Anyway, the election results are a big surprise. Just a couple of months ago very senior Georgian politicians were expecting something like a 50% to 30% victory for Saakahsvili, and were saying that the main danger from Ivanishvili was not for this round of elections, but for the next electoral cycle where he could build on his 30% to make the leap towards a proper majority.

Of liberalism and social democracy

The reasons for the elections results are manifold. The most important is basically too right wing a government. In his near-decade in power Saakashvili achieved huge successes in state building. The list of achievements is very long and has been so often quoted by Georgia apologists and friendly lobbyists that many people are tired of it. However, what Saakashvili achieved is no mean feat. He drastically reduced low-level corruption when it comes to the interaction between the citizen and the state – from traffic police to construction-permit issuers. He attracted significant investments, and most importantly (re)built the skeleton of a more or less functioning state, starting with the police and tax-inspectorate, then moving on to courts, universities, and municipal services (Here is a good book from the World Bank chronicling Georgia’s reforms). All was supplemented with a huge deregulation drive – that ranged from cutting red-tape and giving as free a hand to investors to drastic liberalisation of visa procedures for as many countries as possible. Georgia was open to anyone who would come to spend money or invest – from Iranian or Turks going to casinos in Batumi, to Russian, Kazakh or Gulf investors. Georgia now occupies the formidable 16^th place in the Cost of Doing Business ranking and for several years held the title of the most reformist country in the world.

Georgia’s success has two key ingredients that are now becoming its weaknesses. The first was that the reforms were conducted with a firm hand, uncompromising manner and in a very centralised decision-making style. This was good for the speed and depth of reforms, but Saakashvili’s governing style alienated many of the better off, including a good chunk of the Tbilisi elite. The second was an extremely liberal approach to the business environment, as well as a preference for various ‘grand projet’ from producing a Georgian armoured vehicle (called Didgori) to a Georgian tablet computer, and from posh hotels (Tbilisi has two Marriots, a Radisson SAS, and a Sheraton) to ‘public service halls’ built by famous world architects. Such an approach attracted investments and increased tax-revenue, but created few jobs. And there has been little redistribution. All this alienated the poorer parts of society. Budgetary spending went into good salaries for the public sector (a key factor for the fight against corruption), rebuilding of the police (as an institution, and literary as a series of new glass buildings across the country), army, or roads. But not enough of it was properly redistributed via things such as pensions or support for agriculture. What was good for business was not always good for social protection. Ultra-liberalism generated growth and budgetary revenue, but was not enough to creating jobs or reducing substantially poverty. Between 2003 and 2012 Georgia’s GDP doubled in purchasing power parity (and rose by 3.5 times in nominal terms), and yet poverty was reduced from 28% to 24% only.  Saakashvili’s administration understood this, and the plan was to move the focus of the government from ‘liberalism’ to ‘social-democracy’, but this approach is too new to have visible effects.

So what explains Saakashvili’s success – quick, centralised, determined, non-consensual decision-making, deregulation, liberalism, and business-is-king attitude, also explains why parts of society grew increasingly disillusioned – from the elite that disliked political centralisation, to the underprivileged ones who got did not benefit from the growing economic pie. Another part of the explanation is politics. For a decade Saakashvili was so dominant and politically ruthless to his political opponents, than in the end all of them were forced to join forces under a single political roof – that of Bidzina Ivanishvili.

What next?   

In slightly over a year Saakashvili’s second presidential mandate will come to an end. So far he refused to say what he would do next. He was pondering his options, including the potential scenario where we would stay on as a prime-minister or speaker of the parliament. The parliamentary election results now make it much more difficult for Saakashvili to choose his options without facing strong opposition. Whatever will Saakashvili do (except from stepping aside from politics) will be much more difficult to achieve and contested in Georgia. But it also might strengthen his determination to continue the fight by staying in politics in a belief that the current opposition would just destroy his legacy, and his achievements are not irreversible enough for Georgian politics to move to a post-Saakashvili phase.

