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Democracy is not Good Governance! Western aid and neo-liberal reform in post-revolutionary Georgia Joel Lazarus St Anthonys College University of Oxford.

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Presentation on theme: "Democracy is not Good Governance! Western aid and neo-liberal reform in post-revolutionary Georgia Joel Lazarus St Anthonys College University of Oxford."— Presentation transcript:

1 Democracy is not Good Governance! Western aid and neo-liberal reform in post-revolutionary Georgia Joel Lazarus St Anthonys College University of Oxford

2 Democracy Promotion and Good Governance

3 Merging the democracy promotion and good governance agendas: USAID: Democracy and Governance and Governing Justly and Democratically; OECD (DAC): Governance and Democracy; EC: Governance and Human Rights/Democracy; UNDP: Democratic Governance OECDs CRS aid statistics: Government and Civil Society; Participatory development/Good Governance

4 Democracy Promotion and Good Governance Democracy promotion and good governance: two sides of the same coin: Democracy is good for governance (USAID website) Democracy, good governance, and development reinforce each other to create a virtuous circle (USAID 2005) By holding governments accountable and making foreign aid contingent on good governance, donors can help reverse the democratic recession (Diamond 2008)

5 Democracy Promotion versus Good Governance

6 Democracy vs Good Governance

7

8 Democracy and Governance Government Effectiveness: the quality of public services, the capacity of the civil service and its independence from political pressures and the quality of policy formulation. Regulatory Quality: the ability of the government to provide sound policies and regulations that enable and promote private sector development (World Bank 2009:1)

9 Four questions…

10 If governance and democracy are different and if you can have good governance without democracy then: 1)What is democracy and what is governance? 2)Why are they merged in theory and practice by aid donors? 3)How do democracy and governance differ from a critical perspective? 4)…Or is Georgia just an exception? An undemocratic but disciplined government?

11 A theoretical framework: The hegemonic transnational capitalist class, neo-liberal economic globalisation

12 TCC & NLEG Neo-liberal economic globalisation: Global removal of territorial, legal/regulatory constraints on capital since late 1970s Transnational: Since 1970s, increasing transnationalisation of networks of global productive and financial capital (TNCs, FDI, FPEI, K markets) -> ties to territoriality greatly loosened Transnational: Elites of all nationalities. But US as empire is driving force. Class: Elites managing and owning MNCs at apex of state and international institutions Hegemony = material/military power + ideas/ideology/legitimacy

13 TCC & NLEG Hegemony is a form in which dominance is obscured by achieving an appearance of acquiescence…as if it were the natural order of things…[it] is an internalised coherence which has most probably arisen from an externally imposed order but has been transformed into an intersubjectively constituted reality (Cox 1994: 366).

14 TCC & NLEG Hegemonic project of NLEG imposed through coercion and consent: Coercion: Political (domestic force); Economic (financial markets, IFIs); Military (international force) Consent: Epistemic communities/networks (academy, think tanks, educational institutions, media), e.g. democracy issue network Trasformismo – Co-opting the language of resistance and social democracy, e.g. democracy, empowerment, participation.

15 TCC & NLEG The democracy issue network (Scott 1999) Western states: US, EU, EU member states State bodies: US – State Depts DRL; USAIDs DG Office Quasi-governmental organisations: NED, IRI, NDI, CIPE, AFL- CIO; German Stiftungen; NIMD FP think tanks: CFR, CEIP, CSIS, Hoover Institution Academic centres Philanthropic foundations and MNCs: Ford Foundation, Rockefeller Foundation

16 TCC & NLEG The democracy issue network (Scott 1999): …think-tanks and political foundations seek regularized connections and interactions with their own government, officials from foreign governments, officials from international organizations, individuals from other think-tanks, foundations, or organizations, and democracy activists in other countries in their efforts to promote democracy. This critical aspect of foundation and think-tank activity contributes directly to the development, growth, and maintenance of the connections that establish the transnational democracy issue network, and facilitates the sharing of resources, information and ideas among network members, not to mention the co-ordination of their efforts… through networking think- tanks can become involved in policy recommendation and advising for foreign governments, political parties, and other foreign NGOs, establishing a route for active democracy promotion and 'international think-tanking' (Scott 1999: 157-8).

