Wednesday, June 29, 2016

After Brexit the Special Relationship is next to go

Photo: Andres Putting, Delfi
Britain decided to leave the European Union so that the British would no longer have to pay for building Polish roads and would no longer have to accept Poles in UK. When will a time come when they will decide that they no longer want to pay to protect Poland from Russia?

It has no impact on NATO, everybody repeated after the British referendum on EU membership. In the short run it may be true but in the long run I'm afraid that the Special Relationship (SP) with US will go and UK will cease to play an oversized role in NATO.

UK has been moving the same direction as other Western European countries, like Netherlands, that have been cutting their defense spending. US spends 3,6% of its GDP on defense, but it gets in return the mightiest military in the world. This gives US a lot of clout in the world and gives Americans that feeling of a special nation that they desire. Netherlands, on the other hand, spends 1,16% of GDP on defense. This gives them only a token military, but they don't need more because they live in a very quiet neighborhood. If they would choose to spend 3,6% on military like the Americans it would be just as exhausting for the economy but Netherlands would never get anything near the influence that spending gives the Americans. So why bother with military?

UK was spending around 2% of GDP on military in 2015 but this percentage has been declining for years. It's not just about saving money but also about changing mentality. 

After losing the empire UK started searching for a global role and found it in Special Relationship. It gave London more clout and this special feeling of being important. UK was a major power in Europe during the cold war and remained important in former colonies in Africa. 

Yet over time things changed. End of the Cold War left the feeling that security issues have been mostly solved. Tony Blair's attempt to strengthen the SP by going to war in Iraq next to Americans left a bitter taste. Brits were getting the feeling that defense spending doesn't really justify itself. This was no longer about the anti-war left because the Tory government of David Cameron also ruthlessly cut defense spending. 

A clear mentality change has been taking place. British elite has difficulty understanding what military is for because they no longer think like a great power, but as a great trading nation. For instance, there was a surprising discussion about whether Britain should renew its nuclear deterrent because it was deemed too expensive. They discussed it with all seriousness in a world where several potentially hostile nations want nuclear weapons and several others already have them. UK is building two big aircraft carriers but there is some confusion whether they will actually have any aircraft on them. Budget cuts were so bad that US president Barack Obama had to threaten Cameron that he calls SP finished when UK cuts defense spending below 2% of GDP. We have several signs that the British people and also the British elite no longer consider defense important and don't understand why would they need to pay for it. 

So imagine now that post-Brexit UK has slow growth and a growing budget deficit, yet they still need to keep defense spending at 2% or the Americans will get angry at them. When will a time come when the British will decide that SP just isn't so important to them and that they would rather work harder on those trade agreements with India and China? If this moment comes it will be because of social development in the UK that has been taking place over the years. British euroscepticism also built up over the years, yet most people didn't believe that a decision to leave the EU was really possible. 

The end of the Special Relationship would probably be triggered by an external crisis where US would ask British help but the British would think about it and decide that they actually don't want to get involved. This almost happened in 2013 when the British parliament didn't want to attack Syria. If it happens again the fallout might be much bigger. Once the SP is finished one can expect British defense spending to fall rapidly and then it's all finished and Britain has again become trading nation on a small island. 


Sunday, June 19, 2016

A lesson from Estonia - fighting corruption in Ukraine takes time

Edgar Savisaar, the mayor of  Tallinn, is suspected in
taking bribes and also in taking money form Russia.
Those who are worried about the level of corruption in Ukraine should understand that it takes time to fight it. More than grand announcements Ukraine needs to liberalize it's economy, strengthen democracy and build institutions.

In 2015 Estonian score in Transparency International's Corruption Perception Index was 70, while the cleanest country, Denmark, scored 91 out of 100. Estonia is the highest scoring ex-communist country and has better score than Portugal, Spain or Italy. Ukraine on the other hand scores just 27 points, indicating a high level of corruption. Ukraine is on a par with countries like Iran, Nepal, Nicaragua and Paraguay. Ukraine is even more corrupt than Russia. So one would expect that Estonia has a lot to teach to Ukraine about fighting corruption.

