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Tunisia: A New Opportunity for Democracy and Western Policy in the Maghreb.

Posted by democratist on January 18, 2011

18th January 2010,

Democratist has been taking a semi-break from the CIS for the last couple of days to watch the unfolding events in Tunisia, where the authoritarian President Zine el-Abedine Ben Ali has been deposed. A national unity government has been installed and is to prepare the country for new elections, which must take place within two months, according to the constitution.

The current situation is unstable, and it remains to be seen when those elections will indeed take place, or the extent to which elements of the old regime within the new government will attempt to interfere with them (or indeed if the new government will hold). Nonetheless, with moderate Islamists and secular leftists in the ascendant, the possibility of the long-term emergence of a reasonably stable democratic country in the Maghreb appears on the horizon, in a region where the US and EU have been all too happy to follow a realist policy of propping up local autocrats for many decades.

This is a potentially historic opportunity that needs to be grabbed with both hands while the going is good: Whereas American neo-conservatives may have been disastrously mistaken in their belief that the 2003 invasion of Iraq would lead to the rapid emergence of a democratic exemplar for the rest of the Middle East to copy, the Tunisian “Jasmine” revolution presents mainstream Western foreign policy liberals with a potential opportunity to put policy on a surer footing, and encourage the US and EU to work with the well-educated, westernized and democratically minded Tunisian population towards a similar goal in relation to North Africa; and one that has a considerably greater chance of success.

In the coming months then, the emphasis needs to placed on diplomatic engagement with the new government, economic assistance and preliminary discussions in relation to free trade and FDI. With regard to the first of these, Democratist believes Tunisia presents an important new opportunity for international election observation to make a real difference in helping to ensure the legitimacy of any forthcoming vote, as well as providing feedback on the process for future improvements.

While tellingly Russia Today has been arguing that the revolution in Tunisia took place due to a lack of jobs and economic growth rather than political rights, Democratist is of the opinion that, just as was the case in Georgia (2003), Ukraine (2004) and Moldova (2009) free and fair elections (and an associated end to corruption) have been at the heart of the protestors’ demands.

The West may well now have an opportunity to start to rebuild its reputation with the people of the Maghreb (and not just in Tunisia), but if it is to do so effectively, a commitment to free elections and human rights, and to hold any new government accountable in this regard, must play a central role.

Posted in Elections, Jasmine Revolution, Moldova, Orange Revolution, Revolutions, UK Foreign Policy, Western Foreign Policy | 1 Comment »

BP and Rosneft: Beware Russians bearing gifts.

Posted by democratist on January 15, 2011

15th January 2010,

On New Year’s Eve Democratist wrote that it would be very interesting to see how many foreigners were willing to put their cash into Russia in 2011.

We have just received at least one early affirmative answer, from BP, who have signed a joint venture with the energy firm Rosneft to exploit oil and gas deposits in Russia’s Arctic shelf. The firms are to exchange expertise in exploring the region, and Rosneft will take 5% of BP’s shares in exchange for 9.5% of their own.

The deal is unlikely to actually produce any oil or gas for at least three years, but there are already a couple of potential implications that deserve a preliminary mention;

The first is that the deal again underscores the centrality of raw materials to Russia’s development strategy over the coming decades. While Medvedev talks up liberalization and democracy, it is Putin’s ex-KGB chums in the nomenklatura who control the energy companies and the money they produce. As long as the resource rents keep coming in, and BP provides its know-how to ensure the oil flows freely, the pressure for political or economic reform will remain limited. Depending on price levels, Russia can muddle along with the current mixture of autocracy, corruption and a crumbling Soviet-era industrial sector for many years.

The second is the threat that increased involvement with the Russians poses for the UK over the medium term. As our business relationship with companies such as Rosneft deepens, so Russian political influence through multinationals such as BP will increase. Most of the oligarchs are awash with cash, and have already proved themselves effective as lobbyists. Recent spy scandals also highlight the Russians’ interest in political decision-making in the UK and a desire to influence these processes. While companies like BP are free to do deals with Russia and other petro-states, the vigilance of the serious press, civil society, judiciary and others will be become more important to safeguard our political system and (for example) ensure the rule of law continues to be applied in an independent manner, or prevent the watering-down of UK foreign policy in the CIS.

