Transcript Transformation Index BTI 2016

Transformation Index BTI 2016
Political Management in International Comparison
Regional Findings
Content
East-Central and Southeast Europe: Populists on the rise ..................................................................... 1
Latin America and the Caribbean: In the wake of the “quiet revolution” .......................................... 12
Middle East and North Africa: Revolutions in shambles........................................................................ 24
West and Central Africa: Beyond catastrophes .................................................................................... 37
South and East Africa: Increasingly murky prospects ........................................................................... 49
Post-Soviet Eurasia: Maidan and its implications .................................................................................. 61
Asia and Oceania: In crisis or just lulled? ............................................................................................. 73
East-Central and Southeast Europe
Populists on the rise
Overshadowed by the EU crisis and faced with a lack of accession prospects,
consensus on the objectives of democracy and market economies is crumbling
in East-Central and Southeast Europe. Instead, populists and extremists are
gaining traction.
Those looking for good news about East-Central and Southeast Europe can certainly find it
among the data collected by the BTI 2016. The unchanged position of nine of the 17 states in
the Status Index may, for example, be viewed in positive terms, as the shocks of the global
financial and euro zone crises have not fundamentally damaged the region. Romania’s progress in the area of rule of law was impressive enough to reduce the tally of defective democracies to seven. On top of that, all countries – with the exception of Albania, Bosnia and Herzegovina, and Kosovo – are now categorized as functioning or even developed market economies. The minimal improvements that countries in the region saw in their average Management Index scores can also be counted as a positive.
However, this increase was driven solely by improvements in Albania and the Czech Republic. Management performance stagnated in the other countries or, in the case of Macedonia,
Bulgaria, Hungary and Slovakia actually deteriorated. It is striking that the group of countries
registering losses in the Status and Management indices does not correspond with the historiccultural division of the overall region into East-Central and Southeast Europe, nor with the
distinction between EU membership and non-membership.
While Bulgaria and Hungary have been EU member states since 2007 and 2004, respectively,
Macedonia finds itself in a category of accession-seeking countries to which the EU has affixed the designation “Western Balkans.” Croatia acceded to the EU in July 2013; the other
countries’ hopes of following in its footsteps in the near future faded after the Juncker Commission ruled out any further expansion of the EU before 2019.
In the past, the prospect of accession represented a significant anchor for reform in EastCentral and Southeast Europe, as the EU regarded these reforms as a precondition for member
states and offered technical and financial support for their implementation. Domestic reformers were better able to put their case forward, particularly as the EU monitored reform imple1
mentation and only offered accession to countries that could boast stable democratic institutions as well as market economies that were both functional and competitive.
The enduring euro-zone crisis and the ensuing deferment of EU expansion has weakened the
anchor function that prospects of accession brought with them. Because the new EU member
states (with the exception of Bulgaria and Romania) are no longer subject to the review and
incentive mechanisms of the accession phase, EU instruments are powerless to truly counter
the erosion of democratic institutions and control mechanisms. Euroskeptic and anti-European
actors, in turn, hold the EU responsible for the effects of the economic crisis and austerity
policies.
Over the last two years, these processes have contributed to increasing polarization in political
competition in numerous countries. Protest movements have given expression to pent-up indignation over corruption, opposition to saving measures regarded as unjust and a growing
mistrust of the political establishment. Parties, candidates and movements presenting themselves as people’s advocates or champions of moral integrity have won the support of large
groups of voters. For example, new parties have shaken party systems previously regarded as
comparatively consolidated, such as the Action of Dissatisfied Citizens (ANO 2011) in the
Czech Republic as well as the Positive Slovenia party and the Party of Miro Cerar in Slovenia. At the same time, representatives of big business have presented themselves as competent
alternatives in Slovakia and, again, the Czech Republic.
This type of polarization has the power to return disillusioned voters to the political process
and depose corrupt elites. However, it also carries the risk that governing parties, relying on
the legitimization conferred on them by the will of the people, will defy constitutional limitations and remove checks and balances. This kind of undesirable development has been particularly apparent in recent years in Hungary and Macedonia. The ruling parties there – the
Hungarian Civic Alliance (FIDESZ) and the Internal Macedonian Revolutionary Organization
– Democratic Party for Macedonian National Unity – dominate their respective parliaments
and have increasingly extended their influence to the judiciary, media and other institutions.
And they do so by utilizing the techniques of populist mobilization: demonstrations, campaigns by government-friendly NGOs and referenda with leading questions.
The “oligarchization” of politics
All the political systems in the region can still be regarded as democracies. But
the warning signs cannot be overlooked: Governing parties are using unfair
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means to influence electoral results and ignoring the separation of powers,
while power-hungry media tycoons threaten to undermine democracy.
Romania has made some progress: The EU member state is now categorized as a democracy
in consolidation because its political elite has strengthened checks and balances on the rule of
law and managed to transform the conflict between the president and the parliamentary majority, which escalated into a constitutional crisis in 2012, into a strained yet constitutionally
valid cohabitation. Elsewhere in the region, there have been other hopeful signs, for example,
in the Serbian-Kosovan conflict, where the groundbreaking agreement of March 15, 2013 was
followed by the integration of Serbian-dominated areas of Kosovo into the Kosovan constitutional framework. As a result, numerous Kosovan Serbians have ended their resistance and
taken part in local and national elections.
That, however, is the extent of the positive exceptions. In 11 of the 17 East-Central and
Southeast European countries, the state of political transformation has suffered setbacks. The
reasons for this can be located, on the one hand, in issues associated with exercising the right
to vote and other political liberties, such as freedom of assembly and freedom of association.
On the other hand, individual countries have been downgraded because ruling governments
have imposed restrictions on institutions constitutionally mandated to ensure the separation of
powers, the elite consensus on the ensemble of democratic institutions has eroded, or party
systems have lost stability.
Although all 13 of the national elections carried out in the review period can be classified as
free and competitive overall, ruling parties – particularly in Albania, Hungary, Macedonia and
Montenegro – used unfair methods to influence the election results in their favor. Government
representatives courted votes by promising subsidies, paying social security benefits out to
certain voter groups and creating jobs in public administration. In Macedonia, the leading
opposition party refused to acknowledge its defeat and began boycotting sessions of the newly
convened parliament. In Hungary, the Orbán government, drawing on the two-thirds majority
that grants it power to amend the constitution, went so far as to introduce a radically new electoral system that succeeded in returning its two-thirds majority even though the ruling parties’
share of the vote dropped from 52.7% in 2010 to 44.9% in May 2014. At the same time, an
increasing number of citizens are avoiding the ballot box altogether, which casts doubt on the
representativeness and legitimacy of the people’s representatives.
The BTI observed a further persistent negative trend in freedom of the media, which is in particular jeopardy in 11 countries – on the one hand, from ruling parties and politicians attempt3
ing to influence media coverage and, on the other, from an increased dependence on sponsors
and advertisers brought about by the crisis. Pressure from the political sphere is closely linked
with the weakness of political parties that, in most countries in the region, have neither broad
membership bases nor stable constituencies, and must therefore reach potential voters primarily through the media. In the region’s relatively small national advertising and subscription markets, tabloid and Internet media outlets threaten the economic base of the few quality
newspapers and journals not financed by the state. As a consequence, journalists and editors
are increasingly obliged to subordinate their professional standards to commercial interests. In
addition, influential business actors have taken over leading media outlets: They include Andrej Babiš, one of the Czech Republic’s wealthiest businessmen and deputy prime minister,
who in June 2013 bought the country’s second-largest media company, MAFRA, which numbers two influential daily newspapers among its portfolio. In October 2014, Slovakia’s Penta
group, which was embroiled in a corruption and bugging case, bought a majority stake in the
daily newspaper Sme, which is known for its critical and investigative journalism. In Bosnia,
the media and construction mogul Fahrudin Radončić, owner of the leading daily newspaper,
Dnevni avaz, leads his own political party and served as minister of security between November 2012 and March 2014. In Bulgaria, the media mogul Delyan Peevski was set to take up
leadership of the secret service. These examples point to an increasing “oligarchization” of
politics. Moreover, a lack of transparency in ownership structures conceals the dependencies
between media and business interests.
Adding to this dismal picture is the pressure on critical observers: Journalists in the region are
threatened or hit with ruinous libel charges. Conversely, ruling parties in Macedonia and
Hungary have nurtured compliant NGOs that, for instance, stage demonstrations in support of
them. Hungary also offers a particularly crass example of violation of the separation of powers and independent institutions. The governing coalition twice amended the constitution,
which was only introduced in 2011, to curb the monitoring rights of the president and the constitutional court, and to enact laws previously declared unconstitutional by the constitutional
court. In Macedonia, Serbia and Slovakia, too, there is a discernible trend toward majoritarian
politics with little regard for the constitution.
The broken promise
While the Baltic states have recovered rapidly from the global and European
crises, other economies are falling behind. The failure of this catching-up pro4
cess is helping fuel social protests and disillusionment – and emigration to the
West.
The data from the BTI 2016 confirms the north-south and west-east gaps that have long characterized East-Central and Southeast Europe: With the exception of Hungary, every country
in the Baltic region and East-Central Europe features an advanced market economy; moreover, all of them number among the BTI’s global top 12. Conversely, the southeast European
states have, at best, functioning market economies. Various data points reflect this contrast:
While every country in the region – with the exception of Croatia and Serbia – experienced
economic growth in 2014, in the Baltic states and East-Central Europe, the upturn was stronger. Meanwhile, less developed institutional and structural framework conditions as well as
severe flooding, particularly in Bosnia and Serbia, slowed recovery in the southeast European
states. The same applies when you look at the current account deficit, inflation and, in particular, the unemployment rate: While this has dropped by an average of 3.3 percentage points in
the Baltic states since 2012, it remains at a relatively high level in southeast European countries – 28% in Bosnia, 20 % in Serbia and 17% in Croatia, according to IMF figures for 2014.
The consistently high structural unemployment in the Balkan countries is also expressed in
the share of the working population in employment, which in 2014 was well under 60%,
while the informal economic sector was particularly large, representing around 30 % to 40 %
of GDP. The East-Central European and Baltic states, on the other hand, can boast employment rates of more than 65%, according to Eurostat, and in the case of frontrunner Estonia,
above 74%. However, only in isolated cases have high employment rates and renewed economic growth raised prosperity levels to anything like those of the established EU member
states. Compared to Germany, many national economies have actually fallen behind.
The disparity was particularly dramatic in Slovenia; while it remains the most prosperous
country in the region, between 2008 and 2013, it shed 11 percentage points in GNI per capita
compared to Germany. For the Czech Republic and Croatia, the disparity widened by seven
and six percentage points, respectively. Only Poland, Latvia and Lithuania converged, and in
part only minimally. The socioeconomic catching-up process, which has stagnated and in
some places failed, is among the most significant triggers for the widespread social protests
and growing disillusionment with democracy and the EU in many countries in the region.
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Bank bailouts destabilize public finances
Regional average scores for the banking system and macrostability indicators over the course of the
last five editions of the BTI.
Nonetheless, social indicators collected by Eurostat indicate that between 2008 and 2013, a
significant widening of income disparity was confined to Croatia, Estonia, Hungary and Slovenia. In Croatia, by contrast, the at-risk-of-poverty rate dropped, while countries such as Poland and Romania could also point to lower income disparity and income poverty.
The costs arising from the economic crisis have reduced the scope for government action,
with the gross government debt rising sharply in every country in the region (with the exception of Kosovo) since 2008, and Albania, Croatia, Hungary, Serbia and
Slovenia recording figures of over 70% of GDP. Dismantling of public debt failed in 2013
and 2014, in part because, in both years, every country (except Estonia) either showed budget
deficits or was forecast to do so by the IMF. Rehabilitating ailing banks brought about high
budget deficits, particularly in Slovenia, and an increase in national debt.
In Slovenia, public debt as a proportion of GDP has almost quadrupled in six years, rising
from 22% (2008) to 83% (2014).
For Poland and Slovenia, the European Commission had already commenced proceedings in
2009 to remedy their excessive budget deficits; further proceedings were introduced for Croatia in 2014. During the review period, the Czech Republic, Slovakia as well as Hungary, Latvia, Lithuania and Romania were released from EU budgetary procedures. Latvia and Lithuania fulfilled the monetary and fiscal convergence criteria of the European Economic and
Monetary Union, which allowed them to join the euro zone at the start of 2014 and 2015, re6
spectively. Consequently, both countries score more highly in the BTI for macroeconomic
stability. During the review period, Kosovo, Latvia, Lithuania, Montenegro and Slovenia introduced legislative and in some places constitutional regulations to limit public budget deficits or public debt.
In November 2014, Serbia agreed to a precautionary standby arrangement with the IMF after
the government announced massive austerity measures in the public sector as well as pension
cuts. Bosnia, Kosovo and Romania also had standby arrangements with the IMF during the
review period.
While banks in every country of the region built up sufficient equity ratios overall, by 2014,
the non-performing component of total bank loans grew by over 10 % in 11 of the 17 countries. Non-performing loans represent a risk for the financial stability of banks in Albania,
Romania and Serbia, in particular, where it represents over 20% of total credit volume. A
number of countries in the region witnessed bank insolvencies, including that of KTB, the
fourth-biggest Bulgarian bank, in November 2014. In Hungary, the state acquired equity in a
number of banks with the goal of raising Hungarian ownership of overall bank assets to more
than half. Amid difficult conditions, a series of privatizations of major entities failed, including the sale of Croatia’s postal bank and national carrier as well as that of Romania’s railway
company and energy supplier.
Consensus in danger
European transformation countries no longer serve as exemplary models. There
are protests everywhere, populists and extremists are winning elections, and
reformers have no support. In many countries in East-Central and Southeast Europe, the direction of society is increasingly uncertain.
Do all major political actors agree on democracy and a market economy as long-term strategic
goals? And can reformers either exclude or co-opt anti-democratic actors? These are two of
the questions that the BTI uses to measure the quality of a country’s consensus-building. For
many countries in East-Central and Southeast Europe, they can no longer be affirmed unequivocally: While 14 of the 17 countries in the BTI 2010 achieved top scores in the question
of achieving a consensus on goals, only half managed this result in the BTI 2016; and on the
issue of anti-democratic actors, the number of top-scoring countries fell from seven to five.
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These trends manifest themselves with differing characteristics and forms in the various countries in the region: On the one hand, individual ruling parties, such as those in Hungary and
Macedonia, pursue the kind of dominance-oriented power politics that deepens existing
cleavages and rejects even intermittent cooperation with opposition parties. On the other
hand, antiestablishment parties and movements, whose political identities are derived from a
rejection of established political forces rather than consistent political programs, have gained
influence throughout the region.
Among these new actors are, firstly, far-right parties, such as Ataka in Bulgaria and Jobbik in
Hungary, and the far-right Marian Kotleba, elected governor of Slovakia’s Banská Bystrica
region in the November 2013 regional elections. Secondly, the movement encompasses rightand left-wing populist parties and politicians, such as the Patriotic Front in Bulgaria,
Vetëvendosje in Kosovo, Drąsos kelias in Lithuania, People’s Party – Dan Diaconescu in
Romania and Úsvit in the Czech Republic, some of which have achieved double-digit polling
figures in recent years. Also among their number is Ivan Sinčić, who secured 16% of the vote
in the first round of the December 2014 Croatian presidential election.
Anti-democratic forces are gaining power
The pie charts represent the number of countries at the different rating levels of the consensus on
goals and anti-democratic actors indicators. The larger the wedge, the more countries at the respective rating level.
Thirdly, several newly founded centrist parties and politicians achieved spectacular electoral
success by presenting themselves as upstanding, professional alternatives to an established
political elite perceived as corrupt. Among this group we could mention Positive Slovenia
party and the Party of Miro Cerar in Slovenia, ANO 2011 in the Czech Republic and Andrej
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Kiska, elected President of Slovakia in March 2014. These new political actors articulate a
widespread and growing dissatisfaction that was also visible in the numerous public protests
in 2013 and 2014. In Bulgaria, for example, rises in electricity prices unleashed a wave of
protests targeted at the country’s social malaise that forced Prime Minister Boyko Borissov to
resign in February 2013. From the ensuing parliamentary elections emerged a coalition led by
the opposition Bulgarian Socialist Party, whose system of patronage has since led to five noconfidence votes and, following further conflicts, fresh elections and the return of Borissov.
Larger protests and demonstrations took place in Bosnia, where members of the three major
ethnic communities demonstrated together for the first time against mismanagement, high
unemployment and political standstill. Large-scale demonstrations in the Czech Republic,
Hungary and Poland respectively protested alleged falsification of local authority election
results, the president’s pro-Russia policies and the government’s plan to introduce an Internet
access tax. Some protests were also driven by ethno-national concerns, including demonstrations against the ethnic Serbian minister for communities in Kosovo, the use of Cyrillic characters on public signage in areas of Croatia with Serbian minorities, and the appointment of a
former commander of ethnic Albanian rebels as Macedonia’s defense minister.
On the one hand, what we are witnessing here is the emergence of a more self-confident civil
society, which in some countries has contributed to greater efforts in the fight against corruption. In Romania, for example, in contrast to previous campaigns, legally binding judgments
have actually been handed down against influential figures. The new governments in Albania
and the Czech Republic have also attempted to improve the institutional framework for systematically preventing and combating corruption.
On the other hand, the “politics of protest” can also weaken mechanisms for the separation of
powers and protection of civil rights, and make it harder to introduce reforms that come with
short-term social costs but major long-term benefits for society. Furthermore, “blockade referenda” in Slovenia prompted the government to set stricter conditions for the initiation and
validity of referenda.
Liberal democracy is in danger when populists and protest leaders assume governmental responsibility in possession of a plebiscitary mandate that they imagine empowers them to
amend the constitutional order as they wish. That includes Hungary’s prime minister, Viktor
Orbán, who announced in July 2014 that he was establishing an “illiberal state” whose declared models are Singapore and China.
