By Natasha Srdoc, MBA
The article that shows how individual, economic and political freedoms are still repressed in southeast Europe, and corruption is the biggest reason why.
Few citizens in southeast Europe would be surprised to hear that economic freedom in their countries is “repressed”. Whether or not this state of affairs is addressed head-on in diplomatically-tweaked reports from Brussels, it is common knowledge, muttered about in cafes across the region — even where statistics show that economic growth is brisk.
Yet it is not easy for people in southeast Europe to understand the dichotomy of the difficulties they face in day-to-day economic life and the tide of positive news about progress and reform.
To understand better, they might want to take two steps back from the analytical narrative offered by the European Union and instead read indices focusing on freedoms, the economy and the state of justice.
Does the government let me keep my money, or does it confiscate a lot of it as taxes? Is private property protected in general? Can I get a job easily? If I run a business, can I hire and fire easily when I need to? Can I buy and sell easily within the country, and across its borders? Does the government compete against private businesses, or does it want them to thrive? How important is corruption in this picture?
If we really care about the wealth and well-being of people in this region, then we should take these disappointing scores from the various indices seriously.
Examining research materials, one aspect that jumps out is that all the countries of southeast Europe –Romania, Bulgaria, Croatia, Bosnia-Herzegovina, Macedonia and Albania — are categorized as “repressed” in the areas of property rights and freedom from corruption.
The implication is that economic freedom does not necessarily yield diplomatic rewards. This looks like a mismatch. Milton Friedman, the Nobel Prize winning economist, taught that “economic freedom is a pre-condition of political freedom”. Policy wizards should see to it that the EU — and also NATO as the other key Euro-Atlantic institution — uses its diplomatic leverage for sake of maximising economic freedom and the deep associated political rewards.
Perhaps this has not happened because of a basic misunderstanding. Genuine reformers in post-communist Europe are sometimes surprised to find that they think very differently about freedom than their Western partners, because their contexts remain so different.
For example, I can recall Andrei Illarionov, an advisory board member at the Adriatic Institute of which I am president who was Vladimir Putin’s economic advisor until he parted bitterly with the Kremlin over issues of political freedom, posing a question: “If you have to choose between the rule of law and a favorable business environment, and you cannot have both, which one would you choose?”
To listeners from Western democracies in his audience, including a number of senior politicians and policy experts, the question sounded like contradictory nonsense, since no favourable business environment can exist without the rule of law. But in post-communist Europe, we inhabit this contradiction, and the factor that makes this situation possible is corruption. The law exists, and in a certain sense it rules, but in the manner of its rule it is institutionally subverted.
If we want economic freedom in southeast Europe — and as we learn what it truly means we discover we definitely do — then we need to reprioritise. Yes, we need to see continued efforts to make business environments more conducive to foreign and domestic investment. But we also need to address more overtly the twin legacies of communist rule: disregard for private property rights and the inheritance of institutional power by networks of corrupt government officials and their private partners in crime.
In order to beat back the scourge of corruption we need both to help ourselves, most importantly to be helped by outside forces. Citizens can exert a certain degree of pressure, by resolving not to accept endemic corruption. However, they would benefit greatly from more immediate and more robust support from international partners.
This is why, contrary to conventional wisdom, many citizens of the countries of southeast Europe would be grateful to the EU and NATO if these organizations would more explicitly pressure governments in the region to curb corruption.
The freedom that membership in such organisations is meant to strengthen and protect is otherwise exposed to attack and erosion on its crucial economic flank. The risk may not be felt in Brussels or in this region’s halls of power, but we citizens feel it in our bones.
Natasha Srdoc, MBA, is co-founder and chairman of the Adriatic Institute for Public Policy, Srdoci, Rijeka, Croatia, and co-founder of the US-based International Leaders Summit. This updated article is from Natasha Srdoc’s original piece, first published in Balkan Insight. Srdoc had served on the Advisory Board of BIRN — Balkan Insight. The piece was also featured by The Economist via Eastern Approaches.