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Nomenklatura has little interest in Russia’s WTO accession.

Posted by democratist on April 12, 2011

12th April 2011,

At the beginning of the year, Democratist commented on Russia’s chances of joining the WTO, following an agreement with the EU in December 2010 which had supposedly brought accession closer to reality.

At the time we said,

“…there remains a great deal of protectionist sentiment domestically within Russia. This is best exemplified by Putin’s own attempts last year to modernize domestic industry through a renewed emphasis on industrial policy (to be funded by raw materials rents). A lack of cash seems to have put paid to that strategy for the time being, but Democratist maintains that a rise in raw materials prices beyond a certain point will likely prompt a shift back towards protectionism.”

And lo and behold! With oil heading up towards the $125 per barrel mark, yesterday’s Vedmosti reports  on a recent spot of petulance from Vladimir Putin with regard to WTO (at a conference in Saint Petersburg last Friday). Apparently, “Russia is not going to meet the demands extended to WTO members before becoming a member itself…We are not going to observe anything of the sort as long as we are not members. Period.”

But as the paper ruefully notes, in relation to Russia’s (frequently diverted) path towards possible WTO membership over the last decade; “the government of Russia and Putin himself bear at least part of the blame for the state of affairs where Russia cannot make use of any WTO advantages. As happened on several occasions already, the moment Russia approached the coveted membership, Putin pulled off something unexpected that caused a delay or detour…All speculations on how Russia is kept out of the WTO are really a smoke-screen designed to conceal the lack of genuine interest in the membership. Russian businesses keep seeing the WTO as a threat. The Russian leadership has but a dim awareness of the advantages that go with the membership but know that at the very least it will require transparency of the kind Russia is not accustomed to. There is no powerful group of interests in Russia interested in the WTO membership.”

WTO membership, and the huge boost it would imply for liberalization, is not an option unless the nomenklatura decides it is serious about economic reform. But as long as the oil price remains high there is no incentive. Why risk “instability”, when you can just divvy up the spoils with your old chums from the KGB – with enough left over to keep the proles in line, until the next crisis?

It is this old guard whose opinions count, and which will still count after the Presidential elections, regardless of whether Putin or Medvedev “wins.”

Posted in Autocracy and Innovation, Elections, International Political Economy, Liberalism, Russia & the WTO, Russian Liberalization | Leave a Comment »

The Strategy 2020 Review: A Dangerous Display of Independent Thought and Common Sense.

Posted by democratist on March 2, 2011

2nd March 2011,

Last September, Democratist wrote that we believed Russian President Medvedev’s attempts to introduce an“innovation scenario” (in accordance with the Ministry of Economic Development and Trade’s 2020 Strategy) was beginning to show signs that it was encountering increased resistance from within the elite.

As we said at the time; 

The reason for this emerging impasse is that many in the nomenklatura, grown rich under Putin on the proceeds of  corruption, are implacably opposed both to reform itself (which threatens their privileged position) and even more so to the implied political reforms which would be the backbone of an innovative economy, and which Medvedev tentatively began to promulgate over the summer…we consider Putin’s hints at the Valdai club meeting in Sochi on September 6th that he intends to make a return to the Presidency in 2012 as indicative of a broader reassertion of power by these interests, and an indication that the nomenklatura remains eager to avoid the potentially “destabilizing” effects of the political reform required to both attract increased western investment, and achieve the “innovation” scenario. Instead, the elite appears to be hoping that a recovery in hydrocarbon prices over the next few years will allow them 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. This does not necessarily imply that the “innovation” scenario or its rhetoric is to be abandoned wholesale, or that Russia will instantly return to an openly confrontational and anti-Western foreign policy stance, but rather it seems more plausible that, over the next few years, where the needs of meaningful innovation come into conflict with intrenched elite interests (including in relation to  encouraging foreign investment), innovation will have to give way.”

As we draw to towards the next round of parliamentary and presidential elections (due to begin in December), it appears that the contradiction between the need for the political and economic reform needed to allow Russia to benefit from the opportunities presented by globalization and develop its S&T base on the one hand, and elite rent-seeking on the other, is becoming ever more apparent and public. 