17 TCC & NLEG The democracy issue network MNCs/philanthropic foundations dominate the funding. Their personnel dominate the boards of trustees/directors The Academy: provides scientific legitimation NGOs (civil society) – a channel of control and socialisation of (neo)liberalism: building an NGO elite. Material and ideological co-optation through access to resources

18 TCC & NLEG The democracy issue network E.G. National Endowment of Democracys global network: NED – Neo-conservative founders under Reagan. Congressional funding: Funds CIPE, NDI, IRI, AFL-CIO, and gives grants to NGOs Journal of Democracy – non-peer reviewed but unites a global group of elite political scientists. Huge symbolic capital International Forum for Democratic Studies – brings together and funds global scholars, policy makers, and activists Network of Democracy Research Initiatives – connects and funds a global network of research centres World Movement for Democracy – links and funds global democrats NED links and funds academics, researchers, activists, NGOs, policy makers globally, thereby shaping ontology and epistemology of democracy

19 Three answers…

20 A1) What is democracy for democracy promoters? Within the hegemonic democracy issue network, democracy = polyarchy: It seems to us that the definition of democracy for empirical research is no longer that much of a contested issue. The baseline used in this volume is the mainstream definition descending from Schumpeter (1947: 269) and elaborated by Dahl (1971: 3) in his concept of polyarchy (Lindberg 2009: 11).

21 Three answers… A1) What is democracy for democracy promoters? Polyarchy detaches the political from the economic, whilst at the same time explicitly fusing democracy with free-market capitalism: When global capitalism is the concern, the political is expected to be linked to the social and the economic and normal society is capitalist society. But when economic inequalities and social justice are the concern, the political is expected to be separated from the social and the economic (Robinson 2000: 321) Western polyarchy promotion is designed to limit and control popular demands for democracy…

22 Three answers… A1) What is governance for good governance promoters? Good governance agenda since late 1980s: a response by World Bank to SSA crisis of governance and to external criticism. the manner in which power is exercised in the management of a countrys economic and social resources for development (WB 1989). Governance consists of the traditions and institutions by which authority in a country is exercised. This includes the process by which governments are selected, monitored and replaced… (WB website).

23 Three answers… A1) What is governance? Governance = World Banks non-political avenue into political intervention 1980s Structural Adjustment, Washington Consensus – Getting the prices rights 1990s Good Governance, Post-Washington Consensus – Getting the politics right (Guilhot 2005) 20 years of good governance: increased centralisation of decision-making by Western-educated technocrats; increased IFI intervention, micro- management and surveillance (Abrahamsen 2000, Harrison 2004, Craig & Porter 2005, Whitfield et al 2009)

24 Three answers… A2) Why are democracy and governance merged in theory and practice by aid donors? For Western donors, democracy and governance are two sides of the same coin: intervening in and shaping political and civil society. Governance aid portrayed as democratising the management of the state

25 Three answers… A3) How do democracy and governance differ from a critical perspective? Governance aid as mechanism to construct neo-liberal state.

26 Georgia: a case study

27 If Georgias democratic development were to fail during the next ten to fifteen years, it would prove a severe blow to the concept of democracy promotion. Seldom has so much effort and funding from the international community been directed to democracy promotion in a country that is open to democratic change… Boonstra (2010: 1) Why Georgia?

28 …if democracy cannot be consolidated in Georgia, it is not clear where it can be consolidated. As difficult as the challenges are, the outlook in Georgia still looks brighter than in most of the rest of the nondemocratic world Lincoln Mitchell (2008: 6) Why Georgia?

29 2000-2009: highest post-Soviet recipient of ODA in per capita terms. 7 th highest in world (OECD Stats) 2008- : $4.5b post-war aid pledge Major recipient of democracy promotion/good governance aid… Georgia 6 th largest per capita recipient of USAID democracy promotion/good governance aid for FY10 and FY11 Why Georgia?

