Crises in the Post-Soviet Space

The breakup of the Soviet Union led to the creation of new states and territorial
conflicts of different levels of intensity. Scrutinising the post-Soviet period, this
volume offers explanations for both the frequency and the intensity of crises in
the region.
This book argues that the societies which emerged in the post-Soviet space
share characteristic features, and that the instability and conflict-prone nature of
the Soviet Union’s successor states can be explained by analysing the post-
independence history of the region and linking it to the emergence of overlapping
economic, political and violent crises (called ‘Intersecting Crises Phenomena’).
Transformation itself is shown to be a decisive process and, while acknowledging
specific national and regional characteristics and differences, the authors demon-
strate its shared impact. This comparison across countries and over time presents
patterns of crisis and crisis management common to all the successor states. It
disentangles the process, highlighting the multifaceted features of post-Soviet
crises and draws upon the concept of crisis to determine the tipping points of post-
Soviet development.
Especially useful for scholars and students dealing with the Soviet successor
states, this book should also prove interesting to those researching in the fields of
communist and post-communist Studies, Eurasian politics, international relations
and peace and conflict studies.

Felix Jaitner is a doctoral student at the Department of Political Science,

University of Vienna.

Tina Olteanu is a Professor of Political Science at the Department of Political

Science at the University of Vienna.

Tobias Spöri is a PhD candidate at the Department of Political Science, University

of Vienna.
Post-Soviet Politics
Series Editor – Neil Robinson

The last decade has seen rapid and fundamental change in the countries of the former
Soviet Union. Although there has been considerable academic comment on these changes
over the years, detailed empirical and theoretical research on the transformation of the
post-Soviet space is only just beginning to appear as new paradigms are developed to
explain change.
Post-Soviet Politics is a series focusing on the politics of change in the states of the
former USSR. The series publishes original work that blends theoretical development with
empirical research on post-Soviet politics. The series includes work that progresses
comparative analysis of post-Soviet politics, as well as case study research on political
change in individual post-Soviet states. The series features original research monographs,
thematically strong edited collections and specialised texts.
Uniquely, this series brings together the complete spectrum of work on post-Soviet
politics, providing a voice for academics world wide.
For more information about this series, please visit:
www.routledge.com/Post-Soviet-Politics/book-series/ASHSER1198
Systemic and Non-Systemic Opposition in the Russian Federation
Civil Society Awakens?
Edited by Cameron Ross
Autocratic and Democratic External Influences in Post-Soviet Eurasia
Edited by Anastassia Obydenkova and Alexander Libman
Religion, Politics and Nation-Building in Post-Communist Countries
Edited by Greg Simons and David Westerlund
Vocabularies of International Relations after the Crisis in Ukraine
Edited by Andrey Makarychev and Alexandra Yatsyk
Neighbourhood Perceptions of the Ukraine Crisis
From the Soviet Union into Eurasia?
Edited by Gerhard Besier and Katarzyna Stokłosa
Russia-EU Relations and the Common Neighbourhood
Coercion vs. Authority
Irina Busygina
Russian Foreign Policy in Eurasia
National Interests and Regional Integration
Lilia A. Arakelyan
The Politics and Complexities of Crisis Management in Ukraine
From a Historical Perspective
Edited by Mykola Kapitonenko, Viktor Lavrenyuk, Erik Vlaeminck and Greg Simons
Crises in the Post-Soviet Space
From the dissolution of the Soviet Union to the conflict in Ukraine
Edited by Felix Jaitner, Tina Olteanu and Tobias Spöri
Crises in the
Post-Soviet Space
From the dissolution of the Soviet
Union to the conflict in Ukraine

Edited by
Felix Jaitner, Tina Olteanu
and Tobias Spöri
First published 2018
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Contents

Figures ix
Tables xi
Contributors xiii
Preface by Peter Rutland xvii

1 Crises in the post-Soviet space: From the dissolution of the

Soviet Union to an area of ‘intersecting crises phenomena’? 1
FELIX JAITNER, TINA OLTEANU AND TOBIAS SPORI

PART I
Mapping post-Soviet crises 15

2 The dissolution of the Soviet Union and its consequences 17

D I ET ER S E G ERT

3 Divergent social and economic consequences of transformation

in post-communist states 39
DAVID LANE

4 Divergent political-economic trajectories: Russia, Ukraine,

Belarus 61
JOACHIM BECKER

PART II
Crises of belonging 81

5 Creating the history of the future: Russian historical

memory in the era of the Ukrainian crisis 83
VICTOR APRYSHCHENKO
vi Contents
6 Ukraine: The dynamics of cross-cutting cleavages during
quadruple transition 103
OLENA PODOLIAN AND VALENTYNA ROMANOVA

7 Ethnic divides in the Baltic states: Political orientations

after the Russian–Ukrainian crisis 121
JOAKIM EKMAN AND KJETIL DUVOLD

PART III
Crises of resource accumulation 137

8 Stability’s end: The political economy of Russia’s

intersecting crises since 2009 139
I LY A MA TV EEV

9 The making of Ukraine’s multilevel crisis: Transnational

capitalism, neoliberal kleptocrats, and dispossession 159
YULIYA YURCHENKO

10 Ukraine’s frozen transformation: State capture,

nationalising policies and shifting geopolitics 175
KLAUS MÜLLER

11 Decline of the demos: Latvia, the face of New Europe and

austerity’s return 195
JEFFREY SOMMERS

PART IV
Crises of political power 211

12 Chechnya: A study of a post-Soviet conflict 213

EMIL ASLAN SOULEIMANOV, JASPER SCHWAMPE
AND SOFIE BEDFORD

13 Azerbaijan between post-socialist crisis and fragile stability 225

HANNES MEISSNER

14 Kazakhstan’s political and economic development and the

role of the ruling elites 241
JULIA KUSZNIR
 Contents vii
15 The Ukraine conflict as a result of post-Soviet
crises development 255
FELIX JAITNER, TINA OLTEANU AND TOBIAS SPORI

Index 263
Figures

1.1 Post-Soviet “intersecting crises phenomena” (ICP) 5

3.1 European Union member states and enlargement 41
3.2 The extent of the capitalist market and privatisation: EBRD
indicators, 1999, 2003, 2009, 2014 43
3.3 Gross National Income (per capital 2005 US PPP) 1990–2013.
Post-socialist countries 45
3.4 HD indexes 1987–2007: Russia, Belarus, Ukraine, and Armenia 47
3.5 HD indexes 1987–2007: Uzbekistan, Azerbaizhan, Kazakhstan,
and China 47
3.6 Human Development Indicators: Country ranks 1990, 2013 48
3.7 Gross National Product Index minus Human Development Index
1993–2012 49
3.8 Income Inequality: Gini coefficients selected socialist countries
1987–1988, 2004 50
3.9 Economic situation today compared to under communism 52
3.10 Who gained most from transformation? 53
8.1 GDP growth (annual per cent) 145
8.2 Gross capital formation (per cent of GDP) 145
8.3 Quarterly GDP growth 148
8.4 Poll numbers 148
Tables

2.1 Who benefited from changes since 1989/1991?

(per cent of answers: great deal/ fair amount) 28
2.2 What do you think is the best economic system for Russia? 28
3.1 Outcomes of transformation: types of regime 43
6.1 National vs. regional and local identities in Ukraine
(in percentage terms) 114
7.1 Performance-related political dissatisfaction (per cent) 126
7.2 When was this country best off? (per cent) 127
7.3 Perceptions of the EU (per cent) 128
7.4 Threat perceptions in the Baltic states (per cent) 129
7.5 Threat perceptions in Latvia in 2014 and 2015 (per cent) 130
Contributors

The Editors
Felix Jaitner is a doctoral student at the Department of Political Science, Univers-
ity of Vienna. His research is focused on uneven and peripheral development,
the transformation process in Eastern Europe and the post-Soviet space and
state theory.
Tina Olteanu is a Professor of Political Science at the Department of Political
Science at the University of Vienna. Her research interests are democracy
and democratization, participation and corruption research mainly in Eastern
Europe but also in a European comparative perspective.
Tobias Spöri is a PhD candidate at the Department of Political Science, University
of Vienna. His research deals with political participation, the legacy of state
socialism and the transformation of post-socialist Europe since 1989/1991.

The Contributors
Victor Apryshchenko is Professor of History and Politics at Southern Federal
University, Russia. In his research, he focuses on the transformation of
European identities, security studies and collective memories including
management of historical memory. He is editor-in-chief of an international
journal, Новое прошлое/The New Past (http://newpast.sfedu.ru/en/). His
most recent publications include Scottish History of Modern Times: In Search
of Identities (Aleteya,2016) and Memory and Securitization in Contemporary
Europe (Palgrave Macmillan, 2018).
Joachim Becker is Associate Professor at the Institute for International Economics
and Development of the Vienna University of Economics and Business. His
work is focused on crises and processes of integration and disintegration.
Dr Sofie Bedford is currently a visiting Fellow at the Institute for Human Sciences
(IWM) in Vienna, Austria and a researcher at the Institute for Russian and
Eurasian Studies (IRES) at Uppsala University, Sweden.
Kjetil Duvold is a Senior Lecturer and an Associate Professor of Political Science
at Dalarna University, Sweden. His research is focused on democratisation,
xiv Contributors
political culture, ethnic relations and party systems in Central and Eastern
Europe, with a special focus on the Baltic states.
Joakim Ekman is a Professor of Political Science and the Director of the Centre
for Baltic and East European Studies (CBEES) at Södertörn University
Stockholm, Sweden. His research interests cover public opinion, democrati-
sation, and political participation.
Julia Kusznir has held posts at the Research Centre for East European Studies in
Bremen, and the Department of Comparative Political Studies at the University
of Regensburg. She was also a visiting research Fellow at NUPI in Norway.
Recently, she has worked as a postdoctoral fellow at Jacobs University in
Bremen. She received her doctorate in 2007 from the University of Bremen.
Her research interests include democratization in post-Soviet states, elite
theory, comparative authoritarian regimes, the relationship between business
and politics in post-Soviet states, geopolitics, the development of energy
markets and energy security in Central and Eastern Europe and Central Asia.
David Lane is an Emeritus Fellow of Emmanuel College, Cambridge University,
prior to which he was Professor of Sociology at Birmingham University. He
is a Fellow of the Academy of Social Sciences. His recent publications
include The Capitalist Transformation of State Socialism, (2014) and, with
V. Samokhvalov, The Eurasian Project and Europe (2015).
Ilya Matveev is a Lecturer at the Department of Comparative Political Studies
NWIM RANEPA (St Petersburg) and a doctoral student at the European
University at St Petersburg. His research interests include neoliberalism, the
nexus between big business and the state, and left-wing politics.
Hannes Meissner is a Senior Researcher and Lecturer at the Competence Centre
for Black Sea Region Studies of the University of Applied Sciences BFI
Vienna and a lecturer at the University of Vienna. His research focuses on
informal aspects of rule in the post-Soviet space, political risks for inter-
national businesses and political risk management. In 2012, Hannes Meissner
received a PhD in political science with distinction (“magna cum laude”)
from the University of Hamburg. While working on his doctorate (2007–2012),
he took part in the PhD programmes of the German Institute of Global and
Area Studies (GIGA) and the Research Centre for East European Studies at
the University of Bremen. In 2008, he was granted a three-year full scholarship
from the Konrad Adenauer Foundation. Hannes Meissner has a long track-
record of carrying out field research, in particular on Azerbaijan, Turkmenistan,
Georgia and Ukraine.
Klaus Müller is a full Professor at the Department of Political Science and
Contemporary History at the AGH University of Science & Technology in
Krakow, Poland.
Olena Podolian is a PhD candidate at the Department of Political Science,
Södertörn University, Stockholm, Sweden. She holds MA in Political Science
 Contributors xv
from Central European University, Budapest, Hungary, and MSci in Russian,
Central and East European Studies from University of Glasgow, UK.
Dr Valentyna Romanova holds a PhD in Political Science and is a Lecturer
within a joint Masters Programme “German and European Studies” of the
University of “Kyiv-Mohyla academy” and Friedrich Schiller University
Jena. Also, she is a Senior Expert at the Institute for Strategic Studies “New
Ukraine”.
Jasper Schwampe is a PhD candidate at the Department of Political Science,
Aarhus University, Denmark.
Dieter Segert is an Emeritus Professor of the Department of Political Science,
University of Vienna. He held the chair for Transformation Processes in
Central, Eastern and Southeastern Europe from 2005 until 2017. His research
interests are the transformation of political systems, the legacy of state
socialism and political parties in Central and Eastern Europe.
Jeffrey Sommers is a Professor and Senior Fellow at the Institute of World
Affairs, University of Wisconsin-Milwaukee. Visiting Professor, Stockholm
School of Economics in Riga.
Dr Emil Aslan Souleimanov is associate Professor at the Department of Russian
and East European Studies, Institute of International Studies, Faculty of
Social Sciences, Charles University, Czech Republic.
Yuliya Yurchenko is a Lecturer in International Business and researcher at the
Public Services International Research Unit, the Centre for Business Network
Analysis, and Political Economy Research Centre at University of Greenwich.
She is contributor to the Journal of Contemporary Central and Eastern
Europe, New Political Economy, Sustainability, and Commons.
Preface
Peter Rutland – Wesleyan University

This collection offers a bold overview of the post-Soviet landscape, covering

domestic and international issues across a broad spectrum of states. It brings
together authors from inside and outside the region, and mixes veteran observers
with fresh voices. The unifying theme is the way that “crisis” has become a
permanent way of life for large pockets of society. The crisis mode empowers
elites while disorienting the population.
An unspoken assumption behind much political science is that politics is a
positive sum game: that both elites and society can benefit from political stability
and institution building, which leads to improved state capacity and economic
growth. But in reality, what we see after 25 years of “transition” in the post-Soviet
space is the persistence of negative phenomena from decade to decade: weak state
capacity; unaccountable, kleptocratic elites; widening social inequality; and
unresolved regional conflicts, which were a response by ethnic minorities (aided
and abetted by Russia) to nationalising elites in the newly-independent states.
Conventionally, national independence is connected to democracy and to the
fulfilment of a historic pursuit of authentic national identity, oppressed by
Russian/Soviet rule. In reality, however, Soviet Communist Party ruling elites in
the republics embraced nationalism in 1990–1991 when they saw the opportunities
opening up due to Mikhail Gorbachev’s abortive economic reforms. They realised
that national independence would empower and enrich themselves because it
would give them control over the unfolding privatisation process.
After the collapse of central planning, the logic of comparative advantage in
the global economy kicked in. Within the Russian Federation, the world market
richly rewarded those elites who gained control over the export of oil and gas, and
punished those who tried to keep afloat manufacturing industries producing
unwanted goods with inefficient use of resources. A similar brutal calculus of
rewards and punishments was meted out by the invading market economy in each
of the newly-independent states. Resource-rich countries did well (Russia,
Kazakhstan, Azerbaijan), and vast wealth accruing to the elites, with enough left
over to provide a social safety net for the masses. Some of the resource-poor
countries could share in the oil and gas rents due to their role as transit routes to
European markets (Belarus, Ukraine, and to some extent the Baltic republics, at
least in the 1990s).
xviii Preface
At the same time, the Soviet collapse triggered a vigorous debate about how
the international order that would follow the breakdown of the bipolar Cold War
security system. Was NATO expansion and the eastern enlargement of the
European Union a legitimate and necessary response to the security vacuum and
the threat of Russian revisionism? Or was it an unnecessary powerplay by the US
and its Western allies, taking advantage of Russia at its time of weakness? To
some extent, these debates about international security can best be understood as
the external projection of the domestic social conflicts caused by the wrenching
market transition process. The loss of a sense of political identity that followed
the collapse of the Soviet Union, and the accompanying loss of social certainties
and economic security, got displaced onto broader macro narratives about
“belonging to Europe.”
One stark example of the “intersecting crises” phenomenon is the tragic situation
in Ukraine. For most Western (and Russian) authors, the Maidan crisis of 2013–2014
was just a regional manifestation of a tectonic struggle for control of Eurasia
between Moscow and Brussels/Washington, since the conflict was triggered by
Ukrainian President Viktor Yanukovych’s refusal to sign an association agree-
ment with the European Union. However, Klaus Müller questions whether Ukrainian
oligarchs were really ready to give up their rent-seeking privileges, which association
status would necessarily curtail. Yuliya Yurchenko argues that the foot-soldiers of
the Maidan revolution were the “fragmented dispossessed” who stood to gain little,
whatever the outcome of the confrontation, apart from a fleeting sense of being part
of “history.” At another level, it is a conflict over the future of Ukrainian identity,
over the place of Russian-speakers and ethnic Russians in the Ukrainian state.
However, Olena Podolian and Valentyna Romanova argue that “The crisis of
belonging is not a cause but rather a consequence of the conflict in Ukraine,” since
these divisions significantly deepened in the course of the crisis. At the same time,
the war in Donbas is very much a reflection of specific local conditions: it is a coal
mining region with its own particular brand of local loyalties and historic identity.
The same goes for Crimea itself.
In the transition period, “crisis” became a near-permanent feature of the political,
economic, and social landscape in these countries. According to the dictionary
definition, a “crisis” is a period in a disease after which the patient either dies, or
recovers. So, a 30-year long crisis is something of a contradiction in terms. But
crisis clearly serves as an important tool for elites, justifying the suppression of
democratic accountability and frightening the populace into submission. And
even in mature capitalist societies, after all, we see the institutionalisation of
cyclical crises.
Most scholars agree that it is increasingly absurd to talk about these states as in
“transition,” three decades after the Soviet collapse. Perhaps for the Baltic republics
history “ended” with their accession to the EU in 2004, and a handful of others
may still aspire (however unrealistically) to follow their path (Moldova, Georgia
and Ukraine). But how to describe the others, if they are no longer in “transition”?
In most cases, the tightly coupled political and economic elites have managed
to achieve a degree of political stability, mostly through authoritarian means,
 Preface xix
despite the poor economic performance and rising social inequality. But the long-
term stability of these regimes remains in doubt. They are an uncomfortable
half-way-house between the democratic legitimacy of Europe and the full-blooded
party-state of the People’s Republic of China.
It seems that both advocates and critics of neoliberalism can agree that these
countries have now entered the global capitalist economy; but they disagree over
whether this was a good thing or a bad thing, and over what would have had to
happen for things to have turned out differently.
1 Crises in the post-Soviet space1
From the dissolution of the
Soviet Union to an area of
‘intersecting crises phenomena’?
Felix Jaitner, Tina Olteanu, Tobias Spöri

The strange normality of post-Soviet conflicts

The development in Ukraine since 2014 has caught the international community
as well as social scientists off guard. Since its independence in 1991, Ukraine has
displayed multiple crises among them sharp economic decline, frequent political
or cultural conflicts, such as the disputed status of Russian language. The outbreak
of open warfare and the transformation of the Donbass into a perpetual war zone
seemed, however, inconceivable, even at the beginning of the Maidan protests in
November 2013. Since the outbreak of the military conflict in East Ukraine,
scholars have tried to explain the underlying dynamics by taking the conflict as
an isolated event, independent from the regional context. With regard to the entire
post-Soviet space, this approach reveals some analytic shortcomings. Armed
conflicts in the post-Soviet space appear to be rather the norm than the exception.
The region´s development is shaped by a multitude of forgotten or frozen conflicts.
Against this backdrop, the recent developments in Ukraine follow a rather “typical”
pattern. Comparisons throughout the entire post-Soviet space are likely to reveal
common dynamics contributing to various and multiple conflicts.
A common history as well as remaining cultural, economic and political ties
between the respective countries are still powerful factors in the majority of the
cases. After the dissolution of the USSR, the post-Soviet space has experienced
an extensive transformation with similar characteristics. For a comprehensive
understanding of the causes of conflicts in the region, we need to look into
commonalities before and after 1989 that have shaped the region.
We argue that conflicts in the post-Soviet space share characteristic features
founded in the specific contours of the societal formations that have emerged in
the region over the past 25 years. Three contradictory processes stand at the core:
the (i) dissolution of the Soviet Union and the closely intertwined (ii) political and
(iii) economic transformation processes. We refer to them as the post-Soviet
“intersecting crises phenomena”. Due to this overlap, the post-Soviet space is
more prone to climax in conflicts. We claim that the political and economic
transformation processes intensify and intensified already existing contradictions
stemming from the dissolution of the Soviet Union (peripheral and uneven
development) instead of contributing to overcome them. The interconnectedness
2 Felix Jaitner, Tina Olteanu, Tobias Spöri
between the legacy of the dissolution of the Soviet Union and the outcome of the
political and economic transformations help to explain the developments in
Ukraine, as well as other conflicts of the post-Soviet space. Latent crises are one
common denominator of the whole region, paving the way for the eruption of
conflict.

Studying the conflict in Ukraine as a post-Soviet conflict

In the entire post-Soviet space, most contributions on conflicts emanate from the
field of security and conflict studies (Kanet and Sussex 2015; Liikanen et al. 2016;
Pourchot 2008). The debate focuses predominantly on the role of NATO and the
EU on the one hand, and Russia and its security interests on the other. Some
scholars emphasise the destabilising effects of the eastern enlargement of NATO
and the EU towards the Russian border, leading to increased tensions between
Russia and the West. Debates about potential NATO-accession of Georgia or
Ukraine, including intensified military co-operation, or the Eastern Neighbourhood
policy of the EU openly challenge Russia´s position in the post-Soviet space,
laying the foundation for further conflicts (Dzarasov 2016; Mearsheimer 2014).
Other scholars stress Russia´s geopolitical resurgence since Vladimir Putin´s
presidency as the crucial factor explaining increased conflicts in the region.
Accordingly, armed conflicts are regarded as closely connected to Russia´s imperial
ambitions to dominate the post-Soviet space (Giles 2016; Shevtsova 2015).
Pursuing “a massive revisionist agenda” (Wilson 2014: 162), Russia actively
seeks to revise the current international system (Major and Puglierin 2014).
The diverging approaches can be traced in the debate on the conflict in Ukraine
as well, which has been the topic of numerous publications since 2015 and has
stirred a controversial academic debate. Some stress the conflict in Ukraine itself,
its emergence, the geopolitical context and domestic developments as explanatory
factors.
A highly contested issue concerns Russia´s role and objectives in the conflict.
Yekelchyk (2015: 145) concludes that Russia´s primary goal is to prevent
Ukraine´s potential NATO-accession. The Russian Government prefers to contain
the conflict as a frozen conflict (Götz 2015). According to Menon and Rumer
(2015: 86), Russia prefers that Donbass remains an integral part of Ukraine while
the region should be granted an autonomous status in order to transform it into a
Russian protectorate. Other scholars, e.g. Thomas (2015), presume Russian actions
are motivated by expansionist aspirations attempting to control vast territories
(e.g. Transnistria, Odessa, and Mariupol). Others emphasise the EU enlargement/
Russia nexus with a special focus on Ukraine (Karolewski and Cross 2017; Kuzio
2017).
Although this short overview clearly indicates that scientific research on conflicts
in the post-Soviet space is an increasingly important field, the debate tends to
neglect contextual factors explaining the region´s crisis-prone development. The
most common approaches focus predominantly on external causes of the con-
flict, be it in terms of external actors such as Russia, the EU and NATO or as an
 Crises in the post-Soviet space 3
outcome of long-term historical and geopolitical developments. With regard to
the conflict in Ukraine, a variety of primarily domestic factors have been identified
contributing to the conflict, such as the split along ethnic, linguistic, cultural and
economic lines (Kudelia 2014; Zhukov 2016). Thus, the uprising in Donbass can
be understood as a specific regional reaction to the permanent crises in Ukraine.
Due to the country’s pronounced regional identities and social, cultural and
historical heterogeneity, diverging positions and reactions on crises can be observed
in different regions. The same observation could be applied to conflicts in
Chechnya, Central Asia, Transnistria and Transcaucasia. This argument does not
exclude a military entanglement of Russia in Donbass (on Russia´s role, see
Robinson 2016), but it ascribes to the conflict a local cause entrenched in the
specific contradictory societal development of Ukraine.
An attempt to grasp the complex interaction between the domestic and
international level is presented by Sasse (2016) in a special issue on “International
Linkages and the Dynamics of Conflict”. She understands the post-Soviet conflicts
as a dynamic process resulting from linkage and leverage factors between domestic
and international elites. Accordingly, external leverage increases the vulnerability
of an authoritarian system, whereas linkage factors are defined as the density
and diversity of linkages of a given authoritarian system to external actors. The
approach tends to neglect broad societal developments, such as the dissolution of
the Soviet Union or the transformation process. Moreover, the interaction between
state, elite and external actors on the one hand and the people of a respective
country on the other remains unclear.

