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Kleptocracy: final stage of Soviet-style socialism

The tumult in Ukraine marks a wider crisis of the corrupt post-Soviet model. The impact will be felt most acutely in Russia itself, says Krzysztof Bobinski.

Viktor Yanukovych’s fall in Ukraine marks the beginning of the end for the post-Soviet mafia-style kleptocracies which emerged from the collapsing communist system after 1989. The rulers of these kleptocracies have shown that they are ready to murder and lie to defend a system which allowed them to build fabulous fortunes by stealing from their people.

The irony is that these kleptocracies mark the final stage of the Soviet path to communism. A very different outcome to the classless nirvana which Soviet ideologists long said would arrive once the new system was put into place. Indeed, their divagations gave rise to the Czech joke about the man who, when he heard at a party meeting that the final stage of communism was approaching, muttered: “I’m not worried, I have cancer”.

In light of unfolding events in Ukraine, the question now arises whether anyone in the Kremlin is thinking of how Russia’s own kleptocratic regime will fare once the population begins to question the right of their rulers to loot their country in the way that Viktor Yanukovych and his cronies have been doing.

It may be that there is such a person. The Financial Times on 27 February quotes a contact with Kremlin officials as thinking: "Ukraine needs to find a new economic model which can help distribute wealth more evenly and put an end to endemic corruption". The comment might just as well have referred to Russia itself, which instead of criticising the new authorities in Kiev should be contemplating how to implement such a model at home.

None of the dreary pre-1989 Soviet ideologists could have imagined, even in their wildest dreams, that the finalite of the struggle to build socialism in their country and its constituent parts would be a kleptocracy - a political and social formation where the entire system is designed to uphold a mafia capture of the state.

That outcome was also unimaginable to people from the west who greeted the fall of the Soviet system after 1989 with enthusiasm and looked forward to happy times as the Soviet successor-states embraced the free market, the rule of law and a democratic regime.

As the stream of advisors from the west sought to acquaint the (by then) post-Soviet populations with the rules of the western system, the brightest among the Soviet natives - abetted it might be said by western financiers - moved swiftly to gain control over large chunks of the economy. They established a new system under which soon-to-be-fabulously-rich oligarchs ran their businesses under the watchful eye of their politicians, with whom they shared their ill-gotten gains.

An end and a beginning

Then, in 2009, came the European Union’s Eastern Partnership programme. It was a quixotic project which sought once again to try and reform six of the post-Soviet states - Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine - with the aim of re-establishing the free market, the rule of law and a democratic regime, and thus bringing these countries closer to the EU. But the EU officials failed to realise that a programme which emphasised the rule of law and the empowerment of the people would also threaten the current rulers, by ending their ability to steal with impunity from the people.   

Under the programme, four countries negotiated association agreements with the EU - Ukraine, Armenia, Georgia and Moldova (Belarus is beyond the pale thanks to its bad civil-rights record, and energy-rich Azerbaijan doesn’t need this kind of relationship with the EU). Of the four, only Georgia and Moldova are moving ahead with implementation of the agreements. Armenia was scared off by Russia and Vladimir Putin bribed and cajoled Viktor Yanukovych  to drop plans to sign the association agreement, which it is now clear that the Ukrainian president had no intention of implementing. However, Yanukovych  went along with the programme, convinced he could get the EU to accept his failure to pursue reforms even as the EU continued to provide financial support for his country’s ailing economy.

This was happening as Yanukovych and his allies such as Viktor Pshonka, Ukraine’s (now ex-) prosecutor-general were amassing fortunes and building private mansions in excruciating bad taste to show off  their new-found wealth. It was Pshonka, according to documents published by the internet publication Business New Europe, who in the final days of the Yanukovych regime urged the ousted president to impose a thirty-day state of emergency and crush the Maidan revolt in Kiev. And it came as no surprise that the Ukrainian authorities turned to criminal thugs to terrorise the protesters, and that Yanukovych himself used mafia-style threats to keep his party’s deputies in the parliament in line when they threatened to desert.

The Russian people have been watching and reading this on the internet. The reason they have not already come out onto the streets in protest against their rulers is probably because they agree with President Putin who argues that Ukraine must stay closer to Russia than the EU. But at the same time the dominant feeling throughout the Eastern Partnership region and Russia is anger at corruption, which is at the base of the system in these countries and the massive inequalities it engenders.

It is impossible to tell when Russians and the other countries in the region will rise up against their rulers but there is a more than even chance that they will rebel sooner or later. Such revolts are all the more likely if the new Ukrainian regime manages to bring in reforms which will indeed put the country on the path of the western-style normality which the people - and especially the younger generation - crave.

This is the challenge which Vladimir Putin faces. A Ukraine building a western-style market economy based on the rule of law poses a major threat to a system he is defending, where corruption is endemic and the path to inconceivable riches can be followed only by those who enjoy the rulers' favour. The last twenty-five years have seen the rule of the post-Soviet kleptocrats in a kind of "Indian summer" of the Soviet regime. That regime is now, at last, coming to an end.      

About the author

Krzysztof Bobinski is the president of Unia & Polska, a pro-European think-tank in Warsaw. He was the Warsaw correspondent of the Financial Times (1976-2000) and later published Unia & Polska magazine. He served as co-chair of the Eastern Partnership Civil Society Forum in 2013

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Krzysztof Bobinski is the president of Unia & Polska, a pro-European think-tank in Warsaw. He was the Warsaw correspondent of the Financial Times (1976-2000) and later published Unia & Polska magazine. He served as co-chair of the Eastern Partnership Civil Society Forum in 2013


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