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Archive for May, 2012

To rig, or not to rig?

Posted by democratist on May 28, 2012


May 28th 2012,

As Kiev enjoys this year’s first drawn out spell of summer weather, growing social tension suggests that the parliamentary elections in October will be key for Ukraine’s future stability. Given its deep unpopularity as a result of an economic slowdown and series of corruption scandals, the temptation for the government to rig the vote is strong. Unfortunately, its track-record in this area is not good: Viktor Yanukovich first came to national prominence because he was able to help deliver a majority for Leonid Kuchma through his influence in the eastern part of the country during the 1999 polls. Indeed, it was Yanukovich’s Party of the Regions (PoR) which was allegedly responsible for most of the fraud that occurred during the November 2004 vote, sparking the Orange Revolution.

And while Yanukovich won the February 2010 presidential contest fair and square, those elections were administered under his opponent, Viktor Yushenko. Yushenko was a disappointment in many ways, but made a point of  ensuring that the election administration was improved, and the 2010 poll well run. Subsequent trends have not been as promising: local elections held under the new government in November 2010 were marred by fraud allegations. More recently, opposition leader Yulia Tymoshenko has been imprisoned on charges seemingly motivated more by political considerations than legal ones. It is likely she will be barred from running for parliament on a technicality, even if released.

Yet the government is fearful of upsetting the US and EU too much, since that might force it into accepting Moscow’s financial embrace, with the potential impact this would have on the local oligarchy’s political and economic position. So there remains a chance that Western diplomatic pressure, including via election observation outfits such as the OSCE, might have a moderating influence on the way the polls are conducted.

Even so, on the basis of events in parliament after the last presidential elections, much of the most important manipulation will probably take place in the weeks following the vote rather than on election day itself: back in 2010, Yanukovich initially lacked sufficient support in the Rada. However, several MP’s switched sides following his win, providing the PoR with the required majority. For some this may have been result of financial inducements, but in other cases blackmail cannot be ruled out as a factor.

That may not happen this year. If the elections are genuinely free and fair the sheer number of opposition MPs would make such a scenario hard to pull off. The government has lost much of the popularity it had, especially in its traditional heartland in the east. However, if there is fraud, or if the vote is followed by the defection of MPs leading to a clear subversion of the popular will, violent protest is likely.

The Ukrainians demonstrated that they will only be pushed so far in 2004. In October we will see to what extent the government is willing to test their patience once more.

Posted in Ukraine, Ukrainian Politics | Leave a Comment »

Ukraine: Awaiting the Protestor’s Return

Posted by democratist on May 21, 2012

May 21st 2012,

The period since the election of Viktor Yanukovich to the Ukrainian Presidency in February 2010 has been a shambles: Support for his Party of the Regions (PoR) has slumped even in its traditional heartlands in the east of the country. There has been a massive and apparently uncontrollable rise in corruption. Ukraine dropped some 18 places in Transparency International’s Index to a woeful 154th place last December, and things now appear to be getting even worse. Potential fraud in parliamentary elections in the autumn may provoke a violent backlash.

President Yanukovich is in the process of creating a highly personalized style of government. According to our sources, all revenue streams have now been put under the control of family or close friends, including the national bank, finance ministry, treasury, tax, and customs. Additionally, the main security organs have come under similarly personalized control, including the prosecutor’s office and the Security Service (now run by the President’s elder son). Even the Party of the Regions is its losing relevance as the President comes to draw more and more on direct ties.

FDI has dried up, and most M&A activity is domestic, with international firms taking a cautious back seat. The exception to this rule is oil and gas, where Shell and Chevron are being bought in because local companies lack expertise to extract recently discovered shale gas. Anecdotal evidence suggests that many ex-pats have already left, or are making plans to do so over the next few months. Additionally, there is speculation that visa requirements might be brought back in for EU nationals.

These developments have been distressing for those who voted for former Prime Minister Yulia Tymoshenko in February 2010, but even more so for those, concentrated in the south and east, who voted for Yanukovich on the basis that he might offer something better than the political and economic instability which followed the 2004 Orange Revolution. In fact corruption, and the expropriation of businesses through a captured legal system have been especially evident in these parts of the country.

But while popular resentment is running high throughout Ukraine, the opportunity for the population to make its voice heard at the elections in October may be subject to interference. The current administration does not have a good track-record when it comes to electoral fraud: Yanukovich was initially summoned to Kiev precisely because he was able to help the PoR garner a majority for Leonid Kuchma during the 1999 polls. The falsification during the 2004 presidential elections remains an exemplar of all the varied means by which manipulation can be achieved, not least the 1.1 million votes added to Yanukovich’s tally by computer hacking during the second round. It cannot be ruled out that the current government might again resort to these familiar tactics.

Ms. Tymoshenko has already been imprisoned on apparently politically motivated charges, as a way of preventing her running in October, and it seems that technical measures will be found to ensure she is unable to stand for parliament, even if she is freed in order to placate the EU. Nonetheless, her imprisonment has acted to boost her waning popularity, and if released she can be expected to campaign with her usual dynamism for the opposition. This will boost their poll ratings considerably and raise the stakes in advance of the 2015 presidential election.