Soviet Union was a corrupted place but it wasn't as bad as Ukraine or Russia now. When it imploded in 1991 Estonia and Ukraine went different into different directions - Estonia become less, Ukraine more corrupted.

In the beginning in Estonia it wasn't really about fighting corruption, but about liberalization to join the West. The push for liberalization also helped to limit corruption. Liberalization itself was about efficiency and modernization because a minimalist state was easier to run.

Corruption in politics and public sector remained a serious issue in the 90s. Privatization scandals were common. Tiit Vähi, a prime minister in the 90s, lost his job because one corruption scandal. Once he was no longer in politics he turned out to be an owner of a large company called Silmet that was privatized while he was in office. Nothing happened about this or other major corruption scandals of the 90s. The politicians were untouchables. The prosecutors office was under political influence. The internal security service Kapo was operating at least partly outside of the law.

It got better when Estonia joined the European Union. Estonia had strengthened law enforcement and in the decade between 2000-2010 there were several corruption cases against civil servants. Convictions in corruption cases were no longer rare.  In 2008 25 traffic police officers of Harju county were convicted in taking bribes. Before it anti-corruption officials had in two major operations charged dozens of traffic police officers of Harju county for taking bribes. After they all were indicted the Harju county that includes the capital Tallinn for some time had almost no functional traffic police because most previous officers were waiting for trial for corruption.

In 2010 Villu Reiljan, a former minister of environment, was convicted in corruption. He was the first former minister in Estonia who was convicted for a crime he committed in office. It took 19 years of independence to convict someone of his stature. In 2014 he was once more convicted for corruption for a crime he committed as minister. He is now once more indicted for a third case of corruption, this time for intermediating a bribe.

Yet corruption remains a serious issue. Everything associated with cars is still rife with corruption. It is still possible to buy a driving license or pay your way through vehicle inspection even though corruption is in these days more hidden than before.

It was only in this decade that Estonia started seriously tackling political corruption. In 2012 there was a major scandal about funding of the ruling Reform party. There were several scandals about influence peddling, also often about the Reform party. Then in 2015 leader of the Center party, Edgar Savisaar, was charged with corruption for taking bribes as a mayor of Tallinn.

So why did it take so long in Estonia to fight political corruption and what has made fighting corruption possible now? It's about several actors working in tandem. The first is development of law enforcement agencies that prioritize fighting corruption and are no longer afraid of targeting politically influential people. Building up such capacities takes time.

The second is political pluralism. The dominant Reform party and Center party have attempted to manipulate rules in their favor and to cement their hold on power with public money. Yet their power has always been limited because all governments have been multi-party governments. This matters. When the state prosecutor Heili Sepp started investigating Reform party finances in 2012 the Reform party was very vicious in their criticism of her and they didn't deny their desire to destroy her career. They didn't succeed because she was able to work in institutions not controlled by the Reform party.

It also helps to have a free press and outside actors independent of political power. The Autorollo scandal that forced the former minister of foreign affairs Keit Pentus-Rosimannus (also from the Reform party) to leave office was uncovered by a businessman who lost money in the bankruptcy of the trucking company Autorollo. It was an investigation financed by him that uncovered a lot of dirty details and clear signs of influence peddling in the wheeling and dealing around that company that cost the tax-payer 325 000 euros.

Ukraine has the benefit of a strong civil society that is pushing for reforms. Emergence of a strong political force that campaigns against corruption has always been important in fighting corruption. The anti-corruption fighters in Ukraine should avoid pushing for individual indictments and concentrate on building efficient institutions. An anti-corruption agency would be great, it has worked well in Latvia and Romania. Yet the best cure against corruption is a well functioning modern state that no longer has any soviet pockets nowhere in public administration.