China’s Gateway to Political Expansion:

A Case Study of Cambodia’s Faltering Democracy

Author: Blair Sullivan, Research Intern (Summer & Fall 2020), Center for Strategic and International Studies

Credits: Getty AFP / TANG CHHIN SOTHY

In just a few decades, China has transformed the global geopolitical landscape. Since joining the World Trade Organization as a member in 2001, China has achieved staggering economic growth and quickly leveraged this success to transform its diplomatic relations. Its booming economy allowed the nation to amass great regional and global influence, particularly with developing countries. While many thought China’s acceptance of globalization would lead to domestic liberalization and moderation, Beijing’s emergence as an influential global power has instead expanded its own illiberal sphere of influence. Since President Xi Jinping’s rise to power in 2013, China has experienced an aggressive centralization of power and a vast domestic crackdown through domestic surveillance and the social credit system, the repression of ethnic minorities, and state control of the private sector. While Xi has restricted foreign influence and political and economic freedom at home, he actively seeks to shape international relations and export his political views and values around the world.

Despite its historical non-interference foreign policy, Beijing has redirected its international strategy under Xi, particularly in Southeast Asia, through its adoption of a peripheral diplomacy model. China’s new international outlook prioritizes implementing cooperative regional economic, political, and security projects all instrumental to Xi’s “Chinese Dream”.

Chinese soft power and sharp power have been the primary modes of influence employed to establish Xi’s “community of common destiny.” Joseph Nye’s notion of “soft power” coined in 1990 still holds today, as demonstrated by China’s growing international and regional influence. President Xi Jinping spoke directly to this strategy in 2014 when he stated, “We should increase China’s soft power, give a good Chinese narrative, and better communicate China’s message to the world.” By using persuasion and attraction, rather than hard power coercion, China has received less opposition and resistance to its motives and desired outcomes. Alongside soft power influence, China has also adopted a “sharp power” foreign policy. This newly coined term by the National Endowment for Democracy highlights the space between soft and hard power as an authoritarian influence that “centers on distraction and manipulation… to pierce, penetrate, or perforate the political and information environments in the targeted countries.” Both of these modes of influence are strategically used by China to suppress political freedom and pluralism domestically and internationally.

The Indo-Pacific, particularly Southeast Asia, has become a region of rapidly growing strategic significance. The region’s lack of a major superpower and its fluid geopolitical orientation has put it at the forefront of China’s foreign policy. While Beijing may not directly push its authoritarian model on the region, it disguises its efforts to do so through consistent engagement in countries of weak governance such as Cambodia.

Case study: Cambodia

Cambodia has had a long history of grappling with Chinese influence. Following America’s withdrawal from Vietnam, Phnom Penh fell to China-backed Khmer Rouge in 1975, crowding out the last of the United States-backed Khmer Republic. This communist push gave way to a complete systematic restructuring, modelled on Maoist China, and to the persecution and killing of millions in the Cambodian Genocide. Cambodia and China later renewed bilateral relations in 2010 with a comprehensive strategic partnership. However, over the last decade, Chinese authoritarian influence has again spread in Cambodia, fueling corruption and further weakening its fragile democracy.

Economic diplomacy has been the main driver of China’s soft power campaign in Cambodia. China is Cambodia’s largest source of Foreign Direct Investment, accounting for 43 percent in 2019, and leverages this economic power to solidify influence in Cambodia. Chinese investment is largely expressed through new institutions and infrastructure projects– most notably the Belt Road Initiative (BRI). With a largely agrarian-based, low-skilled economy, Cambodia has relied on Chinese investment projects to develop its economy. Enormous infrastructure projects, amounting to $5.3 billion in Chinese investments, are underway and have given jobs to 20,000 Cambodians. Despite the development that Chinese investments and loans have created, they have ultimately weakened Cambodia’s autonomy as the country has amassed over $4 billion in debt to Beijing, thus creating a debt-trap subjection. China’s economic influence and predatory lending practices have become campaigns for direct influence in Cambodian politics and governance, with Cambodia’s resources and other strategic assets included in the collateral.

Unlike its soft power influence and highly publicized development investments, China’s breach into Cambodia’s digital economy has been covert and gradual. With low digital literacy and only 40 percent of the population in Cambodia using the Internet, Cambodia lacks sophisticated digital infrastructure, allowing room for Chinese digital development as a conduit for strategic corruption. China has rebranded development investment toward digital economies through the Digital Silk Road’s low-cost information and communications technology (ICT) projects. Sharp power influence through control of Chinese ICT companies in Cambodia allows for the seemingly invisible surveillance, manipulation, and exploitation of digital information flows and “cyber sovereignty.” China’s cyber governance, which promotes and normalizes invasive and inhibiting cyber laws, has successfully taken root in Cambodia, as it directly plays into the strategic interests of Cambodian Prime Minister Hun Sen.

Democratic Deterioration

China’s soft and sharp power influence has led to a significant regression in Cambodians’ civil liberties and political rights, particularly from rising trends of autocracy, disinformation, political coercion, human rights violations, and corruption. With a low score of 21 out of 100 from Transparency International’s Corruption Perceptions Index, Cambodia’s faltering democracy offers China space to penetrate and dismantle the nation’s democracy from inside out.

Cambodia’s Prime Minister Hun Sen, one of the longest-serving leaders in the world, has led since 1985. Over the years, he has gained Beijing’s full support and in return has promoted Chinese interests domestically and abroad. Most notably, Cambodia’s position in ASEAN has become a conduit for China’s strategic ambitions; in 2016, Beijing pledged Cambodia $500 million in aid, and a week later Cambodia voted for continued Chinese military presence in the South China Sea. China’s authoritarian model appeals to political leaders, such as Hun Sen, whose political control is threatened by Western democratic institutions such as free speech, rule of law, and transparency.