30 Saakashvili era: 2004- Neo-liberal revolution The revolutionary ruling elite Small, neo-liberal vanguard elite with social transformation project Goal of building neo-liberal state and economy, competitive authoritarian regime, and dominant-party system Strong ties to US foreign policy, aid, and transnational capital networks…

31 Saakashvili era: 2004-10 Neo-liberal revolution The revolutionary ruling elite Mikheil Saakashvili (President) – Americophile; Colombia University law graduate Kakha Bendukidze – close links to World Bank: Georgia should sell everything that can be sold except its conscience …as long as governments continue to rely on central banks and extensive regulation of the financial industry rather than free banking, periodic financial crises will continue to plague mankind. Many other key ministers: Western-educated, links to US democracy aid

32 Saakashvili era: 2004-10 Neo-liberal revolution The revolutionary ruling elite Lado Gurgenidze (US MBA, UK Banker, Georgian PM 2007-8): Saw himself as a technocrat, not a politician Preserving Georgia's democracy and territorial integrity is increasingly seen as not about just Georgia any more, but about the inviolability of sovereign borders and the supremacy of the rule of international law over the rule of force. I would argue that there is another, often- overlooked dimension. The World Bank ranks Georgia as the 15th freest economy in the world, with the level of economic liberty exceeding our Central and Eastern European peers and most EU countries (the United Kingdom is ranked 6th). The world has a vested interest in promoting Georgia's success on its chosen path.

33 Saakashvili era: 2004-10 Neo-liberal revolution Major achievements Revival of a failing kleptocratic state: Provision of public goods again Major infrastructural improvements Virtual and rapid eradication of petty corruption Dramatically improved efficiency in public administration Ousting of Adjaran dictator Abashidze and reintegration of Adjara

34 Saakashvili era: 2004- Building competitive authoritarianism A Competitive Authoritarian regime Formal political institutions routinely ignored, undermined, and manipulated by ruling party and by opposition parties Skews the playing field in favor of incumbents (Levitsky & Way 2010: 1) Competitive authoritarian regimes produce dominant- party systems

35 Saakashvili era: 2004-10 Building competitive authoritarianism Building a competitive authoritarian regime Public, selective, extra-legal attacks on ancien régime Building a dominant party - merging party and state Attacking the political opposition Media clampdown Violent break-up of huge demonstrations in Nov 2007 (May 2011?) Formal institutional manipulation: constitution, electoral code 2008 elections - Use of administrative resource; fraud; intimidation; media; formal institutional manipulation

36 Saakashvili era: 2004-10 Neo-liberal revolution Economic reforms: creating a neo-liberal utopia Tax and business laws radically simplified and lowered: corporation down, CGT abolished, VAT up Privatisation laws untouched Almost all regulation dismantled…including competition law and regulations Georgians property rights ignored (de-privatisation) Workers rights removed (Labour Code 2006) …Unprincipled libertarianism serving interests of Georgian ruling elite and foreign capital

37 Saakashvili era: 2004-10 Neo-liberal revolution Economic reforms: creating a liberal utopia FDI grows fivefold in 5 years: 2003 - $340m 2007 - $1.6b Sources of FDI very varied (transnational), not always transparent ownership! GDP growth rates soar, reaching 12.7% in 2007 2006, 2007 – in World Banks top two reformers worldwide

38 Saakashvili era: 2004-10 Neo-liberal revolution …for foreign and politically connected capital Inflation up: average 8.4% between 2004 and 2007 Unemployment up: 2003 – 11.5%; 2005-7 ->13% Inequality grows: poorest quintiles income = 6% in 2000, 5.4% in 2007 Better living standards greatly dependent on welfare transfers =Economic conditions worsening in real terms Petty corruption gone but elite corruption persists… FDI levels collapsed post-war/economic crisis Now big questions about economic stability (OA, MacFarlane, IMF)

39 Western aid and the construction of Georgias neo-liberal state

40 Five examples 1.The early post-Revolution years: from civil society to direct government aid 2.DP/GG aid: Centralising technocracy 3.GoG, USAID, and World Bank: imagineering Georgia 4.MNCs unparalleled influence within Georgias political society 5.The Democracy Issue Network in Georgia