Explaining post-Soviet ‘intersecting crises phenomena’

This edited volume explains the instability in the 15 successor states of the Soviet
Union by scrutinising the comparatively short history of the post-Soviet space
and links it to the emergence of overlapping transformation crises. Linking
specific regional conflicts to broader developments allows us to reveal the crisis-
prone contours of the comprehensive transformation in the region since the
dissolution of the Soviet Union. The literature on transformation starts from
diverse assumptions. One concept acknowledges at a very early stage the potential
for contradictory and conflictual developments within the post-Soviet space. The
so-called “dilemma of simultaneity” (Elster 1990; Offe 1991) stresses the multiple
challenges of the transformation process for the former state-socialist societies by
incorporating various dimensions shaping the spheres of politics, economy, society,
and culture. As prominently argued by Carothers (2002), the transformation does
not inevitably end with fully consolidated democracies. Countries might get
stuck in the ‘grey’, in the form of a hybrid between democratic and authoritarian
regimes. Transformation is, therefore, also closely linked to progress, stagnation
and deterioration. The last two terms already indicate that crises are an inherent
element of transformation.
However, the notion of crisis is usually perceived as a rather temporary con-
dition. Sociologist Olga Shevchenko (2009: 2) argues that the term crisis “typically
4 Felix Jaitner, Tina Olteanu, Tobias Spöri
evokes the connotations of a sudden rupture, of a breakdown in the natural order
of things, of all that everyday life is not.” Analysing the “everyday crisis” and its
effect on people´s life in Moscow in the 1990s, Shevchenko concludes that crisis
on the individual level becomes a routine, an unchanging and diffuse condition
blending with everyday reality (ibid.). Boris Kagarlitsky (2007) puts it in a similar
way. He describes the development of the post-Soviet space as “disaster manage-
ment”. Also on the macro level (society in general as compared to individuals),
crisis becomes a normal and permanent condition. The increasing social polar-
isation intensifies societal contradictions, producing tensions, instability, and,
subsequently, conflicts.
We argue that the transformation itself needs to be regarded as a decisive pro-
cess. It produces manifold, overlapping crises in different societal spheres.
Moreover, we claim that the dissolution of the Soviet Union is a crucial factor that
needs to be taken into account. Although we acknowledge specific national and
regional characteristics and differences, we claim that all respective countries
share similar trends stemming from the mentioned processes of dissolution of the
Soviet Union and the political and economic transformation. These three inter-
secting processes condense in crisis-prone societal formations. Following the
approaches of Shevchenko and Kagarlitsky, we argue that crisis becomes a
permanent condition, an integral part of societal development with varying
intensity. Therefore, we speak of crisis, and not instability, that produces conflicts.
However, it would be misleading to define conflicts exclusively as violent. Despite
the ongoing crises, some post-Soviet successor-states are remarkably stable. Our
understanding of conflicts incorporates struggles over resources, social rights and
political power. The violent escalation of conflicts is by no means a logical
consequence of post-Soviet development. It is rather a result of various factors
shaping the societal formations in the region.
The comparison across countries (including the Baltics, Ukraine and Russia,
Caucasus and Central Asia) and over time (since 1991) presents patterns of crisis
and crisis management, which can be found in all 15 successor states. The edited
volume disentangles these processes since the dissolution of the Soviet Union by
highlighting the multifaceted features of post-Soviet crises. The interdisciplinary
notion of crises is shared by all the authors. Applying the concept of ‘intersecting
crises phenomena’, we argue for a comprehensive perspective to explain (latent
and manifest) conflicts.
By post-Soviet ‘intersecting crises phenomena’ we mean three contradictory
processes that predominantly shape the post-Soviet development: the dissolution
of the Soviet Union and the closely intertwined political and economic trans-
formation processes. Each process sparked comprehensive societal change in the
spheres of politics, economy, culture, and society. Furthermore, these processes
are interconnected, which means that the transformation of one sphere affects
the remaining two. We claim that the political and economic transformation
processes intensified already existing contradictions stemming from the dissolution
of the Soviet Union instead of contributing to overcome them. The intersec-
ting crises emerge as societal contradictions, ruptures and conflicts. We seek to
 Crises in the post-Soviet space 5

Dissoluon of the
Soviet Union

Intersecng
Crises
Phenomena

Polical Economic
Transformaon Transformaon

Figure 1.1 Post-Soviet “intersecting crises phenomena” (ICP)

determine how crises emerge and what impact they have on the post-Soviet
countries.

The dissolution of the Soviet Union

In the post-Soviet space, the dissolution of the Soviet Union and its memory is
still contested and heavily politicised. There, the range spans from anti-socialist
attitudes along with the feeling of being freed from the Soviet repression, to a
positive perception of the Soviet Union, sometimes nostalgic, whose disintegration
brought rather negative changes. The process contributes to the understanding of
post-Soviet crises and helps to explain the current conflict in Ukraine as well as
similar conflicts in the post-Soviet space. The abrupt and uncontrolled dissolution
of the USSR stimulated a secession-dynamic challenging the legitimacy of multi-
ethnic states, which quickly spread to a number of successor-states. Out of the
nation-building process in the 15 successor states of the Soviet Union emerged
new problems for various societal groups. Nationalism arose in the new political
6 Felix Jaitner, Tina Olteanu, Tobias Spöri
entities (Isaacs and Polese 2016). The so-called “great reconfiguration” (Brubaker
2011: 1786) describes the formation of nation states with a dominant core nation.
Ethnic belonging and social and political rights (e.g. citizenship, language politics)
became more salient, as well as their contestation. The strategy of the political
elites was twofold. They made use of identity politics in order to gain legitimacy
by portraying themselves as part of the core nation, and often also as anti-
communist. Nationalising discourses and policies were constructed, which often
resulted in exclusive politics towards minorities (ibid. 2011: 1789–1802). Often
this led to a reorganisation of the political space along national lines. An ethno-
cultural framing of a nation fosters distrust towards state institutions and impedes
the consolidation of a democratic system. At the same time, the emergence of
nationalism in the post-Soviet space is based on economic interests. National
elites in the Soviet Union favoured independence because it allowed them to
control the subsequent privatisation process. The formation of national entre-
preneurs was imperative in order to provide solid support for the new nation
states. Exclusive politics do not only affect political rights, but also materialise in
an uneven social development of certain regions or ethnic groups.
The analytic dimensions that result from the dissolution of the Soviet Union
are an increase of aggressive nationalism, the growing importance of ethnic
belonging, exclusive policies in terms of social and political rights (e.g. citizenship,
language politics), the connection between nationalism and economic interest,
and a new form of identity politics.

The political transformation

According to the dominant narrative, one of the greatest challenges of the political
transformation was to establish democratic institutions such as constitutions,
free elections, rule of law, pluralistic party systems, and free media (Ishiyama
1995; Kitschelt 1995; Lovell 2001: 28). In the early 1990s, the old regime or
nomenclature partly played an ambiguous role (Burton and Higley 2001: 187). In
general, the political and economic elites were the national promotors of the
transformation and respective reforms. Furthermore, the elite had the possibility
to “manipulate the transformation process in order to safeguard their individual
interests” (Albertus and Menaldo 2014: 577). Establishing democracy and its
institutions was not their primary aim.
In order to stabilise the economic and political development, the Russian
government propagated a new form of authoritarian state. Instrumental for the
consolidation was a centralisation of substantial resources within the state apparatus
and a transfer of powers to the executive branch, often referred to as “power
vertical” (Sakwa 2008). The authoritarian turn was backed by a compromise
among the ruling elite, the state bureaucracy and the oligarchs. With regard to
economic policy, the state pursued a more active, regulating role. In resource-
abundant countries the inflow of rents enabled the governments to repay debts and
partially support selected industrial branches. The resource boom in the early
2000s guaranteed high growth rates and mass consumption for the population. At
 Crises in the post-Soviet space 7
the same time, clientelistic policies reduced poverty and fostered the development
of a small middle class. These steps created support among certain social groups,
without challenging existing power relations. Such developments can be observed
since the 1990s also in other post-Soviet states such as Azerbaijan, Belarus,
Kazakhstan, Turkmenistan, and Uzbekistan.
Countries, such as Georgia, Kyrgyzstan, Moldova or Ukraine, face continued
economic decline and instability. Elites were not able to unite diverging interests
in a common project stabilising economic and political development. In Ukraine,
the diverse and often contradictory interests of the oligarchs prevented political
consolidation (Yurchenko 2012). Even though frequent protests, on different
scales and tackling various issues (e.g. plant closures, neoliberal policies, or
student protests) occurred even before the second Maidan in 2013 (Varga 2012),
a broad discussion regarding privatisation, social inequality and uneven distribution
of wealth remained marginal. A comparable development occurred in Georgia
and Kyrgyzstan. Protests and even open revolts led to changes of government.
However, they rather replaced one elite faction with another. These groups may
differ in their economic interests, social base and even their geopolitical alignment.
Yet, as transformation profiteers, they share a deep suspicion of democratic values.
Subsequently, cleavages stemming from the dissolution of the Soviet Union and
the transformation process – social inequality or authoritarian rule – were pre-
served, inducing growing societal instability.
Institutional change or stalemate, continuity and change of the elite, conflicts
among different elite factions and growing authoritarian tendencies are under
scrutiny. Special attention is paid to reactions on the region´s crisis-prone develop-
ment. This includes the question of public support and legitimacy among the
population for a specific form of rule.

The economic transformation

The end of the cold war accelerated the integration of the former state-socialist
countries into the Western dominated capitalist world-system. The far-reaching
outcomes of this process have shaped the region up to this day.
A crucial driving force promoting the dissolution of the Soviet Union was
the Russian elite. During the 1980s, the technological gap between the Soviet
industry and the West reached its peak. Maintaining the relatively unproductive in-
dustry would have demanded high investments. In contrast to a modernisation
of the industrial base, a focus on extractive industries such as oil and gas appeared
very lucrative. Two factors seemed to confirm the position of the Russian elite.
First, Russia was rather weakly integrated in domestic trade during Soviet times
and, second, the countries´ powerful role as the dominating energy supplier
(Langhammer and Lücke 1999: 5). Accordingly, the preservation of the Soviet
Union restricted the successful global expansion of resource-extractive industries
and, subsequently, impeded Russia´s economic development. In fact, the dissolu-
tion of the Soviet Union enabled parts of the elite to influence the privatisation
processes that followed afterwards both in Russia and other new emerging states,
8 Felix Jaitner, Tina Olteanu, Tobias Spöri
such as Ukraine (Hale 1999). Despite all democratic declarations by new and old
actors, economic interests heavily drove this process.
In contrast to China or the Four Asian Tigers (South Korea, Taiwan etc.), the
governments in the Soviet successor states did not promote a strategy of industrial
development. Instead, they were keen to pursue a neoliberal economic policy,
including the reduction of price controls, liberalisation of foreign trade and the
development of a private financial sector (Desai 1997; Pomer and Klein 2001;
Roaf et al. 2014). The implemented agenda was clearly targeted against the
institutions of the planned economy. As former Russian president Boris Yeltsin
stated, the official goal of this policy was to make the reforms “irreversible”
(Yeltsin 1994: 235). Therefore, the implementation of these policies had to occur
as fast and as radical as possible (“shock-therapy”). The privatisation of state
property was central to the economic transformation process. It was mainly
organised in non-transparent and corrupt procedures, and produced a new class
of capitalist businessmen, especially in the post-Soviet space referred to as
oligarchs (Dzarasov 2014; Kolganov 2013; Yurchenko 2012). Their main
economic activity is centred on trade, the resource and the financial sector.
At the same time, the so-called “shock-therapy” led to a dramatic increase in
social inequality (for an overview see Lane 2011) and a severe economic recession.
According to the sociologist Nataliya Tichonova (2011), about one third of the
Russian population became impoverished as a direct consequence of the
transformation process. Jospeh Stiglitz (2002) has illustrated the whole extent of
the economic decline. Accordingly, the Russian economy, measured in terms of
GDP, suffered greater losses than during the Second World War. Other post-
Soviet countries were similarly affected by economic decline. However, the
intensity and duration of economic crisis significantly differs across the 15 Soviet
successors (see Myant and Drahokoupil 2011: 51–55).
Against this backdrop, the democratic reform process initiated during the
Perestroika came to a standstill. Already in the early 1990s, the majority of post-
Soviet states largely suppressed a public debate on alternative economic policy
and citizens’ control in the privatisation process, laying the foundation for
authoritarian rule and future conflicts. In the early 2000s, economic and societal
development in most post-Soviet states was stabilised. An integral part of the
aforementioned elite consensus in Russia (and other countries) was the state´s
acknowledgment of the new ownership structure emerging from the 1990s. In
return, oligarchs were incorporated as the national bourgeoisie in the new societal
formation, which allowed the state to regain a certain degree of autonomy.
Although the new societal order and dominant role of the state was fiercely
disputed by factions of the oligarchs (the case of Khodorkovsky is the most
prominent, but by far not the only example), a majority supported the stability-
paradigm creating a favourable business environment.
The precarious stabilisation, which by no means did succeed all over the region,
was endangered by the global financial and economic crisis in 2008. All countries
were hit by the economic decline. Imposed budget constraints gave rise to already
latent crises.
 Crises in the post-Soviet space 9
The economic transformation is the third pillar of the post-Soviet crises
phenomena. It consists of the impact of neoliberal reforms in terms of social and
economic inequality, budget constraints, in particular after the economic crisis in
2008, and the commodification of power. The notion of peripheral development
is an important analytic term, which allows one to embed the changes of the post-
Soviet space since the early 1990s.
To sum it up, it is apparent that the increasing steadiness, the normalisation of
crisis has become an integral part of post-Soviet development. Three processes,
the dissolution of the Soviet Union and the political and economic transformation,
fostered the peripheral integration of the region into the world-market. The
important features of post-Soviet societal formations are political instability,
economic dependence, high social inequality and a limited autonomy of the state.
Each aspect can be found in various degrees and different intensity in all countries.
In contrast to the common understanding of crisis, we define crisis as a perma-
nent condition incorporated in post-Soviet development. In fact, each successor
state emerged out of a contradictory process. The intensity of crisis, however,
varies over time. Following the disintegration process after the dissolution of the
Soviet Union and the encompassing societal transformation in the 1990s, crises
appeared to be more visible and acute, affecting all levels of societal development.
Whereas the 1990s were shaped by disintegration, economic decline and political
chaos, the 2000s stabilised the societal order emerging from the transformation
process. Despite undeniable efforts, dominant strategies rather selectively tackled
some of the most pressing issues (poverty, peripheral development, political
instability) by means of clientelistic policies. Precisely through their partial
modernisation, the crisis-prone societal formations were rather reinforced than
called into question.

Outline
Drawing upon the concept of “Intersecting Crises Phenomena”, we seek to
determine tipping points of post-Soviet development. The developments are traced
back in the book sections, dealing with the dissolution of the Soviet Union, the
political and economic transformation of the post-Soviet Space.
The first section, “Mapping post-Soviet Crises”, gives an overview of the three
intersecting crises in a comparative perspective. Dieter Segert traces back the
reasons for the breakup of the Soviet Union and lays out political and economic
consequences that still prevail as recurring element of crisis in domestic and
foreign politics. David Lane compares the economic and political developments
in the post-socialist new member states of the EU and those not being part of the
EU enlargement process. Joachim Becker assesses the converging and diverging
results of the economic transformation in Russia, Belarus and Ukraine, taking into
account the specific political/economic elite nexus.
The second section, “Crises of Belonging”, highlights the relevance of iden-
tity politics and development. In all three case studies, the dynamics of identity
formation are intertwined with legacies of the Soviet Union as well as processes
10 Felix Jaitner, Tina Olteanu, Tobias Spöri
of political steering and new societal dynamics perpetuated by various crises.
Victor Apryshchenko deals with the Russian perspective on the collapse of the
USSR and respective historical imaginations of the country, which are considered
as a “response” to the trauma. Olena Podolian and Valentyna Romanova tackle
the question of the contested nation-building process and diverse regional identities
in Ukraine. Joakim Ekman and Kjetil Duvold analyse citizens’ (and non-citizens’)
perceptions of citizenship, national identity and political equality in the three
Baltic states. The three case studies demonstrate the impact or the legacy of the
dissolution of the Soviet Union and the two transformations in various ways.
Moreover, all contributions add pieces to the overall puzzle – the emergence of
intersecting crisis phenomena – by analysing outcomes of the dissolution in terms
of citizenship, collective memories and identities, and the reinforcements of such
latent cleavages for political and economic power consolidation.
The third section focuses on the “Crises of Resource Accumulation”. All
contributions deal with the interconnectedness of the political and economic elites
in different post-Soviet countries. From the perspective of political economy, they
outline how the kleptocratic grip of oligarchs on the economy has rendered these
countries vulnerable to conjoined economic and political crises.
Ilya Matveev and Yuliya Yurchenko focus on the crisis-prone development of
Ukraine and Russia. Ilya Matveev analyses the “interlocking crises” (economic,
political and “geopolitical” crises) in Russia, which root in the countries trajectory
since the transformation process in the 1990s and the “stability-era” from 2000–
2008. Yuliya Yurchenko argues that the accumulation of capital is the driving
force for manufacturing socially destabilising dynamics in Ukraine. The systematic
failure of the state to effectively perform its administrative and governing functions
has hit its temporary peak in the course of the ongoing conflict in Ukraine. Klaus
Müller contributes to the discussion by analysing the geopolitical post-Maidan
dimension through the lens of political economy. He questions the “transformative
power” of the EU in Ukraine. Jeffrey Sommers focuses on financialisation
strategies of the Baltic states (e.g. Latvia).
The fourth section, “Crises of Political Power”, analyses the multiple crises in
the post-Soviet region from the perspective of consolidating political power
in hybrid political regimes. Emil Aslan Souleimanov, Jasper Schwampe and Sofie
Bedford deal with the specific case of Chechnya and trace the causes of the war
back to a set of multiple crises originating in domestic Russian political and eco-
nomic considerations. Hannes Meissner identifies clientelism and corruption as
the most important strategies of Heydar Aliyev to deal with inner elite competition
in Azerbaijan. Julia Kusznir analyses the strategic consolidation of political and
economic power under President Nazabayev in Kazakhstan and his authoritarian
reconfiguration of the state and related areas, such as the media and NGO sector.
In the conclusion, we discuss the findings of each section as well as the concept
of “intersecting crises phenomena” in the post-Soviet sphere as proposed here.
Furthermore, a tentative outline of crises patterns across the whole region is
presented.
 Crises in the post-Soviet space 11
Notes
1 We would like to express our special thanks and gratitude to Andreas Pigl and Claudia
Strate who helped us a lot in finalizing this project.

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Part I

Mapping post-Soviet
crises
2 The dissolution of the Soviet
Union and its consequences
Dieter Segert

The dissolution of the Soviet Union was followed by an intensive discussion of

the reasons contributing to its end in the early 1990s. Due to its speedy and
nonviolent character, the disappearance of the Soviet state appears, to some
scholars, as a puzzle or even as a miracle. Others emphasise the accidental nature
of this breakdown (see, among others: Cohen 2004; Ettrich 2005; Hale 1999;
Kamer 2003a). Based on the argument that the crisis and the failure of the social
order of state socialism is a sine qua non for any analysis of the decay of the
Soviet empire, the following chapter first summarises relevant branches of the
literature attempting to better understand the causes of the dissolution. A contra-
factual perspective highlighting group interests and socio-economic conditions
will be discussed. After developing the term ‘post-Soviet capitalism’, the final
part of the contribution stresses the economic and social outcomes of the dissolution
of the Soviet Union for its successor states and for international security.