Either way Saakashvili’s defeat, is both good and bad for Georgia. It is bad because it is unclear what Ivanishvili stands for except being anti-Saakashvili and whether his party is committed enough to continue supporting Georgia transformation not just into a more pluralistic state, but into a better functioning state that continues to fight corruption, attract investments and modernise the country. But the election results can also be good news because even though not all opposition victories lead to or strengthen democracy (many of them actually don’t), fundamentally all democracies are built through victories and defeats of all governments. Benjamin Franklin once said that ‘our critics are our friends; they show us our faults’. So if these elections become a Franklin moment for Saakashvili making him and his party deliver better for the population at large and refocus their governance style and agenda – these elections might be turned from a short-term defeat into a longer-term victory.

Appearances can be deceptive

Money and a careful foreign policy between various great power interests made Azerbaijan the ultimate balancer and a fairly arrogant regional player. But the Azerbaijani system is more fragile than the country’s foreign partners think. The foundations of that system are increasingly shaky for several reasons.

One key factor is decreasing oil production. Oil production peaked in 2010; it will go down by half by 2017 and two-thirds by 2019. The hope is that new gas reserves will make up for the difference in incomes. This might compensate the fall in revenues, but only partly and insufficiently. The problem is also compounded by pretty profligate spending and a lack of institutionalised rules on how to use the oil money. Other oil-producing countries like Russia or Kazakhstan are more disciplined in ‘parking’ oil money in reserve funds. These are needed for ‘rainy days’ as well as insulating national economies from inflationary pressures, excessive liquidity, Dutch disease [the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector] and the volatility of oil prices.

Azerbaijan, though, is using much more of its oil money for current expenses: the country’s oil reserve fund SOFAZ transfers half of its annual income to the state budget. Some of this money has been invested in the future – infrastructure, motorways, and scholarships for studies abroad. Some has been spent on barely productive vanity projects from fountains to posh palaces. But most of it seems to have been siphoned off.  One estimate suggests that a kilometre of highway costs on average $18 mln in Azerbaijan, compared to $5.9 million in the US, $6.9 mln in the EU, $2.2 mln in China, $17.6 mln in Russia.

Politics and the economy

With the shaky foundations of the status quo, Azerbaijan does not have much time to diversify its economy. But it is not apparently doing much. The country’s elite has been for years in a comfortable, but corrosive equilibrium. The economy is riddled with monopolies and cartels with various highly ranked officials and their families controlling different sectors of the economy – from the import of bananas to road building. Unsurprisingly, the prices in the country are very high for everything, since they are pushed up by both cartels and currency appreciation stemming from an excessive inflow of oil money.

Politically, the situation is not totally unhealthy, but less and less so. From 1969 until 2003 Azerbaijan’s political life was (on and off) dominated by Heydar Aliev, once a KGB boss, then first Communist party secretary, then president of independent Azerbaijan. His son, Ilham Aliev inherited the post in 2003. But local experts say that whereas Heydar Aliev, for all (or perhaps due to) his Soviet background was primarily a ‘statesman’, the current president is primarily a ‘businessman’. Under him the elite’s corrupt money-making has morphed from a side-benefit and instrument of governance into the raison d’être of government.

Negative political trends are plenty, among them the removal of constitutional limits  on the number of presidential terms, the jailing of bloggers and the denial of visas to Council of Europe rapporteurs. This is matched by a sleazy ‘caviar diplomacy‘ offensive among the European political elite, as outlined in a recent report by the European Stability Initiative. Perhaps not hugely important, but indicative of the political climate and trends in the country, has been the toughening of visa requirements for EU and US citizens (who until a few years ago could receive visas on arrival at the airport, but not any more). A side-story of that is the surprising situation when Azerbaijan’s most strategic of all partners, Turkey, has a visa-free travel regime with countries ranging from Morocco to Kazakhstan, and from Serbia to Syria (and soon with Russia and Ukraine), but not with Azerbaijan.

