on the behavior of a totalitarian regime toward dissidents: an economic analysis

On the Behavior of a Totalitarian Regime Toward Dissidents: An Economic AnalysisAuthor(s): Pham ChungSource: Public Choice, Vol. 33, No. 1 (1978), pp. 75-84Published by: SpringerStable URL: http://www.jstor.org/stable/30023022 .

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Articles

8

On the behavior of a

totalitarian regime toward dissidents: an economic analysis

Pham Chung*

1. The problem which a totalitarian regime faces in the treatment of dissidents may be viewed partly as an economic problem of assessing the associated benefits and costs. By dissidents, I mean those individuals or groups of individuals who demand that their government recognize certain basic human rights, those that are taken more or less for granted by citizens of Western democratic societies. In dealing with dissidents, the choice of a repressive authority is either to punish or not to punish them. But a decision of a regime to punish or not to punish dissidents can be expected to entail benefits and costs, both internal and external. The external costs of punishment, for instance, may be in the form of decreases in economic and financial assistance from industrial, democratic societies of the West, particularly the United States. The recent announcement of the United States government to the effect that its economic and technical assistance would be considered in relation to the respect of human rights seems to be based on the premise that foreign repressive regimes would respond to external economic pressures by relaxing their policy of repression of dissidents. This note presents an analysis of the economic benefits and costs associated with a repressive regime's decision to punish or not to punish dissidents, its choice of an optimal strategy, and the relative effectiveness and limitation of the use of foreign assistance as an instrument of foreign policy.

2. As noted above, the decision of a regime to punish (or not to punish) dissidents entail external economic costs as well as internal benefits. The external costs arise largely from reaction and protest from people in Western democratic societies, above all the United States, who would consequently be less willing to support their government's foreign economic and financial

*University of New Mexico.



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assistance. It would seem reasonable to assume that the "severity" of punishment imposed on dissidents is an important determinant of external costs. The more severe the punishment, the greater the reaction and protest from abroad, and the higher the external costs.' These costs may be measured in terms of GNP losses caused by decreases in assistance from foreign sources. Assuming that punishment is in the conventional form of imprisonment, then imprisonment time (e.g., weeks or months) is a well defined index of severity of punishment. The problem is that aside from this conventional form of punishment, there are others as well. And while some people may consider some of these forms of punishment as severe, to many others they may be considered as mild punishment or non-punishment. For example, the decision of the Kremlin authority to force dissident writer Alexander Solzhenitsyn into exile in the West or to allow geneticist Medvedev to go to England and deny him a re-entry permit was undoubtedly considered as punishment by many intellectuals, among others. But many people would probably consider this as mild punishment or non-punishment. To the dissidents themselves it was, of course, punishment as they repeatedly expressed their desire to work in their homeland.

The presence of these and other forms of punishment (e.g., constant harassment by the secret police) suggests the difficulty of defining severity of punishment in general. This, however, does not seem to be a difficult problem when viewed from the standpoint of external economic costs since these costs are associated largely with the reaction of the majority of citizens in Western democracies. It is true that the forced exile of writer Solzhenitsyn and the denial of a re-entry permit to Medvedev are considered as punishment by many intellectuals in the West; yet, it would seem reasonable to assume that to the majority of people in the West, these actions on the part of the Kremlin authority constitute at most a mild form of punishment. Thus, from the standpoint of external costs, imprisonment time is by and large the relevant index of severity of punishment.

Apart from severity of punishment, the "external identity" of the dissidents seems to be another determinant of external costs. The external costs associated with the decision of the Kremlin to punish world-renowned nuclear physicist and Nobel Peace Prize winner Andrei Sakharov would be different from those associated with the same decision imposed on a dissident of much less renown. The greater the external identity of dissidents, i.e., the greater the support they receive from people in Western democracies, the greater the external costs of decisions to punish.