The processes of dissolution, its causes and driving forces

Among the many analyses of the end of the Soviet Union in December 1991,
some are especially important. The Journal of Cold War Studies published special
issues in 2003 and 2005 on the subject. In the introduction to the first issue, Mark
Kramer differentiated between direct, indirect, and fundamental causes of the
dissolution of the Soviet Union (Kramer 2003a: 6). Other authors distinguish
structural and institutional reasons (Brown 2009; Ettrich 2005). This section will
use these authors’ analyses to describe the turning points and most important steps
of the decay.
In the foreground were, first, the failing reform attempts amid a deep crisis of
state socialism in the second half of the 1980s. The economic reforms led to a
drastic deterioration of most citizens’ daily life in 1990 and 1991. However, the
negative trend started already with the campaign against alcoholism in 1985. As
Brown stresses, the campaign seriously damaged the reputation of the party
leadership (Brown 2009: 496). A second important reason for the decline of the
multi-ethnic state was the rising of movements for national autonomy at the
margins of the empire. These protests against the centre were especially strong in
the Baltic states and in Georgia. Gorbachev tried to counterbalance these forces
18 Dieter Segert
by proposing a new treaty on the federation, but failed in 1991. Valerie Bunce
makes a specific argument about the institutional basis for the decline of the
multi-ethnic states of Soviet Union, Yugoslavia and Czechoslovakia. She believes
that a specific type of federalism based on ethnic communities was the decisive
reason for the breakup of these respective states (Bunce 1999)1. A third factor in
the dissolution of the Soviet Union was the failed coup d’état in August 1991. It
did not succeed mainly due to the subordination of the military forces to the
civilian leadership. Because the president was the commander-in-chief of
the armed forces, and because Gorbachev did not support the coup, it failed.
If the Soviet generals engaged in the coup were to have ignored the formal chain
of command, the coup could have been successful (Dunlop 2003). Gorbachev’s
reluctance to use force against the anti-Soviet nationalist movements was one
important reason for the dissolution of the state (Kramer 2003a). Fourth, in
summer 1991, the disintegration of the COMECON and the Warsaw Pact treaty
following the downfall of the former political allies resulted in a deep unsettledness
of the Soviet elite (Kramer 2004). As a fifth factor, several authors have mentioned
the difficult relationship between the two Soviet leaders. The starting point of
these tensions emerged on the eve of the 70th anniversary of the October revolution
in fall 1989. Yeltsin wanted to accelerate the reinterpretation of the history of the
Soviet Union without considering the difficult situation of his comrade Gorbachev,
whom the conservatives had already attacked. Gorbachev dismissed Yeltsin from
the party leadership, but gave him a second-level position in the state apparatus.
After he returned to power in summer 1990, Yeltsin sought revenge. During the
crisis in 1990 and 1991, many observers thought the personal conflict between the
two leaders was one of the most serious obstacles for problem solving (Zlotnik
2003).2
So far, five general explanations have been given for the dissolution of the
Soviet Union. A sixth argument is not as widely accepted. Discussion continues
as to whether the political liberalisation during the perestroika years contributed
to the destabilisation of power. The liberalisation was relevant for the destruction
of the old regime, but it failed to legitimise the emerging new state structure of
the Soviet Union. Most of all, a strong civil society did not emerge (Howard
2003). Cohen uses the same argument when he assesses the weak public support
for Yeltsin’s resistance against the coup d’état: “There was, for example, no
response to Yeltsin’s call for a general strike against the putsch” (Cohen 2004:
466–467).
A last argument concerns the external reasons for the dissolution. How much
importance can be attributed to agents of the West? There are positive and negative
arguments. Some argue that the pressure against the Soviet Union was present at
earlier stages of perestroika, but without strong results (Kramer 2003b; Wallander
2003). However, there was, undoubtedly, indirect influence. The deployment of
intermediate-range missiles in Western Europe at the beginning of the 1980s
placed a new pressure on Soviet politics. Another indirect influence on Soviet
politics resulted from the United States’ military support of the “mujahedin” in
Afghanistan. Both initiatives weakened the hard-line opponents of Gorbachev
 The dissolution of the Soviet Union 19
and prepared the ground for his policy of “new thinking”. Also, Western pressure
influenced the internal Soviet politics, as Kramer has stressed, “by the end of the
1980s, Gorbachev’s policies towards human rights activists, dissidents, and
peaceful nationalist movements were increasingly constrained by his desire to
stay on good terms with the West” (Kramer, op cit.: 36). Another element of
Western influence was the lack of Western support for Gorbachev’s economic
reform. Only Germany had a certain willingness to support his policy through
economic aid (Cohen 2004: 463).

A contra factual perspective – the dissolution as an avertible

or an irreversible event?
By noting so many events and processes, I do not intend to suggest that the
dissolution was irreversible from the beginning of the crisis of state socialism, as
suggested by some of the presented arguments about the end of the Soviet Union.
Other multi-ethnic states, such as India or the post-Soviet Russia, have been able
to resist separatism and decay. “Relatively small alterations in circumstances,
events, or political choices in the Soviet Union might have led to a different out-
come” (Kramer 2003b: 24). However, Kramer argues mainly that coercion was
successfully used against movements striving for separatism3.
By taking a contra factual perspective on the end of the USSR, one should most
notably reject the central role of individual, personal decisions. This is possible
in two ways; first, to concentrate on group interests more than on individual ones.
Hale follows this path as he points to economic interests (Hale 1999: 36). Second,
one can examine the societal conditions of the late Soviet Union and identify their
transformative potentials. This perspective of Stephen Cohen will be considered
comprehensively in this section. Unlike Kramer, Cohen connects the study of the
decay of the Soviet state with the analysis of state socialism as a specific society.
His central question is: “Was the Soviet system reformable?” (Cohen 2004).
Cohen starts with criticism of counterarguments. Numerous scholars see the
demise of the Soviet Union as an inevitable event caused by an incurable disease
(see, among others, Cohen 2004: 460; Malia 2002; Pipes 1994). Cohen believes
that several of these authors use theological patterns of argumentation. He refers
especially to Martin Malia who regards the illegitimate coup (revolution) in
October 1917 as a kind of “original sin”. This iniquity would have doomed all
other developments in the country. It was the original “evil” which was not
reparable later by the reforms of Khrushchev or Gorbachev (Cohen 2004: 461).
A second argument for the widespread conviction that the disappearance of the
Soviet Union was unavoidable consists of the normative power of the factual. The
collapse appears as inevitable if history is interpreted from its end. It is the per-
spective that matters: It is possible to interpret all events as an unavoidable step
towards the result. Finally, a third argument for the necessary breakup builds upon
an assessment of the power structure of state socialism. Supposedly, a totalitarian
authority can never be reformed. He quotes Peter Rutland: It is because “the
political system had been constructed along totalitarian lines . . . its institutions
20 Dieter Segert
could not be retooled to serve pluralistic goals” (Rutland 1998: 43). A fourth argu-
ment consists of the claim that, after political liberalisation, the subjects had their
first opportunity to show their real relationship to socialist politics. It is argued
that the Russian people were inherently anti-Soviet “and swept away the system
in favour of a radically non-Soviet one” (Cohen 2004: 465). Cohen refuted this
last argument by stressing that such an “anti-Soviet revolution from below” never
took place. In general, Cohen does not believe that Soviet citizens were inherently
anti-socialist (ibid). In order to reinforce the argument, Cohen quotes Stephen
White (2001: 75): “Russians, it seemed, wanted a ‘socialism that worked’”.
After this criticism of other perspectives, Cohen comes now to the substance
of his argument. The Soviet Union’s unintentional disintegration was complex
and included possibilities of alternative results. The collapse of both the state and
the Soviet system was not inevitable: “We found no conceptual reasons for
believing the Soviet system was unreformable, there are no empirical ones either”
(ibid.: 487).
This section will discuss his arguments in more detail because they help increase
our understanding of the heritage of Soviet state socialism. You can easier detect
the vestiges of state socialism if you know the former entity and its – albeit not
implemented, not completely unrealistic – alternatives. The causes of the path of
transformation after 1991 are manifold and even puzzling. They cannot be reduced
to the intended paths. Neither the aims of the three presidents, the Russian, the
Ukrainian and the Belarussian, that met in the Biełaviežskaja Pušča National Park
near Minsk on December 8, 1991, nor the neoliberal zeitgeist alone shaped an
inevitable future. State socialism left its marks, especially within the expectations
of bigger parts of the population. Of importance were the interests and identities
of the numerous Soviet “nomenklatura”.
Cohen relies mainly on theoretical arguments and adds empirical evidence. In
his opinion, four elements were the cornerstones of a reformed Soviet system.
Those were, first, a socialist idea that includes national, pre-soviet Russian
traditions. Second, the “soviets” were to be specific representative institutions of
the citizens. Third, he notes a “state-private, mixed-market economy with enough
social entitlements to be called socialist”. Finally, the list includes a federal or
confederal state with Russia and at least some of the former republics of the old
Soviet Union (Cohen 2004: 469). These elements were connected with others.
Hale described the direction of transformation as one from “an ethnofederation
founded on force into one based primarily on consent” (Hale 1999: 6).
Cohen’s predominantly theoretical intention is visible from the fact that he
does not equally emphasise all four elements. He concentrates on the second and
fourth aspect. Additionally, he points to the destruction of the power monopoly
of the Communist Party as the starting point of transformation. This deterioration
is, at the same time, the birth of a new system. The proto-parties of a pluralistic
party system emerge from within the monolithic Communist Party.
Cohen then recaps Gorbachev’s and his supporters’ long process of serious
reforms directed against the authoritarian and inflexible system. Their endeavour
 The dissolution of the Soviet Union 21
started by destroying both the state ideology and the party’s monopoly on public
opinion. Then, they abolished the Communist officials’ primacy at every level.
He summarises: “In only five years . . . the Soviet political system had ceased to
be Leninist” (ibid.: 471). “The apparat’s control even over its own party had been
substantially diminished” (ibid.: 473).
After all that, the party disaggregated. At least two embryonic parties emerged
from within the party, the “proreform or radical perestroika wing” (“now all but
social democratic”), and “the amalgam of conservative and neo-Stalinist forces”
(Cohen 2004: 476). As Petra Stykow wrote earlier, the split of “the party” into at
least two parties was the origin of the post-Soviet, multi-party-system (Stykow
1992: 25). The only great mistake of Gorbachev was not to create a political party
before summer 1990 (see also Brown 1996: 206). The institutional basis of the
political system, the reformed soviets as political representative institutions,
developed simultaneously with the founding of a new structure of soviets at the
national and federal levels and the half-free elections in 1989 and 1990.
Like Cohen, Brown has stressed the fundamental changes within the Soviet
system after Gorbachev came to power (Brown 2009). Even the terms used to
justify politics have changed. “Perestroika” became synonym for “radical reform”.
The ideological ties that held together the system originally started to fray between
1985 and 1988 (ibid.: Chapter 24). A main driving force was the liberalisation
of art and culture. Brown stresses the importance of the publication in 1989 of
Solzhenitsyn’s The Gulag Archipelago. However, he argues that the first signs of
the liberal openings were still earlier: the publication of Anna Akhmatova’s poem
“Requiem” and of the books Doctor Zhivago (Boris Pasternak) and Life and Fate
(Vasily Grossman) in 1988 (ibid.: 492, 508). These cultural events were both very
important for the Soviet intelligentsia and for the West.
Brown, like Cohen, states that the Soviet system had changed radically before
it was completely dissolved. However, unlike Cohen, he stresses the break but
does not identify the timing of the changes. The agent of this clear discontinuity
was Gorbachev. At the latest, the Soviet Communist Party conference in summer
1988 is regarded as the point of no return. Gorbachev had become a social
democrat, therefore the opposite of a Communist (ibid.: 596).
This leads us to the relevance of economic reform. Brown stresses that there
could not be a third way between market economy and command economy and
does not elaborate on this topic in more detail (ibid.: 661). In contrast, Cohen
underlines the reformability of the Soviet economy. He argues against the perceived
antagonism between planned and market economies. “All modern capitalist
economies have been mixed and regulated to various degrees.” (Cohen 2004:
480). Concerning the late Soviet economy and its reforms, he stresses the gradual
widening of the old system. Gradually, market forces were expanded, and it was
intended to increase further.
He provides various pieces of evidence for this argument: Gorbachev had
launched economic reform by 1990. He pushed through the legislation needed for
economic reform; he had converted “large segments of the Soviet elite to market
22 Dieter Segert
thinking”; he “had freed the economy from the clutches” of the party apparatus;
and “state property was already in effect being privatised” (ibid.: 481).
Still, he ignores that these economic reforms did not lead to a viable new
economic system. This can be explained by the narrow focus. When the reforms’
catastrophic outcome is seen through the lens of the majority of the population’s
struggle in its day-to-day life, it is not possible to call them a (even a potential)
success. It was the failure of reforms in this field that constituted the main
obstacles for the survival of the Soviet system (see Brown 2009: Chapter 29).
There is no doubt about the deep economic crisis of 1990 and 1991. I know the
poor consumer situation in the 1970s and 1980s and can compare it with the
situation in Moscow in the year 1991: the shelves in the food stores had never
been as empty as they were during my last stay in December 1991.
Cohen himself offers an argument against his hypothesis that reforms had
started that could have led to a renewed kind of socialist economy. He noted that
during these reforms the process of “nomenklatura-privatisation” began, which
led to the recent kind of brutal capitalism in Russia. It could be argued that
Gorbachev unintentionally established the ground for a new society of high social
inequality and the central role of the so-called “oligarchs”. Yet the nucleus of new
property relations could develop only later, after the breakup of the Soviet Union.
The last point of Cohen’s argument concerns the reformability of the Soviet
Union’s state structures. Cohen delivers an important counter-argument against
the allegedly inevitable dissolution. He criticises the assumption that the state was
bound together only by the party apparatus. If that was the case, it is self-evident
that there would be no way out of the crisis. However his arguments – concerning
mainly the additional cohesion of the society – remind us of the legacy of state
socialism: “The role of the party should not be minimised, but others factors also
bound the Union together” (ibid.: 483). He mentions several branches of admin-
istration (specific ministries and the military), and adds the “single Soviet economic
space”. He later lists a major factor of the Soviet heritage, “human elements”,
such as the millions of mixed families, but also that nearly one third of the
population lived outside their ethnic territories (ibid.). One part of the ‘societal
glue’ consisted of shared historical experiences, notwithstanding that they were
triggered by relentless agitation and propaganda. Equally important was the
common language within the Soviet Union, the Russian language: “more than
60 per cent of non-Russians spoke Russian fluently” (ibid.: 484). After the dis-
appearance of political institutions such as the state party, other connections
remained through administrative branches and the military. The economy continues
to exist in the form of a division of labour and trade between the national econo-
mies of successor states. The ability to communicate in Russian remains in the
generations that grew up in the Soviet Union and within the transnational families.
The common historical memory has remained for a longer period and serves as a
basis for the ongoing effectiveness of Russian television in the “near abroad”. The
emergence of national states based on a specific ethnos became an important
trigger for post-Soviet emigration of ethnic Russians from these new states towards
the Russian Federation.
 The dissolution of the Soviet Union 23
Cohen’s second argument is based on a chronology of the events during 1991.
After the referendum on a renewed union in March 1991, the leaders of the federal
republics began the “Novo-Ogarevo” negotiations and prepared a new treaty. A
group of presidents (Russia and eight other republics) were going to sign it on
August 20. The proclaimed name for the new state should have been “Union of
Soviet Sovereign Republics”. Only six republics at the margins of Soviet Union
had refused to sign: the three Baltic republics, Georgia, Armenia, and Moldavia
(see Hale 1999: 13–16).
The coup d’état on August 19 prevented the signing ceremony. “In other words,
the treaty did not fail because the Union was unreformable but because a small
group of high-level of Moscow officials staged an army coup on August 19 to stop
its successful reform” (Cohen 2004: 486). Moreover, even after the failed coup,
the politicians continued the negotiations. Still, at the end of November, at least
seven republics were open for signing of a new treaty on their union. However,
on December 8, 1991, the three presidents of Ukraine, Belarus and Russia
prevented the signing. Cohen calls it a second coup d’état; this time, a successful
one (ibid.).
Felix Jaitner gives an interesting interpretation of the three presidents’ decision
(see Jaitner 2014: 55–56): Yeltsin and his allies were driven by the attempt to
forestall a democratic revolution of the masses. As a proof, he quotes his memoires
(Yeltsin 1994: 165–166).

The dissolution of the Soviet Union and the emerging type of

post-Soviet capitalism
It has already been noted that the transformation towards capitalism started during
perestroika. However, the basic institutions of capitalism such as banks, insurance
companies, and labour bureaus did not yet exist. A class of entrepreneurs was
only in its embryonic phase. I agree with David Lane’s view that this transition
was not merely a change from one type of capitalism to another. The state social-
ism was not just a type of state capitalism: “The transformation of state socialism
into a form of market capitalism required the creation of a capitalist economy and
superstructure, as well as a capitalist class” (Lane 2006: 144). The development
and diffusion of a cultural orientation, which Lane called “market ideology”,
helped prepare for the formation of the basic institutions and agents of capitalism.
In my opinion, consumer socialism was a special period of preparation for this
change. (See for the concept Boyer 2008; Hübner & Hübner 2008.)4
Aside from this general cultural preparation, it was important to encourage
entrepreneurs. From which field of practice did this group emerge? First, it was
the administrative elite of state socialism, as Lane mentioned. They supported
“the extension of their administrative control of the means of production to its
ownership” (Lane 2011: 145). A main path of entrepreneurial development during
privatisation of former state enterprises was via “management buyout”. This way
of privatisation was significant in most post-socialist states, including Russia and
Ukraine (see Kalotay and Hunya 2000: 41).
24 Dieter Segert
Another trigger for the change towards capitalism was the “intelligentsia’s”
desire for a meritocratic rewards system. This interest led to more inequality. It
“furthered a market system of exchange and market valorisation of labour” (Lane
2011: 146). During Gorbachev’s perestroika, as the party apparatus lost its grip
on political power, the “intelligentsia” became proportionally more powerful.
“This set off a tipping process whereby previously loyal ‘within system’-reformers
felt able to shift their support to . . . radical market reform” (ibid.: 147). The mass
support of this politics came from the population that wanted to satisfy their
consumer needs.
So far, I have concentrated on the phase preceding the breakup. Now I will turn
to the development of capitalism in the post-Soviet space.
The core was the reconstruction of the economic system. Both the intended and
unintended transition towards capitalism started during the times of “perestroika”.
In 1991, there was neither a functioning market nor a planned economy (Brown
2009: 694). The economy was in a deep crisis. The state tried to manage the
shortages with food ration cards (Kornev 2010: 25).
The international financial institutions initiated various programs to support the
restart of the economies after the dissolution of the Soviet Union. “The approach
was based on three main pillars: liberalisation of prices, restrictive fiscal and
monetary policies including public spending, and speedy privatisation” (Shmulyar
Gréen 2009: 188–189). Some responsible actors (like Yegor Gaidar) called the
path of transformation in Russia a “shock therapy”. Its preparation started already
in the summer of 1991, just after Yeltsin was directly elected as president of
Russia and thereby acquired the formal legitimacy for radical political changes.
His team of leading advisors consisted of both liberal oriented Russian economists
(mainly Yegor Gaidar and Anatoly Chubais) and Western consultants (like Jeffrey
Sachs and Anders Åslund). Nevertheless, Yeltsin was the most important political
actor behind this policy change.
Yeltsin appointed, in autumn 1991, Gaidar as the Minister for Economic Affairs
and Deputy Prime Minister in the Russian government. Gaidar was deeply
convinced that the first and foremost economic policy target should be just the
liberalisation of prices:

Free market and a large service sector came to form the primary aims of the
Russian liberals. At the same time, any elements of planning in the market
economy, rejection of economic determinism, and incorporating Russian
cultural traditions and public opinion became anathema to their vision
(Shmulyar Gréens 2009: 192)

This was a very ignorant treatment of the expectations and moral concepts of
the population. The resulting policy has led to deep tensions and conflicts within
the Russian society and between the citizens and the political class.
On January 2, 1992, all consumer prices were liberalised except for bread, milk
and tickets for public transport. Personal saving accounts were frozen by the state.
The huge destruction by the hyperinflation affected the accounts of 75 million
 The dissolution of the Soviet Union 25
savers and over 500 billion roubles (Kornev 2010: 101). Thus, a hyperinflation
emerged at the level of 1,500 per cent in 1992. The next years, inflation remained
very high, at the levels of 875 (in 1993), 311 (in 1994) and 198 (in 1995) per cent
(EBRD 1999: 261). Due to a similar development in Ukraine concerning shock
transition and the liberalisation of prices, the inflation rates were 1,210 per cent
in 1992, 4,735 (in 1993), 891 (in 1994), and 377 (in 1995) (ibid.: 281). What
Jaitner assesses for Russia is valid as well for Ukraine: the hyperinflation
“devastated not only the saving accounts of the Russian population but aggravated
as well the social situation in the country in general” (Jaitner 2014: 63).
In addition to prices, foreign trade was liberalised. The state monopoly in
international trade was replaced by licences issued to specific enterprises for the
foreign trade with goods. Unfortunately, there was nearly no state control of trade.
This lack of oversight invited a high degree of misuse. “It was estimated that
about 20 per cent of the export of crude oil and about one third of all metal exports
were smuggled in the period 1992–1994” (ibid.: 64). Benefits from the “grey
economy”, more accurately called criminal activity, contributed to the emergence
of a class of entrepreneurs in Russia.
The class of entrepreneurs emerged similarly in all post-Soviet societies. Heiko
Pleines analysed these processes in Ukraine:

Starting just with the introduction of market reforms, many enterprises, which
operated in a grey-zone economy, gained huge profits . . . In the sphere of
trade, the purchase of metallic products on the domestic market was still
highly subsidised whereas the sale for world market prices was enormously
profitable. The gross profit margin was up to 900 per cent.
(Pleines 2011: 129–130)