For all the complications of Azerbaijan’s political and economic situation, the country is not only strategically important but also has great potential. It is not just some oil-cursed sultanate. Its elite is autocratic and corrupt, but is in a different league from the bloody or bizarre dictators of Central Asia. Azerbaijan is in many ways stuck somewhere in between resource-rich countries that made it, and those that didn’t; halfway, as it were, between Dubai, Bahrain or Qatar one the one hand, and Angola or Nigeria on the other. Azerbaijan ranks (place 66 in the world) above Croatia, Romania and Turkey in the cost of doing business, but is behind Armenia and Kazakhstan. Its global competitiveness index (place 55) is better than that of Slovakia, Bulgaria, or Serbia, but lags behind Oman, Tunisia or Sri-Lanka. Azerbaijan has still a lot to improve, but its starting point is not too bad.

The way forward

Fundamentally, Azerbaijan faces a huge contradiction between the entrenched interests of the elite and the need to build a post-oil economy. For that it needs to open up. Its economy, its borders and its political system. Joining the World Trade Organisation and then signing a deep and comprehensive free trade agreement (DCFTA) with the EU should be the country’s next priorities. It could also present a more open face to the world by abolishing visas for the citizens of Turkey, EU and US citizens at least.

It does not have much time to waste, nor much money to pour down the thirsty throats of so many corrupt vested interests. Ultimately, its president has to decide whether he wants his cronies to continue enjoying monopolistic rents and ballooning bank accounts, or to sacrifice some of their incomes for the sake of actually developing a post-oil economy. In the end it is not just the future of Azerbaijan that depends on this, but also that of the ruling family which might be too weak to survive a rapid contraction of oil revenues.

Published in OpenDemocracy, 27 September 2012

Tightening the screws

During 2005 and 2006 Russia adopted swaths of legislation designed to prevent events like the 2004 Orange revolution in Ukraine or the 2003 Rose revolution in Georgia. Electoral laws were toughened in ways that strengthened the pro-Kremlin ‘United Russia’ and weakened potential alternatives; thuggish pro-Kremlin youth groups such as Nashi (‘Ours’) were established; new restrictions were introduced, seriously complicating NGO activities and election monitoring; and vaguely defined legislative provisions against ‘extremism’ that could then be used against opposition activists were adopted.

Under Medvedev’s presidency the bulldozer of state repression was used with less enthusiasm. Sometimes it actually receded. Earlier this year it even seemed that the authorities might actually embark on liberalising the political system in response to the street protests. Instead, the protests seemed to have sparked a new round of attempts to tighten the screws and refurbish the repressive apparatus.

It started with the legislative software. As president, Medevedev last autumn decriminalised libel; as head of ‘United Russia’ he has just overseen its re-criminalisation. A humiliating volte-face. On this front, Russia now lags behind even the Central Asian states of Kyrgyzstan and Tajikistan, which have both decriminalised libel in the last couple of years.

The authorities also introduced huge fines ranging from €13,000 to €39,000 for unauthorised protests. The law is said to be a copy of the French riot act, but the French law applies to rioters, whereas the Russian law has much wider application and could be used to target peaceful demonstrators.

In mid-July the authorities adopted a new law designed to discredit and undermine NGOs. Under this law all NGOs that receive any funding from abroad and are, no matter how indirectly, involved in politics should declare themselves publicly as ‘foreign agents.’ So anti-corruption and environmental groups, or charities calling for some legislative changes (which presupposes interference with the political process) to address the needs of, say, disabled children or orphans, would all be labeled ‘foreign agents.’ In Russian this is a synonym for ‘spy.’ The law is currently formulated so vaguely that it could apply to any organisation with the slightest trace of foreign funding.

The law claims to mirror the US Foreign Agents Registration Act. But the claim is spurious at best. The US law applies to a very limited number of US-based organisations acting on behalf, and in the direct interests, of some foreign governments, whereas in Russia the law applies to all recipients of foreign funds.