While the external economic costs are an increasing function of the severity of punishment, the internal benefits associated with such a decision can also be expected to rise. The failure of a totalitarian regime to punish critics would probably encourage more dissidents. And this would constitute a source of internal "subversive activity" that is a threat to the



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stability of a totalitarian regime, i.e., its ability to stay in power with all the economic benefits derived therefrom. If it is considered by a regime that severe punishment of dissidents would discourage others from assuming that role (and this seems to be historically the belief of leaders of authoritarian societies) thereby reducing the threat to its ability to stay in power, then severe punishment would increase the internal benefits. The latter may be defined simply in terms of the dollar amount of GNP losses from aid and other foreign assistance that a regime is willing to forego as a result of punishment. The greater the dollar amount of GNP losses from decreases in aid that a regime is willing to forego, the greater the internal benefits perceived by a regime in punishing dissidents. One can assume that the relation between internal benefits and severity of punishment is monotonic; internal benefits rise with severity of punishment. But one can also assume that internal benefits rise up to a certain level of punishment and decline for further increases. Indeed, beyond a certain level, punishment may be judged by the general public (particularly those who sympathize with the cause of the dissidents) to be so harsh that it may lead to protest and riots. In other words, beyond certain level of punishment, a regime may "hang" dissidents with the same rope around its own neck.

In addition to severity of punishment, the "internal" identity of the dissidents is another determinant of internal benefits. This is reflected in the support dissidents receive from domestic followers. The greater the internal support for dissidents, the greater the internal benefits perceived by a regime from punishment.

3. Considering the economic benefits and costs associated with decisions to punish or not to punish, the problem which a totalitarian regime faces in dealing with dissidents is (at least partly) a choice of punishment that would optimize its perceived net benefits. Since the external costs and internal benefits are related to the severity of punishment and both the internal and external identities of dissidents, one should expect a regime's optimal treatment to vary for individual or groups of dissidents. In general, it would seem reasonable to postulate that less severe punishment may be expected for dissidents who have widespread support in Western democracies but have little or no domestic following. The reverse would hold in the case of dissidents who have considerable domestic support but are not well known and supported abroad.

As an example, one may consider the behavior of the Kremlin authority in the treatment of dissident writer Solzhenitsyn. The internal benefits associated with a decision of the Kremlin to severely punish the famed writer can be expected to be small since his ideas and works, except for a small circle of underground intellectuals, are not well known in the U.S.S.R. because of the government's control network. Severe punishment, on the



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other hand, would generate heavy external costs as such a decision would

surely give rise to reaction and protest from the public in the West, which would be more reluctant to support their government's efforts to further

improve East-West "detente", not to speak of the possible alienation of Western communist parties such as the French and Italian Communist Parties which have at least on paper explicitly endorsed civil liberties and individual freedom. Considering the potentially high external costs of severe

punishment and negligible internal benefits, mild punishment seems to be the optimal choice. The ingenuity of the KGB was its ability to devise a form of punishment that would be considered by many in Western democracies as mild punishment or non-punishment, yet it was harsh

punishment for the writer himself: his forced exile in the West. In the case of Solzhenitsyn, the KGB indeed seems "to have the cake and eat it too".

They punished him for what he did, yet in the eyes of the Western world, he is essentially a "free" man. It goes without saying that some of his

underground supporters would in all probability volunteer for that kind of

punishment. Yet, one can hardly argue that this would encourage some of them to become open dissidents. They are well aware of the fact that since they are not well known in the West, instead of a jet flight to some Western cities, they would probably go on a long journey by train to Siberia if they became open dissidents.

The Kremlin's treatment of nuclear physicist Andrei Sakharov up to this point also seems to be consistent with the calculus of benefits and costs. A decision of the regime to severely punish the famed scientist would undoubtedly incur high external costs as it would cause an uproar of protest at least by the international scientific community while the internal benefits of such a decision would not be large; what the dissident advocates in regard to human rights is effectively suppressed by the government and hence not known by the Soviet public. By the same token, the relatively light sentences recently imposed by the Kremlin authority on dissident writer Mustafa Djemiliev and human rights campaigner, Andrei Tverdokhlebov, may be considered partly as a response of the regime to potentially high external costs from harsher treatment of these dissidents. As Valentin Turchin, a co-founder of Moscow's chapter of Amnesty International has stated to the Western press, the only reason for the light sentence imposed on Andrei Tverdokhlebov is the public pressure which has been brought on the Soviet authority.

