Tuesday, April 26, 2005

On corruption and rule of law

Corruption is bad and the lack of rule of law is bad also. To say this though is not to explain why cultures tolerate both of these. The short asnwer is that it gives people in power things and power and there is something to this. But that is not the whole story. Below I post an analysis of corruption and rule of law which I did for a company looking to help Afghanis set up rule of law systems in Afghanistan.

The problem here though is setting up a dispute resolution program in Afghanistan. Because of the lack of rule of law traditions, the problem is not so much setting up a dispute resolution mechanism; that can be done quite easily. The problem is setting up a dispute resolution mechanism that is effective. That is a much more difficult problem...[and] presents some extra difficulties.

What we usually mean by a lack of rule of law is that a dispute resolution method is not in keeping with the standards we use in the West. Those standards focus on impartiality and transparency. From our viewpoint, countries that lack rule of law systems are not transparent enough and are not impartial enough to be effective. And this is true. Countries that have systems that are impartial and transparent have rule of law systems. So we want countries to adopt measures to make them more impartial—or at least create the likelihood of more impartiality-- and more transparent because we want them to have rule of law systems.

The problem with this perspective is that it tends not to recognize—or to downplay if it is recognized at all--the problems inherent in making those kinds of changes to a country’s system. And when we add the term “corruption” and say that these systems are rife with corruption, which they can be, that word usually kicks things into an emotional high gear and the problem then becomes one of either the people of the country learning not to be as greedy, or as “bad,” as they are or dealing with the low pay of civil servants. Both of these things may be a good thing to have happen, one being more possible than the other, but they both miss the point. There are cultural reasons why these systems are the way they are and these cultural reasons are usually of longstanding having been in place for centuries in some cases. But it also fails to realize that these cultural reasons are often intimately bound up with the identity of the people in that country. To ask them to change is not to ask them to be better but to ask them to jettison part of what identifies them as a society and as individuals in that society.

Traditional societies rest on different foundations than Western societies do. The point is that traditional societies are contextual in the way they see the world and their place in it. That context is defined by relations, personal relations, relations, for example, not with an abstract “government” but with the person in power, something which we would define abstractly as “government.” This relationship identifies them as do their other relationships within their tribe (often substituted now by country), their family and within their religion.

In the West, people know things about people without really knowing them. Any stranger on the street has certain inherent characteristics that identify him or her in the West. These are the characteristics of freedom, equality and fundamental rights as a human being, for starters. And these characteristics establish a relationship between people that occurs whether they know each other or not. But that relationship is abstract; it doesn’t depend on who it is standing before them, be they family, friend or stranger.

In traditional societies it is different. Persons who are a part of traditional societies need to actually know who the person is to know something about that person. It is the actual relationship they have with that particular person that establishes everything for them. With a stranger, they have no such relationship. What this means is that, in the West, even when we have no context with other people we have a type of relationship with them. In traditional societies however, no context with a person means no relationship. And it is that relationship which is important. Those
relationships are found in context.

The point is that in traditional societies, context is everything and that means relationship is everything. Relationship is context. And that relationship also helps to establish identity. In the West, to say, for example, “My dad was a butler; my grandfather was a butler and I am a butler” is a pitiful description. Abstractly it suggests that the person is pleased with subservience and that he has no ambition to do anything other than serve. And that is how it would be viewed from a Western perspective. But in traditional societies, this has meaning. It establishes a relationship, not to power or authority in the abstract, but often to a specific person or family. That relationship can pinpoint where a person is and that serves to create identity. But it also helps to create identity further in another way: It establishes a relationship with a person’s ancestors and with history.

In traditional societies, therefore, the problem for any system of justice is obvious. In these societies, since relations are of the utmost importance, they can have an effect on the justice system, since that may result in some sort of relation to the case or to the trier of fact. (And that relationship may be cultivated if it does not already exist.) In the West and in America, any connection to the case or to any party to a case by any trier of fact, a jury or a judge, will result in a dismissal for cause of the jury member or a recusal for any judge. This is an essential part of fairness for us. No one is to have any relationship with the parties or the case; they must be detached from either. That lack of connection is a significant component in creating

But for traditional cultures, relationship is everything. Though we would see any relationship with the trier of fact to potentially bias the results, they do not see things this way. For them, a relationship to the authority creates a system that is more congenial to their traditions. People know people by virtue of relationships and those people are often expected to get them results by virtue of the type of relationship they have with them. In its favor, one might argue that that type of system takes more into account the people before it, their individual characteristics, more effectively than our impassive system does. There is nothing of the personal in our system. In these societies where contacts and relationships are the norm, however, justice, at least as they would define it, if they define it at all other than relationally, has a recognizable face to it.

