Let’s Not Forget the Good News: Croatia Joins the EU

With the ongoing conflict in Syria, Southern Europe’s financial difficulties, growing social unrest in Turkey and Egypt, and much else, it seems that “good news” often gets too little attention. Less than two decades after the end of some the most violent and brutal fighting in human history, Croatia just became the 28th member of the European Union. This is a triumph of the Croatian people’s will, international mediation, post-conflict institution building, and international organizations (though not all would agree with the latter assessment). Indeed, Croatia’s accession is merely another step in the rebuilding of the former Yugoslavia: the previous step was Slovenia’s accession and adoption of the Euro, the next steps will include the membership of Serbia, Macedonia, and Montenegro. Bosnia and Herzegovina and Kosovo, those “irredeemable” hotbeds of violence from the 90s, have remained free of fighting for over a decade, without any indication that conflict will recur.

But, for now, this is Croatia’s moment alone. The failures of post-conflict institution-building  in Afghanistan and Iraq loom large over the international community’s collective conscience, as well they should. However, these experiences shouldn’t cloud the massive successes elsewhere. This week, we celebrate one of these success as Croatia joins the EU and cements its status as a 21st century liberal democracy. A remarkable trajectory for a country sadly often known solely for its achievements in strife rather than liberty. Congratulations, Croatia, and welcome to the European Union.

For more of his thoughts on the role of international actors in post-conflict societies, follow William on Twitter.

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Bringing the State Back In (to the discussion on redistribution and innovation)

SoupCarLine

In recent months, the New York Times has published a series of opinion pieces that read like an abbreviated syllabus in comparative political economy. An analytic piece from late April chronicling the (perhaps) excessive generosity of Danish social democracy kicked off the discussion, prompting a response from Nancy Folbre as well as a “Room for Debate” roundtable on the sustainability of continental welfare states. The Folbre piece linked above makes brief reference to a recent(ish) paper by Acemoglu, Robinson and Verdier (ARV) which argues that while some countries may be able to combine robust welfare states with sustained economic growth, all countries can’t do so at the same time without retarding global innovation rates. They explain their argument succinctly in the short version of their piece:

The fact that technological progress requires incentives for workers and entrepreneurs results in greater inequality and greater poverty (and a weaker safety net) for a society encouraging more intense innovation. Crucially, however in a world with technological interdependence, when one (or a small subset) of societies is at the technological frontier and contributing disproportionately to its advancement, the incentives for others to do so will be weaker. In particular, innovation incentives by economies at the world technology frontier will create higher growth by advancing the frontier, while strong innovation incentives by followers will only increase their incomes today since the world technology frontier is already being advanced by the economies at the frontier.

America: enduring child poverty and substandard education so you don’t have to. You’re welcome, Sweden.

Thomas Edsall has a piece from April evaluating this argument in light of some countervailing claims, and it’s well worth a read. Whether redistributive incentives are really the key driver of cross-national innovation rates deserves serious critical scrutiny. It’s also worth thinking in normative terms about whether one might tolerate a slower iPhone development cycle (or even – gasp – a lack of iPhones altogether) for the sake of greater social equity.

That aside, however, the ARV model seems plausible. Anyone who has dug a bit into the literature on Varieties of Capitalism will recall the basic claim about innovation: both ‘cutthroat’ liberal market economies (LMEs) and ‘cuddly’ coordinated market economies (CMEs) innovate, but do so differently. LMEs, with their flexible labor markets and ubiquitous-but-impatient venture capital, make radical technological leaps, while CMEs are better at incremental advances. America develops the Fordist production system, Germany makes cars that don’t suck. The ARV model takes this observation to its logical conclusion: CME incrementalism relies on LMEs to expand the technological frontier. For those of us who would like to see a more robust safety net and more egalitarian distribution of post-transfer income, this is discomfiting.

I don’t have anything close to the formal chops necessary to critically evaluate the technical specifics of the ARV model. I would, however, make two observations about its real-world importance and applicability. First, as the authors briefly acknowledge, people have tried to test some of the implications of their thesis. Taylor (2004) and Akkermans, Castaldi and Los (2007) both use patent data to compare innovation rates between “cutthroat” LMEs and “cuddly” CMEs. The former article finds no discernible difference between them, while the latter finds limited and industry-specific support for the notion that LMEs innovate the fastest and/or most radically. ARV do cite both of these efforts, but don’t really address the complications they present to their central argument.