While the behavior of the Soviet authority in the treatment of these individual dissidents may be explained in terms of economic benefits and costs, its behavior toward Soviet Jews at least in appearance does not seem to be consistent with the maximization of economic benefits; the Soviet government has refused to modify its policy of harassment and restriction toward Jews who wish to emigrate to Israel in exchange for economic advantages from a trade agreement with the United States.2 This is probably



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indicative of the presence of factors other than economic that act upon the decisions of the soviet regime toward dissidents. The point is that the refusal of the Kremlin authority to relax its restrictive policy toward the emigration of Jews is by no means an unequivocal evidence that economic benefits and costs play no part in explaining the regime's behavior. It should be noted that the external economic benefits of the Kremlin's policy to liberalize the emigration of Jews are only a component of the benefits and costs associated with such a policy. One should not expect the Kremlin regime to modify its policy toward Jews for a trade agreement with the United States so long as the economic benefits from such an agreement are more than offset by the costs associated with such a policy as perceived by the U.S.S.R. After all uncertainty is inherent in economic benefits from foreign sources as they can be abrogated at the discretion of foreign governments whereas a large scale emigration of Soviet Jews, particularly scientists and engineers, on the other hand, are permanent losses. The addition of these scientists and engineers would surely contribute to increasing the scientific and technological capability of Israel, and consequently its economic and military capability, not to speak of increases in Israel's defense manpower made possible by a large inflow of emigrants from the U.S.S.R. Over the long haul, the increase in Israel's scientific and military capability may be sufficient to cause some degree of imbalance in military power in the Middle East in favor of Israel. To redress such an imbalance, the Kremlin authority then may have to increase its economic and military assistance to its close allies in the area. This potential source of costs from a scientific and technological drain to Israel is not to be neglected.

4. What has been discussed suggests that the United States cannot expect a favorable response from a repressive regime every time it makes a decision to reduce or cut off economic and financial assistance. A favorable response from a foreign regime may be expected when the costs caused by a decrease or cut off of assistance more than offset the economic benefits to the regime of a policy of continued repression. Whether the internal economic benefits would be more than offset by external costs depend on the magnitude of the initial flow of foreign assistance and the extent to which that flow is reduced. Thus, the recent decision of the United States government to cut off economic assistance to the Brazilian regime (unless it modifies its repressive policy) can hardly be expected to result in a favorable response. The flow of United States assistance, which is reported to be less than $30 million a year, is probably too small to have any significant effect on the regime's calculation of benefits and costs. Indeed, the Brazilian authority can more than offset such a loss by jacking up taxes on coffee exports. It is true that a large share of the coffee exports of Brazil goes to the United States. Consequently, the U. S. government may put pressure on



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the regime by threatening to reduce coffee imports. But considering the strong American propensity to consume coffee, a U. S. threat to reduce coffee imports from Brazil would carry about as much weight as a U. S. threat to reduce oil imports from Saudi Arabia. Moreover, Brazil can export coffee to the United States through third-party exporting sources unless U. S. imports strictly specify coffee blends which would not allow no more than a fixed percentage of Brazilian coffee in the mix. At any rate, the effectiveness of the use of trade restriction as an instrument to deal with the Brazilian regime is likely to be limited. In the first place, the United States has been in a surplus position in its trade with Brazil. Second, Brazil's trade with the United States is not a large share of its total volume of trade. In 1970, for instance, Brazil's exports to the United States were valued at $669 million, about 24 percent of total exports of $2,739 million. During the same year, Brazil imported $839 million from the Untied States, about 30 percent of total imports of $2,849 million.3 A restriction of trade relations by the United States under these conditions would surely result in substantial self-inflicted damages.

Similarly, the decision of the United States to cut off assistance to Argentina and Chile also should not be expected to have any significant influence on the regimes because the flow of United States assistance to these countries was small. Likewise, there is not much room for the United States to use trade restrictions against these regimes. As in the case of Brazil, the U. S. enjoys a surplus in trading with Argentina and Chile; and their trade with the U. S. is a rather small fraction of their total trade. In 1970, Argentina's exports to the United States were $172 million, less than 10 percent of total exports of $1,740 million and its imports from the U. S. were $440 million, about 25 percent of total imports of $1,694 million. In the same year, Chile exported $154 million to the United States (about 12 percent of total exports of $1,247 million) and imported $300 million from the U. S. (approximately 32 percent of total imports of $931 million).4

