Frequently Asked Questions on Democracy and Businesses: A Compilation of CIPE Leadership’s Thoughts and Ideas

03.14.2022 | Articles | Nora Wheelehan

Frequently Asked Questions on Democracy and Businesses:

A Compilation of CIPE Leadership’s Thoughts and Ideas

Compiled and Edited by Nora Wheelehan

Responses are almost verbatim, edited only for continuity, length, and flow. For the complete interviews, please see Defending Against Authoritarianism, Advancing Respect for Human Rights, and Fight Against Corruption.

President Biden’s virtual Summit for Democracy on December 9-10, 2021 provided the platform to bring together leaders from government, civil society, and the private sector to focus on the challenges and opportunities facing democracies. As the first of two summits, it was an opportunity for leaders from 100 countries to set forth an affirmative agenda for democratic renewal and make both individual and collective commitments to defend democracy and human rights at home and abroad.

The Center for International Private Enterprise (CIPE) decided to take this important conversation regarding democracy to the countries on the receiving end of American democracy assistance, proactively engage with audiences in South Asia, and attempt to fulfill the promise of listening to regional perspectives on democracy. CIPE collaborated with Tritiyo Matra (Third Dimension), Bangladesh’s most popular political talk show hosted by Zillur Rahman. The collaboration resulted in a series of four TV talk shows, each focusing on one of the Summit themes, defending against authoritarianismadvancing respect for human rights, and addressing and fighting corruption. The fourth show presents South Asian perspectives on democracy featured leaders in democracy program implementation from Bangladesh, Nepal, Pakistan, and Sri Lanka.

1. On the current state of democracy

Andrew Wilson – CIPE Executive Director: We must admit that there has been a democratic backsliding over the last 15 years. Over the last decade, democracy and globalization has failed to deliver prosperity for the public, alienated people from their domestic cultures, and heightened political discontent, empowering Populists and Authoritarians to creep in. The COVID-19 crisis exacerbated these feelings of the lack of control, and in the early stages of the crisis, Authoritarians deployed models that seemed to effectively deal with COVID while democratic systems struggled. Democracy is messy, hard work, and not an easy system of governance. Although it delivers in the long run, at the best of times it can test the patience of voters, leading to questions of if political systems are working well for the people. Moreover, when you’re feeling disconnected and economically challenges, that’s not a message you want to hear, you want to hear from people who tell you they have an easy path. However, I think people are now starting to see that the easy path may not be as easy as they thought, instead it’s destructive. Part of why I remain an optimist, when we see the resilience of democracies in responding to COVID, as they develop drugs, get treatments and restore people’s lives to some sense of normalcy with freedom, I think we’re going to see people start to look at democracies as being more resilient and as being in the long term better for their own prosperity and health.

 

Kim Eric Bettcher – Director of Policy and Program Learning: I would argue that the atmosphere of gloom and doom has been overstated. Authoritarian “success” outliers, like Singapore, are highlighted while failures, like Zimbabwe and Venezuela, are sidelined along with democratic hopefuls from Sudan to Colombia to Nepal. Moreover, we must remember that at the turn of the century we had unprecedented numbers of democracies worldwide, and many of these were not well established, lacked democratic norms and institutions, and were not very serious democracies to begin with. Additionally, there’s not a strong movement towards authoritarianism either with authoritarians reverting to competitive regimes, while popular protests are on the rise and public opinion polling (PEW, World Values Survey) consistently proves people prefer democracy. Finally, authoritarian regimes are not as strong as they like to project with their own internal challenges, limited legitimacy basis, and inabilities to adapt and perform over the long term as innovative economies.

 

Abdulwahab Alkebsi – Managing Director for Programs: The democratic processes alone are insufficient and without believing in democratic values, there is no democracy. The public and the media tend to focus on the processes of democracy, like working elections and political parties, but forget about the values of democracy: human rights, rule of law, and the freedom of expression and assembly. Once we select the people that represent us in government, how they govern and what happens between election is even more vital to democracy. Moreover, this is when we can focus on human rights, by working to ensure human rights are embedded in our democracies, strengthening civil society participation, and strengthening citizen and minority participation in between elections. Democracies, like the human body, get sick and need continuous care, and right now they are facing tremendous challenges that require all of us to engage and provide it nourishment to succeed and move forward. We must remember that democracy is not guaranteed, we must work hard on maintaining it.

