“State capture” by oligarchs: the Ukrainian lesson for Central Asia

The today’s situation in Ukraine and a lesson which the former Soviet republics of Central Asia have to take from it, is analyzed by the Candidate of History, the dean of faculty of policy and the international relations of the Siberian Institute of Management — branch of the Russian Academy of National Economy and Public Administration under the President of the Russian Federation President Sergey Kozlov.

The last 10 years of political life of Ukraine were marked by a succession of large-scale political crises replacing each other, the foundation to which the stock «Ukraine without Kuchma» in 2002 laid. Mass demonstrations proceeding any more the first month at first in Kiev and then in other cities, received the name «Euromaidan», testify that the Ukrainian statehood is still far from desired stabilization. What is the reason of similar instability of the Ukrainian political system?

From the point of view of the political science, the greatest heuristic potential for an explanation of the political processes happening in Ukraine, possess:

firstly, the concept of neopatrimonialism offered by neo-Weberianists Günter Roth, Shmuel Eisenstadt etc. It opens mechanisms of implementation of political domination. Institutional specifics of neopatrimonial regimes consist in domination of neopatrimonial rules of a game of politics, domination of the patron-client relations, power and property merge etc.

secondly, the ideas of force of the state which in the classical political theory called «sovereignty». Within this approach the state is considered as territorial monopoly of legitimate physical and symbolical abuse, and basic aspects of its activity are autonomy and capacity of the state. Autonomy assumes ability of the state to formulate own interests even contrary to will of various social groups. Capacity is defined as ability of the state to carry out strategic decisions on achievement of the purposes in society. Within similar approach it is logical to divide the states on strong (what are capable to realize the national and state interests) and weak (not capable to work independently). By the way, similar approach was already used by Ottorino Cappelli in the analysis of the state construction in Post-Soviet Russia. But we have a speech now about Ukraine.

Independent and self- dependent Ukrainian state, formed in 1991, the field of disintegration of the Soviet Union on administrative borders, in the first years of the existence, in fact, represented Ukrainian Soviet Socialist Republic only without the Soviet Socialist Republic. If to use the words of the Ukrainian researcher Alexander Osipyan, it was «the broken-away province of the empire headed by the former local imperial bureaucracy which … in the rhetoric uses etjhnocentric model of etatism». Only the Soviet ideological stamps were quickly replaced by nationalist (absolutely not without reason at the beginning of the 90th the question of introduction of a high school course of scientific nationalism instead of the drawn scientific communism was seriously discussed in Ukraine).

The Ukrainian authority together with the hardest social and economic crisis inherited that the classic of the British historical macro-sociology Michael Mann called the weakness of the infrastructure power from the late Soviet Union. It is a question of superficial penetration of the state into society that causes weak ability of the states to change behaviour of the citizens. In the 90th, the insignificant infrastructure power of Kiev over processes in the country (or capacity of the Ukrainian state) even more weakened.

By the end of the 90th this emptiness was filled by oligarchic «clans» which start playing more and more noticeable role in political and economic life of Ukraine. Emergence of oligarchic «clans» had under itself as the reasons of social and economic character (decomposition of system of rent extraction by «red directors») and was caused by aspiration of the head of state to rely on large players to whom he provided access to these or those economic resources in exchange for political support. Each of similar «clans» was formed on the basis of large business groups, whose economic influence was based on intermediary operations with energy carriers and participation in «big privatization».

Each «clan» represented a conglomerate of businessmen, officials and public politicians, connected with the patron- client relations among themselves. The clan system provided existence of the whole hierarchy of clients and the patron relations. «Clans» arise in the 2nd half of the 90th at regional level and further make attempts to extend the influence on all territory of the country, first of all through receiving access to decision-making levers. The main tools for this purpose served:

- the organization of own or «privatization» of already existing political parties for upholding of own interests in the Verkhovna Rada (so, the Social Democratic Party of Ukraine (integrated) was political cover of Kiev «clan», «Party of Regions» of Donetsk, «Labour Ukraine» — Dnepropetrovsk etc.);

- advance of own representatives on key state posts (in particular, in 1996 — 1997 the head of the Dnepropetrovsk clan Pavel Lazarenko was the prime minister, in 1995 — 1996 and 2002−2004 this position was held by protege of Donetsk «clans» Evgeny Marchuk and Victor Yanukovych who has changed a chair of the prime minister from a chair of the Donetsk governor);

- entry into existing patron-client networks and receiving access to the president through informal contacts with the persons entering his direct environment.