41 Western aid and the construction of Georgias neo-liberal state 1. The early post-Revolution years For the West generally, and the United States specifically, the Rose Revolution was viewed as an ideological and political victory. It was immediately hailed as a success story for the promotion of democracy and U.S. foreign policy. A great deal of hope was placed in the new Georgian governments ability to deliver democracy, reform, and economic growth. Accordingly, Europe and the United States sought to support the new Georgian government beginning in the days immediately following the resignation of President Shevardnadze (Mitchell 2008)

42 Western aid and the construction of Georgias neo-liberal state 1. The early post-Revolution years Shift from civil society to direct government aid to new democratic government: GoG – embodiment of democracy USAID 2007) USAID parliamentary strengthening programme designed toimplement a parliamentary strengthening project that responds to the priorities of the government of Georgia. Good governance seemed to become more urgent than democracy for Western donors (Muskhelishvili and Jorjoliani 2009: 694).

43 Western aid and the construction of Georgias neo-liberal state 2. DP/GG aid: centralising technocracy EU focus on technocratic governance aid/harmonising institutions. US focus on technocratic governance aid Technical assistance prioritises individuals over institutions: EC/CofE project to strengthen local and regional democracy required professionals charged with incorporating European standards into legislation and practice target groups from within influential intellectual and professional networks in Georgia were carefully selected (EC/CofE 2003: 5)

44 Western aid and the construction of Georgias neo-liberal state 2. DP/GG aid: centralising technocracy USAID-sponsored project: Support to the new GoG designed to improve government effectiveness. Development Alternatives Inc project implementer. No mention of democracy beyond Page 1. Focus instead on technical reforms and PR Success based on working with and winning over the right Georgian (DAI 2006: 13).

45 Western aid and the construction of Georgias neo-liberal state 2. DP/GG aid: centralising technocracy Governance aid delivered by Western experts and consultants Building neo-liberal state dependent on co-operation with small politically insulated and powerful clique of technocrats Centralising technocratic decision-making Bringing local elites into international aid/governance networks

46 Western aid and the construction of Georgias neo-liberal state 3. Imagineering Georgia Bendukidze (GoG), Simeon Djankov (World Bank), USAID: close co-operation to engineer Georgias meteoric rise up Banks Ease of Doing Business Index (Schueth 2010). Georgia: From 112 th in 2006 to 37 th in 2007. Georgia named Banks top reformer in 2007. 2010 ranking: 11 th. 2007/8 – GoG launches major international publicity campaign with Saatchi&Saatchi: Invest in Georgia, And the Winner Is…

47 Western aid and the construction of Georgias neo-liberal state 3. Imagineering Georgia And the Winner is… So, looking to invest? Georgia vs. Hong Kong: Which country has the worlds most liberal labour force and most literate workforce? Georgia vs. Germany: Where it is easier to start a business? Georgia vs. China: Which country is the worlds number one economic reformer? Georgia vs Australia: Which country has the most liberal employment laws (Sources cited: WB EDBI, IMF, Heritage Foundation, etc)

48 The West in Saakashvilis Georgia: Aiding competitive authoritarianism 3. Imagineering Georgia Imagineering Georgia away from failed post-Soviet state to frontier market (Schueth 2010). Signalling to transnational capital its reputational capital through World Bank, credit-rating agencies, international financial media But image over substance. Formal institutional changes: WEFs Global Competitiveness Index 2010: Georgia 90 th out of 139 nations. EDBI project – a transnational capitalist project of neo-liberal state construction

49 The West in Saakashvilis Georgia: Aiding competitive authoritarianism 4. Transnational capitals political influence 2006 Labour code designed to make Georgia rather more attractive to foreign investors (Papava 2009) Left workers with literally no rights at all (Papava 2009) Introduced without even consulting trade unions or Georgian Employers Association (GEA) Praised by American Chamber of Commerce (AmCham) and World Bank Criticised by EU, ILO, ITUC, even GEA -> ILO-brokered trilateral negotiations and considered amendments