This means that an approach that works through existing mechanisms will be much more effective in Afghanistan. And that is what I understand your organization is
doing. That is the only way to go about it, in my opinion. Going about it this way means going about it from their cultural perspective and not our own. That will make for a greater likelihood of success than most rule of law programs have had to date. They tend to go at by looking at it from a Western cultural perspective and then by imposing a Western standard.

One of the things that should be of use is Islam. Most people would think of Islam as a hindrance. It need not be. Historically, Islam has a tradition of fairness and tolerance that can be drawn upon to buttress effective dispute resolution procedures. When the Jews were expelled from Spain, for example, many found refuge in the Ottoman Empire, the site of the caliphate of Islam, and were treated fairly and with a greater degree of tolerance than they had been and had had in Europe. That is a useful tradition.

The same thing is true of any non-Western culture.

One man once stood up at a conference discussing third world poverty where corruption was a topic and said, "One of my colleagues in the Far East once said to me, 'You call it corruption; we call it family values.'" That I think that expresses the problem quite succinctly.

Putin's speech

In Putin's state of the country speech, he said the following which has gotten some play in the blogs:

Let me remind you again of how modern Russian history began. First of all, it should be acknowledged, and I have spoken of this before, that the collapse of the Soviet Union was the greatest geopolitical catastrophe of the century. And for the Russian people, it was a real drama. Tens of millions of our citizens and fellow-countrymen found themselves outside the Russian Federation.

I am not one who thinks that Putin is moving the country back toward a Soviet styled state. I think he is not in as much control of things as the West tends to think. But I do think the Kremlin acts like it has no sense some times. I think it comes from insularity. They get the information that reinforces their own biases and worst instincts because they have cut themselves off from other sources of information.

In any event, when I read this I was amazed at it because it sounded like some of what was said before Hitler invaded the Sudetenland and Austria. It was the ethnic Germans he was looking to protect, he said, though his real intentions were something much larger and much worse.

Does this signal anything as sinister? Maybe not of the same order of magnitude but anything that might be short of that, I really don't know. At the very least, Putin is pandering to nationalism. But stoking a fire like that can create consequences that maybe even Putin would not want. If he can manage democracy, however, maybe he and his people think that managing nationalist sentiment will be the same kind of deal.

Does he think that this will make his neighbors comfortable, those with ethnic Russian populations, especially at a time when Hitler and the consequences of the war are on the minds of so many people?

And Bush got grief for using crusade language when referring to the Middle East.

I just think it is one of a number of stupid things to have come from the Kremlin recently.

The corruption problem

A few weeks back, my wife took our youngest girl to the kindergarten she goes to. As she was walking home, she saw a woman she recognized as being from our building. She fell in with her and struck up a conversation. Since my wife had just left off our daughter, she naturally asked this woman what kindergarten her daughter went to. The woman named one that we had tried to get into, a kindergarten that had some reputation in the area. The reason we could not get in is because the director told us there were no places. We ended up taking her to another school a little further away.

So my wife was interested in knowing how this woman got her daughter into that kindergarten. My wife said to her, “They told us there weren’t any places.” The woman responded, “Of course there weren’t any places. When I went to talk to the director, I took $200. $100 I put in my pocket. The other $100, I took in hand. I then told her I wanted my daughter to go to that kindergarten and handed her $100. All it took was the $100. I didn’t need any more.” My wife said that the woman spoke with the air of someone who had made the best deal of her life.

The problem is that all the kindergartens are government schools and it is illegal for the directors of these schools to take bribes. It was that way before Yuschenko came to power and it is still that way.

