The Teaching of Historical (Neo)institutionalism
There are not many law-like findings in political science. The reasons which explain this scarcity are many, but for the purpose of this post it would suffice here to mention the difficulty of capturing and predicting three things: cognitive flaws, inconsistent human behaviour and problems with aggregation from the individual to the collective behaviour. In short, it is commonly accepted to say that social reality is too complex and the best social scientists can do is only to approximate it. However, theoretical elaborations and methodological techniques have walked a long way in the last five to six decades and have produced a number of law-like findings that tend to remain valid across time and space.
One of these findings has been generated in the ontological space of historical (neo)institutionalism. The teaching of this theoretical strand that institutions tend to persist has become nearly an axiom. There is not much to be contested about the reproduction and sustainability of existing institutions. Institutions in this understanding are the norms, rules, conventions and the like. The logic of historical institutionalism is easy to follow. Historical institutionalists argue that critical junctures open up several institutional choices, among which one is selected. Critical juncture might sound bombastic for someone with no training in political science, but in fact it could be simply understood as a major event – where usually both international and domestic dynamics converge –, which disturbs the foundation of a political system and opens up new institutional choices. Such a critical juncture was, for example, the Glorious Revolution of 1688 in England, which was, by at large, the result of increased Atlantic trade, the emergence of a rich class of merchants and the conflict between this empowered class and the absolutist extractive institutions of the Stuart dynasty.
Historical institutionalists argue then that a selected institutional choice sets the course of subsequent development along an institutional path, which becomes “locked-in” and difficult to diverge from because of costs and reproduction mechanisms. Changing an electoral rule may be (and is often) costly for the governing political elites, as it could increase competition from the side of opposing political groups and diminish the chance of being re-elected. Or, consider what would be the cost of changing the rule of left-hand traffic in England, many countries in Sub-Saharan Africa, India, Indonesia, Australia, Japan, etc.? No doubt, huge. As to the reproduction mechanisms, the literature mentions “positive feedback” effects or “increasing returns” (Pierson 2000, 2004, Thelen 1999). The logic behind these reproduction mechanisms is not difficult to understand. The most common example invoked in this regard is that of the “QWERTY keyboard”, we are all familiar with. It has been demonstrated that alternative keyboards may be more efficient in terms of memorizing the position of letters and the speed of typing, but nevertheless the “QWERTY keyboard” prevailed. Economists explain that it is so, because all relevant actors in the field (computer manufacturers, electronics corporations, software firms, etc.) have adjusted to the prevailing pattern and invested heavily in technologies which make the “QWERTY keyboard” persistent. Similarly, in politics certain rules are not without flaws, but they tend to be persistent, because relevant actors adjust to and invest into this institutional equilibrium. An electoral rule may be sub-optimal, but adjusted structures of electoral administration, party organizations and the habits of voters would reinforce this rule. The rule of left-hand traffic may also be sub-optimal, but car manufacturers, road infrastructure, established habits of drivers and pedestrians have reinforced this rule. However, this does not mean that institutions cannot be changed. They can and do change. Another critical juncture may offset a given institutional equilibrium, create a new opening and alternative institutional choices. Yet, when selected, a particular institutional choice would tend again to be persistent.
"Manus Manum Lavat"
The teaching of historical institutionalism has been developed primarily with regard to formal institutions. However, it is also valid for informal institutions. They do tend to be persistent as well. Particular informal institutions may be selected as a result of a critical juncture (i.e. major event), which may be brought about by an interaction of international and domestic dynamics and opens up new institutional choices. Such an event was, for example, the October Revolution of 1917 in Tsarist Russia, where both international dynamics (World War I and the availability of ideological contenders) and domestic factors (economic misery and social despair) converged and created the premises for the overthrow of Tsarism and the instauration of the power of Soviets. After selection, informal institutions evolve also on an institutional path, which tends to become “locked-in”, as costs to be incurred in situations when the path is deviated from, as well as the reproduction mechanisms reinforce it.