Cambodia’s Flawed National Elections

Cambodia’s 2018 national election was arguably the most notable and visible example of China’s authoritarian model in Cambodia. Before the election, Hun Sen, with assistance from Beijing, made numerous strategic efforts to ensure his continued leadership. After the U.S.-funded National Democratic Institute exposed Hun Sen’s undemocratic grip, the Prime Minister expelled the American election monitoring organization from Cambodia. This occurred alongside Chinese hacking of political groups and election entities opposing Hun Sen. Just before the election, Kem Sokha, head of the Cambodia National Rescue Party (CNRP), and other opposition party members were charged with treason and arrested, and the CNRP was dissolved by the Cambodian Supreme Court. The United States responded by cutting about $8.3 million in election assistance, though shortly after, Beijing added $20 million of election equipment to its prior $11 million donation. In the final 48 hours before the elections, the Cambodian government blocked independent news websites including Radio Free Asia, Voice of America, and Voice of Democracy, and by the end of the election, the CPP “won” all 125 seats in parliament, making Cambodia a de facto one party state.

Evidence of Chinese influence and political deterioration is indisputable as the country regresses towards autocracy. Perhaps the most significant autocratic incursion has been the repression of fundamental civil liberties such as freedom of expression, assembly, and association. The suppression of the media and press escalated with a new lèse-majesté law in 2018, criminalizing any sentiment insulting the monarch, as well as the permanent discontinuation of independent newspapers and broadcasting such as The Cambodia Daily, Radio Free Asia and Voice of America. China has used its sharp power influence and Cambodia’s weak digital infrastructure to fill this void with Chinese state-run media outlets like China Daily and The Global Times.

Pandemic Power

While fundamental civil liberties such as freedom of the press are particularly crucial in a global crisis, Covid-19 has widened the gap for corruption and Chinese authoritarian influence.The Cambodian government has leveraged Covid-19 to assume greater control and curtail liberties such as freedom of expression and association through numerous arrests of opposition supporters and journalists for spreading “fake news.” Since the outbreak of the pandemic, the government has arrested over 30 government dissenters, 12 of which having connections to the dissolved Cambodian National Rescue Party (CNRP). Under the pretense of a national response to Covid-19, the government even drafted a ‘Law on National Administration in the State of Emergency’ that could further violate basic freedoms through restrictions on media and unlimited telecommunications surveillance. As the first leader to visit China after the outbreak, Hun Sen has given into China’s strategic pandemic diplomacy and plans to deepen their “steadfast friendship.”

Recommendations:

China’s continued influence in Cambodia and Southeast Asia poses numerous threats inimical to the region’s balance of power, political orientation, and partnerships with the West. An American response thus remains crucial to preserve political and economic sovereignty and democratic governance in the region and prove the strength of a rules-based order, even in China’s sphere of influence. Recommendations for the U.S. response include:

  1. Provide alternative sources of support

Chinese investment has given countries like Cambodia the ability to enhance infrastructure development and other opportunities otherwise unavailable to them. The U.S. needs to increase its economic and diplomatic presence in the region, particularly through partnerships and programs mentioned in the Indo-Pacific Strategy. One example is the Blue Dot Network led by the U.S. International Development Finance Corporation (DFC), Australia’s Department of Foreign Affairs and Trade (DFAT), and the Japanese Bank for International Cooperation (JBIC). It needs to enhance its approach to the region to combat foreign authoritarian influence with particular focus on responsible infrastructure investment and digital connectivity. The U.S. should work with allies in bilateral and multilateral economic engagement efforts across economic, diplomatic, and military domains to crowd out authoritarian predatory practices.

  • Ensure support and protection for civil society and impose human rights safeguards in all internet-related laws and practices

The U.S. must use its partnerships and influence to support fundamental civil liberties andadherence to international standards, particularly in inclusive internet policies. Previous initiatives includes the 2018 Digital Connectivity and Cybersecurity Partnership (DCCP) that works to foster democratic principles through increasing engagement in an open, secure, and transparent Internet. Efforts must pave the way for grassroots movements by targeting younger generations averse to Hun Sen, particularly youth and the 50 percent of the population that is under 22 years old. The United States and its allies must also ensure the freedom of convicted journalists and political opposition.

  • Use institutions to build, support, and hold democratic infrastructure accountable

A values-based democratic foreign policy and the promotion of institutions, rules, and norms protecting liberal values are essential to insulate vulnerable democracies from authoritarian exploitation. The United States should strengthen existing international and domestic institutions and programs to support democratic values such as the Indo-Pacific Transparency Initiative, to “promote civil society, the rule of law, and transparent and accountable governance in the Indo-Pacific region.” Efforts must be made to guarantee electoral integrity, to strengthen and protect civil society, and to establish democratic solidarity in the region.

Cambodia is not the first case of illiberal interference and exploitation of weak democratic infrastructure. The United States must renew its commitment to democracy both domestically and internationally. America must support Cambodia and other democracies threatened by illiberal influence and specifically empower younger generations and embolden civic sentiment.

Closing the Global Digital Divide: The Significance of the International Telecommunication Union (ITU) to Emerging Economies

Author: Ruchi Gupta, Research Intern Summer 2021, Center For Strategic and International Studies

Credit: ipopba/Adobe Stock

Information and Communication Technologies (ICTs) – broadly encompassing telecommunications, mobile telephony, big data, and the internet – have permeated most aspects of life by providing newer and quicker ways for people to interact, gain access to information, and learn. A World Economic Forum report reveals that an increase in the digitization of a country by 10 percent fuels a 0.75 percent increase in GDP per capita, and a 1.02 percent drop in the unemployment rate. With applications in education, medicine, banking,  governance and e-commerce, ICTs are a key driver of economic growth and productivity, especially in developing countries, connecting people to valuable services and jobs, and allowing businesses to conduct their operations. Instrumental in this digital transformation journey of the developing world are some of the international entities like the World Bank, Organization for Economic Co-operation and Development (OECD), World Health Organization (WHO), among others that are supporting ICT implementation and the development of a pro-competitive policy and regulatory environment for the ICT sector.

