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A reply to Peter Lavelle’s, “The Return of Vladimir Putin.” In The National Interest.

Posted by democratist on March 9, 2012

9th March 2012,

A reply to Peter Lavelle’s article “The Return of Vladimir Putin” in The National Interest.

After a recent Facebook discussion, Peter Lavelle (of Russia Today fame) has asked me to review his new piece in the The National Interest.

To save time, I will highlight Lavelle’s main points in bold, which will be followed by my replies.

“There is ample evidence of some voting fraud in December, though hardly enough to change the final results.”

This is untrue for a two reasons. Firstly it is false because the considerable falsification that took place in December (6%-15% depending on who you believe) meant that more United Russia candidates were elected to parliament that should have been, and conversely other parties have less representation than they deserved.

Secondly, and more importantly, it is misleading because electoral fraud and the manipulation of public opinion in Russia take a wider form than just ballot stuffing on election day. If we look at the OSCE ODIHR final report on the parliamentary elections, we will see that they make the following points;

“Although seven parties ran, the prior denial of registration to certain political parties narrowed political competition. The contest was also slanted in favour of the ruling party. This was evidenced by the lack of independence of the election administration, the partiality of most media, and the undue interference of state authorities at different levels. This did not provide the necessary conditions for fair electoral competition… The denial by the Ministry of Justice of registration to a number of political parties reduced the choices available to voters. In one case, the European Court of Human Rights recently ruled that the state’s disbanding of one party was disproportionate and constituted an unlawful interference in the party’s internal functioning.”

So it is also necessary to look more broadly at the context of the parliamentary elections. The choice of parties was unfairly narrowed before the elections took place, and some parties which may have been represented in parliament under a fair vote were denied access to the electoral process. Additionally, both electoral administration and media were biased, and these also affected the final result. Therefore Lavelle is being highly disingenuous when he states, “United Russia’s poor showing in the parliamentary elections proves that the electoral mechanism reflects public opinion.” United Russia’s poor showing (which should have been a lot poorer) proves that a majority of people are not prepared to vote for the party, but this does not mean that the electoral mechanism accurately reflects the full range of public opinion.

“Politics during and after the presidential election is characterized by accountability and confidence.”

Accountability? Really? I again refer to the OSCE’s report on the parliamentary polls from December. They state;

“The process of adjudication of complaints’ by the CEC [Central Electoral Commission] lacked transparency and did not afford the contestants effective and timely redress. The CEC has not complied with the legal requirement that all complaints must be acted upon and responded to in writing. Representatives of most political parties expressed a high degree of distrust in the impartiality of election commissions at all levels and questioned their independence from various state administration bodies.”

So how “accountable” is that? And to what extend did the lack of accountability from the parliamentary polls in December effect the “confidence” which you suggest was present during the presidential election?

“Now parliament must legislate through compromise.”

This is misleading. It is easy to compromise when a high degree of consensus already exists (as discussed above). All three parliamentary “opposition” parties are in fact systemic to a greater or lesser extent (with corruption playing a critical role in keeping them all in line, see below). Characters such as Zhirinovsky and Lugovoi do not inspire much confidence and are unlikely to rock the boat. There is every indication that the Duma will continue to act as a rubber stamp.

“Putin’s intensive-growth strategy must take into account social demands that are hardly revolutionary or alien to him and his inner circle. They include respect for property rights, promotion of small- and medium-size business culture, a tax system that promotes economic growth, decent pensions for the elderly and a serious effort to tackle the scourge of modern Russia—pervasive corruption.”

This is very curious. Where exactly has this great reformer been for the last 12 years? And why was it not possible to deal with these issues during the previous period of “extensive growth” which Lavelle describes? The fact that such problems (especially corruption) continue to flourish strongly suggests that reform is unlikely. Transparency International rated Russia 143rd (out of 182 countries) last year (Russia was 80th in 1999).

The case of Sergei Magnitsky is instructive in this regard. He died in prison in November 2009 after being arrested by the very officials he accused of fraud. As far as I am aware, despite plentiful evidence, no action has yet been taken against those who originally stole $230 million from Hermitage Capital, nor against those responsible for Magnitsky’s murder.

For an indication of the source of much of Russia’s corruption, we need look no further than Angus Roxburgh’s analysis of the extraordinary good fortunes of Putin’s friends from his Saint Petersburg youth, and the Ozero dacha collective of which Putin was a member. (Strongman: Vladimir Putin and the Struggle for Russia, I.B. Tauris 2012). As an example, Arkady and Boris Rotenburg, Putin’s erstwhile judo partners, each now have assets worth $1.75 billion. Yuri Kovalchuk, from the Ozero collective is worth just under a billion dollars. Roxburgh provides many other similar examples.