These legislative changes are not something new in the Russian political system. They are just upgrades of the authoritarian software designed earlier in the last decade, and now adapted to Russia’s new circumstances.

DDOS-ing the opposition

In information technology, the most widespread type of attacks on websites takes the form of distributed denial-of-service (DDOS). This involves sending so many fake requests to a website that it cannot process them all and collapses under the weight. The so-called server overload makes it difficult or impossible for a website to provide its normal services.

This is largely what the Russian state is doing to the opposition – keeping it under a DDOS-like siege of bureaucratic harassment. The authorities are trying to overload the protest movement with requests: in the last few months these have come in the form of arrests, criminal investigations, apartment searches, bureaucratic harassment, and other forms of keeping the opposition on its toes dealing with law-enforcement agencies and courts, rather than continuing to strengthen its power base, self-organise and hold the government to account.

Alegedly, a group of 160 persons from the Investigative Committee of the Russian Federation is working full time on the political opposition. The aim is to keep any potential political leaders busy dealing with harassment and thus to reduce the time they are able to dedicate to building an opposition.

Forcing them to constantly be on the defensive is designed to make sure they cannot expand their base either in the regions or by institution building.

But, like DDOS attacks, what the authorities are doing is not just harmless harassment. A dozen protesters are already in jail. Three girls from Pussy Riot, the punk-group accused of hooliganism for having performed an anti-Putin song in the main Russian cathedral, might be sentenced to as much as 3 years in jail. A criminal investigation against Alexei Navalny, anti-corruption activist, blogger and probably the most popular opposition leader, has been re-opened and he too might face jail. This is all targeted and not very harsh repression. It is, nonetheless, a signal that the economic and political modernisation, much discussed during the past few years, has turned into a refurbishment of the authoritarian apparatus.

What doesn’t kill you makes you stronger

The opposition was already facing several dilemmas before the Russian state went all out with its strategy of DDOS-ing the opposition. The key questions were how to transform protests into institutions, street presence into political power and online dissatisfaction into offline action. There are no clear solutions to that. Yet, for all the dilemmas, the opposition activists seem to realise that the only growth strategy is to build institutions, be it parties or networks of activists.

And the authorities are doing everything to help. They seem to be trying to push the genie back into the bottle, instead of dealing with it. This is not only impossible. It is also counter-productive for the authorities themselves. The soft crackdown deepens the rift between the authorities and the middle classes. If repression turns nastier, a witch-hunt among oligarchs might follow, which would chip away at even more of Putin’s supporters.

The attempts to discredit and undermine the NGOs are also a mixed blessing for the authorities. Previous attempts to restrict foreign funding in Russia have been successful. But this had unintended consequences, one of which was the emergence of genuine, home-grown, grassroots, self-financed (through crowd sourcing) civil society organisations, much stronger and more sustainable than the foreign-funded, elitist, top-down and donor-driven NGOs typical of most other post-Soviet states. This is how some of the leaders of the protest movement actually emerged.

The anti-Putin euphoria of the Russian middle-classes earlier this year and the excited European commentary on the topic have now gone. Russia is embarking on a protracted tug-of-war between the authorities and the active parts of its society. Whatever happens in Russia next, it will be a long drawn-out process.

Open Democracy, 16 August 2012

The article looks at three broad themes:

1) How Russian nationalism is evolving from an expansionist, Eurasian, and imperial version into something that is primarily anti-immigrant, defensive and sometimes non-expansionist.

2) How nationalists started to adopt some pro-democracy rhetoric in the belief that a more democratic system based on majority-rule would make state policies closer to their policy prescriptions.

3) How some Russian democrats sometimes entered into ad hoc alliances with nationalist groups on an anti-Putinist platform, but also how a much deeper fusion of democratic and nationalist views starts to be espoused by various political players. This phenomenon is still in its early stages, but could be a sign of things to come.

