Good Governance and Human Security in the Caspian Region

Lecture Presented at the Conference on Caucus, Caspian and Central Asia: Maritime Dimensions of Security

May 14-16, 2004. Center for Foreign Policy Studies, Dalhousie University, Halifax, Nova Scotia, Canada

Hooshang Amirahmadi, Rutgers University

Ladies and Gentlemen,

Good morning! Let me begin by saying how honored I am to have been invited to speak at this distinguished gathering of experts on Caspian security. I want to thank David Griffths of the Center for Foreign Policy Studies (of Dalhousie University, Halifax, Nova Scotia, Canada) and Amir Mohagheghi of the Cooperative Monitoring Center (of the Sandia National Laboratories, Albuquerque, USA) for the invitation and joint sponsorship of this rather timely conference. After the tragic events of September 11, 2001, the Caspian region has taken a back seat to the Middle East, where the United States has focused its war against terrorism, the former Iraqi regime, and now the religious and nationalist Iraqi rebels. Yet the Caspian region and its security are no less important to global peace, regional stability, and American security.

Equally important is the security of the Caspian region for its own people, particularly if viewed from a multidimensional perspective, involving human-social, military-strategic, resource-economic, marine-environment, geopolitics-boundaries, and emergency-management security issues. In this lecture, however, I wish to focus my talk on “good governance and human security in the Caspian region,” covering the five littoral states: Iran, Russian Federation, Kazakhstan, Turkmenistan, and Azerbaijan. I shall begin with an outline of my conceptual thinking on the subject and then apply the framework to the real situation in the countries. Except as otherwise specified, the statistics I refer to in the lecture are for 2001 and taken from the Human Development Report 2003 of the United Nation Development Programs (HUR 2003, UNDP).

For centuries, the Caspian region was the strategic crossroads for the empires of Europe, Asia, and Africa. Control of its vital land and water routes, particularly for the spice trade, assured great power and wealth; it also invited rivalry – “the Great Game.” During the Cold War, ideological confrontations were added to the geopolitical allure of the area, causing the region to serve as a fault line in the East-West struggle.  Now that technological changes have diminished the significance of its trade routes and the Cold War has ended, the control of the region's rich hydrocarbon resources has become the focus of international business and political players -- the region has once again become a pivotal frontier.

However, it is a frontier vastly different from that of the past. History teaches us that while new frontiers bring significant dangers, they also generate opportunities for progress. The disappearance of the Soviet Union prompted regional and outside players to expand their influence in the region – a game characterized by gross shortsightedness with respect to the people in the region and their needs for good governance and human security. Governance - the way society collectively solves its problems and meets its needs, and human security - human rights and human capacity development, are the most critical challenges that the littoral states must meet in order to advance their societies in the global community.

Governance and Security Requirements of the New World

Till the end of the Cold War, security was understood in largely political and military terms as it was defined by the state for the protection of its national territory and control of its people. As such, neither human security nor governance were central to the security debates. Both were submerged under the rubric of national sovereignty and territorial integrity – the two most sacred defensive functions of the nation-state in the Cold War era. This political concept of security was partly influenced by the American experience, where early theories of international security were developed. Emergence of a democratic-imperial capitalist America, in parallel with the emergence of the Soviet Union as another world power of a “social-imperialist” dictatorial nature, was the key factor.

But the bi-polar, state-centric world, which gave birth to this concept of security, has largely disappeared: the ambitious tightly knit USSR has been partially replaced with a loose and largely timid Commonwealth of Independent Countries (CIS), and Western Europe has gained relative political autonomy from the United States in international relations. Even Japan now has become politically assertive in global matters. One consequence of this is that a new world has emerged where the state is no more the only player and security is no longer only the state’s business. Specifically, in the current tri-centric world where the state is challenged by multinational corporations and civil society groups, a new concept of security is emerging where governance and human security are the key concepts alongside the old concept of state security.

Prior to World War II, the concept of security was dominated by liberal ideas, which gave prominence to legal arguments and state preference, as opposed to capabilities, and tended to view international relations in optimistic terms. In the post-World War II, that is in the Cold War environment, realists, and then neo-realists, took over the security field and placed state power in the center of their new constructs as a means of regulating an otherwise anarchic international system. Security then emerged as a field preoccupied with constraining the power of other sovereign states and non-state actors through military deterrence and containment. But pre-emption, a concept central to the current Bush doctrine, was not allowed. The current United States defense strategy has gone even beyond pre-emption, in practice becoming a prevention strategy.