Second, and more crucially, much of the discussion around this question ignores the state’s potential to drive innovation through direct investment in science. ARV treat innovation as a function of incentive structures facing potentially innovative individuals or firms. “Cutthroat” economies, with their looser regulation and weaker redistributive regimes, provide innovators with stronger incentives to invest capital in risky-but-potentially-innovative ventures. State investments in R&D, though, could plausibly drive innovation on the supply side by providing resources in a manner divorced (or at least estranged) from market pressures.

To cite a few well-worn American examples, many of the technological advances crucial to the twenty-first century economy happened outside the private sector. The first general-purpose computer was developed to calculate artillery firing tables for the U.S. Army. The microprocessor was developed by NASA in order to miniaturize computers for guidance and navigation during the Apollo program. The packet switching network that became today’s internet was first developed by ARPA (now DARPA), an advanced research agency within the Pentagon. Today, the National Institutes of Health commits a budget of roughly $30 billion per year to biomedical research, including the kind of risky basic research that may not generate immediate commercial returns, but can lead to radical innovations over time. The NIH alone represents almost a third of the money spent on health research in the United States, and is likely the reason that America is a leading innovator in this sector. The National Science Foundation commands another $7 billion to fund research across scientific disciplines (with one, ahem, notable exception). More trivially, that self-driving car that Google has been promoting like mad recently? It also has its roots in a series of DARPA initiatives.

I don’t mean to suggest that the private sector doesn’t drive a substantial majority of innovation in contemporary developed economies. Even the NIH budget, colossal by any standard, represents less than half the capital devoted to biomedical research in the United States. Nor is all state-funded research created equal. Some work suggests that state subsidies of private sector R&D initiatives may crowd out, in whole or in part, private investment in similar projects (a cursory lit review indicates mixed evidence on this score). Still, if the concern is that more egalitarian societies might de-incentivize the kinds of risky bets that lead to radical technological leaps, that effect could be at least partially offset by direct public investment. It may yet be possible to subsidize school lunches without gutting technological progress.

Taksim: The Public’s Square

Amnesty International.

(Editor’s note: The following is a guest contribution by Jonathan Endelman, PhD student in Sociology at Yale University)

Ostensibly, the protests in Turkey began after the Prime Minister Recep Tayyip Erdogan planned to place a shopping center and luxury housing complex in the Taksim Square’s Gezi Park in Istanbul, an historical gathering point for protest movements of the Turkish left. However, the current controversy over the proposed shopping center in Taksim square in Istanbul is a much larger matter than a construction project. As many analysts have recently pointed out, it was never really about the trees. What we are seeing today is nothing less than a power struggle between two opposing sides with radically different visions for the country’s future.

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Will the Gezi Protests Change Politics in Turkey?

Nearly a week ago, on 28th May, the first people gathered at Gezi Park, Istanbul, to protest the demolition of the park to accommodate a shopping mall and a replica of an Ottoman-era barracks. However, by Friday, the protest had already reached massive proportions – police used tear gas and water gas to disperse protestors, a number of people were taken in police custody and 3G was blocked in the area around the Taksim Square. By Saturday, access to Twitter and local internet was temporarily cut off, and protests had spread to other major cities such as Izmir and Ankara.

Gezi Protests

While an Istanbul Administrative court stayed the construction of the Ottoman-era Topçu Barracks on Friday, a number of other reasons probably exacerbated the protests – among them, the issue of naming of a third bridge over the Bosphorus after Yavuz Sultan Selim, an Ottoman ruler known for his massacre of the Anatolia Alevis, the controversial recent bill on the sale, consumption and advertising of alcohol, and most importantly, the excessive use of police force during the protests.

Despite the strong crackdown beginning Friday afternoon, protestors kept increasing in numbers, and by Saturday, a large chunk of protestors were chanting for Erdoğan to resign. What do these protests mean for Erdoğan’s support base?