Another source for high profits emerged in the banking sector. The central bank
provided loans at favourable conditions to the newly founded commercial banks
that profited from lending to private customers (Halling 2015: 1). Starting in
1995, a third relevant source of profits became the privatised import of natural
gas.
These steps represent the first phase of building a domestic bourgeoisie in
Ukraine with the help of the state administration. A second period followed with
a volatile rising and declining of industrial holdings until the end of the 1990s.
Afterwards, in a third period of development, the winners of the second phase
expanded again on the domestic and the world markets and built up an enormous
and growing wealth. Pleines has estimated that about 44 Ukrainian oligarchs each
possessed more than 200 million USD in 2008 (ibid.: 131).
Privatisation of state firms and accordingly the rise of private firms was the core
of capitalist transformation. For Russia, Oksana Shmulyar Gréen also differentiates
three periods. The first one started with the law on cooperatives (in 1988). It is
characterised by a spontaneous privatisation and led to both small firms in the
service sector and private financial enterprises like banks and insurance companies.
Sometimes these private “cooperatives” emerged by “borrowing” machines from
26 Dieter Segert
state enterprises (see also Burawoy 2013: 531–533). At the end of 1991, this type
of enterprises employed at least 15 per cent of all Russian employees (Shmulyar
Gréen 2009: 198). The second period began in July 1991 with the voucher
privatisation. The shares of the former state firms were distributed to the
employees and the management. The managers gained the most. It was a typical
“nomenklatura privatisation”(ibid.: 199). In this period, the commercial banks,
the commodity exchanges, and the stock markets profited the most. “At the end
of 1994, the majority of the small enterprises in retailing, catering and consumer
services that previously belonged to the municipal authorities were privatised on
mandatory terms” (ibid.: 201). In 1995, the private economy already had a share
of 55 per cent of the Russian GDP (Jaitner 2014: 73).
“Loans for shares” is usually the practice in the third period. A small group of
owners was allowed to acquire the most profitable state firms in the gas and oil
sector and in the production of nickel, ore and other metals. The privatisation was
carried out by allegedly public sales5. They took place on the eve of the presidential
elections in 1996. The battle for the victory of Yeltsin was staged as a fight against
the deviation from the “path of capitalist development” (ibid.: 204). It resulted in
a highly unequal distribution of property in the Russian society and in a group of
“nouveaux Russes” (the new rich) that influenced not only the economy, but also
the political sphere. It was the hour of the birth of the “oligarchs” (Pleines 2005a,
2005b, 2011; see also Schröder 2008: 12). The creation of the “oligarchy” generally
finalised the transformation from state socialism to the post-Soviet capitalism.
The economic transformation was also embedded in a political and societal
context and had severe societal outcomes that have been less discussed in the
literature. My description can be no more than a mere draft. First, the preconditions
were the dissolution of the Soviet Union and the abrupt end of the socialist path
of development. The next steps were the emergence of independent successor
states, the partition between the new states of the Soviet state and military assets,
the enacting of constitutions, and elections to build parliaments and governments.
The elections were more or less free, at least at the beginning.
Open political conflicts and even violent coercion accompanied the political
transformation. Examples include the constitutional crisis between president and
parliament in Russia in the fall of 1993 or the South Caucasus conflicts (in
Georgia, the breakaway regions of Abkhazia and South Ossetia; and war between
Armenia and Azerbaijan in Nagorno-Karabakh). Other similar events were
Transnistria succession from Moldova in a military conflict in 1992 and the two
wars in Chechnya between Russia and the domestic population after 1994 and
1999. In the new ethnic states in Central Asia, conflicts emerged with their huge
Russian minorities; for example, in Uzbekistan and Tajikistan, these conflicts led
to the emigration of millions of ethnic Russians to Russia (see Kunze and Beutel
2006: 4; Mukomel 2006: 2).
The international support by the Western states was one further condition of
the post-Soviet economic transformation. “The international community’s approval
of the Russian systemic transformation was an important precondition for the
introduction of capitalism in Russia”, wrote Jaitner (2014: 80). The state could
 The dissolution of the Soviet Union 27
join the International Monetary Fund, World Bank and the London-based European
Bank for Reconstruction and Development already in 1992. An intense cooperation
with the G7 also started early. Yeltsin took part in his first G7 meeting in 1994.
The Western politicians heavily supported him in his electoral campaign in
1996 due to the possible victory of the Communist Party leader Zyuganov. Yeltsin
received an unconditional loan from the German government to support his
electoral campaign (Jaitner 2014: 125). The Western support helped to legitimate
Yeltsin’s policy in a period of uncertainty in which the country was in a deep
crisis and searching for a better future (Kornev 2010: 89).
The positive and negative legacy of state socialism played a decisive role in the
economic transformation. The relatively high level of education, the successful
trend of individualisation in the cultural sphere, and the widespread orientation
towards consumer goods belong to the positive legacies of Soviet state socialism
for a functioning market economy. Less beneficial were both the weak tradition
of trade-union resistance and the widespread paternalistic expectations towards
political authorities. How should we classify the desire for social justice? To what
degree could nostalgia towards the achievements of Soviet socialism be regarded
as a positive or negative factor? How has the deep frustration towards Western
values (“democracy and market economy”) influenced further developments and
especially political stability? These questions are quite difficult to answer explicitly.
Concerning the nostalgia issue, Mitja Velikonja (2009) has pointed to its
potential for resistance against hegemonic discourses. This could be one condition
for self-confident political participation. In this sense, the aim of nostalgic
recollection cannot be reduced to the desire to return to a seemingly better past.
It is also a recall of the promises of the former society in order to compare them
with the present: “nostalgia is not only about past realities but is in large measure
about past dreams, past visions, past expectations” (ibid.: 546). Nostalgia is a
resistance strategy, “it can have strong emancipatory potential and can become an
agent of liberation from oppression of contemporary hegemonic discourses and
practices” (ibid.: 547).
Seeing the past more positively than the present includes a criticism of today.
In Eastern Europe, the present situation deserves a lot of criticism. There is
widespread and deep frustration about the social results of the transformation.
Aside from the frustrated population, politicians are also unhappy. Czech Prime
Minister Sobotka mentioned that the Social Democrats were frustrated about the
slow speed of convergence between the Czech Republic and the Western European
countries. Twenty-five years after the start of the transformation, a big gap still
remains between the Czech living standard and the ones of Germany and Austria
(Radio Prague 2016).
The frustrations were visible from an opinion poll of the “Pew Global Center”
at the end of 2009. The participants were asked for the biggest winner of
transformation and systemic changes. The proposed choice was between three
groups: ordinary people, entrepreneurs, and politicians. The answer had the same
tendency in all seven societies: “There is clear consensus in Eastern Europe that
politicians and business owners have reaped more benefits from the fall of
28 Dieter Segert

Table 2.1 Who benefited from changes since 1989/1991? (per cent of answers: great
deal/ fair amount)

Country Ordinary people Business owners Politicians

Czech Republic 53 86 94
Poland 42 85 92
Russia 21 85 86
Slovakia 21 81 97
Hungary 17 63 89
Bulgaria 11 82 94
Ukraine 10 82 92
Source: Pew Research Center (2009, 31).

Table 2.2 What do you think is the best economic system for Russia?

2005 2006 2007

Market economy 15 17 15
Mixed (planned and market) 43 44 47
Planned economy 28 25 24
Don’t know 11 9 10
Refused 3 6 5
Source: The Levada Center Moscow (2016).

communism than have ordinary people” (Pew Center 2009: 35). In Ukraine, the
situation was regarded as even more negative than in Russia.
The vast social differences between winners and losers shaped people’s
assessments of changes since 1989/1991. The public’s criticism partly emerged
because of the promises of state socialism about equality. However, this criticism
could also be the starting point of resistance against the redistribution processes
from the bottom to the top, which occurred in the last decades.
The relationship to different types of economic systems is also worth
mentioning. Maybe we should interpret the preference of ordinary Russians
towards the mixed economy as a kind of criticism against the radical privatisation
processes in post-Soviet societies?
In this section, I discuss the social outcome of politics. Economic development
and neoliberal orientation of politics both led to a worsening of the population’s
social situation. I focus on Russia and Ukraine. Both the gross domestic product
and wages sank strongly because of privatisation, economic liberalisation, and the
breakup of the common economic space. Economic output decreased on average
about 50 per cent (Popov 2007: 37). The recession caused by the transformation
was deeper in post-Soviet economies than in the rest of Eastern Europe. In 1997,
the average real wages in Russia had fallen to 55 per cent of the levels of the crisis
year 1990 (Kornev 2010: 103). Russia’s Human Development Index (HDI) sank
 The dissolution of the Soviet Union 29
from 1990 until 1995, as did Ukraine’s HDI (Popov 2007: 40 citing the Human
Development Report 2006). Russia’s average life expectancy dropped from 70 to
64 years (1990–1995). Especially high was the rate of death from external causes
(accidents, murders and suicides) in Russia (the figure for 2002 was highest in the
world at 245 per 100,000 inhabitants, while the figures in Belarus, Estonia,
Kazakhstan and Ukraine were lower, but also very high at 172, 168, 157, and 151
per 100,000 inhabitants). Most impressive was the high rate of accidents in Russia,
158 per 100,000 inhabitants; but the number of murders in Russia was also very
high: 33 per 100,000 inhabitants, compared with 15 in Ukraine and Estonia. In
the U.S., the homicide rate was about 6 to 7 per 100,000 inhabitants (all data from
Popov 2007: 46–48). “Social-political nihilism” was the main feature of the
state’s social policy. Only when President Putin took office did the Russian state
begin any kind of deliberate social welfare policy (Fruchtmann 2012: 15).
Henning Schröder described the social development in Russia since the 1990s
in the following way:

The economic transformation – including the privatisations of state property,

the crash of the industrial production, and the extreme inflation – has led to
the overall decline of the middle class and widespread poverty. Only a very
small group profited from the turbulent transition period, could ascend to the
power elite and become extremely rich. However, the increase of the oil
prices at the beginning of the Putin era facilitated the economic situation.
Most of the losers of the 1990s have gained ground and self-esteem. But the
distance between “above” and “below”, “poor” and “rich” remains high,
despite improvement of living conditions.
(Schröder 2008: 10)

These social developments contributed most to the popular support for Putin as
president. This legitimisation was only since 2012 supplemented by Russian
ethnic nationalism. Schröder (ibid.: 12) stressed that this specific transition to
market economy was a major reason for the popular perception of “democracy”
and “market economy” as being deeply unjust. Most harmful were economic
reforms at the beginning of the 1990s, as noted by the Russian sociologist
Tichonova: “The share of the poor in society rose to extremely high levels. Even
the official statistics reported one third of the population in this category in 1992”
(Tichonova 2011: 2). The monthly average wage was below 200 USD in 2003.
In 2011, it increased to one thousand USD (Russland-Analysen 2012:19). Other
data show the monthly average wage in 2001 at about 111 USD, and in 2011 at
about 778 USD (Russland-Analysen 2011: 9). Still more difficult was the situation
of the pensioners. From the beginning of the “reforms”, they were in a crisis.
From time to time, this group of people did not even have enough money for food
and medical care (Schröder 2008:10).
To sum up: the Russian and Ukrainian examples demonstrate that, in post-
Soviet societies, a specific variation or kind of capitalist market economy has
emerged, which could be named “post-Soviet capitalism”. Other scholars such as
30 Dieter Segert
Ehrke (2004) called it “post-communist capitalism”. However, since there was no
“communism” in Eastern Europe, I would argue for using the term “post-Soviet
capitalism”. This type of society is characterised by huge social differentiation
between the poor and the rich. Most people must bear enormous social burdens
and are therefore frustrated with the results of post-socialist transformation and
with the conceptions connected to it. The transformation clearly benefited a class
of entrepreneurs who, through partially criminal methods, acquired much of the
wealth of the nation. They assure their powerful positions through strong ties to
helpful politicians.
This economic relationship is accompanied by a political system that could be
characterised as the “new authoritarianism”. In recent years, Russia has seen a
decline of the power of “oligarchs”, but the huge inequality in the distribution of
wealth remains. In Ukraine, it is not yet clear whether the “revolution of dignity”
(since 2014) will be able to reduce the unjust situation in relation to the distribution
of wealth in the country. In this regard, the Ukrainian situation resembles that of
its big neighbour. Notwithstanding contests between the different networks of
oligarchs, they produce a kind of plurality that can count as a more favourable
condition for democracy, it is unlikely that democracy can develop due to citizens’
low ability to control both the powerholders and the super-rich (see also Hale
2006 and his classification “patronal presidentialism”). If most citizens must
struggle to survive, they are too weak to participate effectively in politics. A by-
product of the enduring contestation between oligarchs is the instability of the
Ukrainian state (see Stykow 2014: 54).

Consequences of the dissolution of the Soviet Union for the

international system and the successor states
In addition to the social outcomes, the dissolution of the Soviet Union has had
manifold consequences for the international system and the state-building processes
in the successor states.
The dissolution of the Soviet Union was the final step of its decay as a world
power. The situation of a level playing field between the U.S. and the Soviet
Union itself was relatively new. It dated from the beginning of the 1960s, when
a military-strategic equilibrium emerged that was based on nuclear weapons of
mass destruction and ballistic missiles. Notwithstanding the Soviet Union’s
military power, the country still had economic and technological shortfalls. Helmut
Schmidt sharply dismissed of the Soviet Union as a kind of “Upper Volta with
nuclear weapons”. This mismatch between military power and economic strength
was increasing due to the “information revolution” from the beginning of the
1970s.
Since 1991, the geo-political decline of Russia has accelerated. The nuclear
weapons were removed from all non-Russian successor states. Based on the
START treaties, both the U.S. and the Soviet Union reduced their nuclear arsenals.
In the first decades after 1991Russia has had many troubles with the modernisation
of its armed forces. Symbols for these weaknesses were the rusty submarines in
 The dissolution of the Soviet Union 31
Murmansk and the loss of the “Kursk”, the newest submarine at that time, by an
accident. Since the late perestroika period, the Soviet Union had considerably
reduced its support for third world regimes; and Russia continued to reduce
support after 1991. This changed the global balance of forces in favour of the U.S.
After the end of the Cold War and the breakup of the Soviet Union, some
politicians in the U.S. argued for the concept of a unipolar world dominated by
their own state. They sought to consolidate the U.S.’s favourable geo-political
situation. That was accompanied by half-hearted attempts to integrate Russia into
the security architecture of the West; for example, the partnership for peace
program and the NATO-Russia Council (in 2002). Russia’s leading politicians
became increasingly worried about a strategic encircling of their country. For the
first time, Yeltsin claimed in 1995 that Russia should be addressed more
respectfully. A low-point of the bilateral relationship has been President Obama
calling Russia a “regional power” (Obama 2014).
In his “State of the Union” speech in 2005, Putin put forth his argument that
the dissolution of Soviet Union was the “biggest geopolitical disaster of the 20th
century”, speaking of the destructive forces that caused the decay and that continue
to endanger the stability of Russia (Putin 2005). At the 2007 conference on
security in Munich, he stated that the conception of the unipolar world has failed
(Putin 2007). He noted the supposed attempts to replace the UN by the NATO or
EU. The enlargement of NATO into East European countries, especially into the
Baltic states that emerged as successor states of the Soviet Union, was taken as a
provocation against Russia.
During President George W. Bush’s last term in office, there were attempts to
exert pressure on Russia and to enlarge the U.S.’s own security alliance. In 2008,
NATO considered adding Georgia and Ukraine as members. Only because of
objections by some West European NATO members did the attempt fail. Another
pressure was the antimissile defence system that should be situated in the Czech
Republic and Poland. It was declared as being aimed against the danger of Iranian
nuclear weapons; however, it could easily be also used against Russian missiles.
Yet, U.S. foreign policy was not responsible for the rising of tensions between
the two countries alone; Russia also had its share of blame. The biggest provocation
was Russia’s annexation of Crimea. The U.S. was already concerned by the
reform of Russian armed forces and the attempts of the country to modernise its
strategic capacity. All these tendencies alarmed the international public and were
expressed in the fear of “a second Cold War”.
To sum up: geo-political tensions are rising after the dissolution of the Soviet
Union. This can be seen as a result of some politicians in the U.S. attempting to
build a unipolar world dominated by their own country. The chance was lost to
develop a new worldwide security system. Contradictory tendencies emerged in
2016. On the one hand, Russia attempted to recover prestige through involvement
in conflict-solving processes (such as in the treaty on nuclear power with the
Iran); on the other hand, there are deepening confrontations such as those between
Russia and most East European NATO members, or between Russia and Turkey
in Syria.
32 Dieter Segert
The most important problem after the breakup of the Soviet Union was building
national states based on multi-ethnic societies. It would be too easy to call the
Soviet Union a Russian empire. The regional domination by the leading class of
the Soviet Union was only one feature of a picture with many more colours. Also,
it was not an ethnic-Russian group that governed. Therefore, the breakup of the
Soviet Union cannot be reduced to the liberation of suppressed nations. The
modernisation of Soviet society, inner Soviet migrations, cross-ethnic marriages
and other integrating processes led to complex societal relationships. The Soviet
Union’s dissolution meant that difficult processes of nation building had to start.
Only the Baltic republics and Georgia could facilitate the building of a nation
state by using national narratives of suppressed ethnic communities. Based on the
secret treaty between Stalin and Hitler in 1939, the Soviet Union occupied the
Baltic states that had had several decades of independence after the collapse of
the Romanov dynasty. Georgia was, at least during a short period between 1918
and 1921, an independent state. After a Bolshevik uprising, it was occupied by
the Red Army and became a part of the Soviet Union. The western part of Ukraine
has a similar narrative of a brief attempt at statehood after World War I, but this
story does not apply to other areas of the country.
Most successor states emerged with multiple problems after the collapse of the
Soviet Union. In the first years after 1991, Moldova oscillated between independent
statehood and joining Romania. In 1992, the situation became even more com-
plicated with the secession of Transnistria. Belarus had a weak national identity,
compounded after 1994 when the newly elected president Lukashenka returned
to using Russian as the state language and focusing on a politicised history
emphasising the Soviet era and the military victory in WWII. This politics of
memory stresses the huge death toll and the heroic defence of Belarussian people
against the German aggressor, which is presented in the giant museum of victory
in Minsk (cf. Apryshchenko in this volume). However, this policy was not
connected with the abandonment of independence from Russia.
In the new states of Central Asia, ethnic nationalism was the binding ideology
and central legitimisation of power. This led partly to conflicts between the local
ethnicities and ethnic Russians. Many Russians migrated (“returned”) to Russia.
This region’s state building could rely partly on pre-Soviet states, but social
modernisation during the Soviet era provided the most important influence on the
societies.
The biggest problem of post-Soviet state building emerged in Ukraine. The late
Soviet leadership of Ukraine contributed most to the dissolution of the Soviet
Union. As noted previously, the referendum on Ukrainian independence in
December 1991 was a major factor inspiring the presidents of Ukraine, Russia and
Belarus to dramatically reshape the Soviet Union. The Ukrainian nomenklatura
had succeeded in legitimising its own power by cooperating with the nationalist
movement “Rukh”. This was the price to pay to integrate the west Ukrainian
narrative into the national identity. This stabilised the power of a reformed
nomenklatura (the group of “red managers”, e.g., Leonid Kučma) to facilitate
the nomenklatura privatisation in Ukraine. They had a stable grip on power for
 The dissolution of the Soviet Union 33
15 years. Even the “Orange Revolution” (2004–2010) changed only the specific
group of profiteers but not the general social basis of power.
However, the cultural, ethnic identity of Ukrainian citizens remained nonho-
mogeneous and a field in which the political elites compete with each other for
power. Language politics became an important field for contestation.
The varied parts of Ukraine even had different historical narratives. The anti-
Soviet and anti-Russia narrative became stronger after the overthrow of president
Yanukovych, but the plurality of the different regional narratives remained. The
political struggles have so far hindered the emergence of a homogeneous state
identity. The process of identity building has benefits and negatives. For example,
the annexation of Crimea has pushed forward Ukraine’s cultural and political
delimitation from Russia. However, the laws on “totalitarian propaganda” and the
de-Sovietisation of the public space – with its fall of monuments and renaming of
streets and municipalities – impede the unification of identities (Myeshkov 2015).
One can learn from the history of the breakup of Yugoslavia that a foreign
enemy can help build a common identity, but it can also provoke internal struggle
that can escalate into civil war. In both the former Yugoslavia and the former
Soviet Union, the politics of history and language have played a central role.
Ukraine’s main problem with their politics of history is that families have both
positive and negative personal stories about the Soviet era. On the one hand, some
identify the Soviet history only with occupation and deliberate murder by the
Communist Party of Russia. The ethnic Ukrainian involvement in the Communist
dictatorship is fading out from official historical narrative. On the other hand, the
Soviet Union is regarded as part of their own history and culture. One part of the
Ukrainian population feels ongoing ties to Russia and to its church. The Moscow
Patriarchate organises most Orthodox Christian believers in Ukraine (see Bremer
2008: 23).
The immediate ancestor of present-day Ukraine is the Soviet Ukraine. The
recent borders (including Crimea attachment to Ukraine) are identical with the
previous ones during Soviet history. Ukrainian history was, at least for 300 years,
part of the Russian history. For example, Odessa was founded by the Russian state
in 1794. However, Ukrainian history was also part of other European states:
western Ukraine had regions governed by the Habsburg Empire and, after World
War I, by the new national states of Poland and Romania. It is not possible to
reduce the statehood of Ukraine only to its pure Ukrainian ethnic elements and
to cleanse it from its Russian roots. That policy would increase identity conflicts
among Ukrainian citizens. However, in a certain sense, this would foster a strange
kind of “Europeanisation” of Ukraine: namely this trend across Europe of
promoting particular ethnic nationalisms. There are nationalist-populist parties
marching towards power. This is not the kind of Europe wanted by most of us.

Notes
1 Kramer comprehensively criticised this assumption (2003b, 17–21). In my opinion,
Bunce convincingly identifies one of the factors that facilitated the breakup of the
34 Dieter Segert
multi-ethnic state. Most of all, this institutional structure favoured the emergence of
an ethnic identity among the economic and political elites who became, after 1991, the
moving forces of state building.
2 Hale has developed an argument against this interpretation: In his opinion, the personal
foibles of Yeltsin did not play a prominent role in the processes of the dissolution.
Russia’s economic interests were more important for the politics of the Russian president
in this period. Yeltsin’s political goals were mainly better use of the natural resources of
the biggest country of the Soviet Union. The new Russian elite was interested in a new
basis of the federation in order to finish or at least to reduce substantially the previous
subsidisation of the other republics (Hale 1999: 18). More important for the breakaway
republics was the elite-led mobilisation of nationalism in Ukraine, the second biggest
federal state. The December 1 referendum on Ukrainian independence allowed the
leaders of that country to produce a fait accompli that could not be ignored. Only after
this event, Yeltsin decided to follow the Ukraine and establish a new basis for the
relationship with this important neighbour. “Russia thus destroyed the union in order to
save it” (ibid.: 21).
3 Kramer argued: “Ethnic unrest during the Gorbachev era could have been quelled at
any number of points through the consistent application of force” (Kramer 2003b: 24).
He analysed a whole range of specific ethnic protests and pointed out that, in most
cases, the leading politician, Gorbachev, was not willing to use force, and subsequently
the protest spread further (ibid., 24–29). “The inconsistency of the use of force
elsewhere tended to embolden the opposition and to undercut the regime’s own ‘internal
consensus’ about the prospects for restoring order” (ibid.: 29). Henry Hale uses the
same argument and stresses that Gorbachev had the chance to solve the problems by
coercion but never used this “Plan B” (Hale 1999: 11).
4 Lane identified this special type of late socialism only as an ideology, he calls it
“ideology of consumerism”. However, his assumption that it was a phenomenon
caused by external impulses (“externally generated changes in values and aspirations”,
Lane 2006: 147) is, in my opinion, one-sided and misleading. The main impulses for
the emergence of the consumer socialism came from within; it was triggered by the
population’s expectations concerning consumer goods and by political decisions of
the Communist Party leadership. To put it simply: consumer socialism was not an
outcome of ideological subversion of the West but a result of modernisation processes
and the internal cultural change.
5 Between 1993 and 1995, 133,000 state firms were privatised. Among them were huge
enterprises such as Gazprom, Norilsk Nickel and other giants. Russian scholars estimate
that “the sold assets have comprised a value of about six trillion USD, but the state
budget received only 9.3 billion USD (Kornev 2010: 94; he quotes Видьманов В.
Приватизация: мифы и реальность [Privatisation – Myths und Reality]. Chapter 5).