Here are a couple of paragraphs from the essay:

‘Over the last few years, the traditional expansionist nationalism has been losing ground to a newer breed of isolationist, insular, and defensive nationalism that is primarily xenophobic and hostile to immigrants. This strain of nationalism is focused more on maintaining Russia’s “Russianness” than on territorial expansion. The key source of defensive nationalism is the toxic mix of high immigration into Russia coupled with a demographic crisis among native-born ethnic Russians. Home to more than twelve-million  non-Russians, Russia is the world’s second leading destination for immigrants (after the United States).’

‘Defensive Russian nationalism is at its core the fruit of flagging confidence in Russia’s power to expand and assimilate its periphery, particularly the culturally distant Muslim populations of Central Asia and the Caucasus. Such nationalism is primarily concerned with shielding Russia, not enlarging it. Traditional expansionist nationalists were ready to “die for the Caucasus” rather than see it leave the Russian fold. The new nationalists, by contrast, want to “stop feeding the Caucasus,” and see the region as a burden that Russia should unload.’

The evolution of Russian nationalism today is not unlike that of other European nationalisms that mutated from the expansionist-imperial mission civilisatrice of a century ago into the defensive “fortress Europe” nationalism of recent decades. Perhaps the representative embodiment of this evolution is Jean-Marie Le Pen (b. 1928), former leader of the far-right National Front in France. He began his political career in the late 1950s fighting to keep Algeria in France and ended it in the 2000s campaigning to keep Algerians (and other migrants) out of France.

Here is the FULL TEXT of the essay

1. On the surface three fourths of the government were changed, but the changes were rather (and unsurprisingly) conservative. The composition of the new government suggest neither a strong reformist push, nor a centralising backlash, but rather more of the same. Especially given that several key former ministers just joined Putin in the Presidential Administration as his advisors, but are likely to exercise more influence over specific policies than many of the new ministers.

2. Overall the government looks unexpectedly ‘Medvedievist’ – in the sense of having a good presence of soit-disant ‘liberals’. Igor Shuvalov, first deputy prime minister and one of the vocal proponents of modernisation in recent years, stayed on despite the recent exposure of some questionable financial transactions. Arkady Dvorkovich, ex-advisor to President Medvedev and another modernisation advocate was also appointed deputy prime-minister. Igor Sechin, ex-deputy prime minister in charge of the energy sector and the erstwhile silovik tsar who has the image of the dark cardinal behind the throne, is out. He moved (back) to the Russian state-owned oil company Rosneft. There is also talk that with his departure will mean that the running of the energy-related matters is taken out of the government.

3. Some of the core ministers from the previous government stayed on. This is the case of both foreign minister Sergey Lavrov and Anton Siluanov, the Finance Minister. But that was not difficult to predict. Another key minister, who was on much shakier ground, Anatoly Serdyukov, the defence minister, also stayed on. He is a former businessman (manager of a furniture shop) who ruthlessly tries to reform the Defence ministry behemoth and hence is in open conflict with most of the military, and a wide range of vested interests in the military-industrial complex. The signal is that reform will be continued, and many Russian analysts say that the military is almost the only sector in Russia which is truly modernising. It is also indicative that Dmitry Rogozin (whose Moldova portfolio as discussed in this previous post), deputy prime minister in charge of the military industrial complex was rumoured a month or so ago to take over the defence ministry, but in the end this did not happen.

4. There also are some surprises. For better or worse. Vladimir Medinsky – a Putin apologist who spent the last few years denouncing traitors right and left and defending with a lot of fervour the current system – was appointed minister of culture. As if to balance that, 29-years old Nikolai Nikiforov was appointed minister for communications, much to the delight of some prominent Russian bloggers. Previously he worked as minister for communications in the region of Tatarstan where he made a reputation for developing a rather well functioning e-governance system.

The composition of the new government is neither suggesting a Putin 2.0 nor a strong tilt towards greater repression. But its balance is slightly inclined towards what in the Russian political system are called ‘liberals’. However, the truth is that most of the key decisions will not be taken in the government anyway, but in Putin’s ‘presidential administration’. And for all the reading into this or that appointment, the government will primarily be a lightweight structure primarily working under the shadow of the real government in the Kremlin.

