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Greedy Presidents

October 10, 2012 - Andrew Wilson - Bez kategorii

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Most East European states are a long way from democratic; but the stability of their regimes depends on respecting certain rules of the game, such as dividing the spoils. It is normally the president who acts as “Lord of The Rings” to keep the various circles of interest in balance, although there are several ways of playing the role.

Most East European states are a long way from democratic; but the stability of their regimes depends on respecting certain rules of the game, such as dividing the spoils. It is normally the president who acts as “Lord of The Rings” to keep the various circles of interest in balance, although there are several ways of playing the role. The president may be above the game, or he may control the key forces of balance in the game, like kompromat or “judicial resources”.

He may be a player himself (less likely herself), which would give him weight; but if he and his supporters win control of too many resources they will not be trusted by the other players. More than 20 years after the fall of the USSR, “transition” may be a forlorn hope, but time can undermine balance: several East European regimes are now showing destabilising signs of incumbents’ greed.

The Yanukovych “Family”

It is Ukraine under Yanukovych where elite politics seems to be going most badly awry. Nostalgic supporters of former President Kuchma (1994-2005) recall that he played the game with more skill: oligarchs were kept inside the tent and the tent itself (i.e. the institutions of state) was less flimsy. As with the famous lament of moderate Germans in the 1930s (“First they came for the communists, but I didn’t speak out because I wasn’t a communist…”), Yanukovych has gradually upped the ante.

He spent his initial months in office rewarding his campaign supporters. Then former “orange” oligarchs were pressurised to join his camp. Then the big fish started to eat the smaller fish, using the tax and regulatory authorities to soften up their targets first. “Raiderstvo” has escalated out of hand. Ukraine’s SME sector is actually shrinking, to less than 20 per cent of GDP.

The system then turned cannibalistic. Yanukovych has proclaimed “equidistance” from the oligarchs, but to take over rather than take down their empires. No one is now safe from the rise of the literal and metaphorical Yanukovych “Family”, a phenomenon which Yuliia Mostova, the editor of the Ukrainian paper Mirror of the Week, has dubbed “Semostiinyi Yanukovych” (a play on words, meaning “independence in the family”), also arguing that “Yanukovych is the first president of Ukraine who needs a controlling packet not only of all power in the country, but of all its business too”. The “Family” is now crossing swords with other previously untouchable oligarchs, moving into coal and expanding in telecoms and agriculture.

Yanukovych is gambling that he has made the presidency stronger than in Kuchma’s time, but we can guess how the process will end, with a friendless Yanukovych suddenly stabbed in the back. However, there is no telling when this might be or how much damage will have been done by then. In the meantime, moreover, the game of balance doesn’t disappear; it just gets displaced.

The upcoming elections on October 28th are about more than government versus opposition. They are also about Yanukovych’s plans to win an all-powerful two-thirds’ majority in parliament, and about the threatened oligarchs spreading their bets within that majority, “independents” and opposition.

Azerbaijan, Armenia and Belarus

Elsewhere in the region, the rise and rise of the Pashayev family in Azerbaijan, the relatives of First Lady Mehriban Aliyeva, threatens the interests of older groups such as Minister for Emergency Situations Kamalledin Heydarov, and the head of the Presidential Administration Ramiz Mehdiyev. After a dynastic succession in 2003, President Ilham Aliyev may now want to become his own man, gradually distancing himself from the old guard who served his father before him; but Aliyev’s natural caution is probably wiser than Yanukovych’s haste, as the likes of Heydarov run what are practically independent fiefdoms (“Emergency Situations” gives him vast licensing power over construction and other business, and he still controls the customs).

In Armenia, the oligarchy is now split, with the Prosperous Armenia party controlled by leading oligarch Garik Tsarukyan moving into opposition after the May 2012 parliamentary elections, in advance of the presidential contest due in February 2013. Armenia has always had both a strong opposition and a strong state, with the strength of the latter a function of post-war “securitisation” and elite unity. Both may be declining assets – despite Azerbaijan’s ongoing military build-up.

Belarusian President Alexander Lukashenka has many faults, but he has skilfully avoided having to play the game of balance. Belarus has plenty of rich Lukashenko supporters, but no independent oligarchs; not even the businessmen on the European Union sanctions list, such as Yury Chyzh or Uladzimir Peftsiew.

Lukashenko has also long resisted the formation of a regime party that would act as a lobby for collective elite interests. But he needs extra props for his regime after the severe economic crisis of 2011. It is therefore potentially significant that 63 out of the 109 new MPs elected in September 2012 have been claimed as supporters of “Belaya Rus”, the would-be Belarusian equivalent of United Russia, first set up in 2007 (which is not the same as enthusiastic members), and which may become a fully-fledged political party at its congress due in November 2012. Its patron is Aliaksandr Radzkow, Deputy Head of the Presidential Administration, who has floated the name of “Belarusian Party of National Unity”.

What about Russia?

And what about Russia? The rules of balance were completely rewritten by the Yukos affair, although both before and after Khodorkovsky’s arrest the point of reference was clear: before 2003 it was the succession agreement with the Yeltsin “Family”, after 2003 it was Putin himself. The point of “Operation Successor 2.0” in 2008 was that Putin would remain powerful enough to continue playing the role of arbiter between the clans. This was managed successfully enough through the election, but the “tandem” introduced enough uncertainty for the “Friends of Putin” to gain a destabilising margin of extra influence under the Medvedev presidency; and it is not yet clear how Putin’s third term will redress the imbalance, if indeed he still wants to try. Economic factors are also key: a new round of privatisations, particularly tranches of energy companies like Rosneft, Transneft, Transnefteprodukt and Zarubezhneft, at a time of continued elite division, opposition protest and weakening global energy markets, could make the mixture even more combustible.

Andrew Wilson is a Senior Policy Fellow with the European Council on Foreign Relations (ECFR) and the author of Belarus: The Last European Dictatorship, published by Yale University Press.

This article first appeared on the ECFR website here.

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