 

Barbara Langley – Director of Center for Women’s Economic Empowerment (CWEE): Democracies require an active approach. A democratic government gives its citizens the parameters in which to work and operate freely, but it’s truly up to us as citizens and constituents to be active and involved. The process can look messy and a little disjointed, but this is really where things/hopes come to fruition.

 

2. On balancing democracy interests with geopolitics

Kim: The U.S. reaps long-term benefits from consistently supporting democratic principles, and although democracy may not always rank at the top of the U.S. foreign policy objectives, the USG has many tools at its disposal to counter authoritarianism. It does not have to be the executive branch pf a government alone pursuing a democracy policy. One such tool is CIPE’s role in the NED-led effort, premised on a whole society approach to assisting democracy and civil society-to-civil society relationships across countries. The NED family represents business, labor, and both political parties while working with a wide range of actors in other countries including youth, women, economic organizations, political parties, and so forth. This model reminds us that democracy is created by the people and civil society in each country, and democracy is not purely a government project.

 

Andrew: There has always been a struggle between the idealist and realist sides of U.S. foreign policy, and these arise in the inherent conflict between the U.S.’ promotion of democratic values and security cooperation with undemocratic regimes. The U.S. government should have a realist foreign policy that addresses its security issues and commercial interests, while maintaining a foundational basis in democracy. Democracy is the cornerstone of U.S. foreign policy: we believe that the success of our own democracy is at stake, and through the success of our own democracy, we can work with other democracies around the world to create this global system of values and practices.

 

Abdu: The American people and institutions have been consistent supporters of democracy, despite administration disparities. Rather than relying solely on government-to-government work, democracy activists can develop relationships with American civil society and continue supporting the value of democracy and human rights. There are fantastic American organizations whose only reason to exist is to support democracy around the world, such as CIPE and the NED, because civil society-to-civil society and citizen-to-citizen work is vital.

 

 

Barbara: With respect to human rights and women’s economic empowerment, the economic interests of nations are to be determined and thus defined by economic prosperity for all and there’s absolutely no prosperity for all without the respect for basic human rights and dignity, that’s the ideal. WEE is a perfect example of this as the barriers to WEE are often human rights related, and studies show that by removing these barriers we could increase global GDP by $28 trillion.

 

3. On lessons in CIPE’s work regarding challenges facing democracy

Kim: Through CIPE’s work, the primary challenges to democracy today we’re seeing are: the erosion of democratic institutions, growing inequality, authoritarian learning, implementation gaps, and lack of collective action. First, authoritarians are slowly but steadily dismantling pieces of democracy in a precise and calculated manner over time with attacks on the free media, intendent courts, the civil service quality, and the public space for NGOs. Second, although the international standard of living has increased, inequality within countries is more pronounced, and people are unable to access the benefits of globalization and democracy. Both inequality and the erosion of institutions undermine trust and threatens democracy. Third, authoritarians learning from their experience and other authoritarians. They are adapting by playing democratic-style games, like having more open economies, elections, or some form of opposition, but they continue to find ways to undermine democracy, create doubt and disinformation, and limit freedom. Fourth, implementation gaps are a consistent barrier CIPE faces. Although CIPE can support local actors in their pursuit of democratic policies and movements, these reforms stay on paper and are not put into practice or enforced. Finally, the lack of collective action is a persistent challenge to democracy. The public benefits from greater economic opportunities and opportunities to hold government accountable, but they must organize and come together, because if there is a fragmented civil society, then people cannot aggregate their issues and wield their power.

 

Abdu: CIPE has found that the same challenges that obstruct human rights also obstruct thriving democratic businesses and inclusive growth. The private sector and human rights share the same incentive structure, as the environment that encourages/cultivates proper human rights and rule of law also enables a democratic business to thrive. The same courts and laws that protect human rights also protect property rights for a business and the same citizen need to access information for protection applies to businesses as well. Rule of law is vital to ensuring proper human rights, and it’s also crucial for successful democratic businesses. Additionally, good growth, the proper kind, is inclusive growth for all, not just those with access to money, information, or protection. Inclusive growth delivers freedom and affords everyone the same opportunities and protections. CIPE strives to provide everyone this human right, access to the opportunity to succeed.