ICTs can be hugely transformative in developing countries. For instance, an interactive geospatial ICT map is helping Mexico deliver financial inclusivity by pinpointing gaps and providing bank accounts to its ‘unbanked’ citizens, similar to the launch of micropayments via mobile phones in Kenya and Tanzania that greatly reduced the cost of banking services and transactional burdens. The introduction of mHealth (mobile health) applications in developing countries such as Cape Verde resulted in more accessible, affordable, and higher quality healthcare services. Farmers in Mozambique are able to send information about leaf damage to authorities through a mobile phone app and monitor the presence of an invasive pest threatening farm revenue and food security. Investing in ICT infrastructure is currently a top agenda for policy makers in most developing countries and those yet to establish an ICT ecosystem stand to be deprived of economic acceleration and digitization benefits. It will not be wrong to say that international organizations within this ecosystem – both those who set regulations and standards, and those that help in hard infrastructure –are perhaps more critical than ever as they are endowed with substantial resources to help build a robust ICT ecosystem for digitally constrained economies.

The Role of the ITU in the Digital Revolution: Global ICT Standards, E-health, and Online Learning

An organization that sits on the forefront of the digital revolution is the International Telecommunication Union (ITU). As the United Nation’s specialized agency for ICTs, the ITU works at the nexus of digital connectivity and sustainable development, and supports developing countries to fully expand ICTs, as they respond to and recover from the pandemic, while building preparedness for future global emergencies. With the upcoming election of its leader in 2022 – i.e., the Secretary General – the future state of ITU will play an intricate role for the future of ICTs in the developing world. While many policy papers have examined the role of the United States in the ITU, it is also important to understand the organization from the perspective of the developing world. The stakes for the ITU are particularly high, especially as progress on ICTs has not been equitable across the world due to lack of physical infrastructure, weak access and affordability to power and other public services, inadequate regulatory frameworks and policies, and poor literacy and digital skills of the population. These supply and demand gaps have led to startling digital inequalities between the developed and developing countries- while in advanced economies close to 87 percent of the population is connected to the internet, only 47 percent of people in developing nations are online. In the poorest countries, this figure plummets to just 19 percent of people connected.

Overall, 3.7 billion people (almost 50 percent of the world) remain offline, unable to take advantage of the transformative power of ICTs.

To bridge the staggering digital divide which has been further exposed by the Covid-19 pandemic, the ITU is enabling ICT infrastructure in e-health, e-learning, e-governance, and e-commerce. Additionally, the tools to shape future ICT governance and global standards provided by the organization are vital for the forward movement of the digital regulatory cursor. Particularly suited to lead in the development of telecommunication and ICT networks 2030 Agenda is the ITU-D (Telecommunication Development Sector), one of three main bureaus within the organization. As digital transformation continues to pose challenges for regulatory structures traditionally organized on a sectoral basis, policymakers can benefit from the interdisciplinary gold standard best practices provided by the ITU-D for policy, legal, regulatory, as well as on economic and financial issues and market developments. A strong partnership between ITU, U.S. companies and policymakers of emerging economies can create tremendous potential for interoperability and harness the ICT enablers necessary to navigate the digital transformation journey. Reinforcing ICTs particularly in the field of remote learning and telemedicine can prove to be giant leaps in the health and education sectors.

ITU can be a leader in expanding e-health technologies…

E-Health technologies are significantly relevant for developing countries, where access to quality healthcare facilities are lacking. Nearly half of the global population  still lives in rural communities that have historically struggled with healthcare access and infrastructure challenges. Health care services like clinical care, diagnostics, electronic patient monitoring and access to medical information can be provided through ICT applications like telemedicine, e-health, and m-health that are a cost-effective way to deliver healthcare in these underserved communities. For instance, research conducted on e-health technology in Sub-Saharan Africa demonstrated how patient identification, financial management and structured reporting improved dramatically after implementing well-adapted ICT tools in a set of 19 African health facilities. E-health standardization policy guidelines and adoption of emerging technology trends, notably big data and Artificial Intelligence provided by ITU-D are helping develop a secure health ecosystem with provider-patient connectedness, asset tracking, and regulatory compliance.

Countries like Ghana currently lack adequate cutting-edge research to guide decision making and policy implementation for effective allocation of national resources.

It is crucial to note that some of the most significant challenges of e-health delivery for many low- and medium-income (LMIC) countries are poor ICT infrastructure (patchy broadband coverage), non-standardized, fragmented health information systems with limited interoperability, high cost of acquisition, lack of technical skills, and lack of public trust towards the privacy and security of medical data. ITU can essentially play a lead role in overriding social, legal, and ethical barriers to e-health implementation, alongside identifying a roadmap to overcome obstacles in the health informatics landscape. On the other hand, involving the ITU in the process of crafting their national e-health strategies can help governments of developing countries tailor the ICT structural reforms to their unique health priority areas, simultaneously as they are being strategized, developed, and deployed.

…And the ITU can help close the global literacy gap with online education

E-learning platforms as rational, cost-effective means of continued education came under spotlight with the disruption of the traditional educational pedagogy due to COVID-19, when schools for more than 168 million children globally were completely closed for almost a full year. It is estimated that over 100 million additional children will fall below the minimum proficiency level in reading as a result of the health crisis. A recent OECD report estimates the societal cost of school closures to be a 1.5% lower global GDP for the next century, with a deeper impact on disadvantaged students.

Going forward, governments and education institutions need to invest not only in the technical infrastructure at a student’s home, but also the right digital pedagogical skills. At the heart of this is ensuring reliable and uninterrupted access to the Internet.