The Vietnam War helped to weaken the realists and increase the predominance of critical theories in security and international relations. The road was then opened to new ideas, some of which, like deconstructionism and post-modernism, begin to question the ideological basis and assumptions of political security as a means of state domination. The state was also rejected as the only unit of world security. It was argued that the Hobbsian view of the individual as inherently ruthless and self-driven is contrary to human experience and must thus be rejected. This cultural approach was complemented by the globalization debate, arguing that it has empowered the transnational corporations in international relations. Humanizing the individual, recognizing the corporate players, and limiting the sovereign privilege of the state meant that the old state-centric security concepts were no longer valid in the emerging post-Cold War world.

The international system is now viewed as having three groups of stakeholders: the state, the multinational corporation, and the individual. This latter in turn was considered as having a three-dimensional existence: member of the human race, self, and citizen (civil society actor as well). Only this last dimension was recognized by the old state-centric security concept: that state security also meant in a sense the security of its citizens, who were considered anarchical and assumed to have contradictory (national) interests to those of citizens in other states.  Here, citizens are territorially bound within a sovereign entity – the nation-state. Individual as a member of the human race or as self was considered irrelevant and in fact anti-security. 

Expanding the rights of the individual beyond citizenship rights and accounting for the corporate players meant that a new approach was also needed to conceptualize the way societies were governed, namely a governance model. The old concept held that citizens have governing rights but have, under democracies, bestowed that right to their state. In dictatorships, it was held that such rights are usurped by the state. But as far as security was concerned, the state represented its respective citizens in both cases, and the representation was legitimate to the extent that the state did indeed provide the required strategic security. In other words, the protective state, democratic or otherwise, had an inalienable sovereign right to security.

Governance, the way society collectively solves its problems and meets its needs, requires public participation, decentralization and partnership among the state, the civil society and the corporate sector.  The key concept of partnership in turn involves or enhances consultation, cooperation and coordination across functional (sectoral) and territorial (spatial) units of the nation-state.  Governance is, thus, a more integrated approach to decision-making, development planning, and societal management. It improves transparency, accountability and social inclusion, and thus results in societal cohesiveness. More importantly, the model fits the tri-centric world of the state, the civil society and the corporate sector.

The governance model is, thus, only possible under a democratic state or at the least a state that is prepared to recognize the rights of its citizens beyond the ordinary citizenship rights to include rights they are entitled to as individuals and members of the human race. These rights include human rights as defined in the UN Universal Declaration of Human Rights, and human development as outlined in the UN Millennium Development Goals.   Included in these documents are political, economic, social, cultural, territorial, institutional, spiritual, ideological, and informational needs and aspirations. From this perspective, states are classified as high, medium, and low human development achievers.

Besides these changes, globalization has also resulted in a number of significant developments, the most important of which are the emergence of issues that are both threats and panaceas to the security concerns of the state, the individual, and the corporation. These include terrorism, weapons of mass destruction, HIV/AIDS, drug trafficking and addiction, environmental degradation, poverty, corruption, and heightened trans-border traffic of people and commodities. For example, the Afghan opium trade is a major security concern for Iran but a security panacea for Afghan cultivators; and corruption in Caspian states is a major means of wealth accumulation but threatens the social fabric of the nations. The emergence of issues as security factors adds the concern of dealing with non-state actors, who are often not bound to any particular territory. Terrorism is, evidently, a case in point.

Globalization, by making peoples and states more interdependent has increased poverty and income inequality though it had the potential to reduce them.  Globalization has particularly endangered the security of the smaller developing countries whose governments are slow to adapt to technological and societal changes, and who have more difficulty seeing beyond short-term financial interests toward the long-term health of their peoples. Competing for international resources can be a dangerous proposition for the poorer states, as they already are facing tremendous challenges in managing their debts and fueling sustainable growth.  More critically, their relative poverty in the absence of appropriate governance makes them highly exploitable by multinational corporations. In addition, competition among nations to attract foreign investment leads to a lack of taxation, labor law, and environmental protection.