 

Frank: CIPE found that the behavior of corrupt actors in emerging markets is a significant corruption challenge, so we focus on ways to leverage market and businesses forces in ways that changes corrupt actors’ behaviors. Similarly, CIPE has observed that businesses are far more responsive to incentives than to punishments. Moreover, businesses are less concerned with the moral argument about corruption, whether something is right or wrong, but rather they’re concerned with whether it’s legal, illegal, risky, or will cause long term damage to their business. CIPE suggests to businesses that if they want to reduce the likelihood of risks, prosecution, and serious fines, CIPE will work with them to change the behavior of business partners, employers, and employees in order to reduce business participation in corrupt activities.

 

4. On the leadership role of the private sector as agents of change

Andrew: While chambers of commerce and business associations are essential to collective action and private sector mobilization, they must reflect their societies and democracies. Often a key shortcoming of these institutions is that they tend to reflect the needs of their elected leadership, while doing a poor job of reflecting the overall needs of a business community that is not a monolith, that is broad-based and very diverse. I think the better these institutions can do at being transparent, listening to their membership, and representing the private sector’s collective interests, the more they can contribute to growth and democracy within a country.

 

Abdu: One must first understand the misconceptions and myths around the private sector to understand how it can be an agent of change. First, the private sector is often misrepresented as a monolith of elite multinational corporations and big conglomerates, while in reality it’s incredibly diverse and comprised of businesses of different sectors, sizes, and motivations with individuals from all parts of society. Second, countries are assumed to have a market economy if they have a private sector, despite its oligarchic or monopolistic nature. Nevertheless, that is not a market economy, which CIPE believes is a fundamental condition of having a democracy. Finally, economic approaches are depicted as limiting government intervention to enable private sector success. However, CIPE recognizes the significance of private-government partnership as an indispensable tool to improve the environment.

Therefore, the private sector supports democracy by being democratic itself, advocating for internal changes, collaborating with the government, and fighting for their own human rights. When the private sector is democratic, it inspires and nurtures the growth of democratic values in other sectors of a society. The private sector is pushing changes in how it operates and who it serves, with the introduction of stakeholder capitalism – the idea that a company should serve all of its stakeholders instead of just its shareholders – and ESG principles – the environmental, social, and governance considerations that help businesses support human rights, protect the environment, and ensure proper governance within the firm, society, and ecosystem. The private sector is cooperating with government regulation since it’s necessary for ensuring companies are good citizens and properly protect workers. Finally, the private sector is important to ensuring human rights because it also suffers when there is a lack of human rights. When human rights are missing, the limits imposed on certain members of society also apply to the economy as well as women and minority entrepreneurs do not have a chance to enter the economy, which exacerbates the lack of freedoms already experienced by these individuals.

 

Barbara: The private sector can be a changemaker through creating a positive, enabling environment that address the unique barriers to women’s economic empowerment (WEE). Society treats women and women’s rights as special interest groups, despite women representing 50% of the global population, a powerful constituency group in terms of numbers. The World Bank’s Women, Business, and Law report estimates that globally women have about 3/4th the rights of men with implementation gaps and social norms challenging WEE in the most progressive of systems. Moreover, the COVID-19 pandemic exacerbated these barriers and highlighted the urgency for reform. For example, the US alone lost a net total of 140,000 jobs last December, all of which were held by women. Ultimately, we need to create a true ecosystem of legal regulatory and societal empowerment. Something that gives women the power of agency, and the option and opportunity to choose her own path in life and not have the state or society as a whole limit her decisions.

