios for this inflamed region?

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