Another critical feature of the new tri-centric world system is a built-in tension in its drive for simultaneous stability and chaos, a development that has followed the emergence of a global civil society of global actors and constituencies, and thus global accountability and common vulnerability.  In particular, the system is caught between two diametrically opposing tendencies, one calling for integration and cooperation and the other creating conditions for disintegration and conflict.  Let us call these influences world-integrating forces and world-disintegrating forces. Broadly speaking, world-integrating forces include the corporate sector and technological forces, while disintegrative forces are comprised of interventionist states and certain non-state fundamentalist actors such as terrorist organizations and ethnic separatist movements.

There are many ramifications of the contradictory tendencies for integration and disintegration; the one I believe is most pivotal for a new paradigm of global security and coexistence is the diminishing utility of illegitimate power and offensive force, including militarism and violence, the so-called “hard power,” in gaining societal hegemony or maintaining a popularly undesirable status quo. As the power of offensive force has diminished, particularly when used unilaterally and preventively, economic force and information technologies, along with other components of so-called “soft power,” have become the most effective means of influence and domination.  Indeed, Japan and Germany have grown into powerful international forces almost entirely because of their economic strength and information-processing capabilities. In the absence of an expansive “soft power,” no amount of “hard power” may be exercised to gain dominance, legitimacy, or democracy.

In the tri-centric world, military power is not the most effective way of providing security for a country. The United Nations Development Forum says “the world can never be at peace unless people have security in their daily lives.  Future conflicts may often be within nations rather than between them—with their origins buried deep in growing socio-economic deprivation and disparities.  The search for security in such a milieu lies in development, not in arms.”  It will be impossible for a developing nation to make progress towards such goals as peace, development, environmental protection, human rights, and democratization without attending first to the sustainable development of its people’s capacities. The lack of human security, a universal issue now, is one of the causes of national discord, and can lead to multinational military conflicts. These conflicts can be prevented by meeting threats to human security before they become larger and more violent problems.

With the growing recognition of economics and information technologies as fields of force, and thus means of security, the state has come under increasing pressure to show performance in these areas. This demand is particularly significant in the context of the increasing rights of individuals and corporations. Significantly, under the new condition, totalitarian and authoritarian regimes are increasingly forced to accept the legitimate rights of their human and corporate elements, and become accountable to national and global societies. Indeed, the state is viewed as legitimate only to the extent that it is acceptably developmental and democratic. Otherwise, they are considered failed states; such states are increasingly barred from claiming sovereignty, a concept that has increasingly become people-centered.

Experience and Challenges of the Littoral Caspian States

How have the littoral Caspian states fared in the tri-centric world, and what challenges do they face in security and governance? The answer to this question must naturally recognize the significant differences that exist among them in relation to their geography, population, resources endowment, historic and cultural significance, and regional and international relations and standing. Iran and the Russian Federation, for example, have bigger economies and larger populations, and are far more developed, wealthier, and better placed strategically than Azerbaijan, Turkmenistan and Kazakhstan. Nevertheless, they suffer from common problems and enjoy similar advantages.

Iran and Russia should have been major regional integrationist forces given their vast and strategic geographies and populations. In reality, however, they are only marginally influential in their region and are often seen as siding with disintegrative forces. Iran-US conflict and US- Russia competition are key obstacles to the potentials these countries have to assume a more active and effective role in various regional matters. For example, Iran and Russia only play peripheral roles in mediating regional conflicts, such as that between Azerbaijan and Armenia, as they themselves have unresolved conflicts with some states or ethnic groups at home or in the region. And, more significantly, the states still need to find a solution to the problem of the Caspian Sea legal regime.

Iran’s international political challenges include allegations regarding state terrorism and nuclear proliferation. Both these allegations are directed at the Iranian state, while terrorism in most nations is a non-state phenomenon. Russia, on the other hand, is a nuclear state and likes to view itself as a victim of Chechen terrorism. Yet, Russia refuses to actively engage itself in the so-called American war against terrorism, viewing the fighting in Afghanistan and Iraq as largely rooted in the American desire to dominate the region.  The other Caspian states are largely viewed as irrelevant to the terrorism and nuclear issues, but also have their own international challenges. For example, the dispute over Nagorno-Karabakh between Azerbaijan and Armenia remains a time bomb, and Azerbaijan and Turkmenistan need to settle claims over fields in the Caspian Sea.

