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Reports from the Regional Workshops
Democracy Forum 2000


Former Soviet Union (Chapter 1)

The workshop was held in Yerevan, Armenia, 7-8 April, 2000
Local partner: Institute for Democracy and Human Rights, Armenia

"The optimist says that it can’t be worse and the pessimist says that it can."

Context for democracy and poverty in the former Soviet Union

The participants agreed that the past ten years in the former Soviet Union have been characterised by a multi-level transition: transition to independence, transition from planned to market economy, transition from single party politics to multiparty politics, and the transition of social classes. These transitions were followed by a growing national self-awareness causing conflicts between ethnic and religious groups which in turn began to form new social structures.

Poverty is new in the former Soviet Union. The quick transition from the Soviet economy to market economy arose from the collapse of the Soviet Union. The economic transition and integration into the world economy have undermined traditional industries and have required a new attitude from the population. The importance of regional co-operation was emphasised throughout the workshop. However, conflict still exists between and within countries over land and other resources. It was also pointed out that all regional developments take place in a global context. External agencies have provided assistance and some economic integration to the international market has taken place.

Countries in the former Soviet Union region face different economic challenges, but they also share common elements. In South Caucasus, poverty was brought about by natural disasters and conflicts which were subsequently followed by a flow of refugees and migration. In Russia, the great number of young single mothers and single elderly women coupled with the decline of cultural and educational services and food processing industries have made poverty especially harsh on the female population. All countries in the region are concerned about a sizeable shadow economy and corrupt and unprofessional management of state resources. Furthermore, the structure of urban poverty is different from that of rural poverty and all countries face the problem of losing important resources through either migration or investment.

Migration has changed the demography of some of the countries in the region. For example, an important percentage of the male population between the ages of 27 and 40 live outside Azerbaijan. In Armenia, the proportion of men is 75 men to 100 women.

It was stressed that poverty is a new phenomenon in the former Soviet Union. The old social classes - peasantry, proletariat, intelligentsia - have disappeared and new social divisions are developing. Currently there are only two classes, the rich and the poor and the gap between these two classes is large. The threat is that the rich are getting richer and the poor are being further marginalized regarding education, health care and social services. Although some participants predicted that poverty would be overcome within a few years in the South Caucasus, they thought that the gap may still grow. The poor are demoralized and poverty reproduces poverty.

The transition of political culture seems to take longer than other transitions. People’s values and attitudes do not correspond to the existing reality. The way of thinking is currently undergoing a slow change towards a more individualistic mentality and this is best seen in the youth.

An important point to note is that poverty became associated with democracy after the collapse of the Soviet Union. Participants referred to the state of democracy as "a façade that imitates democracy" and "a show of elections". Lack of knowledge about democracy is a hindrance to people who want to exercise their rights and participate into decision-making. The poor are not informed or involved in policy-making. A democratic culture will not appear without a wider knowledge and understanding of the democratic system of governance. People need to be educated on democratic values and practices. One participant commented, "It is possible to speak only about a beginning of a process of democratisation."

New forms of social relations are appearing. Presently two social classes exist, the rich and the poor, while the middle class is almost non-existent. The role of the middle class in transition was discussed at great length in the workshop. It was said that in Russia the new middle class consists of tradesman and other small business classes. The old middle class of public servants is undervalued. In the countries of South Caucasus, the middle class migrates.

The whole region faces the danger of being cut off from the development of information technologies.

Accountable governance

"We understand very well what is the meaning of elections in our countries. They are just a show."

Accountable governance involves three dimensions. Firstly, rule-making engages the rulers and the ruled in a process of managing the resources of the country. The second dimension is the institutions of governance such as elections and political parties. It includes the effectiveness of the institutions to represent the interests of different groups in the society. The third dimension is the outcomes of the governance process. Governance can be assessed on the basis of the products and services the process brings.

Government is made accountable by restraint. A system of checks and balances and separation of powers defines the balance between restraint and flexibility. Government is also made accountable by an effective civil society. The dilemma in the former Soviet Union seems to be a lack of tradition of civil society activism and insufficient trust in the freedom of speech and association. Faith and trust in political institutions and the independent judiciary are a key factor towards creating an active civil society.

Governance reform in South Caucasus should be based on two building blocks: (1) separation of powers with a system of checks and balances and (2) reform of political institutions. The reform should aim to increase people’s access to political institutions and participation in policy-making.

One participant observed that traditionally people in the region have remained passive and been reluctant to speak up on issues that concern them. Civil society activism should therefore be supported. Creating trust in institutions is crucial. At the moment there is relatively little motivation to participate in the democratic process since people lack belief in political institutions. However, democracy at the community and grassroots level is appearing and looks promising.

Corruption is a widespread problem in the region. There is corruption both at the institutional level and in society in general. Corruption is connected to both individuals and the transition. It was said that people in decision-making positions have grown more skeptical about the transition and there may be more corruption now than in the 1990s. A Russian participant suggested that corruption is a sign of absence of laws or their implementation.

