Good Governance in the Era of Global Neoliberalism Good Governance has become the major buzzword in aid policy and devel- opment thinking today. The concept is often defined as a political regime based on the model of a liberal democratic polity, which protects human and civil rights, combined with a competent, non-corrupt and accountable public administration. As this book will show, however, Good Governance is not just 'good'. The concept, as advocated by the donor community, often represents an instrumentalist, managerial and technocratic approach to development, aiming at the creation of an environment favourable to the implementation of prescribed economic reforms. By making use of a wide range of in-depth case studies from various developing countries and post-communist states, this book analyses the causes and effects of neoliberal restructuring and the process of depolitisa- tion and conflict that went with it. The contributors critically examine the contradictory nature of the concept of good governance and the conse- quences that have been seen to go with it. This important book provides a refreshing contribution to the literature on good governance. It will provide an interesting read for those with an interest in economics and development studies as well as being useful to policy makers and non-governmental organizations. Jolie Demmers is researcher and lecturer at the Centre for Conflict Studies at Utrecht University, The Netherlands. Alex E. Fernandez Jilberto is senior lecturer in International Relations at the University of Amsterdam, The Netherlands. Another of his books, Labour Relations in Development, is also available from Routledge. Barbara Hogenboom is researcher and lecturer at the Centre for Latin American Research and Documentation (CEDLA), Amsterdam, The Netherlands. 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Das 46 International Labor Mobility Unemployment and increasing returns to scale Bharati Basu Good Governance in the Era of Global Neoliberalism Conflict and depolitisation in Latin America, Eastern Europe, Asia and Africa Edited by Jolie Demmers, Alex E. Fernandez Jilberto and Barbara Hogenboom First published 2004 by Routledge Published 2017 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 711 Third Avenue, New York, NY 10017, USA Routledge is an imprint of the Taylor & Francis Group, an iriforma business Copyright © 2004 Jolie Demmers, Alex E. Fernandez Jilberto and Barbara Hogenboom, selection and editorial matter; individual chapters, the contributors Typeset in Times by Taylor & Francis Books Ltd The Open Access version of this book, available at www.tandfebooks.com, has been made available under a Creative Commons Attribution-Non Commercial-No Derivatives 4.0 license. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Pub/ication Data A catalog record for this book has been requested ISBN 978-0-415-34116-5 (hbk) In loving memory of Jean Carriere Contents 1 2 3 4 5 6 List of illustrations Notes on Contributors Preface JOLLE DEMMERS, ALEX E. FERNANDEZ JILBERTO AND BARBARA HOGENBOOM Good governance and democracy in a world of neoliberal regimes JOLLE DEMMERS, ALEX E. FERNANDEZ JILBERTO AND BARBARA HOGENBOOM The political economy of neoliberal governance in Latin America: The case of Chile ALEX E. FERNANDEZ JILBERTO 'Que se vayan todos': Neoliberal collapse and social protest in Argentina NORMA GIARRACCA AND MIGUEL TEUBAL Governing Mexico's market democracy BARBARA HOGENBOOM Triple transition and governance in El Salvador CHRIS VAN DER BORGH Playing Russian roulette: Putin in search of good governance ANDRE MOMMEN xi Xlll xvii 38 66 91 116 134 X Contents 7 'Good governance' can make bad government: A study of international anti-corruption initiatives in Bosnia-Herzegovina 161 DAVID CHANDLER 8 Clanism and predatory capitalism: The rise of a neoliberal nomenklatura in Ukraine 180 HANS VAN ZON 9 Between globalisation and sub-national politics: Russian think tanks and liberalism 203 ANDREYS. MAKARYCHEV 10 'Bad governance' under democratic rule in Taiwan 224 TAK-WING NGO 11 The political economy of recovery in Indonesia 246 J. THOMAS LINDBLAD 12 China's transition to industrial capitalism: Tracking institutional reform 265 HENK HOUWELING 13 From new order to new world order: Good governance and violence in Indonesia 287 JUDITH LARGE AND NICK MAWDSLEY 14 Good governance, privatisation and ethno-regional conflict in Cameroon 306 PIET KONINGS 15 Global neoliberalisation and violent conflict: Some concluding thoughts 331 JOLLE DEMMERS Index 342 Illustrations Figures 3.1 Argentina: Percentage variation of the GDP, 1987-2002 74 3.2 Argentina: Bank deposits, 1994--2002 75 3.3 Argentina: Unemployment and underemployment, 1982-2002 76 3.4 Argentina: Poverty and indigence rates, 1988-2002 77 3.5 Argentina: Total number of conflicts during the Convertibility Plan, 1991-2001 80 3.6 Argentina: Causes of conflicts, 1993-2000 81 3.7 Argentina: Causes of conflicts, 1997-2000 82 Tables 2.1 Ecuador, Peru and Argentina: Major economic indicators, 1999-2001 43 2.2 Latin America and the Caribbean: Development of some economic indicators, 1982-2001 49 2.3 Latin America: Poor and indigent population, 1980-1999 50 2.4 Chile: GDP and total foreign debt, 1986-2001 53 2.5 Chile: Socio-economic indicators of distribution and the concentration of income, 1990-2000 60 9.1 Russia: The roles and functions of Russian think tanks 218 Contributors Chris van der Borgh is lecturer and researcher at the Centre for Conflict Studies, Utrecht University (The Netherlands). He wrote his PhD thesis on post-war El Salvador and specializes in issues of conflict transform- ation, political reform and development interventions. His recent publications include 'Political violence, intrastate conflict and peace processes in Latin America' (European Review of Latin American and the Caribbean Studies, no. 70, 2001) and 'The Politics of Neoliberalism in Post-War El Salvador' (The International Journal of Political Economy, vol. 30, no. 1, 2001). David Chandler is senior lecturer in International Relations at the Centre for the Study of Democracy, University of Westminster. He has written widely on democracy, human rights and international relations. His most recent publications include Bosnia: Faking Democracy After Dayton (London: Pluto Press, 1999) and From Kosovo to Kabul: Human Rights and International Intervention (London: Pluto Press, 2002), and he edited Rethinking Human Rights: Critical Approaches to International Politics (New York: Palgrave, 2002). Jolie Demmers is researcher and lecturer at the Centre for Conflict Studies at Utrecht University (The Netherlands). She works on (long-distance) nationalism and violent conflict, and neoliberal restructuring and conflict. Her recent publications include Friends and Bitter Enemies: Politics and Neoliberal Reform in Yucatan, Mexico (Amsterdam: Thela Thesis, 1998), Miraculous Metamorphoses: The Neoliberalization of Latin American Populism (edited with Alex E. Fernandez Jilberto and Barbara Hogenboom, London: Zed Books, 2001) and 'Diaspora and Conflict: long-distance nationalism, locality and the delocalisation of conflict dynamics' (Javnost!The Public: Journal of the European Institute for Communication and Culture, vol. 9, no. 1, 2002). Alex E. Fernandez Jilberto is senior lecturer in International Relations at the University of Amsterdam. He has published various books and articles on the political economy of Latin America and developing countries in xiv Contributors general. His most recent publications include Regionalization and Globalization in the Modern World Economy: Perspectives on the Third World and Transitional Economies (edited with Andre Mommen, London: Routledge, 1998), Miraculous Metamorphoses: The Neoliberalization of Latin American Populism (edited with Jolle Demmers and Barbara Hogenboom, London: Zed Books, 2001) and Labour Relations in Development (edited with Marieke Riethof, London: Routledge, 2002). Norma Giarracca is a sociologist teaching at the University of Buenos Aires and researching at the Instituto Gino Germani (University of Buenos Aires) where she coordinates the Grupo de Estudios Rurales. She has written and edited numerous books, most recently La Protesta Social en la Argentina. Transformaciones econ6micas y crisis social en el interior de! pais (Buenos Aires: Alianza Editorial, 2001), ;, Una nueva ruralidad en America Latina? (Buenos Aires: CLACSO, 2001) and 'Crisis and Agrarian Protest in Argentina. The Mujeres Agropecuarias en Lucha' (Latin American Perspectives, 2001). Barbara Hogenboom is researcher and lecturer at the Centre for Latin American Research and Documentation (CEOLA) in Amsterdam. She writes on national and transnational politics and neoliberal restructuring in Latin America. Among her recent publications are Mexico and the NAFTA Environment Debate: The Transnational Politics of Economic Integration (Utrecht: International Books, 1998), Miraculous Metamorphoses: The Neoliberalization of Latin American Populism (edited with Jolle Demmers and Alex E. Fernandez Jilberto, London: Zed Books, 2001) and 'Awakening from the dream of global civil society: the NAFTA experience' (in B. Hogenboom et al., Cross-border activism and its limits: Mexican environmental organizations and the United States, Amsterdam: CEOLA, 2003). Henk Houweling is associate professor of International Relations at the Department of Political Science, University of Amsterdam. His research field is peace and war in relation to problems of industrialization, devel- opment and underdevelopment. Among his recent publications are 'Destabilizing consequences of sequential development' (in L. van de Goor, K. Rupesinghe and P. Sciarone (eds), Between development and destruction. An enquiry into