While for some countries in Africa, Asia, and Latin America, the pandemic accelerated their adoption of ICT services for online learning, emerging economies that have not yet implemented online education need to draw on the action lines provided by ITU bureaus to invest in the right ICT mix to continue to educate their next generation. For instance, in Jakarta, poor internet connection and lack of digital device accessibility are still impeding online learning for half of its student population, as the pandemic havoc continues. The ITU can potentially play the central role of a leveler in closing the global literacy gap through e-learning technologies, currently hindered due to poor quality of connectivity, lack of digital skills and devices, and bad regulatory choices. ITU-D is not only helping in bridging the digital gender divide, it is also leveraging the power of public-private partnerships that can work wonders in the education sector. For instance, in India, the state government of Karnataka equipped seven hundred schools with ICT labs through partnership with a private computer institute in an astonishingly short timeframe of forty-five days!

ITU Towards Fifth Generation Technology and beyond

Anytime from 2025 onwards, the number of connected devices on the Internet is projected to reach 50 billion. The deployment of 5G is a priority to meet the growing demand of connectivity, flexibility, and resiliency requirements, more so in the post-pandemic world. For countries like India, 5G is key to its digital ambitions, with industry-wide applications in agriculture, education, health, transportation, and most importantly – the Internet of Things (IoT).

Emerging economies currently shaping their next generation of telecommunication and cellular technologies including the 5G ecosystem are face tasked with choices of radio spectrum, selection of equipment suppliers, potential issues over public health, as well as its real level of industrial and consumer demand.

Guiding the evolution of 3G and 4G standards, the ITU will continue to play a pivotal role in developing globally applicable 5G standards, stable international regulations, sufficient spectrum for 5G, and the core network to enable successful 5G deployments at the regional and international levels, allowing countries to rapidly expand their digital technology and process very high volumes of data with minimal delay.

Looking Ahead: A Happy Marriage between the ITU and Emerging Economies

A strong partnership between ITU and its member states should ensure emerging economies have access to tailored assistance to promote confidence​ in the use of ICTs, while building their human and institutional capacity for the next generation of technologies. An important component of this partnership will be the ITU-SG 2022 elections- the organization needs a leader with democratic principles, one that can foster international cooperation and help countries close the digital divide with open and transparent internet governance. Governments of developing countries also need to do their part. For the seamless transition to a sustainable digital economy, governments should essentially focus on:

  • Infrastructure: Allocate adequate resources to boost internet access, affordability, and quality, fortified with secure, reliable internet governance, data regulations, and standardization frameworks, while prioritizing cybersecurity and data protection of citizens
  • Regulation: Establishing local governmental regulators with the scientific know-how and capabilities for collaborative cross-sectoral regulation, while safeguarding consumers
  • Environment: Create a holistic culture of change, information sharing, trust, and acceptance for digital tools and technology through digital skills training to enable capital development across all ICT work areas; develop policies to promote digital innovation and market creation
  • Stakeholders: Develop multistakeholder partnerships with ITU (and thereby with its gamut of member countries, regulators, and private sector players) driven by common goals, to create a coherent convergence of multiple initiatives for a digital ecosystem

Galvanizing efforts towards these goals will ensure the movement of digital inclusivity from vision to action. Failure to do so may exacerbate the current digital inequities and undermine the economic prospects of the developing world, leaving them behind in this era of digital revolution. More so, absence of a robust regulatory framework could result in opaque regulators gaining foothold in resource rich but economically poor countries with debt-trap policies, to eventually colonize them digitally. As the agency that is responsible for closing the digital divide, ITU’s policies, strategies, programming, and technical support on telecommunication and ICT development issues are significant. Pairing this huge potential of ITU with emerging economies is the way going forward and can be a transformational force to advance global development by leaps and bounds.

Ruchi Gupta was a Summer 2021 Research Intern for the Project of Prosperity and Development at the Center For Strategic and International Studies.  She has previously worked in the public and private sectors in India and the U.S and has a media and technology background. She did her MBA in Business Leadership and Marketing from the University of Notre Dame and is a current MPPA candidate at the University of St. Thomas. 

Facilitating West African Monetary Integration through the ECOWAS

By Samuel Matthews

For decades, there have been hopes for a greater degree of monetary integration across West Africa. The establishment of a currency union for the Economic Community of West African States (ECOWAS) would significantly impact the region’s macroeconomic situation and therefore its development. The continent is no stranger to currency zones: although it receives less attention than the larger Euro zone, the CFA franc zone covers fifteen countries with a total population of about 150 million. It was established by France in 1945 for its then-colonies, but the system survived the colonies’ independence. Initially pegged to the French franc, the CFA franc has been fixed to the euro since 1999 at a rate guaranteed by the French Treasury. There are two monetary unions that use the CFA franc: the West African Economic and Monetary Union (WAEMU) and the Economic and Monetary Community of Central Africa (CEMAC). The further monetary integration of West Africa has the potential to promote the region’s economic growth leading to rising living standards for its people.

For the eight member states of WAEMU, the CFA franc has been a source of both monetary stability and controversy. Compared to their neighbors, the nations of WAEMU have generally experienced lower rates of inflation and benefitted from the fiscal restraints imposed by the arrangement. This stability promotes trade and investment from Europe. But many of their citizens, particularly young people, have increasingly expressed dissatisfaction with what they see as a form of French neocolonialism. There are concerns among academics that the parity between the CFA franc and the euro has been set to “make France’s market the exclusive outlet for her former colonies’ raw materials.”