An Editorial in Nezavisimaya Gazeta yesterday, entitled “Strategy 2020 Writers Turn into Mutineers: Government’s Economists: Success of economic modernization requires political reforms,” describes the current situation as follows;

“[The] Strategy’ 2020 revision initiated by the government might spring some nasty surprises on the powers-that-be. Premier Vladimir Putin’s first meeting with experts took place in mid-February. Economists then advised the government to cut social expenses and concentrate on reduction of the budget deficit. Soon afterwards, however, the economists got down to criticism of the very fundamental principles of the economic and political model functioning in Russia…Strategy 2020 writers drew a direct connection between success of economic modernization and political reforms in Russia. These latter ought to introduce free and fair elections, political competition, and genuine rather than declaratory division of powers. The economists said that no modernization was possible and that there was no way to tackle the strategic tasks the county was facing without all of that. It is fair to add that it was not renegades or mavericks like Nemtsov, Kasparov, or Limonov who made the list of the necessary reforms. The list was made by the economists who could never be suspected of any disloyalty – Vladimir Mau of the Russian Academy of Economy and Civil Service, Yevsei Gurvich of the Economic Expert Group, Yevgeny Yasin of the Supreme School of Economics, etc. The economists in question cannot help knowing that any reform on the list they made will essentially dismantle the model established in Russia and functioning since circa 2000. And yet, degradation of [the] economy is the only alternative to the reforms, and this unpalatable truth compelled scientists to call a spade a spade. Without the radical reforms, the gap between Russia on the one hand and the advanced countries and emerging markets on the other will keep broadening. The Russian economy will develop at a slower rate than in 2010 at least until 2050. There is no way to keep up the development rate at more than 4% a year without modernization which in its turn requires dramatic reforms.”

It will be interesting to see how Putin reacts to this dangerous display of independent thought and common sense.

Posted in Autocracy and Innovation, Democratization, Elections, Liberalism | 1 Comment »

Anna Chapman and United Russia: Inevitable Bedfellows.

Posted by democratist on February 23, 2011

23rd February 2011,

According to Nezavisimaya Gazeta, United Russia has selected Anna Chapman as a candidate for the Volgograd region for the Duma elections.

Who would have guessed that Chapman would have had such a future in front of her, given that she failed so spectacularly in her first career as an SVR “illegal”?

Well Democratist for one.

Chapman is fast becoming a symbol of everything that’s rotten about the political system in contemporary Russia; a place where sub-saharan levels of corruption (and electoral fraud) mean that media success and political careers can be built on family connections, rather than on any kind of ability.

In Chapman’s case these are the very best sort of connections available; those that link directly to the SVR and to Prime Minister, Vladimir Putin. As Andrew Osborn pointed out in an article in The Telegraph just after Chapman was expelled from the US last July, her father Vasily Kushchenko is almost certainly a veteran KGB/SVR man of long-standing, and a good friend of Sergei Ivanov (with whom he worked in Kenya back in the Soviet period).

For those who do not know about Ivanov, he was Minister of Defence between 2001-2007, and has served since then as Deputy Prime Minister. Ivanov (just like erstwhile Gazprom Chairman Dimitry Medvedev) almost certainly owes his career since 2000 to his relationship with Putin (who Ivanov has known since he met him at a KGB training institute in Saint Petersburg the mid 1970′s).

Since Kushenko is apparently another good friend of Ivanov’s, and the Russian media (such as REN-TV) has become little more than an appendage to the state bureaucracy, it is hardly a surprise that Chapman managed to get fast-tracked onto a  media career within a few weeks of her return from the US, and has now got herself onto the United Russia ticket.  

Her candidacy is further evidence that, just as Mikhail Gorbachev stated in a news conference he gave on Monday, United Russia has become a “bad copy” of the Communist Party of the Soviet Union; a ruling party/rubber stamp largely stocked with the appointees of those who really wield power.

Posted in Elections, Russia Propaganda, Russian Espionage | Leave a Comment »

Russia: FDI and the forthcoming elections.

Posted by democratist on February 18, 2011

18th February 2011,

Democratist was fascinated by Russian Finance Minister Alexei Kudrin’s speech in Krasnoyarsk yesterday.

According to Kudrin FDI into Russia fell to  $12-14 billion last year, the third successive year of decline since 2008.

“Direct foreign investment was one and a half times lower,” Kudrin said, “This is not much. In the best years it reached $27 billion.”

And he also stated that this has had a negative impact on President Medvedev’s “modernization” effort, and is holding back economic growth. “We will see in the coming years a stable growth of around 4% and above. However for Russia this – the level of a mid-ranking economy – is insufficient,” he said. “We need a significantly higher growth rate of 6-7%.”

For Democratist’s perspective, what is most interesting about these figures is that they cover the period before last December’s release of embarrassing Wikileaks cables which described Russia as “a virtual mafia state.”

Given the near-continuous (and frankly mostly warranted) bad press the Russians have been suffering over the past several months, it seems very unlikely that the much hoped-for Western FDI flows into Russia will recover any time soon.

