Introduction: Transitions and Trade

Abstract

Trade is critical to the success of the economic and political reforms in post-Communist economies. “Free trade” with the West is vital as both a source of revenue and a conduit of market discipline to former centrally planned industries. The U.S. Department of Commerce has stated that “international trade helps ensure political stability in foreign nations, promotes better international understanding and higher standards of living, and improves bilateral relations through the interchange of products, ideas, and culture” (U.S. Department of Commerce 2000a). Capitalist and democratic institutions are assumed to be mutually reinforcing. The West’s promotion of economic development and international trade in transitional economies is therefore presumed to have positive spillover effects on their political systems, thereby aiding in the process of democratization (Haggard and Kaufman 1995; Lipset 1994; Przeworski 1985, 1991; Rueschmeyer, Stephens, and Stephens 1992). Moreover, the ability of post-Communist countries to participate in the international political economy is a good indicator of the depth and scope of their transitions.

Pity the unpopular Russians. In July [2000], Mexico elects its first president from outside the ruling party; The Economist magazine labels it a “real democracy.” Russia elects a president from the political opposition in 1991, then holds no fewer than five competitive generally free national elections in the following years; The Economist calls it a “phony democracy.” Colombia has a problem with organized crime, and Washington gives its government $1.3 billion to help fight the drug lords. Russia also has a problem with organized crime, and American politicians sternly lecture Moscow not to expect any more aid until it cleans up its act. An undercover U.S. operation finds several Mexican banks laundering drug money in the United States, and Washington apologizes to the Mexicans for conducting sting operations on their territory. An American bank allegedly launders money for Russian organized criminals, and a leading senator accuses the Russian government of being “the worlds most virulent kleptocracy.” When the Asian crisis scares investors away from the Brazilian market and the real collapses, commentators declare it a bump in the road. When the Asian crisis scared foreign investors away from the Russian market and the ruble collapses, commentators declare the crash proof of the failure of liberal economic reform in Russia…. As readers of the Western press know, there are no business men in Russia only mafiosi; no democrats, only corrupt politicians; no citizens, only an impoverished, nationalistic mass. Members of the Russian middle class are often discouraged to learn, upon picking up Western papers, that they do not yet exist.

—Daniel Treisman, 2000. “Blaming Russia First.” Foreign Affairs, 79:6, pp. 146–7.