Informal institutions are many, but those which are most relevant in the context of EU’s Eastern neighbourhood are clientelism and nepotism. Clientelism is about pyramidal systems of power with the patrons at the top and clients at different layers of the administrative system. Clients consent to offer loyalty for and undisputed subordination to the patron, in exchange for material benefits (rents) they can extract while using their administrative positions in ministries, agencies, courts, law enforcement institutions, state enterprises, etc. Patrons know very well what their clients do, but in exchange for loyalty, subordination and often for a contribution from the rent they turn a blind eye to the rent seeking behaviour of their clients and may even offer protection when the rent extraction habits of their subordinates are exposed.
Nepotism is a more narrow type of patron-client relationships, where the main distinctive element is the family ties between the patron and the client. The exchange here follows the same pattern: the client offers his loyalty and subordination to the patron in exchange for the possibility to extract rents in a given sector and for protection. A wide spread practice is when the patron designates a family member in an administrative position in public or private sectors, so that the latter extracts rents less for himself, but mostly for the patron. This explains how patrons in all Eastern neighbourhood countries, while earning several hundred dollars in public sector, afford themselves expensive vacations, travel with private jets, luxury estate properties and premium cars.
The cost of losing the control over a rent extraction scheme is usually high and its anticipation make both the patron and the client to heavily invest time and effort into the scheme’s maintenance, which in turn reinforces clientelism and nepotism. There are also costs associated with the exposure of the rent extraction habits to the general public or to competing political and business groups. Therefore, rent extraction became highly sophisticated with funds being circulated through dozens of obscure firms, local and foreign banks, from where they land in offshore accounts. Then, the assets may be brought back to the country of origin in the form of Foreign Direct Investments (FDI) in highly lucrative sectors of the economy. The farce may even go on with triumphalist reports in local mass media about the ability of governing elites to attract FDI! Another way through which funds are brought back to the country of origin is most probably by the means of fictive export contracts. Consider just few perplexing examples. Belize, a Central American micro-state with a population of about 341 thousands – comparable with the population of Belfast or Nice –, was among the top 20 export destinations of Armenia in 2010-2013. Compared to 2009, exports to Belize in 2010 climbed 139 positions in the ranking of Armenian export destinations. In 2011, the volume of Armenian exports to Belize was comparable with the volume of its exports to Ukraine or France. In the same vein, Azerbaijan exported in 2014 more goods to Gibraltar than to China or Iran. Georgia exported in 2011 a comparable volume of goods to Trinidad and Tobago and to United Kingdom. In 2011, more Moldovan exports went to Panama than to either China or India. Ukraine has a larger economy and therefore such fiscal eldorados are not among its top export destinations, but they are still used for suspect trade deals. In 2012, the volume of Ukrainian exports to Belize has reached 225 million USD, which exceeds 16 times the volume of Armenian exports to the same destination in the same year. These examples suggest that an entire array of entities such as obscure firms, domestic and foreign banks, tax and custom agencies, as well as law enforcing authorities may participate directly or indirectly in the sort of vicious exchange brought about by informal institutions. In this way, complex networks underpin the feedback mechanism, which reinforces both clientelism and nepotism.
This type of vicious exchange between patrons and clients in the EU’s Eastern neighbourhood is far from new. It is as old as, at least, the European civilization. The old Latin proverb manus manum lavat – which comes from the Greek dramatist Epicharmus via a translation into Latin by the Roman stoic philosopher Lucius Annaeus Seneca – captures the essence of this vicious exchange. After more than two millennia, manus manum lavat in the form of clientelism and nepotism is still the modus operandi in the EU’s Eastern neighbourhood. The most dangerous phenomenon these institutions create and maintain is endemic corruption, which brought some countries in the EU’s Eastern neighbourhood on the brink of state failure.
