Analysts report on varied experiences of "Nations in Transit" (02/28/99)

Analysts report on varied experiences of "Nations in Transit"

by Yaro Bihun
Special to The Ukrainian Weekly

WASHINGTON - The political and economic transition of countries in Central Europe and the geographic area once part of the USSR has been as varied as their historical legacy, and the U.S. and other Western governments, for the most part, have not taken these differences into account in their assistance policies.

This was one of the major points underscored by the participants in a recent briefing in Congress on the publication of "Nations in Transit 1998: Civil Society, Democracy and Markets in East Central Europe and the Newly Independent States."

The book, published by Freedom House and edited by two of the briefers - Freedom House President Adrian Karatnycky and Prof. Alexander Motyl of Rutgers University - is a study and analysis of 28 post-communist countries of that region. The third briefer, was E. Wayne Merry, a retired Foreign Service officer and former senior advisor at the Commission on Security and Cooperation in Europe, the sponsor of the February 18 briefing.

Mr. Karatnycky noted that the report groups these countries into three categories: seven Central European and Baltic countries are considered "consolidated democracies and market economies"; four - Belarus, Tajikistan, Turkmenistan and Uzbekistan - are grouped as "autocracies and state economies"; and the remaining 17, including Ukraine and most of the former Soviet states, are seen as "transitional."

The study found a strong correlation between economic reform and growth, and political reform, which, Mr. Karatnycky said, tend to reinforce each other. The average economic growth rate of consolidated market democracies was 4.7 percent; the transitional countries varied widely, but, as a group, they grew 1.9 percent; while the statist autocracies declined by 2.85 percent.

Ukraine and Russia are stagnant economically, Mr. Karatnycky said. While they made some strides in privatizing state industries, bringing their budgets into balance, restraining inflation and adopting some characteristics of a market system, he said, "they failed to create the basis for an entrepreneurial economy, in which small business is the driving engine for growth."

In these and some other cases in which countries have lost their reform momentum, he said, donor countries and organizations need to re-evaluate the effectiveness of their current programs in order to break that deadlock.

But even though some of these programs have not been successful, the money was not wasted, he said. "In the absence of intervention and engagement of the West, the outcomes can be and could have been even more harmful than they have been."

Prof. Motyl, who until recently was associate director of the Harriman Institute at Columbia University and is the author of 10 books on Soviet and post-Soviet policy and history, underscored the striking differences between the East-Central European and Baltic states, which have done well, and the former Soviet states, which are not doing well.

He attributed the lack of progress in the post-Soviet states to the absence of the historical and cultural legacies of democratic and economic experience - enjoyed by such countries as Poland, the Czech Republic, Slovakia, Hungary, and the Baltic states - and to their Soviet "institutional baggage."

"Seventy years of totalitarian communism destroyed the political elites, destroyed the cultural elites, destroyed the society, destroyed whatever markets existed, destroyed whatever civil society existed, and transformed whatever incipient political classes these countries had into bureaucrats and apparatchiks of the Communist Party," Prof. Motyl said.

The Central-East European countries managed to preserve some of these institutions - like Poland's Catholic Church and its vibrant peasant class, and Hungary's limited private enterprise - and later built on these foundations.

"The suggestion that is often made that Russia should have learned from Poland ... in some ways is fundamentally irrelevant," Prof. Motyl pointed out, "because Poland was not like Russia; Poland was not like Ukraine."

That does not mean that democratic and market reforms cannot be pursued in these countries, he said. "It's just that the policies that are pursued in the former Soviet space, the Soviet bloc should not be a one-size-fits-all kind of policy."

He suggested that local elites should pursue reform policies differently, and U.S. and other Western assistance should be tailored to these different circumstances and adapted, as needed, over time.

The West should also be realistic about what can be achieved in these countries, Prof. Motyl said. It cannot force reform but only "nudge" it along, and over the long-term. But the West dare not isolate these former Soviet countries back into their own "ghetto," he stressed.

Among future challenges, Prof. Motyl noted that volatile mixture of the growth of Russian nationalism and the potential for an authoritarian regime coming into power. As for the other post-Soviet states, he said, they face instability ahead, both from continued stagnation, on the one hand, as well as from any attempts at radical reform.

Another serious challenge is the expansion of the European Union into Central Europe. While positive by itself, he said, "it has the potential of creating another institutional boundary between the East, that is to say, chaotic Russia, Ukraine - corrupt, unstable, and the West - rich, prosperous, stable and functioning quite well."

That, he said, has the potential of not only disrupting the internal workings of these states but also the security and stability of Europe.

Mr. Merry also cautioned against trying to apply a "one-size-fits-all" model for democratic and economic reform. And the model he suggests they should be most cautious about emulating is the American model, because it developed in such an unusual and unique historical environment.

In the development of post-Soviet economies, the local elites emphasized self-interest, "with a heavy emphasis on 'self'," he said, and this was reinforced by Western policies and beliefs that the development of market economies would automatically develop democratic, civil societies. That causal relationship, he said, is false.

Most Western businessmen and investors can handle the economic problems in these countries, he said, and when they have complaints they usually fall into the "rule of law" rubric.

Mr. Merry said that Western policies, which supported the growth of crony capitalism in these countries, not only wasted funds but, more important, resulted in the loss of prestige and authority of Western approaches and reversed the progress of democratic institutions.

He said he expects things will probably get worse before they get better, the present borders will not remain unchanged, and outside forces - Russia and the United States, among them - will try to exert their influence on developments in the region.

The U.S. role, he expects, will not necessarily be benign. "Unfortunately we have tended, as we did in much of the Third World in the post-colonial period, to place a very low emphasis on the development of civil institutions and the rule of law, giving much more attention to our quest for stability and for issues such as security and economic change."

The briefing, coming as it did on the day Secretary of State Madeleine K. Albright was to announce her certification decision on assistance to Ukraine, the panel members were asked to comment on that aspect of the U.S.-Ukraine relationship.

Mr. Karatnycky saw the certification process as a laudable way of trying to press the Ukrainian government towards instituting fundamental economic reforms, even though the results have not been as dramatic as the authors of the legislation would have liked them to be.

The process, however, should be viewed in the context of Ukraine's "geopolitical environment," he said, pointing to renewed attempts to form some kind of a Slavic union.

"In a context where there is going to be intense and intensifying pressure on Ukraine to join, first some inter-parliamentary structures, and then some broader political structures leading towards eventual confederation" of Russia, Belarus and Ukraine, he said, "It would seem me to be advisable in this context that we not scale back our relationship and our aid relationship with Ukraine."

Mr. Merry said he views the certification exercise as more psychological and political than economic - to try to get authorities in Kyiv "to stop believing their press notices."

"A failure of U.S. policy towards Ukraine was that we told them that we loved them and how important they were to such an extent that they came to believe that there would be no real sanction for failure to implement serious structural and other reforms," he said.

Mr. Motyl said that there should be no illusions about Ukraine or most of the other former Soviet republic being able to do economically what the United States would like for them to do.

He said he sees the question of certification directly related to the larger issue of whether the United States wants Ukraine to be integrated into global and West European structures and institutions, "or whether we don't want that, and are willing to accept the consequences," mentioning as a possible consequence the "resurgent Slavic union of one kind or other."

"That's the choice facing this country, I think," he added.

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