 

5. On opportunities in supporting democracy

Andrew: The nature of opportunities has changed during the last 3 political phases: post-communist era, era of globalization, and the post-globalist period. The post-communist era is defined by complex, political transitions from authoritarian models with a centralized authority to a constitutional authority and the creation of democratic institutions such as rule of law, political parties, and mechanisms of democracy. At the same time, economic transformation occurred with the dismantling of centrally planned state systems and creating market-driven economies. The primary opportunities were the creation and support of democratic institutions and capacity development of trained individuals in these systems. The globalization era provided opportunities for growth with global values chains, MNCs reaching local producers, and expanding markets and middle classes. However, the global aspirations for rule of law and markets fell short due to implementation gaps and international corruption emerged as funds flowed from corrupt countries and the corrupt exploited laws originally created to encourage the development of markets, firms, and business deals, instead used to hide money and its movements.

The post-globalist period was centered on the intense optimism about the internet’s potential role in supporting democracy, by providing a space for civil society, and economies, with digital financial transactions moving money and goods at an unprecedent pace. The period also depicted democracies, especially in Europe and North America, failing to address the needs of those being left behind, so it wasn’t a failure of globalization, it was a failure of a domestic response to the challenges that globalization put forth. Current opportunities focus on mitigating the damage by renegotiating social contracts, cultivating democratic resiliency, and defining the rules of the internet and digital economy.

 

Barbara: There are ample opportunities for the private sector to introduce democratic changes, either at the multinational or the MSME level. At the international level, the private sector stepped up to lead by example and learn from its past mistakes, as demonstrated by MNCs like L’Oréal, H&M, and GAP, publicly supporting the ILO convention C190 focusing on eliminating violence and harassment in the workplace. At the local level, MSMEs can organize, create coalitions, join chamber of commerce or business association, and speak with one voice as a proactive partner to the government and proposing well-research, balanced, best practice solutions to a country’s most challenging economic and social issues. CIPE’s partnership with the Bangladesh Women’s Chamber of Commerce and Industry (BWCCI) equipped BWCCI with the advocacy tools to change how commercial loans were offered to women business owners. After just a few years, 65% of commercial banks dedicated desks for female borrowers, a 30% jump in commercial loans, $95 million, were completed for 10,000 women business owners, and BWCCI is now replicating the ILO’s dialogue on eliminating violence and harassment in the workplace at the country and local levels. The best opportunities for change are centered around working on dialogue with business, labor, civic, and political leaders and tackling some of those human rights issues, such as eliminating violence and harassment in the workplace, which circles back to advocacy and mobilization.

 

Abdu: Foreign investments provide opportunities for democratic accountability. There are pressures from foreign governments placed on receiving governments, but more important are the pressures the constituents put on their receiving governments, as the people should have a say in what kind of investments come to their country. The citizenry must insist and work hard to ensure that these investments, aid, and capital is constructive, helps domestic governance, fights corruption, and improves living standards, not just builds bridges or airports. On the other hand, corrosive capital is incredibly harmful to the domestic population. For example, corrosive capital doesn’t follow environmental regulations or labor laws, inclusively transfer technology and knowledge to the local community, and furthers corruption and bad practices. Ultimately, foreign investments are significant opportunities for democratic change and reform.

 

Frank: The opportunities for best addressing corruption and accountability are found in young people, the media, and understanding the cause of the problem. Young people are essential to reform because they are more willing to act than those with societal ties, inspired by their frustrations based in their experiences, and best equipped to seek out like-minded people also ready for change. Moreover, if youth can work together through an organization, they are much more powerful and less likely to give up hope, as they know that others are ready to help work together and collectively try to reform the corruption witnessed globally. Young people should see their role in society in terms of patriotism and serving your people by ensuring your country’s resources are equally, not perversely distributed because of corruption.

Corruption is intricate, subtle, complicated, hard to describe, and people have difficulty understanding it, so it’s up to the media to create a compelling narrative that explains how corruption impacts everyone’s life. The media can explain that corruption is the reason that local hospitals are not built, classrooms are overfilled, and food necessities have exorbitant prices. A free, independent media is essential to bringing about change. Finally, the only way to address corruption is through understanding it. Academics provide case studies that capture what does and doesn’t work and vital factors required, such as business and international community support and domestic political will. The new USAID anti-corruption taskforce presents a reinvigorated opportunity as its members understand the issue, incorporate lessons learned, and utilize a nuanced approach to fighting corruption.