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In the western Balkan states, the goal of EU accession still unites leading political actors, and
Croatia in fact acceded to the union on July 1, 2013. Its neighbors, however, have made little
progress on the road to the EU. With Bosnia and Kosovo now on board, every state in the
region is now subject to a Stabilization and Association Agreement (SAA). But the accession
prospects of the Balkan states suffered a major setback when European Commission President
Jean-Claude Juncker declared that there would be no further EU expansion during the current
term of the commission, set to run until 2019.
The cost of crisis
What began in 2008 as a global economic crisis and persists to this day as a euro zone crisis
has also had a severe political impact on East-Central and Southeast Europe. Not only has the
connection been economic integration and prosperity been discredited, but we can no longer
assume that “responsible” government leadership dovetails with a responsive government.
The political elites have long promoted EU membership and foreign investment as the only
possible strategy for prosperity and stability. But now their credibility has been shaken. For
many citizens, it wasn’t just that the EU proved incapable of protecting its new member
states; its management of the crisis also offended their sense of justice by holding poorer
member states liable for the debts of wealthier southern European member states.
Risk-averse international finance markets and stricter EU monitoring procedures arising from
the euro-zone crisis have curtailed governmental scope for distribution in the region. As a
result, there is a growing divide between external conditions and public opinion as aids to
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orientation. Responsive policies that take public opinion into consideration are moving further
away from policies that fulfill the expectations and requirements of the EU and seek to establish or maintain the confidence of actors in the international finance markets.
In East-Central and Southeast Europe, institutional weakness of the political parties has increased the impact of the crises. There has traditionally been a lower level of societal trust in
parties here than in Western Europe, as indicated in surveys, as well as lower rates of party
membership and voter turnout. However, the BTI country reports indicate that the erosion of
democratic control mechanisms in the interests of financial policy responsibility has increased
representation problems in the young democracies. Voters who see the ruling parties they
voted for partially or completely failing to keep their electoral promises due to external pressure tend to avoid the ballot box, support protest actions or opt for populist alternatives.
When anti-establishment parties take over government, they face a multifaceted dilemma. If
they defer their actual goals, they risk losing credibility and the support of voters. If they attempt to make good on their promises, they are likely to face sanctions from financial markets
and EU institutions for their “irresponsible” policies. The third option is to combine responsive policies with measures to limit public control and political competition, which leads to
the kind of dominance-oriented power politics that has emerged in Hungary.
In contrast to Hungary, the most significant political elites in Bulgaria, Romania and Slovakia
maintained their EU-friendly attitude even after EU accession and refrained from exploiting
conflicts with the EU for political mobilization. In the western Balkan countries, the incentives and conditions of the accession process limited the political scope for EU skepticism
among moderate parties.
Then there are differences in the electoral system and, finally, societies in the region differ in
terms of the relationship between economic performance and the population’s pro-democratic
attitude. In the Czech Republic, Poland and Slovakia, democratization is associated in perception and memory with the end of the communist economy of scarcity. In Croatia and Slovenia, the transformation is connected to national sovereignty. Hungary’s citizens, on the other
hand, link transformation to a large degree with the economic decline that followed on the
heels of the sham prosperity of “goulash communism.” And it is precisely the example of
Hungary that demonstrates: When the wrong influences converge, deconsolidation of the young democracies on Europe’s eastern periphery is a possibility.
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Latin America and the Caribbean
In the wake of the „quiet revolution“
Latent changes in Latin America are making themselves felt with increasing
clarity. Citizens are often demanding more from political and economic elites: a
greater say in policy decisions, more social services, more honesty. These demands, voiced in growing protests, are a direct consequence of successful
transformation. But most governments have yet to find a compelling response
to these challenges.
Two decades ago, Argentinian political scientist Guillermo O’Donnell urged patience for the
young Latin American democracies. If they could only be afforded a long phase of stability,
he predicted, then the disadvantaged masses would organize more decisively to exercise their
rights and submit their demands.
This prediction appears to be ringing true. Simmering desires for further change, now spilling
over into the streets, are linked to a change in the region’s political culture In short, this
change is driven by citizens who are fed up with poor governance and finally exercising their
right to protest and make demands on their governments.
This is related to the fact that problems, such as high levels of social inequality, the fixation
on commodity exports and the erosion of stateness, have persisted despite the progress made
since the 1980s, as has the mismatch between social demands and the responsiveness of the
political system. Even in the new democratic era, Latin America’s political class has been
largely dominated by elites who remain suspicious of citizen participation and, in some cases,
have placed further restraints on such activity.
The social protests in Chile, Brazil and other countries are an expression of widespread disappointment in the absence of responsiveness. At the same time, they mark an opportunity to
deepen democracy in these countries. In many other countries, however, the political elites do
not seem sufficiently conscious of the growing challenges and have not developed commensurate strategies.
Ironically, the new problems finding expression in a series of social protests – for example, in
Brazil during the 2013 Confederations Cup or the 2014 FIFA World Cup – result in part from
a successful economic policy. As numerous studies (such as those from the World Bank)
show, economic growth, structural labor-market improvements, rising education levels and a
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decline in income inequality have contributed to the emergence in recent years of a “new
middle class” in many Latin American countries. However, these individuals, who comprise
what the International Labour Organization refers to as a “floating group,” live at a level not
far above the poverty line. Entire strata of the population therefore remain vulnerable and face
the real danger of renewed social decline.
This danger could become reality if declining economic output and an associated job shortage
combine with existing structural deficiencies in education and health care, a neglected infrastructure and the fight against corruption. This is why fears of social decline and the claims
made by the “new middle class” are leading not only to demands for the protection of material
welfare, but have also been directed toward better education and infrastructure, environmental
concerns, greater political transparency and sustainable democratization.
Given this context of socioeconomic upheaval, it is significant that Latin America countries
have generally respected the principles of constitutional democracy while cultivating sociopolitical corrective measures in their market economies. Aside from Cuba, which has remained a
classic autocracy, and Costa Rica, which has been consistently democratic since 1949, all
countries in the region have undergone a democratization process since the end of the 1970s.
Also in response to what, in some cases, were massive human rights violations perpetrated
under dictatorships, Latin America was and is characterized by a generally high level of consensus regarding democracy as a guiding principle of transformation.
On the other hand, neoliberal reforms, which were carried out initially in Chile in the 1970s
and then more broadly throughout the region in the 1980s, have significantly changed the region’s socioeconomic structure and, with it, the political and social culture. These reforms
broke with the Latin American version of Keynesianism and yielded little more than scanty
results in many countries, triggering radical and moderate-left countermovements in response.
The “third way,” featuring mixed systems in Bolivia, Ecuador and Venezuela, remains in
place, as does Cuba’s state socialism. Five years after the earthquake, Haiti’s fragility remains
unchanged, and prospects are bleak for a run-down Venezuela, too. An additional characteristic of the region is that – aside from border skirmishes and various U.S. interventions – there
have been no interstate wars for almost a century. In this regard, the prospects for intraregional cooperation are good. However, violent domestic conflicts and high murder rates offer a
sharp contrast to this fact. The region contains 21 of the 25 countries and 43 of the 50 cities
with the highest murder rates worldwide (outside war zones). This poor state of security demands new or even cross-national strategies.
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Still at the crossroads
The growth of democratic deficits in Latin America seems generally to have
slowed. However, in some countries, the spiral of violence, structural obstacles
and populist temptations have ushered in a lengthy period of negative developments.
Aside from stateness, political participation represents the strongest pillar of democracy in
Latin America. This is expressed to a significant degree in the quality of elections. In 2013
and 2014, a total of 12 presidential elections took place, with only two being seriously disputed. The most dubious was the 2013 election in Venezuela, in which Nicolás Maduro was
elected as Hugo Chávez’s successor – a result that the opposition candidate, Henrique
Capriles, refused to recognize. The presidential and
parliamentary elections in Ecuador, which in February 2014 not only returned incumbent Rafael Correa to office with a clear majority, but also – supported by a new electoral law –
earned his Alianza PAIS party a near three-quarters parliamentary majority, can be deemed
free and fair to only a qualified degree.
Dissatisfaction with the performance of governments has risen notably, leading to growing
protests. On the one hand, this indicates that citizens are demanding their rights even outside
the electoral context more actively than was previously the case. However, on the other hand,
it may also lead to major conflicts as individual political systems fail to respond to public demands. Currently, this trend is evident in about half of the region’s countries. So far, this unrest has not led to any major systemic changes. However, the average level of approval for
democracy has been on the decline since 2010.
In essence, two phenomena – weakened state structures as a result of the expansion of organized crime, and populist challenges to the liberal state – in combination with structural factors and at times flagrant mismanagement, are responsible for some significant negative developments. With regard to stateness problems, this applies to Guatemala and Mexico, while
the “populist” camp includes Ecuador, Nicaragua and Venezuela.
In Mexico, the downward spiral of violence and counterviolence that began under the presidency of Felipe Calderón (2006 –2012) has continued under the Peña Nieto government. Corrupt networks linking politics, law enforcement and drug gangs, and the resulting nearcomplete impunity, are further undermining the rule of law. Moreover, the human-rights sit14
uation is precarious. Quite clearly, the government lacks the capacity to mount a more forceful fight against the threat of national disintegration. As a result, Mexico increasingly resembles Guatemala, which is exposed to a similar syndrome of corruption, escalating violence
and criminal networks. And, with its fragile institutional structure, it represents the weakest
democracy in the BTI overall.
In the populist camp, proto-democratic institutions and procedures have further deteriorated,
particularly in Venezuela. The government of Chávez’s successor, Nicolás Maduro, a weak
leader, has seen itself confronted with growing economic and social problems since taking
office in April 2013, and these issues have been further exacerbated by the decline in oil prices. The government has become increasingly repressive toward the opposition and mass media, and has imprisoned several prominent opposition politicians. While the country’s strong
political polarization, along with a mostly disunited opposition, constitutes a considerable
source of power for a “Chavismo without Chavez,” the desolate condition of state institutions
makes it impossible to rule out a future scenario of anomie and anarchy.
Democracies in retreat
Score changes in the political transformation dimension, BTI 2006–BTI 2016. Only countries with significant changes of ±0.50 are depicted.
Comparatively speaking, Nicaragua and Ecuador offer a more stable environment, as presidents Daniel Ortega and Rafael Correa have proven successful in gradually monopolizing
power and protecting it with a mix of respect for, evasion of and alteration of democratic institutions. While the former left-revolutionary Ortega has come to terms with Nicaragua’s
economic elites, Correa envisions an economic order characterized by significant state inter15
vention in order to end the “long night of neoliberalism.” Both presidents have successfully
made their parties into hegemonic powers and neutralized the weak opposition, so that both
countries have taken a step closer to being “electoral autocracies.” In Correa’s case, it is also
true that, in some respects, he actually governs better than his mostly incompetent predecessors, which has earned him a level of support within the population that remains high.
In only two cases in the last decade, by contrast, have there been significant positive democratic developments: Bolivia and Colombia. Bolivia is a particularly interesting case, as the
country – governed since 2006 by President Evo Morales – is numbered among the leftpopulist regimes. Generally, these are almost by definition contrary to the principles of liberal
democracy because the personalization of such regimes is linked to a general weakening of
institutions and eff orts to monopolize the public sphere. However, with a new constitution
and the subsequent establishment of a new institutional structure, Morales has been simultaneously successful in opening the political system and stabilizing the country. Unlike his
counterparts in Ecuador and Venezuela, he has had to grant the opposition considerable leeway. He also continues to enjoy strong support in civil society, which is relatively heterogeneous and cannot be controlled.
Colombia’s political progress has followed a different track. First, President Álvaro Uribe
(2002 –2010) strengthened stateness in the violence-ridden country – at the expense of the
rule of law and human rights, but relatively successfully. Under President Juan Manuel Santos, in office since 2010 and re-elected in 2014, the rule of law was once again strengthened,
while peace negotiations with the guerillas, despite repeated setbacks, helped mitigate conflicts.
Big states, big problems
Despite a challenging global economic environment, most of the region’s economies appear to be stable. However, dependence on raw materials remains a
massive problem, as does social inequality. Leftist governments are responsible
for both the greatest successes and the biggest setbacks.
Declining commodity prices, weak demand from Europe and China – the economic climate
has been anything but favorable to the economies of Latin America in recent years. The fact
that experts nevertheless regard most of the economies as robust enough to surmount these
16
challenges is a positive outcome of the reform processes of the 1980s and 1990s, which resulted in clear institutional-stability gains in most countries.
However, the region’s core problems remain unchanged: first, the dependence on commodity
exports, and thus too-low productivity and competitiveness; and, second, the still-high level of
social inequality. This, in turn, serves as the breeding ground for a third malady: abrupt, politically motivated changes in economic policy, and changes to the framework of economic institutions. These basic patterns are also reflected in the BTI’s classification of Latin.
America’s market economies, which has remained fundamentally unchanged for years. A
handful of developed or at least functioning market economies, with Uruguay and Chile at the
top, contrasts with the majority of countries that display clear to, in some cases, severe functional deficits. As previously, Haiti, Venezuela and Cuba bring up the region’s rear.
The fact that Cuba has significantly surpassed Venezuela with respect to the economictransformation assessment is not due to some burst of market-economic development on the
Caribbean island, but to Venezuela’s increasingly drastic decline. Even if Raúl Castro’s reforms are in the public spotlight, the slight improvements in the economic order here (a little
competition, liberalization and private property) are broadly balanced by downward social
trends (greater inequality as a result of reforms), and the overall trend over the past few years
has been negative due to the weakening economic performance. Venezuela fared far worse
and has slid increasingly into economic chaos during President Maduro’s term. This has expressed itself in disastrous monetary and fiscal policies, horrendous inflation, supply shortages and a worsening recession, further driven by the decline in oil prices.
The fact that the average regional score for economic transformation has declined since 2010
is primarily due to two factors: less-solid stability policies and, even more so, declining economic performance. This is the consequence of Latin America’s dependence on commodity
exports. While this contributed to a boom in exports after 2002, and thus also to growing
prosperity, a new middle class and a reduction in poverty, the situation has reversed in recent
years in the wake of falling prices for raw materials. This drastically reduced export earnings
as well as reserves. According to the Economic Commission for Latin America and the Caribbean (ECLAC), Latin America’s per capita economic growth rate has declined from 3.1% in
2011 to 0.1% in 2014, with equally weak IMF forecasts for 2015 and 2016.
However, these developments have not had equal impact in all countries. Differences are attributable to specific policy decisions made within different countries, particularly with regard
to stability policy and its institutional safeguarding through means such as stabilization funds.
17
Interestingly, it is mainly the smaller countries that have maintained an overall positive development, while it is primarily the large economies that are struggling. Along with Venezuela,
this currently applies to Brazil. The Dilma Rousseff government has pursued a significantly
laxer and inconsistent fiscal policy, although a decline in economic performance (rising inflation, trade deficit and budget deficit) has been apparent for a while. The adjustment policy
initiated in December 2014 is likely to take effect only in the medium term.
Large economies under pressure
Changes in the economic performance criterion, BTI 2008–BTI 2016. The 15 smaller economies were
merged and their scores weighted by GDP.
The downward trends in Costa Rica and Mexico show a slightly different pattern, as factors
beyond weaker performance and stability policy have also had an influence. In Mexico, where
about 40% of the state budget is financed through oil revenues, these additional factors included the effects of increasingly undermined property rights as well as weak environmental
policies. In Costa Rica, which has long been viewed as a country with relatively good social
standards, poverty and inequality have expanded over the course of years, and have become a
burden for the country’s development. Costa Rica was one of the few countries in Latin
America to see a rise in the Gini coefficient during the boom years of 2002 –2011; this trend
has continued since then, and reached a historically high level in 2013. By contrast, most other countries were far better able to overcome the social challenges despite partial weaknesses.
A similar picture can also be identified in the medium-term perspective since 2006, which
identifies Argentina, Venezuela and Brazil as those countries suffering the greatest losses and,
18
aside from Peru, primarily smaller countries, such as Uruguay, Paraguay, Ecuador and Bolivia, as those registering the greatest gains. With respect to the underlying economic-policy
principles, this points to an apparent paradox, as Latin America’s left-wing governments –
and not only the moderate ones – have been responsible for both the greatest progress and the
greatest setbacks. As Bolivia and Ecuador show, left-populist governments do not necessarily
have to fall into an erratic economic policy à la Venezuela, but can safeguard and combine
inclusion-oriented economic and social policies with some standards of liberal economic order.
Suffering from the “Brazil Syndrome”
All across Latin America, new social classes are creating new challenges. Yet
political responses have largely failed to keep pace. This is not the only area in
which the region has developed a considerable backlog of reforms.
The 2013 Confederations Cup in Brazil was planned as a joyful event and a mass spectacle.
Instead, it turned into a catalyst for mass anger. However, the protests ignited in the context of
this World Cup preparatory tournament transcended national borders. They serve as examples
of how difficult nearly all governments in Latin America are finding it to develop appropriate
responses to the region’s new configurations of multifaceted problems.
The “Brazil syndrome” is closely linked with the social changes underway that have accompanied democratic advances and growing socioeconomic opportunity in the past decade. Economic success and sociopolitical policies have precipitated the emergence of a “new middle
class.” These strata of the population, whose members feel that their social status is at risk,
have clear expectations and demands of the political system with regard to education, infrastructure, transportation, public security and environmental protection. If the state’s performance fails to meet these expectations, a latent discontent emerges, which becomes manifest
displeasure if – as in Brazil – massive sums of money are expended on prestige projects and
protests are apparently not taken seriously. Corruption scandals embroiling leading politicians
exacerbate this effect, deepening the rift between the population and the political class or, in
extreme cases, even promoting a disaffection with the idea of democracy.
Since 2013, Dilma Rousseff in Brazil has faced exactly this mixture of reform deficits, discontent and loss of legitimacy. And even if, at the end of the review period, some signs indi-
19
cated that Rousseff had at least recognized the necessity of fundamental reforms, the government has not yet been able to demonstrate forward-looking perspectives.
Brazil is not an isolated case. The situation in Chile, where the legacies of the Pinochet era
continue to play a defining role, is similar if somewhat differently configured. The rise in social and political conflict under the presidency of Sebastián Piñera – protests particularly by
students and the conflict with the Mapuche – contributed to Michelle Bachelet’s re-election as
president. Backed by a majority of her own allies in parliament, Bachelet initiated a tax reform, an electoral reform and an education-system reform in her first year in office, among
other policies. In this regard, she was able to build on the country’s institutionalized mechanisms of good governance. Thus, once again, Chile holds second place in the BTI’s entire
management ranking, following Uruguay.