Şule Kulu at Today’s Zaman, one of Turkey’s largest newspapers, argues that “Erdoğan has shot himself in the foot” due to the violent nature of the crackdown. She further argues that many of Erdoğan’s supporters united with those in the opposition due to their common ground in opposing the Taksim project and police brutality. However, Mustafa Aykol, a renowned Turkish journalist and author of Islam Without Extremes, is of the view that, “Erdoğan’s support base is still intact,” and not everybody agrees with the protestors. However, he argues that Erdoğan needs to acknowledge that, “the ballot box is not the only thing that counts in a truly participatory democracy,” which seems to be sorely lacking in Turkey.

Most importantly perhaps may be the lack of a credible opposition. Erdoğan’s Justice and Development Party (AKP) has been in power for the last 12 years, and  Erdoğan is the only prime minister in Turkish history to win three consecutive general elections and receive more votes each time. In the 2011 elections, the AKP secured almost double the number of votes than the opposition party,  the center-left Republican People’s Party (CHP), Turkey’s oldest political party established by Atatürk in 1923.

Further, Kemal Kılıçdaroğlu’s CHP has not shown much initiative on two main issues facing Turkey: the peace process with the PKK and the civil war in Syria. With regard to the former, the party has refused to take any responsibility for the solution to the Kurdish question, when in fact, a recent poll shows that two-thirds of CHP voters back the Kurdish peace process. Earlier last month, when 30 deputies from the CHP’s reformist wing released a declaration supporting the peace process with the PKK, others from the party’s nationalist wing condemned this stance, a move which many might see as evidence of rift between the party and an inability to take a stance of pressing issues. The party’s Syrian policy has also been criticized because the CHP has yet to condemn Assad’s policy of targeting his own citizens. However, Kılıçdaroğlu’s decision on Saturday to cancel his party’s rally in Istanbul in order to keep the protest apolitical and not hijack the movement for political gains was appreciated by many.

It is still too early to speculate on the next general elections. But in the face of a democratic government acting in an undemocratic manner, and the dividends from AKP’s economic success (which propelled them to power in the first place) being distributed unequally across society, one thing is clear: even if a weakening of Erdoğan’s support base does take place, any significant electoral shifts are unlikely to occur in the 2014 elections in the absence of a credible and effective opposition.

For more on the Turkish protests, follow Suparna on Twitter.

David Cameron and Centrifugal Crises

British Prime Minister David Cameron made waves in late January when he announced plans to hold a referendum on the U.K.’s continued membership in the European Union. Should the Conservatives win elections in 2015, Cameron promised a simple “in or out” referendum on E.U. membership by 2017.  The move seems to have roots in domestic politics. Cameron faces considerable pressure from the Eurosceptic wing of his own party as well as a challenge from the UK Independence Party, which has been surging along the Conservatives’ political flank.

This all raises the prospect that, absent Conservative defeat or a Europhilic turn on the part of the British public, one of the core members (and key funders) of the E.U. could make an ungraceful exit in the coming years. In the long term, this could prove a greater threat to the viability of the European project than the economic woes of more peripheral members like Greece and Spain.

Labour leader Ed Miliband sharply criticized the proposal and hardened his own opposition to such a step (though support from some of his backbenchers may be shaky). Nick Clegg, whose Liberal Democrats are members of the Conservative governing coalition, dissented sharply as well. Heads of state in Europe did not react warmly to the news, nor to the strong-arm tactics it represents. Former Prime Minister Tony Blair said Cameron’s brinksmanship could backfire: “It reminds me a bit of the Mel Brooks comedy Blazing Saddles where the sheriff says at one point as he holds a gun to his own head: ‘If you don’t do what I want I’ll blow my brains out.’ You want to watch out that one of the 26 [other EU member states] doesn’t just say: ‘OK, go ahead.'”

Extra points for the Mel Brooks reference, and for having the good sense not to repeat the quote verbatim.

Cameron’s move seems risky, but makes sense in light of both domestic and international factors. In addition to shoring up cracks in his governing coalition, his announcement seems designed to increase his leverage in upcoming negotiations over the E.U. budget. Cameron himself is not a hard Eurosceptic, but his support for a pro-Europe vote in any future referendum has now been made implicitly contingent on his receiving an acceptable offer from his counterparts on the continent. By publicly committing to a referendum, Cameron presents Paris, Berlin and Brussels with the choice of either buying British support for a “yes” vote or hoping that the Conservatives lose the next election. How palatable they’ll find either option remains an open question.