It has to be made clear that there are no miraculous solutions against clientelism and nepotism. These will tend to be persistent and to erode the statehood in EU’s Eastern neighbourhood. However, one could still envision several long-term solutions against vicious informal institutions. One solution can be deduced from the teaching of historical institutionalism. A critical juncture, where international context and domestic democratically committed forces will interact may, in theory, open up new institutional choices, and set the course of subsequent developments on a path with dominant formal democratic institutions. However, in practice, a critical juncture is very much contingent on a multitude of external and internal factors and will only take place in very rare historical episodes. Events like the Glorious Revolution of 1688, the French Revolution of 1778, the fall of Berlin Wall in 1989 and the collapse of the Soviet Union in 1991 are extremely rare. Moreover, in these episodes, human crafting was necessary, but not sufficient to mount a credible and potent challenge against the old (autocratic) regimes. Likewise, human crafting of international and domestic democratically committed actors in the context of EU’s Eastern neighbourhood would be necessary, but not sufficient from the view point of historical institutionalism to fight successfully the vicious informal institutions and endemic corruption in this region. History, generally speaking, would also need to be on the side of democratic progressive forces, but this is highly contingent on a multitude of (external and internal) factors, which are very difficult to anticipate and predict. What we know for sure is that critical junctures are rare and it takes long periods of time for them to configure. Moreover, as the example of the Glorious Revolution in England shows, it also takes long time until paths with dominant democratic institutions become “locked-in” and self-reinforcing. After the Glorious Revolution of 1688, England became an inclusive democracy only in several hundred years, at the beginning of the XX-th century.
Another solution could be deduced from the implications of modernisation theory. In short, increased levels of economic development would lead to urbanisation, technological progress and industrialisation, a growing density of communication, higher levels of education, a larger and stronger middle class, which in exchange for taxes will demand more accountability, increased levels of political participation and greater inclusion in the political sphere. A powerful middle class would be in the position to successfully oppose clientelism and nepotism. Yet, the question to be asked here is how sustained economic development can be achieved under prominent extractive institutions such as clientelism and nepotism? Acemoglu and Robinson (2012) show in their eminent work that extractive institutions represent a formidable impediment to prosperity and reasons of state failure. Even if economic modernisation could take place alongside clientelism and nepotism, the entire chain of causation which leads to the formation of a powerful middle class would require an extensive period of time.
One could envision some other long-term solutions against clientelism and nepotism, but ordinary people in the EU’s Eastern neighbourhood require and deserve solutions now. Once asked about long-term solutions, the British economist John Maynard Keynes said that “in the long run we are all dead”! The existential question is what can be done now against clientelism and nepotism, as well as against endemic corruption and misery they create? The central piece in this puzzle is the judiciary. An independent and democratically committed judiciary can gradually neutralize clientelism and nepotism and significantly minimise corruption. However, the extraordinary challenge is that judiciary in the EU’s Eastern neighbourhood is itself deeply affected by clientelism and nepotism. Manus manum lavat is rather the rule, than the exception in this sector. The locus of patrons in the case of this vicious exchange is both outside and inside judiciary. Outside the sector are patrons who are active in politics or business, the latter having often strong connections with the political establishment. The patrons inside the system are in most of the cases high-ranked officials with administrative roles in the court infrastructure or prosecutor office. Often the patrons inside the system are the clients of the patrons located outside the judiciary. The exchange here follows the usual pattern. The clients offer their loyalty and subordination in return for possibilities to extract rents and for protection. The reproduction mechanisms of this vicious exchange are again a function of clientelistic and family ties. Clientelist ties in Georgia, Moldova and Ukraine are most often based on party affiliations, while in Armenia and Azerbaijan they are based on a mixture of party and regional clan affiliations. Family ties are based on kinship, but also on family alliances resulting, due to tradition, after marriages. The central idea of this post it that if reproduction mechanisms reinforce and reproduce the vicious exchange, any effort at fighting clientelism and nepotism should be directed with “surgical” precision against the very reproduction mechanisms, which are based on clientelistic-party-clan affiliations and family relationships.