Up to 2002 the relations between «clans» had rather peace character, allowing to avoid the sharp conflicts and «wars» for the section and property repartition. There was it in many respects thanks to that the key role in political system, a role of the arbitrator, the veto player and the rent distributor, was kept by the president Leonid Kuchma. In his hands there were opportunities to provide to large players various economic preferences (distribution of energy resources, participation in privatization of the largest enterprises, tax privileges) in exchange for political support. This system was under construction on the principles of loyalty to the central figure.

Besides economic interest the weakness of the state which has been created (?) by natives of ranks of the party and Soviet nomenclature and a technocracy, was compensated by mechanisms of that received the name blackmail state in the western literature. The head of state by means of a compromising evidence controlled the key political and economic actors.

Thus, by the end of the first decade of independence in Ukraine there was the consolidated neopatrimonial regime functioning on the basis of political and economic hegemony of the head of state, controlling the levers of power and fiscal influence. Round the president the powerful group of the highest state bureaucracy was created for which the state is object of private interests and use of resources of the government — way of personal enrichment.

The developed system started glitching by the end of the second presidential term of Leonid Kuchma when some business groups of the second order set as the purpose change of developed status quo in power and property distribution and in the conditions of a lack of resources relied on the appeal to voters and external support. «Orange revolution» became the result which was a combination of purposeful use of technologies of protest mobilization and the mass emotional and political excitement which has poured out in protest actions on the Maidan Nezalezhnosti. However, not only «orange coalition» stormed the power in the fall-winter of 2004. A similar attempt was made also by the most powerful of regional «clans» — Donetsk clan. There were not tow big players during the period of «orange revolution» actually: the power and opposition, but three — Kuchma, «orange» and «Donetsk».

Disintegration of the developed model of the neopatrimonial domination based on hegemony of the president became the result of events of 2004−2005. In fact, there was «state capture» by the coalition of heads of a number of business groups of the second order. In a public discourse it was reflected in a type of metaphorical designation of «orange revolution» as the revolt of millionaires against billionaires. Sponsors of «orange revolution», been a part of the advantageous coalition (Yulia Timoshenko, Pyotr Poroshenko, David Zhvaniya, etc.) began to use the received powers of authority for maximizing the influence on a political field. Elimination of the key veto player considerably lowered the cost of receiving a prize. Though Tymoshenko’s government carried out a number of the measures directed on fight against the shadow income, the termination of tax frauds, as a whole a situation remained at which large business close to the power received certain preferences. «Beneficiaries» changed only.

Elimination of the president Kuchma and his environment (a number of general security officers unexpectedly committed suicide), heading «device» of «blackmail state», weakened control of the largest actors of political process and even more reduced the capacity of the state.

Besides, important and still underestimated in literature aspect of political dynamics of Post-Soviet transformation was connected with alternation of generations in the Ukrainian elite. It is a question of the large-scale cleaning of government undertaken by the «orange» government. Having dismissed the considerable part of representatives of the late Soviet party and Soviet nomenclature and the technocracy keeping besides personal mercenary motives orientation to service to the state, the «orange» authorities in a mass order replaced them with representatives of new generation — generation of «seventieth» (as the researcher from the European university in St. Petersburg Dmitry Travin calls them). Rent oriented political businessmen came to government at the average level.

As the constitutional reform redistributing powers of authority from the president to parliament was a condition of resolution of crisis of 2004, possibilities of the head of state on regulation of the relations between the largest business groups were significantly reduced. Owing to this fact, and also because of V. Yushchenko’s personal weakness to fall of 2005 it was actually eliminated from similar arbitration that turned back surge in raiding.

Summing up the intermediate results, it is possible to note that «orange revolution» became not so much triumph of democracy and civil society, as many change of model of the neopatrimonial state which has turned back decrease in its autonomy and capacity. The Ukrainian political life of 2005−2013 is continuous fight of oligarchic «clans» for domination. It is possible to tell that the period of peaceful co-existence of financial and industrial groups with departure of the Supreme arbitrator ended, having replaced by the period of sharp confrontation. It is possible to stop on its short chronology.

The breakdown of «orange» coalition almost right after «revolution» and the sharp conflicts among its participants led to mass disappointment of electorate in «orange» parties. Result of it was that the victory was gained by the Party of Regions at parliamentary elections of 2006, showing political cover of Donetsk oligarchic «clan». Now this clan, having created «anti-recessionary coalition» together with communists and socialists, made an attempt of capture of the state. Party of Regions, having received positions of the prime minister, all deputy prime ministers and 14 portfolios from 19, returned to practice of granting economic privileges to own client groups.

