The socialist legacy

Author: Leon Runje


It is widely considered that during the communist period corruption in the Western Balkans was widespread, but was, for the most part, petty. During this period administrative corruption was prevalent, meaning that it took the form of low level bureaucratic corruption of state and public institutions as opposed to the corruption of centralized government bodies and agencies which occurred at the top of the hierarchical structures of government. The first phenomenon can be described as „administrative corruption“, while the latter tends to be denoted by the use of the term „state capture“. (McRobie, 2010: 5 - 8)  This assertion cannot be empirically disproved, however, there is a problem with its claims. Namely, as McRobie points out, low level political corruption tends to either correlate or be a direct result of the metastases of high level political corruption or state capture. (McRobie, 2010: 10) If the correlation is so strong, how is it that the primary forms of corruption recorded in the Western Balkans during the communist period were of the low level administrative variety? The cause most likely lies in the way corruption was defined in socialist countries during the Cold War. The current definition of state capture stems from the World Bank and defines the term as the efforts of a small number of firms (or such groups as the military, ethnic groups and kleptocratic politicians) to shape the rules of the game to their advantage through illicit, non-transparent provision of private gains to public officials, examples of such behavior include the private purchase of legislative votes, executive decrees, court decisions and illicit political party funding.  This concept links the problem of corruption with vested economic, social and political interests – which   in turn form key obstacles to economic reform (World Bank, 2001) This of course gets obfuscated in a socialist system which does not necessarily value or protect the concept of private property, indeed regardless of the various dogmas of „social ownership“ the majority of the companies in the Western Balkans were state owned, that is to say, the ruling communist party was free to control them by way of having access to key managerial positions within state owned companies. (Begovic, as cited in McRobie, 2010: 10) Evidence of these practices continuing even after the end of the Cold War and the subsequent fall of communism can be found in the fact that, in certain cases, as was the situation in Serbia, large swathes of state property were not privatized but rather became party property of the reformed communists, now called the Socialist Party of Serbia. (Pešić, as cited in McRobie, 2010: 14) Furthermore the ruling parties continued the tradition of directly controlling state owned enterprises, as Pešić points out, the idea that government owned companies should be administered by party elected cadres is alive and well in Serbia. (Pešić, as cited in McRobie, 2010: 15) What follows logically from this fact is that, in the Western Balkans generally, and in Serbia and Albania specifically, legal state capture which existed during the communist period, has in a sense, been transformed in to party capture. That is to say, special vested interests will focus on supporting a specific party and then, once and it obtains power, use it as a tool to perpetrate state capture upon the government system. The development of this approach in the Western Balkans is a direct result of the fact that the authoritarian socialist regimes in the region have given way to nominally democratic ones. In these systems political parties are forced to contend for power on the one hand, while the national election campaigns have become ever costlier for them on the other. (McRobie, 2010: 22) As far as government funded campaigns are concerned, particularly in the case of Albania, high tax avoidance rates make it difficult for the government to provide this public service.  
 

The legacy of war and isolation


The twinned legacies of war and isolation in the Western Balkans are hard to separate, even though they affected the regions constituents in radically different ways. If one takes a moment to consider the definition of the Western Balkans, (at least as proposed by the European Union, in terms of its expansion plans) one usually gets the formula of Ex-Yugoslavia minus Slovenia plus Albania. If one accepts this definition, one can notice two diverging histories. While Yugoslavia was generally the most open of the socialist countries during the Cold War, Albania on the other hand, was subject to a strict self-imposed isolation by its Cold War socialist regime under Enver Hodja. Although this policy was abolished by the 1990's, it lasted for a full forty years and made smuggling an essential economic activity. This is where the strong link between organized crime and Albania's political elite begins. (McRobie, 2010: 26) Yugoslavia, on the other hand, had a very different trajectory. The relationship between the political elites of the individual Yugoslav Republics is also strongly connected with smuggling activities, however for vastly different reasons. As McRobie points out, „the elites of the Yugoslav Republics during the war, were actively involved in the development and organization of smuggling channels.“ (McRobie, 2010: 2015) This has a lot to do with international isolation caused by the war itself. That being said, the motivations for such behavior diverged between the individual Yugoslav Republics. The primary motivation of Croatia and Slovenia for engaging in illegal smuggling initially was to break the arms embargo imposed by the international community, given the fact that the Yugoslav People's Army, which they were facing at the time, was far better equipped for the immanent conflict. Serbia on the other hand, commanded the Yugoslav People's Army or what was left of it, and therefore hardly had the need for importing weapons. It was, however, faced with a wide array of economic sanctions due to its war time activities and was, therefore, in dire need of smuggling services in order to procure certain goods. Both the case of political isolation of Albania and the former Yugoslavia cemented the connection between local governments and organized crime.  (McRobie, 2010: 15) Furthermore, the war in the former Yugoslavia also strengthened organized crime networks in Albania. This was primarily evident in these crime networks supplying the Albanian Kosovo Liberation Army with weapons, however it was also simply a way for these networks to profit from Serbia's relative isolation through providing smuggling services. The fact that Albania itself was experiencing an institutional crisis which would lead to an institutional collapse in 1997 did nothing to alleviate matters. (Mcrobie, 2010: 21 – 22)  