So, what are the most likely effects of  continually declining FDI on Russian politics? Will Russia, as Kudrin (rather unexpectedly) suggested, decide to hold free and fair elections later this year, and in 2012 as part of a strategy for future liberalization?

Alas, this is unlikely. The nomenklatura has an intrenched fear of “instability.” Giving power away in any meaningful sense is largely anathema for Putin and his former KGB pals, regardless of the lessons that recent developments in Tunisia and Egypt may imply. Their main medium-term hope remains a (continued) rise in raw materials prices.

So while there may be some measured liberalization in the parliamentary polls set to take place in December, Democratist continues to maintain that the regime will probably try to leverage the Presidential elections due in 2012 as method for winning increased international legitimacy by enhancing the (not so far especially successful) illusion of Russia’s “democratic development” through a poll that apparently offers more political competition than was the case in recent years, but in reality whose parameters have been carefully determined in advance.

While the exact form this contest will take may be beyond even our predictive powers, Democratist continues to feel that the obvious choice will be a superficial competition between an emphasis on ”stability” or “modernization”; between Putin or Medvedev.

Posted in Democratization, Elections, FDI, Hydrocarbons, Jasmine Revolution, Russia 2012 Elections, Russian Economy, Russian Politics | 3 Comments »

Belarus 2010: How they cheated.

Posted by democratist on February 14, 2011

14th February 2010,

The Belarusian domestic nonpartisan election monitoring NGO,  Human Rights Defenders for Free Elections has just released their Final Report on the 19th December 2010 elections.

This is an excellent report, that gives considerable detail on the techniques used by the regime to rig the polls (which broadly match our predictions). You can link to it here, or read Democratist’s short summary below.

The main points are;

  • The necessary foundation for democratic elections, in particular regarding the real independence and balance of the election authorities, vote count procedures and effective complaints and appeals process, was not established.
  • 2009 census data provides an indication that 300-350,000 persons who have the right to vote were not included on the voter lists, and that the real number of eligible voters in Belarus during the election should have been 7.4-7.45 million.
  • The complete dominance of state broadcast and printed media by the incumbent, especially during the last two weeks of the campaign period, disadvantaged other opposition candidates who were either not mentioned, or were portrayed in an overwhelmingly negative light.
  • The majority of the national observers were representatives of NGOs and political parties loyal to the regime. Their task was to interfere with activities of independent national observers and journalists. No single complaint has been lodged by these observers, or any election observation report released.
  • The authorities used state administrative resources to coerce voters, especially students and state employees, to vote early. Observers experienced numerous obstacles during early voting, including denial of accreditation and withholding of information on the registration figures.
  • A high number of reported irregularities concerned the inclusion of voters into the list for mobile voting. As a rule, voters were added to the special voter list based on their age and the geographical distance from the polling station (especially in rural areas) rather than at the request of the voter. In many polling stations, the number of mobile voters was disproportionate, i.e. up to 30%.
  • The vote count was carried out in a non-transparent manner. Though most of the observers were allowed to observe the vote count, in most cases the distance from which they were allowed to watch did not allow them to view the content of ballot papers.
  • It is impossible to say whether the ballots in the ballot boxes at the moment the vote count started were the same ballots which were cast by the voters themselves, because during early voting and mobile voting, members of election commissions (which were not independent or pluralistic) and unauthorized persons had access to relevant ballot boxes in absence of observers or other witnesses, and the way the ballot boxes were designed and sealed did not provide an adequate safeguard against potential manipulation.
  • Peaceful conduct of the election was marred on the evening of election day, 19 December, when riot police brutally dispersed participants of a mass demonstration who came to Nezalezhnasci Square in Minsk to protest against unfair conduct of the election. By the morning of 20 December, about 700 persons were detained, including seven presidential candidates. Many of those detained were beaten, including three presidential candidates. At the time of the report’s release, four presidential candidates and 31 of their supporters were in pre-trial detention facilities and under house arrest. They are charged with organization of a mass riot or participation in it.

Posted in Belarus, Domestic NGOs, Elections, Electoral Fraud, Human Rights | Leave a Comment »

Decision time for Moldova’s Constitutional Court.

Posted by democratist on February 8, 2011

8th February 2010,

An interesting day for those of us who concern ourselves with the (rather convoluted) domestic politics of Moldova;

Itar-Tass reports that the constitution court is due to hold a session to decide the time limits by which the president should be elected by parliamentary vote.

