July/August 2014

Protecting Freedom Where It’s Threatened

It’s now a decade since Ukraine’s “Orange Revolution” brought hope that the country could be liberated from its post-Soviet legacy and join the ranks of the successful transitional countries of Central and Eastern Europe. Those hopes were sadly disappointed. But can the Ukrainians do better this time around? Besides the threat from Russia, Ukrainians face another large challenge: how to build durable institutions of democratic capitalism.

For nearly a decade now, the Cato Institute’s Center for Global Liberty and Prosperity under the direction of Ian Vásquez has worked tirelessly to advance policies that protect human rights, extend the range of personal choice, and support the central role of economic freedom in ending world poverty. In March the Center cohosted a conference in Kiev with the Atlas Network and the Ukraine-based European Business Association — an event that brought together prominent speakers from postcommunist countries who had had intimate experience with the challenges facing their Ukrainian counterparts.

Ivan Mikloš, former deputy prime minister of Slovakia and author of that country’s flat tax reform, urged the Ukrainian government not to delay the inevitable fiscal consolidation. The quicker and more radical the fiscal adjustment, he said, the sooner Ukraine’s economy will start to grow, generating opportunities for ordinary people, not just the oligarchs. While risky, such bold reforms often pay off politically. Mikloš’s own party recorded historically high levels of support in the election in 2006, after eight years of far-reaching reforms in the area of tax policy, pensions, and healthcare, as well as privatization and restructuring of ailing banks and utilities.

Other speakers included Einars Repše, former prime minister and head of the central bank of Latvia; Kakha Bendukidze, former minister of the economy of Georgia; and Cato’s own Andrei Illarionov, a veteran of economic reform efforts in Russia. The event attracted more than 500 attendees and significant media attention. As columnist Anne Applebaum wrote in the New Republic: One of the most positive events in Kiev last week took place not at the barricades, but in the gaudy conference room of the Intercontinental Hotel where hundreds of economists, bankers, and members of parliament gathered to hear advice from politicians who had been through equally dramatic revolutions. A former Georgian economy minister told the audience that the fight against corruption requires one crucial element: jail, for those who break the law. A Slovak told his Ukrainian colleagues to prepare fundamental reforms and to prepare to be really unpopular.

The suited Ukrainians in the room, none of whom looked remotely revolutionary, all asked the same kinds of questions: What laws do we need? What rules must we have? How can we make sure that this time the changes are real? That conversation won’t attract photographers, but it holds out the promise of something permanent.

On the heels of the Kiev conference, the Center for Global Liberty and Prosperity held a Latin American version of Cato University — the Institute’s premier educational event — in Caracas in April. After nearly 15 years of socialist rule, Venezuela is now facing an acute economic and political crisis: it has the highest inflation rate in the world, one of the highest murder rates, pervasive shortages, and widespread protests. Co-sponsored by CEDICE, Venezuela’s leading free-market think tank, the event attracted more than sixty students from all over the country to hear lectures on the impossibility of socialism, Austrian economics, Latin America’s populist tradition, and the relation between economic freedom and human progress.

Cato scholars Ian Vásquez and Juan Carlos Hidalgo also spoke at CEDICE’s 30th anniversary conference which gathered leading classical liberal intellectuals from all over Latin America, including Peruvian Nobel Laureate Mario Vargas Llosa. Vásquez and Hidalgo also visited the camps of the student protestors. Unfortunately, several weeks after the events, the Venezuelan government dispersed the camps, detaining scores of students in the process.

Cato recognizes that this student movement is one of the driving forces behind the struggle for freedom in Venezuela. Building on the Institute’s extensive work in the international arena, the Center for Global Liberty and Prosperity will continue to promote a better understanding of classical liberal ideas — noting in particular that young people’s appreciation of the failure of socialism is increasingly complemented by their desire to live in a country that recognizes both personal and economic liberties.