The COVID-19 pandemic has brought new opportunities for kleptocratic networks and authoritarian capitalist models to expand into Europe and Eurasia. Democratic nations’ weak responses to the pandemic and resultant economic crisis has shaken public institutions in developed and developing countries. In this context, authoritarian leaders have increasingly been using Corrosive Capital, financial flows that lack transparency, accountability, and market orientation, to present an authoritarian capitalist model of development and governance as a viable alternative to liberal democracy and market economies.
Since 2017, CIPE has worked with private sector and civil society partners throughout Europe and Eurasia to analyze inflows of Corrosive Capital and close governance gaps. Across more than 10 countries in the region, CIPE has worked on mapping authoritarian economic footprints, uniting stakeholders’ coalitions committed to accountable investment, and supporting advocacy campaigns.
CIPE’S Corrosive and Constructive Initiative Objectives in the Region
- Identify gaps in governance that allow for Corrosive Capital to enter the region;
- Create, in collaboration with diverse stakeholders, recommendations to close governance gaps exploited by Corrosive Capital; and
- Raise awareness and support for corrective recommendations to foster an investment environment that respects national laws, is accountable to stakeholders, and responds to market demand.
CIPE currently works with its partner, the Center for Contemporary Politics (CSP), to research Corrosive Capital investment in Serbia and develop policy measures that can close governance gaps. Recently CSP published a policy paper analyzing Chinese investments in the Serbian mining industry.
Bosnia and Herzegovina (BiH)
CIPE works with the Center for Civic Initiatives (CCI) to analyze the impacts of Corrosive Capital and close governance gaps. CCI is currently researching Huawei telecommunication infrastructure investment in BiH.
In Montenegro, CIPE works with local partners to close governance gaps that facilitate Corrosive Capital inflows. CIPE continues to support its local partner, the Center for Democratic Transition (CDT), to examine high-risk foreign capital inflows from authoritarian states and implement local initiatives to advocate for specific policy changes. Recently, CDT published a new report highlighting how China’s Corrosive Capital investments in Montenegro’s infrastructure projects will burden the country with significant debt for years to come.
In North Macedonia, the Institute for Democracy „Societas Civilis“ – Skopje (IDSCS) researches the impact of Corrosive Capital inflows from Russia and China. Recently, IDSCS published a policy paper analyzing the economic impacts of Chinese highway infrastructure investment in North Macedonia.
CIPE partner, the Central Asian Development Institute (CADI), researches the status of economic reforms, governance practices and limitations, and the impact of these policies on Central Asia’s private sector.
In Kazakhstan, the Economics and Management Consulting Group (EMCG) researches the scope and impact of trade initiatives and investment inflows from actors like China into the Kazakhstani market. Recently, EMCG published a report on the financial and economic effects of Eurasian economic integration through the Eurasian Economic Union.
In Ukraine, CIPE works with the Center for Economic Strategy (CES) to investigate the country’s Russian and Chinese investment footprint and formulate recommendations on how policymakers and the private sector can create a free and fair market. CES recently published a study on the impact of Russian investment in Ukraine and is working with policymakers to address the report’s recommendations. CES is currently working on a study of Chinese capital invested in Ukraine and its impact on the country’s nascent democratic and market institutions. CES also wrote a policy report attempting to illustrate Ukraine’s comparative advantages in a world with reshoring and shortening supply chains, publishing “China on the Dniper” (in Russian).
CIPE and the Alliance of Small Enterprises (AIM) work with the private sector to strengthen its business integrity and improve the business climate in Moldova. Additionally, CIPE works with the Center for Entrepreneurship and Economic Policy (CEEP) to analyze the influx of Corrosive Capital and develop policy recommendations to close the governance gaps.
Eric Hontz, Deputy Regional Director, Europe and Eurasia