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India and Visegrad Four: Meeting Each Other Halfway

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Members of the Visegrad Group (Poland, Hungary, Czech Republic, Slovakia) are set on expanding cooperation with India. That such cooperation is of mutual interest was confirmed by Indian Foreign Minister Subramaniam Jaishankar’s visit to Hungary and Poland in August. Hungary and Poland pursue the most active foreign policy within the Visegrad Four.

This trend is not new – it clearly manifests itself in the policies of the Visegrad Group after the 2008 economic crisis. The Indian economy demonstrates an impressively fast growth rate (more than 7% annually). As it became clear in wake of the visit, Poland, Slovakia and the Czech Republic want to cooperate with India in the transport, energy, agricultural and defense sectors, Hungary – in pharmaceuticals and biotechnology, and all together – in investment and research projects.

Significantly, unlike cooperation with China, cooperation with India does not present a political dilemma for these countries. For the West, India is a democratic state, while China is accused of violating democratic freedoms, and Sino-US economic negotiations are in limbo. In addition, a certain rapprochement between India and the USA against the background of the economic differences between China and the USA makes it more convenient for the Visegrad Four to expand cooperation with India.

Apparently, New Delhi and Beijing are becoming part of European competition. India, however, will have to work hard to strengthen its economic, political and cultural presence in Europe if it wants to catch up with Beijing, which began working with Europe earlier and has been doing it more successfully and dynamically.

India positions itself as a self-sufficient civilization striving to become a connecting link between Europe and Asia. In many ways, the EU has the same vision of India. Given the situation, fitting Indian-European relations into a wider geopolitical context is at odds with China’s civilizational regionalism – the desire to keep Asian policy within the framework of the wider-context Chinese civilization and its sphere of influence. Therefore, the appearance of new, Asian players in Europe is not welcomed by Beijing, although it does not declare it openly.

The prospect of the UK’s withdrawal from the EU deprives India of one of the most valuable allies in Europe. Hence the search for new partners within the EU. Countries of the Visegrad Group come handy and, to some extent, could compensate the loss. Poland is an ardent ally of the United States in the EU, the United States is India’s ally in Asia. Slovakia and the Czech Republic are more pro-German and could somewhat contribute to New Delhi’s cooperation with Berlin.

India is also guided by economic considerations. The Visegrad Four expands relations with Japan, South Korea, Brazil and other rapidly developing economies. The absence of India on this list seems illogical. The participants believe that the economic potential of the Visegrad Four is not used to maximum capacity: 95% of trade between India and the EU is provided by countries of “old” Europe.

Apart from all that, India needs diplomatic support for its desire to become a permanent member of the UN Security Council. Although a reform of this structure is still a matter of remote future and is hardly realistic, India continues to push for it. Poland performs the functions of a non-permanent member of the UN Security Council in 2018-2019. Both parties view diplomatic cooperation of Poland and the other four countries with India as mutually beneficial. The latest example of such cooperation is Poland’s protest against Pakistan’s intention to include the issue of Kashmir in the agenda of the UN Security Council.

What could present some obstacles to the rapid expansion of India’s extensive partnership with the Visegrad Four is certain disagreements over the future of Europe, as well as the orientation of the two main “Visegradians” – Hungary and Poland – to various international partners.

Hungary opposes the presence of American NGOs, the financial and political dominance of Brussels and Washington, as well as the EU migration policy, but advocates constructive relations with Russia and China to the point of participation in the Chinese “One Belt, One Road” Project.

Poland favors building up the US military presence in Europe and is against improving relations with Russia, but, like Hungary, it opposes migration policy and the financial dictatorship of Brussels. Warsaw has a restrained attitude to the One Belt, One Road Project for fear of spoiling Washington’s mood.

Slovakia and the Czech Republic speak for the development of trade and economic relations with Asian partners, but in a format that would not disrupt their interaction with the export-oriented German economy. Like Poland and Hungary, Slovakia and the Czech Republic do not support the EU migration policy.

Under the circumstances, India will adhere to a nuance-based approach in relations with the Visegrad Four. In 2020, after Warsaw takes over the presidency of the Visegrad Four, it can be assumed that this will be the time for Poland to pursue its plans in cooperation with India. The Indian-Hungarian dialogue and relations between Slovakia and the Czech Republic will follow separate scenarios. 