50 The West in Saakashvilis Georgia: Aiding competitive authoritarianism 4. Transnational capitals political influence AmCham vigorously and publicly opposed the proposed amendments, denounced them as unfair to business GoG rejected proposed amendments, kept Labour Code unchanged Domestic labour, domestic employers ignored. Transnational capital more influential

51 Western aid and the construction of Georgias neo-liberal state 4. Transnational capitals political influence AmCham, British Chamber, European Chamber AmCham: International Division seeks to lower barriers and expand our members' commercial interests across the globe Center for International Private Enterprise (NED congressional funding) Center for Capital Markets Competitiveness aims to maintain and advance America's global leadership in capital formation

52 Western aid and the construction of Georgias neo-liberal state 4. Transnational capitals political influence AmCham in Georgia: America-Georgia Business Council since 1998: direct access to the high-level government officials and agencies (AGBC) Influence within GoG, e.g. Giorgi Pertaia: ex-AmCham, now PMs Chief Advisor British Chamber: access our network of people and businesses in both countries. Access to a particular decision-maker AmCham, BritCham members include: BP, ExxonMobil, PWC, E&Y, BAT, HSBC Important institutional link between Georgian ruling elite and transnational capitalist class

53 Western aid and the construction of Georgias neo-liberal state 4. MNCs democracy promotion International Association of Business and Parliaments (IABP) – formed by several European national business and parliament associations in 1998 IABP seeks to improve legislative capacity within Georgian Parliament. Activities include: Organising round table and working group on health care between MPs and insurance firms Arranged seminar on economic freedom with Heritage Foundation Funds a Foreign Investors Advisory Council which provides investors with an accessible and transparent, neutral Forum for dialogue between the parliament and foreign investors in Georgia Established Business and Economics Centre in Parliament. Funded by BP

54 Western aid and the construction of Georgias neo-liberal state 4. MNCs democracy promotion IABP insists it is non-partisan and engaged in the fight against corruption and for transparency in politics IABPs own information hard to find IABP provides MNCs a vehicle for direct lobbying to parliamentarians under the guise of democracy promotion/legislative strengthening Transnational capitals access to parliamentarians greater than that of Georgias own electorate

55 Western aid and the construction of Georgias neo-liberal state 5. The democracy issue network in Georgia Caucasus Research Resource Centre (CRRC) – leading research centre in South Caucasus. A network of resource, research, and training centers Founded and funded by Carnegie Corporation, USAID, Eurasia Partnership Foundation, and local universities including TSU. EPF funded by Carnegie, BP, Philip Morris, StatOil, and Eurasia Foundation, etc. Eurasia Foundation funded by USAID, other Western donors, StatOil, ExxonMobil, Chevron, Microsoft, Western Union, etc. Eurasia Foundation: board dominated by reps of transnational capital, e.g. Chairman Jan Kalicki (Chevron), VC Dan Witt (ITIC – funded by MNCs).

56 Western aid and the construction of Georgias neo-liberal state 5. The democracy issue network in Georgia Caucasus Research Resource Centre (CRRC) member of NEDs Network of Democracy Research Initiatives CRRC – Georgias link into the transnational democracy issue network: Connecting US government, American academy, philanthropic foundations, MNCs, with scholars, policy makers, researchers, activists in Georgia. Through the network, the hegemonic class seeks to construct and define inter-subjective meaning of democracy; to define knowledge and expertise – what is valid/invalid knowledge, what is expertise Just one example. Economics another important example

57 Western aid and the construction of Georgias neo-liberal state

58 Aiding the construction of a neo-liberal state in Georgia International regime legitimation Political legitimacy: post-election support (OECD PA, US) and muted criticisms; describing Georgian government as democratic Economic legitimacy: High rankings on international league tables; US, EU, and IFI praise; credit rating agencies; international financial media Democracy promotion/good governance – direct government support. Georgian government, parliament, academy, civil society linked into global transnational capitalist networks The construction and consolidation of Georgias neo-liberal state

59 Georgia in a global context

60 Georgia is a key U.S. ally in the war on terrorism and a gateway for energy resources from the region to Europe and beyond. Since the 2003 Rose Revolution, the Government of Georgia (GOG) has carried out numerous democratic and economic reforms, raising living standards of its citizens. To help Georgia become a vibrant, free-market, and stable democracy, USAID focuses on good governance and the rule of law, economic growth and energy security, health, and education USAID Georgia Website Country Overview