Power protection and accumulation 

When dealing with state capture in the Western Balkans one would be wise to further introduce a categorical distinction within the terms used to describe the wider phenomena of political corruption. While political corruption is broadly defined as the use of public power for private benefit (World Bank, as cited in McRobie, 2010: 7) there are two ways in which the regimes which arose in the Western Balkans after the fall of communism manifested political corruption in particular. The first mode was the use of the corruption of state institutions to accumulate wealth through its extraction from both the private and public sectors, whether through outright theft of government property or through corrupt dealings with private enterprises. This activity would not have been possible without the second mode of manifestation of corrupt behavior. This behavior can be best described as corruption with the aim of power preservation. The regime would promote civil servants as well as deal with private companies based exclusively on their displays of political loyalty as opposed to competence. This would free the regime from considerable restraint while it was engaging in illegal activity as well as create an extensive network of individuals and organizations which all stood to benefit from the regime's activities. (McRobie, 2010: 8 – 15) It is hard to separate these two forms of corruptive behavior by a specific government regime from each other, mainly due to the fact that they complement and necessitate each other. It is therefore difficult to answer the question of which mode of behavior came first, however one can make a reasonable assumption that were one of these behaviors exist, the other will follow.  

Ethnic divisions and state capture 

The states of the West Balkan region are not only divided by the different variants of socialism they experienced during the Cold War, or by the various positions they found themselves in during the break-up of the Yugoslav Federation. The main difference in terms of the levels of state capture in individual Balkan States stems primarily from the ethnic divisions within their respective societies. Therefore, a key difference arises, primarily between states where ethnic divisions are not at the forefront of national politics, such as Serbia and Croatia on the one hand, and those where that is the case such as Bosnia, Macedonia and Kosovo. As Vacuolar points out, „In Serbia and Croatia office seeking parties have responded to strong incentives to moderate their positions in order to become EU-compatible. In Bosnia and Macedonia, however, political competition is structured almost entirely on identity, with parties hardly taking any positions on managing the economy and public services (...) These party systems have been captured by small groups of elites who profit from illiberal democracy, to protect it, they keep the EU at bay, and use nationalism and chauvinism as a strategy to deflect attention from rampart corruption and the rollback of democratic freedoms, transparency and the rule of law.“  (Vachudova, 2017) Furthermore, as Peter Van Ham points out, „Bosnia and Herzegovina, as well as Kosovo, remain (at least partially) internationally administered. Bosnia and Herzegovina is hamstrung by a political deadlock between the three main ethnic groups: Bosniaks, Croats and Serbs.“ (Van Ham, 2014: 8) Furthermore, in the case of Kosovo and Macedonia, ethnic based state capture is further facilitated by international circumstances. As Van Ham points out „Kosovo's ties with the EU are restricted, since the five EU member states (Cyprus, Greece, Romania, Slovakia and Spain) refuse to recognize Kosovo's independence. (Van Ham, 2014: 8) Macedonia is another example where ethnic based identity politics is not only legitimizing state capture at home, but also facilitating it in the international arena through provoking inter-state confrontation. The clearest example of such a phenomenon is Macedonia's continuing failure in its attempts to join both the EU and NATO. The main reason for this is the persistent opposition to Macedonia's application bid by Greece, who opposes the usage of the name „Macedonia“ in order to denote the Former Yugoslav Republic of Macedonia. The issue is in fact one of ethnic identity for both the Macedonians and the Greeks. (Van Ham, 2014: 8) Another dimension of ethnic based state capture in the Western Balkans is the high level of kin-trust characteristic of ethnically homogenous groups. Since the break-up of Yugoslavia in the 1990's, the newly created states, even though multi-ethnic themselves, have become home to ever more homogenous ethnic groups on the sub-state level. Examples of this are the Serb, Croat and Bosniak communities in Bosnia, the Serb and Albanian communities in Kosovo, the Serbs and Montenegrins in Montenegro as well as the Albanians and Macedonians in Macedonia. In addition to this, there is a particular historic legacy in the region, stemming from centuries of foreign occupation. The region's history saw the local community, the kin or the clan, pitted in a long term struggle against the state, which was considered to be a hostile and foreign actor. From such a mentality, sprang up a culture of familial connections and other para-state institutions which greatly facilitated state capture. (Van Ham, 2014: 11) Given this history, combined with the aforementioned increasing levels of homogeneity among the ethnic groups of the region since the Yugoslav Wars, it is a small wonder that Alan Riley can claim that what the Western Balkans have experienced in the last 20 years is akin to a process of „refeudalization“. By this Riley denotes a process whereby „power is held by informal networks that run through every state institution and the private sector “. (Van Ham, 2014: 9)     
 