the causes of conflict in post-colonial states, London: Macmillan, 1996) and 'Industrialization in East Asia' (in H. Henke and I. Boxill (eds), The end of the Asian model? Amsterdam: John Benjamins, 1999). Piet Konings is senior researcher at the African Studies Centre, University of Leiden (The Netherlands). He has published widely on the political economy and labour in Africa, especially in Ghana and Cameroon. His most recent publications include Unilever Estates in Crisis and the Power of Organizations in Cameroon (Hamburg: LIT Verlag, 1998), Trajectoires Contributors xv de Liberation en Afrique Contemporaine (Paris: Karthala, 2000), and Negotiating Anglophone Identity: A Study in the Politics of Recognition and Representation in Cameroon (forthcoming). Judith Large is a research fellow of the Department of Politics and International Relations at the University of Kent, Canterbury, and an independent practitioner/consultant in conflict analysis and strategic planning. Her work in Indonesia has included practical experience in Maluku, Aceh, Kalimantan and Sulawesi. From September 2000 to March 2001 she was visiting lecturer at the Centre for Conflict Studies, University of Utrecht (The Netherlands). J. Thomas Lindblad is an associate professor at the departments of Southeast Asian Studies and History of the University of Leiden. He specializes in the modem economic history of Southeast Asia, in partic- ular Indonesia. Recent publications include Foreign Investment in Southeast Asia in the Twentieth Century (London: Macmillan, 1998), Coolie Labour in Late Colonial Indonesia (with Vincent Houben and others, Wiesbaden: Harrassowitz, 1999) and The Emergence of a National Economy. An Economic History of Indonesia, 1800-2000 (with Howard Dick, Vincent Houben and Thee Kian Wie, Crows Nest, NSW: Allen & Unwin, 2002). Andrey S. Makarychev is professor at the Department of International Relations and Political Science, Nizhny Novgorod Linguistic University, Russia. His fields of research are comparative regionalism and feder- alism, security studies, and the international relations of Russia's subnational units. From 2000 to 2003 he was International Policy Fellow at the Open Society Institute, Budapest. Recent publications include 'Economic reforms and new patterns of post-Soviet regionalism' (in A.E. Fernandez Jilberto and A. Mommen (eds), Regionalization and Globalization in the Modern World Economy: Perspectives on the Third World and Transitional Economies, London: Routledge, 1998), and 'Russia's regional labours markets: coping with the pressures of global- ization' (in A.E. Fernandez Jilberto and M. Riethof, Labour Relations in Development, London: Routledge, 2002). Nick Mawdsley has worked and lived in Indonesia for six years, initially as a researcher in the forestry sector. At the British Council he was the manager of the Governance and Society programme, where he worked on issues of governance reform, conflict management and the social safety net. He is currently working on short-term assignments on these issues. Andre Mommen works for the Department of Political Science, University of Amsterdam. In the past, his research has focused on neo-liberal reforms in developing and transitional countries. He has written on the effects of reforms in both developed and developing countries on the position of xvi Contributors trade unions. Among his most recent publications is Regionalization and Globalization in the Modern World Economy: Perspectives on the Third World and Transitional Economies (edited with Alex Fernandez Jilberto; London: Routledge 1998). Tak-Wing Ngo is lecturer in Chinese Politics at Leiden University (The Netherlands) and has been a Fellow of The Netherlands Institute for Advanced Study (NIAS). He is currently the editor of China Information - a major journal in the China field, and the editor of the NIAS Press (formerly Curzon Press) series of books on Democracy in Asia. Among his recent publications are the edited volumes The Cultural Construction of Politics in Asia (Richmond: Curzon, 2000) and Hong Kong's History: State and Society under Colonial Rule (London: Routledge, 1999). Miguel Teubal is professor of economics at the University of Buenos Aires and researcher for the National Council for Scientific and Technological Research (CONICET) at the Centre for Advanced Studies of the same university. He has published widely on the political economy of food, agriculture and poverty in Latin America and Argentina. Recent books include Agro y alimentos en la Globalizaci6n: una perspectiva critica (Buenos Aires: La Colmena, 2002), Globalizaci6n y expansion agroindus- trial. Superaci6n de la pobreza en America Latina? (Buenos Aires: Ediciones Corregidor, 1995), and Teoria, estructuras y procesos econ6micos, a collection of essays in honor of Dr. Julio H. G. Olivera (Buenos Aires: Eudeba, 1998). Hans van Zoo is