Oligarchy in Georgia, Moldova and Ukraine: between withdrawal, regrouping and “re-education”. Analysis by Dionis Cenușa

Op-Ed
	Oligarchs continue to be active political actors in Georgia, Moldova and Ukraine. Although their real influence can not be accurately measured, it cannot be underestimated, as it affects the quality of democratic processes and undermines national security in favor of Russian interests...
Dionis Cenuşa, Senior Contributor

Recent signs of improvement in political competition in Eastern European states dictate a change in the behavior of financially leveraged actors, also known as oligarchs, who have become indispensable forces in local political systems. They seek to review their strategies, the purpose of which varies from restoring and consolidating their powers to maintaining channels of intervention in the decision-making process. No matter how imperfect the democratic institutions in Georgia, Moldova and Ukraine may be, the existing conditions still allow for favorable situations for the democratization of the political landscape. The rhetoric and actions of the European Union (EU) play a significant role in changing the balance of power between political actors in neighboring countries, while also leaving some visible imprints on the conduct of oligarchic centers.

The mediation of the political crisis in Georgia, in which a number of European institutions participated, from the European Council to the European Parliament, put pressure on major political actors. It is because of this pressure that the ruling party (the "Georgian Dream") has accepted some redistributions of roles in parliament in favor of the opposition. Such concessions were difficult to swallow, given the comfortable parliamentary majority obtained by the GD in the October 2020 elections (90 seats out of 150). In addition, a series of structural reforms called for by the opposition have gained public and political urgency (NEE, April 2021), to the detriment of the slow and partial reform model with which the "Georgian Dream" is accustomed, regardless of its stagnating external credibility.

In the case of Moldova, the political scene began to change immediately after the presidency was taken over by Maia Sandu at the end of 2020 (3DCFTAs, November 2020). The elimination of the influence of old informal networks in state institutions, but also in the sanitation of the management of property and public funds, is the leitmotif of President Sandu's mandate. This approach received the unconditional support of the EU, which also provided unlimited external legitimacy for Maia Sandu's initiative to dissolve parliament (April 28, 2021) and trigger the early parliamentary elections on July 11, 2021. One of the major stakes of the election announced by President Sandu is "the fight to clean up the political class."

The political scene in Ukraine is calmer, as President Volodymyr Zelensky has a functional majority in parliament (254 seats out of a total of 450), and the next parliamentary elections will take place in 2023. The pandemic crisis is testing the strength of Zelensky's popularity. The latest polls show that about 43.8% of the population evaluates Zelensky's activity negatively, 37.2% have neutral opinions and only 15.4% evaluate it positively (Razumkov Center, March 2021). In May, the voting intention for Zelensky was about 10% higher than for his main political opponent Petro Poroshenko - 23.4% versus 13.5%. The relationship of the Zelensky administration with the oligarchs varies, and political subjectivism is ubiquitous. While former President Petro Pororeshenko is being investigated by the prosecutor's office in about 30 cases, oligarch Ihor Kolomoysky is facing increasingly prohibitive and protectionist antitrust laws and decisions related to the banking (Privatbank’s nationalization) and energy (oil prices, restructuring of Ukrnafta) sectors. However, Zelensky does not want or cannot open too many battlefronts with all Ukrainian oligarchs, prioritizing counteracting the influence of pro-Russian oligarchs, such as Viktor Medvedchuk, currently being investigated for allegedly committing crimes of treason in favor of Russia (Meduza, May 2021).

The oligarchic influence in Georgia, Moldova and Ukraine differs depending on the country and the local constraints, but it is everywhere toxic to the freedom and proper functioning of democratic institutions. Although oligarchs are widely treated as a risk to political processes, they are seen as a threat to national security only in Ukraine. At the same time, EU exponents are publicly targeting oligarchic networks only in Moldova in connection with the investigation of large-scale crimes (such as "bank robbery"). The phenomenon of the existing oligarchy in Georgia is not at all visible in EU assessments, not even when it underlies political crises. At the same time, the Ukrainian oligarchy is under EU scrutiny more in terms of sectoral reforms than in terms of the rule of law. Therefore, both national and EU authorities have distinct views concerning the local oligarchs, who are selectively perceived as a factor that put in jeopardy the democratization of countries or their national security (See Table).

Table. Predominant approaches to oligarchs in Georgia, Moldova and Ukraine

Source: Compilation by the author

Georgia - the shadow retreat of the main oligarch

The intensity of European and American participation in managing the Georgian political crisis of 2020-2021 has forced oligarch Bidzina Ivanishvili to retreat into the shadows (NEE, March 2021), at least temporarily. The political crisis of 2020-2021 exceeded the proportions of the protests against the Russian occupation, which upset the Georgian public in the summer of 2019. In any case, Ivanishvili's resignation from the ruling party and his alleged political retirement occurred only after the violent arrest of opposition leader Nika Melia (United National Movement Party) (BBC, February 2021). Political tension has become unbearable for Ivanishvili, who risked even individual sanctions, not just new waves of protests. If he had not given up his centrality in decision-making at the height of the political crisis, then the West would have felt forced to explicitly admit the features of the "captured state", coordinated by Ivanishvili. In addition to the costs of irreparably damaging of his image, other more serious consequences could even include a possible revision of EU financial assistance (through enacting the conditionality).