Stabilocracy in the Western Balkans: state capture and the refugee crisis   

Another issue which has helped stabilize and strengthen the state capture regimes currently in place in the Western Balkans has been the refugee crisis. This situation has provided the weak democracies in the region, with autocratically minded leaders, who govern through informal patronage networks, with the legitimacy of, once again, providing the West with stability in the region. (BiEPAG, 2017: 7)  The collaboration of western states with Balkan autocrats is certainly nothing new, from King Alexander, Marshall Tito to President Milosevic, the West has historically been happy to trade in democracy for stability. What differentiates this new form of „Stabilocracy“ from its previous incarnations is the fact that in the 2000's the EU actually did invest a considerable amount of effort and political capital in to providing the region with a path to full EU membership. This path was always heavily predicated upon the implementation of the required reforms. The current backsliding in to „Stabilocracy“ puts all the invested work and political capital in jeopardy. It also explains the very different reactions of the leaders of Hungary and Serbia to the refugee crisis. Although they both use nationalism to cement their ever- stronger grip on state power, Viktor Orban of Hungary and Aleksandar Vučić of Serbia reacted very differently to the recent refugee crisis. While Orban rode the populist wave and closed off his country's borders using the crisis to gain political points from his right-wing base, Aleksandar Vučič had a completely different agenda. He was primarily interested in demonstrating Serbia's usefulness to the EU in the crisis, and had therefore behaved accordingly. Consequently, Serbia opened its borders to the refugees and allowed itself to be used as a transit zone. This was welcomed in Brussels and Vučić was treated as an EU partner and ally.  Such a turn of events is worrying primarily because it signifies that certain events, such as the refugee crisis or certain competitors for influence in the region like Russia and China for instance, can severely limit the soft power of the EU. Local regimes in the region are now in the position to play off external global actors against each other, be they the EU, Turkey or Russia. This is the first time, since the end of the Cold War, that local regimes find themselves in a position to extract resources from foreign actors due to their countries' strategic position. (BiEPAG, 2017: 8)  

Conclusion 

The Western Balkans is currently a region of some geostrategic importance, lagging behind the rest of Europe in terms of its economic growth. It is also currently home to numerous clientelistic regimes which perpetrate state capture for the purpose of servicing the needs of various vested interest groups. The reasons for this vary from historical, cultural to geopolitical. The EU, as the main external actor in the region is both a positive and negative influence in this regard. On the one hand, it has the power to influence the local regimes in to conducting reforms through the process of accession conditionality. On the other hand, the EU's dependence on the collaboration of the Balkan states and Turkey in the recent refugee crisis leads to an additional source of international legitimacy for the political parties currently in power in the region. Finally, the EU also serves as a method of easing the social tensions within the individual Balkan states, being itself a primary destination for working migrants from the region. The EU allows the dissatisfaction, among the population of the Balkan states, fueled by the failure of the captured institutions of state to generate prosperity, to be partly diffused by providing economic opportunity to the populations of these countries within its own borders.  
 
 Bibliography: 


Hellman, Joel & Kauffman, Daniel, Imf.org (2001) Confronting the Challange of State Capture in Transition Economies, http://www.imf.org/external/pubs/ft/fandd/2001/09/hellman.htm (last accessed 15.6.2017.)

 
Mcrobie, Heather (2010)  State capture and political corruption in Serbia and Albania in: Democracy cluster (edit.) Francesco Privitera 


Begovic, Boris. 'Corruption in Serbia: Causes and Remedies.'  Policy brief No. 27.  The William Davidson Institute at the University of Michigan Business School.  Detroit, Michigan. 2005.


Begovic, Boris and Bosko Mijatovic (eds). Corruption In Serbia Five Years Later.  Center for Liberal-Democratic Studies. Akademija Press. Belgrade, Serbia. 2007 


Center for the Study of Democracy. 'Corruption, Contraband and Organised Crime in the Balkans'. Center for the Study of Democracy Research Paper. Sofia, Bulgaria. 2003.

  
PesicVesna. "State Capture and Widespread Corruption in Serbia', CEPS Working Document No. 262. Centre for European Policy Studies. March 2007.​


VachudovaMilada. “Party Positions and State Capture in the Western Balkans” (with Marko Zilovic, George Washington University). University of Graz.  23.3.2017. Lecture.
 
Van Ham, Peter. “Gridlock, Corruption and Crime in the Western Balkans Why the EU Must Acknowledge its Limits“, Clingendael report. Netherlands Institute of International Relations. October 2014.
 
„The Crisis of Democracy in the Western Balkans. Authoritarianism and EU Stabilitocracy.“ BiEPAG Policy Paper. March 2017.

 

The article was published in September 2017 by Heinrich Boll Stiftung in the magazine Perspectives, Issue number 3, "Captured States in the Balkans".

 

FILTER

READ THIS ALSO