However, domination of Donetsk «clan» was not too long. The dissolution which has followed in April, 2007 of the Verkhovna Rada for a while suspended expansion of Donetsk «clan». However the early elections which have taken place on September 30, 2007 didn’t change a situation as a whole. The new political deal led to the new section of spheres of influence between various business clans and bureaucratic groups. «Second coming» of Tymoshenko’s government ended with a victory of Yanukovych on presidential elections in 2010 and the victory of the Party of Regions on parliamentary elections in 2012. The revenge of «Donetsk» turned back the most powerful pressure upon business, deterioration of the business climate, new cleaning of civil servants at the average level with their replacement by natives of Donetsk. All this became the reason of growth of discontent which eventually led to «Euromaidan».

For the political «pendulum» which was alternately giving the power in the country those to «orange» or «white-blue» governments, there was a fight not party and ideological platforms or strategic programs of development of the country, but the coalitions of political businessmen, the rent oriented business groups and neopatrimonial bureaucratic cliques for control establishment over government resources.

In general, standard aligned on the democratic and legal structure of the state institutes of representation and those concept by which they are described in a political discourse, poorly are suitable for understanding of features of the Ukrainian neopatrimonializm. When we speak about Ukrainian «president», «parties», «parliament», it must be kept in mind that the Ukrainian president is not the head of the legal and formal state putting into practice the national and state interests, but the head of the coalition of business groups who through patron-client operation of public resources apply for control over the government for achievement of own business interests; the Ukrainian parties is not the part of the civil society, reflecting interests of its different segments, but the political cars built round business structures or leaders; the Ukrainian parliament is club of the political businessmen affiliated with various oligarchic «clans».

Thus the legitimacy of any president, any government and any parliamentary majority in Ukraine inevitably is limited owing to fundamental cultural split inherent in the Ukrainian society — on the Russian cultural East and the Ukrainian cultural West, successfully politicized in case of need by means of a number of problems markers (Russian, NATO, the Black Sea fleet). This split, or using Seymour Lipset and Steyn Rokkan’s term, cleavage leads to that any leader relying on support or the West and the Centre or the Southeast, is inevitably perceived by «second half» of Ukraine as the aggressor usurping the right to act on behalf of political whole, with which each of half is inclined to identify only itself.

Proceeding from classical, going back to Max Weber and Pierre Bourdieu’s constructions, ideas of the state about monopoly of physical and symbolical abuse it is possible to state insufficiency of power and symbolical resources which the Ukrainian state has for overcoming of «state capture», critical dependence on external actors, and also ensuring cultural homogenization of society.

Any advantageous coalition is doomed to try to hold control over government resources by means of populist measures in these conditions. Certainly, the weak state isn’t able to carry out the ripened structural reforms. And the economic policy is reduced to spending of the Soviet inheritance — to use of export-oriented branches (metallurgy and the chemical industry). The means received from export, concentrate in hands of the business groups, trying to come nearer to the power and sponsoring all large political forces on a case of their victory on elections.

The result of oligarchic «state capture» and private assignment of the order by the public political power for the sake of own interests to the detriment of production of the public benefits is available — we observe a state collapse in the face of a spontaneous protest even of not «annoyed», but «enraged» citizens.

What lessons can learn the state of Central Asia from the Ukrainian history?

- Strengthening of influence of oligarchic «clans» in political and economic life poses direct threat of statehood as the logic of business interests contradicts logic of the national state. Representations that development of the large capital promotes economic progress of the country are illusion. In the conditions of lack of regulation of the property rights and the short-term horizons of planning large business groups are guided not by development and long-term investments, but by «spending» of the Soviet inheritance.

- Business elite isn’t interested in a universalization of rules of the game as their influence is based on a particularism and receiving «exclusive» access to decision-making levers.

- Attempts of financial and industrial groups to realize the interests via various mechanisms are undermined by autonomy of the state, turning it into the instrument of influence of competing «clans».

- Operation of resources of the government in private interests leads to ignoring of production of the public benefits that is fraught with social explosion. Business elite shifts care of maintenance of the social contract to the weak state.

- And the last. The stabilization of mechanisms of intra elite reproduction is necessary to the Post-Soviet states, especially it concerns Central Asia. Not related, clan and client communications have to define the career. Access to elite has to be provided through an education system. In the modern states it carries out the function of formation of an inequality as it allocates the graduates with the symbolical capital and provides them the planned future.