The State as Investment Market The State as Investment Market An Analytical Framework for Interpreting Politics and Bureaucracy in Kyrgyzstan Johan Engvall Table of Contents Acknowledgements ....................................................................................... 11 Chapter 1: Introduction ................................................................................. 13 The Study of the Post-Soviet State: A Critique ........................................ 16 The Modernization Bias ...................................................................... 18 Society-Centered Approaches ............................................................. 20 The Argument in Brief ............................................................................. 23 Why State Building, Why Kyrgyzstan? ................................................... 25 Outline of Study ....................................................................................... 28 Chapter 2: Theoretical Framework ............................................................... 30 The Modern State ..................................................................................... 31 The Soviet State ....................................................................................... 34 The Shadow State ..................................................................................... 37 Insufficiencies of Prevalent Approaches .................................................. 41 The State as an Investment Market .......................................................... 43 Historical Precedents ........................................................................... 44 A Note on the Market .......................................................................... 46 Market Access ..................................................................................... 48 Why Invest in Public Offices? ............................................................. 51 Returning Investments ......................................................................... 54 Implications for Political Stability and Instability ............................... 57 Concluding Remarks ................................................................................ 59 Chapter 3: Method and Research Design ...................................................... 60 Protection, Taxation and Jurisdiction ....................................................... 60 Approach to Human Behavior .................................................................. 62 Rationality and the Real-Life Context ................................................. 63 Collecting and Analyzing Empirical Material .......................................... 65 A Note on Written Sources .................................................................. 66 Field Studies and Interviews .................................................................... 69 Categories of Interview Subjects ......................................................... 70 Accessing Elites and Officials ............................................................. 72 Interview Design .................................................................................. 74 Challenges ........................................................................................... 76 Chapter 4: Political Development in Kyrgyzstan ......................................... 79 A Note on Pre-Soviet and Soviet History ................................................ 80 Emerging Elite Competition within the Disintegrating Monolith ....... 82 Central Asia’s “Island of Democracy” ..................................................... 83 First President Askar Akaev ................................................................ 84 Economic Collapse and Reforms ......................................................... 85 Unorganized Democracy ..................................................................... 87 The Authoritarian Temptation .................................................................. 90 Burgeoning Criminalization of Politics ............................................... 93 The Tulip Revolution ........................................................................... 94 Kurmanbek Bakiev’s Presidency ............................................................. 95 Violent Elite Competition .................................................................... 96 Bakiev’s Power Consolidation ............................................................ 98 The Bloody April Revolution ............................................................ 101 After Akaev and Bakiev ......................................................................... 101 Concluding Remarks .............................................................................. 103 Chapter 5: Market Access – Recrutiment to the State ............................... 104 Dominant Views on Recruitment to Public Offices in Kyrgyzstan........ 105 Collapse of the Old Recruitment System ........................................... 105 The Rise of the Sale of Political Offices ................................................ 107 The Sale of Administrative Offices ........................................................ 112 Educational System ........................................................................... 112 Buying a Police Job ........................................................................... 117 Recruiting Revenue Collectors .......................................................... 120 Appointing Judges ............................................................................. 122 Money in Relation to Merits and Personal Ties ..................................... 128 Concluding Remarks .............................................................................. 133 Chapter 6: Why Invest? Motives for Buying Public Offices ..................... 134 Administrative Motives .......................................................................... 135 Special Means and Remuneration by Fees ........................................ 136 Administrative Rights ........................................................................ 139 Ineffective Monitoring, or Office as a Franchise? ............................. 143 Why the State is Valuable for Elites ...................................................... 146 Economic Assets of the State ............................................................ 147 The Power of Decision-Making and Enforcement ............................ 149 Access to the State and the Protection of Wealth .............................. 153 Alternative Investment Markets ............................................................. 157 Kyrgyzstan in Historical Comparison: Same Practices, Different Purposes ............................................................................................. 160 Concluding Remarks .............................................................................. 164 Chapter 7: How to Make a Return on the Investment ................................ 167 Converting Political Power into Economic Capital................................ 168 Sustained Operation of Inefficient Forms of Production ................... 168 Gold, Electricity and Foreign Aid ..................................................... 170 Rigged Privatizations ......................................................................... 173 Embezzlement ................................................................................... 174 How Come Generals are so Wealthy? ............................................... 177 Office for Private Disposal ................................................................ 179 Making Money from Administrative Posts ............................................ 180 Perceptions toward the Police ............................................................ 180 Crime Control in Practice .................................................................. 184 Competition for Bribes in Revenue Collection .................................. 186 The Sale of Justice .................................................................................. 190 Non-Monetary Influence ................................................................... 195 Concluding Remarks .............................................................................. 197 Chapter 8: Market Stability and Instability ................................................. 199 Implications for State Performance ........................................................ 200 Short Time Horizons.......................................................................... 200 A Distinct Career System .................................................................. 201 Economic Development ..................................................................... 204 Understanding Political Instability ......................................................... 206 Why Personal Ties are Inherent to the “Public-Office-as-Investment” State ................................................. 207 A Stylized Summary of Akaev and Bakiev ....................................... 210 Manipulating Access to the State ...................................................... 214 Concluding Remarks .............................................................................. 216 Chapter 9: Closing Thoughts ...................................................................... 218 How to Break Out? ................................................................................