What is necessary to undermine the reproduction mechanisms of clientelism and nepotism in judiciary, could be the so-called Rule of Law Missions, led and supported by the EU or an interested international organisation such as the UN. The idea is not at all new. The EU did launch a Rule of Law Mission (EUJUST THEMIS) to Georgia in July 2004, but it was in operation only until July 2005 and had a limited mandate to assist Georgian authorities in developing a co-ordinated approach concerning the reform process in the criminal justice system. Such Rule of Law Missions might have a positive role, as it was the case of EUJUST THEMIS in Georgia, but they do not have the potential to undermine the reproduction mechanisms of clientelism and nepotism in the justice sector. Apart from the expertise these missions might bring, the core element of such missions should represent a team of experienced European or international judges and prosecutors, selected through a rigorous international competition, who would work alongside their local colleagues in courts and prosecutor offices. Because it would be difficult for such a mission to cover the court system and prosecutor offices of an entire country, say Ukraine, it could be convened for the European and international judges and prosecutors to work alongside their local colleagues in the highest supreme courts and central prosecutor offices. Outsourcing partly the judicial system would undermine the reproduction mechanisms of clientelism and nepotism for the very reason that foreign professionals would not be linked with clientelistic and family networks that invest heavily in the maintenance of these informal institutions.
A telling example in this regard is the UN-sponsored International Commission against Impunity (CICIG) launched in 2007 in Guatemala . CICIG has personnel from about 20 countries, broad powers to launch its own criminal investigations and works alongside Guatemala’s general prosecutor office. What CICIG has accomplished in a short period of time was imaginable in a country ravaged not so long ago by a 36-year civil war. Luhnow (2015) shows that because of corruption-related charges, the first democratically elected president of Guatemala Otto Pérez Molina, the vice president, the heads of the central bank, customs and tax agency, and social security institute, the head of congress, leaders from several political parties, a judge, and a vice presidential candidate are all in custody. CICIG’s investigations have led to charges against more than 160 former and current officials, most of whom have been convicted. For a country where almost nobody was held responsible for the tens of thousands of people murdered during the civil war, bringing behind bars this list of high-ranking officials on corruption-related charges is truly impressive. The level of trust in CICIG exceeds now the level of trust in all other important public institutions, including the Catholic Church! Since the launch of CICIG in 2007, the rate of impunity fell in Guatemala from a mind-blowing 95% to 70%. This could only happen, because CICIG could undermine the reproduction mechanisms of local clientelistic networks, which also have large ramifications in the justice sector. Particular instructive in this regard is how Ivan Velasquez, an experienced Columbian prosecutor and head of CICIG, explains agency’s achievements in Guatemala: “You can’t influence us”. […] We aren’t linked to the business class, or military, or judges or lawmakers. That gives us enormous freedom” (Luhnow 2015). The experience of CICIG in Guatemala could be used as an example for the Rule of Law Missions to be thoroughly conceived and deployed to the EU’s Eastern neighbours. Such missions would be expensive undertakings, but they should not be more expensive than the amounts the EU has already spent without much success for reforms in the justice sector in its Eastern partners.
The question now is whether national governments in EU’s Eastern neighbourhood would be interested to host such Rule of Law Missions? Executives in Armenia and Azerbaijan will reject outright such an idea, though ordinary people in these countries would most likely welcome it. Clientelism and nepotism are here well established and local political elites would not give up the use of these highly extractive and profitable habits. Moreover, the EU has almost no leverage over Azerbaijan and a rather weak leverage over Armenia. Azerbaijan is not dependent on Western financial assistance and has enough oil reserves to play its own strategic game. The average annual volume of assistance (20.17 million EUR) provided by the EU to Azerbaijan over the period 1991-2014 is less than the amount Azerbaijan earns in a single day from oil revenues! Armenia is rather dependent on Western financial support, but Western leverage over Erevan is severely constrained by Russia.
The governments in Georgia, Moldova and Ukraine would also most probably prefer no rule of law missions similar to CICIG, but here civil societies will very much welcome the deployment of such missions. In addition, the EU poses a reasonable leverage over them. Georgia and Moldova are leading in terms of received assistance per capita from the EU. The cut in the EU assistance to Moldova as a result of the mega-fraud in the banking sector has very much perturbed budgetary planning, as the anticipated inflows from EU sources were calculated when the budget was drafted. Georgia, apart from assistance, looks forward to a free visa regime with the EU and counts on Western support in its territorial disputes with Russia. Until recently, the EU had little leverage over Ukraine, which was one of the least recipients of EU aid per capita in the region. Since the war in its Eastern regions in 2014-2015, Ukraine became increasingly dependent on Western help for financial assistance and strategic backing.