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3 Divergent social and economic
consequences of transformation
in post-communist states
David Lane

The dismantling of the state socialist societies heralded a process of transition.

Transition implies an intentional movement from an existing state to a specified
type of society (in this case the target is usually a market type of capitalism,
encased in an electoral competitive democracy). The policy of transition initially
contained four components: domestically, the creation of national sovereign
state units; a market system based on privately owned property, democratic
competitive electoral politics and a pluralist civil society. The fifth component
was in the international sphere which called for exposure to the world economy
and normalisation of political relations with the dominant political powers. These
objectives, however, could be achieved in different ways, as illustrated by different
types of capitalisms: the ‘competitive capitalism’ of the USA, social-democracy
as in Sweden, a form of ‘coordinated capitalism’ as in Germany and Japan, or of
state capitalism which is developing in China. To take these and other social
formations into account, the process of change is now often analysed in terms of
transformation – a looser term implying significant societal change with no defined
outcome or end-state.
In the transformation process, the post socialist states took two different roads:
first, inclusion of the New Member States (NMS) into the European Union;
second, the formation of a Commonwealth of Independent State (CIS) composed
of the remaining republics of the former Soviet Union. In this chapter, I consider
the variations between countries in the second group as well as making occasional
comparisons with the NMS. The focus in the paper is on the states which composed
the CIS and the Baltic states which later joined the European Union. I outline the
structural changes, the effects of transformation on people’s well-being and
consider people’s perceptions of the transformation. Domestic social change is
analysed in the context of world politics. Developments in post-Soviet space need
to be understood as being shaped to some degree to the enlargement of the
European Union. To contrast the different trajectories, I make some comparisons
with other post-socialist East European member states of the European Union, as
well as China. Finally, I speculate about future developments.
In this ex-post analysis, the economic and political structures are outlined. It
should be emphasised that such developments were the consequence of crisis
which is the subject of later chapters. By ‘crisis’ is meant that happenings were
40 David Lane
not planned or intended but were unexpected, the social goals of transformation
from the old system to a new one were continually under threat. The significance
of ‘crisis’ is that the system does not break down or collapse; it is, however, in a
state of disequilibrium. The transforming societies had high levels of uncertainty
which threatened to undermine the values and institutions which the new political
and economic elites were seeking to put into place – sometimes with no clear idea
of exactly where they were going. The argument of this chapter is that the nature
of the transformation and the context in which it took place have affected the
kinds of ‘crisis’ which the different constellations of power experience: some of
the post-socialist societies are less ‘crisis prone’ than others and the types of crisis
they confront also differ.

New geo-political architecture

Location in the world political order shaped the types of domestic reforms which
took place after the disintegration of the communist bloc. It was widely expected
that the end of the Cold War would lead to a peace dividend. Politically, one
theoretical possibility was for a neutralised central and Eastern Europe. It was
optimistically believed (in the West as well as in the post-communist countries)
that both the Warsaw Pact and NATO could be disbanded in favour of strength-
ening the pan-European Conference on Security and Cooperation in Europe
(CSCE). Economically, the former CMEA (Council for Mutual Economic
Assistance) countries could have continued as a trading block, conducting free
trade with third parties. This could have taken the shape either of a customs union
or of bilateral trading links with the (then) European Community.
Neither of these more gradual forms of integration into the international sphere
was adopted. A leading group of central European countries, initially the Visegrad
countries (Poland, Czech Republic, Slovakia and Hungary), later followed by
other post-socialist central European countries, looked for economic and political
integration with the European Union and to strategic security with NATO.
The leading Western states – prompted by economic and geo-political interests
– sought to accommodate them within these institutions. Thus a divergent path
opened up between the central European post-socialist countries and the
Commonwealth of Independent States.
An economic and political union between the post-communist states and the
EU would ensure that their economic and political institutions and processes
would be compatible with the economic and political structures of global capital-
ism. It would also fit into the EU’s geopolitical interests. The inclusion of the
post-socialist countries as member states of the EU would be an irrevocable step
on the way to capitalism and concurrently would promote electoral democracy.
In 2004, membership was offered to the Czech Republic, Cyprus, Estonia,
Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. Bulgaria and
Romania were left out, though they remained candidates and eventually joined in
January 2007. Of particular importance to the topic of this book is the inclusion
of the former Baltic republics of the USSR in the European Union and the
 Divergent consequences of transformation 41
exclusion of Ukraine. The relentless enlargement of the European Union to the
east is shown clearly in Figure 3.1.
Membership requires the subordination of sovereignty of member states to a
common economic, political and social policy. Neo-liberalism and electoral liberal
democracy provided the ideological basis guiding policy. Ironically, perhaps,
having opposed the hegemony of the USSR, the newly independent CEECs had
to acquiesce to limitations on their independence required by the conditions
imposed on the new members of the EU. The post-socialist societies were no
longer designated legally or politically as sovereign states but as ‘member
states’ of the European Union. Only developments following the global financial
crisis of 2007 have brought home its significance.
Major policies underpinning reforms in, and later the transformation of, the
USSR were intended to ensure Russia’s acceptance in the political order of
the West. Mikhail Gorbachev’s intention was for the USSR to ‘rejoin its European
home’. Boris Yeltsin’s objective was to ensure that Russia would be a full and

Current members
Candidate countries
Potential candidate
countries

Figure 3.1 European Union member states and enlargement

Source: https://commons.wikimedia.org/wiki/File:EU-candidate_countries_map.svg#
42 David Lane
accepted member of the economically advanced capitalist nations. While the
Treaty of Rome provided that any European country could apply for membership
of the European Economic Community, it became increasingly clear that Russia,
for economic, political and cultural reasons, was not going to be considered.
The Commonwealth of Independent States (CIS) was formed in December
1991 by the Republic of Belarus, the Russian Federation and Ukraine, and later
joined by Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Turkmenistan,
Tajikistan and Uzbekistan; Georgia joined in 1993. However, many of these
countries, including Ukraine, have had little active presence in the CIS. Unlike the
European Union (EU), the CIS did not succeed in forming an economic or political
union though a number of significant bilateral agreements have been made. In
terms of the crisis analogy, the disintegration of the trading and political blocs led
by the Soviet Union, had led to uncertainty but not to breakdown. While nation
states were established, a further search for regional identity was also necessary.
The creation of a customs’ union and a single ‘economic space’ between Russia,
Belarus and Kazakhstan was formed only in 2011, which, in January 2015, became
the Eurasian Economic Union. Consequently, unlike the EU, the CIS countries
preserved considerable state sovereignty, became less integrated into the world
economic and political order and, consequently, retained more of their traditional
institutions.
The formation of these two major economic and political blocs and their links
to the hegemonic core have framed the context in which domestic transformations
have taken place.

Economic and social transformation

Despite these institutional differences, to a greater or lesser extent, all the post-
socialist countries have opened their economies to the world market, privatised
public assets, organised electoral polyarchies, monetarised social provision, and
established a free labour market. However, there remain considerable differences
between the various countries which, from an economic point of view, may be
grasped by study of the extent of privatisation and marketisation1. Figure 3.2 plots
crucial components of the EBRD Transition Index for different groups of post
socialist countries over four time periods: 1999, 2003, 2009 and 2014. As one
moves to the right of the Figure, the extent of transformation declines.
In post-Soviet space, one might distinguish between two major groups. First,
Russia, Ukraine and Kazakhstan which have more slowly moved to a market
economy and, by 2014, maintained some of the features of the previous system.
Second, a number of partly reformed countries including Belarus and the Central
Asian economies of Uzbekistan and Turkmenistan. Overall, the move to privat-
isation and the market has been relentless and has increased every year in all the
post-socialist countries. These structural changes have brought about an economic
convergence to the market features of Western capitalist societies.
These are shown as types of regimes in Table 3.1. Here, four components of
transformation are defined: ownership of assets, type of political power, the form
 Divergent consequences of transformation 43

40

35
EBRD Econ Transi Index

30

25 1999
2003
20
2009
15 2014

10

0
Cz Pol Lat Russ Kaz Uzb

Figure 3.2 The extent of the capitalist market and privatisation: EBRD indicators, 1999,
2003, 2009, 20142
In this table, the higher the index, the greater the level of marketisation and
privatisation. (36 = level of capitalist economy). EBRD, European Bank of
Reconstruction and Development.
Source: Transition Report 2003. London: EBRD 2003. p. 16. Transition Report 1999. London:
EBRD 1999. p. 24. Transition Report 2010: Table 1.1. www.ebrd.com/downloads/research/
transition/TR09.pdf

Table 3.1 Outcomes of transformation: types of regime

TYPE OF POLITICAL POWER

OWNERSHIP Polyarchy/ Mixed Autocratic ECONOMIC
OF ASSETS Pluralist COORDINATION
Private GLOBAL Market
CAPITALISM
Mixed HYBRID STATE- Mixed
REGIME CAPITALISM
State STATE- State
SOCIALISM
Comprehensive Uneven Partial
INTEGRATION INTO INTERNATIONAL ORDER
Key: Global Capitalist: New member states of EU; Hybrids: Eurasian states; State Capitalist: China;
State Socialist: Soviet Union before Gorbachev

of economic coordination and embeddedness in the international order. A trans-

formation to capitalism occurs when there concurrently takes place privatisation
of the economy, a polyarchic system of political power and the market acts as the
major coordinator of the economy. An unreformed system maintains effective
state power in these three dimensions; the states currently forming the Eurasian
Economic Union (the core of Belarus, Russia and Kazakhstan, and Armenia and
44 David Lane
Kyrgyzstan) are a mixture of state and private ownership, and state control as
well as market forms of economic coordination. State capitalist societies are a
particular type of hybrid regime. They lack the political coordination provided by
polyarchy (electoral democracy), though they have allowed both the functioning
of the market economic mechanism and elements of private ownership. Inter-
national exposure is crucial for the development of global capitalism: here the
New Member States of the EU, among them the Baltic states, are economically,
politically, ideologically and militarily integrated. The hybrid and state capitalist
regimes are much less economically, ideologically and politically incorporated
and not militarily included at all. The crises engendered by transformation have
been resolved in different ways. The ‘regime changes’ in the hybrid regimes have
not led to an ‘authoritarian backlash’ because the political structures of the Soviet
regime were not undermined to the same extent as in the Central European states.
There was greater continuity of personnel and institutions, particularly in the cen-
tral Asian states. Ethnic tensions, for example between Russians and other ethic
groups were contained more successfully in Kazakhstan than in Latvia.
The economic and social legacy of each state socialist society shaped its char-
acter after the collapse. Those countries bordering on the EU after the dismantling
of the Soviet system have all transformed more effectively than those of the
former USSR. Most of these countries initially were less favourably politically
disposed towards the communist system epitomised by the USSR, making the
replacement of state socialism easier. The external factors were also favourable
for systemic globalisation. The promise of membership of the EU required the
fulfilment of economic, political and social conditions to bring them into line with
those of the EU and globalised capitalism and was a potent incentive. These
changes, however, could not be made without costs.

Economic outcomes
The immediate economic consequences of transformation were significant falls
in gross national product. For example, between 1990 and 1993, real GDP had
declined in Lithuania –18 per cent, Ukraine –10 per cent, Russia –10.1 per cent
and Tajikistan –12.2 per cent3. The first ten years of transformation was a period
of great social disruption and chaos. The introduction of a market system of
exchange led to a severe decline in gross domestic product, contraction of the
labour market, and unemployment leading to social malaise including a rising
death and suicide rate. Even ten years after 1989, Georgia, Ukraine and Armenia
were less than 40 per cent of the 1989 level of GDP and Russia 57 per cent4.
At the end of the 1990s, there was a recovery. Figure 3.3 shows the changes in
gross national income (PPP $) for various post-socialist countries from 1990 to
2013. One has to exercise caution in interpreting these figures as they also measure
the effects of marketisation and financialisation. (Introducing pricing where they
had previously been free goods, such as charging for car parking, raises GDP
figures, though there has been no real growth). The figure includes three repre-
sentative groups of the NMS and the European CIS; Kazakhstan is included for
 Divergent consequences of transformation 45

25000

20000

15000
US$ ppp

10000

5000

0.5
1990 2000 2010 2013

Cze Pol Hun

Lat Rus Bel
Kaz Chi Ukr

Figure 3.3 Gross National Income (per capital 2005 US PPP) 1990–2013. Post-socialist
countries
Source: UNDP, Human Development Indicators, Human development index 2013 available at:
http://hdr.undp.org/sites/default/files/reports/14/hdr2013_en_complete.pdf. Accessed: 10 July 2015.

comparative purposes. The New Member States as well as the CIS had a fairly
constant rise in GNP from 2000 to 2010 and a slight decline thereafter.
Even taking into account the considerable economic downturns of 2008 and
2009, the average GDP growth for all transition countries was 140 per cent over
the period 1997 to 2010; with the post-socialist central European and Baltic states
averaging 156 per cent, south-eastern Europe 114 per cent, Russia 108 per cent,
Eastern Europe and the Caucasus 100 per cent, and central Asia 149 per cent5.
Again, one has to bear in mind that marketisation and financialisation had some
effects on the figures.

Effects on social well-being

Gross national product, however, is an inadequate measure of well-being as it
defines total output of a country rather than the uses to which national product
is put. Increasing the income of the richest one per cent of the population, which
they use for conspicuous consumption, has little positive effect on raising human
development. (It is not completely irrelevant as more people are employed and
GDP rises). The Human Development Index provides a composite ranking of
46 David Lane
countries based on three components: life expectancy at birth, education (adult
literacy and school enrolment – recent measures have used mean years of school-
ing, expected years of schooling) and real income (gross domestic product per
capita (PPP)6. This is a benchmark to measure the comparative levels of develop-
ment of the states of the former USSR, and to assess the effects of changes
entailed in the transformation process. I discuss two aspects of well-being as
measured by the index. First, changes over time in the post-Soviet countries and,
second, how these changes related comparatively to other countries. These
measures enable us to detect the extent to which well-being improved within the
respective countries, and whether they converged to (or diverged from) the more
economically advanced countries.
Figures 3.4–3.5 show the trends of well-being from either the beginning of the
reform period (1987) or from 1990, to 2007. Data have been tracked for each
yearly edition of the Human Development Report, not taken from composite
tables retrospectively constructed by UNDP; later Reports (from 2010) also have
modified criteria and are not used in these graphs. The figures are derived from
incomplete sources and can only be considered as general tendencies. They do,
however, bring out major differences and changes within countries over time. The
first graph illustrates developments in the European CIS states: Russia, Belarus,
Ukraine, and Armenia. Here, a strong regressive decline occurred, particularly in
Armenia and Ukraine. In both the CIS member states the levels of the Soviet
period were not enhanced. In Figure 3.5, the central Asian republics of Kazakhstan
and Uzbekistan as well as Azerbaizhan are depicted. Uzbekistan had a much
shallower fall in levels and a recovery to the standards of the Soviet period by
2005, thereafter, however, further deterioration occurred.
A second question is the comparison of the post-socialist countries with the
rest of the world. Is the ranking any higher compared with other countries than it
was before transformation? Have they ‘closed the gap’ on the Western developed
countries? Here we compare the ranking of these countries in international
perspective. In the Human Development Index, the highest human development
is given a rank of 1. European and Anglo-Saxon countries occupy the top positions
(the only exception is Japan which is in the top ten countries). In the world order,
in the late 1980s, Czechoslovakia (ranked 27th), followed by Hungary (30th) and
the USSR (31st), had the highest levels of human development of the socialist
countries. At this time, all the European socialist countries (except Romania)
were in the ‘high human development category’ – comprising 53 countries
(Romania was 58th).
Unfortunately for the comparative study of post-socialist developments, the
republics of the former USSR were not differentiated from the USSR aggregate
data until they became independent states in 1992. A further complication arises
when we attempt to compare developments after 1992, as the rankings of countries
refer to a different number of states. I have, therefore, had to rework data from
the USSR to differentiate between the European and Asian republics. I also had
to allocate the new post socialist European states (such as Latvia and Slovakia)
to a position in the index. On this basis we are able to construct a truly comparable
 Divergent consequences of transformation 47

0.9

0.8

0.7

0.6

0.5
1987 1990 1995 2005 2007 2013

Bela Ukr Arm Rus Chi

Figure 3.4 HD Indexes 1987–2007: Russia, Belarus, Ukraine, and Armenia

0.9

0.8

0.7

0.6

0.5
1987 1990 1995 2005 2007 2013

Uzb Azer Kaz Rus

Figure 3.5 HD Indexes 1987–2007: Uzbekistan, Azerbaizhan, Kazakhstan, and China

Data based on: life expectancy at birth, adult literacy, school enrolment (later
mean years of schooling, expected years of schooling) and gross national
income per capita (PPP$).
Source: Human Development Reports for appropriate years. Human Development Report 1991.
UNDP New York 1991, pp. 119–121. Human Development Report 1990, pp. 128–129. Available
at: http://hdr.undp.org/en/media/hdr_1990_en_indicators1.pdf. Similar for subsequent years.
48 David Lane
table showing the rankings between contemporary states and how they have
changed over time.
Differences in economic development between the Soviet republics were
considerable. GDP data were not published in the annual statistical reports of the
USSR for various republics. However, one measure which reflects economic
standards is the earnings of manual and non-manual workers. I have, therefore,
calculated the ratio of average earnings between the republics and the USSR
average: the European republics being at the top and the central Asian ones at
the bottom7. For an index of health I have used the life expectancy and infant
mortality figures which are available for the Soviet republics8. Data were collected
on the educational levels of people with higher and specialist education working
in the economy in each republic. Finally, to measure economic development
I used the level of retail trade turnover9. These four indexes (infant mortality,
level of education, average wages, and retail trade turnover) were aggregated to
form a composite picture of the levels of human development in the republics
of the USSR at the end of the Soviet period. This analysis enables one to allocate
the countries of the former USSR to the world ranking of states in terms of human
development10.
The rankings in 1990 and 2013 are shown on Figure 3.6. In Soviet times, the
Baltic republics and Russia form a group at the upper end of development and the
four central Asian republics (plus Moldavia) constituting the bottom five.
Kazakhstan is somewhat apart from the other republics being ninth (out of fifteen)
in the ranking11.

140

120

100

80
Rank

60

40

20

0
US LAT RUS UK BE AZ UZ

1990 2013

Figure 3.6 Human Development Indicators: Country ranks 1990, 2013

In the above table countries ranked in order of development, 1 being the
highest.
Source: Human Development Report 2009. UNDP 2009. http://hdr.undp.org/en/statistics/ Accessed
March 2010. Human Development Report 1991. UNDP New York 1991, pp. 119–121. The figure
for the USSR was disaggregated to the constituent republics. In 1990, there were 177 countries
(estimates added by author to original 160). Data for 2013, Human Development Report 2014,
http://hdr.undp.org.
 Divergent consequences of transformation 49
Only one country has improved comparatively its position in the world order –
Belarus. The European CIS have all had serious declines – Ukraine by 41 places
and Russia falling by 24 places in their international rankings. The central Asian
republics, especially Uzbekistan and Turkmenistan, also had sharp falls.
The divergence between the rises in GDP and the stagnant or falling levels of
human development is partly explained by the unequal allocation of resources.
Figure 3.7 shows the difference in the ranks between Gross National Product and
Human Development for various post-communist countries. The difference is
positive when human development is higher than gross national product. Kuwait
for example, has a very high national income, but its level of health and education
are much inferior to countries with a lower national income as income is used
for other military purposes and conspicuous consumption (there is a difference of
51 places between their ranks). Figure 3.7 shows that, before transformation, all
the socialist countries out-performed their national income in terms of social
development. As one moves from left to right on the graph, the indexes fall.
Between 1993 and 2004, only Armenia, Uzbekistan and Latvia (very slightly) had
increased their scores. Others had severe falls: Russia in particular.

50

40
GDP rank minus HDI rank

30

20

10

0
1993 2004 2010 2012

–10

–20

Chi Pol Hun CZ

Azer Arm Ukr Bela
Uzb Russ Lat Kaz

Figure 3.7 Gross National Product Index minus Human Development Index 1993–2012
A plus number indicates that human well-being is higher in the same year
than the country’s gross national product.
Source: Human Development Report 1994. Available at: http://hdr.undp.org/sites/default/files/
reports/255/hdr_1994_en_complete_nostats.pdf Data for 2012 in 2013 Report, p. 144. 1993 was the
first time that UNDP disaggregated by country of former USSR. Data for 2004 in 2006 report,
Table 1, p. 283.
50 David Lane
Over the whole period 1993 to 2012, rises in differentials occurred for Ukraine
from 13 to 22, Uzbekistan 12 to 19, Latvia 8 to 10, and Kazakhstan 1 to 8. This
is probably due to a fall in the level of GDP. For example, if GDP index fell from
20 to 30 and the HDI remained the same at 10, the difference would rise from
10 to 20. There are some very notable falls of HDI compared to GNP: in Russia
from 10 to minus 6 in 2004, and to minus 15 in 2010. In other words, increases
in GDP (derived from energy sales in Russia) were not transferred into equivalent
levels of human development.
Inequality has risen greatly since the fall of state socialism12. In 1987–1988, the
median Gini coefficient for the USSR was 23, Russia being 24, Ukraine 24. In the
period after 2000 (latest dates available in 2010), two countries had indexes over
40: Turkmenistan and Russia. Excepting for countries such as the USA (41) and
capitalist developing societies, such as Brazil (59), most industrialised Western
countries are in the 20s (Germany 28, Denmark 25). After 2000, three of the post-
Soviet countries were 30 or under: Uzbekistan, Ukraine and Belarus. Figure 3.8
illustrates the increases for selected countries (not all post socialist societies are
given in the sources).
Clearly, the expectations of those who anticipated positive results from trans-
formation to capitalism have been somewhat disappointed. As we concluded from
the data above, though national GDP has grown, for many of the post-socialist
countries the comparable levels of human development are not very much higher
(and for some are lower) than they were in Soviet times. The distance between
the former socialist countries and the industrialised West has not decreased to any
significant extent. The divergence between the rises in GDP and the much smaller
rise or even falling levels of human development is partly explained by the
unequal distribution of resources. Declines in assets devoted to human development
have occurred in all the former state socialist societies and are consequences of
the growing inequality of wealth and income. And the state has been seriously

50
45
40
35
Rini Coeff

30
25
20
15
10
5
0
Rus Chin USA UK Lat Est Lith Pol Slven Kaz Hun Bel Ukr Slka Den

87–88 04–

Figure 3.8 Income Inequality: Gini coefficients selected socialist countries 1987–1988,
2004
Source: World Bank Development Report 2010. World Bank: Washington DC.
 Divergent consequences of transformation 51
weakened as an instrument of redistribution. These indexes measure the effects
of transformation on economic and social outcomes. Public opinion polls, to
which we now turn, illustrate how the changes are perceived by the public in the
various countries.