That being said, Brian Taylor points out that the Tories may be undermining their position on the question of Scottish sovereignty:

They have said that the [Scottish National Party] cannot guarantee Scottish membership of the EU, post independence.

The Nationalists have, of course, contested that vigorously but, at the very least, the issue gained some traction.

Now what do the Tories say on this topic?

Reject the SNP, stick with the UK – and we will offer you the prospect that a vote across the whole of these islands may take you out of the EU, perhaps in contradistinction to opinion in Scotland.

In a bid to reassert the economic and political autonomy of Britain, then, the Tories could end up actually weakening the British state.

Whatever the outcome, this episode highlights the contradictory and self-undermining nature of elite responses to the ongoing economic crisis in Europe. Years of austerity, some of it imposed at the encouragement or insistence of Brussels, have made the financial burdens of European integration heavier for the continent’s economic core. At the same time they have constricted recovery and led to anemic growth, high unemployment, and prolonged economic misery.

It would be naive to say that say that such conditions “cause” nationalist or parochial backlash, but the economic crisis does seem to be having centrifugal effects on multiple fronts.

On the one hand, it puts sustained pressure on the political and economic bargains that make the E.U. viable. Though not a member of the Eurozone, Britain is a major net donor to the E.U. (see chart from Le Monde, below) and the third largest economy in Europe. Its departure would represent a major shock to the institution.

EU Contributions; Le Monde

On the other hand, the crisis has intensified sub-national fissures in a number of member states. Separatist and nationalist movements in Scotland, Catalonia and Flanders have all seen their fortunes improve since the onset of the crisis. They present an interesting twist on what Frederick Solt calls “new-nations” theories of economic distress and nationalism (see Brown, Hechter and Brass). In their simplest forms, such theories predict sub-national mobilization by groups that are materially deprived relative to society at large. Relative deprivation is key.  Here, though, nationalist grievances have coalesced around a different narrative. Separatist elites have made hay over the uneven financial burdens imposed by ‘society at large’ on local prosperity. As movements, they seek to protect the fruits of relative affluence rather than overcome relative deprivation.

Recent developments in the U.K. suggest how these super-national and sub-national crises of legitimacy could become mutually reinforcing. The specter of an E.U. exit undermines confidence in the national state’s position as a point of access to European markets and institutions. This in turn raises the stakes of regional separatist politics by sharpening the distinction between national and European alignment.

Cameron may well be able to balance these competing interests for the moment. Acute though the current crisis may be, the institutional roots of both the E.U. and the United Kingdom run deep, and continue to reflect considerable elite and popular consensus. That said, centrifugal pressures across the region seem unlikely to abate until Europe can return to robust and broadly shared growth, something which the broader policies of recent years have done much to forestall.

Election’s Outcome is Huge News for Georgian Democracy

By Daniel F. Wollrich

On October 1, Georgia held parliamentary elections that were sure to be a victory for President Mikheil Saakashvili’s United National Movement party. Except they weren’t. In fact, challenger Bidzina Ivanishvili’s Georgian Dream coalition—“a group of progressive opposition forces in the Republic of Georgia”—prevailed and will enjoy a parliamentary majority. Even before all the ballots had been counted, President Saakashvili gave his concession speech, overtly accepting the shift in governmental control. The symbolic power of the election and the results’ acceptance by the leadership, however, is far more important and indicates a strong Georgian embrace of democratic governance.

Georgia, a post-Soviet state located in the historically conflict-ridden Caucasus region south of Russia and north of the Middle East, has a short democratic history. With two centuries of explicit Russian dominance (save a few years following the violent collapse of the Russian Empire and during the early consolidation of the Soviet Union), Georgia only reestablished its independence in 1991. While not immediately embracing a democratic institutional framework like the Baltic States, Georgia under Eduard Shevardnadze—former Soviet minister of foreign affairs and Georgian head of state from 1992 to 2003—experienced a mild improvement over the Soviet regime. The country’s politics were marked by stuttering liberalization and weak, often merely symbolic, democratic institutions. Fraud and corruption continued to mar the country’s government, sparking the Rose Revolution following the fraudulent November 2003 parliamentary elections. Shevardnadze was cast out and the Saakashvili era began. This marked the shift to a truly post-Soviet Georgia, establishing enough democratic institutions to earn the title “democracy” from Western observers (even if not a “full democracy”).

