Category Archives: economic cooperation

Author interview: 30 Years since the Fall of the Berlin Wall: Turns and Twists in Economies, Politics, and Societies in the Post-Communist Countries, edited by Alexandr Akimov and Gennadi Kazakevitch

Editor’s note:  In this post, we are pleased to present Alfinura Sharafeyeva (University of Adelaide), who interviews Alexandr Akimov (Griffith University), one of the editors of the volume 30 Years since the Fall of the Berlin Wall:  Turns and Twists in Economies, Politics, and Societies in the Post-Communist Countries, published by Palgrave Press (Palgrave Studies in Economic History). Akimov also authored a chapter in the volume, titled “Why Uzbekistan and Kazakhstan Are Not Singapore: Comparing the First 25 Years of Reforms”.  Here Sharafeyeva and Akimov discuss the impact of issues such as the legacy of communism, authoritarianism, and intraregional cooperation, in the economic development and reform of Central Asia.

What was the key idea of putting the book together, who are the authors, which countries and key topics covered in this book?

The idea of putting together a book came about at the bi-annual conference of Australasian Association of Communist and Post-communist Studies (AACAPS), which we hosted at Griffith University early in 2019. As conference took place in the year when we marked the occasion of 30 years since the fall of the Berlin wall, it was natural that marking the occasion became the main theme of the event. Our goal was to bring together researchers from the Australia, New Zealand and the rest of the world to share their research on Eastern and South-Eastern Europe, Central Asia and North Asia. With a diverse paths communist and post-communist countries took since the collapse of the Berlin wall, we were interested to hear the stories across the region on how communism and post-communism have been tracking.  We had a good turnout at the conference with a range of topics of our interest representing all major communist/post-communist countries. There, at the conference, Dr. Gennadi Kazakevitch from Monash University proposed that we prepare a submission for a book volume. I should note that this as not the first book volume, which came out from one of the conferences. Our colleagues, Stephen Fish, Graeme Gill and Milenko Petrovic a few years back published the volume A Quarter Century of Post-Communism Assessed. We thought it was a good idea continuing this nice tradition.

Fig 1  Alexandr Akimov speaking at the AACAPS 2019 conference

Fig 2 Book contributors and other conference participants at AACAPS 2019 conference (photo credit Griffith University)

The book itself, published by Palgrave Macmillan, have a good coverage of disciplines and countries. First section has a focus on common themes for post-communism or broader regional issues, with papers from our distinguished colleagues, such as Leslie Holmes, Richard Pomfret, Gennadi Kazakevicth and Milenko Petrovic. Dr. Kazakevitch starts the book with the taxonomy of post-communist countries, Prof. Pomfret and Dr. Petrovic discuss the transition in Central Asia and South-Eastern Europe, whereas Prof. Holmes talks about the cross -border issue of organized crime in the whole region, including the largest countries in the region – Russia and China.

The second section was dedicated to the largest country in the region – Russia, and examines topics in international relations, media and energy security. We had a combination of established and emerging scholars contributing to this section. The fourth section of the book dug deeper into the history with parallels drawn in Russian revolution and perestroika, migration to Australia by Vietnamese and Yugoslav communities, Chinese and Soviet economic reforms and sociological journey of Zygmunt Baumann. Yet again, there has been a good mix of contributions from prominent and emerging scholars to this section.

