Does decline in the rule of law bear an economic cost? In a CDDRL seminar series talk, the Center’s Gerhard Casper Fellow in Rule of Law Janka Deli addressed this question. Using European Union (EU) trade data, she challenges the conventional wisdom that deterioration in the rule of law generates decline in economic vitality, on the belief that markets tend to punish states whose conduct violates liberal rule of law norms.

In the past decade, the rule of law has declined among EU member states, with Poland and Hungry embodying this trend. While conventional wisdom assumes that rule of law and economic growth move hand in hand, Deli presented findings betraying this expectation. With the EU as a case study, Deli examines how deteriorations in the rule of law, measured in terms of breaches in international investment agreements, affect bilateral trade.

What happens to the economy when rule of law declines? Deli finds that, on average, rule-of-law-related breaches of investment agreement are associated with a decline in exports due to trade losses suffered by Spain and Italy. In contrast, among newer EU member states, that trend was in the reverse. Decline in the rule of law, evidenced by repeated breaches of investment agreements, was accompanied by an increase in exports.

In making sense of this counterintuitive trend, Deli hypothesizes that norms and expectations surrounding investment agreement breaches vary across “old” and “new” EU states. Put simply; trading partners may be employing higher standards in dealing with investment breaches involving old member states while showing more tolerance to similar violations by new member states.

Deli’s findings challenge the belief that markets’ “invisible hand” will always punish illiberal economic practices and behavior, thereby steering countries toward liberal values and commitments. In the realm of EU trade, the empirical realities suggest otherwise.

How have EU (European Union) accession and NATO (North Atlantic Treaty Organization) enlargement affected commitments to liberalism in EU countries? Claremont McKenna College Professor of Government Hilary Appel presented findings from her research on this question at a Rethinking European Development and Security (REDS) seminar, cosponsored by CDDRL, The Europe Center, and the Hoover Institution.

Appel’s talk addressed the rise of Euroscepticism, illiberalism, and economic nationalism, as expressed by populist leaders in Eastern Europe over the last decade. Whereas many assume these trends have emerged in response to EU accession and NATO enlargement, her research suggests otherwise.

As NATO and the EU extended conditional membership invitations to Eastern European countries in the 1990s, many saw these steps as opportunities for advancing liberal governance. Appel highlighted the intrusive nature of the conditions imposed on these countries in that context. Specifically, that they were required to cede policy autonomy, rewrite laws to meet EU standards, and submit to bureaucratic monitoring. 

Some have argued that the invasive nature of this process has generated domestic backlash in these countries and, as a result, a declining commitment to liberal policy, as evidenced by the growing Eurosceptic and illiberal rhetoric of populist leaders like Hungary’s Viktor Orbán. Appel’s research pushes back on this argument.

Her talk cited public opinion data showing that peaks in Euroscepticism occurred primarily in the 2010s and not during either EU accession processes. Furthermore, she added, anti-liberal sentiment does not seem to run deep in public opinion polls, even though many populist leaders continue to use Brussels as a “punching bag” for policy failures.

The rise of populism, according to Appel, coincided with a climate in which the EU was ineffective in penalizing member states for violating previously agreed upon conditions and norms. The initial success of some populist leaders who openly rejected liberal policies and values, she explains, has demonstrated that there was no real consequence for subverting EU guidelines. Thus, other politicians followed suit, embracing populist rhetoric and policies. Put simply, the assumption that EU accession would constrain leaders of new member states (and lock them in a path of liberalization) proved misguided. 

Using the war in Ukraine as a lens for assessing the strength of EU and NATO alliances, Appel finds that alliance in Europe is stronger than expected, and the war has led to a renewed appreciation of NATO. That said, the war has not necessarily caused the electorate to turn away from Eurosceptic leaders. The war has also shifted EU priorities to the extent that condemnation of illiberalism has been put on the back burner for countries like Poland largely due to their instrumental support in aiding Ukrainian refugees.

As part of the Center on Democracy, Development and the Rule of Law’s Fall 2023 Research Seminar series, University of Southern California Political Scientists, Hoover Fellows, and CDDRL affiliated scholars Erin Baggot Carter and Brett Carter presented findings from their latest book Propaganda in Autocracies: Institutions, Information, and the Politics of Belief (Cambridge University Press, 2023). The book offers unique insight into how and why autocratic regimes use propaganda.

Under authoritarian regimes with “non-binding electoral constraints,” the authors explained, the goal of propaganda is to intimidate citizens and convey the idea that the regime can survive without their support. Propaganda in this context also makes the consequences of dissent common knowledge, thereby saving the regime the cost of actual repression. 

As for regimes with binding electoral constraints, their use of propaganda is often aimed at creating a semblance of credibility with a view to enhancing the functioning of future messaging. This involves mixing fact and fiction by exploiting the infrequent provision of public goods and occasionally conceding policy failures. The latter can sometimes prove damaging to the regime since it may contribute to future protests and unrest. 

The data compiled and analyzed by the Carters in this book constitute the world’s largest dataset on propaganda in autocracies, comprising 80 newspapers from 70 countries. Based on extensive coding and computational linguistics techniques, the authors used the coverage of about 8 million articles to build several measures of pro-regime propaganda.