But, going back to Magnitsky, the enrichment of Putin’s friends is just the tip of the iceberg. As Edward Lucas writes in Deception: Spies, Lies and How Russia Dupes the West (Bloomsbury, 2012), numerous officials involved in that case from the interior ministry and tax department have in fact been linked to the FSB, and the fraud which was perpetuated against Hermitage Capital may well have been directed from the ministerial level.

In this regard, Roxburgh notes in Strongman, “…by far the biggest obstacle to foreign investment (or the creation of an international financial center in Russia) can be summed up in one word – corruption – a word so complex that one leading Russian businessman told me I would never, as a Westerner understand it. “Theft,” he said, “is not theft as you know it. It is the entire system – the political system, the business establishment, the police, the judiciary, the government, from top to bottom, all intertwined and inseparable.””

Professor Alena Ledeneva (of the School of Slavonic and East European Studies, UCL, and author of numerous books on the subject) has argued in a number of recent public discussions that the Putin corruption systema is, (much like the Soviet Union during the Gorbachev era) fundamentally unreformable, and will remain in place until a change in the political or economic situation provokes a collapse. Given the evidence presented above, as well as the continued popularity of the government, and the involvement of large sections of Russian society in various corruption networks, the re-election of Vladimir Putin is extremely unlikely to herald a period of reform. Rather, a better case can be made that Putin has become captive to a system he helped to create and (just as was the case with Dimitry Medvedev), he will be unable to introduce the reforms Russia needs without alienating these critically important constituencies.

Since this is the case, while (as Lavelle’s article hints), the United Russia (UR) party will probably be officially rolled-up soon, the function of any replacement party (and doubtless much of its membership) will remain the same; it is the “party of power,” and (to quote Mikhail Gorbachev) a “bad copy” of the Communist Party of the Soviet Union: At the regional level, it exists to bolster the existing power structures, for example by organizing the widespread electoral fraud we saw in the December elections. United Russia is merely the most recent incarnation of this “party of power.” It will not be the last.

The same can be said of any forthcoming cabinet reshuffles: things will change a little, so that they don’t really change at all. Ministers come and go, but ultimately the same small group of people will retain political and economic power.

“Consider challenger Mikhail Prokhorov’s remarkable 7.94 percent presidential vote return, in the wake of a very public fallout with the Kremlin.”

Fallouts can be manufactured or exaggerated, as Mr. Lavelle, of all people should know. Prokhorov is smart and would not have run (or have been allowed to run) without a green light from the top. It is interesting that he did not face any of the legal hurdles to his candidacy mentioned above, (and which were used to effectively prevent the candidacy of the liberal Grigory Yavlinsky. There remains every possibility that Prokhorov is essentially a long-term kremlin project; someone who might one day be needed to (yet again) provide the illusion of change, whilst essentially keeping the current system in place.

“For the next six years, Putin has no choice but to govern—not to rule, as he has in one form or another over the past twelve years. Normal politics have finally arrived in Russia.”

In fact, as we have argued, Putin probably has no choice but to autocratically “rule”, and not govern Russia for as long as he remains in power (in as far as “governance” – a rather vague and underspecified term as Lavelle uses it here, implies democratization or structural economic reform). And there is certainly much in Russia’s recent history that might cause us to doubt his assertion that “…there is every reason to believe that the Russians are on the path to build a democracy that they can call their own.”

Opposition figures such as Navalny and Udaltsov should avoid any temptation to work within the existing system because the “transformed political terrain” which Lavelle claims has emerged from the presidential elections exists only in his imagination: Co-operation with the regime would result in a rapid loss of support among their overwhelmingly urban and politically savvy fan-bases.

The only thing that has changed since December is that a small (but growing) section of the population is beginning to demand reform, and there has been some very minor media liberalization (which can be quickly reversed) – whereas previously almost no one cared about either of these things. If the opposition is really looking for power in order to drive through real change (as opposed to personal enrichment) then they need to be prepared to remain outside the system, and probably for a very long time indeed. Change is certainly coming, because Russian society is changing, but the tipping point is many years away; the oil price is rising, so social spending can remain high. Many people are enjoying materially better lives, and indeed much more freedom than Russians have enjoyed historically. Additionally the current system has the strong backing of the FSB (Federal Security Service), an organization which, as Andrei Soldatov and Irina Borogan point out in The New Nobility (Public Affairs, 2010), acts in a manner closer to an arab mukhabarat than a Western Security Service, and which therefore sees the protection of the regime as a key priority.

Posted in Electoral Fraud, NATO, OSCE, Russia Today, Russian Middle Class | Leave a Comment »

Russia and the WTO: Not so fast, Seymour.

Posted by democratist on January 12, 2011

12th January 2011,

Last December’s agreement between Russia and the EU, and the subsequent speculation about potential accession to the WTO at some point in 2011, has prompted Democratist to cogitate upon the likely impact of international economic integration on Russia over the next few years.

While the agreement with the Europeans may have brought accession further towards reality, 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.

