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US Scholar Critical of East European Privatizations


An American scholar who focuses on post-communist Europe told an audience at Washington's Wilson Center Wednesday that authoritarian governments in the region are facing sustained pressure to move toward democracy and western-style institutions.

Political scientist John Gould from Colorado College says there is increasing evidence that the transforming countries that are the most democratic are also having the most success economically.

Mr. Gould says what he calls the illiberal regimes such as Russia, Azerbaijan, Kyrgyzstan and Belarus are likely to encounter more foreign and domestic pressure to adopt western-style institutions, particularly the rule of law. He said the trend toward democratization is seen over the past five years in the advance of freedoms in Bulgaria, Croatia, Serbia and Montenegro, Georgia and Ukraine.

Mr. Gould says while there are several methods of privatizating state-owned assets, countries that facilitated foreign ownership have arguably been the most successful. Hungary and Estonia are economies that rank highest in attracting foreign direct investment.

Most of all, Mr. Gould says, privatization must be a transparent process.

"When so much is on the table, everybody is corruptible. And we have to assume that everybody is corruptible. The answer to that is not better people, but better institutions, more competitive institutions, transparency, more competitiveness, a freer press, and so on," he explained.

Mr. Gould says a key mistake of the privatizations of the early 1990s was the assumption that any private owner, corrupt or not, was better than the government.

Insider privatizations, in which cronies of often corrupt political leaders got control of state assets, he says, were widespread in Russia, but non-existent in the three Baltic republics.

Mr. Gould says, because foreign investors generally insist on strong institutions, the business communities even in repressive societies have become more vocal in demanding reform and political accountability.

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