Despite these successes, the subtle de-legitimation of the so-called democracy of agreements
is ongoing, however latent. The internationally recognized politics of consensus, with which
the political elites have successfully governed the country since 1990, have for some time also
been perceived as the expression of a party oligopoly. Increasing alienation among a broad
portion of the citizenry has been the result. Bachelet’s program initially purported to be engaged in a “refounding” of democracy. However, following several corruption scandals involving members of the government as well as the president’s son, this idea has nearly vanished.
Similar sets of problems are visible elsewhere. In Mexico, the Peña Nieto government, after a
hopeful first year with its “Pact for Mexico” and a few important reform initiatives, has been
thrown on the defensive by the escalation in violence and the subsequent protests. Not least
because of its ambivalent reactions to the massacre of students in the state of Guerrero, the
government has largely lost its legitimacy.
In Guatemala and Honduras, too, early 2015 saw the beginning of waves of protest against
violence, corruption and impunity. These were driven primarily by young citizens who organized themselves using social networks, outside traditional channels of participation, and who
were in large part protesting against the established power structures. These recent clashes are
attended by older conflicts in other countries that remain unresolved in many cases or have
even been (consciously) exacerbated. This is the case in Argentina and Ecuador, for example,
where governments have resolutely pursued a strategy of polarization. However, it is also true
of Peru, where President Ollanta Humala has not been successful in defusing that country’s
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complex conflict, which has contributed to a certain weakness of leadership on the part of the
government.
To be sure, the BTI 2016 also registers significant positive developments. Alongside the special case of Cuba, which has significantly improved in the last decade – albeit from a very low
level – this is certainly true of Panama. Here, the new president, Juan
Carlos Varela, has ushered in a breath of new democratic air, revising the autocratic governing style fostered under predecessor Ricardo Martinelli. Similarly, Paraguay under President
Horacio Cartes, who took office in 2013, has returned to democratic routine following the
turmoil surrounding the ouster of President Lugo. This has also enabled the country’s reintegration into the Mercosur and UNASUR regional organizations.
A new pact is needed
Stability or stagnation? This is the question with regard to short- and medium-term developments in Latin America and the Caribbean. In historical perspective, the positive must be noted first: Outside the problematic cases of Cuba, Haiti, Venezuela and, to some extent, Guatemala, political and economic institutions alike are more stable overall. The great differences
in institutional quality are nevertheless an indicator that the countries are quite differently
prepared for future internal and external challenges, and are thus vulnerable to crisis to a
greater or lesser degree.
21
In the political realm, these challenges have in recent years included increasingly visible problems with the responsiveness of the political systems, while in the economic sphere, the combination of structural deficits and the uncertainties of external conditions has been a particular
concern.
In the area of political transformation, with the exception of the always highly ranked Chile,
Costa Rica and Uruguay, the gap between a relatively high level of “polyarchy” (political
participation) and the lack of quality regarding the rule of law has remained unbridgeable.
This mismatch represents an Achilles’ heel for future development, as political power legitimized by elections cannot be sufficiently controlled, and the systems are thus vulnerable to
autocratic tendencies, corruption and populism. Particularly in Central America, the prospect
of future crises cannot be excluded. As in Mexico, the situation here is further complicated by
stateness problems and the relatively high level of violence and organized crime. In addition,
the latent tension between democratic values and security needs is sure to render things all
that more difficult.
The institutionally more consolidated democracies have thus far proved better positioned to
react to social upheavals and to launch reform initiatives. This suggests that – despite current
problems which will likely compel Brazil and Chile, in particular, to undergo political changes in the coming years – these challenges will not negatively affect these countries’ democratic stability.
22
A similar pattern can be seen in the area of economic transformation. Although progress and
setbacks have balanced one another here, the majority of countries have been able to build on
top of fairly solid economic institutions. To be sure, economic structures differ to what is at
times a significant degree, so development prospects vary considerably. In addition, shortcomings (particularly in the areas of the welfare state and education) hamper the development
of greater economic dynamism. In this regard, the political elites have failed to follow up on
specific social programs by also introducing fairer taxation systems.
In nearly all countries, some structural problems have remained unresolved despite – or perhaps because of – the economic boom. The dependence on commodity exports has not diminished, and is accompanied by a relatively low level of productivity and added value. In addition, inequality still has not been significantly reduced and, in many places, is associated with
an extensive informal sector.
As already evident in the review period, a further slackening of international demand could
put the current growth model even more strongly to the test. In recent years, the clear reduction in poverty as well as in inequality, to some extent, has primarily been linked to the increase in employment. Consequently, setbacks in this area could also be possible, which
would have implications for political development.
The political and economic challenges facing governments and the political elites overall remain immense, demanding new adjustment and reform strategies. With regard to the region’s
growth model, ECLAC has called for no less than a “new social contract” that would lift Latin
American economies to a higher level of productivity and social equality – in part through
reforms creating a more redistribution-oriented tax structure. However, the question is whether Latin America’s political elites are ready for this, or whether they will rather hold to the
habitual strategy of “muddling through” until the next round of major crises.
23
Middle East and North Africa
Revolutions in shambles
The Arab Spring was short-lived. Five years later, there are few traces of optimism remaining in the countries of the Middle East and North Africa. Even
worse, a stark barbarism has taken hold in the countries of the region locked in
civil war.
The year 2011 was one of euphoria. In many North African countries, and even in the hardline autocracies of the Gulf, populations rose up and called for bread, freedom and social justice. This was initially met with success; dictators who had retained power for decades were
swept away in only a short time. People who had for years languished in exile on political
grounds returned to their home countries to help build fledgling democracies. Increased political freedoms and economic prosperity, an end to the ossified power structures of corrupt
elites, and greater equality of opportunity for all levels of the population appeared to be realistic goals.
Now, five years later, the disappointment is great. Aside from Tunisia, no country has shown
notable improvements. The military junta in Egypt has implacably defended its claim to power and has restored the former political order. In Sudan, President Omar al-Bashir sent his
security forces to quell the biggest disturbances of his term – in 2013 alone, as many as 200
people were shot at demonstrations. In Bahrain, demonstrations by Shi’ites, who face discrimination within the country, were crushed with the help of allied military forces. Turkey, too,
has left its path of democratization under President Recep Tayyip Erdoğan. Quantitatively
speaking, the region has fallen behind every political and economic development level measured in the BTI since 2006.
Worse still, the number of states that are failing, by sinking into anarchy and civil war, is
growing. Along with Syria, the BTI identifies Libya and Yemen as failing states, while the
stability of Iraq is also severely endangered. The degree of barbarism – not only on the part of
official security forces, but particularly by the militant Islamist extremists and the militias of
the Islamic State (IS) – is difficult to understand, even if one takes the fragile state of affairs
in these countries into account. Yazidis have been driven into the mountains to die of thirst;
cultural goods of the first order have been destroyed with hammer and chisel in order to eradicate memories of millennia-old civilizations; people have been beheaded by sword in public
24
show trials, burned alive or drowned; and children have been abused as soldiers or child
brides.
The barbarity has, in turn, triggered further repression. Where the state remains at all capable
of action, governments have strengthened their focus on security issues, in most cases at the
expense of the rule of law. New anti-terror laws have significantly restricted individual and
collective freedoms.
Civil society organizations have come under pressure, while Islamists and secular activists
have been imprisoned, exiled or tortured and killed in prisons, just as before. In the name of
counterterrorism, regimes are smothering all that might jeopardize their own hold on power.
This is true of the Gulf monarchies as well as for the military regimes in Egypt, Sudan and
elsewhere. The only exception is Tunisia. Despite difficult underlying conditions, this country
has democratized, established structures supporting the rule of law, and created a framework
for a successful economic transformation. After a few years of transition, a regular parliament
and government were both elected in 2014. Apart from its security problems and the concerns
presented by the many people lacking official employment, the country has the best possibility of any Arab state of continuing successfully along the path of transformation into a liberal
democracy and a social market economy.
Morocco, too, has made economic progress, but without bringing about notable political improvements. In the remaining countries, the state of economic development was stagnant or
declined, particularly in the politically unstable states, such as Bahrain, Iraq, Lebanon, Libya,
Oman, Sudan and Syria. One of the biggest obstacles on the path to prosperous and inclusive
societies in the region remains the high rates of youth unemployment. If the (official) statistics
can be trusted, this is at levels of up to 30%. The resistance to reform evinced by most governments is reflected in the Management Index, in particular. Alongside Tunisia, only Iran
achieved notable progress due to the change in government from Ahmadinejad to Rouhani.
By contrast, significant deteriorations were evident in Qatar, which – by supporting the Egyptian Muslim Brotherhood and the IS fighters in Iraq and Syria – not only disrupted regional
cooperation, but also fueled conflicts and made itself complicit in human rights violations.
Turkey, too, was downgraded due to its increasingly authoritarian governance style. Finally,
government performances in Libya, Sudan and Syria have contributed fundamentally to a
continuously escalating, increasingly unstable situation, and thus are among the worst-rated
worldwide.
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Violence and focus on security smother freedom
Prospects are poor for the region’s democrats, who are being crushed between
Islamist fundamentalists and military dictatorships. Libya, Syria and Yemen are
failing states. Only Tunisia remains a beacon of hope.
Tunisia has accomplished amazing progress in recent years. It has avoided looming polarization between secular forces and Islamists, earned the trust of the international community, and
expanded fundamental civil rights. Progress regarding the separation of powers has been particularly strong. The provisional Constituent Assembly was superseded following the October
2014 elections by a full-fledged parliament. With the new constitution, the independence of
the judiciary and the opportunities for effective work by political parties and independent interest groups have also improved somewhat since 2014. As a result, state institutions have
done a better job of providing services, which in turn has won them greater appreciation. Improvements relative to the Ben Ali government have been enormous.
In the cases of Egypt and Libya, by contrast, two other North African revolutionary states
have left their original reform paths and even fallen significantly behind the scores achieved
during the Mubarak and al-Qadhafi eras. Egypt has experienced a veritable roller-coaster ride.
First, Islamist President Mohamed Morsi – now facing a death sentence – was overthrown
after a year in office as a result of polarizing policies that sought primarily to consolidate the
power of the Muslim Brotherhood. Demonstrations by millions of Egyptians offered the military under then-Field Marshall Abdel Fattah al-Sisi the welcome opportunity to push Morsi
from office. Since the summer of 2014, al-Sisi has governed the country as president with a
heavy hand. Political participation rights, the rule of law, and political and social integration
have fallen back to the level of the Mubarak period. The political instrumentalization of the
judicial system, the disregard for fundamental rights and the worsening security situation are
particular grounds for concern.
Security concerns, in turn, give al-Sisi a trump card: With every attack that occurs in Sinai or
Cairo, his allusions to Egypt’s endangerment by Islamist extremists appear more credible.
Conflict-ridden Libya, destabilized by high levels of violence – which provides material
grounds for Egyptian fears – has suffered significant setbacks in all five BTI criteria of political transformation. The state no longer holds a monopoly on the use of force; rather, rival
militias fight for supremacy in the three regions into which the country has de facto disintegrated. Each of these groups engage in shifting alliances, with changing degrees of radicalism
and religiosity, rendering the exact lines of conflict difficult to ascertain. Since the summer of
26
2014, the country has had two “official” governments and parliaments: the New General National Congress, with Nouri Abusahmain as president and Omar al-Hassi as prime minister of
the National Salvation government in Tripoli, and the House of Representatives as parliament
in Tobruk, with the government of Abdullah al-Thinni.
The state of affairs in Yemen and particularly in Syria have taken a catastrophic turn for the
worse. Here, government troops are fighting against various groups of rebels and insurgents.
The fact that Syrian President Bashar al-Assad, despite his numerous human rights violations,
is seen by many as the lesser evil in comparison to the IS and the al-Nusra Front shows the
hopelessness of the situation in an almost macabre way.
Because of this social fragmentation, there is little hope of things improving quickly with regard to the millions of refugees and the country’s devastated infrastructure. Nonetheless, in
the Kurdish-controlled Rojava area, the signs of an incipient functioning stateness are evident.
However, given the Kurdish aspirations for independence in Iraq and Turkey, any potential
secession would produce wholly new tensions. Even though Turkey had continued its policy
of reconciliation with the Kurds throughout the BTI assessment period, conflicts with the
PKK escalated in the summer of 2015. Before that, the harsh response of the Turkish security
forces to the 2013 Gezi protests, as well as the policy of intimidation against opposition activists and journalists, had already led to a decline in scores, particularly in the areas of fundamental rights and the freedom of expression. Moreover, the separation of powers has suffered
due to Erdoğan’s accumulation of powers.
The effects of Syrian state failure in conjunction with the rise of the IS can be clearly seen in
Iraq, which is classified as an autocracy again for the first time since the BTI 2008. In particular, the freedom of expression and the civil rights situation no longer meet minimum democratic standards. However, this is not wholly attributable to the influence of the IS; rather, the
authoritarian policies of former Prime Minister Nouri al-Maliki also had a destabilizing effect.
The massive instability of its neighbors even affected Lebanon, the only Arab country to have
maintained a democracy across decades. There are serious doubts arising regarding democratically elected representatives’ effective power to govern. Alongside Iran and Assad’s Syria,
Saudi Arabia has also intervened in Lebanon’s internal affairs to a considerable extent. Moreover, in 2013, the parliamentary elections were postponed twice because the main political
factions could not agree on a new electoral law, and because the unsafe situation in many border areas made it appear impossible to ensure that the vote would be carried out properly. In-
27
stead, the existing parliament was extended a full legislative term, until 2017, which poses
fundamental questions about its legitimacy.
In looking at the monarchies of the Gulf region, the continuing negative trend in Bahrain is
evident. In terms of electoral rights and the freedoms of assembly and expression, the country
has taken several steps backward as a result of the conflict between the Shi’ite majority and
the Sunni ruling family. Even in Kuwait, traditionally the most moderate autocracy in the area, the trend is negative. Here, too, under the pretext of national security, the government has
flagrantly restricted assembly rights and the freedom of expression, puncturing hopes of a
liberalization.
28
Epicenters of political bankruptcy
Countries are arranged by the average of scores received in three clusters of BTI indicators. The innermost circle represents the worst performance. Only countries scoring 3.0 or below are depicted.
“State failure” = no monopoly on the use of force & basic administration; “no political participation” = no
free and fair elections, effective power to govern, association/assembly rights & freedom of expression; “no rule of law” = no separation of powers, independent judiciary, prosecution of office abuse &
civil rights.
29
A question of (oil) prices
At least economically, some of the Gulf’s hard-line autocracies have proven to
be still capable of reform. The United Arab Emirates, along with Qatar, represent the only fully developed economies in the region. As previously, possession
of oil as a resource – and how it is handled – proves critical to the state of national economies.
For the region’s oil-importing countries – which can be seen as the region’s “poorer half” –
the sharp decline in oil prices since the summer of 2014 has brought great advantages with
regard to stabilizing budgets and trade balances. In addition, it has created a politically opportune occasion for the urgently needed correction of the generous fuel subsidies offered in
many places. These subsidies are not only a steady burden on budgets; they also reduce incentives to save energy and favor the affluent strata of society, as the genuinely poor consume
little gasoline. During the review period, these subsidies were gradually reduced in Egypt,
Jordan, Morocco and Sudan.
Even in Syria, the price of oil plays a significant role. Since the IS has brought numerous Syrian oilfields under its control, it sells this oil to the Assad regime and generates a portion of its
income in this way – a good example of how the war economy functions. A transformation of
this system to a viable postwar economic order is currently difficult to imagine.
The United Arab Emirates – which had already more than made up for the negative effects of
the 2009 world economic crisis in the BTI 2014 – has almost closed the gap with Qatar, the
region’s traditional economic leader. This results from the implementation of parts of the Vision 2021 development strategy, as well as from improvements in competition order, antimonopoly legislation and banking-sector regulation. Progress has also been evident in “soft
economic factors” such as non-discriminatory access to jobs and social services, environmental protection and education policy. For example, the government invested 21% of the 2014
state budget in education – not only in infrastructure, but also in further training for teachers,
who (as in the entire region) are insufficiently skilled. The record is once again clouded by the
persistence of the Kafala system of private sponsorship of labor immigrants in all Gulf monarchies, which places South Asian workers, in particular, under a system resembling serfdom
and deprives them of their rights to self-determination.
Morocco and Tunisia also made significant progress. Morocco’s government has not only
reduced subsidies, but has also stabilized the banking system. In addition, the government
took steps toward increasing the sustainability of the economic system by adopting a new
30
environmental law and expanding the alternative energy sector. Jordan also improved in terms
of sustainability by reaching an agreement in December 2013 with Israeli and Palestinian authorities on the use of water from the Jordan River, and also gave the go-ahead for the construction of nine new solar and two windturbine facilities. Tunisia has also consolidated to a
certain extent after its first four breathless years following the revolution. The creation of
jobs, especially for youth and university graduates, is currently the greatest challenge.
In Egypt, the government of President al-Sisi and Prime Minister Ibrahim Mahlab was striving to deepen economic cooperation with international partners, primarily in connection with
mega-projects, such as the expansion of the Suez Canal and the construction of completely
new cities. The constitution adopted in 2014 postulates that the state increase public-health
spending from 2% to 3% of GDP in order to eliminate the greatest shortcomings. In addition,
it posits the equality of the sexes and religions, and thus offers a legal framework for a reduction of existing inequities.
The economies of Iraq, Libya, Sudan and Syria are completely shattered. The war has affected
millions of people who have been dislocated, injured or killed, and the destruction of critical
infrastructure has set Libya and Syria, in particular, back by decades. However, the Iraqi
northern territories under the control of the Kurdish Regional Government remain a positive
exception, even though the massive flow of refugees from the IS-occupied areas represents a
heavy burden.