Domestic politics are almost equally problematic in all five Caspian states. Iran and Russia are authoritarian states that allow dissent but also repress opposition selectively. They divide the population into conformists and nonconformists, allowing freedom to the former while restricting the rights of the latter in significant ways. Azerbaijan, Turkmenistan and Kazakhstan, on the other hands, are totalitarian states where elections are disallowed or allowed only as an international public relations ploy. In all these states candidates for public offices are vetted, overtly or covertly, and elections are rigged. Kazakhstan is not a signatory to the International Convention on Civil and Political Rights (1966) and the International Convention on Economic, Social and Cultural Rights (1966), while Iran has refused to sign the UN Convention Against Torture and Other Cruel and Inhumane or Degrading Treatment and Punishment (1984), and the UN Convention on the Elimination of All Forms of Discrimination Against Women (1979).  Ideological rigidity and power monopoly continue to remain major obstacles to the development of a democratic polity in the Caspian states.

Economically, too, the Caspian states do not fare well in the new world. While relatively wealthy because of oil and gas resources, their GDP per capita (PPP US$) is below the world average of about $7,376.  More importantly, their per capita GDP has declined in the last two decades or so, while income inequality has increased as has regional and sectoral disparities.  The littoral states are also only partially integrated into the global economy through the extractive oil and gas sector, though Russia has the added advantage of being a big exporter of armaments. Their share of the total imports of industrialized countries (including oil) is very low, under 0.5 percent, with the exception of Russia, whose share is comparable to the major Western European economies. Statistics for their share of the total exports from the same countries is similarly low. With the exception of Russia again, some 70 to 80 percent of imports are consumer goods; only 1 to 2 percent is capital goods.

Foreign investment remains miniscule in Iran, Azerbaijan, Turkmenistan and Kazakhstan, and the little capital that has been attracted concentrate in the oil and gas sector. In Iran, for example, only $400 million in foreign capital has been invested in non-oil sectors since the revolution. Iran’s manufacturing value added per capita in 2001 was only $285 (1990 US dollars) compared to $876 for the developing countries (See IMF 2003 report on Iran’s economy). Except for Russia, the other Caspian states have no better position with respect to non-oil foreign investment or the value added in manufacturing sector. In Azerbaijan, the manufacturing sector has all but vanished. The fact is that the Caspian states remain undeveloped and largely isolated from the international non-oil markets. Of all the Caspian states, only Russia can claim to be sufficiently engaged and developed.

The Caspian states are decades behind in technological development, despite the fact that in countries like Iran and Russia, the people could have created a powerful competitive economy. Russia is again relatively advanced in technological fields but all the other states are decades behind in the seven or eight key industries of our age: electronics, telecommunications, computer hardware and software, new materials, biotechnology, civil aviation, and genetic engineering. The high-technology sector makes up 8 percent of Russia’s manufacturing exports. For Iran the figure is 2 percent and for Kazakhstan and Turkmenistan 4 percent and 5 percent respectively. Russia spends 1 percent of its GDP (Purchasing Power Parity - PPP $US) on research and development, other littoral states much less. For Iran the figure stands at 0.1 percent, for Azerbaijan at 0.2 percent, for Kazakhstan at about 0.3 percent, and for Turkmenistan at close to zero. Compare these figures to the figure for South Korea at 2.7 percent. Figures for internet users are similarly low: for every 1,000 people, 29.3 Russian citizens are internet users, for Iran 15.6, for Kazakhstan 9.3, for Turkmenistan 1.7, and for Azerbaijan 3.7. Compare these figures to the figure for South Korea at 521.1.  

The Caspian states continues to mismanage their economies, which have declined relative to the years immediately preceding the Soviet era and pre-revolution in Iran. Managers are appointed on ideological and relational bases, not on the basis of expertise or merit. Corruption and rent seeking is rampant, and the governments dominate and lead the economies at the expense of the private sectors, except for a few well-connected, often corrupt, wealthy businessmen.  It will take years before these states can turn their economies and information-processing capabilities into fields of force for security purposes. Yet unless they mange to do so in the foreseeable future, the Caspian states will increasingly have to resort to military expenditures and thus further drain themselves of resources for economic and technological developments. At present, they spent almost as much on military as on health care or education. The Caspian states spend between 3.5 and 4.4 percent of their GDP on education and between 0.6 and 3.6 percent on health care, while spending between 1 and 4.9 percent on military expenditures. 

