Tag Archives: economic reform

Key Minister Resigns in Ukraine, Casting 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 by 10 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.

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Leveraging the Youth Bulge to Transform the Arab World

Syrian Economic Forum students learning civic education in Syria.

Syrian Economic Forum students learning civic education in Syria.

Last Thursday marked five years since Tunisian President Zine El Abidine Ben Ali was ousted from power in what has come to be known as the Jasmine Revolution. A well-waged campaign of civil resistance, provoked by the self-immolation of Mohamed Bouazizi, ultimately led to the upending of Ben Ali’s autocracy and catalyzed a series of protests across the Middle East and North Africa.

Five years after the first Arab Spring uprising, we have the benefit of hindsight. We can pinpoint, with relative certainty, the various elements that contributed to the revolutions occurring when and where they did. Five years on, and we continue to grapple with both the inspiring and heartbreaking implications of revolutions in Syria, Egypt, Libya, and Tunisia. A critical element that drove the protests, often mentioned in the early days but since relegated to the margins of the conversation, is the youth populations of these countries.

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Can Closer Economic Ties with Moldova Resolve the Transnistrian Frozen Conflict?

frozen-conflicts-transnistria

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.

The conflict between Ukraine and Russia has set in motion events that could have major implications for the unrecognized Moldovan breakaway region of Transnistria. Wedged between Ukraine and Moldova, two countries that have taken a Western turn in their foreign policy, Transnistria is distant from its backers in Moscow.

In May 2015, the Ukrainian parliament suspended all military co-operation with Russia, including a 1995 agreement giving Russia transit rights across Ukraine to reach Transnistria. Losing access via Ukraine means that Russia must route supplies to Transnistria by air through Moldova’s capital Chisinau, but the Moldovan government has been turning back suspected military personnel, and Tiraspol — Transnistria’s capital and the second largest city in Moldova — has an runway unsuitable for cargo flights from Russia.

The loss of direct Russian access has limited the flow of aid, one Transnistria’s most important revenue sources, and put the economic squeeze on a region already weakened by the poor economic situation in Russia. Industries in Transnistria, such as they are, have been shutting down or decreasing production. Moldova’s signing of a key trade deal with the European Union will increase the pressure on Transnistria’s economy. The net result could be to push Transnistria back toward its Moldovan parent state, in the process resolving one of the oldest post-Soviet frozen conflicts.

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Keeping the Economy on the Radar, Even in the Hardest Times

A new job category in Aleppo -- "the crosser" who ferries good across the border under dangerous conditions. (Photo: Syrian Economic Forum)

A new job category in Aleppo — “the crosser” who ferries good across the border under dangerous conditions. (Photo: Syrian Economic Forum)

In Beirut during Lebanon’s civil war, people continued to go to school and attend theater performances. One woman once told me how, to get to her university, she would take a taxi to the line between East and West Beirut, dash to the other side behind overturned trash dumpsters to avoid snipers, and then catch another ride to university — always with a change of clothing in case she could not get home again for a while.

Not every war sees people able to defiantly and bravely continue school and go to the theater, but the story underscores an important point left out of most news reports: conflict is not a permanent state…even during conflict.

Media reports show the most bullet-ridden, shell resounding, civilian-fleeing dramatic moments, but even in situations of all-out war, pockets of fighting revolve and front lines move. Whenever there is a lull in violence, civilians generally try to make life go on as much as they can, however they can. And that includes the economy. Farmers will return to their fields and factories will resume operation as often as possible, and people will buy, sell, and barter what they need to survive. And yes, sometimes they even study for exams by candle in hallways lined with mattresses during shelling (another story I once heard from another Lebanese).

Recently, a group of CIPE staff with experience in conflict-affected settings formed a task force to do some more thinking about CIPE’s own projects in conflict-affected areas. We found it interesting that we work with local groups in areas that range from unstable to war-torn, but that we rarely think of them as “conflict projects” per se. So we started throwing around a lot of questions: is it worth even thinking of our projects through a conflict lens ? (Short answer: yes.) What is our approach to conflict and is it unique? What are the various ways CIPE has either reacted programmatically to conflict, or designed programs to be conflict sensitive?

We’re still thinking, but we have started to articulate what we think we know (more on that at the end of this post). So here it goes…

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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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The Real Problem for Intra-African Trade

Photo: BBC / AFP

Photo: BBC / AFP

This post is continuation of a previous article on regional integration in Africa.

Reducing tariffs is a great start for increasing trade within Africa, but important non-tariff barriers (NTBs) must also be reduced in order to boost trade both within and outside of the continent. In fact, the United Nations Economic Commission for Africa found the costs of NTBs in 2010 were higher than the costs of tariffs. The African Development Bank notes that, “while tariffs have progressively fallen, the key challenge to intra-African trade is non-tariff barriers that stifle the movement of goods, services and people across borders.”

What sort of non-tariff barriers exist in Africa? Infrastructure across the continent is poor, discouraging the movement of goods and people. Less than a quarter of roads are paved, and those are often filled with potholes. It’s not uncommon for airfare with a layover in Europe or Asia to be cheaper than direct intra-continental flights. Meanwhile, seaports are crumbling and rail connection is paltry.

“Thick borders” are also an issue, created by burdensome administrative procedures for clearing goods for import and export. Lines of trucks at the border lead to waits measured in days due to excessive bureaucratic red tape and burdensome administrative procedures. A report by Transparency International (TI) and TradeMark East Africa (TMEA) found that drivers at Rwanda-Tanzania customs stations spent an average of 72 hours obtaining customs clearance. World Bank economist Paul Brenton found that a truck serving supermarkets across a Southern Africa border may need to carry up to 1600 documents to comply with different countries’ requirements for permits, licenses, and other required paperwork.

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Can Regional Integration Help Africa Reach Its Economic Potential?

Headquarters of the South African Development Community in Gaborone, Botswana. (Photo: Wikimedia Commons)

Headquarters of the South African Development Community in Gaborone, Botswana. (Photo: Wikimedia Commons)

Much of the discussion at last year’s landmark U.S.-Africa Leaders Summit in Washington, DC, focused on transatlantic trade and investment between the U.S. and African countries – for example, the need to renew the African Growth and Opportunity Act, which aims to promote trade with the U.S. by removing tariffs on a number of African exports. Another theme that was prevalent throughout the summit, however, was the need to open up borders, reduce barriers, and increase trade between African nations.

It’s becoming quite common to talk about the rise of Africa and the potential return on investment in a continent often compared, demographically and economically, to countries like China and India. In fact, even developing sub-Saharan Africa is slightly richer than India on a per capita basis, and the continent as a whole has a larger GDP. The economic potential of Africa’s billion people, as both workers and consumers, is only beginning to be tapped.

These statistics are accurate and encouraging, but they can also be slightly misleading. Africa is not a single country, like China or India. It is 54 different countries with 54 different sets of borders and laws creating 54 fragmented, often tiny markets. Doing business in China or India means over a billion people as potential customers or employees. But there is no equivalent “African market.” Investing in Cameroon does not give you much access to Algeria or Zimbabwe, or any country in between. High tariffs, bureaucratic red tape at the borders, and poor infrastructure all make it hard for goods, capital, and workers to move freely through the continent.

Undeniable progress has been made in regards to tariffs, with the establishment of regional trade blocs such as the Southern African Development Community (SADC), Economic Community of West African States (ECOWAS), and the East African Community (EAC). Yet there is still much that needs to be done to unite the continent and also to integrate it with the rest of the world.

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