Democratist supports the promotion of political freedom in the FSU. We know that (for the time being) the deck is stacked against us, but we do not share the views of those  in this country who would be all too willing to voluntarily put on the golden handcuffs of the Russian state for short-term gain: Corruption, initially during the Soviet period, but more significantly since 1991, has been a disaster for the Russian people, and the City of London (among others) has been implicated in its facilitation. However the UK has also become home to more than 300,000 Russian citizens over the last 20 years, many of whom are by no means mega-wealthy, and who have been attracted to our country in part as a refuge from lawlessness at home (“voting with their feet,” as Lenin might have put it). Over the coming years, a deepening business relationship with Russia in the raw-materials sector will mean it becomes ever more important for the UK to protect and retain the freedoms that have made our country so attractive to outsiders, and prevent the import of corrosive business. political and legal practices along with the financial interests British companies have acquired in Russia.

Posted in Energy Politics, Russian Economy, UK Foreign Policy, Western Foreign Policy | 2 Comments »

Mr Hancock and the Azerbaijanis

Posted by democratist on September 1, 2010

1st September 2010

It is interesting to see that Mike Hancock MP has been in the news again;

It would appear that The Guardian is also now on the case, and is starting to ask some rather pertinent questions about Hancock’s relations with the Russians.

By way of contribution to the debate, Democratist remembers, at the time of the Azerbaijani Presidential elections in 2008, Hancock came out with the following statement – in his capacity as a PACE observer in the OSCE-led, joint Election Observation Mission – just after midday on polling day (i.e. a good eight hours before polling closed).

“The election process can be valued positively”, Member of PACE Observation Mission, British Parliamentarian Mike Hancock told APA. Stressing his observation mission during the previous elections in Azerbaijan, the British Deputy said he had observed the election process in seven polling stations in Yasamal and Sabayel districts. “I value the activity of the electoral commission members positively. It is observed that they mastered instructions on the organizing of the elections perfectly. Voters were also educated well”. Mike Hancock expressed regret that some opposition leaders did not join the elections. “It means that opposition is not active. It is not the fault of the President that some oppositional candidates did not join the elections. I consider that the opposition behaves undemocratically in these elections. It would be better if the opposition joined the elections even if they lost, because the election is important process for the political organizations”.

Quite something for one person to say, before polling had even ended – especially if they are supposed to be part of a team of several hundred people. And especially if they had been instructed not to make personal comments to the media, but rather contribute to the joint statement (as we believe is the case for all OSCE observers, even PACE MPs). Indeed, if we were more cynical, Democratist might suggest that the statement almost seemed as if it were prepared in advance.

Democratist was also informed that Mr. Hancock apparently managed (pretty much single-handedly) to make the OSCE preliminary statement on those elections far more positive than it would otherwise have been, through his influence as a PACE MP observer on the drafting process.

It is therefore also to be noted that, in addition to his cordial relations with the Russians, Mr Hancock has continued since 2008 to defend the Azerbaijani regime on many occasions.

Here’s a quick example, the relevant passage from which we reproduce below;

British deputy Michael Hancock noted that he sees Azerbaijan’s future positively and told that there is democracy in Azerbaijan. “There is democracy in Azerbaijan. Therefore, the Azerbaijani people voted for the current government. In this country there is no strong opposition, which refused to participate in the elections. The Government of Azerbaijan will continue to cooperate with the Council of Europe. In this direction is the political will of the authorities of Azerbaijan’, he said.

Posted in Azerbaijan, Democratization, Elections, OSCE, UK Foreign Policy | 3 Comments »

Encouraging Liberalization in Russia.

Posted by democratist on July 27, 2010

27th July 2010

Democratist has been reading  Samuel Charap’s article in the Washington Post (“U.S. needs to carefully plot engagement with Russia” – 23rd July 2010) with interest.