Along with seven additional West African nations, WAEMU members are also part of ECOWAS. Since its creation in 1975 with the Treaty of Lagos, there have been plans for the creation of an ECOWAS currency zone. These aspirations solidified in the form of the eco, a common currency that would replace the CFA franc and include all fifteen members of ECOWAS. Although its creation has been delayed many times over the last twenty years. In June 2019, ECOWAS announced plans to implement the eco by the end of 2020. However, Covid-19 and regional rivalries brought further delays. The pandemic is predicted to delay the implementation of the eco by three to five years. Perhaps even more important is the lack of agreement about what form the eco zone would take. At the beginning of 2020, WAEMU President Alassane Ouattara and French President Emmanuel Macron jointly announced reforms to the CFA franc that would decrease French involvement and involve renaming it to the eco – without input from the rest of ECOWAS. This prompted protest from prominent anglophone nations like Nigeria who want even less French involvement in the eco. For example, Ghana has proposed dropping the peg to the euro altogether.  

Photo by ISSOUF SANOGO / AFP) (Photo by ISSOUF SANOGO/AFP via Getty Images)

Clearly, there is momentum behind the establishment of the eco. Even though serious questions remain about the system that would replace the CFA franc, it seems likely that it will be implemented sometime within the next ten years. This means that it is important to consider the ways in which West Africa’s monetary integration can be better facilitated. A common currency is no guarantee of stability; the history of the euro zone is proof enough of this. Therefore, ECOWAS should simultaneously pursue policies to ease this transition by simultaneously pursuing fiscal integration, embracing currency digitalization, and adopting a sound industrial policy.

Recommendations for the Transition to Monetary Integration

  1. Fiscal Integration

Fiscal integration is one of the criteria for optimal currency areas. It is necessary to allow for the redistribution of resources between zone members. During times of crisis, weaker states can receive support from more stable economies, promoting the wellbeing of the currency zone as a whole. There are serious concerns that Nigeria would dominate the eco zone as it represents 67 percent of ECOWAS GDP. If the eco loses the peg to the euro, Nigeria’s exposure to volatility through oil revenues would threaten the stability of the eco’s exchange rate. A centralized fiscal body would promote the efficient use of public resources as well as convergence which would help to ameliorate these concerns. Such an institution would work alongside the zone’s central bank to coordinate monetary and fiscal policy. These fiscal links would also improve the zone’s ability to collectively respond to crises, particularly in the face of evidence that there is a low degree of correlation between how the nations of West Africa experience shocks.  

  • Currency Digitalization

As West Africa contemplates monetary integration, it should take advantage of the benefits of currency digitalization. The use of digital currencies is not foreign to the region. According to one survey, Nigeria has the world’s highest rate of adoption of cryptocurrencies, which are used to avoid high transaction costs when sending remittances. In December 2016, Senegal became the second country in the world to launch a national digital currency. As Senegal is a member of WAEMU, the “eCFA” is equivalent to the CFA franc in value. The adoption of a digital eco would strengthen the transition to a unified currency zone and yield important benefits to the members of ECOWAS, including reduced expenses from handling cash, financial inclusion, and a more responsive monetary policy. There would be challenges, however, as West Africa was slower to adopt mobile banking than East Africa. Only 6 percent of Nigerians use their phones for mobile transactions compared to 73 percent of Kenyans. However, Covid-19 has served as a catalyst for digital finance in the region. Maintaining this momentum, ECOWAS should build upon existing progress and architecture to adopt a digital eco.  

  • New Industrial Reforms

Addressing the serious structural challenges facing the region’s economies will promote growth and macroeconomic stability, providing a healthy environment for the adoption of the eco. Alongside fiscal integration and currency digitalization, it is essential that ECOWAS adopt an integrated industrial policy to confront these barriers to development. Skills-based education programs, infrastructure development, and regulatory reform to attract foreign investors are all examples of what this industrial policy might entail. West Africa suffers from a lack of industrialization. In 2019, the nations of West Africa only averaged 13.9 percent of employment in industry, compared to 20.3 percent for Latin America and 25.6 percent for East Asia, two regions with significantly greater levels of development. Successful structural transformation typically entails the movement of labor from primary commodity production to manufacturing and then from manufacturing to services. Yet many African economies have “leapfrogged” from agriculture straight to employment in low-productivity services like retail have limited potential for sustainable growth.

As the history of other currency zones demonstrates, the monetary integration of ECOWAS is not sufficient to secure sustainable growth. The eco should be accompanied by fiscal integration, currency digitalization, and industrial reforms. These policies are interdependent. By reducing exchange rate risk, a stable monetary policy promotes exports, which then fuels the growth of industry in countries with limited domestic markets. As policy makers recover from the effects of Covid-19 and look towards the implementation of the eco, they must prepare an integrated growth strategy that addresses the multifaceted challenges facing the region.

Samuel Matthews was a spring intern 2021 on the Project on Prosperity and Development at CSIS.

Anticorruption in Uzbekistan: An Opportunity for American Engagement

Author: Christine Li, Research Intern (Spring 2021), Center for Strategic and International Studies

Photo Credits: Giorgio Montersino, “Mother Russia Hotel,” https://www.flickr.com/photos/39442289@N00/1055047184.

An extravagant castle in France, a shell company in Gibraltar, and a Swedish telecom company may seem to be disparate things. However, they weave together as integral parts of an elaborate scheme to amass wealth and power – with Gulnara Karimova at the center. When her father (former Uzbek President Islam Karimov) was in power, Karimova used her status to extort billions for her own personal coffers, even creating her own transnational organized crime group. Known as “the most hated person in Uzbekistan,” she is now serving a 13-year prison sentence. Although this case represents one of the most egregious manifestations of corruption in Uzbekistan, other cases of endemic corruption have siphoned millions from Uzbekistan’s development.

Gulnara Karimova’s actions were indisputably horrific. However, her fall from grace created a rare opportunity for governance reform in Uzbekistan—she was no longer her father’s intended successor after her arrest in 2014. With his death soon after in 2016, power was transferred to Shavkat Mirziyoyev, for the first time in the country’s post-Soviet history.