Evaluating the changes: the views of the public

State socialism was evaluated in a negative light by most Western commentators
and by many in these states themselves. The experience of market reforms has led
to a reconfiguration of personal views on life under state socialism. As we shall
discover, there is a growing nostalgia for the past. Public opinion polls are our
major source of information concerning the public’s evaluation of life under
communism and its transformation into something else. Researchers at the Pew
Center (USA) studied public opinion in the post-socialist countries in 1991 and
2009 and these provide a good measure of public attitudes to various aspects of
the transformation experience. This work is supplemented by other reports
conducted in Russia and Ukraine.
A change to a multiparty system and market economy in 1991 was widely
approved in all of the post-socialist countries. The Czech Republic had an 80 per
cent approval rate for a multi-party system in 1991 and even in Russia 50 per cent
were in favour of a multi-party system in 1991. Support for the ‘capitalist system’
in 1991 was much less in Russia and Ukraine than in the New Member States,
though here the approval rate was generally over 60 per cent – and particularly
strong in the former GDR and Czech Republic (Pew Global Attitudes Project
2009).
Reservations about the changes have increased between 1991 and 2009; though
support for change is much greater in the New Member States of the EU than in
Russia and Ukraine.
Over the 18-year period, only Slovakia and Poland had any positive increase
in the approval of change and this was in the area of multi-party politics. In
Ukraine, Bulgaria, Lithuania and Hungary there were notable falls in public
confidence in the multi-party system. Approval for the market capitalist system
was less than for competitive democracy in all the post-socialist states, and parti-
cularly so in three former republics of the USSR (Russia, Ukraine, Lithuania).
Moreover, in all the post-Soviet societies, support for capitalism fell between
1991 and 2009; in Hungary, Lithuania, Russia and Ukraine approval rates dropped
to 50 per cent or less of the respondents.
When we turned to economic issues, public opinion was more averse. In answer
to the question, ‘Would you say that the economic situation for most people in
(country of survey) today is better, worse, or about the same as it was under com-
munism’, in not one post-socialist country did more than half of the population
believe that it is better in 2009. As we note in Figure 3.9, in Hungary in 2009,
72 per cent in Ukraine and 62 per cent in Bulgaria believed that the people are
worse off than they were under communism. Even in the most successful countries
(Czech Republic and Poland), between a third and two-fifths of the respondents
52 David Lane

80
70
60
50
40
30
20
10
0
Hun Bul Ukr Lith Slok Rus Cze Pol

Worse The same Better

Figure 3.9 Economic situation today compared to that under communism

Source: Pew Global Attitudes Project 2009. www.pewglobal.org. p.5.

felt that they were better off under communism. The negative responses are
explained by the levels of social inequality. Rises in GDP do not equally affect
all citizens. As we noted above, levels of human development are not in line with
the rises in GDP. However, we must bear in mind that many were better off, and
some were very much richer. The surveys show considerable division of opinion
between different strata of the population (Pew Global Attitudes Project 2009).
As noted in the discussion of income inequality, all the post-socialist societies
have significant divisions between different social groups. There is also a con-
sciousness of some strata having benefitted at the expense of others. As illustrated
in Figure 3.10, in only the Czech Republic did a (bare) majority of respondents
believe that ‘ordinary people’ had benefitted from the changes, whereas in all
countries (except Hungary) over 80 per cent of the respondents believed that
business owners had benefitted, and, for nearly all countries, over 90 per cent of
respondents considered that politicians had gained most from the transformation.
In the public consciousness there is a clear awareness of which groups have
gained, and which had lost.
Other studies of perceptions of life satisfaction show general dissatisfaction
with living conditions in Russia and Ukraine. Surveys conducted by the Levada
Research Centre found that, in Russia, only six per cent of the population in 1998
were satisfied or mostly satisfied with life in general, this had risen to only 26 per
cent in 2005; at the other end of the scale, 26 per cent in 1998 were either
completely or for the most part dissatisfied with their life conditions: by 2005, the
proportion had risen to 34 per cent13. When we disaggregate these responses,
there is a clear correlation between social position and economic hardship: of
people who described themselves as ‘hardly able to make both ends meet, there
is not enough money even for food’, 32 per cent of the unemployed were in that
category, 37 per cent of pensioners, 22 per cent of housewives, 31 per cent of
 Divergent consequences of transformation 53

Ukr

Bul

Hun

Rus

Slok

Pol

Cze

0 10 20 30 40 50 60 70 80 90 100

Politicians Business People

Figure 3.10 Who gained most from transformation?

Question. Who benefitted from changes since 1989/1991? (Ukraine and
Russia since 1991). Data refer to ‘a great deal/a fair amount’.
Source: Pew Global Attitudes Project 2009. www.pewglobal.org. p.31

unqualified workers, 14 per cent of skilled workers, 12 per cent of unskilled non-
manuals, but only six per cent of ‘specialists’ (employees with professional
qualifications) and five per cent of managers14. Clearly, the effects and perceptions
of transformation varied significantly between social groups. Some enhanced
their social position and life chance considerably under transformation.
Overall, one has a picture of divided societies. Over time, enthusiasm for
change, even in the New Member States, has diminished.

The transformation balance sheet

State socialism was based on a collectivist ideology which promised the fulfilment
of people’s social needs from the cradle to the grave. The radical reformers of
state socialism have undermined collective agency and replaced it with
individualistic competitive activity. The effects of market capitalism have been
uneven. On one side, the move to capitalism and liberal democracy was widely
welcomed and many still cherish the personal freedom it has delivered. On the
other side, personal discontent has increased greatly and caused resentment on
the part of a considerable part of the population. Where it has been successful
is in providing a belief in diversity and market choice; it has appealed to those
who seek individualist solutions to public problems; and to those who are likely
to benefit from individual initiative.
There are also important differences between the post-socialist countries. The
New Member States of the European Union have had a less volatile transformation
54 David Lane
than those in the CIS. The post-communist societies have had mixed achievements.
Disengagement and disappointment at the consequences of transformation is
widespread. Between a third and a quarter of the population live in relative
poverty and suffer its consequences – physical and psychological stress. We can
conclude with confidence that the promises of the radical reformers and their
Western advisers have not resulted, for the population as a whole, in a convergence
to the living conditions of the advanced capitalist states. On the other side, many
of the new political and economic elites as well as other business people and
strata of the new middle classes have certainly gained and others, particularly
among the younger generation, welcome the diversity and market choice provided
by a consumer society. What has not arrived is what state socialism provided –
societies that could experience comprehensive development, full employment,
a regular income, peace and stability. The human development indicators showed
a positive improvement in the ranking only in Poland and Belarus of the post-
socialist states. Russia and Ukraine have suffered significant declines in human
development. Rather than catching up with the levels of the Western industrialised
states, most have fallen further behind.
Underlying the political and economic changes are the unequal effects of
privatisation, the ineffectiveness of electoral democracy to turn public aspirations
into political practice, the inadequacies of the labour market leading to unem-
ployment, and the withdrawal of the state as provider of comprehensive welfare.
The privatisation of physical assets has led to the rise of a rent-seeking capitalist
class, not only to a new bourgeoisie, but also to a privileged state bureaucracy,
which sprung from what Ovsi Shkaratan has described as etacratism15. While the
intention of the elites and classes leading transformation was to instigate a
Schumpeterian form of ‘creative destruction’, the result has been destruction
without creation.
It is important to note that significant parts of the population still support
distribution based on need, a strong role for government over the economy and a
full employment economy16. While ‘statism’ was widely unpopular, ironically,
state provision is still widely accepted and more so in the countries of the former
USSR than in the NMS of the European Union. Comparatively, Russia stands out
as having suffered negative dislocations in the transformation. Its GDP, human
development indexes and levels of equality had serious falls. The initial entry into
the world market led to economic dislocation and privatisation of natural assets
which shifted resources from the public to the private sector. These trends have
been somewhat reversed under President Putin. Public disapproval of the changes
is widespread, but no more so than in other countries- such as Ukraine. Trends in
public attitudes in all the post-socialist countries show more support for the
installation of a competitive electoral system than for the economic market, and
here positive sentiment is greater in the central European societies than in the east.
There are also deeper seated cultural differences, between the countries of
central Europe, like Czech Republic and Hungary, which have had a greater
affinity with the values of Western Europe, and countries in the East. The latter
are rooted in a different form of Christianity with more collectivist values and a
 Divergent consequences of transformation 55
long and deep statist tradition forming the basis for what many consider to be
distinctive values of Eurasia as a civilisation.

Two types of post state-socialist capitalism

Following the dismantling of state socialism, a market system based on private
ownership and production for profit has been constructed to a greater of lesser
extent. The structural changes have by design precluded a return to state socialism.
The measures of reform have secured a high level of irreversibility: the planning
mechanism has been destroyed, and the lynchpin of the political system, the
Communist Party apparatus, dissolved. The consequences of transformation have
led to two blocks of post-Soviet countries: the first one is market orientated and
has large private sectors and the second one is a smaller cluster of countries which
preserve to some degree statist economies (Uzbekistan, Belarus and Turkmenistan)
and is ignored in the following discussion.
Weber’s claim that modern capitalism is distinguished by ‘the pursuit of pro-
fit and forever renewed profit, by means of continuous, rational, capitalistic
enterprise’17 captures the spirit of early capitalism. But it lacks many of the char-
acteristics of contemporary global capitalism. For both Weber and Marx, the
economic system and economic institutions were the critical variables, but capital-
ism and the capitalist mode of production are not limited to economic institutions.
Analysis has to understand the ways the economy is embedded in political and
social institutions which provide leadership, scientific innovation, social cohesion
and forms of division and conflict. Important components promoting cohesion in
society are the state, social class and ideology. A sociological interpretation con-
siders the integrative mechanisms in society, the institutions which maintain the
cohesion of the system: a value system, a dominant bourgeois class, and asso-
ciations not only promoting social, political and economic coherence but also
sustaining a dynamic of development. Moreover, the political units of capitalism,
as understood by Marx and Weber, were largely coterminous with state boundaries.
The transnational corporation and the rise of hegemonic states put the global order
at the centre of modern Western capitalism.
I would, therefore, define modern globalised capitalism as a system of privately
owned production and services taking place for global market exchange, utilising
money as a medium which determines differentials of income, levels of investment
and the distribution of goods and services. Productive assets are privately
(collectively or individually) owned, and profit leading to accumulation is a major
motive of economic life. The state, which is embedded in a more or less pluralistic
society, establishes an effective system of law which secures private property and
rights of owners over the proceeds of production. A dominant legitimating ideology
of electoral democracy (effective polyarchy) endorses competition between parties
and groups for influence over the legislature and executive arm of state government.
A sphere of autonomy (including the economy) is secured between the individual
(and family) and the state which secures civil society. Finally, individual states
are located in a global market and a hegemonic political world order which not
56 David Lane
only limits the power of states but in many ways supersedes them. The overlapping
legacies of socialism, the market form of transformation and the introduction of
competitive capitalism have to be contextualised in a wider framework of European
Union and world politics. ‘Crises’ in the sense of ‘unexpected’ and uncertain
results of transformation have been not led to unpredictable consequences. The
EU has provided an economic and political model. The stability and order of
the socialist regime has been replaced by economic and political uncertainty. The
post-socialist Central European states are members of a supra-national state, and
since the world recession of 2007, the political crisis has moved away from the
post-Soviet transformation process to the political and economic contradictions
of the European Union.
In contrast to the outlined features of modern global capitalism a model of a
hybrid state/market uncoordinated capitalism emerged during the transition. It
consists of economically poorer countries which have had an unsuccessful period
of transition: Russia, Ukraine, Kazakhstan, Georgia, and Moldova. That is to say
that they have been ‘unsuccessful’ in moving to the target which many of their
leaders had of an electoral capitalist market democracy. They have the charac-
teristics of low income, primary sector exporting countries, with lower integration
into the global economy. They have particularly low levels of domestically
sourced investment, though those with a large energy sector (such as Russia) have
significant and disproportionate foreign direct investments. The form privatisation
has taken has lead to relatively few owners with great wealth in extractive
industries on the one hand and, because of relatively low employment rates and
ineffective redistribution policies, to poverty on the other. Economic policy should
be concerned not only with efficiency, but also with equity. The move to the
market and private ownership has significantly diminished equity in all the post-
communist states.
In the Russian Federation, the initial period of privatisation and destatisation
led to a weakening of the state and consequently to a period of ‘chaotic capitalism’
lacking in institutional coordination. In the Yeltsin and early Putin period, ‘state
capture’ by private interests was widespread. By state capture, we mean that
private bodies are able to effect changes on the state to promote their own interests.
This state of affairs has been attenuated somewhat by the leadership of President
Putin, who has sought to strengthen the role of the state in economic regulation.
However, the economic system is far from being a modern wealth-creating one;
Russia is also much less globally integrated – economically and ideologically.
It is in this respect that the country’s leaders and intelligentsia have turned to
Eurasianism as a civilisation to legitimate, at least ideologically, an alternative
form of capitalism which I believe is moving towards national capitalism.
In the states making up the Commonwealth of Independent States, the shock
of the disintegration of the USSR had to be solved domestically; they had no
ready-made model imposed from the outside, and their citizens had been members
of a socialist state and had no memory of an alternative. The crisis of transformation
was resolved by adapting the political and economic institutions of socialism to
market conditions. The initial concern with forging national identity and creating
 Divergent consequences of transformation 57
state sovereignty weakened considerably any moves for the formation of regional
units. The equivalent of the European Union came only in the second decade of
the twenty-first century.

Future trends
What does this herald for the future? It remains to be seen whether the trans-
formative revolutions in the post-communist regimes will lead to successful stable
liberal democracies. The central European post socialist states have moved to a
liberal variant of capitalism and integration into the European core which has
bound them irrevocably into the European Union. The data I have cited in this
paper show that there are very firmly seated levels of discontent with the economic
and political situation in all the post-socialist states. The economically hybrid and
more state-led countries forming the core of the Eurasian Economic Union (Russia,
Belarus, and Kazakhstan) face a real possibility that neo-liberal policies will ensure
a permanent state of retarded or one-sided development. Further liberalisation,
though advocated by some both internally and abroad, has diminishing political
appeal. But neo-liberal capitalism is less entrenched and the countries are less
integrated into the global political and economic systems than the NMS of the EU.
A possible scenario for the stability and redevelopment of Russia is a limited
market economy, a regulative state and cooperative economic institutions in which
management has an important place and in which ownership is in the hands of
interconnected state and private businesses and financial institutions. This kind
of state-led national capitalism might ensure accumulation. Not only would the
state directly channel economic rents earned from export-oriented industries such
as armaments, precious metals and energy resources, but also private and semi-
private companies would indirectly be financed through state institutions and
banks. A state-led development policy would involve support for space and nuclear
industries, computer software, arms production, aircraft. The private sector is
unable to provide the long-term finance required to develop these industries.
The key components of such a state led system would be:

• Driving forces: The State.

• Institutions: Stakeholders: industrial management, leading capitalists, political
elites, workers’ collectives.
• Culture: National, traditional.
• Solidarity: Social compact, welfare state.
• Ideology: Russia as a civilisation.
• International: Eurasia as part of a complementary/competing economic and
political bloc.

In a longer-term perspective, a movement away from markets mechanisms to

statism, legitimated by some form of Eurasianism, would no doubt be supported
by a large proportion of the population. In terms of crisis management, the options
which are likely are those derived not only from the legacy of socialism, but go
58 David Lane
back further to the cultural and economic patterns of pre-Soviet history. The prob-
lem here is that many of the ideological components of Eurasianism are backward
looking and are rooted in Orthodoxy which has little resonance with the younger
generation of citizens. Other alternatives might be found in what Ovsi Shkaratan
has referred to as a different form of Europe. Here forms of corporatism18 or
democratic socialism provide more modern alternatives. They would involve a
strong element of state control channelling the investment of state and private
companies on a regional basis. Here again the legacy of socialism is reconstituted
in a different economic and political form. The democratic gains of transformation
in the form of a pluralistic society would be preserved. For many, all these options
would be a more acceptable type of capitalism than what has arrived through the
transformation process.

Notes
1 This index considers government consumption as a proportion of total consumption,
the ratio of transfers and subsidies to GDP, the number, composition and share of
output by state-operated enterprises, government investment as a share of total
investment, the use of price controls, the rates of top marginal tax thresholds, duration
and use of military conscription, growth rate of money supply, level of inflation, access
to foreign currency bank accounts, exchange rate controls, risk of property confiscation,
risk of government cancelling contracts, revenue derived from taxes on international
trade, variation on tariff rates, share of trade sector covered by non-tariff restrictions,
size of the trade sector, percentage of bank deposits held in privately owned banks,
share of total domestic credit allocated to the private sector, determination of interest
rates by market forces, and access to country’s capital markets by foreign capital.
Summarized from Appendix 2, Explanatory Notes and Data Sources. EBRD, Transition
Report 1999 (EBRD: London 1999 p.24). In interpreting these data, one should note
that in some countries, privately owned companies may still have considerable state
ownership, especially in large-scale industry. For other indexes see also: Philip G.
Roeder (1999). “The Revolution of 1989: Post communism and the Social Sciences”,
Slavic Review, 58(4), 743–755.
2 Data for 2014 is derived from EBRD Table 5.7, which only has 6 indicators, unlike
the 9 in the other years. These cover enterprise restructuring and markets and trade,
and have been extrapolated for comparison with the earlier years. These data include
large- and smallscale privatisation, governance and enterprise restructuring, price
liberalisation, trade and foreign exchange, and competition policy.
3 Transition Report Update 1999. London: EBRD 1999, p.6.
4 Transition Report 1999. London: EBRD, 199, p.3.
5 EBRD, Transition Report 2009. www.ebrd.com/downloads/research/TR09.pdf, p.21
6 Human Development Report 2005. www.hdr.undp.org/reports/global/2005. (Reference
for 2005). In Reports after 2010 different measures have been used and the data are not
strictly comparable. Real income and life expectancy have been used, but in addition
education has two measures: mean years of schooling (the average number of years of
education received by people aged 25 and under, converted from educational attainment
levels using official duration of each level) and expected years of schooling (the
number of years of schooling that a child of school entrance age can expect to receive
if prevailing patterns of age specific enrolment rates persist throughout the child’s life).
In the following tables, the issues of Human Development Report for 2001 (referring
to the year 2000) were used. For 1992, Human Development Report 1991. Published
by Oxford University Press, New York and London, 1991.
 Divergent consequences of transformation 59
7 The top rankings were Estonia, Russia, Latvia, and Lithuania, followed by Turkmenistan
and Kazakhstan, just below the top four European republics, and the poorest republics
were Kirgizia, Uzbekistan, Tadzhikistan, Azerbaizhan and (bottom) Moldavia. Trud v
SSSR, Goskomstat SSSR, Moscow 1988 pp. 154–155. Collective farmers (peasants)
are excluded from these figures. This is because they derive income from collective
farms and individual plots. With the possible exception of Georgia, earnings in
agriculture were very much less than in industry and services; and social and economic
conditions were also very much inferior.
8 The lowest infant mortality was in Latvia, followed by Lithuania, Belorussia, Ukraine,
Estonia and Russia; at the other end of the list were Azerbaidzhan, Kazakhstan,
Kirgizia, Uzbekistan Tazhkikistan and (bottom) Turkmenistan. Data for 1987, Naselenie
SSSR 1988, Moscow: Goskomstat SSSR, 1989. Life expectancy, p.492; infant
mortality, pp.680–684.
9 In 1988, for the USSR, there were 53 per 10,000 inhabitants; in the Russian Federation,
there were 70 per 10,000; the respective numbers in Uzbekistan, Kazakhstan, Kirgizia,
Tadzhikistan and Turkistan were: 20, 25, 24, 18, 16. These figures include employees
with higher specialist education working in pure and applied research and higher level
teaching. Nauchnye kadry SSSR, Moscow: Mysl’ 1991, p.110. For retail trade turnover,
see Retail Trade Source: Narodnoe khozyaystvo SSSR 1985, p.466.
10 I have standardised the number of countries to coincide with those included in the
Human Development Report for 2003 (HDR 2005). I have added to the list 18 new
states (and excluded the USSR); the total number of states in the Report was 160 in
1990 and 177 in 2003. 187 in 2013.
11 The rank order of republics is from top to bottom: Latvia, Estonia, Russia, Lithuania,
Armenia, Ukraine, Georgia, Belarus, Kazakhstan, Azerbaidzhan, Turkmenistan,
Kirgiziya, Moldova, Uzbekistan, and Tadzhikistan.
12 This section draws on Chapter 17 in my book of 2014, The Capitalist Transformation
of State Socialism. London and New York: Routledge. Sources used are: Human
Development Reports for 2002 and 2005. Human Development Reports are published
annually for the United Nations Development Programme (UNDP). United Nations
Development Programme. New York: OUP, 2002. Similar title and publisher for 2005.
World Development Report 1996, NY: Oxford University Press, 1996, Table 5. Post-
2004 data taken from Human Development Report 2010, World Bank, 2010. Branko
Milanovic, Income, Inequality and Poverty during the Transition from Planned to
Market Economy. World Bank: Washington, D.C., 1998, p. 41. Data for 1987–1988.
For an overview and explanation, see T.F. Remington, The Politics of Inequality in
Russia. Cambridge: Cambridge University Press, 2011.
13 Vestnik obshchestvennogo mneniya, 34(77), May-June 2005, Table II, p. 73.
14 Vestnik, ibid., p. 87.
15 Shkaratan, O. (2007). The Russian Transformation: A New Form of Etacratism? In:
David Lane (Ed.) The Transformation of State Socialism. Palgrave: Basingstoke and
New York, pp. 143–158.
16 See Mason, D., “Attitudes toward the Market and Political Participation in the
Postcommunist States”, Slavic Review 54( 2), Summer 1995, esp. pp 388–390. These
conclusions are based on comprehensive interviews in the post-communist societies.
17 Weber, M. (1970). The Protestant Ethic and the Spirit of Capitalism. London: Unwin
Books, p.17. See also King, L. (2003). “Shock Privatization; The Effects of Rapid
Large-Scale Privatization on Enterprise Restructuring”, Politics and Society, 3(1):
3–30; Lane, D. (2002). Russian Banking, Northampton, MA: Edward Elgar.
18 By corporatist I mean the interaction of the most important stake-holders in society –
in particular, private and state business, central and local government institutions and
organised political groups, including labour. The importance of, and balance between,
these groupings changes between societies and over time.
60 David Lane
References
EBRD (1999). Transition Report. London: EBRD.
EBRD (2003). “Transition Report”. Available at: www.ebrd.com/downloads/research/
transition/TR09.pdf.
EBRD (2009). Transition Report. Available at: www.ebrd.com/downloads/research/
TR09.pdf.
Goskomstat SSSR (1988). Trud v SSSR. Moscow.
Goskomstat SSSR (1989). Naselenie SSSR. Moscow.
Human Development Report (1991), Available at: http://hdr.undp.org.
Human Development Report (1991). New York and London: Oxford University Press.
Human Development Report (1994). Available at: http://hdr.undp.org/sites/default/files/
reports/255/hdr_1994_en_complete_nostats.pdf.
Human Development Report (2001). Available at: www.hdr.undp.or/reports.
Human Development Report (2005). Available at: www.hdr.undp.org/reports/global/2005.
Human Development Report (2009). Available at: http://hdr.undp.org.
King, L. (2003). “Shock Privatization; The Effects of Rapid Large-Scale Privatization on
Enterprise Restructuring”. Politics and Society, 31(1), 3–30.
Lane, D. (2002). Russian Banking. Northampton, MA: Edward Elgar.
Mason, D. S. (1995). “Attitudes toward the Market and Political Participation in the Post-
communist States”. Slavic Review, 54(2).
Pew Global Attitudes Project (2009). Available at: www.pewglobal.org.
Roeder, P. G. (1999). “The Revolution of 1989: Post communism and the Social Sciences”.
Slavic Review, 58(4), 743–755.
Shkaratan, O. (2007). “The Russian Transformation: A New Form of Etacratism?” In:
David Lane (Ed.). The Transformation of State Socialism. Basingstoke and New York:
Palgrave.
Vestnik obshchestvennogo mneniya (2005), 34 (77).
Weber, M. (1970). The Protestant Ethic and the Spirit of Capitalism. London: Unwin
Books.
World Bank (2010). World Bank Development Report. Washington, D.C.: World Bank.
4 Divergent political-economic
trajectories
Russia, Ukraine, Belarus
Joachim Becker

It was the Russian, Ukrainian and Belorussian leaders of the respective Soviet
Republics that terminated the Soviet Union in 1991. The level of economic
development of these three key Soviet Republics reached a similar level in the
late 1980s. In the subsequent 25 years, their economic trajectories have diverged
significantly, however. This reflected even at a superficial comparative look at
GDP data. In 2009, the Belorussian GDP reached 161 per cent of the 1989 level
whereas in Russia it attained just 99 per cent of the 1989 GDP and in the case of
Ukraine was 41 per cent below the 1989 level (Myant and Drahokoupil 2011:
Table A2). It is the question how this starkly diverging performance can be
explained. For answering it, two elements seem to be crucial: the relationship of
the dominant class forces to the state and the development strategies that were
chosen (respectively the more or less complete absence of such a strategy).