Charap suggests a number of potential benefits that might stem from enhancing US foreign policy engagement, as part of a gradualist strategy aimed at fostering the development of a more open political system in Russia, while also counteracting more regressive political forces. He sees three main benefits of improved ties;
  • They increase the chances that the US can express concerns about what is happening in Russia without the discussion devolving into a “shouting match.”
  • Such engagement deprives the Kremlin of the specter used to justify its turn away from open politics (the “West as the enemy at the gates”) and the removal of this should improve the position of western-backed NGO’s and increase Russian citizens’ exposure to the US and its political system.
  • Successful governmental engagement will, over time, raise the cost to the Kremlin of actions that would undermine ties.

Democratist is broadly in agreement with the notion of enhanced engagement with Russia, but remains sceptical of the likelihood of success in terms of fostering a more open Russian political system (sections of the nomenklatura have little interest in reform, and remain all to happy to return to a “shouting match” at the earliest opportunity).  We therefore offer the following suggested analysis and approach;

Democratist sees contemporary Russia as suffering from two relevant, and related problems driving the country towards some degree of liberalization; one minor and probably of only medium term relevance, and the second more significant and deeper, but both of which have the same common fundamental cause;

The first problem is the  sharp reduction in world market price for hydrocarbons since 2008 (e.g from around $100 per barrel, to about $75 now). The Russian economy suffers from a lack of diversification and is therefore remains reliant on oil, gas and minerals for 70% of exports. The recent fall in prices for these as a result of the financial crisis has resulted in some additional fiscal pressure, which will have some impact on spending over the next few years. However, this problem should be at least superficially alleviated as hydrocarbon prices recover.

The more significant longer-term problem is a pronounced and increasing national inability in the sphere of technological innovation: Russia is falling behind in terms of its industrial, technological and scientific capabilities. This has serious implications for her continued status as even a regional political, economic and military player, and has manifested itself (for example) in an inability to produce and deploy an effective  reconnaissance UAV (as demonstrated during the August 2008 war with Georgia). Genetics, space, IT, energy, and telecommunications are all other areas of concern.

It is apparently this second problem (especially in relation to the loss of military prowess) which is of greater concern for the nomenklatura, and which therefore provides greater impetus for the current reform drive.

Democratist believes that both of these problems; lack of economic diversification and technological innovation have the same fundamental cause; Russia’s truly extraordinary levels of corruption (worse than many sub-saharan African countries according to Transparency International) which extends throughout all sections of society, but which stem from the top –  because the distribution of rents on the basis of loyalty has been a central component of how the Russian government has done business, especially since 2000, as part of a corporatist economic model.

So, as we have argued, while until recently the government may have been initially hoping to resolve Russia’s lack of diversification and innovation simply by encouraging investment from the West through tax breaks and technology parks, this tactic is unlikely to have any significant effect on its own in as far as it refuses to countenance the kind of deep political reforms required to seriously address Russia’s “hypercorruption”, and thereby make the country a place where innovative Western firms would actually want to invest, and where Russia might develop its own innovative companies.

However, evidence is starting to emerge that for Medvedev at least, this stance may be changing; as George Bovt from the EU-Russia center notes; in a speech given to the Russian diplomatic corps last week, the President stated that the foreign ministry should engage in three tasks as part of his modernization agenda; the fight against organised crime, modernising the economy and most significantly, strengthening the institutions of Russian democracy and civil society.

But even if Medvedev is personally committed, the obstacles to meaningful reform remain enormous and include most prominently an authoritarian concept of the State that flourished precisely as a reaction to the supposed shortcomings of the liberalization of the 1990’s.

So, what can Western countries do to encourage potential liberalization?

We have two initial suggestions:

Firstly, Democratist urges a little restraint. We should begin by highlighting what we can’t do. Preaching at the Russians is likely to be counterproductive given the mindset of many in the nomenklatura. However, in relation to foreign investment, the main position to take is to reinforce the point that, whereas Russia may currently have a corporatist system with a high degree of political control and support for ostensibly private firms, this is generally far less the case in the West, and therefore while the tax breaks, techo-hubs and other initiatives we have seen so far are to be welcomed, it is essentially up to the Russians themselves to make their country a place where innovative Western firms will want to invest.