The aftermath of a historic transition

Considering Mirziyoyev’s 13 years as Karimov’s Prime Minister, one may have rightfully expected little to change. But Mirziyoyev has shifted course from the closed-off, repressive regime of his predecessor. For instance, Mirziyoyev restrained the security forces to a certain extent, while also taking major steps to liberalize the state-run cotton industry. The International Labour Organization recently reported that “the systematic and systemic use of child labour and forced labour in Uzbekistan’s cotton industry has come to an end, although some local vestiges still remain.” The government has also eased currency controls and increased trade with neighbors, boosting flows by 11.3% in only the first year post-transition and marking an era of greater economic liberalization. More broadly, Mirziyoyev recently affirmed his commitment for a more open foreign policy agenda, focused on multilateralism and development cooperation

Beyond this litany of reforms, Mirziyoyev has also prioritized addressing his predecessor Karimov’s pervasive patronage system that forged a cadre of loyal oligarchs. In fact, Mirziyoyev’s first law was titled, “On Combating Corruption,” and provided the first major framework for addressing corruption in Uzbekistan. His government has since continued this momentum for over four years with initiatives, such as the 2018 law “On Public Procurement” and the creation of the Republican Inter-agency Commission on Combating Corruption. Most recently, the government established the landmark Anti-Corruption Agency  in June 2020, further institutionalizing anticorruption efforts.

Considering his ties to Islam Karimov, his somewhat inconsistent expansion of rights and freedoms, and significant pushes for a more liberalized economy, some believe that Mirziyoyev’s moves are more focused on maintaining his power over improving long-term governance conditions for the Uzbek people. However, even if his true intentions differ from his public messaging, these reforms provide some of the first opportunities in Uzbekistan’s post-Soviet history to institutionally cement major change.

Ongoing corruption struggles

Despite changes, there is also evidence that Mirziyoyev is perpetuating corrupt practices within his closest circles, appointing family members to highly influential positions and selectively enforcing anticorruption laws. Journalists exposing corruption have also continued to come under fire from government forces, and international outcry has recently emerged over the six and a half year imprisonment of anticorruption blogger and activist Otabek Sattoriy.

The 2020 Sardoba Reservoir Dam collapse that killed six people and displaced another estimated 70,000 provides an important case study of corruption in Uzbekistan. Though a taskforce was quickly established, there were major conflict of interest issues—the senator in charge was found to have possible business connections and was responsible for awarding construction contracts for the dam. Even more concerning, a closed-door trial recently handed down four to ten year sentences for 17 defendants whose relatives believe that they are scapegoats for larger officials responsible. Considering these ongoing problems, it is no surprise that Uzbekistan ranks 146 out of 179 countries on the 2020 Corruption Perceptions Index.

Mirziyoyev’s reforms are also creating new opportunities for corruption. In a push to demonstrate Uzbekistan’s growth and potential for investment, developers have begun a number of mega-projects with debatable transparency. The Tashkent City project, worth $1.3 billion, underwent an extremely opaque tendering process, and many companies involved in the project were tied to the Akfa-Artel group, founded by the Mayor of Tashkent himself. There has also been a substantial push for privatization, with an ambitious 2020 Presidential Decree for nearly 3,000 state-owned enterprises to be partly or fully privatized. However, there are reports that foreign investment attached to this privatization is “suspiciously circular,” possibly reaping economic benefits for elites within Uzbekistan who have brokered deals with government actors.

Externally, Covid-19 has also increased opportunities of corruption. A greater amount of foreign assistance and credit has created new Covid-19-related programs and, respectively, more opportunities for officials to siphon off money.

Three levels of engagement opportunities

Given these ongoing corruption problems, the U.S. should take advantage of President Mirziyoyev’s public stance on fighting corruption and pursue greater anticorruption cooperation with Uzbekistan. The U.S. and Uzbekistan have already substantially increased cooperation since 2016, with foreign assistance obligations more than doubling from $19.7 million in 2016 to $47.1 million in 2019. In October 2020, USAID also announced the creation of a bilateral mission in Uzbekistan. The initial press release emphasizes the role of USAID in “strengthening private business, non-governmental organizations, and independent media,” providing a beneficial opening. An overarching first step for engagement should be enshrining distinct anticorruption provisions within the next USAID five-year country development cooperation strategy (CDCS). By directly enshrining anticorruption as a priority, the U.S. will have greater latitude and possibly political will from the Uzbek government to undertake ambitious plans.

Strengthening institutions

After framing, the U.S. should prioritize strengthening institutions relevant to anticorruption reforms, beyond the executive branch. With existing concerns on Mirziyoyev’s anticorruption intentions, strengthening both prevention and enforcement institutions, such as the Oliy Majlis (parliament), judiciary, and the Anti-Corruption Agency can help lay foundations for a strengthened anticorruption ecosystem that can more likely hold its own, even after Uzbekistan’s national development strategy for 2017-2021 expires.

The fledgling Anti-Corruption Agency should be a priority institution. Created less than a year ago with relatively few legal mandates, the U.S. has a major opening to shape a powerful anticorruption mechanism. USAID could support foundational best practices through providing technical support for the agency’s early work in “designing an internal anticorruption control system,” monitoring staffing, and drafting future anticorruption legislation. Considering that the weakness of specialized state anticorruption agencies has hindered the success of previous U.S. anticorruption initiatives, this initiative will also be a worthy investment for future anticorruption endeavors. Another benefit of investing in the Anti-Corruption Agency is that implementing reforms may face less enshrined pushback than other institutions, as Uzbek judges and legislative members have traditionally benefitted from the spoils of corruption.