From our partner International Affairs

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Eastern Europe

As Georgians Fight Each Other, Russia Gleefully Looks On

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Earlier today, the leader of Georgia’s major opposition party – United National Movement (UNM) – was detained at his party headquarters by government security forces, the most recent escalation in a drawn-out political crisis. This could well be the beginning of a new troubled period in the country’s internal dynamics, with repercussions for the country’s foreign policy.

The optics favor the opposition. Images of armed and armored police storming UNM’s headquarters was damaging to the ruling party, Georgian Dream (GD). Western diplomats expressed grave concern over the events and their repercussions. Protests have been called, and will likely be covered closely in Western media.

What comes next, however, is not clear.

Much will depend on what long-term vision for the country the opposition can articulate in the aftermath of the most recent events. It was not that long ago that UNM was declining as a political force in Georgian politics. There is a real opportunity here. But the burden is on the opposition to make a play for the loyalty of voters beyond its circle of already-convinced supporters.

Appealing to ordinary Georgian voters is ultimately the key to resolving the crisis. Beyond the intra-party clashes about the legitimacy of the most recent elections, there is a growing chasm between political elites and the challenges faced by people in their daily lives. And tackling these challenges successfully will not be easy.

Both the ruling party and the opposition have been facing declining support from the public at large. Long-term economic problems, which have been greatly exacerbated by the pandemic, have not been credibly addressed by either side. Instead of solutions, both sides have engaged in political theatrics. For many voters, the current crisis is more about a struggle for political power, rather than about democracy and the economic development of the country. No wonder that most people consider their social and economic human rights to have been violated for decades no matter which party is in power. These attitudes help explain high abstention rates during the most recent election. Despite remarkable successes in the early years after the Rose Revolution, Georgia has lacked a long-term policy for reimagining its fragile economy since its independence and the disastrous conflicts of the 1990s.

None of this, however, should minimize the threats to Georgian struggling democracy. Today’s arrests reinforce a longstanding trend in Georgian politics: the belief that the ruling party always stands above the law. This was the case with Eduard Shevardnadze, Mikheil Saakashvili, and is now the case with the current government. For less politically engaged citizens, plus ça change: Georgian political elites for the last 30 years have all ended up behaving the same way, they say. That kind of cynicism is especially toxic to the establishment of healthy democratic norms.

The crisis also has a broader, regional dimension. The South Caucasus features two small and extremely fragile democracies – Armenia and Georgia. The former took a major hit last year, with its dependence on Moscow growing following Yerevan’s defeat in the Second Karabakh War. Today, Russia is much better positioned to roll back any reformist agenda Armenians may want to enact. Armenia’s current Prime Minister Nikol Pashinyan has been weakened, and easily staged protests are an easy way to keep him in line.

Georgia faces similar challenges. At a time when Washington and Brussels are patching things up after four years of Trump, and the Biden administration vigorously reiterates its support for NATO, Georgia’s woes are a boon for Moscow. Chaos at the top weakens Georgia’s international standing and undermines its hopes for NATO and EU membership. And internal deadlock not only makes Georgia seem like a basket-case but also makes a breakthrough on economic matters ever more unlikely. Without a serious course correction, international attention will inevitably drift away.

At the end of the day, democracy is about a lot more than finding an intra-party consensus or even securing a modus vivendi in a deeply polarized society. It is about moving beyond the push-and-pull of everyday politics and addressing the everyday needs of the people. No party has risen to the occasion yet. Georgia’s NATO and EU aspirations remain a touchstone for Georgian voters, and both parties lay claim to fully representing those aspirations. But only through credibly addressing Georgia’s internal economic problems can these aspirations ever be fully realized. The party that manages to articulate this fact would triumph.

Author’s note: first published in cepa.org

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Eastern Europe

A Fateful Step Towards Annexation

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It’s easy to lose sight of regional developments amid high political drama. The story of Alexei Navalny’s poisoning, flight to Germany, return, and arrest has dominated Russia coverage in the West. Specialists have also been focusing on the struggle over the Nord Stream 2 pipeline, and the fallout of the Nagorno-Karabakh War. Meanwhile, when in November of last year Georgia’s Russian-occupied region of Abkhazia signed a 46-point agreement to create a unified socio-economic space with Moscow, not many took note. While pitched as a move to alleviate the territory’s economic troubles, the program marks a huge step toward eventual annexation of Georgia’s region by Russia.