Makes me wonder who she voted for. Yuschenko campaigned on eliminating corruption. That she might have voted for Yuschenko she would not see as inconsistent. She was looking out for her own interests and that was that. But the problem is that corruption here is not limited to the oligarchs nor to Kuchma nor is it limited to those in power. Everyone has been involved in it to some extent. That was and still is how people got and get by.

During the election, Yuschenko said that corruption was eating away at the Ukrainian soul. That is an all encompassing statement not limited to Kuchma and to the oligarchs. And he was right.

Wednesday, April 20, 2005

More price controls?

More price control

It was reported on Radio Era this morning that the natural gas companies are looking to hike their prices. The government sees a conspiracy in this so the PM has informed them that they cannot raise them more than a set rate, a rate set by the government. It looks like price control for the natural gas industries too.

It is hard to understand why they are doing this. The comments suggest that it might have to do with the elections in 06. But that would be buying the election in the way that Yanukovych tried to buy the presidency (at least it was one leg of his plan to buy the presidency.) Yuschenko appealed to the crowd with ideas and they followed him. Is he now looking to buy them for the Rada elections? I would think Yuschenko could see the inconsistency.

The other idea is that Moroz is behind it all. That is plausible but I think Yuschenko didn’t cave into him to select him as PM, why would he need to cave in on this sort of thing, especially in the face of his promises to rationalize and modernize the economy? I think Moroz had his couple of picks and is a non-issue now. Other things must be afoot. What those are I have no idea. But the movement does not seem to be in the right direction.

Tuesday, April 19, 2005

Kuchma ordered it?

Oleksandr Turchynov says that the order for troops to move in on Maidan to disperse the protestors and put an end to the revolution came from Kuchma, according to the Ukrainska Pravda This was the troop movement that occurred on November 28th which was followed by US satellites.

Of course, Turchynov was a member of Yuschenko's team at the time and this may be what he believes happened. It would be interesting to know on what he bases this. Maybe he has some evidence of it. Being the new head of the SBU might suggest that. But I would be interested to know what it is he has, if anything, that would show Kuchma did.

I think he did and thought so at the time. There were very few people, only a handful, that could have issued that order. But I don't think anyone other than Kuchma would have issued it on their own. Kuchma may have been on his way out in absolute terms, but he had been the power and, for all they knew, was still the power that had to be dealt with. I doubt anyone would have issued any such order without his consent.

This is, of course, speculation without any kind of proof. And that proof will only be in the form of recollections of people to the event, unless an order is found with Kuchma's signature on it. (That is doubtful.) And these recollections will not constitute definitive proof but will serve, if a number of them come forward to speak, as better and better evidence that he did.

Thursday, April 14, 2005

Some government action

I don’t know what to make of this but there have been some actions by the government that are not market oriented. Some of them are:

--The Rada approved the appointment of a socialist, Valentyna Semeniuk, as head of the state property fund. She does not have a history of being pro-market and pro-privatization. The state property fund is in charge of privatizing state businesses. One of the big businesses still set to be privatized is UkrTelecom, the Ukrainian telephone company. It was set to go last year but then it was to be this year. With this appointment, it might be much later or never. If this means that privatization will be slowed or stopped altogether, that could affect the budget. It also still leaves portions of the economy in state hands. That is good neither for the economy nor for the people in the long run.

--The government has halted the steep rise in gasoline prices by putting restrictions on the mark-ups of refineries and retail outlets. The limit is 15% over costs. This is price control pure and simple and, though I am not an economist, it will not benefit the economy in the long run.

The government also instituted a ban on the export of diesel fuel in an attempt to keep the prices down in the Ukraine. More state intervention.

--The state is set to make purchases of beef and pork in the amount of 500 million.
This meat will then be sold by the government through state enterprises at low prices. Meat prices have been going up quite steeply in the past few months. We have been hearing that the government was instituting policies that would bring the price down. But we had heard it would be through a decrease in import duties. That may still be what they are doing and this purchase might be a short-term way of getting the price down as we move into the Easter celebration. But it is obviously not a market method.