Secondly, if the Russians do show signs that they are starting to take such an approach seriously, the US and EU might also quietly suggest that, as an initial step they could do far worse than ensuring that the OSCE ODIHR is allowed to observe the forthcoming parliamentary and presidential elections in late 2011/ early 2012. These polls could potentially provide Russia with the opportunity to  demonstrate how things are beginning to change (especially in contrast to the polls in 2007/8 where the Russians deliberately sabotaged the OSCE missions). It would be easy enough to allow some limited media liberalization and reform of the electoral law, and thereby potentially allow some genuine opposition voices into the Duma, while either Medvedev or Putin would almost certainly win the presidency without need for too much recourse to the abuse of “administrative resources” or other forms of fraud. Indeed, this line of thinking may already beginning to emerge; the issue of “winning without the use of administrative clout” was mooted at a special meeting of the United Russia general council (Kommersant, 16th June 2010). However, it will take clear guidance from the top to ensure that such aspirations are observed in practice – and at the moment Democratist still fully anticipates widespread fraud in the local elections due this October (as was the case last year).

If Russia really wants to move from its current position as a raw materials supplier at the periphery of the world economy towards becoming the sort of diverse economy where innovation flourishes, it will have to develop the institutional structures required to make this a reality, and these imply democratic reform because, as Russia is now discovering, accountable institutions provide the sine qua non that supports technological innovation.

Posted in International Political Economy, OSCE, Russian Economy, Russian Liberalization, UK Foreign Policy, US - Russia | 1 Comment »

British diplomacy: In need of a bit more “Sic Semper Tyrannis”, and a bit less Bordeaux?

Posted by democratist on July 1, 2010

1st July 2010

Democratist today avidly watched the speech given by new British Foreign Secretary William Hague, which sets out how the new coalition government is to conduct UK foreign policy.

We were especially pleased that Hague put renewed emphasis on the need for the UK to engage in a proactive foreign policy that places an “enlightened national interest” at it’s core: We fully support that notion that, as Hague stated, the UK needs a foreign policy that “…is ambitious in what it can achieve for others as well as ourselves, that is inspired by and seeks to inspire others with our values of political freedom…that is resolute in its support for those around the world who are striving to free themselves through their own efforts from poverty or political fetters.”

It was additionally notable that the new government underlined its commitment to spending 0.7% of GNI on overseas aid from 2013, and also that the importance of helping former Soviet states in the process of transition to democracy was mentioned directly.

With this in mind therefore, Democratist is keen that the FCO should immediately make clear that intends to fully back the UK’s commitment to OSCE ODIHR election observation over the next few years, and more specifically to ensuring (at the very least) that the UK sends the full complement of 10% of election observers to all future OSCE ODIHR election observation missions, a policy to which it had been largely committed prior to 2008 (but sadly somewhat neglected over the past two years).

Democratist conjectures that OSCE election observation is about the best value for money currently available to the UK in terms of its overseas aid/foreign policy in relation to the former Soviet Union. Election observation played a key role in the development of the Baltic States in the 1990’s, and more recently in Georgia, Ukraine and Moldova (considerably improving the relationships of each of these countries with the UK, and allowing for far higher levels of co-operation than had previously been possible). It retains huge potential to positively influence developments in countries as diverse as Belarus,  Azerbaijan, Kyrgyzstan, and even (over the longer-term) Russia itself. All this at a total average cost of just over £600,000 per annum (apparently less than the current value of the FCO’s wine cellar).

It should also be noted that, if the UK does not put people forward to work as observers, it means that certain, perhaps less well-intentioned countries gain proportionately more influence in the process of observation, and will be able to have greater influence on subsequent OSCE  statements and reports over the coming years. In a worst-case scenario, such an outcome could do significant damage to the OSCE’s reputation – and (as the Foreign Secretary so correctly noted in his speech) such damage is not easily repaired.

Posted in Democratization, Elections, Orange Revolution, OSCE, UK Foreign Policy | Leave a Comment »

Springtime for Dima?

Posted by democratist on May 22, 2010

22nd May 2010

Rumours abound that a new, pro-western foreign policy shift is underway in Moscow. But if Russia really wants to attract European investment and American technology for the long-term it will need to implement root and branch political and economic reforms. Are the Russians really ready to play ball?

A report on two supposedly “leaked” internal foreign ministry documents which appeared in Russkiy Newsweek on May 10th has sparked off a wave of speculation about the possible future orientation of Russian foreign policy in the local press and diplomatic circles.