Multiple new provisions feature in the new document which were absent in the 2014 military agreement. The new pact creates various provisions for the sale of local real estate, among them a stipulation on dual citizenship allowing Russians to get Abkhaz passports. A whole range of laws will be introduced whereby Russian investors will be able to invest money into and buy majority shares in what still remains valuable in Abkhazia.

The latest agreement also proposes allowing the Russians to buy into Abkhazia’s energy sector. Additionally, the Abkhaz will make legislative and administrative amendments according to the Russian law in social, economic, health, and political spheres. There is also a stipulation on simplification of law procedures for Russian investors.

While this may end up giving a shot in the arm to a decrepit Abkhaz economy, the high level of harmonization with Russian laws lays the groundwork for a future merger with Russia. It is this dilemma between closer cooperation with Russia and deep fear of Russian intentions that will haunt the Abkhazian political class for the foreseeable future. Though officially the new “socio-economic” program does not involve a change in Abkhazia’s political status, Abkhaz elites fret they are heading down the path to eventual incorporation into Russia.

Criticism of the pact in Abkhazia forced the region’s leader Aslan Bzhania to forcefully deny that Abkhazia was losing any sovereignty. Instead, he emphasized the positive elements of the document, especially the re-opening of Sukhumi airport. Bzhania also cited Abkhazia’s chronic energy shortages and the acute need for Russian assistance as justification for the deal. Still, fears persist. After all, unlike South Ossetia, the other Russian-occupied region in Georgia, Abkhazia has never entertained the idea of merging with Russia.

But Russia is playing a long game. Pressure on Abkhazia has been building up gradually over the course of 2020. After the resignation of Moscow’s preferred client Raul Khajimba, Bzhania’s candidacy was regarded with suspicion by Kremlin officials. As a result, when he won, Bzhania had to make multiple visits to Moscow to kiss the ring, even as Russian funding continued to dry up amid the pandemic. The cost of resuming aid, it appears, was increasing economic harmonization and with the looming threat of eventual assimilation.

With Russian investments into the energy sector and land purchases, Abkhazia will slowly lose its last vestiges of de-facto independence. On an economic level, Abkhazia is far richer than South Ossetia. But controlling it has other virtues. Out of all the separatist regions Russia controls, Abkhazia is arguably the most strategically located. A passage from the North to the South Caucasus, the region is also famous for its harbors and military infrastructure. Control over it gives Russia capabilities to check NATO/EU expansion into the region.

Russian plans in Abkhazia should be also seen within the context of Russia’s push to solidify its presence in the South Caucasus, especially in the aftermath of events in Karabakh and Russia’s peacekeeping mission there. Economic inroads into Abkhazia also mean a further distancing of other potential players such as Tbilisi and the collective West.

Author’s note: first published in cepa.org

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Eastern Europe

In Azerbaijan, Human Capital Investments are the Key to Resilient Growth in the era of COVID-19

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Photo: World Bank

By limiting access to health, education, social protection, and jobs, the COVID-19 pandemic threatens to reverse human capital gains in Azerbaijan. In a recently published report, Survive, Learn, Thrive: Strategic Human Capital Investments to Accelerate Azerbaijan’s Growth, the government of Azerbaijan and the World Bank identify the main challenges to building and activating human capital and put a spotlight on high-impact interventions that respond to constraints.

Fadia M. Saadah, World Bank Human Development Regional Director for Europe and Central Asia, reflects on the success and challenges of the past, and opportunities for the World Bank Group to partner with the government of Azerbaijan in ensuring resilient growth, powered by human capital investments.

Q. What do you see as the main challenges facing human capital formation and activation in Azerbaijan?

The government of Azerbaijan has achieved a great deal in terms of human capital development. Over the last five years, enrollment in higher education rose 21 percent. The introduction of mandatory health insurance supported an increase in the use of essential primary care level and improvements in efficiency. Contributory pensions and poverty-targeted social transfers raised the incomes of the bottom 40 percent substantially, facilitating household-level investments in health and education.

Despite this progress, gaps in human capital investments persist. On standardized tests, students from wealthier families score the equivalent of three years of schooling above students from poor families, an indication of wide inequalities in learning outcomes. Out-of-pocket payments remain high, despite the launch of mandatory health insurance, reducing access to services needed to control the rise of noncommunicable diseases. Only one in five households in the poorest quintile benefits from the targeted social assistance program, and labor force participation remains low, especially among women.