The third section that would be of the most interest to the CESS members was dedicated to Central Asia. This region remains relatively under-researched in comparison to its European peers, therefore I was personally very happy that we had four papers in this section, three of them were looking at the various economic aspects of transition and one looking at language and ethnical aspects of legal reforms. Not surprisingly, the largest two countries in the region, Uzbekistan and Kazakhstan were dominant countries of focus in those papers. In particular, Alisher Ergashev investigated potential reasons for the lack of nutrition in Uzbekistan in his chapter ‘Money can’t buy me love but it can buy apples: an analysis of fruit and vegetable demand in Uzbekistan’. Jakhongir Kakhkharov and Muzaffar Ahunov, in their chapter ‘Squandering remittances income in conspicuous consumption?’, used household level data to examine the impact of remittances from Uzbek workers abroad on the household expenditure on food, consumables, health, education and traditional ceremonies. Aziz Ismatov, in his chapter ‘Equal citizenship, language, and ethnicity dilemmas in the context of the post-socialist legal reforms in Central Asia’ discussed whether citizenship law in Central Asian countries aimed at excluding or including ethnic minorities from the citizenships and thus reduced their rights and freedoms in these countries. Finally, there was my humble contribution to the book where I analysed why Kazakhstan and Uzbekistan have not become Central Asian ‘Singapores’.

Your book has been published after 30 years of the fall of the Berlin wall, and in the book’s preface Graeme Gill states that the consequences of the fall of communism in 1989/91 are still with us today. What are the main passes and achievements that have been reached by the post-Communist countries globally? What are the key trajectories of the former members of the USSR and the Soviet bloc after three decades?

Graeme Gill is right that the consequences of communism are still with us. Many in the West, in the first decade of post-communism in Eastern Europe and ex-USSR, thought the communism is done and dusted and we will see the gradual dismantling of communist outposts in countries like China, Vietnam, Cuba and North Korea. As we know it has not happened. In China, communist party retained and strengthened its grip on power since the Xi Jinping became a leader. In many countries of ex-USSR, early free market reforms were partially reversed, and countries are run by some authoritarian and semi-authoritarian rulers. Even in the largest democracy in the world, USA, under Donald Trump, we saw a reversal of liberal free market ideas and push for protectionism and to a degree – authoritarianism.

The struggles between liberal democracy and authoritarianism, free markets and protectionism, individual rights vs society interests are still there.

In terms of achievements, we can say countries of Eastern Europe, who were able to join European Union, were the major beneficiaries. They were generally able to improve their standards of living, gain more economic and political freedoms, and opportunities for self-realisation. Those countries are generally committed to that Western liberal values, although we saw some reversals of those in countries like Hungary and Poland.  For people in former Soviet Union, it was a bit more of a mixed bag with opportunities for entrepreneurs, access to education and travel abroad for a part of population. However, there have been some inferior outcomes for more vulnerable communities with higher levels of inequality and poverty. Some post-communist countries have settled on the model with a combination of market forces and strong state intervention.

One phenomenal outcome among the communist/post-communist group was China. We all know that market reforms allowed China to leap forward in terms of economic development and improved social outcomes even without liberalisation in the political scene. The system proved to be rather liveable and may stay around for years to come.

Gennadi Kazakevitch shares a Cluster Analysis of the post-communist countries transition from planned to market economy. Could you briefly explain the concept of the clustering? We can find that Central Asian economies are spread across different clusters. What are the key reasons for such a trend?

The concept of clustering in Dr. Kazakevitch’s analysis is an attempt to form groupings of countries that share certain characteristics. In this work, indicators from the Economic Freedom survey, such as property rights, government integrity and corruption, government spending, business freedom, monetary freedom, international trade freedom, investment freedom and financial freedom are used as criteria for forming the clusters. Using statistical methodology, Dr. Kazakevitch was able to narrow the number of clusters to five. Central Asian countries were spread over three cluster. Kazakhstan was the only country from the region to appear in cluster 2, which represent countries that ‘more or less successfully built market economies, albeit with some limitations’. The limitations may include significantly higher proportion of grey and black economy, as well as corruption and tax evasion in comparison to developed Western economies. Cluster 3 contained many post-Soviet republics, including Central Asian republics of Kyrgyzstan and Tajikistan. These group is described in the chapter as either authoritarian states or imperfect democracies with quasi-market economies. Finally, Uzbekistan and Turkmenistan were placed in Cluster 4, which is characterised by strong authoritarianism and a strong intervention of the state in most aspects of economic activity, apart from small business.

