Christopher Walker and Sylvana Habdank-Kolaczkowska of Freedom House -

The absence of rule of law is a glaring feature of virtually all of the countries of the non-Baltic former Soviet Union. To one degree or another, these systems still struggle with the legacy of hyper-presidential systems, monopolised politics and entrenched corruption. A subset of the region's authoritarian states, including Kazakhstan and Russia, have ambitions for economic modernisation, but they are ill-equipped to achieve meaningful institutional reform, given the absence of genuine political competition and lack of transparency in their governance systems. Already 20 years since the collapse of the Soviet Union, Central Asia has had particular difficulty in establishing the rule of law.

Findings from the 2011 edition of "Nations in Transit", Freedom House's annual assessment of democratic development in the former Soviet Union and Central and Eastern Europe, put the challenge into perspective. On key indicators, the five Central Asian republics perform at woefully poor levels.

For example, on judicial independence, the average rating of the Central Asian republics is 6.55 on a scale of 1 to 7, with 7 representing a total absence of meaningful redress mechanisms. This level of performance reflects environments in which judges routinely face interference and coercion from the executive branch of government and other powerful actors, and where there is little expectation of dispassionate resolution of disputes. This is especially true concerning politically sensitive cases and those involving strategic economic interests. The average corruption rating for the Central Asian republics is 6.5, the same as Russia's.

Shades of grey

Kazakhstan, the wealthiest and most advanced of the Central Asian states, continues to confront major corruption-related challenges. Corruption fuelled by enormous oil, gas and mineral wealth is deeply embedded among ruling elites, who use their official positions to appropriate and distribute key resources for personal gain. Under the leadership of President Nursultan Nazarbayev, anti-corruption efforts are applied selectively and capriciously. The most recent "Nations in Transit" report on Kazakhstan points out that, "charges of corruption and abuse of office tend to be levelled against government officials or political figures only after they enter into a personal or political rivalry with more powerful elites or challenge President Nazarbayev's authority." The main bodies charged with tackling corrupt practices - the Ministry of Internal Affairs, the National Security Committee (KNB), and the tax and financial police - have become instruments for senior officials to accrue power, intimidate rivals and extort bribes.

In Russia, the size of the grey economy is estimated at anywhere between 20-50% of the country's economic output, and capital flight in 2010 was estimated at $38.5bn. Although President Dmitry Medvedev has made cleaning up corruption a top priority of his government, the 2011 "Nations in Transit" report on Russia finds that anti-corruption rhetoric has not translated into meaningful action to get corruption under control. After nearly a full Medvedev term, it appears as though the corruption genie is entirely out of the bottle.

Freedom House's Russia report details a long and growing list of problems that include, "civil service appointments in exchange for bribes or on the basis of personal connections, business activities conducted by public officials, the influence of billionaire business magnates on state decisions, demands for informal payments from businesses, and widespread graft problems in the health and education spheres."

In general, the extent to which citizens can exercise their rights depends not on the law as established by freely elected representatives and enforced by impartial courts, but on the state of their relations with the leadership. Loyalists are rewarded and enemies are punished.

These realities must be considered carefully by potential investors in key parts of the former Soviet Union. The distinction between "emerging" and "frontier" markets in the region says little about these countries' performance on indicators of democratic governance, which can be strikingly similar. Russia and Kazakhstan are both designated as consolidated authoritarian regimes in "Nations in Transit" and both are heading in the wrong direction on the assessment's indicators.

While these two countries have made headway in terms of macroeconomic growth, much of this is a result of rising commodity prices. To date, neither state has been able diversify its economy from reliance on hydrocarbons, which among other things speaks to the absence of serious policy debate and alternatives in these systems. Serious questions remain as to whether these countries can turn the corner and establish publicly accountable and transparent institutions capable of consistently protecting property, enforcing contracts and combating graft. The trajectory in Freedom House findings suggest that without a major democratic opening, they are unlikely to do so.

Christopher Walker is director of studies and Sylvana Habdank-Kolaczkowska is managing editor of "Nations in Transit", an annual assessment of democratic institutions in the former Soviet Union and Central and Eastern Europe at Freedom House.