Modes of development and modes of decline

For analysing the political-economic trajectories of Russia, Ukraine and Belarus,
the regulationist and dependency approaches seem to be suitable. These theoretical
approaches focus on patterns of economic development, put the development
trajectories of nation-states into the context of their position in the international
division of labour and analyse the economic and political sphere in their inte-
rconnectedness. Such dimensions have been neglected by mainstream “transition”
approaches applied to Eastern Europe. Instead, a normative path to “consolidated
democracy” and a fully-fledged “market economy” was mapped a yard-stick to
measure the progress of transition (cf. e.g. for critique Tomić 2011). Structural
features of the state and the capitalist economy of the Western core have been the
implicit reference of successful transition, often even in an idealised form that
does not take the economic and political crisis potential within the core into
account.
Both regulationist and dependency approaches see capitalist economies and
societies as being inherently beset by contradictions. The state and civil society
which are strongly interrelated are viewed as being crucial for dealing with those
contradictions and for temporarily containing them in such a way that periods of
(relative) economic and political stability and functioning capital accumulation
62 Joachim Becker
and economic growth are achieved. The notions for defining economic trajectories
in such periods show a clear bias towards growth – “regime of accumulation”
(Aglietta 1982), “growth regime” or “development model”. Such specific growth
constellations are, however, temporary and their stability is relative. Even in such
constellations, small economic crises which can be contained relatively easily
by economic policy counter-measures may occur (cf. Boyer 1987: 62 f., Boyer
2015: 81 ff.). Small crises might as well originate in the political sphere, e.g. in
the form of government crises (e.g. O’Donnell 1996: 53). In the case of “great
crises”, the crisis is multi-dimensional, e.g. economic and political. “Great crises”,
which are characterised by massive conflicts on the way out of the crisis and to
major changes in the economic structure, are the major turning points in econo-
mic trajectories. Thus, such a crisis is a crisis of the mode of domination and of
hegemony since the “ ‘normal’ forms of daily reproduction of the society are
disturbed” (O’Donnell 1996: 57). In the countries of the periphery and the partially
industrialised semi-periphery like the post-Soviet states, “great crises” of the core
economies have had a massive impact – both on the development model and on
the position in the international division of labour (Becker 1999). Crisis is in its
original understanding a point of decision between alternatives, like life and
death (medicine), defeat and victory (war) and law or lawlessness (Hudeček 2015:
62). In broader sense, these constellations can be interpreted as turning points. It
seems, however, not be a fitting term for prolonged periods of many years.
Differently from the editors of the volume, I prefer the term “instability” for
prolonged periods of recurrent smaller (and even occasional bigger) crises (Becker
2002: 200 ff.). The patterns of “instability” might be rather stable over prolonged
time periods.
Based on the past experience of the core countries, early regulationist econo-
mists developed the conception of a sequence of great crisis, (relatively) stable
development, great crisis . . . (Boyer 2015: 81 ff.). There is no inherent mechanism
that would guarantee a return to a relatively stable economic and political trajectory
after a “great crisis”. Indeed, prolonged periods of instability and recurrent
significant crises can be observed in countries of the periphery and semi-periphery
(Becker 2002: 200 ff.). In some of the post-socialist countries, instability
and recurrent economic and political crisis result in a tendency of economic and
social decline which is reflected in declining per capita incomes, increasing
poverty and phases of a lowering life expectancy. Notions like “growth regimes”
or “development models” are clearly not adequate for characterising such
trajectories since there is no development and recurrent and extended episodes of
recessions occur. Notions like “modes of decline” would be more fitting.
The first and basic question is whether economic activities and investment are
primarily geared towards the productive or the financial sphere. This is the
distinction between primarily productive or primarily financialised accumulation.
Regarding primarily productive accumulation, it has been industry that has
particularly caught most of the attention of the regulationist writers. Aglietta
(1982: 60 f.) has distinguished between primarily extensive accumulation based
 Divergent political-economic trajectories 63
on employing increasing numbers of workers and/or working time and primarily
intensive accumulation based on increasing labour productivity.
A typical structural feature of peripheral and semi-peripheral economies is
that sectors linked to ground rent tend to play a key role in accumulation. These
sectors do not only include extractive activities like mining and agriculture, but
also construction, real estate and tourism. They have in common that they enjoy
protection through differential rent which is location-specific (e.g. oil, gas or ore
deposits, agro-ecological conditions, location on the seaside or on river). The
existence of the differential rent allows to some extent to compensate lower
productivity (Becker and Weissenbacher 2015: 4 f.). And it is this feature that
renders specialisations in extractive activities, tourism and urbanisation-related
activities so attractive for the periphery and semi-periphery.
As Arrighi (1994) pointed out, capital turns towards financial investment when
productive accumulation slows down. In such a constellation of more limited pro-
ductive investment opportunities and a higher degree of uncertainty, capital looks
for flexible and new investment opportunities. Investments in the (semi-)periphery
tend to be more positively evaluated when there is a certain saturation in the core.
In addition, interest rates are higher in peripheral than in core countries, which
makes financial investments, at least in the financially more developed regions of
the periphery, particularly worthwhile. This form of financialisation is characterised
by relatively high interest rates and/or the rapid expansion of credits. The general
level of interest rates is high in the (semi-)periphery due to the higher perceived
risk. In turn, this makes them an attractive place for financial placements.
A specific feature of the (semi-)periphery, including post-Soviet countries, has
been that parts of the credits to domestic borrowers have denominated in foreign
currency (or at least been indexed to the exchange rate). Both banks and middle
class foreign exchange debtors display a clear preference for exchange rate stabil-
ity (or currency appreciation) in the case of high foreign exchange exposures.
Such a policy has detrimental effects on local production and stimulates imports.
The concomitant deterioration of the current account undermines the credibility
of the exchange rate policy over time. Partial dollarisation (or euroisation) renders
financialisation extremely vulnerable to crisis (Becker 2007).
It makes a crucial difference whether regimes of accumulation are inward-
looking, export-orientated or import-dependent. Import dependence in crucial
areas is characteristic of (semi-)peripheral or dominated economies (Beaud 1987:
100 ff.). Usually, dependence on key good imports, a recurrent deficit of the
current account and dependence on capital inflows go hand in hand. Dependence
on imported machinery implies that each growth spurt leads to rapidly increasing
imports and, at least in the short run, to a worsening trade balance. The availability
of foreign exchange is a key constraint in most (semi-)peripheral economies (cf.
Ercan 2006) and is an expression of the structural external dependence. It depends
on the historical conjuncture which type of dependence – technological and
machinery or foreign direct investment or external portfolio investment etc. – is
in the foreground.
64 Joachim Becker
Accumulation strategies depend on social and legal norms and state policies.
Dependency theory has highlighted the impact of external dependence on the
state (e.g. Cardoso and Faletto 1976, Evers 1977, Becker 2008). The degree
external interests and extraverted capital groups are able to condition norm-
making and state policy-making depends on the historical juncture. This is the key
issue of external state autonomy.
Though the capitalist state is institutionally separate from the economic sphere,
its degree of autonomy shows significant variation. Domestic capital in the
periphery tends to be more reliant on the state for protection against external com-
petition. This implies often a much closer relationship between state and (groups
of) capital. In the more extreme cases, this might take the form of oligarchies
where political and economic power are, to some extent, fused (cf. van der Pijl
2015: 51 ff.).

Transformation of the state and new capital

The political developments in Russia played a crucial role for the fate of the
Soviet Union. A significant section of the pro-privatisation forces viewed the All-
Union structures increasingly as an obstacle for its preferred transformation
strategy and questioned the continued existence of the Soviet Union (Jaitner
2014: 39 f.). After the coup attempt against the then Secretary General of the
Communist Party of the Soviet Union, Mihail Gorbačev, in August 1991, it
gained control of decisive commanding heights and pushed ahead the dissolution
of the USSR.

Russia
With the end of the Soviet Union, the Russian radical pro-privatisations forces
which were in line with the Washington Consensus overcome all political and
institutional obstacles to their political project. Their radical privatisation process
faced strong rejection both in the population and in parliament (Nekipelov 2012:
78). The parliamentary aimed at strengthening domestic production, domestic
entrepreneurs and softening the social impact of the crisis. In autumn 1993, the
conflict escalated and the Jelcin camp eliminated the parliament through the use
of military force. The new constitution centralised powers in the hands of the
President. The Jelcin regime established a “new authoritarianism” (Jaitner 2014:
92) in order to push through its radical transformation strategy which produced a
socio-economic collapse which lasted almost a decade.
The rationale of the Russian radical reformers behind privatisation was not
economic development, but to “ensure that the dismantled Soviet system would
never revive. Therefore, they pursued an objective of creating a new business elite
as quickly as possible at whatever the costs” (Dzarasov 2016: 399, cf. also Ivanter
2012: 48). The Russian government created a social force – a class of capitalists
closely linked to the regime – which was to turn into a solid pillar of Jelcin’s
political power.
 Divergent political-economic trajectories 65
Though privatisation had already begun in the final phase of the Soviet Union,
it gained only full swing after its demise. The core of the early Russian privatisation
policy lasting from 1992 to 1994 was the so-called voucher privatisation. Workers
were formally favoured by this privatisation policy, but it was usually mainly
the management that was able to take advantage of it. The few “insiders” that
were able to evaluate the value of the firm realistically stood to gain from the
voucher privatisation. Though the government sold this privatisation as a “people’s
privatisation”, it resulted in an advanced concentration of property (Jaitner 2014:
72 f.).
Another key element of “primitive accumulation” and privatisation in Russia
was the banking sector. Its reform started in 1988 still in the Soviet Union. The
state banking sector was re-organised, but increasingly the establishment of new
private banks was permitted as well. Banking policy in Russia rapidly assumed
a political dimension. As Myant and Drahokoupil (2011: 271) point out, “(t)he
Russian Central Bank created a deliberately relaxed regulatory environment so
as to encourage banks to break with the Soviet central bank and to recognise the
new Russian authority.” The new banks tended to be closely linked to companies
and provided desperately needed liquidity to them. The government encouraged
the formation of so-called financial industrial groups, i.e. conglomerates encom-
passing banks and non-financial enterprises. Given the collapse of the domestic
market, it was only export, i.e. raw material-based, sectors that looked promising
in the productive sphere. Media companies often complemented the portfolio
of the financial-industrial groups. The loans-for-shares programmes launched in
1995 permitted the banks to take over last chunks of profitable companies at
discount prices. The state provided lucrative shares at massively undervalued
prices as collateral for credits. In the case that the state would not pay in time, the
shares were to be transferred into the hand of the creditors. This was a key factor
in the emergence of an oligarchy very close to the Jelcin regime.
In 1998, the oligarchic structures were heavily shaken by the 1998 financial
crisis. It was in particularly the private banking sector and, thus, the core of many
of the big holdings that was mauled by the crisis. Capital groups with a strong
focus on raw materials were much more able to cope with the crisis (Macek
2015: 121). The financial crisis had immediate political consequences. The new
Prime Minister, Jevgenij Primakov, strengthened state regulation, in particular in
regard to external financial relations. Primakov was not able to institutionalise his
vision of a developmental state and his government was short-lived. Nevertheless,
the crisis made dominant forces rethink the role of the state. Vladimir Putin, who
was chosen as the successor to Jelcin, became the representative of the political
re-orientation towards a strengthening of the role of the state in the Russian
economy and of limiting the direct “seizure” of state structures by oligarchic
groups. Since Putin was much less orientated towards re-industrialisation and the
creation of a developmental state than Primakov, he was more acceptable for big
capital groups with a strong orientation towards raw material exports.
Putin who was closely linked to liberal technocrats and the security apparatus
changed the relationship between state and oligarchs. He reduced the influence of
66 Joachim Becker
individual big capital groups on state structures and increased the role of state in
the strategic gas and oil sector (Pirani 2010: 70). Thus, the autonomy of the state
vis-á-vis individual capital groups increased. Changing the state-oligarchy
relationship implied – limited though real – conflicts between the government and
those oligarchs who were not willing a redefining of the role. The emblematic
case was Mihail Chorodkovskij.
Nevertheless, big Russian capital – the oligarchic groups – has continued to be
key social and political force. In key sectors (raw material and finance), foreign
capital tends to be in a subordinate position vis-à-vis domestic capital. In 2011,
the asset share of foreign banks was only 17 per cent, the lowest among Eastern
European countries (IMF 2013, Table 1).
After the chaos and decline of the Jelcin years, the Putin/Medvedev governments
were able gain relatively broad acceptance by improving living standards through
high growth and the promise of stability. The recent crisis years have eroded this
legitimisation strategy. Instead nationalist mobilisation has come to the fore. In
the big metropoles, significant sections of the (upper) middle strata sympathise
with liberal opposition forces. The social and regional base of the splintered and
organisationally weak liberal opposition whose image is still tainted by the Jelcin
years is quite circumscribed. Though social organisations are usually not well
established, there have been instances of social mobilisation around social issues
in the past (Pirani 2010: 173 ff.). Those social protests have made the Putin
government ensure guaranteeing social minima even in the present severe
economic crisis (Prus-Wojciechowska 2016: 80) though health services have
been massively cut down and pensions have been increased less than in the past
(Marie 2016: 297 f.).

Ukraine
As in Russia, privatisation in Ukraine started in the late Soviet times. The Kučma
governments (1994–2004) aimed at establishing “a strong national class and to
restrict foreign ownership of strategic industries, the banking sector and the fuel
and energy complex” (Bojcun 2010: 154). Yurchenko (2012: 131) characterises
Ukrainian privatisation as “a combination of traditionally western methods of
accumulation, and extra-legal methods, i.e. bribery, personal networks, adminis-
trative restrictions and pressure, threats, racketeering etc.”
Sector key patterns of oligarchic enterprises emerged already during the
Kučma years. The concentration of oligarchic capital revolved and still revolves
around three commodity chains: “(1) coking coal – coke – sheet metal pipes; (2)
thermal coal – power – metal; (3) gas – metal – gas pipes; the last being the most
profitable” (Yurchenko 2012: 133). Thus, the basic business of Ukrainian oligarchs
is linked to raw materials. Compared to Russia, the raw material base is
significantly smaller and does not have gas and oil as its main pillar. Over
extended periods, the transit of gas was a particularly profitable business. The
raw material base of Ukrainian oligarchs is – as in Russia – an indication of the
(semi-)peripheral character of the economy. Due to the high degree of uncertainty,
 Divergent political-economic trajectories 67
the Ukrainian big capital groups are diversified holdings. Some of them include
financial institutions. The control of media is important for the oligarchs for
political reasons (cf. Matuszak 2012: 35 ff.).
Oligarchs are clustered on a regional basis – with a particular relevance for
the Doneck and the Dnipropetrovsk in the more heavily industrial central-Eastern
and Eastern regions (cf. Yurchenko 2012). In the most recent times, a third clan
– the Vinnica clan around present President Petro Porošenko – might be emerging
(Piechal 2016: 92).
Competition between oligarchic groups has translated into the formation of
competing political parties. Matuszak (2012) characterises Ukraine as an “oli-
garchic democracy”. Possibly, a competitive oligarchic party system would be
a more fitting characterisation since oligarchic control of the parties and the state
is so strong. Party competition has been to some extent constructed on regional
identities and differing nation concepts – one strongly ethno-nationalist, partially
with explicit references to the far right wing nationalist groups of the 1930s and
1940s in Western Ukraine and the other rather territorial and emphasising both
the Ukrainian and Russian elements in Eastern Ukraine (cf. Studenna-Skrukwa
2014: 77. ff., 89). Differing geopolitical orientations – pro-Western on the one
hand, multi-vectoral aiming at cordial relations both with EU/USA and Russia on
the hand – have also been part of party competition. The geo-political component
made party and oligarchic competition particularly explosive. Still political
conflicts should not be perceived as a pro-Western vs. East Ukrainian, multi-
vectoral bloc. Political alliances have had a conjunctural character and have been
shifted – at times in at first glance rather surprising ways – according to tactical
considerations.
In the context of US/EU-Russian geo-political competition, the mixture of
inter-oligarchic struggles and popular discontent with oligarchic rule and the
desolate social situation crystalised twice – 2004 and 2013/2014 – in massive
protest waves, political crisis and regime change. Protests against oligarchic rule
and authoritarian tendencies flamed up in Kučma’s second term in office.
Though these events were dubbed “orange revolution”, the results fell far short
of a revolution. Oligarchic rule remained in place, only the power relations among
oligarchic groups changed (cf. Segert 2015: 23). Even the Doneck capital which
was on the loser’s side was able to retain some important positions. In a realignment
of forces, Juščenko and his erstwhile competitor Janukovyč temporarily even
entered into cohabitation as president and prime minister. The geopolitical positions
shifted towards the US and the EU. Foreign capital benefitted more from the
accelerated privatisation than in the past. In particular, the role of foreign capital
in banking expanded. In 2011, foreign banks held 38 per cent of banking assets
(IMF 2013: 6, Figure 1, cf. also Bocjun 2010: 162 f.).
Winning presidential elections in 2010 Janukovyč managed to achieve at least
a minimal economic re-stabilisation. Differently from Kučma, Janukovyč was
unable to strike a balance between the different oligarchic forces and strived
to “control everything” (Duleba 2016: 47). Janukovyč was not only able deal with
the internal power balances, but destabilised also the external balances. His
68 Joachim Becker
government concluded the negotiations with the EU on an Association Agreement
which was not only to liberalise trade relations, but also includes the adoption of
a significant part of the EU acquis communautaire. Besides direct negative effects
on the Ukrainian economy, signing this treaty implied taking unequivocally sides
between the EU and Russia with both of them being of crucial economic
importance for Ukraine. Faced with the foreseeable negative impact on the already
very fragile economic situation and Russian pressures, Janukovyč backed away
in the almost literal last minute from signing the Agreement in autumn 2013
(Becker 2014a).
Like in 2004, power relations among oligarchic groups changed in the course
of the 2013/2014 protests, but oligarchic power remained in place. For the first
time, one of the largest oligarchs – Petro Porošenko – who had backed the Majdan
protests was elected as a president. Political activists made it on lists of the
new governing parties into parliament. However, even they admit the continued
strong oligarchic influence in their parties (Pogorzelski 2015). The dominant role
of oligarchs was confirmed in the local elections in autumn 2015 (Iwański 2016).
In the post-regime change conflicts with separatist forces enjoying backing from
Russia, the Dnipropetrovsk oligarch Ihor Kolomojskij financed para-military
forces with a strong far right-wing colouring. Thus, individual oligarchs have
eroded the state monopoly of means of coercion at least in an incipient way. In
the shift of power relations, heavy industrial capital seems to have lost influence,
whereas agro-industrial capital emerged strengthened (Konończuk 2015: 8).
Nevertheless, none of the main oligarchic groups has been dismantled in spite of
the heightened conflict.
Geopolitically, the Ukraine has shifted strongly towards the West. Still, conflicts
between the Ukrainian government and Western governments on implementing
the Western “reform agenda”, e.g. regarding the judiciary, have persisted. While
its “internal” autonomy vis-à-vis oligarchs is quite low, the Ukrainian government
seems to enjoy more external autonomy than it seems to be the case at a superficial
glance.