Socially, too, there are disturbing developments in these countries when compared to developments globally. Income inequality is widest in Russia and Iran, where the share of the richest 10 percent is between 10 to 20 times larger than the share of the bottom 10 percent poor. In Azerbaijan, where poverty is a more serious problem, almost 10 percent of the population earns less than $2 a day, and the GDP per capita shrinks 1.3 percent every year. Between 30 to 45 percent of the people in the littoral states live below the poverty line, and the female share of the total earned income is between 10 and 15 percent. Women are economically more exploited than men across the states, and in Iran they are also socially oppressed. The youth unemployment stands at between 20 to 30 percent, and the annual rate of “brain drain” ranges between 2 and 5 for every 1000 people, Iran suffering the most. The young populations, about 60 percent of whom are below the age of 30, also suffer from the lack of social recreations. Many are addicted to drugs, particularly in Iran according to official statistics. Ethnic groups remain restless and some are plotting with foreign forces for separatist movements. In Kazakhstan, regional disparity is extreme.

The Caspian states predominantly view their national strength and defense in military terms, and thus pour a large percentage of their resources into their military and police sectors. This tendency is partly imposed on them, as they live in a dangerous neighborhood, but some officials of the governments actually believe in the use of offensive force and in the liberating power of violence.  While Frantz Fanon, the Martinican/French revolutionary political thinker, is no longer widely read, his influence continues: “Violence is a cleansing force,” he wrote in his The Wretched of the Earth, and it “restores self-respect.” More specifically, the Caspian states continue to view their security through the old state-centric lenses. The state remains dominant and unanswerable to civil society and to private businesses, and individuals are viewed as mere citizens with rights determined by the state. The rights of the individual or citizen as self or as members of the human race are peripheral at best.

Significant governance problems exist in the Caspian states. While parliaments exist, they are often made null and void by decrees or institutional mechanisms. Public participation in decision-making, particularly in strategic areas, is even institutionally absent. Almost no partnership exists between the state, civil society and the business firms, and public policies often lead to social exclusion rather than inclusion. The lack of participation and partnership means that little cooperation and coordination exists across functions and territories at almost every administrative level. No wonder the Caspian states suffer from social incoherence and political tension. The tragedy of September 11 has indeed exacerbated the governance problem in the region as the states have often used the security pretext to further limit freedoms, and abuse the human rights and human development of their citizens.  Political dissidents are often labeled and dealt with as “terrorists.” 

Not a single Caspian state is among the high human development category of the UN report on Human Development. Of 175 countries included in the UN ranking of nations with regard to their achievements in human development, the Human Development Index (HDI) rank for Russia is 63 and for Iran 106, with other nations in between these two figures: Kazakhstan 76, Turkmenistan 87, and Azerbaijan 89. Iran’s situation is particularly problematic as it is the only Caspian littoral state with a negative GDP per capita (PPP $US) rank minus HDI rank figure. At –29, Iran is only better than 7 countries in the 175 countries included. The data is a good indication of state efficiency in managing its resources. A higher positive figure will indicate a more efficient bureaucracy, while a lower figure shows exact the reverse.  In terms of human rights, too, the Caspian states fare badly compared to many in the world, with Iran, Kazakhstan and Turkmenistan topping the list in the region with the most negative records.

There is also some good news. The countries’ political cultures are changing. Foreign policy is increasingly based on national interest, away from ideological considerations, and increasingly thicker lines are drawn between the states and disintegrative forces. It is now recognized that new nuclear proliferators will not be tolerated, and that identification with terrorists is dangerous. An increasing number of the political elite now sees offensive force as counterproductive, though the states continue to have a hard time grasping the value of defensive forces such as economics and technology or human rights and human developments. The role of government is increasingly being challenged by a growing number of NGOs and business firms throughout the region, and humanitarian causes are receiving significant attention. A clear break is developing between the state and NGOs, and this change demonstrates the fact that the legitimacy of the state in the region has sharply declined due to its inefficiency and the lack of transparency and accountability.