However, if mass falsification does take place and is uncovered, the question of the 2015 polls may become less relevant. There is real anger on the streets at the lack of official accountability. This was demonstrated by the nationwide unrest that took place in March after local police refused to charge two politically connected youths who raped an 18 year-old girl and left her for dead in the southern town of Mykolayiv. The potential for violence on all sides is becoming clearer. The most important question to be answered in October is therefore: Will popular anger once again explode into protest as it did in 2004, or is the population, especially in the eastern Donbass, so scared that they will stay at home during the election period? The reaction of these towns is critical because, if eastern Ukraine comes out in protest, the traditionally opposition-minded west will rise for sure.

Posted in Ukraine, Ukrainian Corruption, Ukrainian Politics | 2 Comments »

Putin’s Third Term: “Potemkin reform”

Posted by democratist on May 2, 2012

May 2nd 2012,

In our last article, Democratist wrote about the concept of “international society as homogeneity”: The basic idea is that states become more like each other over time because of the spread of ideas or ideologies at the international level; for example, the French revolution of 1789 popularized the ideas of nationalism, democracy and a more centralized state, which then became influential throughout Europe in the following two centuries. At around the same time the rise of the British Empire underscored the importance of science for national power through the industrial revolution.

As states compete against each other they promote ideas like nationalism, mass education, investment in infrastructure, and innovation to improve their international position: In each case the elite seeks to protect itself from the ultimate threat of military defeat through modernization.  As a result, states begin to resemble each other not only because of globalization or the exchange of ideas, but because their rulers have a vested interest in becoming more “modern” in order to protect their legitimacy at home, and compete internationally.

In many countries, this process has contributed to the adoption of democracy. In Britain for example, the extension of the franchise to the working class in 1918 can be seen, at least in part, as a reaction to the 1917 revolution, and fear of its influence on soldiers returning from the trenches by the British government.

In Russia there at least two major contemporary sources of this kind of international pressure on the state. The first is the idea of democracy itself as a form of legitimation: Internationally this pressure has grown sharply over the last twenty-five years. Domestically, it remains weak, but is growing as a result of flawed elections and government intransigence.

The second major source of pressure (and one of more immediate concern to the leadership) is the need for scientific innovation, especially in terms of military applications. This is of course not new; Russia has been trying to catch up with the west since at least the time of Peter the Great. However, since 2008 we have seen a resurgence in this issue, as it has become apparent that Russia is falling further behind.

Indeed, this problem was the main driving force behind the “Russia 2020” programme: First outlined in a speech given by Vladimir Putin in February 2008 (i.e just before the start of the Medvedev Presidency), “Russia 2020” suggests three alternative scenarios, in terms of the potential trajectories of Russia’s economic development;

  • The ”innovation” scenario. This presupposes the development of a national innovation system, competitive human capital, and regional development centers, and requires a comprehensive reform and investment programme.  It foresees an average annual GDP growth of 6.5%.
  • The “energy and raw materials” scenario, which is based on faster development and modernization of the extractive sector, and projects an average annual growth of 5.3%.
  • The ”inertia” scenario,” which assumes no significant improvement, and therefore forecasts an average growth rate of 3.9% per year.

In our opinion, while over the course of his presidency Dimitry Medvedev has genuinely attempted to put some flesh on the bones of the proposed “innovation” scenario (tax breaks, technology parks, abolishing import duties on high-tech equipment, trying to encourage foreign investment), over the last couple of years it has shown increasing signs that it is encountering resistance from within the ruling class.

The reason for this impasse is that many in the nomenklatura are opposed both to economic reform (which threatens their privileged positions) and even more so to the implied political changes which would be the backbone of an innovative economy.

In this regard, we consider Putin’s return to the presidency on 7th May as indicative of a broader reassertion of power by these interests, and an indication that they remain eager to avoid the potentially “destabilizing” effects of the political and economic reform required to both attract increased investment, and meaningfully achieve the “innovation” scenario.

Instead, they appear to be hoping that a continued recovery in hydrocarbon prices over the next few years will allow Russia to return to a greater emphasis on the second, ”energy and raw materials” development path, with its promise of a (still robust) 5.3% average annual growth.

They may or may not achieve this goal. But while such growth rates are impressive, especially when compared with a still crisis-ridden West, the inability to modernize which this choice implies suggests serious problems for Russia’s military capabilities: In the absence of innovation from within the domestic public or private sectors or from foreign investors, and with a continuing “brain-drain”, Russia’s aging cadre of engineers and largely soviet-era industrial base are falling behind.

As Alexander Golts wrote in Yezhednevny Zhurnal on 24th April, the leadership is now worried, “that the technological revolution sweeping the world could devalue their most important legacy from the Soviet era – its nuclear arsenal.” However, as he also correctly argues, “any serious reform in education or the defense industry “will eventually run up against Putin’s unyielding power vertical”.

Pressure from the international level is therefore increasingly making itself felt in Russia’s domestic politics: The opportunities for democratization, liberalization and innovation exist and all three are interconnected. However, the threat they pose to key vested interests make all equally unlikely. Instead we will more likely see “Potemkin reform”; pre-selected candidates for gubernatorial elections and a multiplicity of insignificant parties instead of democracy; promises, corruption and profligate spending instead of innovation.

But while you can ignore reality, you can’t ignore the results of ignoring reality: In the event that the Russian military were to face a humiliating defeat or serious setback over the coming years as a result of its increasing comparative backwardness, while growing demands for political change remain unanswered, the domestic political impact will be devastating.

Posted in Autocracy and Innovation, Russian Liberalization | Leave a Comment »