However, while we cannot yet be fully sure that it will finally happen, the prospect of accession looks like being one of the Kremlin’s key trump cards for 2011. In the face of western investor scepticism, anger over the second Khordokovsky trial and the imprisonment of Boris Nemtsov, Medvedev will doubtless find it convenient to offer up the prospect of Russia’s eventual WTO accession as an indicator that the country is basically on the right, liberal path.

This will play well with many Western leaders as it appears to accord with liberal political theory. According to this perspective (often attributed in origin to Seymour Lipset’s 1959 classic Some Social Requisites of Democracy), WTO accession will act as an anchor for long-term reform and increase economic growth, leading to the consolidation of a democratically minded middle class. Seen in this light, the privatization program that began in Russia last year promises a lengthy pull-back by the state, and continuing rapprochement with the West as Russia seeks support for modernization.

But we might wish to refrain from opening the champagne for a second; Democratist has long argued that whether Putin or Medvedev wins the Presidential election in 2012, any liberalization in Russia will remain tightly constrained by the interests of the nomenklatura. The current government has demonstrated comprehensively over the past decade that the manipulation of public opinion is one of the few things they genuinely do well. In this regard, in contrast to the rosier expectations of some of our liberal friends, Democratist suspects it may take several decades for economic development to provide a basis for the promotion of the rule of law and a broader liberalization.

Additionally, WTO membership seems unlikely to do much to promote the diversification of the Russian economy away from reliance on raw materials without a concerted effort to tackle corruption. Given that the current regime has itself acted as an important facilitator and beneficiary of corruption since 2000, Democratist is of the opinion that change in this area will take a long time to emerge, and will face many serious setbacks. If parts of Russia’s backward (and still largely state-controlled) industrial sector start to lose out after the country joins the WTO, causing unemployment and unrest, this may also prompt a return to a greater reliance on industrial policy, or back to protectionism. 

As is so often the case, much depends on the price of hydrocarbons; Russia requires deep and potentially unpopular reforms to diversify its economy, but many among the elite seem to believe that, despite the apparent lessons of the Soviet period, the economy can be developed effectively (and painlessly) through state-led industrial policy. If the money becomes available again, this would presumably be the prefered option. However, if prices stagnate or decrease over the coming year or two, the prospects for economic reform within the context of WTO accession will be somewhat better (although they will still face resistance from elements within the elite).

Posted in Russia 2012 Elections, Russian Corruption, Russian Economy, Russian Foreign Policy, Russian Liberalization, Russian Middle Class, Russian Politics | Leave a Comment »

Modernization, Property Rights and the Russian Middle Class

Posted by democratist on June 20, 2010

20th June 2010

Last Friday (June 18th) President Medvedev used the annual St. Petersburg Economic Forum as a platform for the official launch of his much-anticipated reform programme, which has been designed to attract foreign investment as a basis for the modernization and diversification of the domestic economy.

As such the following reforms have been unveiled; capital gains tax is to be abolished for FDI from 2011; tax breaks will be introduced for innovative companies and educational institutions; the number of firms deemed “strategic” will be cut five-fold (to allow for greater foreign participation); a more relaxed visa policy will be introduced for foreign businesses; and finally assurances have been made that the legal basis needed to fight corruption will be strengthened.

While this is all fine liberal stuff - as far as it goes - those already familiar with this column will not be surprised to hear that Democratist remains profoundly sceptical about the long-term viability of Medvedev’s project. The dominant barrier Russia faces in attracting foreign investment is its extraordinary record on corruption; in 2009 it ranked at 146th (out of 180) in Transparency International’s Corruption Perceptions Index - putting it on a par with Zimbabwe or Sierra Leone, and the idea that the current government is about to seriously tighten up the legal basis for combatting this problem is questionable, to say the very least.

As Sergey Mitrokhin, leader of the marginalized extraparliamentary liberal Yabloko Party recently noted his article Modernization or Stagnation? (June 15th – http://politcom.ru/10274.html) any measures taken under the current regime are likely to remain superficial and short-lived; firstly because a large part of the Russian elite is afraid of change because of the threat of losing property and income accumulated over the last 20 years, and more fundamentally because Russia has not yet managed to develop the kind of politically mature middle class needed to drive any modernization programme forward over the longer-term.

As Mitrokhin states; “The structure of property rights in Russia is reminiscent of an upside-down pyramid; the higher up one is on the social hierarchy, the more property, and the rights to guarantee it one has. The lower one is, the less one has of both…with such an upside-down pyramid, there is no niche for the development of a full-fledged middle class in the country, which in most of the transformed countries was the main social bearer of the modernization project… the elite must give the first impetus, but if this impetus does not have a strong social bearer, then modernization will prove to be “elite-oriented,” and will quickly die out.”

Posted in Historical Materialism, Russian Corruption, Russian Economy, Russian Middle Class, Russian Politics | Leave a Comment »

 
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