Of course, Georgian democracy has been far from flawless. Saakashvili, elected president in 2004 and re-elected in 2008, had seen his popularity wane in the past few years. Accusations of authoritarian rule had sprouted, derived from the strong hand he has played in instituting changes to Georgia’s political landscape. Saakashvili’s most overtly disturbing move, at least internationally, was his attempt to remove his challenger, Ivanishvili, from the political scene by revoking his Georgian citizenship. A law was invoked—driven by Saakashvili—that forbids Georgians from maintaining multiple citizenships. Since Ivanishvili was also a citizen of Russia and France (he has since renounced his Russian citizenship), he was stripped of his status as a Georgian citizen. A constitutional amendment introduced in May, however, may pave the path for a non-Georgian citizen (under certain conditions) to become prime minister. The legal battle remains unresolved, and when—or whether—Ivanishvili can become prime minister is yet to be determined.

More recently, the scandal surrounding abuse in Georgia’s prison system has deeply tainted the carefully cultivated righteous image of Georgian leaders. The torture, taunting, and sexual assault of prisoners sparked angry demonstrations, resulting in the resignation of recently appointed minister of interior Bacho Akhalaia. Moreover, defense minister Dmitri Shashkin was minister of penitentiaries after 2008, indicating the depth—and height—of the scandal in the government. The Georgian regime was struck at its heart, immediately prior to elections, and the evident overstretch of high-level governmental power suggested that Georgian authorities might reveal themselves unwilling to play by rules of fairness and democracy, should they lose the popular vote.

Yet, a warmer light shined upon Georgia’s future this month. The election’s winner was the democratic process. When Saakashvili conceded in spite of expectations that his party would prevail, he showed by action what his words had claimed for years: his rule was for bringing democracy to the Georgian people. In 2008, Georgia held what the Organization for Co-operation and Security in Europe called the “first genuinely competitive post-independence presidential election,” and this year, the country enjoyed its first democratic change in power.

Predicting where this leads is difficult. One key challenge not yet discussed here concerns Georgian sovereignty over its entire claimed territory and relations with its northern neighbor, Russia. Throughout his rule, one of Saakashvili’s primary goals has been shoring up the country’s autonomy and establishing territorial integrity, noting that he inherited autonomous or semi-autonomous regions in the northwestern Abkhazia, the north-central South Ossetia, and the southwestern Ajaria. Although he quickly and successfully reintegrated Ajaria, stoking optimism for the remaining two breakaway regions, South Ossetia and Abkhazia would prove more resistant. These difficulties stemmed in large part from these regions’ mighty benefactor to the north. This territorial problem continues to haunt Tbilisi, with no apparent solution. It will disrupt Georgian efforts at reconciliation with Russia, regardless of Ivanishvili’s desire to warm relations, and it will obfuscate any paths to NATO membership and official alliance with the West.

Domestic problems also trouble Georgia’s immediate political future. Opposition rallies have continued beyond the election and threaten domestic tranquility and the peacefulness of the transition, in spite of Ivanishvili’s calls for their end. In addition, as discussed above, the question of Ivanishvili’s citizenship and whether he can even become prime minister presents a peculiar and unfortunate case of domestic institutional  manipulation interfering with democratic system processes. Regardless of who assumes the role of prime minister, the probability of political wrangling and the possibility of stalemate between the Georgian Dream coalition in parliament and Saakashvili and the United National Movement in the presidency until next year loom threateningly.

Nevertheless, one cannot underestimate the power of commitment to an idea and especially, as in this case, democracy. Although Saakashvili and Georgia’s political future once seemed intimately intertwined, the president’s prompt and willing concession suggests that Georgia’s governing ideology is not Saakashvili-ism but rather democracy and the rule of the people. Going forward, numerous factors must be watched: Will the Georgian Dream be a dream of democratic consolidation? Will the press be open and liberated and will transparency infiltrate the government?  How will the new government relate to the West, Russia, and its other immediate neighbors? Will the dilemma of South Ossetia and Abkhazia prove obstructionist to international integration and domestic stability? These and other questions illustrate the challenges before Georgia’s new government. But the peaceful, legitimately democratic change of power in Kutaisi bodes well. This election is indeed huge news for Georgia’s democratic endeavors.