For now, it is not certain that Ivanishvili will not decide to return to the forefront after the dust surrounding the current political crisis settle down. Nevertheless, until then, other businessmen tend to grow political muscles to compete with the political system built by Ivanishvili. Among them is Mamuka Khazaradze, the leader of the "Lelo" party (4 seats in the current parliament), investigated from 2019 in a case of alleged money laundering of $ 17 million allegedly committed in 2008 (during the reign of Mikhail Saakashvili). Levan Vasadze is another Georgian businessman who in May 2021 announced his plans to set up the "Eri" party, on a platform that promotes family and traditional values ​​and as a reaction to EU intervention in mediating the political crisis (Sova, May 2021).
 

Moldova - is the regrouping of the oligarchs possible?

The total war on corruption promoted by President Sandu also includes a kind of efficiency of the "hunt" after the oligarchs behind the bank crimes from 2012-2014. The same "hunt" is for the return of financial goods stolen from the public sector and hidden in "offshores", where the oligarchs finance luxurious personal lives and pull the strings in domestic politics. The expropriation of illegally obtained funds by oligarchs is part of the high-level corruption program announced by President Sandu. The model of confiscating the money of the oligarch's son and former prime minister Vlad Filat, coming from "offshores" (about 534 thousand euros), with their return by the British authorities to Moldova (Anticoruptie.md, May 2021), shows that the financial integrity of fugitive oligarchs is no longer intangible, on the contrary.

In the aftermath of the upcoming early elections, the setting of an anti-corruption agenda at parliamentary and executive level is certain. The materialization of such a scenario concerns the oligarchic forces, which contributed to the (de-) formation of the parliament (2019-2021), dissolved in April, intending to keep the pro-EU and anti-corruption political parties in the minority. The runaway oligarchs - Vlad Plahotniuc (Turkey) and Ilan Shor (Israel) - need time and favorable political conditions to regroup. A large number of President Sandu's ideological rivals in the legislative future would be extremely favorable. More precisely, it refers to the anti-Western Socialists Party running in the electoral bloc together with the Communist Party. In addition, the oligarchic centers emanating destructive influence from abroad rely on their own political projects - the "Șor" Party - or other electoral constructions, supported by financial sources of dubious origin and led by political leaders with authoritarian behavior, such as the "Renato Usatii" Bloc. The disorientation and weakening of anti-corruption reforms is the major goal pursued by the above-mentioned oligarchs. If it fails, then they would look for political opportunities in destabilizing the new parliament on ideological and geopolitical criteria.

Ukraine and the attempt to "re-educate" the oligarchs

Unlike Georgia and Moldova, the Ukrainian authorities have expressed their determination to counter the risks posed by oligarchs to national security. In April 2021, President Zelensky called for legislation aimed at de-oligarchization. After that, the National Security Council announced that 13 businessmen are qualified as oligarchs, and the suggested de-oligarchization must result in the "elimination of the fifth column." In addition, Zelensky's political motivation for clarifying the state of Ukrainian oligarchs considers not only counteracting the influence of pro-Russian oligarchs, but also at establishing a sort of "guideline for correct conduct" for current and future oligarchs.

Launched about two years after the beginning of Zelensky's term and a month after the US introduced sanctions against Kolomoysky (RBC, March 2021), the de-oligarchization initiative provides for the establishment of competing and transparent rules, with the option of "re-education" of the oligarchs. Through this, Zelensky offers a kind of "green lane" to those oligarchs who want to become just businessmen, disconnected from politics and without monopolies in the economy. Against the background of investigations against Poroshenko, Kolomoysky and Medvedchuk, Zelensky's offer may become truly attractive. In any case, the feasibility of de-oligarchization (still in the pipeline) depends on reforming the judiciary and strengthening the independence of antitrust and anti-corruption agencies, which are under constant pressure from anachronistic forces.

Instead lieu conclusions...

"Oligarchs continue to be active political actors in Georgia, Moldova and Ukraine. Although their real influence can not be accurately measured, it cannot be underestimated, as it affects the quality of democratic processes and undermines national security in favor of Russian interests.

Although President Zelensky's initiative to get rid of oligarchs is still in its infancy, the Ukrainian experience needs to be carefully studied so that it can be replicated later in Georgia and Moldova. The EU could support such initiatives, thus positioning itself in a principled and coherent manner against oligarchic influence, which seems reversible and one of the most serious internal threats to democratic reforms in these countries.

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