research professor in Central and East-European Studies, University of Sunderland (UK). He worked as research coordinator for the European Commission (DG XII). His recent publications include The Political Economy of Independent Ukraine (London: Macmillan, 2000), Central European Industry in the Information Age (Aldershot: Ashgate, 2000) and 'Central and Eastern Europe: Catching Up or Marginalization in the European Free Trade Zone' (in A.E. Fernandez Jilberto and A. Mammen (eds), Regionalization and Globalization in the Modern World Economy, London: Routledge, 1998). Preface At the dawn of the twenty-first century world politics is (once again) framed in terms of Good and Evil. The Forces of Freedom are fighting the Axes of Evil, while Civilization and Enlightenment are placed opposite Fundamentalism, Darkness and Barbarism. As is often the case, these words hide complex and ambiguous realities. The recipe for 'freedom', for instance, as proclaimed by Western powers and International Financial Institutions (IFis) based on globalisation and market deregulation, is often seen as 'market fundamentalism' by developing countries. This is perhaps the greatest paradox of our times: the implemen- tation of liberalism by force. This volume deals with the complexities and paradoxes surrounding one of the 'Goods' in contemporary development discourse: Good Governance. During the 1990s, the IFis refashioned their somewhat worn-out discourse on the salutary effects of the free market by a strong emphasis on poverty reduction, transparent governance, human rights and democracy. Put under one heading, this new discourse was called Good Governance. And indeed, it seemed to proclaim only 'the good'. It aimed to help countries reach economic prosperity, ensure the rule of law, improve the efficiency and accountability of their public sectors and tackle corruption. Good Governance was to confront the Bad Governance of many developing coun- tries' administrations. It was this Bad Governance that was held responsible for the disappointing results of the structural adjustment programmes of the 1980s and the rise of the parallel economy, poverty and income disparities in recently 'neoliberalised' countries. However, this book tells a different story. By making use of a wide variety of case-studies from various developing countries and post-communist states, this edited collection critically analyses the causes and effects of neoliberal restructuring and the policy of Good Governance that went with it. It shows how, in the encounter with national and local contexts, the recipe of Good Governance produced unexpected and often unwanted outcomes. The Good Governance approach entails an essentially depoliticised notion of governance, insulating governance from the actual political process: the struggles for power, control over resources, as well as access to the decision- xvm Preface making process. Apart from many differences and specificities, the case studies in this book show how the neoliberal recipe encouraged new forms of division, inequality and instability. In addition, the book unmasks the Good Governance solution embraced by the IFis and many donor countries and lays bare its essentially neoliberal agenda. This book started from the fascination of our co-authors and ourselves with the uncontested popularity of Good Governance in policy circles and the adverse effects of global neoliberalisation in many developing countries. Building on previous research projects on issues such as market reforms in developing countries and the rise of neoliberal populism, we were happy to have a very diverse group of academics willing to participate in this project on the connection between neoliberalism, Good Governance, depolitisation and conflict. Without the authors' in-depth knowledge of their regions, their critical analysis and intellectual dedication, this book would not have been possible. We are very sad, however, that our dear friend and political scien- tist Jean Carriere no longer forms part of this group of critical thinkers. It is to him we dedicate this book. Jolie Demmers, Alex E. Fernandez Jilberto and Barbara Hogenboom 1 Good Governance and democracy in a world of neoliberal regimes Jolie Demmers, Alex E. Fernandez Jilberto and Barbara H ogenboom Good Governance has become the major buzzword in aid policy and devel- opment thinking today. It even seems to have dethroned Sustainable Development as the international policymakers' mantra. Conceived within the World Bank, the concept has been embraced by the governments of Western countries and by the IMF as both a goal and a condition of official (development) assistance. To lending countries, Good Governance is first of all yet another element of conditionality for indispensable loans, and ulti- mately for their acceptance as equal participants in the global economy. The transformation of Good Governance from simply a goal to also a condition for development assistance, emergency credits and debt relief coincided with the substantial decrease of North-South redistribution by means of official development funding. It coincided as well with the international compliance of the left with the position that free markets are the primary tool for the development of what were once known as the Second and Third Worlds. In the early years of neoliberal globalisation, neoliberalism was primarily an economic agenda that included a negative connotation of the state and the public sector. 