The contrast between the transition at the Kremlin and China’s upcoming – and strictly choreographed – power transfer could hardly be starker. This autumn, all nine members of the Politburo Standing Committee, including the country’s president, Hu Jintao, and premier, Wen Jiabao, will step down, and at least 14 members of the 24-member Politburo will retire, making way for a new generation of leaders.

So, although China has the more authoritarian system, it is moving forward. The same cannot be said for Putin’s Russia.

Unlike China, a one-party state, where real power is insulated from direct voting by layers of Communist Party structures, Russia has a multi-party political system, with regular elections at most levels of government. To be sure, not all parties or candidates are allowed to run, and elections can be manipulated. Still, there is more room in Russia than in China for opposition voices to express themselves.

Indeed, Russian civil society and protest movements are more assertive and politicized, while protests in China are crushed without remorse. The Russian media, particularly newspapers and radio, have more freedom as well, and openly disparage Putin, whereas Chinese journalists can take on issues like corruption, but may not criticize the Party. Likewise, the Internet is not censored in Russia as it is in China.

Given that China is significantly more authoritarian than Russia, it seems counter-intuitive that China’s political system manages to produce some rotation of leaders, however imperfect and even tense, whereas Russia does not. In this way, China takes advantage of one of democracy’s key benefits – leadership turnover – without the risk of popular accountability.

Read the continuation of this commentary on Project Syndicate

1. Promise both Russia and the EU everything they might want to hear (usually integration into some Russian- or EU-led initiative);
2. Ask for something in exchange (market access, lower gas prices, financial assistance, opportunities for lucrative but opaque deals  etc).
3. Get what you asked and drag your feet on delivering on your promises.
4. If either the EU or Russia is upset for not getting what they were promised – threaten that you will intensify cooperation with the other external partner.

The truth is that this has mostly worked. (Not just for Ukraine, but also for Moldova under Voronin and at times Belarus’ Lukashenko or a whole series of Central Asian states, not to mention a plethora of historical case from Italian city-states in the Middle Ages, to Nasser’s Egypt and Tito’s Yugoslavia.) The EU has long been quite lenient with Ukraine not because it was impressed by Ukraine’s reforms performance, but because it had to be nice to such a geopolitically important country. Ukraine, at its turn, whenever felt the heat of potential pressure from Brussels, would start tickling Brussels nerves with positive noises about integration with Russia; and vice-versa, whenever Russian demands on Ukraine became too assertive, Kiev was thrown into accesses of declarative pro-Europeanness (and pro-Atlanticism).

This has been going on for most of the last two decades. But the problem with the game is that the more you play it the less credibility you have, the less likely your partners are to play by your rules and the more likely they are to toughen their demands and ask for concrete deliverables (by following the dogma of one of the heroes of Ilf and Petrov – ‘if you give me the money in the evening – you get the chairs in the morning; or if you give me the money in the morning – you the chairs in the evening’). So with each new round of the game your room for manoeuvre is smaller and smaller and the usual Ukrainian foreign policy recipe works less and less well. Both Russia and the EU are tired of the game, and much less interested in playing it.

This explains why the EU is now more than ever in a non-blinking mood over the signature of the EU-Ukraine association agreement, put on hold because of the imprisonment of former prime-minister Timoshenko (and three former ministers) and other questionable ways in which Ukrainian domestic politics has been evolving. In usual fashion, the Ukrainian prime-minister tried to hint that Ukraine might join the Russia-led Customs Union. But EU’s resolve which at better times would have melted at such a threat, remained solid.