This classification is not surprising; Central Asian republics never really declared a goal of becoming liberal Western democracies. They modelled their economic management more in line with countries like Russian and China, both of which are in Cluster 3.

None of the Central Asian countries had previous history as independent states. A common perception in the 1990s was that their prospects for long-term survival were poor. Nevertheless, they have survived for over a quarter of a century. According to Richard Pomfret, what are the key factors that benefitted Central Asian countries? What are the key economic shocks that newly independent countries faced while in transition?

It is hard to pin a set of uniform factors for the whole region. The story of each country is unique. One reason might be that these newly independent countries were largely left to themselves. There have been no strong disruptive forces from major global and regional players. In four out of five republics, local elites were consolidated around the country leaders. The only exception is Tajikistan, which faced problems of Islamic fundamentalism and a civil war until Emomali Rakhmonov came to power. Economically, three out of five countries, Kazakhstan, Turkmenistan and Uzbekistan had enough easily tradeable commodities to sustain themselves, such as oil, gas, other mineral resources, agricultural commodities, such as grain and cotton. The economies of Tajikistan and Kyrgyzstan were hit harder. They had to rely on economic support from Russia and to a degree from Kazakhstan and try to develop strong economic ties with China.  Culturally, in four out of five Central Asian republics the population was rather homogeneous, with large ethic majorities of indigenous people. That, to a degree, helped to reduce the probability of ethnic conflicts. The only exception was inter- ethnic conflict in Southern Kyrgyzstan where large Uzbek community resides. Finally, some credit should be given to skillful leadership in countries like Kazakhstan, Uzbekistan and in Kyrgyzstan, particularly in difficult 1990s.

The major economic shocks were the immediate years of post-independence when economic ties between the republics of ex-USSR were cut. It took few years for the policy-makers in the countries to get a firm grip on economic management and set reform agendas. Further challenges accompanied Russian and Asian crises at the end of 1990s, where we saw some reform reversals. In 2000s, GFC was certainly a significant test for all economies in the region. Interestingly, closed economies such as Uzbekistan and Turkmenistan weathered the storm better than more open Kazakhstan and Kyrgyzstan. Finally, current Covid-19 pandemic provides even greater economic challenge to the global economies, including economies in the region. We know that political career of Kyrgyz president Sooronbayev became a first casualty of the pandemic induced economic crisis in the region.

Despite the geographic closeness, cultural and common historic ties there is still weak intra-regional cooperation among Central Asian economies. Why and what could be done to improve the situation?

There are several objective and subjective reasons for relatively low level of intra-regional cooperation. For economic relations and trade, the key driver is complementarity of goods and services countries produce. In other words, if two countries are to trade, they should be able to offer to each other something that the other wants but does not have. Historically the regions have developed somewhat similar economic structures, which limit opportunities to trade, and even make the countries competitors. For example, Tajikistan agricultural produce is also grown in Uzbekistan, Turkmenistan, South Kazakhstan and Kyrgyzstan. Turkmenistan, Kazakhstan and on a smaller scale Uzbekistan sell oil, gas and other mineral resources to the world market. Still, there are many opportunities that remain untapped. This includes potential for more cooperation in energy, transport, smaller scale manufacturing and construction, food processing and textiles. On a political level, the key condition for stronger ties in the region were arguable relationships between two largest countries in the region – Kazakhstan and Uzbekistan. However, political rivalry between two ex-Presidents might have played a role why the region has never spoke in a unison. There are some positive emerging trends though, particularly after Mirziyoyev took over leadership in Uzbekistan. Uzbekistan’s relationships with its neighbors have been gradually improving in the last few years, which is promising for intra-regional cooperation.

In the chapter that you authored, you are exploring why Kazakhstan and Uzbekistan did not reach the level of Singapore’s development, as it was the benchmark set up by the heads of these two countries. Could you please explain what made these two countries prefer Singapore’s way of transition to market economy in the first place, and not the traditional “Western” path? What are the conditions that pre-existed in Singapore to become successful in their transition and was not present in Kazakhstan and Uzbekistan?