This also suggests that recommendations recently made by some politi- cians and public figures in the United States that food and grain exports to the Soviet Union should be used to obtain concessions from the Kremlin, particularly in regard to the regime's policy toward the emigration of Soviet Jews,- are of dubious value. Such a policy is not likely to be effective. An embargo on food and grain exports to the U.S.S.R. in a magnitude that would cause significant costs to the regime would result in heavier costs in the United States, given that U. S. supply is plentiful relative to domestic demand, which has always been the case. After all, there are alternative sources of supply to the Soviet Union such as Canada and Australia. It is true that in the event of a U. S. embargo on grain exports, the Soviet regime may not be able to acquire from these alternative sources its required volume of imports. The Kremlin authority, however, has the ability to reduce the consumption standards of its population. Furthermore, with the



recently concluded United States-U.S.S.R. agreement in terms of which the Soviet Union can purchase up to eight million tons of grain from the United States, the Kremlin authority can conveniently justify any reduced consumption standards by blaming the United States for her failure to honor an international agreement. U. S. food and grain exports may be used as an instrument in dealing with the Soviet regime. But it would seem foolish to use a weapon that would result in greater self-inflicted damages (e.g., reduced farm income and employment and foreign exchange earnings, etc.) than damages inflicted. The decision of the U. S. President to put a temporary embargo on grain exports to the U.S.S.R. in 1975 of course had nothing to do with any desire on the part of the administration to obtain concessions from the Soviet regime. It was essentially a precautionary measure to prevent the possibility of higher food prices and domestic inflation as it was not certain at the time if the harvest would be adequate to meet both domestic demand and export commitments.

A restrictive policy on trade and development credit through the Import-Export Bank and international financial institutions whose lending policies are under substantial U. S. influences may be used against foreign repressive regimes. But the scope of the use of such a policy in general is limited. A decision of the U. S. Import-Export Bank to reduce credit to these regimes to finance imports from the United States would result essentially in U. S. economic losses (i.e., reduced exports and foreign exchange earnings) since these regimes may obtain credits and imports from competing sources such as Japan and Western Europe, assuming that substitutes for U. S. imports are available from these alternative suppliers. And this would surely be the case of imports of industrial goods.

The United States may have a substantial influence on the lending policies of international financial institutions such as the World Bank, the International Development Association, and the International Monetary Fund. Yet, for these institutions to substantially reduce short- and long-term credits to repressive regimes would require the cooperation of other influential member nations, namely Japan and those of Western Europe. And this is not very likely where they wish to establish greater economic and trade relations in direct competition with the United States. For instance, one should not expect Western Europe and Japan to engage in any kind of policies which would impair their rising economic and trade relations with Argentina, Brazil, and other Latin American countries. By the same token, the United States may have a large voice in the lending policy of the Inter-American Development Bank. But for this institution to adopt more restrictive lending policies toward certain regimes in Latin America would certainly require the agreement of other members. And such agreement seems unlikely because, with a few exceptions, most countries in the Southern hemisphere are under more or less repressive regimes. They are, so to speak, "in the same boat".s



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United States trade restriction is perhaps more effective in dealing with regimes in small economies which depend on the U. S. market for the lion's share of their exports. A decision of the United States to reduce imports from such small economies as Costa Rica, Dominican Republic, Ecuador, Haiti, and Honduras,6 to name a few, would probably cause sufficiently high external economic costs to force these regimes to modify to some degree their policies of repression.

5. There are repressive regimes which receive large economic and financial assistances from the United States (not to speak of military aid). Yet, a threat of the United States to reduce assistances to these regimes may not have any significant effect on their repressive behavior since under existing international economic and political conditions, such a threat would lack credibility. The aids are considered by the recipients (as well as the United States) largely as U. S. investments in its foreign economic and security benefits. South Korea and the Phillippines seem to represent these cases. The regime in South Korea is a recipient of large economic (and military) benefits from the United States. It is also aware of the fact that the aids are necessary payments for the United States to maintain its economic and security position in Asia. A decision of the U. S. to reduce assistance to the South Korean regime to an extent that it could undermine the economic and military security of this country would also undermine the economic and security interests of the United States in the Pacific, since any U. S. actions that would impair the security of South Korea would mean a serious threat to the security of Japan, an industrial power and close ally of the United States. In other words, a change in the policy of assistance to South Korea that could result in a loss of this strategic position would be too costly to the United States; for the U. S. to maintain its economic and strategic balance in the area following such a loss would require far greater resources than current levels of assistance to the South Korean regime. The same thing can also be said in the case of the Phillippines. U. S. aids to this regime are in a large part payments for U. S. security benefits derived from the use of air and naval bases. The (deliberate) omission of South Korea and the Phillippines in the announcement of United States policy of foreign assistance and its relation to human rights seems to reflect the different objectives of U. S. aids to these regimes.