There are positive developments in the economic sphere too. The states have set up an “oil fund” to better manage their budgets and allocate resources for future development, and their economies are growing while their macroeconomic environment is stable. With the exception of Russia, Caspian littoral states as yet have no multinational corporations, but the business communities are increasingly asserting their relative autonomy from the states. This is particularly true of the small industrial entrepreneurs in the forefront of the struggle for modernization of the economies. A few Iranian companies now operate internationally, and an expatriate counterpart has also emerged in the West. The internationalization of these companies will help Iran’s economic integration, technology transfer, capital flow, and foreign partnership. It will take a while before firms in Azerbaijan, Kazakhstan, and Turkmenistan can hope to achieve international prominence. 

There is some good news socially as well. The middle class continues to remain assertive and demand liberalism and democracy. Compared to the past, their numbers are large and their quality high in Russia and Iran. They now have better connections with both the working people and the modern sections of the upper classes. In other littoral states, however, they remain less significant but growing as well. It is particularly important to note the progress that women are making in private and public domains. Their literacy rate and economic independence has improved significantly in recent years, though their relative wellbeing is much lower than that achieved by men. In Iran, there are many great women artists and poets, powerful political voices, a Nobel laureate, an Oscar nominee, a best-selling author, and a beauty queen. Women’s achievements have been even more notable in the Russian Federation.

Ultimately, the main source of the Caspian states’ wealth today and tomorrow is their people. Here too there is good news. Their level of education and professionalism is fast improving, as is their global reach and awareness. The literacy rate is well over 75 percent in every state, and, according to the World Bank, 20 percent of the relevant age group in the Caspian states participates in some form of tertiary education. There are now millions of university graduates in these countries, and their size is particularly expanding in science and technology fields as well as in key social science disciplines. These achievements notwithstanding, the Caspian states continue to fail to generate visionary leaders among themselves. Why? In a nutshell, the problem is rooted in the undeveloped nature of their polity, and largely in the absence of well-developed political parties. 

To conclude this discussion, let me say that the Caspian littoral states face a multiple of political, economic, social, cultural, spatial, institutional and international challenges in order to develop their countries. Among them, and from a security perspective, governance and human development need to receive the highest priority. The key to achieving success in these areas is to intelligently mobilize and utilize available resources. Given that these states are oil and gas rich, their attention must particularly focus on a more transparent and accountable management of the revenue from these natural resources. They must translate the finite resources provided by nature into sustainable development, and this needs to be done as quickly as possible, since for most states in the Caspian region, oil provides a very short window of opportunity – in Azerbaijan, e.g., less that 20 years.

It is often the case that a sound fiscal policy, like creation of an “oil fund,” is viewed as the only proper policy. Yet, transparency, accountability, a vibrant civil society, and genuine democracy play an even more important role. It is indeed due to misunderstanding of this aspect of natural resource management that most, if not all natural-resources rich countries have less developed societies than nations lacking significant natural resources: they have greater poverty, income inequality and regional disparity, higher international debt and dependency, more dictatorship and human rights abuses, worse governance and legal procedures, and higher military and nonproductive expenditures. While oil revenue is an additional source of income and disruptive of traditional authority, it has also led to declining per capita income and authoritarianism, raising the likelihood for domestic conflicts. 

To be sure, there is a political dimension to “resource curse.” Revenues from the natural resources flow to the state, making it relatively autonomous from the citizens and the private businesses. They then often pay no taxes, or pay only negligibly, in such rentier states, and thus these states receive little clamor for representation from their citizens. The leaders here find no reason to share power and often refuse to account for the revenues. When transparency becomes a victim as a free press is suppressed, a host of negative consequences will follow, including dictatorship and human rights abuses. The absence of democracy then distorts economic policy and national priorities. Thus, instead of seeking legitimacy through the electoral process, the rulers seek it through inappropriate spending. Rent seeking, corruption, debt accumulation, and inflation can result, leading to political instability and conflict, which is how the regime of the former Shah of Iran collapsed.  A recreation of the past then becomes a desirable alternative and the future fails to come to life.

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