One of the more interesting episodes of these games is taking place in Kiev. Usually, it is American or Russian diplomats using straight talk to make a point and have the full backing of powerful states behind. EU’s diplomatic modus operandi is usually different. The EU has long been known for the fact that most of its diplomats are soft-spoken and controversy-shy project managers happily disbursing EU assistance, but avoiding tough political issues. Not least because their backing from ‘home’ can be less straightforward since the EU itself is so affected by many different, if not conflicting, member states preferences. In any case the EU has usually been a nice diplomatic pet, much easier to ignore than US or Russia. But not anymore (as argued in a recent post on EU is showing its teeth). The last few months saw some sharp diplomatic exchanges between the Ukrainian MFA and the EU delegation in Kiev. First, the EU ambassador to Kiev said that Yanukovich is not delivering on his promises to fight corruption. This provoked a strong rebuke from the Ukrainian MFA which accused the EU ambassador of behaving like a ‘ukrainized’ political analyst. Then the EU diplomat said his job is to say what he thinks about the situation in Ukraine and that the Ukrainians should not count on his fake smiles and praise of a non-improving business climate and that he is now someone’s ‘puppet’.

What a few years ago was called ‘Ukraine fatigue‘ in the EU, a feeling of disappointment with the failure of pursuing long-promised reforms by Yushchenko and Timoshenko, has now turned into active irritation with Yanukovich’s administration. Not a very good mood to attend the forthcoming football championship for Ukraine. By the way, attending EU leaders might want to start thinking now how to behave then. One option is to stay home, like Angela Merkel and Barroso. The other is to go, but spoil the party and visit Timoshenko. And the third, is to go and enjoy it. The bet is on EU’s different political leaders going for all three options undermining what until now has been a semblance of EU unity.

But another important factor is how Putin and Yanukovich play their systems. Putin’s role in the Russian system is that of the ultimate arbiter between various elite groups. He is a moderator, not a player in the elite squabbles. He is not neutral, nor fair. During his presidency, his closest friends acquired vast assets, and there has been quite some redistribution of property. But Putin mainly tries to stay above the fray realising that this is an important power resource for him. This is how he makes himself indispensable to the multiple interests groups within the Russian elites. That is also why elites value him – he has the power and the skill to maintain some degree of balance between competing factions.

But Yanukovich seems to be different. He is less of a moderator and more of a player than Putin is. This is exemplified by the sudden appearance Yanukovich’s eldest son, Alexandr, on the list of the richest Ukrainians. His $100 million is not much by the standards of Ukrainian politics, but what caught the eye is that Alexandr was not known for being a successful businessman before and that he his bank had a 1800% growth in the last year, ie it multiplied its revenue by 18 times. There is also talk of the emergence of a ‘Yanukovich clan’ or ‘the family’ with a set of new names being promoted to positions of influence including the ministry of interior or the tax inspectorate. This is done at the expense of the other clans and oligarchs who supported Yanukovich and the Party of Regions for years and years. In other words, Yanukovich is not only bulldozing the opposition (with Timoshenko in jail and on hunger strike, as well as 3 other former ministers now jailed) but also pushing back against his older allies by building his own personal political and financial power base and promoting people who owe their rise exclusively to him personally. In some sense this might strengthen him, but it also can weaken if he chooses to become even more of player and potential competitor to his own networks of supporters, rather than the indispensable arbiter than Putin is.

It is perhaps time to reconsider at least some of the standard, off the cuff, assessments of the EEAS (and Catherine Ashton). If one looks at some specific foreign policy dossiers, the reality is that of EEAS gradually emerging as a political animal that can show its teeth if and when necessary (were the Soviet Union alive, its propaganda department would have have used the consecrated term of  ’zverinnyi oskal imperializma’ – the evil grin of imperialism), rather than a fat cat throwing money around as its recently dominant image used to be. The last year’s EU approach to Libya, Syria or Belarus have been a partial confirmation. The EU sanctions on Iran are also case in point. Last weekend at talks in Istanbul the squeezed Iranians seemed to be more open to having a conversation, whereas Ashton’s performance in dealing with them has been widely praised.