These documents: “A List of Criteria for the Effectiveness of Foreign Policy” and “A Program for the Effective Exploitation of Foreign Policy Factors for the Purposes of Long-term Development” – both written over the past six months, together imply a rethinking and potential realignment of Russia’s external relations.

In line with the much-discussed (but so far largely rhetorical) trend evident since Medvedev took on Presidency in 2008, the focus of both papers is the need to modernize the Russian economy, and the use of foreign policy to achieve this goal. As such, both underline the need to attract external financial investment, as well as the technological and scientific resources required for Russia’s modernization – especially from the United States and European Union.

This renewed concern with foreign relations as a path to domestic modernisation, while clearly still a matter of internal dispute within the ruling elite (indeed the “leaking” of these documents are almost certainly a symptom of these internal discussions) nonetheless reflects two serious problems that Russia needs to address with some urgency; firstly the impact of the ongoing global financial crisis on the Russian economy, especially through the effect that this has had on global hydrocarbon and raw materials prices; and secondly, a recognition that Russia is falling behind in terms of technological innovation.

With regard to raw materials, oil, gas and mineral exports currently account for 70% of Russia’s exports, making the economy hostage to price fluctuations. Finance Minister Alexei Kudrin stated on May 14th that Russia’s 2010 federal budget, including reserve fund spending, will only be balanced if oil reaches $95 per barrel (considerably above the current price of about $71). Given recent market developments, oil prices seem likely to stall or decline over at least the short-term, and perhaps for longer. As a result, The Russian government expects its budget deficit to rise to 5% of GDP by the end of the year and external sources of funds will therefore be required. Given that overall debt stands at only 50-60% of GDP (compared with 115% for Greece), Russia had little difficulty raising $5.5 Bn from its sovereign debt sale in April (the first since 1998). Nonetheless, this pattern of borrowing looks set to grow significantly as reserve funds are drawn down.

As for technological innovation, as Dimitry Trenin, director of the Carnegie Moscow Centre noted in an article in the Moscow times on 14th May, in addition to diminishing the hubris that Russia displayed in the years of high energy prices, the current crisis has awakened the leadership to the reality that Russia is losing ground in the global pecking order by falling behind in terms of its industrial, technological and scientific capabilities.

As Trenin observes “…Russia is sorely lacking what it takes to be a major global economic and political force in the 21st century. Relative energy abundance and nuclear arsenals are simply not enough. The Kremlin …[has been]… forced to come to terms with the fact that Russia cannot modernize on its own and that it needs Western investment and strong business partnerships with the West.”

But how will this need for investment and scientific know-how be translated into policy? Is Russia really willing to make the deep domestic political and economic changes necessary to make itself an attractive place for sceptical Western companies to invest, as Trenin suggests? Western markets cannot be bargained with or cajoled in the same way that Russia strong-arms other States – they will have to want to come.

However, there are a number of compelling reasons why serious reform is unlikely:

The main argument against the probability of anything more than superficial political an economic reform in Russia over the next few years is the nature of the current regime. This is essentially a reconfigured Soviet nomeklatura – more homo Sovieticus than homo economicus. The nomenklatura sees itself as having a quasi-divine right to rule and shape the country, and sought in the early 2000’s to move precisely away the “Western” template of market economics and political freedom introduced in the 1990’s – because it considered that these reforms had failed (culminating in the national humiliation of 1998) and that additionally, as many siloviki believed, that these reforms had in any case been little more than an elaborate Western “conspiracy” aimed at weakening Russia right from the start.

This nomeklatura is distinguished by its strong nationalism and desire for Russian national resurgence (as a regional power, if no longer perhaps a “superpower”) but also additionally by three significant traits [1] inherited from the late Soviet period that make economic liberalization and diversification extremely difficult.

These are;

  • A culture of nearly all-pervading corruption and rent-seeking.
  • An authoritarian concept of the State (in which the elite maintains a decisive and guiding – albeit sometimes informal – control over key aspects of the economy).
  • An instrumental “end justifies the means” attitude towards ethics.