In my chapter, I have never asked a question why the countries aspired to follow Singapore’s development path rather focusing on how they tried to achieve it and what have been achieved.  It is a very good question though, which I will try to answer. A good way to start with is to look what Uzbek and Kazakh leaders said early in their presidency.  Karimov in his 1992 work Uzbekistan: Its Way of Revival and Progress argued for gradual transition to market economy and democracy and emphasized a strong executive power as key for successful implementation of reforms.  Thus, he was dismissive of Polish style shock therapy and liberal democracy, suggesting that people are not ready for this and it will take long-time for mentality to change. Nazarbayev in his autobiographic 2006 book The Kazakhstan Way argued that post-communist transition after the dissolution of the USSR has been a unique process, with no similar historical precedents. The closest experience, he argued, was post-colonial independence of South-East Asian countries, where Singapore stood as a best example of success in building a developed independent state. Both those points, I believe, are the valid points. Eastern European countries that chose rapid transition to capitalism and democratic reforms had an experience of being capitalist countries before World War II with appropriate institutions to support market economy. In contrast, neither Kazakhstan nor Uzbekistan, had a historical experience to lean on. There has been no history of protection of private property rights, no independent courts or legislation that would enforce it, the population with no knowledge on how to exercise its democratic rights. In those circumstances, rapid democratization and shock therapy could lead to a chaos and/or the ‘wild west’ style of capitalism we saw in Russia. Therefore, gradual transition with strong central powers were much more acceptable among the population. In addition, personal ambitions of both leaders to become historical figures also played an important role. One of the advantages Singapore had over both countries was the fact that they did inherit functioning institutions to support the market economy. Lee Kuan Yew and his team had to skillfully use those institutions to promote the strategic development. Another advantage Singapore had over both countries was its geographical location. As a city port, it could relatively smoothly re-focus its trade relationship in line with its priorities. Kazakhstan and Uzbekistan do not have access to a seaport. Considering the Afghan conflict, they had no choice but to work with Russia and China as logistical transits for their import/export operations. Since Russia was itself in disarray and west-east infrastructure in China was relatively underdeveloped, the diversification was a rather challenging task. Finally, the fact that Singapore is a small city-state also mattered. The transformation process was much more manageable.

Despite the failure to become “Central Asian Singapore” in 25 years, could you highlight what has been achieved relative to this “benchmark” and what could be done to improve the situation?

Neither Uzbekistan nor Kazakhstan were able to achieve level of socio-economic progress and prosperity we saw in Singapore for a range of objective and subjective reasons. However, some achievements worth highlighting. Linking to your early comment, the fact that both countries have survived the difficult years without major confrontations or civil unrest is already an important achievement. Both countries have recorded impressive economic growth rates since 2000s with a resultant higher average level of economic prosperity, especially in Kazakhstan. Citizens in both countries acquired certain level of civil liberties, including starting their own business and an opportunity to travel/study/live abroad.

What could have been done better? Neither of the countries were able to move away from corruption, cronyism and nepotism. Coupled with relatively low and ineffective investments in education in both countries, this led to much less competitive workforce critical in the modern global economy. We know that Lee saw a strong system of meritocracy in Singapore to be a key ingredient of success. The proper functioning institutions for market economy are also yet to be established, although Kazakhstan is more advanced in this regard. Political interferences are still endemic, especially in Uzbekistan. Notably that current Uzbek leadership highlights the issue as one of the priorities that need fixing. Finally, the economic strategies both countries adopted can also be questioned. Kazakhstan has over-relied on its natural endowment and was largely unable to build any internationally competitive industries apart from mining. Uzbekistan has erroneously focused on import-substitution policy, which also led to creation of some inefficient and government subsidized industries and enterprises, which would not survive the test of time. More open economic policy together with structural reforms should help to change the tides.