Azerbaijan’s Human Capital Index is 0.58, meaning that a child born today in Azerbaijan would be 58 percent as productive as she could have been as an adult if she had enjoyed full health and had benefited from a complete education. The COVID-19 pandemic has reduced access to social services and is projected to lead to an economic contraction of 4.2 percent in 2020. The government has risen to the challenge of recovering the gains in health and learning outcomes and ensuring that human capital development remains central to the political agenda.

Q. Azerbaijan faces the dual challenge of recovering from the COVID-19 pandemic and strengthening health, education, learning, and employment services to facilitate growth. What strategic investments do you recommend for the human development sector in the short and medium term?

The government aims to balance the medium-to-long term objective of reforming social systems with the ongoing COVID-19 pandemic response. Hence, in the health sector, we recommend the digitalization and interoperability of health information systems to support comprehensive surveillance and facilitate continuity of care in the treatment of noncommunicable diseases. Reforming health financing to increase public health spending and protect households from out-of-pocket costs will be important to increase health care access.

As schools reopen, Azerbaijan is investing in remediating learning losses. Doing so may involve ensuring that schools follow health protocols to reduce their risks of becoming the source of group infections, providing students with financial and nonfinancial incentives not to drop out of school, and equipping schools and training teachers to better manage in-person and distance learning. We also recommend establishing a fund to support innovation in higher education.

Social assistance will be essential to ensuring that the most vulnerable households are able to access social services. Improving the coverage of the targeted social assistance program and increasing public financing for these transfers will further improve households’ resilience to consumption shocks. Including employers in the design and implementation of active labor market programs will help link people to jobs.

The potential for human capital investments to drive growth and resilience in Azerbaijan is significant. An analysis by the World Bank, The Changing Wealth of Nations 2018, reports that human capital comprises 64 percent of global wealth. If Azerbaijan ensured complete education and healthcare among children and adults, its long-run per capita gross domestic product could be 1.67 times higher than it is today.

Q. The World Bank has partnered with Azerbaijan on landmark reforms since independence. How do you see the engagement evolving over the next few years?

The next phase of the human capital policy dialogue in Azerbaijan can benefit from a focus on putting this agenda into practice through investments in human capital. The World Bank Group remains committed to providing technical and financial support for operationalizing and implementing this ambitious strategy. We highlight important areas of engagement in education, health, social protection, and jobs below.

Education: The World Bank Group has long supported the government in the development of the education system, including reforms in general education and formulation of the country’s education sector development strategy. The government has introduced per capita financing in tertiary education and a remuneration and quality assurance system in secondary education.

The Second Education Sector Development Project, which closed in 2016, focused on improving the quality of teaching and learning in general education. Through ongoing policy dialogue, the World Bank Group will continue to support education reforms, especially to increase access to early childhood education and spur innovation in tertiary education.

Health: The World Bank Group has engaged in the health sector over the past few years through policy dialogue and provision of technical expertise to support health financing reforms. At the request of the government, it is facilitating knowledge exchanges that may inform the implementation of mandatory health insurance, drawing on the experiences of Kazakhstan, the Republic of Korea, and Costa Rica.

With funding from the Japan Policy and Human Resources Development Fund, the World Bank Group is supporting efforts to improve the governance of digital data and leverage claims data to strengthen provider payment mechanisms within the mandatory health insurance system. Over the next few years, the World Bank Group will continue to engage in policy dialogue on priority issues, including health insurance, e-health and telemedicine, and the development of an integrated claims management system.

Social Protection and Labor: In the past few years, the World Bank Group has supported efforts by the government to raise the most vulnerable people in Azerbaijan out of poverty, by investing in the implementation of the National Employment Strategy and critical social assistance and disability reforms.

A recently approved Employment Support Project aims to improve vulnerable people’s access to employment by enhancing the scope and effectiveness of the government’s Self-Employment Program, enhancing employment services and programs, and building public sector capacity.

The Internally Displaced Person Living Standards and Livelihoods Project and Additional Financing, which closed in 2019, helped improve the living conditions and increase the economic self-reliance of internally displaced persons. The World Bank Group will continue to support Azerbaijan through ongoing policy dialogue to strengthen the social protection system as a platform to improve human capital outcomes and households’ resilience to shocks.

World Bank

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