--The government is set to reduce the electricity tariff paid by agricultural producers by 20%. Energy is quite heavily subsidized by the government here and lowering the rate paid by these producers will mean the government will have to make up the shortfall. So it will just be subsidizing the energy costs even more. This is not something that will directly affect people like the cost of meat for Easter or the rise in gasoline prices. But it could be a bid to stop rising prices without injuring the agricultural sector by doing something like lowering tariffs. But again this is more government interference in the economy.

I don’t know why the government is doing all of this. It could affect the entry into the WTO and won’t look good for EU accession. Maybe though they are just trying to give the people some evidence that their lives have changed for the better, some kind of short-term strategy. But if it is more than this, it will only delay the reckoning. Eventually, state enterprises will have to be privatized, the prices of gasoline and meat will have to be left to the market and energy will need to be paid for by those who use it.

Wednesday, April 13, 2005

Oligarchs assert their human rights?

It has been reported that the Krivoryzhstal Mill re-nationalization will be taken to the European Court of Human Rights. If it is true, it is priceless and signals to me that they are no smarter about any of this than they were during the revolution. I went to the site to see if they had filed anything and couldn’t find anything noting they had. That doesn’t mean they haven’t or won’t, I just didn’t find anything about it when I looked.

After the last election, when Yanukovych finally lost, they threatened to take the whole thing to the same court. I think people are still laughing about this one. It was hard to know what he thought he could gain from that. Everyone in Europe thought he had stolen the prior two elections, so he was going to go to the ECHR and argue what? That they stole the election from him? The story that would have been circulated about it would have been along the lines of, “A corrupt politician (Kremlin backed, by the way) and his oligarch backers are seeking to use the institutions of Europe to overturn what was finally a free and fair election.” Or something like that. It is hard to see that he would have even gotten a hearing on it. I guess they were to the point of using any threat to hand. This one wasn’t a particularly good one.

If Pinchuk and Akhmetov take this case to the ECHR, it suffers from the same sort of problem. The story would be something like, “Corrupt oligarchs frustrated by free and fair elections and a campaign to root out corruption, seek to use the institutions of Europe to get what they want.” Or something like that. These people might consider this to be entirely unfair, but that will be the gist of it from most of the press (except of course, from the Guardian who saw America behind it all. Guardian: “America, bad. Anybody arrayed against America, good.”) And that is if they could get a hearing on it in the first place. (If I have some time, I might post something on the merits of their claim under the convention.)

But let’s assume that they get the Court to rule in their favor, something I think won’t happen on the merits, but let’s assume it. What does it get them then? If the Court grants them some sort of damages, how would they collect them? “The Court hereby orders the Government of Ukraine to pay to y and z, x amount of money in damages.” How would the Court enforce this order? The Ukraine is a sovereign nation and in control of its borders with the ability to use force in its own territory to enforce its own laws and to further its own policies. How then would the Court get the Ukraine to pay up? Send in the sheriff? (Visa denied.) Shake its finger at them?

The International Court of Justice recently ruled that the execution of Mexican nationals in the US violates some international treaties. What has been the result of that ruling? Absolutely nothing. The Mexican nationals in question were in fact executed under the laws of the states where they were convicted of the crime. And, if they are convicted and sentenced to die from now on, they will still be executed under the laws of the state where they are convicted of the crime. This has internationalists wringing their hands, livid that the US ignores international law. Setting aside the problem of international law—is there really any?—the practical problem is that that ruling cannot be enforced because the US is a powerful sovereign nation and the UN cannot do much of anything about it. In theory, they can convene the Security Council and pass some sort of resolution against the US creating sanctions because of its violations of international law, but that would be subject to a US veto. And even if the US had no veto, it could ignore the resolution with impunity. The point is that there is nothing in reality they can do about it. The Court has no ability to enforce its decisions just as the UN has no ability to enforce its decisions, absent a country (read: “the US”) or group of countries (again read: “the US”) that will take it on.

And, as an aside, a court that issues decisions that are ignored will never develop any authority of its own. A more careful court, that is, more careful judges, interested in nurturing and cultivating its (their) authority, might pick its battles better. But one gets the feeling that this Court has simply constituted another forum for US bashing, a growth industry in the UN for a number of decades.