At the other end of the affluence scale, the oil-producing states face an increasingly imminent
dilemma. As the oil supply declines and oil rents dip, the generous provisions of their welfare
system will soon no longer be sustainable at the same level. Oil-dependent economies already
fall short of keeping up their once-achieved levels of social safety and opportunity (see chart
below). Therefore, diversification and investment in economic growth sectors should be pursued further. In the long run, even Saudi Arabia would be unable to cope with the current low
oil prices; however, as the largest oil producer, it has the greatest capacity to drive the world
oil price higher by further reducing its own output, if the country’s own finances require such
a step.
However, dropping oil revenues alone cannot remotely explain all economic and social
strains. Bahrain’s example demonstrates how political instability can lead to greater economic
distortions, as the unrest in 2011 triggered a massive capital flight and prompted a reduction
in the country’s credit rating. The country is falling behind in its competition with Saudi Arabia, Qatar and the United Arab Emirates, in particular, to become the strongest financial cen31
ter in the Gulf region. Due to ongoing political tensions, the government has delayed urgently
needed fiscal reforms, including a reduction of the far-too-high subsidies. The situation of the
Shi’ite majority has drastically worsened, as its members remain largely excluded from public
jobs, especially in the security forces. The only counterstrategy is the exploration and exploitation of additional oil sources; however, this comes at a high price, as it threatens entire ecosystems.
The end of oil-financed welfare?
Oil rents (x-axis) are the difference between the value of crude oil production at world prices and total
costs of production (source: World Bank, World Development Indicators). BTI Welfare Regime scores
(y-axis) roughly correspond in time with the reference years: BTI 2010 (covering 2/2007 to 1/2009)
with 2008 values and BTI 2016 (covering 2/2013 to 1/2015) with 2013 values. Countries were selected
on the basis of an oil-rents-to-GDP ratio above 20% as of 2008, the year of “peak oil.”
Changing of the political guards
New faces or new parties: The three countries to undergo a change in political
direction were the only ones to show improvements in government performance. Meanwhile, more than half of the countries have stagnated or suffer
under total mismanagement.
How similar these pictures are: From authoritarian conduct follows a pragmatic course of reconciliation; from confrontational behavior comes a de-escalation of tensions. Described here
are Iran and Iraq, in each of which a change in the state’s top leadership has led to initial successes. Thus, Iran’s new president, Hassan Rouhani, is making conciliatory gestures after
years without any reform eff orts. By easing tensions in the nuclear negotiations, the Islamic
Republic can now count more strongly on international support. Rouhani has also made significant domestic moves, bringing the issue of rampant corruption under Mahmoud Ahmad32
inejad, his predecessor, into the public discoursed and distancing himself in many other areas
from the policies of his predecessor.
In Iraq, too, a fresh breeze is blowing after years of frustration. Haider al-Abadi, the new
prime minister, is also pursuing reconciliation, particularly regarding relations between
Shi’ites, Sunnis and Kurds – a task rendered more important and more difficult as the Islamic
State’s territorial gains and countless atrocities do lasting damage to interfaith cooperation.
Following the sometimes miserable performance of the Iraqi army against the advancing IS
fighters, al-Abadi set a security-sector reform process in motion and intensified international
military cooperation. However, little has changed with regard to the country’s precarious position, which leaves the state on the verge of failure.
Tunisia’s shifting governments have made considerable progress with regard to transformation management. Above all, the government leadership is now clearly consensus-oriented.
The two largest parties, the secular Nidaa Tounes and the Islamist Ennahda, have found
common ground, particularly in the area of economic policy, and are also working together
toward the democratization of society. However, both parties are viewed with skepticism:
Nidaa Tounes is accused of promoting members of the old regime, while Ennahda is alleged
to hold a creeping Islamization of the country as its real goal. A strong involvement of civil
society in the policy-making process, as took place particularly in 2013, may here serve as a
safeguard against a departure from the democratic path. In regard to dealing with the injustices of the past, Tunisia – with the passage of a law on transitional justice and reconciliation in
December 2013, and the establishment of a truth commission a year later – has acted as a
trendsetter. However, dealing with past human-rights violations continues to be a very controversial issue domestically; thus, it remains unclear how effective and free from constraint
the commission’s work will prove to be.
The Egyptian transformation record remains ambivalent. A look at the details following the
violently imposed change in government in 2013 is therefore worthwhile. For instance, the
country has made significant progress with regard to policy coordination under the al-Sisi
government. At the same time, the “new old regime,” as critics call it, allows less democracy
and has missed an opportunity to engage in reconciliation with hostile political camps. AlSisi’s uncompromising focus on security policy at the cost of civil and political rights, as well
as the resurgent political and economic dominance of the army, de facto means a return to a
hard-line autocracy reminiscent of the Mubarak era. The security forces’ massacre of regime
33
critics and attacks by extremists on military and police posts signify the enormous increase in
polarization and societal division.
Some improvements were evident in the United Arab Emirates. It temporarily took over leadership within the Gulf Cooperation Council, as Saudi Arabia played a more passive role after
the death of King Abdullah. Qatar, with its support of the Muslim Brotherhood and the Islamic State, maneuvered itself to the political sidelines. Doha’s destabilizing role in the regional
conflicts as well as the political marginalization of its own civil society contributed to a more
skeptical assessment within the BTI.
Significant deterioration took place in Libya and Yemen. Both countries are suffering from a
progressive disintegration of the state and are close to a complete breakdown of steering capability – a condition that has already characterized Syria since the outbreak of the civil war.
Turkey’s transformation management has also deteriorated, albeit from a significantly higher
level. Here, the reservations of those who see Recep Tayyip Erdoğan not so much as a “democratic Islamist,” but rather as an extremely power-conscious patriarch who wants to rebuild
Turkey step by step according to his own vision appear to be confirmed. To be sure, in his
two terms as prime minister, from 2002 to 2014, Erdoğan provided significant reform impetus
in the areas of economic policy and democratization. However, following his election as president in August 2014, he has increasingly become a patriarchic and stubborn decision-maker.
In addition, a less compromise-ready attitude has emerged in Turkish foreign policy, which,
with its strategy of “zero problems” in relations with neighboring states, has failed. Essentially, following its persistent support for the Muslim Brotherhood and its doubtful role in the
Syrian conflict, Turkey has few remaining regional allies. Its relations with the European Union, too, have palpably cooled. There is little question that Turkey faces significant challenges
both domestically and internationally, and it is unclear in which direction it will further develop.
Turning back the clocks
The observations of the BTI 2016 leave no room for doubt: The Middle East and North Africa
are no longer on the upswing. Rather, the state of political transformation and government
performance are reminiscent of the depressing era of dictatorships. Added to this are the barbaric actions of the numerous Islamist extremist groups, particularly the Islamic State. This
will be a lasting burden on future developments.
34
Apart from some successful economic reforms in the Gulf monarchies, Tunisia represents the
only positive exception. However, the road ahead is long and rocky. It remains to be seen, for
example, how well this defective democracy will be able to deal with deeply entrenched deficiencies, such as widespread corruption.
The countries of the Middle East and North Africa currently lack virtually everything important for successful development: social peace and cohesion, economic competitiveness,
social security for the majority of the population, progressive governments and functioning
education systems. Of all the urgent problems, the high youth unemployment rate is likely the
most urgent, as – given birth rates in most countries that remain far too high – it is questionable how the overall weak and poorly governed economies will be able to provide sufficient
bread and social justice for the millions of people that are added every year. Egypt’s population alone, which has already tripled in the course of the past half-century, will grow from
today’s 90 million people to more than 150 million by about 2050, according to a United Nations forecast. But even at the top end of the income scale, it is far from clear how well the
seemingly stable Gulf monarchies would be able to come to terms with oil prices that remained low over the long term, which would constrain their ability to finance the comprehensive welfare benefits so critical to their retention of power.
By using even more instruments of repression and always pointing to the dangers of an outof-control Islamist threat, governments are currently ensuring that freedom – the third of the
prominent demands made during the Arab Spring – will not be granted. Young people, in par35
ticular, are suffering as a result, as their hopes in 2011 were great, and they now have to cope
not only with economic hardships, but with deep political frustration, as well. All in all, the
agenda that drove people to the street five years ago remains relevant today: more democracy
and, as a first important cornerstone, a solid rule of law. It should begin with ensuring that
activists are no longer locked up for years on the basis of trivial offenses, and with enabling
foreign investors to encounter a reliable legal framework. More prosperity is also critical. This
goal can only be achieved through a strengthening of individual enterprises, not through the
state monopolies, kleptocratic networks and powerful militaries so dominant today.
In such a repressive setting, the tension between Islamism and secularism remains unresolved.
The moderation thesis – that the responsibilities of government (e.g. engaging in civil discourse and confronting pragmatic necessities) would smooth political Islam’s sharpest edges –
cannot as yet be assessed. This is because political Islam has not yet had sufficient time to
prove that it is indeed capable of a humane, democratic and sustainable policy.
But, above all, the question of a common social life remains. While the moderate forces, creatives and entrepreneurs increasingly plan their future outside the region, the seed of the next
generation’s hatred is being planted in the prisons and the slums, in the refugee camps and on
the battlefields. And yet, despite Western views, which tend to focus on how extremists deny
a right to exist to those who think or believe differently, there remains a broad majority population that supports tolerance and acceptance of cultural and religious diversity. Strengthening
this majority is the order of the day – so that the hate of the extremists does not result in the
loss of the traditional humanity and hospitality that has so positively characterized the societies of the Mashriq and the Maghreb for so many centuries.
36
West and Central Africa
Beyond catastrophes
Religiously motivated violence, the Ebola epidemic and widespread poverty:
West and Central Africa has repeatedly made negative headlines in recent
years. By contrast, the trends and developments giving rise to hope remain
largely unnoticed.
For international observers, the verdict often seems clear: Sub-Saharan Africa, particularly the
countries in West and Central Africa, stand for civil war, crisis, disease and catastrophe. And
there is plenty of evidence for this to be found in the BTI 2016. During this edition’s review
period, sectarian violence appears to have gained ground. Islamist terror raged in Nigeria and
began to spill over into neighboring states, while bloody clashes between Christians and Muslims claimed numerous victims in the Central African Republic.
The Ebola epidemic periodically threatened large portions of West Africa and dominated
headlines in the Western media. In most countries, poverty is widespread and structurally ingrained despite the presence of resource wealth. And finally, for many countries, the military
remains a central political force. In Mauritania, for example, the military consolidated its
power from within the shadows of a façade democracy, while in Burkina Faso, the military
overthrew longtime President Blaise Compaoré, whose plans to extend his rule had triggered
unrest.
All of this is countered by positive developments and events, often unnoticed by the Western
public, which give cause for hope. Classical assumptions about successful democratization
that draw on modernization theory would not necessarily expect democratic governance to
emerge from the challenging social and economic conditions found in the region. Given this
difficult environment, it is quite remarkable that, despite their shortcomings (which are rather
pronounced in some cases), more than half of the region’s states can be regarded as democracies. This is a first, as the BTI has never before classified a greater number of countries in
West and Central Africa as being democratically governed. Peaceful transfers of power at the
ballot box are happening more frequently.
There are also encouraging signs to be found in socioeconomic terms. An improvement in
living standards is evident despite the persistence of poverty. Particularly since 2000, the re37
gion’s Human Development Index (HDI) scores, as calculated by the United Nations, have
substantially increased. From 2000 on, the gains have been greater than in most other BTI
regions – interestingly, with the exception of South and East Africa.
Aside from these developments, the BTI 2016 reaffirms key findings from previous surveys:
West Africa is fundamentally more advanced with regard to political and economic transformation than is Central Africa. The state of political transformation is more advanced than the
state of economic development, which, in turn, is lower than that observed in any other region. West and Central Africa’s structural obstacles to good governance, which the BTI
measures in terms of degree of difficulty, remain the highest in worldwide comparison. Many
countries also score high with respect to international cooperation, though these encouraging
findings must also be seen against the background of the region’s dependence on development
cooperation.
In individual-country terms, Côte d’Ivoire and Mali, in particular, have shown clear gains in
the Management Index. Both show significant progress being made in the wake of severely
violent clashes. Positive trends are also evident in Senegal and – with some significant qualifications – Guinea. Senegal has seen an upward trend since the 2012 electoral victory of
Macky Sall, the new president, and the country’s relatively successful fight against the Ebola
crisis. In Guinea, parliamentary elections were held in September 2013 after long delays.
In most areas of transformation, as well as in many individual indicators, Ghana remains the
region’s leader. However, growing shortcomings are unmistakable here, for example, with
regard to fiscal policy and the fight against corruption. A number of countries, such as Mauritania and Togo, have not been able to expand upon initially encouraging signs of better governance. Regimes such as the Central African Republic, Chad and the Democratic Republic of
Congo are consistently found at the bottom of the political and economic transformation rankings.
Nigeria, the region’s largest country by far with more than 150 million residents, perhaps best
embodies the ambivalent nature of current developments. The country is suffering under the
violence of the Boko Haram terrorist group; however, shortly after the end of the BTI review
period, it successfully organized elections that led to the first peaceful transfer of power in the
country’s history. The incumbent, Goodluck Jonathan, conceded defeat to his challenger, Muhammadu Buhari, in all likelihood preventing greater political turbulence.
38
Democracies confronted with terror
On the one hand, BTI findings point to more democratically governed countries
in the region than ever before. On the other, in parts of West Africa, in particular, religiously motivated violence is increasingly common. So far, the political
influence of fundamentalism remains limited.
From the perspective of the BTI, there is currently no democracy in West and Central Africa
without major defects. Ghana, the regional leader, which just crossed out of this category
threshold two years ago, has fallen back, particularly in the area of anti-corruption policy.
Nevertheless, because Guinea and Mali have re-emerged from the group of autocracies, the
BTI shows a majority of democratically governed states in the region for the first time.
However, the progress remains too tentative to speak of stable development. Mali, in particular, remains far from the transformation status achieved before the civil war – especially as
the Islamist insurgents in the country’s north are not yet fully defeated. Côte d’Ivoire faces the
challenge of achieving a genuine reconciliation with the vanquished party in its civil war, the
supporters of former President Laurent Gbagbo, who is currently awaiting trial before the
International Criminal Court in The Hague.
Two autocracies have slipped further back. In Cameroon, longtime ruler Paul Biya, now more
than 80 years old, remains in office and is one of the longest-serving “dinosaurs,” as the
“presidents for life” are mockingly dubbed in sub-Saharan Africa. Democratization in the
country has stalled, and the lack of resolution regarding the issue of succession bodes ill for
the foreseeable end of Biya’s term in office.
In Burkina Faso, however, a different dinosaur has fallen. In late October 2014, Blaise Compaoré, who himself came to power through a coup in 1987, failed in his attempt to abolish the
country’s constitutional term limit following the eruption of popular discontent. As protests
escalated, the military finally ousted Compaoré and installed a civilian transitional government.
In broad overview, elections and other elements of political participation (e.g., such as the
freedoms of expression, association and assembly) number among the region’s positive political transformation trends. Natural deaths, defeat in a civil war and military coups have increasingly ceased to be the main reasons for a change in power at the head-of-state level. In
addition, there have been an increasing number of peaceful transfers of power through the
39
ballot box, which would have been largely unthinkable before 1990. In Benin, Ghana, Senegal
and Sierra Leone, governments have been replaced through largely free and fair elections.
Nigeria offers the most recent, and probably most notable, example of a peaceful and democratic transfer of power. Initially, the parliamentary and presidential elections were postponed
to the end of March 2015 due to the poor security situation resulting from the conflict with the
Boko Haram terrorist group, which had raised serious concerns. The inability of Goodluck
Jonathan’s regime to effectively stem the tide of violence contributed to the significant electoral victory of his challenger, Muhammadu Buhari.
How would the incumbent react? The tension was resolved after only a few hours, as Jonathan conceded his electoral defeat and congratulated the challenger on his victory. This was a
historic moment that marked the first peaceful transfer of power in the country’s history, and
that avoided further bloodshed.
At the same time, the context of these elections points to a particular challenge beginning to
spread through broad parts of sub-Saharan Africa: the organized violence of aggressive Islamism and all that is associated with it. While African Islam was long regarded as particularly
moderate and less prone to extremist interpretations, fundamentalist Islamists are now gaining
ground in Nigeria and beyond, as was the case a few years ago in Mali. The first such signs
are already evident in Chad and Cameroon. In Niger, too, there were Islamist outbursts after
the publication of cartoons critical of Islam in the French satirical magazine Charlie Hebdo. In
January 2015, more than 40 churches in southern Niger were burned, and violent protests
have also taken place in other predominantly Muslim countries, such as Senegal.
Religion has also played a role in the violent conflict in the Central African Republic, although in another form. Here, there were clashes between Christian militia groups that had
initially fought against the Muslim government that emerged from the Séléka rebels. After the
fall of the rebel government, these militias continued their assaults on the Muslim minority
population. The Central African Republic’s transitional government and the U.N. peacekeepers had great difficulty preventing such attacks.
And yet at least thus far, the influence of religious dogma within the political sphere remains
relatively weak. In more than two-thirds of all the region’s countries, religious or ethnic diversity is not an inevitable problem despite the potential for conflict. A policy that alleviates
or, better still, prevents radicalization is needed – and is possible. This should include the creation of economic prospects for young people, which could immunize them against the temptations of extremism.
40
It takes more than stable prices for sustainable development
From an economic perspective, West and Central Africa is the most weakly developed BTI region. Poverty and social exclusion are widespread. However, living conditions have improved in recent years.
The BTI examines the current degree of poverty, inequality and exclusion through the socioeconomic development-level criterion. The response from experts in West and Central Africa
in this regard remains as clear as it is depressing: In the BTI 2016, nine of the region’s 18
countries continue to show the lowest possible score, while five others achieve only the second-lowest score. The remaining countries, too – Ghana (4 points), Cameroon, the Republic
of Congo and Mauritania (all 3 points) – lie below the global average of all countries surveyed.
The structure of the economies also shows fundamental shortcomings, ranging from competition regulations to banking systems to private-property protections. A specific problem is the
fact of so many economies’ dependence on the export of raw materials, such as oil, diamonds,
uranium, copper or cocoa. Particularly weak social and educational systems exacerbate these
deficiencies still further.