Editor’s note: Daniel F. Wollrich is a PhD student at the Ohio State University and a guest contributor for the Smoke-Filled Room. 

Dommage for Catalonia: Identity and Economic Crisis

Since the beginning of the Euro crisis, there has been a substantial amount of analysis, and more than a bit of hand-wringing, over the (arguably counterproductive) resurgence of nationalism among the European Union’s constituent states. Nicholas Sambanis’s New York Times op-ed from a few weeks ago is representative: he suggests that the crisis has refocused the European populace on their parochial national identities at the expense of their (potentially) continental one, and that such socio-psychological (re)orientation is preventing concerted action to solve the problem:

As Europe’s status declines, the already shaky European identity will weaken further and the citizens of the richer European nations will be more likely to identify nationally — as Germans or French — rather than as Europeans. This will increase their reluctance to use their taxes for bailouts of the ethnically different Southern Europeans, especially the culturally distant Greeks; and it will diminish any prospect of fiscal integration that could help save the euro.
The result is a vicious circle: as ethnic identities return, ethnic differences become more pronounced, and all sides fall back on stereotypes and the stigmatization of the adversary through language or actions intended to dehumanize, thereby justifying hostile actions. This is a common pattern in ethnic conflicts around the world, and it is also evident in Europe today.

Indeed, the economic malaise plaguing Europe provides some interesting evidence for the interaction between crises, insecurity, institutions, elite behavior, and political identity. It has certainly provided a clarifying moment for those who argue that European identity is sufficiently well-developed to have coherent political meaning. The importance of identity is difficult to observe when peoples’ various subject positions (religion, regional identity, nationality, etc.) coexist in harmony. It is when identities are brought into conflict—via social unrest, economic crisis, political competition or war—that they become the most salient. Events of recent years have not boded well for the European project, and have arguably reaffirmed the primacy of the nation-state as the locus of mass political allegiance.

Recent days have added another wrinkle to this narrative. Underreported in the American press, September 11th saw a colossal Catalan nationalist rally in Barcelona. Local police reported 1.5 million attendees. To put this into perspective, that’s nearly as many people as live in the city, and more than 20 percent of the total population of Catalonia. September 11th is Catalonia’s “national day,” commemorating the 1714 Siege of Barcelona that, according to the relevant national mythos, marked the end of Catalan independence. The holiday often draws a decent-sized crowd. This week’s demonstration, though, was orders of magnitude larger than usual. Reports indicate that protesters expressed grievances over their homeland’s disproportionate tax burden within the Spanish state, itself cash-strapped as it struggles with a balance-of-payments crisis originating in Brussels and Berlin.

There are a few points to be made here. The first is to reiterate that for European elites who profess such dedication to their continent-wide project of neoliberal cosmopolitan governance, austerity policies have been highly counterproductive. By requiring Europe’s periphery to deflate its way to renewed growth, Brussels (read: Berlin) is imposing scarcity and economic misery on the very populations it seeks to bind into a unified community of fate. Competition for a shrinking resource base is a poor breeding ground for mutual identification and positive fellow-feeling, yet rather than play savior by easing the damage done to places like Catalonia by international capital markets, institutional Europe has only exacerbated their ill effects.

The second is to note that the last few years provide a measure of support for the account of modern nationalism advanced by Karl Polanyi more than a half-century ago. For Polanyi, the overly-intensive identification with volk and fatherland that plagued midcentury Europe had roots in the collapse of the nineteenth century economic order and the incapacity of extant institutions to assert control over the fates of their societies. The renewed intensity of Catalan nationalism suggests that it continues to function as a kind of psycho-social defense mechanism through which people search for communities of fate with the capacity to control their own destinies. Madrid lies at the mercy of international creditors and lacks the institutional capability to address Spanish problems with any kind of decisiveness. In some ways it’s not surprising that the citizens of Catalonia search for other notions of community with the potential to do better.