This is the same problem here. If the ECHR issues its decision, how will it be enforced? Conceivably, the EU authorities could issue some sort of sanction or sanctions against the Ukraine for ignoring the opinion of the Court or it could bring up the decisions when Yuschenko or anybody else talks about EU integration. (The EU official waves a hand in the air. “I know, I know you want to talk about integration. But we have serious concerns here about Krivorastal. We won’t even talk to you about integration until you deal with this problem.”) But that would be subject to politics and interests not to mention foreign policy objectives not only directly with Ukraine but also with the US. The whole thing, assuming that they get the Court to rule in their favor, a big, big assumption, would just be sidelined and swept under the rug. Nobody is going to want to be seen as helping out corrupt interests and enemies of democracy in the Ukraine. The point is that in Europe and the US, these guys are seen as corrupt and interested in fleecing the country and its people for all they can get. They might take issue with this characterization, but that is how they are viewed.

I have made the argument in another posting about how they should go about it if they were smart. I made this argument not to give them any help but to alert anybody who cared about it what the strategy might be if someone clever stepped in. But it looks like business as usual for these guys. The problem is that the world has changed out from under them. They used to speak and it was done. They can no longer do that. And that is a serious infringement of their rights that the ECHR should look into.

If, of course, it is true.

Monday, April 11, 2005

On corruption and collapse in Russia

Here an interesting article in the Moscow Times:
A former KGB man, Lebedev was once considered a stalwart backer of Putin's government policies. But recently he has moved into politics, launching an unsuccessful bid for Moscow mayor in 2003. Even though he is a member of the pro-Kremlin Duma faction United Russia, this year he has moved from battling on a regional level to openly criticizing federal policies.

"Before 2004, everything that was being done by the Kremlin was without doubt the right thing," he said. "They were stabilizing the political situation; there was tax reform, [moves toward] administrative reform and pension reform. All this was correct.

"But somewhere along the line a year and a half ago, we reached the point where we needed to stop strengthening the power vertical and get busy with social reforms," he said. "But look what happened: Pension reform collapsed, administrative reforms collapsed, and with tax -- you see for yourself -- now the problem is with tax administration. No one believes the tax authorities anymore. And the monetization of benefits, you see how terrible this was, while the cancellation of elections for governors was the wrong move."

In the meantime, he said, state officials are too busy lining their own pockets, and are starting to challenge the oligarchs who won property in the 1990s for their ability to toss money to the wind.

"Name me just one official of a state corporation who is not a multi- multimillionaire," Lebedev said. "This is a new phenomenon we have to fight. We have already beaten the private oligarchy. They have either run away or they are trembling with fear. But now there are state oligarchs who are spending billions of dollars abroad. ... The residents of European countries see the yachts they are sailing in, they see the hotels they are staying in, which planes they fly in and which jewelry boutiques they frequent and what they buy.

"We are disgracing ourselves all over again," he said, identifying the state officials only involved as the heads of major state-owned corporations but declining to give names. "Of course we will not go far with such state officials. They don't care about the rest of the people who live in this country."

Other businessmen agree that what they see is a new carve-up for control of financial flows. "This reminds me very much of what was happening at the beginning of the 1990s," said the other businessman. "For a number of people working for the state, all the limits have been lifted. These people are trying to redistribute financial flows in their favor and are trying to use the levers of the state for their own gain.

"This is the East. There is a new clan, and for this clan all is forgiven," he said.

But as fears grow over where things are heading, the worsening situation could prove to be a powerful motivation for the Kremlin to wake up and make efforts to rectify the situation, he said.

This is consistent with other reports I have read that corruption has actually gotten worse.

The article suggests that the Kremlin hasn't had a real good view of reality. Mentioning the Orange Revolution, it says:
There are signs of panic over future stability from the Kremlin itself, including the Medvedev interview, said Stanislav Belkovsky, the head of the Council for National Strategy, who said he was called just last week by a Kremlin spin doctor in a scrape over what to do next. "They're frightened everything could blow up at any minute," he said. "They still don't understand the Ukrainian revolution. They were 100 percent certain [Kremlin-backed candidate Viktor Yanukovych] would win and the people would leave the streets because it was freezing cold. It was a tragic misunderstanding of the situation. Now they are afraid of everything. They are even afraid of their own shadow. They have lost the key to understanding the political situation.