However, because the Anti-Corruption Agency is officially accountable to the legislature, reports to the President, and relies on the judiciary for binding enforcement, its power is still contingent on the strength of other institutions. Thus, the U.S. should also invest in the Oliy Majlis and judiciary. This diversified strategy for institutional strengthening will also prevent anticorruption gains from being easily undone at the behest of executive political whims. The Oliy Majlis is traditionally quite weak, but under Mirziyoyev, powers have expanded to some degree. Building on this tide, the U.S. could work with the National Democratic Institute and the International Republican Institute, common U.S. non-profit implementing partners with a legacy of legislative strengthening, to open projects in Uzbekistan as institutional reforms may be difficult to pursue directly between government actors. While working with local civil society actors would be ideal, the lack of formalized, independent organizations may pose challenges. On the judiciary, the U.S. should continue past efforts, such as digital transformation of the judicial system for transparency.

Increasing transparency and accountability in daily governance practices

Tendrils of corruption reach down to the most local levels of government in Uzbekistan. As such, changing daily practices can dramatically improve petty corruption conditions. One strategy is encouraging digital transformation, building on USAID success in Ukraine and India. As emphasized in USAID’s recent digital strategy, digital platforms can help streamline government processes and remove opportunities for corruption. Uzbekistan has already shown great appetite for digitalization, implementing a “Single Window” digital information system at all border customs posts last September and passing a decree last April on introducing digital procedures in procurement bidding.

Digital transformation should also include efforts to increase citizen accountability mechanisms. Under Mirziyoyev, Uzbek citizens have steadily gained internet access, and USAID could implement programs similar to the Civic Action for Accountability Project in Serbia that provides grants for local anticorruption leaders, organizes public events, and creates an online platform for anticorruption civil society leaders. Furthermore, the U.S. could encourage the creation of a digital citizen-led corruption reporting mechanism or provide accountability opportunities through increasing digital budget and procurement data availability.

There is also room for U.S. technical assistance and oversight on Mirziyoyev’s privatization push of state-owned enterprises. Building on the Terms of Reference signed between the Treasury Office of Technical Assistance and the Uzbek Ministry of Finance in 2019, another iteration could be pursued with a distinct focus on proper privatization of state-owned enterprises, or other U.S. agencies with relevant experience could pursue a similar agreement.

Leveraging multilateral support mechanisms

The U.S. should also work with multilateral partners to generate support and resources for anticorruption reform in Uzbekistan. While Covid-19 has increased opportunities for corruption, calls for international recovery also provide unprecedented resource pools to “build back better”—over $21.3 trillion worldwide. Similar to calls for a “green recovery,” the U.S. could encourage the inclusion of anticorruption considerations in a wide swath of recovery projects led by multilateral development banks, ranging from infrastructure to health system strengthening. Uzbekistan also received $375 million from the IMF last May under the Rapid Credit Facility and Rapid Financing Instrument, and a commitment on anticorruption reform featured as a part of the discussions. If Uzbekistan seeks further financial support from the IMF, the U.S. could encourage the IMF to consider providing finances contingent on anticorruption progress and action from conditions at the time of the previous agreement.

On a more political level, the UN General Assembly Special Session on Corruption is coming up in June 2021. Uzbekistan has yet to submit public contributions ahead of the assembly, providing one immediate area for cooperation. A political declaration is also likely to result from the session, and the U.S. could offer to support Uzbekistan in implementing any results.

Importance of anticorruption efforts in Uzbekistan

Supporting anticorruption in Uzbekistan is not good governance for good governance’s sake. Pervasive corruption prevents substantial and sustainable development from occurring by removing funds to improve citizen livelihoods, eroding public trust in government, turning away prospective international partners, and continuing inefficiencies. Furthermore, the government should be wary of the consequences of neglecting corruption, especially Mirziyoyev himself as he faces presidential elections in October. An increasing number of major protests on corruption increasing globally and a recent string of protests within Uzbekistan on the government’s inability to provide heat and electricity, provide alarming foreshadowing. Looking ahead, Uzbekistan will also have to contend with longer-term issues for the economy—issues that may necessitate a reduction in corruption for meaningful change and stability, such as rural-urban inequality and a growing youth population.

The U.S. also has multiple incentives for countering corruption in Uzbekistan. Corruption is emerging as a foreign policy priority, and both Secretary of State Antony Blinken and incoming USAID Administrator Samantha Power have emphasized addressing this global “Achilles heel.” Engaging on anticorruption in Uzbekistan could provide an early and quick win for the Biden Administration as there are distinct opportunities for cooperation and some form of pre-existing political will. Addressing corruption also supports U.S. business interests in the region. Corruption has long deterred U.S. companies from investing in the region, for fear of prosecution under the Foreign Corrupt Practices Act or uncertainty surrounding the general business climate. Lastly, increasing engagement with Uzbekistan serves U.S. national security interests. Uzbekistan is an integral part of China’s vision for the Belt and Road Initiative, and the most recent Interim National Security Strategy calls for the U.S. “to lean forward, not shrink back” against major challenges and adversaries, including China and Russia. With citizen dissatisfaction toward China mounting in Uzbekistan, this tide of anticorruption reform may be a rare opportunity for the U.S. to increase engagement, promote democratic values, and hedge growing Chinese and Russian influence in the region from an alternate angle—before it is too late to even consider this path.

Christine Li was an intern with the CSIS Project on Prosperity and Development and an undergraduate student at Harvard University studying economics.

Post U.S. Exit: Agriculture Can Power Women’s Growth in Afghanistan

Author: Hannah Davin, Research Intern (Spring 2021), Center for Strategic and International Studies

Photo: WAKIL KOHSAR/AFP/Getty Images

On April 14, President Biden announced that the U.S. would begin a sequential withdrawal of all troops from Afghanistan. The original U.S. – Taliban Peace Deal, signed in February 2020 under the Trump administration, called for a complete and immediate U.S. military exit by May 1. To uphold the original agreement while achieving full withdrawal of the remaining 3,500 troops in Afghanistan by the Biden administration’s target date of September 11, the administration will begin the withdrawal process on May 1. In coordination with the U.S. military, NATO has also announced foreign troops under its command will complete their full withdrawal by September 11. 