This was brought about through an appeal from the Moldovan Communist party (PCRM). They believe Moldovan Constitutional law requires a vote be held within two months of the resignation of the last holder of the post (in this case Mihai Ghimpu, who resigned on December 28, 2010).

But figures from the governing Alliance for European Integration (AIE) claim that this provision does not apply in the case of an interim President being in place, and that therefore there need not be any deadline in the situation as it exists at the moment, with the AEI’s Marian Lupu filling the interim role.

If the court decides that a vote does indeed need to take place within two months (i.e. by February 28th), it seems unlikely that the Communists will provide the two additional votes the AIE require to reach the sixty-one vote threshold. Instead of Lupu being officially appointed President, the most likely outcome is that he would continue in the interim role, and the country will return to the polls for the fourth time in three years, in early 2012.

However if they accept the AEI’s position, it looks as if Moldova might be able to muddle along under the current arrangement for the full length of a presidential term (i.e. until 2014).

Either way, Moldova looks likely to remain the object of ongoing geopolitical jockeying from both Russia and the EU. The Russians are currently touting cheap gas (possibly in return for basing rights), whereas the Europeans have offered a comprehensive trade deal as part of an Association Agreement.

Posted in Democratization, Elections, European Union, Moldova, Russian Foreign Policy, Western Foreign Policy | 1 Comment »

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 »

Moldova 2011: A Renewed Opportunity for EU Diplomacy.

Posted by democratist on January 7, 2011

7th January 2010,

Democratist has continued to take a keen interest in Russia and the EU’s geopolitical manoeuverings following the November 27th elections in Moldova. While several polls in the CIS in 2010 have been broadly perceived as “successes” in terms of Russian foreign policy (Ukraine, Kyrgyzstan, Belarus) Democratist sees the current situation in Moldova as holding out at least a little hope for European influence in the former Soviet space.

In the first half of December both Russia and the EU offered alternative trade deals,designed to sway the formation of potential coalitions to their own advantage during the period of negotiation that followed the inconclusive poll: Russian presidential chief of staff Nariskin, hoping for a deal between the traditionally pro-Moscow Communists (PCRM) and Marian Lupu’s Democrats offered inclusion in Russia’s proposed customs union, as well as cheaper gas and a resumption of banned Moldovan wine imports. Meanwhile, attempting to encourage a continuation of the Alliance for European Integration (AIE) which had run the country since September 2009, the EU pushed its association agreement as a path towards more comprehensive free trade, and a proposed visa liberalization plan, while leaving the prospect of eventual Moldovan accession to hover in the background.

On 30th December, having failed to come to an arrangement with the Communists, the Democratic Party agreed to the re-establishment of the AIE; Lupu was elected speaker of Parliament and, in the absence of two of the 61 votes required by the constitution for election to the substantive post, appointed to replace Liberal leader Mihai Ghimpu as acting President. The AIE has not yet attempted to have Lupu formally elected to the presidency, since under the constitution a new parliamentary vote would have to take place if this is not a success. Instead, Prime Minister designate Vlad Filat has suggested the coalition may offer the Communists a ministerial post in the new cabinet in exchange for the two additional votes required.

It remains to be seen if the PCRM will take Filat up on his offer. They have not been willing to do so in the past and complained that the November elections were rigged (despite a thumbs up from the OSCE). If they decide against, another election seems inevitable by the end of 2011 unless a loophole can be found. However, since the electorate is unlikely to thank the Communists for having put them to the trouble of voting four times in under three years, such a strategy would not be without some risk.

As for the Russians, from what Democratist can gather from a recent article in RIA Novosti’s Russia Profile, their mood seems to have shifted over the past few weeks to a mixture of disappointment at the Communists’ waning popularity and inability to form a coalition (implying some loss of influence), a belief that Russia’s continued position as a source of remittances for Moldova will act as a counterweight to that trend, and the hope that Marian Lupu will be someone they could work with. There is also an unwillingness to allow relations with Moldova to sour the more important relationship with the EU.

And so the ball is now back in the EU’s court: Moldova may have to return to the polls at the end of 2011 or, with the support of the PCRM Lupu may be elected to a five-year term as President, but either way an opportunity now exists to show other CIS countries such as Ukraine and Belarus, what it is possible for an impoverished country like Moldova to accomplish through an improved relationship with the EU.

It is time to see whether those free-trade and visa liberalization plans are all just talk – or not.