In some countries of the region corruption is accepted. For example, in Azerbaijan a man made his fortune in the Soviet period in shadow economy. The public opinion is that this person worked for the benefit of his family. He is now planning to run for the presidency.

The Kyrgyz participant said that state structures and programs for poverty reduction exist in Kyrgyzstan and that non-governmental organizations are complementing the state efforts. However, the use of national funds for poverty reduction needed to be more transparent. There are no monitoring mechanisms for governance and local communities lack self-governance and resources.


"The political participation of masses may be as illusionary as it was during the Soviet times, although we hope people have certain influence on decision-making."

Participants agreed that political participation is illusory to a large degree. Legal framework and democratic institutions do not guarantee democracy or poverty reduction. Institutions are meaningless and do not fulfil their representative function without the participation of the people.

The fact that voters turn out less now than in 1991 is only one indicator of low participation in the region. There are several factors that diminish the motivation to participate. Firstly, there is no tradition of participation. Secondly, poverty, lack of education and positive examples may act as hindrances to participation. Thirdly, a participant claimed that people understand democracy as freedoms as opposed to participation into decision-making. Sometimes weak or confused identities restrict participation.

Poverty and participation are interconnected. The poor cannot afford to participate in political parties and elections as often as other social groups According to a participant, the poor are more active at the local than central level.

Importance of genuine civil society movements was stressed as democracy often starts from small groups or at the community level. Reference was made to Poland’s Solidarity that provided a new vision for the country already before the collapse of the Soviet Union.

Citizenship and rights

The quality of education is eroding in Armenia. Teachers are leaving their jobs because of low wages. An average salary for a teacher is less than what is required for a monthly food basket. The energy crises have stopped school courses in the wintertime due to heating problems. Because of these factors a private system of teaching has emerged.

According to a study conducted in Armenia, 90% of those who enter university have had private lessons. However, the majority of the population cannot afford these types of lessons, which subsequently creates unequal opportunities.

Armenia has inherited a network of medical institutions from the Soviet times. However, since 1992 the budget allocation for medical services has dropped. Some medical services have also been transferred to the private sector. The majority of the population cannot afford to pay for private services. In cases where health care is free, the poor have difficulties paying for the medicine.

The majority of the population has no access to power in practice. Everybody has equal social, cultural and economic rights according to the law, but these rights have not been traditionally exercised by the people and the laws have not been enforced effectively. A participant from Armenia said that the society is based on non-written conventions and not on written laws.

Religious movements have appeared to fill in the religious vacuum of the Soviet times. New religious minorities are growing and creating a need for religious tolerance and coexistence.

A participant claimed that in Armenia there is no significant difference between women and men regarding poverty, since the culture is family-based. In Azerbaijan, national minorities live in rural areas, which increases their exposure to poverty. Poverty is especially harsh on children, women and the elderly in the countryside.

There was no legislation on economic rights before the perestroika. Central state organs regulated the Soviet economy until 1991. Now countries are designing economic laws without traditions or practices and there is a noticeable lack of legislation in this area, since economic rights are new. It was pointed out that in the West the laws mirror the reality whereas in the former Soviet Union it is the opposite.

The role of external actors

Presentation: Georgia and external actors

Poverty alleviation and democratization are inter-linked, but on the level of intervention, whether external or internal, there is little connection. The main external actors in the former Soviet Union are the World Bank, the UNDP and the IMF. The World Bank has produced numerous reports on the state of poverty in Georgia and on the region in general. The UNDP spends only a small amount of money on poverty reduction programs and very little is done by other actors in the field of poverty reduction.

Democracy and poverty alleviation can be supported at three levels. First level is the government level. The second is the civic sector including elections and participation in elections. The third level is the non-governmental organizations. Poverty concerns all these sectors of societal life. The government and the external actors are involved in all the sectors although little has been done to reduce poverty.

Only a small part of assistance is given to pensioners or other groups of the population, apart from handouts. Most of the humanitarian assistance goes to the internally displaced people, where incidence for support is less. According to the World Bank figures, poverty among the Georgian population is more than two times higher than among the displaced in Georgia. This shows how assistance can be distributed without a clear strategy.

The UNDP has spent 26-27 million dollars in Georgia in the last few years. About 11 million dollars out of the 26 goes towards the development of oil industry. The UNDP has sponsored only two or three small projects targeted towards assisting the geographically limited areas of Abhazia or South-Osetia. However, money allocated to an economically viable region or sector, such as the oil industry, can help to raise the GDP per capita and finally alleviate poverty. The World Bank incorporates a component of poverty alleviation in its projects in areas such as re-forestation. Some other reform programs backed by the World Bank have worsened the situation for the poor.

There are other actors, like the USAID and the European Union, that assist the poor. Many external actors give hand-outs, which some participants found demoralizing. For example, the USAID pays electricity payments for the poor in Tbilisi. Overall, little is done to build capacity in poor communities.

There is little co-ordination of efforts in different fields and actors. For example, there are now three different institutions for public administration, respectively funded by the United States government, some other American funds, and the European Union. Most of the western actors do not seem to be aware of the situation in the country or in the region.