While Biden’s decision to leave Afghanistan may signal ending the “forever war,” there are a growing number of concerns that a final withdrawal will allow the Taliban and other insurgent groups to expand their jurisdiction and hinder the country’s significant political and economic gains. Furthermore, there are concerns that the exit of foreign troops will be a catalyst for notable regressions in human rights, specifically those for women and girls. Women’s rights in Afghanistan have improved substantially over the last two decades. Even so, many believe that the retreat of the U.S. military could negatively impact women’s employment rates, education, and healthcare outcomes. As the U.S. prepares to leave Afghanistan, the Biden administration should take measures to ensure stability and prevent insurgent groups from ascending to power. Policy initiatives that promote women’s rights and participation in the economy would be instrumental in this regard, primarily in the sector that employs a large majority of the nation’s workers: agriculture. Ideally, this would take the form of more opportunities and provisions for women in the sector.

Currently, women who work in Afghanistan’s agriculture sector face numerous challenges. While approximately 42.50 percent of Afghanistan’s population is employed within the sector, it is Afghan women that power its broad-based success. According to the World Bank, in 2019, 64.96 percent of those employed in agriculture were women compared to only 36.60 percent of men. Women’s main activities in the agriculture sector typically involve unpaid, arduous labor such as weeding, watering, and harvesting. Women are also primarily responsible for breeding livestock and for a majority of the tasks related to animal caretaking and upkeep. While women are responsible for a majority of the sector’s makeup and production activities, they are seldom able to participate in market ventures such as the buying and selling of produce and seeds. These positions are disproportionally reserved for men. This suggests that men hold a majority of the power in the sector and typically oversee the relationship between the household and the market.

Due to a lack of both education and funding, access to agricultural capital and land for women with entrepreneurial or self-sustaining ambitions remain largely unattainable in Afghanistan. Women in Afghanistan typically do not have access to land rights, even if they have inherited land or it has been legally allocated to them. When women are successfully able to own land and run farms, unfortunately their crop yields are 20 to 30 percent lower than those of farms run by men.

Providing equitable agricultural opportunities for women in Afghanistan has the potential to create new opportunities for women while it boosts GDP and rates of employment and improves the country’s human rights record. However, a hasty U.S. departure coupled with a potential expansion of Taliban control will likely make it more difficult to provide opportunities for women that enable them to make social and economic gains. To protect and expand the rights of women and girls and advocate for their participation in the economy, the Biden administration should look to create opportunities through policies and programs within the agricultural sector as it implements a more gradual withdrawal.

Women’s empowerment in agriculture starts with a restructuring of government policy. Strong laws and policies designed to ensure that women are allowed to contribute to the economy and to validate their status and rights as workers will be essential first steps. In Afghanistan’s agriculture sector, four out of every five female rural workers are considered “unpaid family workers”, compared to only one in five men. It is essential that women participate in local markets and receive agricultural training. Women’s economic opportunities must be expanded through increased access to value chains and regional and national production networks.

Much of women’s economic participation in agriculture remains within Afghanistan’s informal economy as women continue to remain “economically engaged but not economically empowered.” The provision of agricultural skills and marketing training must be prioritized for both women and youth. This could be achieved by providing agricultural courses that are sensitive to the obstacles women face every day, both in Afghanistan’s economy and within the sector itself. It is also evident that women should have the opportunity to own land and run their own farms. Achieving this goal will require removing barriers that do not allow women to obtain personal identity information, as a lack of documentation further restricts their rights to secure land and property.

Incorporating sustainable agricultural practices into Afghanistan also has the opportunity to provide economic sustenance for women. Targeted agricultural courses can teach sustainable farming practices including new planting techniques, tree disease prevention, and proper irrigation methods. In Afghanistan, 30 to 60 percent of harvested fruits and vegetables are lost due to insufficient transportation and temperature control. This can be addressed with solar food dryers which are capable of saving 50 to 70 kilograms of produce in three to five days on a small plot of land. Other agricultural initiatives, such as micro-greenhouses, may be able to reduce the unemployment rates of women during the agricultural off season. For example, in the past, unemployment rates in Afghanistan have increased to 44 percent in the winter up from 20 percent during the summer in rural areas.  Micro-greenhouses provide a way to empower women by providing a source of income during the winter months, as women can cultivate this produce for market as well as for their own consumption.

It is also important for development agencies to continue their work on projects that empower the women already employed in Afghanistan’s agricultural sector. The Afghanistan Rural Enterprise Development Program (AREDP) and the National Horticulture and Livestock Project (NHLP) are two examples of development projects benefitting Afghanistan’s agriculture industry. The AREDP in particular establishes small-scale enterprises in six districts in the Parwan Province. Of the 868 savings groups established by the program, 488 were for women, enabling them to run small enterprises. Furthermore, the NHLP project has helped over 390,000 male and female farmers. The project focuses on improving access to technology and providing trainings on best agricultural production practices, post-production practices, and how to gauge markets.

As U.S. and NATO troops leave Afghanistan, protecting the rights of women and girls is of paramount importance. Facilitating women’s participation in the agriculture industry, through strong government policies and sustainable agricultural initiatives, has the potential to be an effective means of addressing this priority. Providing opportunities and making space for women in Afghanistan’s agriculture sector opens new doors for economic opportunity, trade, and human rights outcomes. Through an emphasis on stronger sectoral engagement, better access to markets, and the implementation of sustainable agriculture practices and programs, steps can be taken towards sustaining the country’s agricultural sector and furthering gender equality in Afghanistan after the departure of foreign troops and for years to come.

Hannah Davin is a Research Intern for the Project on Prosperity and Development at the Center for Strategic and International Studies, a DC-based think tank. She is a graduate of the University of Massachusetts Amherst where she studied Environmental Science and Public Health. She has previously worked for WE ACT for Environmental Justice and the U.S. House of Representatives.