'More market and less state' was in fact the prime objective of both the stabilisation programmes that started in the late 1970s, and the Structural Adjustment Programmes (SAPs) that were vigorously enhanced and extended in the 1980s. The early global neoliberal agenda hardly cared about a country's political system, its type of government or the participa- tion of its citizens. The Bretton Woods institutions' main concern was the implementation of economic restructuring, and if necessary the suppression of socialist tendencies - a task that authoritarian regimes and autocratic leaders had generally less trouble with than democratic governments. However, with the ending of the Cold War a new discourse on governance and the political system arose. Unemployment, poverty, income disparities and the sudden rise of the parallel economy, black marketeers and criminal networks in recently 'neoliberalised' countries (particularly the former Soviet Union and large parts of Africa) prompted the idea that global neoliberalism could only successfully proceed in a 'sound' governance environment. It was not the neoliberal model that was to blame for the lack of progress, but rather the immature, corrupt and inefficient state administrations. From the 2 Jolie Demmers, Alex E. Fernandez Jilberto and Barbara Hogenboom early 1990s onwards, the call for less state has gradually been substituted by a call for a better state. This new approach should not be confused with a plea for a return to the strong (Keynesian or socialist) state. Rather it implies better and transparent governance of what is left of the state after neoliberal restructuring has been implemented. Often, the emphasis on 'good' govern- ance was combined with a call for democratisation. As with Sustainable Development, the global fashion of Good Governance has proven hard to resist. In both political and academic circles the concept has easily spread and, apart from irritating some sensitivities in developing countries about new mechanisms of imperialist interference, it has largely been well received. But then, who would be against a rather broad and vague concept with the adjective 'good' attached to it? In this introductory chapter we will critically analyse the emergence of Good Governance and democratisation as prioritised issues of the inter- national development agenda, within the context of worldwide neoliberalisation. Apart from the causes, we will consider the political, economic and social consequences of this triad-like political project for free markets, Good Governance and democratisation. Instead of understanding its emergence as a genuine medicine against the illnesses caused by the free market agenda, we see the introduction of the good governance project as a placebo with possibly lethal consequences. Of course, in itself there is nothing wrong with the idea of 'good governance'. However, as this chapter shows, whereas the concept is explicitly presented as non-political and non- ideological, it strongly favours economic liberalisation. The attractiveness of the concept of Good Governance lies in its capacity to make complex issues seem manageable, to hide disagreement and to provide a practical answer to the disappointing results of the Structural Adjustment Programmes of the 1980s. Good Governance and the effective state By the year 2000 Good Governance had been globally accepted as a crucial means to achieve both development and poverty reduction, as is shown by the world leaders' adoption of the United Nations Millennium Declaration. However, Good Governance is by no means an univocal concept. The foggy and positive aura surrounding Good Governance often blurs the fact that the concept includes at least three different views on development (Leftwich 1993; WRR 2001). The first and dominant approach is managerial or technocratic. Its main elements are efficiency, authority and accountability of the state. In order to achieve this goal, enhancing a sound economic climate, transparency and the rule of law, and tackling corruption are considered the most important mechanisms. Public institutions and officials should therefore be controlled and held responsible for their functioning. This strictly qualitative improve- ment of the (small) state is expected to considerably contribute to