“Central Asia and Eastern Europe experienced post-communist extrication and the new international environment as independent states in very different manners. The Central Asian states were not transformed, as Eastern Europe was, by the forces of globalisation and interactions with Western states and international organisations. Quite the contrary, they innovatively used the new opportunities, institutions and legal tools offered by globalisation to pursue their own private economic agendas on a more global scale.”
Extract from Dictators Beyond Borders: Power and Money in Central Asia, written by Alexander Cooley and John Heathershaw and published by Yale University Press in 2018
Neoliberalism is undoubtedly the predominant economic philosophy in the Western world today. Whilst few actively describe themselves as neoliberals, everyone from politicians to bankers to economists eagerly espouse its key tenets, namely privatisation and deregulation. Yet, as this article aims to demonstrate, many of the assumptions upon which neoliberalism is based on (that open and free trade promote democracy) are based on fallacies, and that in fact, without external oversight, it is just as likely to enable authoritarian regimes, such as the ones that exist in Central Asia today.
To many, the fall of the Soviet Union in 1991 seemed to validate their neo-liberal capitalist and democratic ideologies. Indeed, the speed with which the newly independent Eastern European states such as Bulgaria, Romania and Poland (amongst others) were democratised and integrated into the free market seemingly suggested that capitalism and democracy were two sides of the same coin. Conversely, many blamed the lack of reform in Central Asia on a failure to connect with the global economy, further supporting this argument. One political scientist, Francis Fukuyama, was so confident in this conclusion that he hastily declared ‘the end of history,’ in 1992, a statement that has not aged well with time.
Yet when we compare these two regions, we find that it is not capitalism itself but the regulation of capitalism in pursuit of democracy that persuaded Eastern Europe to abandon its totalitarian past, disproving the myth that neoliberalism is the only system any self-respecting democracy can follow. Indeed, in the case of Central Asia, it becomes clear that a lack of regulation has actually enabled dictators to consolidate and abuse their power.
The similarities between the two regions at the turn of the decade are obvious. In both, political leaders were primarily Soviet strongmen. Both had been exploited by the USSR for their natural resources, and both had been left with no clear path forward following its collapse. Yet where the countries of Eastern Europe were quickly rehabilitated in the years following, Central Asia saw numerous civil wars and the rise of new dictators.
Neoliberalists would argue that the integration of Eastern European states into the European market made democratisation inevitable. Yet whilst the prospect of access to one of the most lucrative markets in the world undoubtedly proved an incentive to democratise, another factor proved key. In order to gain access to these markets Eastern European states were forced to meet the Copenhagen criteria, a set of democratic standards laid down in 1993 that any country wanting entry into the EU would have to pass. This suggests that, unless it comes with a set of external checks, there is no guarantee that neoliberalism will inevitably lead to democracy.
Indeed, as the case of Central Asia shows, if left unchecked the lack of regulation inherent in neoliberalism is just as likely to enable authoritarianism as it is to usher in democracy. Far from being cut off from the outside world, Central Asian dictators have access to a vast network of offshore accounts and shell companies, enabling them to hide money siphoned off state funds. For instance, the release of the Panama Papers in 2015 revealed that Kazakh dictator Nursultan Nazarbayev and his family had kept millions of dollars in offshore accounts, despite having urged Kazakh citizens to repatriate their own money that very same year. These funds enable dictators to consolidate their power further at home, buying powerful allies and keeping resources out of the hands of those they oppress. Without an Asian equivalent of the EU they’re under no pressure to reform, whilst those who are meant to regulate the global markets are all too eager to take a small slice of the pie in return for their silence.
Despite this, neoliberalism is showing no signs of slowing down. The accession of Donald Trump to President of the United States showcased the American public’s desire for an unashamedly pro-business leader. Meanwhile in Britain, our new Prime Minister Boris Johnson has described himself as “anti-regulation.” Those who have openly challenged the neoliberal stranglehold on contemporary politics, such as Jeremy Corbyn and Bernie Sanders, have been hastily labelled as ‘radical,’ and dismissed. Yet this system is the same one that has enabled dictators like Nazarbayev to enrich themselves, their family and supporters, profiting off the very people they oppress. Unless we either restrict access to these international markets, or begin to regulate the markets themselves much more thoroughly, genuine democracy in Central Asia seems a distant prospect.
Image: Cover of ‘Dictators Beyond Borders: Power and Money in Central Asia’ via blogs.lse.ac.uk