6. What we have considered suggests that except perhaps for regimes in small countries which depend almost solely on the United States as a market for the export of a few major products, and the treatment of some internationally known individual dissidents, the effectiveness of the use of foreign economic and financial assistance as an instrument in dealing with



repressive regimes appears to be limited. The amount of U. S. assistance to some regimes is rather small. Consequently, a reduction or even elimination of aid would not cause any significant change in costs (and benefits) to those regimes to modify their repressive policies. For a reduction or cut off of assistance to have any effect the United States would have to initially start its aid at levels that would probably be too high to be acceptable to the Congress and the American voting public. There is also not much scope in the use of trade and credit restrictions since foreign regimes can always turn to U. S. competitors in the world market, particularly Japan and Western Europe, not to speak of the associated U. S. costs in the form of losses in income and employment in those sectors that depend on these export markets. For some repressive regimes which receive substantial U. S. economic and military aids, the flexibility in the downward adjustment of these aids is limited since they are essentially U. S. investments in foreign economic and security interests. In view of these considerations, it does not seem to be too far off the mark to conclude that the recent announcement of U. S. policy of foreign assistance and its relation to the issue of human rights is destined largely for domestic rather than foreign consumption.

Notes

1. For a totalitarian regime which depends on other totalitarian regimes for aid and assistance, the reverse would hold. The more severe the punishment, the smaller the external costs. The experience of Czechoslovakia under the regime of Alexander Dubcek seems to indicate this. Dubcek's tolerance of some degree of domestic dissen- sion resulted in the invasion of his country and he himself was thrown out of office. 2. Soviet Jews who apply for exit permits, particularly those with higher education, have been subject to harassment by the secret police and threats of prosecution by the government. Recipients of exit permits are subject to "financial" charges. In early 1971, Soviet Jews who were granted exit permits were required to pay an exit fee of 400 rubles and an additional fee of 500 rubles for the "renunciation" of citizenship, although it was not clear why they were required to pay for something that was taken away from them. At any rate, as these financial charges did not reduce to any significant degree the number of Soviet Jews applying for exit visas, the Supreme Soviet in late 1972 authorized an increase in the exit fees ranging from 5,000 rubles for a graduate of an institute of humanities to 20,000 rubles for a doctor of science. The new fees were demanded as reimbursements to the state for its expenses on the education of these individuals. In a society in which private accumulation of wealth is in general not possible, these exit fees, known in the West as "diploma ransoms", were of course prohibitive. Although the international outrage generated by such practices, which surely have affected the image of the U.S.S.R., has led to some relaxation on the financial charges for Soviet Jewish emigrants, particularly in the Moscow area where outside observers would have relatively greater access to information on the Kremlin's treatment of these dissidents, the financial charges seem to remain severe in other parts of the country, not to speak of continued threats and harassment to applicants for exit permits.



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3. James W. Wilkie, Statistics and National Policy, U.C.L.A. Statistical Abstract of Latin America. Supplement 3 (1974), Los Angeles: U.S.L.A. Latin American Center, Uni- versity of California, pp. 261,206. 4. Ibid., pp. 259, 262, 305-06. 5. An important factor affecting the response of a repressive regime toward external economic pressures which has not been considered is the attitude toward repression of high-ranking officials or members of military junta whose support is vital to the top leaders to remain in power. The top leaders of a repressive regime supported by high- ranking officers who have a moderate position in regard to repression would probably be relatively more responsive to heavy external economic pressures than those surrounded by hard-liners in favor of more severe repression. In the latter case, a relaxation of repression on the part of the top leaders would increase the probability of their overthrow with the consequent losses of the high style of living and other economic benefits made possible by their positions of power (not tb speak of their lives in many instances). Thus, it would seem unlikely that the top leader of Argentina would relax the existing repressive policy in response to external economic pressures since this would result in the loss of support of other powerful members of the junta who advocate the institution of even more repressi4e measures toward students and intellectuals among others. By the same token, thei top leaders in Brazil and Chile would find it difficult to respond to external pressures if they are surrounded by hard-liners demanding for sterner repression of the regime's critics. 6. In 1970, for instance, the Dominican Republic's export to the United States was 86 percent of total exports; 80 percent for Honduras; 80 percent for Haiti, and 50 percent for both Costa Rica and Ecuador. (James W. Wilkie, Statistics and National Policy, op. cit., pp. 264, 266-67, 270-71, 307-311.)



on the behavior of a totalitarian regime toward dissidents: an economic analysis

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