And yet there are bright spots that most Western media largely overlook. Thus, a look at longterm development indicates that essential elements of human development have improved
over the course of decades despite persistent problems. Direct economic output has increased
in at least some countries. In general, economic performance is among the better elements of
economic development. With the exception of the Central African Republic, the region’s
countries achieve middling scores of between 5 and 7 on this measure. Prices and currencies
are also adequately stable in many countries. This is particularly important for the poorest of
the poor, as they are most directly threatened by inflation.
Within the CFA franc currency union, which is pegged to the euro, independent central banks
set monetary and exchange-rate policies respectively within West and Central Africa. The
Central Bank of the West African States is more efficient than the Bank of the Central African
States. In return for limiting their national monetary sovereignty, the members of the currency
union (Benin, Burkina Faso, Cameroon, Côte d’Ivoire, Mali, Niger, Senegal) have maintained
rather low inflation rates. Recently, a discussion has arisen as to whether the euro peg may not
in fact hold significant disadvantages given the turbulence in the European single currency.
41
This may certainly be the case; however, for the present and recent past, this peg seems to
have provided more advantages than disadvantages.
Lack of a social foundation
Long-term U.N. data confirms the ambivalent nature of West and Central African economic
transformation attested to by the BTI. On the one hand, the Human Development Index (HDI)
rose more sharply here between 2000 and 2013 (the last available data) than in any other BTI
region aside from South and East Africa – a significant indication that living conditions are on
the upswing. On the other hand, sub-Saharan Africa is the only region worldwide in which the
U.N. Millennium Development Goals for combating extreme poverty were missed. In 1990,
57 percent of people here lived in extreme poverty, according to the United Nations; in 2015,
this figure was still 41 percent, meaning the goal of halving the poverty rate remains a considerable way off.
With regard to short-term changes, the clear improvements in Côte d’Ivoire and Mali come as
little surprise given the beginning of re-democratization in each. The economies of these
countries have also benefited from the end of the violent clashes. However, this must be quali42
fied: In general, postwar economies have a higher growth potential because they are starting
from a lower level. Senegal’s rise, too, from the status of poorly functioning market economy
to market economy with functional flaws, should not be overestimated. Only a slight improvement was sufficient to enable this leap into a higher BTI category.
The BTI 2016 identifies the Central African Republic and Ghana as having lost economic
ground. In the case of the Central African Republic, the violent conflict that has convulsed the
country is primarily responsible for this fact. The negative development in Ghana is more
surprising. In past BTI surveys, the country topped the region’s rankings in this area, although
tendencies toward stagnation were already evident. A lack of fiscal discipline is now particularly conspicuous. The country’s debt and budget deficit have both risen significantly. Anticorruption eff orts also remain insufficient. It remains to be seen whether and how oil production will affect future political and economic development. And it is especially in the treatment of national resources that the art of good governance reveals itself, as a look at transformation management shows.
Dealing with epidemics and curses
West and Central African governments are struggling with numerous challenges
simultaneously. Many problems are partly structural and require long-term responses. The dependence on income from commodity exports has profound implications for policy.
At a fundamental level, the state of political and economic transformation is inextricably
linked with the underlying level of management quality – and the correlations between Status
and Management Index outcomes are correspondingly high. However, this is no deterministic
relationship. At least five countries in West and Central Africa demonstrate that good steering
and implementation capabilities can succeed despite a low state of transformation and a high
degree of difficulty. In this regard, there is a new regional leader in Senegal, which has relegated the last survey’s top placer, Ghana, to second place. A third of the region’s states show
moderate transformation management. Cameroon, the Central African Republic, the Republic
of Congo, Mauritania and Nigeria are weakly governed, while governments in Chad and the
Democratic Republic of Congo have no aspirations to democracy or a market economy, and
thus do not engage in political management in the sense used by the BTI.
43
A particular feature of transformation management in West and Central Africa is the extremely high level of difficulty for good governance. In no other region of the world are the challenges greater. This is associated in various countries with the burdens of violent conflict or
the need to deal with the legacies of war, despotism and tyranny. Few countries manage to
address past injustices appropriately and sensitively. The lack of civil society traditions in
many places hampers democratic development. Structural factors, such as desertification and
rudimentary infrastructures, often contribute further to the impedance of socioeconomic development.
Beginning in early 2014, however, these challenges were overshadowed by the severe threat
posed by the Ebola epidemic. According to the Oxfam aid organization, this was the worst
outbreak of this syndrome that has ever been recorded. By August 2015, more than 28,000
people had been infected, and more than 11,000 had died from the highly infectious disease,
according to U.N. figures. Guinea, Liberia and Sierra Leone were particularly strongly affected. Although the epidemic has since been largely contained, a renewed escalation remains
possible.
The disease has had an impact on the economy, increasing the poverty rate and weakening
existing health care systems. At the same time, it has served as a measure of governments’
ability to deal with the situation. Seen in this manner, the many deaths in Guinea, Liberia and
Sierra Leone are also an indicator of the backwardness of health care systems. In Guinea,
medical teams were even attacked. The fact that the epidemic was unable to gain a foothold in
Côte d’Ivoire and Senegal was in large part because necessary precautionary measures were
taken swiftly.
Another comparison underscores just how much depends on good transformation management. The issue here is the “resource curse,” a political-science theorem that is particularly
relevant in West and Central Africa.
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The “resource curse” – a burden, not a destiny
All 18 of the region’s countries are dependent to an above-average degree on the export of
commodities, while nine countries lie even over the sub-Saharan average. This dependence is
particularly pronounced in the oil-producing countries of Chad, the Republic of Congo and
Mauritania. In the Democratic Republic of Congo and Liberia, it is no less significant, but is
distributed across various types of resources.
The resource curse states that strong revenues from the raw-materials sector generate inflationary effects and make other export sectors less competitive. This phenomenon, also known
as the Dutch Disease, is further exacerbated by psychological effects. According to this hypothesis, the presence of apparent wealth leads governments to take on high levels of debt,
engage in lavish and misguided spending, and neglect other economic sectors. When prices
fall, the affected economies face intensified problems; ultimately, the negative effects can
harm democracy, promote corruption and lead to conflicts. Of course, no supernatural powers
are necessary for this “curse.” As the example of West and Central Africa demonstrates, there
is a clear negative correlation between the degree of dependence on natural resources and
management performance. An extreme negative example from the region is Chad, where a
management system that did not allow the use of oil revenues for military expenditures was
abandoned by the government a number of years ago. Decision-makers in the Republic of
Congo, too, are making no efforts to diversify the economy, although the finite nature of oil
45
resources must be clear to all those in charge. Nigeria, as well, shows virtually all the symptoms of the resource curse. In particular, the theft of oil from tankers and tapped pipelines has
become widespread. The management of the oil sector will pose a Herculean task for Buhari,
the new president.
Ghana and Guinea are seeking to prove that it can be done differently. In Guinea, the Condé
administration has reformed legislation in the resource sector and also acted to stem corruption. Ghana sought advice from foreign experts before starting oil production, giving Norwegian consultants a particularly welcome hearing. As yet, no trace of the resource curse has yet
emerged there.
For an unobstructed view
Nearly all West and Central African states face an uncertain future. It will be interesting to see
how Nigeria’s new president, Buhari, responds to the tremendous challenges ahead, including
the Islamist fighters of Boko Haram, poverty and corruption, and management of the oil sector. For post-conflict states, such as Côte d’Ivoire and Mali, it will be essential to continue on
the new path in a determined and expeditious way. In Burkina Faso, it is open to question
whether the first democratic elections in the country’s history will indeed be held anytime
soon, given the fresh coup and military-led ouster of the transitional regime in September
2015. The Central African Republic faces even greater challenges.
The difficult situation in many countries of West and Central Africa deserves attention. It is
enough to recall the stream of refugees across the Mediterranean Sea and the threat of fundamentalist Islamism to recognize the links between the African continent and the countries of
the West.
As deceptive as the clichés of a continent of crises, civil war, disease and catastrophe may be,
it would be equally foolish to deny the reality of negative events and developments. It has
been precisely the desire for positive examples, for “lighthouses” and “model countries,” that
has more than once in the past led to excessive optimism. Mali was one such example; now
the case of Ghana shows how far the road to a self-supporting transformation really stretches.
46
The reality of the region is nuanced – and the possible advice for it is boundless, too. However, some approaches appear particularly important. Political transformation must aim at creating a stable environment in order to be able to build viable democratic decision-making processes. Militaries must perceive their tasks in a professional manner. The balancing of ethnic
and religious identity groups is a crucial element in deepening a political transformation.
However, anyone who wants to protect the young generations, in particular, from being led
astray by religious and other extremists must demonstrate real prospects for a humane existence. This means jobs, effective health sectors and viable social-security systems. States dependent on commodity exports must promote the diversification of their economies, distribute
the revenues in a socially acceptable way, and invest in infrastructure and education. Only in
this way can young people’s prospects be sustainably improved.
The region’s elites remain called upon to serve the common welfare rather than placing their
own retention of power above all else. The promotion of political and economic transformation is above all the task of citizens themselves. This lesson is taught in great part by the
realization that development cooperation alleviates acute situations of need and supports positive developments, and in the best cases can even initiate such developments, but that a transformation from the outside is wholly impossible. Criticism of development cooperation is
therefore often excessive, as expectations are simply too high. Moreover, a paternalistic attitude, particularly toward former European colonies, is neither appropriate nor effective. The
role of international donors should focus on support, not on prescriptions.
47
This does not mean that values should play no role whatsoever. The residents of the West and
Central Africa region, too, deserve support for democracy and human development. Efforts to
prevent further violence are even more necessary. Western countries, in particular, should be
conscious of the fact that conflicting objectives may arise from time to time. The priority of
security interests with respect to the Islamist threat in the Sahel and West Africa often leads to
the support of incumbents whose behavior is contrary to the long-term interests of international actors and the country’s residents. Yet shortsighted policies can have disastrous consequences in this regard.
48
South and East Africa
Increasingly murky prospects
Much has been made in recent years of Africa’s strong potential. However, at
least with regard to the continent’s eastern and southern regions, the euphoria
is premature. Stalled or retreating transformation dominates here, in large part
because decision-makers in many countries are faltering.
“Africa rising. A hopeful continent.” So ran the Economist’s headline in March 2013 as it
reported on what it called an “emerging Africa.” The U.N. Economic Outlook on Africa 2014
also rejoiced over “Africa’s recent impressive economic performance.” Indeed, the number of
voices attesting to positive developments in the continent is increasing, even beyond the issue
of economic prospects. To be sure, as observers often point out, the number of democratically
governed countries has risen since 1990.
BTI 2016 findings do not support this optimism for many of the countries surveyed in the
region of South and East Africa. Instead, the BTI shows 17 of the region’s 20 countries
achieving at most three of a possible 10 points on the measure of socioeconomic development
– a clear indicator of mass poverty and structural discrimination that continue to plague populations across the region. The perpetuation of this kind of stagnation in development is nothing short of a distressing scandal.
In the summer of 2015, after the end of the review period, the particularly extreme example of
Eritrea broke into Western headlines. Here, an autocratic and increasingly totalitarian dictatorship compels women as well as men into military service of indefinite length, has bankrupted the economy and drove 5,000 mostly young Eritreans per month into refugee status in
the first half of 2015 alone. Many people have fled from Nigeria and Cameroon, as well,
though primarily in this case due to ethnic and religiously motivated violence.
Although problems of this nature are not evident throughout the entire region, developments
between 2013 and January 2015 have, overall, grown increasingly cloudy. Few broad steps
forward in favor of democracy have been taken. Madagascar stands out as a positive exception, though it has far to go in re-establishing the democracy it enjoyed prior to its state crisis.
And things are only marginally better as far as economic transformation is concerned. Only
three countries – Kenya, Lesotho and Tanzania – have improved significantly in this regard.
Moreover, only a few economies in the region feature growth rates that are sufficient to com49
pensate for high birth rates, and the income thus derived only rarely benefits the population at
large.
The recent weak growth in South Africa, the region’s largest economy, has proved an additional hindrance. Here, falling commodity prices are leading to the closure of labor-intensive
mines, while internal party strife within the governing African National Congress (ANC) has
paralyzed the country.
Overall, transformation is proceeding in opposite directions in the two subregions. While political transformation in southern Africa is making continual advances despite some setbacks,
eastern African countries are making more significant progress than most southern African
countries with regard to economic transformation.
This mixed, rather negative balance is confirmed by the findings of the BTI’s Management
Index. Only Madagascar achieved notable progress here; in Lesotho, South Sudan and Zimbabwe, by contrast, already-weak management performance deteriorated further, while in the
great majority of countries, scores remained at a low level. Aside from reasons specific to
each country, this stagnation reflects a lack of reform and a low propensity for risk-taking
among the decision-makers.
On the domestic level, this may be related to the fear of reform opponents, and on the foreignpolicy front, to diminishing pressure from donors as increasing engagement from China (and,
to a lesser extent, from India and Brazil) expands governments’ range of choices. In any case,
commitments to reform often remain rhetorical in nature; although the BTI shows a stronger
concern with prioritization, the actual implementation of reforms has stagnated due both to
inadequate capacities and a lack of will.
This mix of weak economic development, sustained allocational inequality and feeble will to
reform creates the risk of increased instability. The much-vaunted new middle class in South
and East Africa, in contrast to its counterparts in many countries in Latin America and Asia,
remains too weak, and its status remains too precarious to be able to push for change. The
weakness of political representation is clearly evident here; too seldom do the fragmented,
polarized or neo-patrimonial party structures offer an environment conducive to critical political discourse or provide impetus to reform. Rather, the BTI shows that the shortcomings of
defective democracies are durable and carry a perpetual risk of triggering a further erosion of
democratic quality.
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Persistent deficits
The region’s democracies have lost ground in all criteria of political transformation. Particularly striking is the erosion of stability, political participation
and rule of law in the defective democracies. The autocracies, too, have shown
little sign of improvement.
Botswana, Mauritius, Namibia and South Africa as a quartet constitute the region’s most advanced democracies. In these four countries, free and fair elections are held regularly, while
democratic institutions function and are, as a rule, respected by relevant actors. In comparison
to 2006, only South Africa, once the regional leader with regard to democracy quality, has
lost significant ground following the change of government from Thabo Mbeki to Jacob Zuma.
Looking at the eight defective democracies with more strongly pronounced deficits, the situation is substantially more problematic. There is no clear improvement seen anywhere and, in
most countries, the key building blocks of democracy have suffered the greatest setbacks. In
some cases, this has involved severe restrictions being placed on the freedoms of assembly
and expression in Kenya, Mozambique, Uganda and Zambia, in combination with losses in
stability and rule of law in all defective democracies, except Madagascar and Tanzania. One
can hardly speak of a consensus on democratic values, or even of a democratic culture, among
elites in these defective democracies. In some countries, the army continues to weigh in as a
veto actor.
The most significant changes took place in three highly defective democracies: In Lesotho, an
August 2014 coup attempt brought an end to the coalition government, after which massive
diplomatic initiatives by South Africa and the African Union (AU) led the country’s political
parties and the military to agree on a roadmap toward a return to democracy, with elections in
February 2015. In a more positive development, the leadership in Madagascar has taken steps
in the right direction. Five years after the extra-constitutional change of power and subsequent
political stagnation, the country held free and fair parliamentary and presidential elections in
2013, which were organized – for the first time ever – by an independent electoral commission. Finally, in Mozambique, long hailed as a model country with regard to reconciliation
after its decades-long civil war, the quality of its democracy has eroded once again, which
continues a trend in place since the BTI 2006. The authoritarian leadership style of longtime
President Armando Guebuza, the unconstitutional, destructive behavior of the opposition, and
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the country’s rampant corruption have led here to a serious decline in public confidence in
democratic values, processes and institutions.
Stumbling democracies
Changes in political participation and rule of law at the indicator level in democracies, BTI 2014–BTI
2016
The BTI classifies eight of the region’s countries as authoritarian regimes. Somalia still brings
up the rear by some distance. Because there has been no effective monopoly on the use of
force here for the last 24 years, the country continues to be classified as a failing state. By
comparison, conditions in Angola are relatively moderate and orderly.
However, civil rights and opposition forces have been subject to increasing restrictions since
2012, at times through violent means. A small circle of individuals around President Eduardo
dos Santos, who has governed for nearly four decades, continues to determine the country’s
fate. Burundi has grappled with increased tensions between its strongly fragmented ethnic
groups and parties in the runup to the 2015 elections. In May 2015, a coup launched by factions within the military was put down. The presidential elections held in July of the same
year drew international criticism due to widespread repressive attacks and intimidation of
voters. The persistent violence indicates that the country’s stability remains endangered.
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In Zimbabwe, the political situation initially improved thanks to the actions of a coalition
government. But after the (relatively peaceful) elections in 2013, liberties remain restricted,
and despite all declarations to the contrary, the endemic abuse of public offices has continued.
What and who will follow Robert Mugabe? Discussion of this question began long ago – and
it paralyzes the country to this day. The president, now more than 90 years old, is seeking to
promote the career of his much younger wife, Grace, and even to recommend her for the presidential office. However, it is not yet clear whether these eff orts will be successful.
Future prospects for the region’s hardline autocracies are even gloomier. Eritrea is developing
increasingly into the “North Korea of Africa,” with the government headed by President
Isaias Afewerki seeking to control all political and economic activities. Since the country’s
independence in 1993, no elections have been held, civil rights have been practically nonexistent, and massive repression directed against civil society and all opposition has been a daily
reality. Ethiopia under Prime Minister Hailemariam Desalegn and particularly Rwanda under
the leadership of Paul Kagame have made strides economically at least, with regimes that
regard themselves as successful modernizing dictatorships. Massive repression is, however,
an integral part of this kind of development.
The civil war that erupted in December 2013 in South Sudan is primarily the result of internal
conflicts within the governing party, the Sudan People’s Liberation Movement (SPLM). Power is the main issue, and this primarily means control over the country’s oil wells. President
Salva Kiir and Vice President Riek Machar are the primary disputants in this regard. Both
politically and economically, their rivalry has set back the resource-rich country by years.