Presentation: Russia and external actors

In the 1990s, the majority of the poor people in Russia were people with jobs. To have a job in Russia today does not correspond to the income level or social status.

In 1997, Russia received the highest loan in the history of the World Bank. By 1999 the World Bank had provided 12 billion dollars for Russia. At the same time, many donors and organizations were openly skeptical about the use and impact of loans and assistance. By the end of the 1990s, the World Bank changed its policies towards Russia. The Bank recognizes now a linkage between macroeconomic stabilization and social development and the key role of the recipient country in planning and implementation of programs.

The donors now organize forums to co-ordinate assistance programs. Financial international organizations often ignore developmental problems. They prefer to deal with the Russian government, although the role of non-governmental organizations and local communities should be supported.

Only ten years ago Russia was a super power. Many donors have considerable national interests involved in their assistance programs. Assistance is politicized.

The transition towards a market economy in Russia was carried out with attention focused on macroeconomic factors while the social price of the reforms was ignored. It is submitted that these social problems will lead to further deepening of social instability and hinder the process of democratization.

Corruption, criminalism, nepotism, prices and absolute power of the bureaucrats have increased to such a high level in Russia that the only solution may be to enforce the state control on economy. It is suggested that this should be carried out simultaneously with a process of strengthening the lower level governance.

Without increased investments Russia will face economic and social crisis. Outflow of money and resources is a major problem in Russia. Recent statistics show that each year 70 billion dollars of raw materials are taken out from Russia illegally whereas the state budget is only 20 billion dollars. In the future, it is necessary to end the outflow of resources and to create favorable economic conditions for their return.

Russia needs new paradigms for development that should be brought forth by Russia with the active involvement of the international community. The development of Russia is important for everybody.


All the participants recognized the high human potential of the populations in the former Soviet Union. The challenge here is to combine human potential with external assistance. The UNDP has attempted to use national expertise in most of its projects in Armenia.

Integration with the West helps countries in the democratization process. For example, an Azeri leader with a Bolshevik and communist past has been pressured to abolish the death sentence and censorship in order to enter the Council of Europe.

Integration into the European Union is not a possibility for Russia. It is difficult to imagine Russia as a member of the Union, although in 1989 and 1990 many Russians foresaw how Russia would integrate to the European Union. It is easier for smaller countries in the region to integrate to Europe.

The World Bank, IMF and other donors cannot approach the countries of the former Soviet Union the way they have approached the Third World. The poverty in the region is a new form of poverty and did not exist ten years ago. The reason why the countries do not place well in the Human Development Index is because per capita income has decreased and life length and the level of education are high.

In some countries there is increased dependence on donors as opposed to the electorate. The loans may correspond to a fourth or even a half of the state budget. The shadow economy and poverty create a condition where tax collection is both ineffective and small scale. Donors give money and at the same time the shadow economy diminishes tax revenues.

Many participants hold hope in the Western world to help solve problems of poverty and democratization, although foreign assistance has some serious flaws, including

  • Lack of consideration for the reality of the former Soviet Union and specific circumstances in general;

  • Lack of co-ordination of efforts between the foreign actors, governments and civil society;

  • Policies and projects carried out for donors' own interest as opposed to the interest of the recipients;

  • Collaboration with local partners in such a way that targeted impact is reverse;

  • Tendency to deal with the governments instead of the society at large. People do not participate to the projects and cannot therefore monitor how they are implemented;

  • Side effects of loans. A few million dollars can create corruption that has to be fought for years.


  • Integration to the international economy is a key.

  • Donors should revise their strategies with the help of national experts and the government.

  • Donors should plan and co-ordinate their activities better.

  • Outflow of resources and money should be stopped - external support is needed in this.

Key messages

"The world is based in three wheels of which the first is ideology. We don’t have ideology. The second is morals. We have lost our moral values. The third is labour, but the working people are poor. The labour has to be appreciated and the person has to live on his work."

"The new generation does not have the Soviet nostalgia. Their main concern is to find a job, to study, to become better professionals."

"I hope there is a stage where development of democratic institutions supports the development of social structures, overcomes poverty and strengthens the role of the electorate in political processes."


  • A multi-dimensional transition in the former Soviet Union is complex, ongoing and poses a challenge to the consolidation of democracy in the region. New ethnic, religious and migratory problems threat to erupt into intra- and inter-state conflicts which are not likely to serve neither democracy nor sustainable human development.

  • Market efficiency and social problems must be addressed simultaneously. Not enough attention was paid to the social cost of the transitions and reforms.

  • The positive experiences and values of the past should be appreciated and learned from. For instance, human capital is high and could be better utilized under the new system of governance. However, human capital will be lost without proper opportunities for education and participation to policy-making.

  • Government and the civil society organizations should find ways of cooperating with each other and develop partnerships.

  • Countries should have well-developed policies and strategies to deal with external actors, including donors and the business sector, in order to direct the development of the country. For example, governments should clearly state what type of assistance they need from donors, not to focus on what assistance they can possibly receive. Prioritization is key.



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