Posted in Elections, European Union, Moldova, OSCE, Russia Foreign Policy | 1 Comment »

Moldova’s New Government: Still on a Knife-Edge

Posted by democratist on December 27, 2010

27th December 2010,

The month following the 28th November 2010 parliamentary elections in Moldova has proved fascinating in terms of Moldova’s own domestic coalition-building, but equally because the EU and Russia have both been jockeying, more or less openly, to influence that process.

With the first session of the new parliament due to take place tomorrow, and the election results finally approved by the constitutional court, horse-trading among the parliamentary political parties has reached fever pitch over the last couple of days.

The situation is on a knife-edge, and hard to predict, but following a period of several weeks during which it seemed that Marian Lupu’s Democratic Party might be able to form a coalition with the Communists (PCRM), those talks have stalled, and the main focus appears to have shifted back towards the reestablishment of the Alliance for European Integration (AIE), which has ruled the country since September 2009.

Although rarely reported in the mainstream Western press, these recent negotiations in Moldova have been closely observed by both EU and Russian diplomats; a Communist MP until 2009, Lupu has always been markedly more pro-Russian than the other two AIE leaders, and the PCRM themselves have retained their traditional pro-Russian stance with leader Vladimir Voronin stating in early December that Moldova might accede to Russia’s proposed customs union (as Alexander Lukashenko of Belarus recently agreed to do), as well as engage in a “deeper strategic partnership,” should the PCRM manage to form a coalition.

As such, it was hardly a surprise that Russian presidential chief of staff Sergey Nariskin visited Chisinau a few days later, offering cheaper gas and a resumption of banned Moldovan wine imports if the parties were able to form a pro-Moscow government.

Meanwhile, the EU have also played their hand in the form of a subsequent visit by Swedish and Polish Foreign Ministers Carl Bildt and Radek Sikorski, apparently designed to shore-up support for a pro-EU coalition.

Bildt is reported as having later commented, “What there is on the European agenda for Moldova is the association agreement. If you look at what the Moldovan economy needs, it is deep and comprehensive free trade with the EU. That is what can over time lead to a better development of what is today the poorest country in Europe. I’m not saying that cheap gas is bad, but economies and prosperity can’t be built on cheap gas.”

So both sides have mapped out their visions of Moldova’s future. Democratist (unsurprisingly) recommends the adoption of the European model as the best option for eventual political and economic reform, but the situation remains fluid, and coalition negotiations could still go either way.

Posted in Elections, European Union, Moldova, Russian Foreign Policy | 1 Comment »

Belarus 2010: An “internal matter.”

Posted by democratist on December 20, 2010

December 21st 2010.

Democratist is disappointed and upset, but not especially surprised to learn of the results and fallout of yesterday’s presidential election in Belarus.

Since the signing of a series of economic agreements earlier this month, the Russians appear to have decided, in the words of Prime Minister Putin that “the Belarusian leadership has taken a clear course towards integration with Russia,” and suitably mollified, their desire for Lukashenko’s ouster has fallen by the wayside - for the moment at least.

Subsequently, reading between the lines of the OSCE’s sensibly diplomatic preliminary statement (which nonetheless provoked the ire of the newly confident Lukashenko), it appears that it was business as usual for the Belarusian electoral administration over the last few days, and the incumbent has been returned to office with just under 80% of the vote, according to the highly questionable official results.

Subsequently, seven of the nine opposition candidates that stood against Lukashenko have been arrested (including one who was dragged from his hospital bed after a police beating) along with 600 of the several thousand protestors brave enough to demonstrate against this charade of an election in Minsk last night.

While the Belarusian authorities have behaved abominably in both their conduct of the election, and the violent crackdown that has followed it, the reaction of the Russian government has served to underline their own extraordinary cynicism, and more specifically, Dimitry Medvedev’s real attitude towards the democratic process to which he paid so much rhetorical homage earlier this year.

According to Reuters, when asked, Medvedev described the Belarusian elections as an “internal matter,” and did not comment on the police crackdown.  He is quoted as saying, “I hope that as a result of these elections, Belarus will continue on the path of creating a modern state based on democracy and friendship with its neighbours.”

And for all its “strong condemnation” of the fraud and violence, and demands that the opposition candidates be freed, the West is left looking weak and ineffectual, with Lukashenko and the Russians the only game in town.

For the time being then, it seems that Belarus will only change when Russia changes its mind about Lukashenko. However, real support for democratization in Belarus (or indeed Russia) in Moscow is lacking, and will continue to be so, regardless of whether Putin or Medvedev wins in 2012.

Posted in Belarus, Elections, Electoral Fraud, Human Rights, OSCE, Russia 2012 Elections, Russian Foreign Policy, Russian Liberalization | 5 Comments »

 
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