There is some pretty steely resolve on Eastern European dossiers as well. When Belarus ‘invited’ the Polish and EU ambassadors to leave Minsk, all EU member states states withdrew their ambassadors. Such shows of solidarity have not been too frequent in EU diplomatic history. The EU Ambassador to Ukraine, Jose Manuel Pinto Teixeira, has been a constant source of news and uncomfortable questions for the Ukrainian president Yanukovich. Teixeira routinely raises issues related to increasing corruption, selective application of justice and increasing political centralisation. He recently stated, pretty bluntly, that unfortunately ‘corruption in Ukraine is now significantly worse than during the so-called chaotic period after the Orange Revolution’. This all comes on top of EU’s refusal to sign the Association agreement with Ukraine as long as Timoshenko is in jail. And even the recent partial initialling of the agreement in Brussels is not likely to change that.

Even in better times, or perhaps due to them, EU unity, toughness and blunt speak have not been traits traditionally associated with European diplomacy. Things might be changing now. If before EEAS, EU ambassadors spent most of their time running projects and coordinating technical assistance, now many EU ambassadors find themselves handling with a firm hand and EU backing serious political storms.

With Putin’s return, protests in Russia and the US elections all talk is now about the end of the reset. In the last few months anti-American propaganda made forceful comeback in the Russian media. Many thought it was just electioneering in the run-up to the March presidential elections. But that was too optimistic, it seems. In the last few weeks things became even more heated. NTV, a Russian TV channel owned by Gazprom Media, has been following US ambassador Michael McFaul pretty much everywhere, which lead to an outburst of indignation from McFaul, as well as accusations that his phone (and therefore calendar) is hacked, and a formal US State Department protest over the harassment of the US ambassador. McFaul also claimed that upon arrival to Moscow last January he felt like he was back in the Cold War and that ’it has been surprising that there was so much anti-Americanism, because we thought we were building a different kind of relationship, and it makes some people nervous that it could so quickly and reflexively go back to – in terms of rhetoric – an era that we thought was behind us’. Then, on a different occasion, Russian foreign minister Sergei Lavrov called McFaul ‘arrogant’. In other words, the dismantlement of what was considered a key achivement of the reset is well advanced.  

For all the controversies around McFaul – the truth is that he was not just the architect of the ‘reset’. He was one of the strongest voices for engagement with Russia in the US and in this sense if not Russia’s best friend, then surely Russia’s best ‘friendly non-adversary’. Back in autumn his designation as ambassador was even delayed for a few months by a hawkish Republican Senator over fears that Obama’s administration might be sharing classified information with Russia. Attacking McFaul only strengthens a much more adversarial approach to Russia in the US, not least by the likes of Mitt Romney who called Russia ‘number one geopolitical foe’.

Despite increasingly heated language the other key achievement of the reset might see better times. In the fog of pre-election anti-Americanism last January, Russia and the US actually agreed on a NATO logistics base (the Russian government prefers to call it a ‘transit centre’) in Ulyanovsk, the birthplace of Vladimir Lenin, which apparently has a convenient 5-km runway at its airport and can receive large aircraft. Of course, a NATO base in Lenin’s birthplace was too much a symbolic blow to Russian communists who staged protests under slogans like ‘while we disarmed, NATO encircled us‘. The base might move somewhere else in the end, but the bigger point is that for all the trading of niceties on the political level, actual cooperation between Russia and the US on some concrete issues continues.

Overall, US-Russia relations seem to be marked for now by increased public jibes on the surface coupled with (still continuing) cooperation on some substantial issues. Such two-level games serve domestic purposes, without seriously endangering Russian foreign policy goals. On the one hand anti-American rhetoric is convenient and useful in stirring-up patriotic sentiment, shoring up support for a gradually weakening Putin, and discrediting the opposition. On the other hand, a Russia has no interest in stirring new disputes with the US, while also benefiting economically and politically from some forms of cooperation on Afghanistan.

The same goes for the US. Some pre-election posturing by Obama’s administration can be helpful, as long as cooperation on concrete issues continues. The danger is that such a situation can be quite unstable, and the experience of the last two decades shows how easily jibes can disrupt cooperation. The reset has not turned into a cold peace yet, but has been clearly upset.