In the West, Putin is seen by some as creating a new Politburo and taking Russia back to the era of the Soviet bosses. I think though there is abundant evidence that he is not in as much control over things as many think. He has amassed power to himself but it has not been enough. Problem is that that power has\been amassed to the Kremlin and it looks like Putin is not in complete control there.

Tuesday, April 05, 2005

Russian prediction for Ukraine

What is in store for Ukraine? According to some Russian commentators, take a look at where Russia was and where it is now and that will tell you the future of Ukraine.

Ukraine today is Russia yesterday, i.e., Russia under Mr. Yeltsin. It has the same enthusiasm of a beginner, the same revolutionary black-and-white judgments, the same romanticism at the expense of balanced pragmatism, the same unrealistic promises to the population, and, regrettably the same, inevitable rush to appoint inappropriate people at the top. And, at last, it has the same blind belief that "the West will help us."

These symptoms can only pass with time and with the help of Russia, which emerged from the same troubles quite recently.

As an experienced patient, Russia can provide Ukraine with numerous tips on how to avoid some of the mistakes committed by Russia's young reformers, if the Ukrainians choose to listen. It can happen at any moment, sooner or later. Mr. Putin's task is to seize the moment tactfully.

There is no doubt that the crucial moment will come. Market and geopolitical laws cannot be ignored, and Russia-Ukraine relations are no exception.

The main thing that has to be understood, though, is that Russia may have lost out in the short-term, but it will still win in a long term. With this in mind, the president's visit to Kiev can be seen with more optimism.

There is no reason to panic whatsoever. Johnson's Russia List
9092, #32RIA NovostiMarch 16, 2005, UKRAINE TODAY IS RUSSIA YESTERDAY MOSCOW, (RIA Novosti political commentator Pyotr Romanov)

Of course the panic caution is not for Ukrainians but for Russians which is more of the same. There are differences though that make the outcome not as certain as is thought here. One of these is that democracy has not been impeached by economic disaster as it was in Russia. They would say that it hasn't yet, but just wait. (Disaster would be a good thing?) But this remains to be seen; the economic signs look good though.

This is I guess there to stop all the handwringing about Ukraine being lost. Don't worry, it says, they are just like us except much more naive and immature. When they wake up they will find that they have ended up where we are.

A lot should be said about this but I will leave it up to Ukrainians to say it.

Monday, April 04, 2005

Pavlovsky on Chubais

This is a bit old I know but interesting nonetheless.

Catching up on some of Russian news and commentary, I saw some commentary on the Chubais assassination attempt by Gleb Pavlovsky that should continue to endear him to many Ukrainians.

I wouldn't speak of it as an attempt on Chubais's life: this is not self-evident to me, because the methods used could reach no other goal but an awkward chance. In my mind, the matter concerns quite a foul staging aimed at achieving provocative political goals. The maker of this wasn't actually aiming at murdering Chubais, but
wanted to produce the atmosphere of event for getting subsequent comments….

This impairs the country's reputation on the global arena; this is among the tasks of this staging in which firearms was used. I wouldn't like to think that Chubais's inner
circle is involved in this. These are irresponsible shadow political circles, which are
willing to upset the situation. The opposition will use this event widely for propagandistic goals, mostly by the extreme anti-Putin, the oligarchic opposition. This suits their style. However, it is inadmissible to point at any of the politicians.

This could be compared to Gongadze's story in Ukraine, where an absolutely senseless murder was contrived with a provocative goal of arising criminal suspicions against the authorities. Johnson’s Russia List #7, Vremya Novostei, March 18, 2005.

In short, what Pavlovsky believes is that the Gangadze murder was perpetrated by anti-government forces who did it as an attempt to discredit the Kuchma government.

It would be interesting to know if he is using this as a reason for why he lost the election for Yanukovych. He is the Russian political technologist—we would call him a “spin doctor”—who shoved the idea of fascist conspiracies undermining the government and Yanukovych down the throats of Ukrainians. When he lost, he beat it home and, if he didn’t say it directly, at least insinuated that the forces of the West, the CIA mostly, undermined him at every turn.