oDR: Opinion

Putin is the product of a corrupt economic system that we must now reform

Market fundamentalism encourages violence as well as theft. This war should mark a turning point for the world

Mary Kaldor
1 March 2022, 1.04pm
Smoke and flames rise over during the shelling in Kyiv, as Russia continues its invasion of Ukraine
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Reuters / Alamy Stock Photo

In all the commentary on the war in Ukraine and the debates about whether the West bears any responsibility, very few people have referred to the social and economic factors. Yet the Putin phenomenon has to be understood as a new type of socio-economic system that was produced by a mixture of oil dependence and market fundamentalism, in a context shaped by the Tsarist and Communist legacy.

In the aftermath of the Cold War, enthusiastic Western economists rushed to Eastern Europe to dismantle the centrally planned economies through reducing state budgets, privatising state enterprises and liberalising trade and investments. In only a handful of cases – mainly those Eastern European countries who joined the European Union – did these reforms result in bourgeois capitalism. Elsewhere, in varying degrees, it led to a new form of authoritarian kleptocracy.

In Communist times, the market was illegal and so market activities were considered a crime. That made it very difficult to distinguish between legitimate exchange and stealing. The consequence of economic reform was the normalisation of stealing from the state. Through privatisation, Communist bureaucrats became oligarchs and competed for state hand-outs. This situation was compounded by the increasingly rentier character of the Russian state as a consequence of dependence on oil and gas; there was no need for a social contract with citizens since state revenue did not depend on taxation. Something very similar could be observed in Saddam Hussein’s Iraq or Bashar al-Assad’s Syria.

The regimes that preside over this type of kleptocracy tend to frame their narratives in terms of ethnic nationalism or racism combined with ‘family values’ (misogyny and homophobia). Elements of this type of system can be observed in Viktor Orbán’s Hungary, which is dependent on rent from the European Union – or even in the rise of Donald Trump and Brexit, as the US and the UK become more dependent on borrowing and revenue from financial assets. Russia, with its vast oil and gas revenues and its history of brutal bureaucracy, represents an extreme version.

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Alex de Waal, an international development expert at the London School of Economics, talks about the ‘political marketplace’ – in which political entrepreneurs compete to steal from the state – as a way to explain persistent violence in parts of Africa. The political marketplace is an extreme form of neoliberalism in which politics literally becomes commodified.

Ethnicised kleptocracy or crony capitalism is what characterises many of the long-running ‘forever wars’ and frozen conflicts in different parts of the world. These are wars where the various warring parties benefit from violence itself, rather than from winning or losing. Violence generates revenue through bargaining within the state as well as a range of predatory activities, while extremist ethnic or racist positions rationalise the violence. This is how we can understand the continued power of ethnic warlords in Bosnia, for example, or Azerbaijan.

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Very often these conflicts begin as a consequence of peaceful pro-democracy protests but, as some groups turn to violence, they tend to be hijacked by ethnic entrepreneurs. For example, those who chose to take up arms to resist the onslaughts from the regime in Syria were funded by Sunni donors in the Gulf, while the Alawite-dominated regime deliberately targeted Sunni areas, so that the violence increasingly became framed in terms of a Shia-Sunni conflict.

Vladimir Putin’s actions are framed in terms of concern about NATO expansion, nostalgia for the Soviet empire and accusations of Ukrainian ethnic nationalism. But it is the Ukrainian democratic experiment that offers the main threat to the repressive kleptocratic regime over which he presides. When he started the war in 2014, it was to prevent a Ukrainian association agreement with the EU that could have led to transparency and a weakening of the hold of oligarchs. Perhaps Putin’s aim now is to turn Ukraine into a ‘forever war’, where ethnicised militias engage in violence against civilians both for economic reasons (loot, pillage, smuggling and so on) and for political reasons (generating ethnic polarisation), as is the case in the breakaway so-called ‘People’s Republics’ of Donetsk and Luhansk.

Even if Russia succeeds in taking Kyiv and imposing a puppet regime, it will not be able to control the country. But doing so could lead to a kind of long-term violent anarchy that represents an alternative to democracy. After all, this is what happened after the American invasions of Iraq and Afghanistan.

Could the invasion lead to a traditional war that spreads all over Europe? The invasion itself seems to suggest that Putin is no longer rational. As resistance mounts and as Western reaction escalates, Putin is likely to use more and more lethal force, reducing Ukraine’s cities to rubble as he did in Chechnya. Perhaps he will even threaten to deploy nuclear weapons. This frightening prospect cannot be discounted: checks and balances within the Russian state have been dismantled. The main hope is that Putin will be stopped by growing domestic opposition, not only on the streets but within the establishment.

Kleptocrats would not survive if there was no civic behaviour – there would be no one left to steal from

The only countervailing logic to this type of ethnicised kleptocracy is what could be called civicness. In all conflict zones, it is possible to find doctors and nurses who are ready to treat anyone in need whatever their ethnicity, teachers who take inclusive education seriously, honest judges or civil servants, neighbours who help each other, and even local governments that try to provide public services without discrimination.

Where conflicts begin with pro-democracy protests, the majority of protesters usually oppose the turn to violence, aware that the opposition can never compete with the state in military terms. When war starts, some leave but others take on a humanitarian role as first responders, or as local mediators, or documenting war crimes and so on. The paradox is that the kleptocrats would not survive if there was no civic behaviour – there would be no one left to steal from.

The courageous Ukrainian resistance and the anti-war movement in Russia are a civic, not ethnic, reaction to the invasion. And their civic stance has global support. An alternative scenario is that the war in Ukraine marks a turning point. It could be the moment when the global financial system starts to control ‘dark money’ – the money emanating from kleptocrats. Or when we recognise that ending dependence on oil and gas is not just a climate imperative but necessary to deal with rogue regimes. Or when we realise that people fleeing war need to be offered asylum whoever they are. Above all, it could be a moment when we begin to understand that there are no longer ‘military solutions’ and that we need to start thinking about an alternative human rights-based security system for the world.

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