When conceiving rule of law missions similar to CICIG for partners in EU’s Eastern neighbourhood, the EU would need to coordinate its offer with relevant international and European institutions such as the UN, IMF, World Bank, Council of Europe, OSCE, etc. A joint offer of these actors to support the deployment of rule of law missions to Georgia, Moldova and Ukraine would increase the chances of such missions for being accepted and they may be tied with conditional substantial IMF and EU macro-financial assistance, for which these countries are desperately in need. If accepted, such rule of law missions will gradually undermine the reproduction mechanisms of clientelism and nepotism.
However, if the offer of hosting such a mission will be rejected by political elites in Chisinau, Kiev and Tbilisi, the EU and other democratically committed international actors would need then to increase the costs of clientelism and nepotism. There are at least three possibilities in this regard. First, the EU could offer more support, inter alia via the European Endowment for Democracy, to local organisations, mass media and NGOs which are specialised in investigative journalism. RISE Project , for example, has been successful in Moldova in documenting and exposing several cases in which informal institutions were used for achieving illegal political and economic gains. Second, the EU could make use of EUROPOL, INTERPOL, OLAF and other specialised bodies to identify, track, expose and combat the money-laundering activities many patrons in EU’s Eastern partners are involved into, while using EU firms, banks and offshore companies. Finally, it does not cost much for the EU to promise a membership perspective for those Eastern neighbours, which will institute rigorous rule of laws regimes and achieve notable success in the fight against corruption. Though this promise does not pose immediate costs for the EU, it will increase notably the costs of sustaining clientelism and nepotism.
Clientelism and nepotism tend to be persistent. There are reproduction mechanisms which reinforce these informal institutions, but also very high costs corrupt elites seek to avoid with a change of the current institutional equilibrium. The most perverse effect of maintaining clientelism and nepotism in the EU’s Eastern neighbourhood is endemic corruption. Any meaningful action against corruption should involve judiciary. A professional and independent judiciary would have the potential to successfully neutralise clientelism and nepotism, but this is highly improbable since judiciary is itself deeply affected by the same vicious exchange.
The central idea of this post is that given the fact clientelism and nepotism are reinforced by reproduction mechanisms, any effort at successfully fighting these informal institutions should be directed against their reproduction mechanisms, which are based on clientelistic-party-clan affiliations and family relationships. The reproduction mechanisms of clientelism and nepotism can be disrupted by Rule of Law Missions, conceived and deployed with the EU’s support to any interested partner in its Eastern neighbourhood. The idea of a Rule of Law Mission is not new. Such an initiative was possible in 2004-2005 in Georgia, but it had a limited mandate and would not be sufficient to substantively undermine the reproduction mechanisms of clientelism and nepotism. What would be in the position to challenge these informal institutions can be inspired by and modelled on the UN-sponsored CICIG, which is active since 2007 in Guatemala. A Rule of Law Mission, similar to CICIG, could be supported by the EU, but it has to be offered by a consortium of international actors and linked to substantial macro-financial assistance.
Nobody should however have the illusion that that such an offer will be met with bread and salt. On the contrary, political and business elites in the EU’s Eastern neighbours will most probably reject it on various grounds. They excel at the hypocrisy. If this should be the case, the EU will need then to make use of at least three instruments to increase the domestic costs of maintaining clientelism and nepotism.
Acemoglu, D. and Robinson, J.A. (2012), Why Nations Fail? The Origins of Power, Prosperity and Poverty, London, Profiles Books LTD;
Luhnow, D. (2015), “Guatemala Outsources a Corruption Crackdown”, The Wall Street Journal, September 11th;
Pierson, P. (2000), “Increasing Returns, Path Dependence and the Study of Politics”, American Political Science Review, 94(2), pp. 251-267;
Pierson, P. (2004), Politics in Time: History, Institutions and Social Analysis, Princeton, Princeton University Press;
Thelen, K. (1999), “Historical Institutionalism in Comparative Politics”, Annual Review of Political Science, 2, pp. 369-404.