Transcript How to break the *Iron law of oligarchy

How to counter democratic
backsliding in CEE?
Peter Golias
INEKO Director, Slovakia
June 21st 2016
Warsaw, Poland
Root causes
Root causes of democratic backsliding in CEE
Traditional beliefs/values (e.g. preferring authoritarian
rule, nationalism, conservativism, trust to
Russians/Americans)
Disappointment, low standard of living, corruption
Iron law of oligarchy, extractive institutions
Populism (unrealistic or harmful promises/measures)
Poor education
Russian propaganda
Key solutions
Solutions to democratic backsliding
Traditional beliefs/values
• Public education
Iron law of oligarchy, Disappointment
• Structural reforms, setting up inclusive institutions
• Higher transparency, watchdogging big public tenders
• Mobilizing democratic forces (e.g. ethical businesses, free media, civil activists,
NGOs)
• Disclosing oligarchs‘ links to politicians and public officials; contrasting legal
income and property of politicians and high state officials
Feedback on populism:
• Tracking promises, fact-checking, evaluation of Gvt measures, public debt breaks
Poor education
• Formal education reform (more focus on democracy, anti-extremism, success in
labor market, etc.)
Russian propaganda
• Monitoring and disclosing suspicious information channels
Trust to Americans
What do you think to what extent could we trust on following nations and rely on
them? Answers about Americans:
Slovaks
Poles
Hungarians
Czechs
0
10
Definitely trust
20
Rather trust
30
40
Neither trust nor distrust
50
60
Rather distrust
70
80
Definitely distrust
Source: Institute for Public Affairs, Slovakia, spring 2015
90
Don´t know
100
Trust to Russians
What do you think to what extent could we trust on following nations and rely on
them? Answers about Russians:
Slovaks
Poles
Hungarians
Czechs
0
10
Definitely trust
20
Rather trust
30
40
Neither trust nor distrust
50
60
Rather distrust
Source: Institute for Public Affairs, Slovakia, spring 2015
70
80
Definitely distrust
90
Don´t know
100
Who is disappointed?
Country
Corruption Perception Index 2015 ranking
Austria
16.
Estonia
23.
Poland
30.
Lithuania
32.
Czech Republic
37.
Latvia
40.
Slovakia
50.
Hungary
50.
Romania
58.
Macedonia
66.
Bulgaria
69.
Serbia
71.
Bosnia and Herzegovina
76.
Moldova
103.
Ukraine
130.
Source: Transparency International
Who is disappointed?
What is the living standard of people like you?
Slovakia
Poland
Hungary
Czech Republic
0
10
20
30
High
40
Neither high nor low
50
60
Low
Don´t know
Source: Institute for Public Affairs, Slovakia, spring 2015
70
80
90
100
Who is disappointed?
What is the level of democracy in your country?
Slovakia
Poland
Hungary
Czech Republic
0
10
20
30
High
40
Neither high nor low
50
60
Low
Don´t know
Source: Institute for Public Affairs, Slovakia, spring 2015
70
80
90
100
Who is disappointed?
GDP per capita (in purchasing power parity, as % of EU28 average)
160
Netherlands
140
Austria
United Kingdom
120
France
EU (28 countries)
100
Spain
Czech Republic
80
Slovakia
Estonia
60
Greece
Hungary
40
Poland
Macedonia
Albania
20
Bosnia and Herz.
Ukraine
Source: Eurostat
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0
Who is disappointed?
GDP per capita change (in purchasing power parity, as % of EU28 average)
41 41
31 30
26
22
18 18
17
23 22
20
17
14 14 13
11
9 9 9
8
7
6
5
1
13
5
8
5
-3
3
-3
3
2
5
1
2
0
-2 -1
-6
8
-2
-1
-4 -4 -5
-9
0
2014/1995
2014/2005
-3
-8 -8 -8
-12 -10
-16
-19
Source: Eurostat, World Bank
Italy
Greece
UK
France
Belgium
Denmark
Sweden
Germany
Austria
Spain
Ukraine
Portugal
Finland
Netherlands
Czech Republic
Slovenia
Serbia
Macedonia
Bulgaria
Albania
Croatia
Hungary
Bosnia & Herz.
Romania
Poland
Slovakia
Latvia
Estonia
Lithuania
-26
Iron law of oligarchy
• 1911: German sociologist Robert Michels
– The new elite will always acquire power for its own
benefit and at the expense of others
• 2012: American economists Daron Acemoglu and
James Robinson (Why Nations Fail)
– To break the Iron law of oligarchy, the country has to
have a broad and strong coalition interested in setting
up “inclusive” institutions and to distribute political
and economic powers in such a way that they cannot
be monopolized by narrow elite
– Key members of coalition: Free media, businesses
independent from Gvt and monopolies
Inclusive institutions
• Political:
– Democratic political system
– Rule of law: Independent justice, regulatory and
controlling authorities
– Free media, transparency, etc.
• Economic:
–
–
–
–
Market economy
Protection of private property
Effective anti-monopoly policy
Level playing field, etc.
Slovak experience
• Key success factor: Creating informal coalition
of people supporting democracy and reforms
– Civil society: Think-tanks and advocacy NGOs
(including INEKO and the Business Alliance of
Slovakia)
– Free media
– Experts from think-tanks and bank analysts
engaging in public discourse
– Reform-minded politicians and policy makers
(often coming from think-tanks)
Who supports democracy?
Slovak experience in foreign funding of NGOs
1990s and early
2000s
Late 2000s and early
2010s
Current situation
US donors
Intensive
support
Decreasing activity,
almost disappeared
Increased activity of OSI
limited to anticorruption
EU donors
Small support
(Embassies)
Minimum support
(Embassies)
Minimum direct
support; Gvt
administrated EU funds
EEA &
Norwegian
grants
No
Sporadic support
(huge administrative
burden)
No
Potential funding sources
• Local private donors
– Limited potential; private interests
• Foreign donors
– Return/Increased activity of US donors
– EEA & Norwegian grants; Swiss grants (need to
focus on democracy and decrease administrative
burden)
– EU (need to focus on democracy, decrease
administrative burden, fund NGOs directly not via
Gvt)
Potential cooperation in CEE
• Discussion platforms, exchange of best
practices about:
– Projects (who is doing what)
– Reforms (what works and what does not work)
– Problems and (potential) solutions
– Funding opportunities, etc.
• Common projects
– Transfer of know-how
– Developing new ideas
Thank you for attention!
http://www.ineko.sk/
Crony-capitalism
Source: The Economist, May 7th, 2016, The party winds down