East Africa catches up
The balance with regard to economic transformation is at best mixed. The index has shown no average improvement over the past decade. South Africa’s
recent failure to act as an economic driver is a current barrier to progress.
Most of the region’s economies continue to lie somewhere between functioning ones (Botswana, Mauritius) and extremely rudimentary ones (Eritrea, Somalia, South Sudan). This
large group is comprised of economies classified either as those featuring functional flaws or,
in more serious cases, as those that function poorly. Encouragingly, the number of poorly
functioning market economies has declined from 10 to seven countries since the BTI 2014,
53
with Kenya, Lesotho and Tanzania having improved somewhat, thereby joining the group of
functionally flawed economies.
However, overall progress is a different story. Eritrea, Somalia and South Sudan are not the
only illustrations of what for many people are catastrophically poor living conditions. Mauritius remains the only country in sub-Saharan Africa to fall into the United Nations Development Program’s (UNDP) category of high human development. Botswana, Namibia and
South Africa are among the countries with medium human development, while all other South
and East African countries fall into the category of low human development.
There is little indication of swift improvements on the horizon, and the modest gains made are
roughly balanced out by losses in other areas. More eastern African than southern African
countries have tended toward improvement. However, it must be noted here that the starting
point was generally lower in East Africa. During the review period, an average of 6% annual
GDP growth in eastern Africa and 3.6% growth in southern Africa was driven by recovery in
the euro zone, a higher level of demand within Africa itself and brisk investment activity
(primarily from China). The United Nations Economic Commission on Africa (UNECA) ascribes the differences to the fact that the economies of commodity-exporting countries grew
more strongly. Within South and East Africa, Angola and South Sudan are significant oil exporters, while other countries increased the extraction of minerals, as was the case for Botswana (diamonds), Eritrea (copper, gold) and Zambia (copper).
Ethiopia achieved the region’s highest growth rate, which can be attributed primarily to foreign investment along with the implementation of massive state infrastructure measures.
However, this also resulted in a significant increase in state debt. Tanzania and Uganda also
showed strong growth, in part due to successful reforms improving investment opportunities.
Kenya, Tanzania and Uganda are forecast to become oil and gas exporters in 2016 or 2017.
By contrast, South Africa, economically the strongest country in the region, grew by only a
moderate 2.7%, according to UNECA.
However, because the BTI does not place a one-dimensional emphasis on economic growth
alone, it is necessary to draw a somewhat more nuanced picture that also includes the level of
socioeconomic development in a country and the sustainability of its development. Taking
this view enables a conclusion that economic transformation has on average declined slightly
between 2006 and 2016.
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Rwanda, an exception to the rule
The four countries with the most highly developed market economies have long been Botswana, Mauritius, Namibia and South Africa – thus, the same countries that are also most
advanced with regard to political transformation. However, there is no automatic correlation
between the state of economic development and the degree of democratization. For example,
Rwanda has achieved clear progress in economic development over the last decade, while at
the same time intensifying its authoritarian tendencies. A converse trend is underway in democratic South Africa. Although the country possesses structural advantages, such as abundant
natural resources, industrial productive capacity and a very good infrastructure, its economic
output has weakened and socioeconomic developments have been problematic. In order to
effectively combat the high level of structural unemployment, a growth rate twice the current
level would be needed. These shortcomings can be partially attributed to the legacy of apartheid, but also to the failures and passivity of the Zuma government.
The members of the East African Community – neighbors Kenya, Tanzania and Uganda –
have shown more positive developments. New laws in Kenya regulate and stabilize the banking sector, and the new constitution has improved the property-rights framework, which has
helped companies. Uganda owes its success to fiscal discipline and reforms that have benefited the private sector, while Tanzania had invested more strongly in the health sector. Howev55
er, economic success has not translated into a considerable reduction in the level of poverty in
these three countries.
In Madagascar, political progress has facilitated positive economic development, visible in the
form of improvements in various macroeconomic indicators. However, the country has not
yet regained the level achieved in the BTI 2010.
By contrast, the overall balance in Angola, Ethiopia, Malawi and Zambia is negative, for reasons that are more specific to each country. For example, poverty has increased in Ethiopia,
while economic growth has been weak in Angola and Zambia due to the decline in oil and
copper prices. In Malawi, macroeconomic data reveal deterioration, in part due to insufficient
and corrupt financial management, that led to the temporary suspension of donor countries’
financial support.
South Africa’s weakness is contagious
Problems in two areas of governance give cause for concern: Already-flawed
anti-corruption efforts have faltered even further, while governments appear
increasingly unwilling and unable to reach political consensus or resolve social
conflicts.
The BTI uses several factors – structural challenges, conflict intensity and the extent of civil
society traditions – to determine the degree of difficulty associated with transformation management, which in turn becomes a part of each country’s evaluation. In the case of South and
East Africa, these difficulty factors remain high and constant. Thus, the fact that the quality of
governance deteriorated in 13 of 20 countries, delivering the region’s worst average value
since 2006, cannot be attributed to expanding challenges. In many places, decision-makers
and elites are increasingly overwhelmed or have completely failed.
The clearest exception to this pattern is Madagascar, following its return to a democratic orientation. However, it remains to be seen whether and how the new president, Hery Rajaonarimampianina, will tackle the country’s problems. Numerous institutions require substantial restructuring, an informal economy in the important commodity sector has spread,
land is sold illegally, and the local administration is operational to only a very limited degree.
In addition, the constitution, which gives the president disproportionate power over the other
institutions, is urgently in need of reform. The first prime minister of the new government
resigned in January 2015 after proving unable to improve the insufficient supply of electrical
56
power. To date, internal party conflicts and the lack of consensus between the parties have
prevented the new president from introducing substantial reforms. Madagascar’s recent history, particularly under former president and businessman Marc Ravalomanana, offers numerous illustrations of large projects and ambitious programs that have been announced but never
implemented.
Developments in Rwanda, by contrast, are more sustainable. Here, the upward trend evident
for some years can be attributed in particular to the successful efforts in the education and
health care sectors.
The strongest deterioration, on the other hand, was shown by Lesotho – now a structurally
unstable country – as well as Ethiopia and South Sudan. Governments here are either not interested in establishing a basic consensus or have even intensified existing tensions as an element of their political calculus. This is a common pattern in South and East Africa, as the
long-term negative trend with regard to consensus-building shows. The average score in the
BTI 2016 is well below that of 2006, and also significantly under the global average.
The situation with regard to corruption is still worse. In both anti-corruption policy and the
prosecution of office abuse, average governance performance has declined further from an
already alarmingly low starting point. Only in Madagascar has the situation slightly improved.
By contrast, the fight against corruption has stagnated in 14 countries, and five countries –
Botswana, Ethiopia, Malawi, Zambia and Zimbabwe – even reduced their efforts as compared
with the previous period. These inadequate and ineffective anti-corruption efforts undermine
the legitimacy of political decision-makers and inflict considerable damage on the countries’
economies.
The persistent weakness of transformation management in South Africa ultimately inhibits the
region as a whole. This country, on which the region’s hopes are to a great extent pinned, and
which represents Africa in the BRICS group, remains well below its potential at present –
and, indeed, has since 2009, when Jacob Zuma took over the presidency. Ongoing infighting
within the governing ANC, as well as a series of scandals in which the president has been
personally embroiled, are among the chief causes of the government’s limited capacity to act.
Zuma’s primary aim has been to keep the heterogeneous party and the tripartite alliance between the Congress of South African Trade Unions (COSATU), the Communist Party and the
ANC together. He managed this for some time until a relatively successful leftist party
emerged from an ANC split before the 2014 elections. The trade union movement also split in
the same year.
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The price for this power-retention strategy has been high, as reforms have been delayed or not
even begun for fear of internal conflict. The moribund energy sector, for which no viable
strategy has yet been developed, offers one example of this passivity. The consequences have
been massive power outages that have had a negative effect on growth and production. Despite extensive investment, the education sector remains ailing. The increase in corruption and
nepotism, as well as a variety of long and polarizing strikes in strategic sectors, such as the
mining industry, have undermined economic dynamism, with growth-dampening effects for
the entire region. Finally, the problematic labor-market situation and dysfunctional administration in many municipalities and regions has left a large portion of the population feeling
distanced from the government, a phenomenon expressed in the rising share of abstaining
voters. Frustration and anxiety regarding the future has also led to a latent propensity for violence that regularly expresses itself in xenophobia and attacks on migrants from other African
countries.
Trending towards instability
The BTI 2016 points to a rather unpleasant state of affairs in South and East Africa in which
an unstable political situation combines with poverty and insufficient economic dynamism.
The fact that things have deteriorated in most of the region’s 20 countries is largely attributable to the elite’s poor management performance.
In many places, the risk of instability is rising further. This is true even – or perhaps especially – of the dozen countries in which technological advances have enabled the discovery of
commercially exploitable oil reserves. Kenya, Tanzania and Uganda will probably soon belong to the circle of oil-exporting countries. Euphoria prevails in all these countries, and battles over the allocation of profits that have yet to appear are already beginning.
This evokes bad memories of past behavior in Angola, the Republic of Congo and Nigeria, all
of which support the thesis of the “resource curse.” For the new oil producers, too, a stronger
social polarization, increases in what is already a high degree of corruption, and the neglect of
other economic sectors is to be feared.
It is significant that, with the exception of Madagascar and Tanzania, all democracies with
comparatively significant shortcomings have declined further with regard to democracy quality, and most also with regard to management performance. This is particularly pronounced in
Lesotho and Mozambique, where both the state monopoly on the use of force and the effec58
tiveness of government administration have weakened. Weak governance outcomes throughout the region’s democracies could ultimately trigger larger crises. In addition, the risk of terrorism from Somalia could increase in Kenya and, to a lesser extent, also in Uganda.
Among the autocracies, Angola stands out as the only country showing negative trends in all
three BTI dimensions. Falling oil prices on global markets have had a profound impact on the
country. To fill the growing holes in its budget, the government will be forced to borrow
(probably from China) and to raise prices (particularly for gasoline), a prospect bearing strong
risk of igniting social discontent. Indeed, such a reform-averse government can hardly be expected to resolve structural problems in a sustainable manner.
In Burundi and Rwanda, instability threatens as a result of the intention of each president to
gain a third term in office in violation of each country’s constitution. In Burundi, one attempted coup already took place in May 2015. In Rwanda, strict control of the population renders
unrest unlikely. There will certainly be criticism of President Kagame’s third presidential term
from donors, but abroad he is regarded as a guarantor of stability.
Instability also threatens in those autocracies where the resignation or death of “dinosaurs”
who have governed for decades – Robert Mugabe in Zimbabwe, Isaias Afewerki in Eritrea
and Eduardo dos Santos in Angola – is imminent. This situation offers opportunities for possible democratization, but also poses the risk of increased confrontation, even to the point of
potential civil war. This is because, in the old system, the interests of key political actors, so59
cial groups and ethnic groups could often be balanced or co-opted, while in times of upheaval,
the old privileges and spoils are no longer guaranteed, and indeed are often challenged. The
military, which serves as a veto actor in some states, represents another source of potential
uncertainty.
For the countries of the region, an important question is how much and what kind of support
they will receive following the replacement of the Millennium Development Goals (MDGs)
by the much-discussed Sustainable Development Goals in 2015. The precarious social situation implied by a population growth of more than 2.5% annually in most countries will make
continued and extensive international support necessary. Given the ongoing refugee crisis, a
trend toward increased external support can be expected. However, the government-approved
escape from South Africa of Sudanese President al-Bashir, who faced the most extensive
criminal accusations by the International Criminal Court, offers a clear example of the fact
that the consensus between Europe and Africa on issues of human rights and democracy,
hailed particularly by the European Union, is in fact much weaker than presumed.
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Post-Soviet Eurasia
Maidan and ist implications
The revolution in Ukraine has changed post-Soviet Eurasia. While it offers the
country itself probably the best chance for democratization in its history despite adverse economic conditions and the conflict in east Ukraine, the region’s
autocrats have reacted by intensifying their repression of protest. In Russia’s
case, the turn away from the West is increasingly apparent.
Taking a bird’s-eye view, average scores in post-Soviet Eurasia have remained at a low level
of development for the last 10 years. The state of political transformation lags significantly
behind that of the African or Asian regions. The same is true of transformation management.
Eurasia ranks better than sub-Saharan Africa only with regard to the transition to a market
economy. The region is also more homogenous in this regard, with comparatively small differences between leader Kazakhstan and last-place Tajikistan.
However, behind these figures lie potentially far-reaching changes that were by no means
predictable two years ago. The most critical event has without doubt been the “Euromaidan”
revolution, which unleashed a new wave of democratization in Ukraine, but also sent shock
waves through most of the region’s other autocratically governed states, leading to a palpable
intensification of repression.
For Ukraine, Euromaidan opened a third opportunity for a successful transformation process
after the previous two – the country’s independence in 1992 and the 2004/2005 Orange Revolution – were squandered. The authoritarian regime that took hold under presidents Kuchma
and Yanukovych, and had not been profoundly adjusted during the administrations of “Orange” representatives Yushchenko and Tymoshenko, led the country to the edge of disaster
with its oligarchal capitalism and endemic corruption. Indeed, by 2013, Ukraine was in many
respects a nonfunctional state. It is thus little surprise that a shift in the government’s already
“multivectoral” policy, little noted by other countries – in this case, the refusal to sign the EU
Association Agreement, which the EU itself had previously blocked due to the imprisonment
of Yulia Tymoshenko – was able to serve as trigger for a popular uprising.
Despite the conflict in east Ukraine, the domestic political conditions for a fundamental and
sustainable transformation in Ukraine are unquestionably more favorable today than ever be61
fore. Seldom before has this goal found such wide support, with people so similarly active and
eager to correct the mistakes of the past. The material conditions, however, are extremely
poor. The task in Ukraine is no more and no less than a fundamental reconstruction – thus, to
reconstitute the wreckage of the country’s decayed industry and infrastructure, and to do so
with hollowed-out state institutions. Moreover, Ukraine must also hold its ground in a military conflict that certainly has domestic roots, but is primarily fueled by foreign intervention.
To be sure, Russian President Putin has made no secret of the fact that he considers Ukraine’s
development to this point to have been on the wrong path, Yanukovych to have been a failure,
and the resistance from the population to be understandable to this degree. However, this has
not prevented him and his propagandists from denouncing the success of Euromaidan as a
Western-controlled “fascist coup.” Since then, he has done a considerable amount to prevent
the success of the new Ukraine in a conflict that has taken on existential stakes. This Russian
reaction can be seen both as an eff ort to secure external influence and to retain domestic control.
As a part of this response, Moscow has worked more actively than in the past to consolidate
its claimed zone of influence, firmly pushing the countries in the region to make a choice between Russia and the West. In addition to Ukraine, this has recently been visible particularly
in the Republic of Moldova (for instance, with regard to the instrumentalization of the Gagauz
minority) and Armenia (exploiting that country’s tense national-security relations with Azerbaijan).
The aggravation of the already precarious relations between Russia and the West has been
associated with a fundamental rejection of Western values and the West’s support for democracy. In their place, separate routes by which to legitimize the autocratic regimes are postulated. In addition, with its promotion of an “eastern vector,” Russia has sought not only an alliance with China, but also to close ideological ranks with Beijing in a relationship that may go
beyond the common recognition of state sovereignty and the principle of nonintervention.
In this regard, Moscow has established itself as the nucleus of a bloc-building effort in the
Eurasian space, the essence of which represents the rejection of transformation goals, such as
democracy and the social market economy. Even if the heterogeneous interests and orientations in the countries concerned will make the formation of such a bloc in accordance with
Moscow’s conditions difficult, the defining patterns of conflict are in this way being fixed in
place.
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Hardened front lines
The region remains divided into two largely unchanged blocs, with the EUoriented, democratic-tending states on one side, and the autocracies located
more or less within Russia’s sphere of influence on the other.
In an overall picture that remains unchanged in the BTI 2016, we see five more or less defective democracies and eight autocracies.
This reflects the essential division of the region between countries that are oriented toward the
European Union and have concluded the mid-2014 EU Association Agreement (Georgia, the
Republic of Moldova, Ukraine and, outside the EU’s Eastern Partnership, Mongolia) and
those that have joined with Russia in the Eurasian Economic Union, which was established on
January 1, 2015 (Armenia, Belarus, Kazakhstan and, recently, Kyrgyzstan). The group of autocracies is further supplemented by Azerbaijan, Tajikistan, Turkmenistan and Uzbekistan,
whose ties to Russia are somewhat weaker.
However, these two camps are not as homogeneous and firmly established as these labels may
suggest. Thus, though Ukraine shows by far the greatest gains with regard to quality of democracy in comparison to the BTI 2014, it still performs under the level achieved in 2006,
immediately after the Orange Revolution. The biggest decline in this regard was shown by the
Republic of Moldova, also an EU-associated nation. Moldova’s case demonstrates that the
orientation toward the European Union neither guarantees transformation progress nor is necessarily associated with credible democratization intentions. For example, the most recent
parliamentary elections were accompanied by questionable ancillary phenomena, while the
subsequent formation of the government sank into a swamp of corruption at an early date.
This and other scandals have for the moment ensured that the country’s cartel of oligarchs can
continue pursuing its dubious activities without being disturbed.
In Ukraine, by contrast, “Europe” served as beacon for an uprising that ultimately swept away
the Viktor Yanukovych regime on February 21, 2014. In this way, Ukraine initiated what may
be the best chance of democratization in its history – though certainly one with no guarantee
of success. To date, although possibilities for political participation have been hugely expanded, the implementation of reforms has been persistently accompanied by setbacks – not to
mention an erosion of state authority. Kiev has permitted the formation of irregular, at times
extremely questionable volunteer units, thus compromising the state’s monopoly on the use of
force, as the defense effort in the country’s east would otherwise have been virtually impossible to organize.
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The fact that a particularly ruthless oligarch, Ihor Kolomoyskyi, was consequently able to
consolidate his influence using time-tested methods is just one of the side effects that have led
some observers to doubt the prospects of a successful transformation. Nevertheless, the presidential and parliamentary votes signaled that far-right and fascistic forces were only drawing
very limited popular support, contrary to Russian propaganda.