61 Georgia in a global context Realist perspective is relevant for Georgia: Oil and gas transit Supporting friendly autocrats Spheres of influence realpolitik - Proxy hot war in new cold war? But the IPE/NLEG factor is of central relevance The needs of capital - liberalisation and integration of Georgias economy into global economy – are paramount

62 Georgia in a global context Uneven and Combined Development (Trotsky, Gramsci) Just as, in a certain sense, in a given state, history is the history of the ruling classes, so, on a world scale, history is the history of the hegemonic states. The history of the subaltern states is explained by the history of hegemonic states (Gramsci 1971) Uneven levels of capitalist development lead backward countries to try to catch up through strategies of imitation of hegemonic nations Combined development: a drawing together of the different stages of the journey, a combining of separate steps, an amalgam of archaic with more contemporary forms (Trotsky 1934)

63 Georgia in a global context Uneven and Combined Development (Trotsky, Gramsci) The need for combined development = the need for forms of state able to facilitate forms of capital accumulation already developed in vanguard states. The state as midwife of modern capitalism (Mandel 1975) Need for active or passive revolution (Gramsci) Generates generic and sui generis state forms: generic – responsive to developments in world capitalist system driven by hegemonic states; sui generis – reflect particular historically-grounded domestic and international social relations in a nation

64 Georgia in a global context Applying Trotsky and Gramsci to Georgia Georgias neo-liberal state: Generic emergence of neo-liberal state to facilitate primitive accumulation in favour of local and foreign transnational capitalist class Sui generis elements: Geo-political context: Ruling elites desire to escape Russian yoke intensifies commitment to neo-liberal reform Particular weakness of Georgian society means disorganised, incoherent, spontaneous, and limited resistance -> greater autonomy of ruling elite Georgias location and size weakens sovereignty more, magnifies the significance and power of external forces

65 Georgia in a global context Applying Trotsky and Gramsci to Georgia Georgia as a laggard not a vanguard neo-liberal state Gurgenidze: Georgia Can be a Guiding Light to Other States (Daily Telegraph) Just as my generation of reformers draws inspiration from the remarkable transformation of Singapore or the radical economic reforms and democratic, European choice of Estonia and other Baltic states, it is entirely conceivable that in 10 or 20 years' time a new generation of policy-makers in emerging markets around the world may draw inspiration from our efforts to build, against high odds, a functioning democracy with the highest-possible level of economic liberties.

66 Georgia in a global context Applying Trotsky and Gramsci to Georgia Georgia as a laggard not a vanguard neo-liberal state Most post-colonial states structural adjustment in 1980s and 1990s Global growing resistance/challenges to neo-liberalism. State forms changing too, e.g. in Latin America Arab Spring – the first anti-neo-liberal active revolutions? Legitimacy of neo-liberal developmental model challenged: Profound crisis of capitalist reproduction Global ideological space opening up Changing world order (Rise of BRICS) Georgias neo-liberal revolution one of the last and just possibly as world capitalist system is changing again… Georgia: laggard not vanguard

67 Georgia in a global context A4: Is Georgia just an exception? In a word, no…

68 Georgia in a global context Egypt governance indicators: 2000-2009

69 Georgia in a global context Tunisia governance indicators: 2000-2009

70 Georgia in a global context Kazakhstan governance indicators: 2000-2009

71 Georgia in a global context Kenya governance indicators: 2000-2009

72 Georgia in a global context Conclusion: From Western aid donors perspective: Polyarchy promotion and good governance agenda two sides of the same coin, two intertwined elements of the same strategy This makes good governance without democracy possible and likely From a critical perspective: Polyarchy promotion and good governance aid facilitate the construction of a neo-liberal state that is deeply undemocratic and anti-democratic Polyarchy promotion and good governance merely reflect foreign aid given under conditions of hegemonic transnational capitalism No real change without major global structural change No democracy without the demos This explains why you have good governance without democracy


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