In terms of corruption and the authoritarian concept of the state, the “transition” as it has taken place in Russia since 2000 has clearly not been to democracy or liberal capitalism but to a repressive political system based on a “corporatist” economic model – with the state retaining decisive influence over key companies as a lever of both economic and political power. This includes, as the most prominent example, Russia’s largest company, Gazprom, which supplies about 17% of the world’s gas and on its own, and has at times accounted for 10% of Russia’s GDP. Gazprom has at least four cabinet ministers on its board of directors, and was chaired from 2002 until 2008 by none other than Dimitry Medvedev – who owed that position (much as he now owes the Presidency) to his relationship with Vladimir Putin. Any statements from the “liberal” Medvedev (or those surrounding him) regarding economic diversification or political reform need to be considered in this light. The recently “leaked” foreign policy documents also need to be considered in this context.

The “corporatist” or “petro-state” model, with its heavy reliance on hydrocarbons and raw materials, fits this authoritarian conception of the State neatly because it allows for an easy source of rents, which can be distributed on the basis of loyalty, and equally because it provides the State with the tools of the energy-based foreign policy we have seen deployed on numerous occasions in Eastern and Central Europe, especially since the Orange revolution in Ukraine in late 2004. While the need for reform is likely to be invoked in order to attempt to drum up foreign investment, any resurgence in the oil price above (say) $100 per barrel will initiate a fairly rapid return “business as usual” so long as the current nomenklatura remains in power.

And it is very likely to remain in th driving seat for many years to come, because the Putin regime is additionally the inheritor of the KGB’s “ethical instrumentalism” and is unlikely to cede power to anyone else anytime soon: Despite a sophisticated propaganda offensive of denial (suggesting such claims are little more than conspiracy theory, comparable to those surrounding the 9/11 attacks in the US), there is little doubt that the current regime achieved power through the mass-murder of hundreds of its own citizens by the FSB in September 1999, as well as through the subsequent resumption of hostilities in Chechnya as a platform to generate support for Putin in the 2000 Presidential elections. Such a regime is unlikely to encourage its own marginalization by the introduction of genuine democratic reforms.

Indeed, over the last ten years, progressive presidential, parliamentary and (most recently) local elections have been marked by a worsening tendency towards fraud. As a result, the key political institutions required for meaningful economic liberalization and the attraction of Foreign Direct Investment – free elections and a free press (to fight Russia’s truly monstrous corruption), the rule of law, and the guarantee of property rights – are largely absent in the contemporary Russian case. The Kremlin has instead assumed (despite the apparent lessons of the Soviet experience) that it is able to manage the social and economic development of the country from above without any requirement for these constraints. So far, the economic crisis has only resulted in a tightening of already severe domestic restrictions – as was evident from the extraordinary level of outright falsification in the 10th October 2009 local elections.

Instead, the instincts of the siloviki are almost always to maintain and extend power and control as far as possible in both political and economic spheres. The history of the regime since 2000 has been one of continual centralization of both polity and economy. In fact, there has been no meaningful diversification of the economy since 1998, despite repeated promises that it would take place, and the period since 2003 has seen the re-nationalization of much of the raw materials and other “strategic” sectors.

While recently the Kremlin may have appeared to be considering the possibility of a fresh round of (vaguely defined) “reform” – with a diplomatic charm offensive (purporting to show how Russia has “changed”) due to take place over the summer, allowing genuine liberalization would potentially allow the development of alternative centers of power to the corporatist state. This raises the specter of, (for example) a revival of independent-minded oligarchs operating outside of the current structures (the “Yukos” effect), or the growth of a critical mass media, or of genuinely reformist political parties gaining seats in the Duma in an un-rigged parlaimentary election in late 2011. Therefore, real reform is most unlikely. Instead, the nomenklatura, is more likely to decide that the best available current strategy is the superficial invocation of the need for change through the offices of the “liberal” President. This will hopefully drum up some additional investment from the more gullible sections of an overly eager West while they wait for a resurgence in commodity prices.

[1] This section draws on work by the late Professor Fred Halliday of the LSE

Posted in Autocracy and Innovation, Democratization, Freedom of the Press, Human Rights, Russia - US Relations, Russia Foreign Policy, Russian Corruption, Russian Economy, Russian Espionage, Russian Liberalization, Russian Military, Russian Politics, UK Foreign Policy, US - Russia | 12 Comments »