This is thus a mixed picture, and yet it offers some indications that the reform process will not
simply vanish quietly from the scene this time. Ukraine’s civil society is much more active
and is taking a more substantial part in decision-making and legislative processes than was the
case after the Orange Revolution. In addition, the influence wielded by Western organizations
and actors is significantly greater, as is reflected not only in regular consultations, but –
uniquely in post-Soviet Eurasia – also in the occupation of top policy positions by nationals of
other countries. Finally, the war in the east of the country has accelerated economic decline,
saddling Ukraine with tremendous costs. However, it has also helped stimulate nationbuilding, triggering a wave of solidarity and cooperation that has cut across all social, ethnic
and political lines. This existential challenge has also created a situation in which the public
pays much closer attention to whether and how far policymakers’ announcements diverge
from their ultimate implementation, as well as to where and to what degree corruption and
cronyism remain problems.
These results have produced an (unintentional) flip side to Euromaidan, as it has made clear to
the region’s autocrats just how fragile their rule really is. Reactions have been accordingly
harsh, primarily in the form of intensified repression, but also in foreign policy through an
implacable animosity toward the new regime in Kiev (and its alleged masterminds in the
West). In this regard, Russia is setting the pace. Moscow not only annexed the Crimea in a
coolly calculated fashion, but also showed little hesitation in engaging in a military intervention that it officially denied while at the same time for months making references with territorial connotation to “Novorossija” (New Russia) and the “Russky Mir” (Russian world) ethnicity area.
These developments are logical extensions of the hysteria sparked by Putin against NGOs
alleged to be foreign-controlled and responsible for political subversion. Unleashed in the
course of the demonstrations against his re-election in 2012, the hysteria found its supposed
confirmation with the Euromaidan movement – and, indeed, reached a new high point as a
result. While a cautious domestic political relaxation was temporarily underway, as expressed
by the approval of Alexei Navalny’s participation in the Moscow mayoral race in September
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2013, since Euromaidan, security issues have come wholly to the fore in Moscow, both in
terms of personalities and policy.
Outwardly, this has manifested itself in a fundamental dissociation from the West and its
democratic values, which the Kremlin now wants to replace with an alternative – and apocryphal – set of “traditional values” and a revival of Cold War themes for propagandistic purposes. Domestically, this has expressed itself in a virtually endless chain of restrictive laws
against every form of non-governmental organization and expression. Russia thus continues
along a path that brings it ever closer to the Central Asian autocracies, which it also wants to
integrate into a power bloc through the creation of the Eurasian Economic Union.
Maidan: Message received – increased repression in autocracies
Improvements in Ukraine and negative trends in autocracies, selected indicators, BTI 2012–BTI 2016
Back in crisis mode
As previously, many countries in the region rely far too heavily on exportable
resources. The chain reactions triggered by Russia’s weakness are rendered
stronger by this fact. For the EU-oriented countries, prosperity remains an unfulfilled promise.
As in the BTI 2104, half of Eurasia’s countries find themselves in the middle of the pack from
an economic perspective. Among the nine market economies with functional flaws are those
countries – Georgia, the Republic of Moldova and Ukraine – that concluded both an association agreement and a free-trade agreement with the European Union in mid-2014. The competitive and welfare gains associated with this remain a promise as yet unfulfilled.
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The basic economic division separates those countries that possess export-capable energy
sources from those that must import them in addition to lacking a competitive export portfolio. This difference is particularly notable with regard to economic performance, although this
is less so with regard to overall market economy status during the current reporting period.
This is due in particular to the collapse of oil prices in 2014, which has had mixed effects
throughout the region. In general, following the 2008 –2009 slump and the subsequent years
of stable growth, all the region’s countries have found themselves again in crisis mode since
2014. However, with the exception of Ukraine, this has not yet led to significant reforms.
The manifestations of crisis are appearing particularly clearly in Russia. Following a decline
in growth rates beginning in 2011, the country slipped into recession in 2015. The country
shows symptoms of the resource curse, but the immediate crisis trigger was the collapse in oil
prices, reinforced by the Western (financial) sanctions imposed in mid-2014. As a consequence, the ruble fell by as much as 40%, inflation rose above 16% and there was $130 billion
in capital outflow in 2014. As in the past, the government and central bank reacted in an orthodox manner, in this case meaning an early decision to shift the ruble to a free-floating basis, an increase in interest rates and a dramatic cutback in budget forecasts (with the exception
of defense expenditures) – which served initially to reinforce the economic slowdown. This
has resulted in fierce attacks on economic policymakers from the populist-patriotic camp,
whose key figures look to import-substitution models (and therefore welcome the Western
policy of sanctions) as well as Soviet-style mobilization campaigns and the defense sector as
drivers of technological innovation and growth. Their influence has increased significantly in
the past two years. There are no signs of structural reforms or industrial-policy initiatives.
Russia’s decline has also put strain on its neighbors. The devaluation of the ruble has limited
access to the Russian market, which is important for Armenia, Belarus, the Republic of Moldova and Uzbekistan. Other countries are affected primarily by the return of migrant workers
and the rapidly declining volume of remittances. These play a major role in Armenia, Kyrgyzstan, Moldova and Tajikistan, but are also significant in Ukraine and Uzbekistan. Finally, investment and financial aid from Russia has dried up.
The chain reactions in Azerbaijan and Turkmenistan have been less serious, although these
countries are also dependent on oil-price developments. The national currencies here are accordingly also under pressure. However, for the time being, this has led to no significant interruption in extravagant prestige projects, such as the European Games, which were held in
Azerbaijan in June 2015 and accompanied by a state-supported construction boom in Baku.
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Nevertheless, the current consumption-oriented economic model has been called into question
in the oil-dependent economies, as well.
Belarus, too, which is closely intertwined with Russia, was forced to devalue its ruble by 30%
in December 2014 in order to support its eastern-bound exports. Minsk, which is experienced
in the re-export of Russian energy sources, otherwise showed itself to be a crisis profiteer in
its habitual fashion: It sprang quickly into the gap opened by Russia’s counter-sanctions
against the import of EU food products and became one of the largest suppliers of goods such
as salmon, lobster and mozzarella – which immediately provoked threats from Moscow to
impose import restrictions despite the free-trade pledges of the Eurasian Economic Union.
The economic situation in Ukraine is particularly dramatic. By the end of 2015, GDP and real
income had shrunk by roughly 15%, while the national currency, the hryvnia, had seen its
value halved on international markets, and inflation had risen to over 30%. At the same time,
public finances are shattered, the budget deficit has climbed to more than 10% of GDP, currency reserves have declined to the point of barely covering the value of two months of imports, and a comprehensive bank restructuring has swallowed up billions more.
The war, the loss of Donbass and Russia’s partition of the country have simultaneously led to
a collapse in exports, as the eastern industrial region had previously contributed more than a
quarter of Ukraine’s export revenues. Implementation of the European Union’s stabilization
programs have faltered. In any case, they will only be successful if they are accompanied by a
comprehensive transformation of the Ukrainian economy.
Good and bad models
Goal-directed governance, civil society participation, anti-corruption policy:
Even in post-Soviet Eurasia, these things are possible. However, the majority of
governments struggle with transformation management. The weaknesses are to
some extent systematic.
Russia and Ukraine, the region’s major antagonists, also show opposing tendencies with regard to transformation management. The Ukrainian government’s performance is classified as
moderate, even though the conditions for consistent and goal-directed government action have
radically deteriorated due to the dual challenges of crisis and war. A comprehensive national
reconciliation and moderation of social tensions can only be seriously addressed once the conflict in eastern Ukraine has been settled.
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The Minsk II ceasefire agreement provides a roadmap that Kiev has so far begun to implement only very cautiously. To be sure, there can be no doubt that the resistance of separatist
irregular fighters in Donbass would have collapsed long ago without Russian (state and nonstate) support. However, the results of the presidential and parliamentary elections in 2014
documented once again that the political mood of the population in the country’s east and
south differs perceptibly from that in the remainder of the country – especially in the west.
Thus far, Kiev has failed to deal constructively with this fact.
As an additional consequence of this conflict, Russia’s credibility has dramatically declined.
This is true not only with regard to the West, which is continually presented with lies regarding Russia’s intervention in its neighboring country, even from the highest levels of government. It also applies to Russia’s allies in the Eurasian Economic Union and the Collective
Security Treaty Organization, for whom Putin’s evocations of the “Russian world” and “New
Russia” awoke uneasy apprehensions. Belarus and Turkmenistan have acted differently, even
if their initial steps have been small – Belarus with its mediation eff orts in the Ukraine conflict and its newly outstretched feelers toward the West, and Turkmenistan with its efforts to
relax its self-imposed isolation to at least a small degree.
By contrast, Moscow’s willingness to accept external assistance has now wholly disappeared.
This can be seen from its ejection of aid organizations, its denunciation of Russian NGOs as
“foreign agents” and the perpetual threat created by a June 2015 law enabling international
organizations to be declared “undesirable,” thus exposing any Russian citizen or organizations
that cooperate with them to criminal penalties. In this regard, Russia accords with Kazakhstan, another country that has lost ground in the BTI 2016. President Nazarbayev’s government has demonstrated a notable openness to learning and reform in the economic realm, but
fundamentally and energetically rejects advice regarding the country’s political order as improper interference.
Russia is also a “model” for the post-Soviet autocracies with regard to dealing with civil society. The scope of activity allowed to independent NGOs is being increasingly restricted, while
at the same time, a state-sanctioned and ultimately state-directed surrogate civil society is
being created through the use of targeted support. However, this system has been perfected in
Azerbaijan, which has combined the stick of license revocations for NGOs with the carrot of
subsidies from the state budget in its own way.
This dominance of anti-democratic forces offers a striking contrast to those states whose
transformation management performance is assessed as good (Mongolia, Georgia) or moder68
ate (Moldova, Ukraine, Kyrgyzstan). For example, the circumstances are exactly reversed in
Mongolia; there, beyond the insignificant political margins, there are no anti-democratic forces to which political influence can be ascribed. The same is true of Georgia, apart from the
decidedly conservative positions of the Orthodox Church.
The same can be said about the role of civil society and NGOs’ potential to make an impact.
NGOs are not subject to any notable restrictions in Georgia or Mongolia, even if their influence is limited. In order to change this, and to further strengthen civil dialogue, democratic
culture and civic engagement in the country, the Mongolian government in 2009 created the
so-called Citizen’s Halls as consultative organs at the national and later also at the local level.
In principle accessible to every citizen, these bodies’ primary task is discussion of the parliament’s legislative proposals (as well as local budgets at the local level). Mongolia’s citizens
are making full use of this opportunity.
Exceptions to the rule: Regional bright spots in selected management indicators
Compared to the other countries in the post-Soviet space, anti-corruption policy in Georgia is
outstanding, a fact that can be credited to Mikhail Saakashvili’s time in office. There are extensive legal regulations on this issue, a number of institutions (e.g., the Anti-Corruption Interagency Council and the Chamber of Control) as well as national action plans that attest
forcefully to the government’s continuing efforts. In practice, these measures have brought
about tangible changes, unlike some other apparently high-priority initiatives launched with a
clear eye toward the international donor community.
This serious eff ort marks an additional fundamental difference between Georgia and those
Central Asian autocracies whose functioning and stability are based on patronage, and in
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which corruption thus has a systematic character, as well as the clientelist political regimes in
Armenia and Russia. To be sure, these states declare themselves to be engaged in the fight
against corruption and have introduced institutional provisions, such as public tenders, transparent procurement-monitoring systems, and income and wealth declarations for public servants. In practice, however, they accomplish little to nothing in this regard.
The risk of autocrats
The conflict over Ukraine has divided the region into two camps. On one side stands Moscow,
which – with its self-imposed isolation from the West and rejection of the norms and processes of constitutional democracy – offers a geostrategic anchor and point of orientation for the
region’s autocracies. However, it also expects loyalty, and its intransigence is gradually deepening the divide with the West.
On the other side is the European Union, which – though it operates on similar basic principles throughout and insists on its corpus of norms – offers in return only limited security assurances to its affiliated countries. Russia is seeking to compensate for its lack of attractiveness as a model for the future by banking on the present’s inertia and exploiting the weight of
relationships established in the past for its own current ends. Since, in times of doubt, many
people put their own obvious interests above more abstract potential gains, the EU risks seeing its attractiveness dwindle if it continues its current reticence. Ukraine, in particular, alongside deep reforms, needs long-term public and private engagement with external actors. By
mid-2015, reforms as well as engagement were evident to only a rudimentary degree – an
unsurprising fact given the dimensions of the task ahead.
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The Russian instrumentalization of existing relationships, as through its threatened or implemented boycotts on imports, is as much of a brake on transformation today as is the EU’s rather modest level of engagement. Moreover, the two camps are far from acting as homogenous actors or as power-political blocs. The interests of the Eurasian countries are too heterogeneous, and the tendency of Moscow and Brussels to seek their own advantage against the
other is too strong.
The two camps have in common the fact that after several years of growth, economically difficult times had returned by 2014 at the latest. Declining energy prices have negatively affected all the region’s economies to a significant degree. In the case of the energy producers, this
has had clear and direct economic dampening effects; for the others, it has acted indirectly
through chain reactions. Whether this ultimately renders governments more predisposed toward far-reaching economic reforms will depend on how long oil prices stay low.
The region is allegedly in a relatively stable phase. However, in many autocracies, the biggest
challenge to stability – change in political leadership – is drawing nearer. This is particularly
true for those (neo)patrimonial regimes in Central Asia whose post-Soviet leaders have
reached an advanced age, including Islam Karimov (78) in Uzbekistan and Nursultan Nazarbayev (75) in Kazakhstan, both of whom were reconfirmed in office in early 2015 with
more than 90% of the vote.
In both cases of marked clan rule, the dynastic succession is precarious. Nazarbayev has three
daughters, but a number of problems are evident. For example, his former son-in-law, Rakhat
Aliyev, following his flight in February 2015, was found dead under mysterious circumstances while in Austrian custody. A similar difficulty faces Karimov, whose oldest of two daughters, Gulnara Karimova, has fallen into disfavor due to internal family feuds and, according to
reports, has been under house arrest since April 2014. In the case of Tajikistan’s Emomali
Rakhmon (63), the dynastic pool is somewhat larger due to his seven daughters and two sons;
for Ilham Aliyev (54), who holds power in Azerbaijan as a second-generation ruler, the question of succession is not acute.
Turkmenistan, where the 2006 transition of power to Gurbanguly Berdymukhamedov following the sudden death of “Turkmenbashi” Saparmurat Niyazov was relatively peaceful, today
demonstrates that even in Central Asia, changes in government outside a single clan are possible. On the other side, those regimes that are not based on clan rule but have nevertheless
undergone autocratic transformation under dominant rulers also face serious stability risks.
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This is no less true of Putin and Russia than of Sargsyan and Armenia and, of course,
Lukashenko and Belarus.
The December 2011 strikes in Kazakhstan’s Zhanaozen, the mass demonstrations in Russia
against electoral fraud in 2011 and 2012, the widespread Armenian protests against increases
in electricity prices in June 2015, and countless other expressions of discontent show that the
autocrats face significant risks behind their pompous facades. Just how dangerous these risks
can be was demonstrated by Euromaidan – originally without any prospects of a genuine
change in government.
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Asia and Oceania
In crisis or just lulled?
With little by way of further democratization, democratic deepening or the expansion of economic reforms, transformation processes in Asia and Oceania
have stagnated, and many countries are reaching a crossroads. Given the heterogeneity of sociopolitical and economic blueprints found across the region, it’s
impossible to speak of a single, uniform “Asian model.”
With little change in regional average scores and drastic differences between subregions, a
cursory glance at the figures in the BTI 2016 might suggest a continuity in transformation
trends. But a closer look at developments in Asia and Oceania since the BTI 2006 reveals five
findings that, taken together, offer cause for concern.
The first finding is the contrast between routine political processes in established democracies
(South Korea and Taiwan) or consolidated autocracies (China, Laos, Singapore and Vietnam)
and the considerable turmoil in highly defective democracies (Bangladesh and Nepal) or unstable autocracies (Afghanistan, Cambodia, Malaysia, Pakistan, and Thailand). Here, it is
above all the South Asian “crisis” states that are distinguished by greater or lesser degrees of
dysfunctional stateness, the emergence of extremist groups and internal violence. But in the
aforementioned Southeast Asian countries, too, the political process is marked by persistent
party-driven blockage and disputed elections. Civil society organizations in these countries
are under pressure from governments and extremists, and the capacity of institutions to integrate diverse interests remains insufficient as only a select few in society have access to political representation.
The second finding is that the maintenance of sufficient state capacities and stability is the
sine qua non for effective change, particularly where economic transformation is concerned.
In this respect, Singapore and Vietnam enjoy far more favorable conditions than do most of
the other countries. However, we should be careful not to jump to conclusions about cause
and effect here. To be sure, political stability, strong institutions and well-developed fiscal
and administrative capacities are conducive to economic transformation. When in place, these
properties make it easier for governments to implement measures. They also provide governments greater opportunities to steer developments in the desired direction while making efficient use of resources. The comparison of “strong” states, such as China, Taiwan, South Korea and Vietnam, with far less competent South Asian countries offers consistent and conclu73
sive proof of this. But the reverse is also true: Socioeconomic performance has an impact on
stability and the state’s operational capacity. The example of North Korea additionally
demonstrates that functioning stateness can only contribute to emocracy and prosperity when
it is accompanied by the necessary political will.
Third, differences between the various countries of Asia and Oceania are significantly greater
than those in, for example, Latin America or the Middle East and North Africa. Few regions
offer such dramatic contrasts in transformation performance or levels of development.
Fourth, it is still impossible to talk of a unified “Asian” model or transformation path. Instead,
we see states pursuing democratic transformation alongside those undergoing authoritarian
modernization. In many of the region’s countries, profound changes to political and economic
systems generally occur asynchronously. India, the largest democracy in the world since gaining its independence in 1947, only recently began transforming its socialist economic order.
In Taiwan and South Korea, by contrast, democratization only emerged in the wake of modernizing dictatorships based on capitalist principles. China, Laos, Malaysia, Singapore and
Vietnam are at the middle or end point of an authoritarian modernization process that is void
of democratization.
The fifth and final finding: Major medium-term trends and dynamics observed in the last 10
years reveal few positive developments. Democratic transformation has stalled in most countries where the structural conditions for democratization were comparatively weak. In some
countries, democratization has even been rolled back significantly. Political participation and
the rule of law have been particularly hard-hit. When it comes to economic transformation,
there has been a conspicuous lack of meaningful improvements in socioeconomic levels of
development, property rights, social order and sustainability. Resource efficiency is faltering
in many countries. What’s more, there is a reduced capacity or will to cultivate political consensus in many places, and just five of the 21 countries have improved appreciably in steering
capability, while 10 are markedly worse. Does this constitute a crisis of transformation, or
does it “merely” point to persistent deadlock? At the very least, numerous indicators suggest
that many countries are reaching a crossroads in their development.
Democracy on poor footing
From dynamic democracies to Stone Age dictatorships: Political conditions in
the 21 countries paint a landscape marked by extremes. Declining levels of political participation and an eroding rule of law are particularly worrying.
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Asia and Oceania is a region of political extremes. The spectrum ranges from established democracies, such as Taiwan and South Korea, to an utterly fossilized autocracy, such as North
Korea. This also applies to the criteria the BTI uses to assess political transformation. With
the exception of stateness (no failed states) and political and social integration (no top performers in relations with civil society), the region offers an almost complete spectrum of
evaluation. Leaving aside the positive and negative outliers, it is notable that while polities in
Asia are largely stable, they tend to be less politically inclusive than countries elsewhere
around the globe. On average, democratic institutions as weak as those of Asia and Oceania
are only seen in post-Soviet Eurasia and the Middle East and North Africa.
A glance at recent developments in individual countries confirms the impression of greatly
contrasting levels and trends. In Nepal, for instance, the constituent assembly was re-elected
in November 2013 and a government answerable to parliament was formed. But, like Bangladesh, it offered nothing more than a caricature of a dynamic popular government, and it certainly bears little resemblance to the BTI’s definition of democracy under the rule of law.
Bhutan and Indonesia offer a counterpoint to this “facade democracy.” Indeed, when it comes
to Bhutan’s political transformation, all that glitters is not gold. However, the Himalayan
kingdom’s astonishing successes since its first review, in the BTI 2008, are beyond question.
Similarly, recent events have proven Indonesia’s achievements to be robust and resilient.
At the same time, 12 of the 21 countries are still subject to autocratic rule, although here, too,
there are significant differences, as the elections conducted within the review period demonstrate. While alleged manipulation marred elections in Afghanistan, Cambodia and Malaysia,
with contested results at times rejected by opposition parties, both the May 2013 parliamentary elections in Pakistan and the January 2015 presidential election in Sri Lanka represented
positive steps.
For the first time in Pakistan’s history, an incumbent government was voted out and power
was transferred peacefully to the opposition. Even more significant were the election results
in Sri Lanka; here, contrary to many observers’ expectations, the authoritarian president,
Mahinda Rajapaksa, lost out to his former health minister, Maithripala Sirisena. Half-hearted
attempts to prevent the transfer of power with the assistance of state and political actors came
to nothing. With all due caution, we can state that the events of 2015 suggest that there is considerable potential for self-healing in this island country.
The opposite is true of Thailand. By staging a coup in May 2014, the military added another
act to a drama that has already enjoyed a decade-long run. It’s not just the BTI experts who
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doubt whether the putsch leader and current head of government, General Prayut Chan-ocha,
can use political consolidation, top-down patriotism and exploitation of “reconciliation policies” and “constitutional reform” to cool the smoldering conflict between supporters and opponents of Thaksin Shinawatra, the head of government deposed in 2006 (also through a
putsch), and bring about a durable balance between the opposing forces in Thai society.
Thailand’s revival of putsch politics, meanwhile, stands in contrast to developments in Myanmar. The country’s transformational dynamism has endured since the inception of the liberalization process in 2010. The process hasn’t been free of negative factors, such as interreligious and inter-ethnic violence, nor has it resulted in democratization – yet. At the same time,
the country’s reforms are substantial and have brought appreciable change to numerous areas
of life.
Strong states without representative institutions
Distribution of BTI scores for the 21 countries of Asia and Oceania and the other 108 countries outside
the region. The middle 50% of countries are found inside the box.
Beyond these obvious milestones and crossroads in transformation, it is worth investigating
the more or less gradual, longer-term processes of the last decade. Particularly worrying here
are the losses registered in free and fair elections, freedom of assembly and freedom of expression. In 13 of the 20 countries reviewed since the BTI 2006, there is less freedom in the
core areas of political participation than there was 10 years ago. The trend toward lower voter
turnouts is one facet of this phenomenon; others include restrictions of civil rights and liberties – particularly freedom of opinion and the media – as well as disputed elections. Erosion
of the rule of law, a development also found in 13 countries, is almost as striking. On the oth76
er hand, the decline in stability of democratic institutions is less pronounced and now only
affects Bangladesh, Sri Lanka and Thailand. In each of these countries, however, the breakdown in the functionality of democratic institutions – and the elite’s commitment to them –
over the last 10 years was dramatic.
The negative changes over the last 10 years in the three named areas contrast with the (modest) improvements in stateness in nine of the 20 countries as well as the very high scores that
remained unchanged in three other countries. Finally, political and social integration is the
only democracy criterion in which a majority of countries showed improvement (12 out of
20).
However, this cannot be attributed to the consolidation of party systems, the rise of wellorganized, assertive and pluralistic interest groups, or a surge in social capital. Rather, the
gain derives from the broad consensus that the system of democracy enjoys among the citizenry – at least for now. Indeed, there are indications that liberal values and attitudes are far
less pronounced in Asian societies than they are in other regions of the world. Authentic supporters of liberal-participatory democracy are usually in the minority. And the proportion of
citizens who are satisfied with the functioning of government institutions is consistently far
lower in the democracies of East and Southeast Asia than in autocratic China, Singapore and
Vietnam.
Giants face immense social challenges
Taiwan, Singapore and South Korea are setting the standards for successful
economic and social policies. But unsatisfactory regulation and disregard for
sustainability in the two largest economies, China and India, continue to pose a
risk to the further development of the entire region. South Asia features one of
the largest deficits in socioeconomic development of any subregion in the
world.
As with political development, so too with economic transformation: There is a broad range
of performance among the countries of Asia and Oceania. At the bottom is North Korea,
where a crisis in state distribution systems has caused the socialist planned economy to drift
apart into subsystems of military economy, cadre capitalism and an informal shadow economy. At the top are Taiwan, Singapore and South Korea, which occupy positions 1, 5 and 8,
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respectively, in economic transformation out of the 129 countries surveyed worldwide. True,
the social order of these three medium-sized powers places much of the burden of protection
against social risks on the individual and the family, particularly women. But demographic
factors, if nothing else, have prompted an expansion of social security systems in South Korea
and Taiwan, and Singapore is likely to follow suit.
Some distance behind these three, we find the functioning market economy of Malaysia. The
Malaysian economy is built on solid macroeconomic foundations and, compared to most
countries in the region, it has achieved a high level of socioeconomic development. But rising
levels of comparatively high private debt and a looming bubble in the domestic property market may prove just as perilous in the short term as the country’s public-sector debt. The country also features structural problems arising from its high dependency on exports as well as
the negative effects of falling prices for raw materials caused by a drop-off in demand in
Western markets and in China. Malaysia’s economy is susceptible to disturbance, not least
because of the close links between politics and business that have preserved the dominance of
the Parti Perikatan (Alliance Party), between 1957 and 1973, and thereafter of its successor
coalition, Barisan Nasional (National Front).
India and China exemplify the inconsistent, at times contradictory developments in the region.
While development in India has slowed considerably and even reversed in the areas of sustainability and inclusive development, China has achieved considerable improvements in most
areas of market economic transformation over the last decade and has proved able to maintain
its already high levels of performance.
Still, it isn’t just turbulence on the Shanghai Stock Exchange and the risky exchange rate policy of the summer of 2015 which indicate that China is far from the model country it is frequently made out to be. Whether its competition regimes or anti-monopoly policies, the banking sector or property rights, social security systems or environmental protection, in numerous
areas, this economic superpower has a lot of ground to make up.
Bhutan is among the nine market economies with functional flaws and, in recent years, it has
made steady improvements in basic social security for its citizens, modest advances in competition and price stability, as well as appreciable strides toward a universally accessible, modern education system while registering healthy economic growth. Transformation has been
even more dynamic in Myanmar, though the base level was very limited. The reforms set in
motion in 2013 have begun to yield dividends, and the economy has profited greatly from the
lifting of most Western sanctions and the liberalization of foreign trade.
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Of the 20 countries reviewed in the BTI 2006, 11 have deteriorated. Thailand, Pakistan, Nepal
and Sri Lanka, in particular, each suffered dramatic falls following political turbulence in the
immediate and recent past.
Longer-term prospects reveal a strength-and-weaknesses profile more or less typical of the
region. On the one hand, it has replaced East-Central and Southeast Europe as the frontrunner
in economic performance. In currency and price stability, too, the region holds up well. On
the other hand, social safety nets, equality of opportunity and social justice, antidiscrimination policies, and compatibility of environmental sustainability and economic
growth continue to represent, on average, the weakest areas of development.
The South Asian countries in aggregate perform particularly poorly here. They also invest
little in health and education. Although there are considerable differences between a country
like Sri Lanka, on the one hand, and Afghanistan, on the other, it is nonetheless telling that
none of the seven national economies of South Asia appears in the two top categories of economic transformation. One positive result: Women in the seven Muslim-majority countries of
South and Southeast Asia experience less discrimination than do their counterparts in the
Middle East.
Past feuds thwart future-oriented statecraft
Mediocre transformation management has many faces: Some governments shun
necessary democratic reforms for fear of losing control; others lack efficient
resource management and the capacity to steer policymaking processes; still
others are mired in traditional patterns of confrontation.
In 2013 and 2014 – prior to the recent turmoil caused by Taliban attacks on Kunduz – Afghanistan made some progress in advancing transformation. The national unity government –
formed in 2014 by President Ashraf Ghani and his erstwhile challenger and current prime
minister, Abdullah Abdullah – has survived its first year. Beyond that achievement, the national government has also tackled a number of reforms and announced others.
But this current positive trend can’t disguise the fact that Afghanistan’s governance is even
worse than it was 10 years ago. Overall, this sobering assessment can be applied to 10 of the
20 countries. The decline in quality is particularly pronounced in South Asia, where steering
capability (Bangladesh, Pakistan) and resource use (Nepal, Pakistan) are now less efficient,
and the capacity for societal consensus (Sri Lanka) and international cooperation (Pakistan,
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Sri Lanka) diminished considerably. The BTI also finds management performance to be considerably poorer in Cambodia, Malaysia and South Korea than it was 10 years ago.
On the other hand, 10 countries managed to improve their quality of transformation management. Here, it is worth looking at three democracies and three autocracies separately. The
former group encompasses Indonesia, the Philippines and Papua New
Guinea. The autocracies in which management performance has improved include Myanmar,
Vietnam and China. While the two single-party dictatorships are distinguished by highly successful economic management, in Myanmar, effective management is largely reflected in processes of political liberalization. However, this cannot disguise the fact that, in absolute terms,
management performance in nearly all the region’s countries remains at best mediocre and
sometimes even below average, according to the BTI’s criteria.
The top performer in the region is Taiwan, which occupies third place for political management worldwide. South Korea, on the other hand, declined slightly for the third time in succession and, since the BTI 2014, now numbers among the countries with good transformation
management. Other countries in this group include Singapore, which demonstrates the best
political management of any autocracy in the world, followed by Malaysia. While the transformation management of these two governments certainly doesn’t point toward democracy,
Singapore, in particular, has long since reached a level at which its governance challenges
resemble those of the core OECD countries.
Major hurdles for good governance in South Asia
Level of difficulty in the seven South Asian countries compared with the global median of all 129 countries under review. The five problem areas correspond with the BTI indicators 13.2–13.6 (in order).
Scores for civil society traditions, conflict intensity as well as deficits in stateness and rule of law are
derived from the qualitative assessments of the BTI experts. Scores for socioeconomic limitations and
educational poverty are based on the scaled external indicators of GDP per capita (Source: World
Bank, World Development Indicators) and the UN Education Index (Source: UNDP, Human Development Report).
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The group of countries categorized as featuring moderate management typify the differing
transformation paths in the region. Here, China and Vietnam prove that innovative governance that is fit for purpose, from a technocratic perspective at least, is by all means possible in
an autocracy. Furthermore, these two cases prove the relative management advantages that
decentralized single-party states enjoy in co-opting the elite, innovation and exploring flexible
solutions. But the constant tension between the preservation of power and economic transformation remains. In addition, these national governments clearly eschew democratic reforms.
On the other hand, there is a range of countries that have weaker management performance
but still fare well in ensuring democratic participation and inclusive decision-making procedures. One notable example is the government of Benigno Aquino III, which has ruled the
Philippines since 2010. Despite considerable weaknesses in steering capability and resource
efficiency, its management performance stands in stark contrast to that of the previous government.
Meanwhile, decision-makers in other (defective) democracies have overburdened the political
process, eroded the foundations for effective transformation management and neglected policy learning. This applies to Bangladesh, Nepal, Thailand (before the May 2014 putsch) and
Sri Lanka (up to the end of the current review period). These countries are currently in the
throes of major crises rife with conflict. In Bangladesh and Thailand, in particular, it is increasingly apparent that the political elites are incapable of overcoming patterns of confrontation that have shaped the political process since the beginning of the millennium.
The fourth group, countries with weak transformation management, includes Myanmar, the
Asian country whose management performance has shown the most improvement over the
last four years. Between February 2013 and January 2015, the government of President Thein
Sein managed to contain reform-averse actors in the military, advance the political consensusbuilding process by including the opposition and civil society groups, and open up new
sources of political and material support beyond the country’s borders. North Korea still has
the worst transformation management of any country. If one assumes that the North Korean
dictatorship and the small group of indispensable supporters bound by familial or other close
ties acts to fulfill its objectives – chief among them being the maintenance of power – one can
only conclude that its governance failures (in normative BTI terms) are rooted in the regime’s
logic of political survival and therefore of its own making.
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In other countries, on the other hand, modest management scores cannot be divorced from
specific contextual limitations on effective governance. This applies particularly to many societies in South Asia that are confronted with the legacies of civil war (Nepal, Sri Lanka) or
violent conflicts which are persistent (Afghanistan) or even escalating (Pakistan). In addition,
many countries suffer from a lack of civil society traditions, difficult socioeconomic conditions and educational poverty. While the countries of South Asia mostly fulfill the minimum
standards for sustainable governance in stateness and rule of law, the subregion still performs
well below average here, as in other areas. The results show that the degree of difficulty is
significantly higher in six of the seven South Asian countries than the median of all developing and transition countries worldwide. Only West and Central Africa has even less leeway in
pursuing successful transformation than does South Asia.
No short-term solution in sight
Where is the region of Asia and Oceania heading? Leaving aside the highly contrasting levels
of commitment to democracy and a market economic framework, a look at medium-term developments invites skepticism. In only a few cases has transformation proceeded in parallel
with democracy under the rule of law and a market economy anchored in principles of social
justice, or already achieved an advanced state. Furthermore, for the period spanning the BTI
2006 to the BTI 2016, the state of political transformation deteriorated in 10 out of 20 countries. For economic transformation, this applies to 11 countries; for transformation management, to 10.
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Is transformation in Asia stuck in crisis mode, or is this just a “lull,” a “slump” brought about
by external conditions, the emergence of new internal civil challenges or – in isolated cases –
governments’ own actions? BTI data suggests that considerably more countries in the region
are moving away from the BTI model than moving toward it.
Does this mean we are witnessing the first signs of a (new) paradigm shift? Are autocratic
models gaining the upper hand once again? Should we fear a “return of the dictators”? For the
region as such, we can say with confidence: no. In countries such as Taiwan, South Korea and
India, but also the Philippines and Indonesia, democracy has an almost 100% chance of survival. And the number of states in which democracy has crumbled since 2005 can be counted
on one hand. These “authoritarian relapses” are offset by an equal number of “redemocratizations.” Four countries have shifted back and forth between autocracy and democracy, in some cases multiple times, over the last 10 years: Thailand, Nepal, Bhutan and Sri
Lanka.
With the exception of Bhutan, these countries are in a crisis zone. Stable, functioning democracy is just as unlikely here as “balanced autocracy.” Bangladesh, too, treads a fine line between democracy and dictatorship. It is telling that the democratic-transformation scores for
Nepal and Bangladesh lie below those of autocratic Singapore.
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In other countries, however, transformation appears to have arrived at a crossroads that borders precarious territory in which functional disruptions represent a threat to a state’s continued existence and are expressed in persistent, latent crises. It is hardly surprising that this also
has an effect on socioeconomic development, the political performance of regimes and the
legitimacy of political institutions and authorities. But there are far too few realistic alternatives in sight for the majority of crisis-struck countries. Certainly, democracy as it manifests
itself in countries such as Bangladesh, Papua New Guinea and Thailand is not conducive to
stateness. But when it comes to economic transformation, the prospects are even worse in
autocracies such as Cambodia, North Korea and Pakistan. Expecting these countries to adopt
the principles, policies and practices of the type of successful management seen in China or
Vietnam, and to yield comparable socioeconomic outcomes, even in the short term, is naive
and unrealistic.
Finally, the findings of the BTI 2016 point to the challenges these high-growth economies
face in processing social and political knock-on effects, whether it’s the rise in social inequality or regional disparities in development. Social imbalances also represent a burden for political stability and economic growth, especially as the authoritarian nature of the political systems of China and Vietnam means that they cannot call on democratic procedures and institutions of integration and consensus-building. In any case, the more autocracies practice rule of
law (Singapore, Malaysia), preserve state order (China) and prevent rudimentary state order
from collapsing completely in the most difficult economic and political contexts (Afghanistan, Pakistan), the more leniently they should be judged.
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