Belarus
Capital-state relations and state reform took a way in Belarus that has differed
fundamentally from both Russia and Ukraine. The inherited Soviet economic
Belorussian structures were different from Russia and Ukraine. Rather advanced
manufacturing, e.g. tractor and truck production, electronic equipment and
fertilisers, was located in the Belorussian SSR. Production was primarily geared
towards the Soviet market (cf. Neunhöffer 2001: 49 ff., Mironowicz 2007: 256
ff., 266 ff.). For the economic future of the country, the stabilisation of the manu-
facturing production and dampening the effects of disintegration of the Soviet
economic space were of crucial importance. Making a private fortune out of raw
material production like in Russia or out of gas transit or raw material-based
heavy industry like in Ukraine was out of question. A rapid international opening
 Divergent political-economic trajectories 69
up and a Russian-style “shock therapy” would have had foreseeably disastrous
consequences (Neunhöffer 2001: 101).
Therefore, dominant socio-political actors – the directors of state enterprises
and former cadres of the Communist Party – desisted from a sweeping privatisation
and opted for a gradualist transformation strategy and close economic relations
with Russia (cf. Neunhöffer 2001: 55 ff., 101 ff.). In the early 1990s, several
political parties and later presidential candidates emerged from these social forces.
Aleksandr Lukašenko as one representative of this broader camp won the 1994
presidential elections with a campaign focussing on socio-economic issues and
corruption.
Lukašenko proceeded very swiftly to consolidate and expand his (presidential)
power (Lallemand and Symaniec 2007: 50 ff.). Like in Russia, this implied
weakening and marginalising the parliament which initially was locus of (potential)
counter power. In his power strategy, Lukašenko ably mixed symbolical and
institutional policies. In the May 1995 referendum, he won wide approval for
giving an official status to the Russian language, re-introducing a modified version
of state symbols of the Belorussian SSR, seeking integration with Russia and
giving the president the power to dissolve the parliament (ibid.: 54 f.). While
systematically closing the political spaces for the opposition, the Lukašenko
regime has systematically strived to build its legitimacy through offering economic
stability and social security. External policies have been put into the service of
development and social stabilisation seeking to assure access to external funds
and to maintain domestic policy spaces. In view of this perspective, the Lukašenko
governments have delicately balanced strategic cooperation with Russia with
tactical rapprochements with the West (cf. Eberhardt 2008; Potocki 2016;
Wierzbowska-Miazga 2013). The liberal opposition which is under massive state
pressure has not found minimally convincing answers to Lukašenko’s
legitimisation strategy.
The socio-economic bloc behind the Lukašenko regime has opted for only
limited privatisation. Manufacturing that is still at the core of the Belorussian
economy is still predominantly in the hands of the state. State-owned enterprises
still account for two thirds of the enterprises (Triebe 2016: 18). The state retained
a system of guiding state enterprises, including price regulations and (expansion-
ary) wage targets and has followed, particularly in recent years, a pro-active state
investment policy (cf. Romanchuk 2009: 59 ff., Miksjuk et al. 2015, 6 ff.). The
relationship between state agencies and the directors are not free from tensions
and conflicts (Neunhöffer 2001: 108 ff., Romanchuk 2009: 73 ff.). The context of
those conflicts is, however, a pro-developmental approach which is completely
lacking in Ukraine and hardly developed in Russia.
The private domestic sector is of limited importance in Belarus. The govern-
ment has sought selectively foreign direct investment. There has been some
FDI in export manufacturing (cf. Katibnikov 2009: 52; Neunhöffer 2001: 73 ff.;
Wierzbowska-Miazga 2013: 18). In the years before the global financial crisis,
several foreign banks – both from Russia and Western Europe – entered the
70 Joachim Becker
Belorussian banking sector controlling 34 per cent of banking assets in 2011 (IMF
2013: 6, figure 1). In the wake of the global financial crisis, Russian influence in
the Belorussian economy has grown. In particular, Russian Gazprom could acquire
100 per cent of the shares of Beltransgaz which is the key company of
the Belorussian gas infrastructure (Wierzbowska-Miazga 2013: 19). Thus, the
influence of foreign capital, particularly Russian capital, has increased in recent
years. Nevertheless, the Belorussian economy still has a strongly etatist character.
A sort of “state class” continues to be at the core of the dominant bloc in Belarus.
However, the crisis since 2008 tends to erode its position and the pressures for
accelerated privatisation – particularly the external ones – might increase in the
not too distant future.
As with Russia and Ukraine, the Belorussian state enjoys a substantial “external”
autonomy. Its relation to the domestic bourgeoisie is, however, very different.
Contrary to Russia and Ukraine with their at least partially extractivist economies,
directors of state companies and technocrats in Belarus with its primarily industrial
economy have desisted from fomenting the emergence of oligarchs. At the core
of the Belorussian dominant bloc is the – industrial – state bourgeoisie and its
state might be characterised as a development state – presently the only of its kind
in Europe.

Economic trajectories from crisis to crisis

Russia
In Russia, the recession was long and very pronounced. With the exception of
1997, the GDP declined in all years between 1990 and 1998. In 1998, the Russian
GDP only reached 55.8 per cent of the 1989 level. Industrial production,
particularly in the technologically more advanced sub-sectors, fared even worse.
In 1998, industrial production was reduced to 43.4 per cent of its 1989 level.
Exports were the only bright spot showing an increase. Mirroring the social
disaster, live expectancy declined by 4.3 years between 1989 and 1998 (Dzarasov
2014: 75). This economic evolution is closer to collapse than to crisis.
The shock therapy adopted by the Jelcin government resulted in lasting monetary
instability – first in extremely high inflation, later in the lack of liquidity, bartering
and the disorganisation of payment and supply chains. Extremely restrictive
monetary policies – accompanied by a valorisation of the rouble which penalised
domestic production additionally – and restrictive fiscal policies, temporarily
having the form of the state simply not paying its bills and employees, followed.
According to estimates, about 70 per cent of the inter-enterprise transactions were
realised without recourse to money at the height of the phenomenon (Ivanter
2012: 93, cf. also Kouvaline 2012: 136 ff., Sapir 2012: 190 ff.). Supply and
payment chains were disrupted. In view of the disorganisation of the domestic
economy, the export sector was relatively privileged. The orientation towards raw
material exports of the Russian economy was rather accentuated in the decade of
economic collapse. Banking was the second privileged sector. It was favoured by
 Divergent political-economic trajectories 71
the exchange-rate anchored and high interest-based anti-inflationary stabilisation
policy which corresponded to the then IMF doctrine. High interest rates,
particularly on state bonds, provided high revenues to banks which refinanced
themselves abroad.
In 1998, this stabilisation policy ran into serious trouble. The IMF announced
a 22.7 bn US$ rescue package in July 1998, but in August the Russian state
defaulted and permitted the rouble to depreciate (Pirani 2010: 45). Strong currency
devaluation ensued. The 1998 financial crisis forced a short opening onto the
oligarch order of the Jelcin years. In his brief period as Prime Minister one of
Primakov´s major achievements was to restore the payment chains of the state.
From 1999 to 2008, the Russian economy recovered. The annual GDP growth
rate was a bit above 6 per cent (Ivanter 2012: 56). In 2008, the GDP reached 108
per cent of the 1989 level (Myant and Drahokoupil 2011: Table A2). High oil and
gas prices ballooned export revenues. The initial currency depreciation was
favourable for exporters as well. More importantly, it provided a sort of protection
for industries producing for the domestic market. Gradually recovering wages
sustained domestic demand. From 2005 to 2007, booming household credits
fuelled middle class consumption (Pirani 2010: 91). Russian banks refinanced
their external activities massively externally. The foreign debt of Russian
companies increased massively as well between 2002 and 2007 (ibid.: 98). Thus,
external vulnerabilities in the financial system persisted in spite of an enormous
current account surplus and a certain re-ordering of the banking sector. The boom
rested, however, not on an investment boom (cf. Sapir 2012: 210, Table 4).
Machinery was insufficiently renewed (cf. Dzarasov 2014: 204). Steps towards
an industrial policy were taken, but were of limited scope (cf. Durand 2007,
Jaitner 2015: 521). Accumulation of the boom years was based on raw material
exports and financialisation.
The global crisis of 2008 and the following years laid bare the vulnerabilities
of this regime of accumulation. The refinancing of the Russian financial sector
was massively affected by the international financial turbulence. Declining
commodity prices affected exports. The external effects spilled over into the
domestic economy. The Russian GDP suffered from a 7.8 per cent decline in
2009. The Russian government used the resources accumulated in the boom years
primarily for stabilising the banking sector. The counter-cyclical stimulus for
production was rather paltry (cf. Becker and Dziwulska 2010: 32 f.; Ivanter 2012:
108 ff.; Pirani 2010: 99 ff.).
Temporarily recovering oil and gas prices and the related financial distension
permitted a rather strong recovery in 2010 and 2011. However, under the effect
of a strong decline of oil and gas prices plus the effects of the sanctions imposed
by Western countries because of the Ukraine conflict, the Russian economy has
recorded stagnation in 2014 and recession in 2015. The currency depreciated
again – and the government launched a support programme for the banking sector.
It adopted fiscal austerity though re-allocating funds to some priority areas,
including the manufacturing sector and social payments (Stepanyan et al. 2015:
8 f.). Since the beginning of the global crisis and the imposition of sanctions, the
72 Joachim Becker
debate on the need to strengthen manufacturing has been revived and assumed a
new urgency (Jainter 2015: 523 ff.). One of industrial sectors viewed as a potential
“growth locomotive” has been arms production (Primakov 2015: 84 ff.). Consumer
goods industries are presently affected by low demand due to the crisis, but the
rouble depreciation provides at least some protection for them. The Eurasian
Economic Union is at least a suitable integration project for re-industrialisation,
though one with a limited scope. A key question is, however, in how far the big
capital groups in the raw material sector would acquiesce to a pro-industrial turn.

Ukraine
Ukraine suffered from the most prolonged, though not deepest fall of the GDP
among the post-Soviet states. The decline lasted for 10 years. The accumulated
fall of the production added up to 59 per cent. In 1999, the Ukrainian GDP
reached barely 41 per cent of the 1990 level (Lukianenko 2009: 304, Table 34).
Concomitantly with the economic decline, the social situation worsened
considerably. Vast sectors of the population relied heavily on agricultural self-
subsistence production for food needs in the mid-1990s.
The 1998 crisis in Russia had effects on Ukraine as well. The national currency
(hryvnia) was devaluated which, in the end, had a beneficial effect on exports.
The accumulation regime of the years 2000–2008 was based on (resource-based)
export and financialisation. It is the strong role of metals in exports and their
crucial role in the accumulation model that has given the Doneck oligarchs a
relatively strong hand in the inter-oligarchic conflicts. Though the Kučma
government wanted to channel export proceeds into the technologically more
advanced branches (Bojcun 2011: 154), the already weak technological profile
continued to deteriorate (Chuzhykov et al. 2009: 322 ff.). Increasing wages – after
a 71.2 per cent fall in real terms between 1991 and 1999 (Chuzhykov et al. 2009:
325) – and consumer credits stimulated production for the domestic market as
well. As in Russia, industrial recovery was not based on a renewal of machinery.
To a large extent, production increases relied on the re-activation of idle machinery
(ibid.: 320 f.). High growth and an increasingly overvalued currency led to a
rapidly deteriorating balance of the current account. In 2008, when the global
crisis rapidly spread, the Ukrainian current account deficit already reached 7.1 per
cent of the GDP (Myant and Drahokoupil 2011: Table A13).
The deteriorated current account proved to be particularly fatal due to basic
characteristics of financialisation in Ukraine. From 2003 to 2008, in the “pro-
Western” Juščenko years, credit growth in Ukraine was among the highest in the
region (IMF 2013: 8 f.). Credits outstripped deposits massively by the ratio two
to one in 2009 (Myant and Drahokoupil 2011: 309, Tab. 16.2). Thus, the increas-
ingly foreign-owned banks relied heavily on external refinancing and pushed
foreign exchange loans. In 2008, they had a share of 59.1 per cent in the total of
loans – almost the double of Russia and Belarus (ibid. 319, Table 17.3).
The Janukovyč government enlisted foreign policies in order to increase his space
for manoeuvre resulting in an agreement with Russia on the Russian military bases
 Divergent political-economic trajectories 73
in Crimea in exchange for substantial funds. At the same time, the government
continued the negotiations with the EU on an Association Agreement. The Russian
government wanted to include Ukraine in the Eurasian Economic Union. The
“mutually exclusive” (Sadowski 2013: 29) projects had economic and fatal geo-
political consequences. The EU Accession Agreement was rather promising for
agro-based industries than for the heavy industries (Kościnski and Worobiow
2013: 1 f.). For heavy industry and particularly for the technologically more
advanced industries, closer integration with Russia held potential promises. The
oligarchs of the heavy industry had reservations towards the Russian option since
they would have been confronted with the stronger Russian capital groups
(Lukierska 2014: 248).
The combination of domestic tensions and geo-political competition triggered
of first massive social protests and the deposition of the Janukovyč government,
then secessionist movements which have enjoyed support from Russia. The
ensuing conflicts sent the Ukrainian economy back into severe recession – 6.6 per
cent in 2014 and 9.9 per cent in 2015 (IMF 2016: 51) with both exports and
domestic demand plummeting. One of the main industrial and mining regions –
the Donbass area – has been directly hit by military conflict. Economic relations
with Russia are massively affected by the conflict. Industrial production plum-
meted. Technologically relatively developed industrial complexes that were geared
primarily to the Russian market (like plane, missile and car factory) have been
particularly strongly affected. Attempts to stabilise the crisis-ridden banking
sector entailed closing down 53 out of 180 banks by June 2015. This seems to
have led to massive losses for small depositors (Sakwa 2016: 267). Due to the
extremely tight external balances, the new Ukrainian government had to conclude
an agreement with the IMF including controversial issues between Kiev and the
IMF. Whereas energy prices were drastically increased to phasing out subsidies
with drastic social consequences, the partial privatisation of the Ukrainian gas
network Naftogaz encountered resistances (Becker 2014a: 81). Western “reform”
proposals continue to be diluted and sidestepped so that oligarchic control on key
parts of the economy and of the state apparatus is assured (cf. Lautenbach 2016: 3).
The Association Agreement which was signed after Janukovyč had been toppled,
however, will entail consequences for Ukraine’s external economic relations and
economic structures. Its trade liberalisation is likely to set the Ukrainian economy
even firmer on the way to reprimarisation.

Belarus
In Belarus, the transformational recession was quite profound. However, it lasted
“only” six years – shorter than in Russia and Ukraine – with an accumulated
35 per cent decline of the GDP (Lukanienko 2009: 304, Table 34).
The power bloc behind Lukašenko tried to get institutions and the economy
back on track through re-establishing state control and adopting a very gradualist
transformation strategy. Former planning institutions were replaced by centralised
economic coordination mechanisms which formulated indicators and incentives
74 Joachim Becker
focusing on the substantial state sector. This included state influence on price and
wage formation (Romanczuk 2009: 59 ff.). After the transformational recession,
wage policies were explicitly expansionary. In the 2000s, consumer demand was
stimulated as well through increased consumer credits, though not to the same
extent as in Ukraine (cf. Zaiko 2009: 30 ff.). The conscious demand-side policies
were extremely exceptional for the region. They had both an economic rationality
– creating domestic demand for inward-looking industries – and a political
rationality – building consent for the regime. They were complemented by a state-
led investment policy, particularly after the year 2000. “Gross fixed investments
nearly doubled between 2000 and 2006 though they presumably have not reached
the levels of the early 1990s yet”, observes Havlik (2009: 204). The investment
ratio reached about 30 per cent, which was considerably higher than in Russia or
Ukraine. For Zaiko (2009: 33), the Belorussian policy had a Keynesian character,
however, inserted into a strong developmental perspective. Therefore, the notion
of “developmental Keynesian” – a term used by Schmalz (2008) for Brazil of the
Lula years – seems to be more adequate. The Belorussian government attributed
less of a priority to reducing the rate of inflation than the Russian and Ukrainian
governments. In the year 2000, the Belorussian rate of inflation was still 168.6 per
cent – compared with 20.8 per cent in Russia and 28.2 per cent in Ukraine
(Kosiedowski 2013: 82).
Between 2001 and 2008, Belarus recorded GDP growth rate of more than eight
per cent (Miksjuk et al. 2015: 6). The pro-investment policies had a favourable
effect on productivity growth as well. The Belorussian development model,
however, suffered from a crucial weakness: the increasing current account deficit
(Romanczuk 2009: 80 ff., Złotnikow 2011: 69 ff.). This can be partly attributed
to the high investment levels and expanding domestic consumption. Exports –
more elaborate and fairly diversified to the post-Soviet space, more basic to the
West (Havlik 2009: 210 f.) – did not keep pace with imports though relatively low
Russian gas import prices (Kosiedowski 2013: 90 f.) attenuated the problems until
2006 on the import side. Maintaining a nominally stable exchange rate in the
context of a higher rate of inflation than most trading partners implied currency
appreciation in real terms, which favoured imports. In 2008, the current account
deficit already reached critical 8.4 per cent of the GDP (Myant and Drahokoupil
2011: Table A 13) and was financed by increasing recourse to external credits.
Since of the global crisis in 2008, the Belorussian development model has been
destabilised. Exports were negatively affected and it became more difficult to
finance the current account deficit. Nevertheless, Belarus was one of the very few
European countries to escape (narrowly) recession in 2009 (Kosiedowski 2013:
77). The Belorussian government concluded an agreement with IMF whose
conditionality was relatively mild. This leniency might be explained by the desire
of Western countries to get Belarus to maintain a distance from Russia (Becker
2014b: 26). However, the Lukašenko government received support from Russia
as well which came at the price of increased Russian economic influence in
Belarus (Wierzbowska-Miazga 2013). In view of the key importance of exports
to Russia, Belarus joined the Eurasian Economic Union.
 Divergent political-economic trajectories 75
The external policy spaces permitted the Lukašenko government to adopt a
mixture of orthodox and heterodox elements (including a mild form of capital
controls) in order to deal with the crisis. It has not been able, however, to continue
its developmental Keynesianism as before. The pro-active investment policies
have run repeatedly into the current account constraint. The government attempted
to combine high investment and accelerating growth with a nominal stable
exchange rate – i.e. in real terms appreciating exchange rate. This did not prove
viable. The current account deficit rapidly widened and the currency had to be
substantially devaluated in 2009, 2011 and 2014 (Miksjuk et al. 2015: 7). Devalu-
ation and deceleration of growth permitted redressing the current account
deficit. The strong increase of the external debt came to a halt in 2012 (Tymanowski
2017: 166). The recession of Russia since the end of 2014 has aggravated the
Belorussian problems. In 2015, the Belorussian economy recorded a recession –
a 3.9 per cent decline of the GDP – for the first time in 20 years. The govern-
ment tries to attenuate the social consequences of the present crisis (Triebe
2016: 18).

Conclusions
In all three countries, the post-Soviet state has preserved a significant degree of
external autonomy. The negotiating power and the capacity of limited conflicts
with international financial institutions are an indicator of this. The degree of state
autonomy vis-à-vis the dominant capital forces, however, varies significantly
among the three countries. This variation impacts on the economic trajectories of
Russia, Ukraine and Belarus.
The Ukrainian state has the least degree of autonomy vis-à-vis the big domestic
capital groups. The Ukrainian oligarchs have entered into open political com-
petition. The political parties are controlled by oligarchs and serve as a transmission
belt into top positions of the state administration. A mixture of exacerbated inter-
oligarchical political competition, geo-political rivalry between the EU/US
and Russia, massive social discontent and deep resentment against oligarchic has
alimented two big protest waves – 2004 and 2013/14. Both waves resulted in a
change of government and, at least temporarily, the geo-political orientation of the
country, but not the weakening of oligarchic rule. It was only the power positions
among oligarchs that changed. Thus, the political trajectory of Ukraine has been
characterised by recurrent deep political crises that, however, have only led to
reproduction of basic features of the oligarchic order and continued political
instability.
In Ukraine, capitalism has proved to be a developmental failure. Sakwa (2016:
265) points out that “(a)ccording to the World Bank, in its 24 years of independence
(1991–2014) Ukraine’s GDP decreased by 35 per cent. This is absolutely the
worst performance in the world and surpasses the fall in Moldova (–29 per
cent), Georgia (–15.4 per cent), Zimbabwe (–2.3 per cent) and the Central African
Republic (–0.94 per cent).” It is remarkable how many post-Soviet states – with
similar “pluralist” oligarchic rule – are among the worst economic performers.
76 Joachim Becker
Their trajectory can only be characterised as a long-term (socio-)economic decline
beset by recurrent crises.
In Russia, the imbrication between state and the emerging oligarchs was
extremely close during the Jelcin years. After the 1998 financial crisis, steps
towards a larger degree of state autonomy were undertaken. The big domestic
capital groups have continued to be a key reference for economic policy making,
however, their more overt political role has been clipped. The key domestic
capital groups are engaged in activities linked to the raw material sector. In so far,
they are more homogeneous than their Ukrainian counterparts. With a more
autonomous and consolidated state and higher export revenues, Russian recovery
after the transformation and then the 1998 crisis was stronger than in Ukraine.
However, the heavy reliance on energy exports and the strong external refinancing
of Russian banks proved to Achilles heels of the growth model of the recovery.
The present Russian development model based on energy exports which has a
more peripheral character than the Soviet development models is highly sensitive
to the ups and downs of the raw material prices and, thus, prone to recurrent crises.
A debate on the need of diversifying the economy and strengthening the
manufacturing sector that had already begun during the 2000’s recovery has
gained new impetus. However, it is an open question in how far the big capital
groups in the raw materials export sector will permit a change in the development
strategy.
In the Belorussian late Soviet economy, manufacturing was more crucial than
in Russia or Ukraine. The directors of the state enterprises gave higher priority to
preserving as far as possible the manufacturing base to sweeping privatisation.
It was a state bourgeoisie with a broader development perspective that emerged,
not an oligarchy as in Russia and Ukraine. The transformed Belorussian state
can be characterised as a developmental state with authoritarian traits. It has been
the only of the three states that has pursued a pro-active development strategy.
The Belorussian state launched a state investment strategy and nurtured – at least
over many years – domestic demand through increasing wages. The exchange rate
policies which have boiled down to real currency appreciation have, however, not
been well suited to the development strategy. They have led to increasing deficits
of the current account and since the 2008 global crisis to repeated exchange rate
crises. It is obvious that the pre-global crisis development strategy cannot be
continued in the present circumstances. The recent economic instability erodes
the legitimisation strategy of the Lukašenko government which is based on growth,
improving living standards and stability. In spite of its limitations, the Belorussian
development trajectory has been the most successful of the three countries.

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Part II

Crises of belonging
5 Creating the history of the future
Russian historical memory in the
era of the Ukrainian crisis
Victor Apryshchenko

Orientation to the past: subject and methodology

The end of August 2016 is remembered for a few changes among Russian federal
ministers. Probably the most important replacement as far as the Russian public
was concerned was that of the Russian Minister of Education and Science. Dmitry
Livanov, a physician, who had been the Minister since May 2012, was replaced
by historian Olga Vasil’eva. Although universally unpopular among Russian
university professors and academics from the Russian Academy of Science, the
previous Minister, from the very beginning of his duties, was believed to be one
of the very ‘westernised’ officials who would promote the integration of Russian
academia into world academic trends. Unlike her predecessor, the new Minister
became famous because of her discourse on patriotism, something which she
emphasises in all her speeches. In her lecture “The shaping of the national idea in
Russia”, which was presented on 29 June 2016, she criticised the lack of a state
patriotic education and called for a new concept of state patriotism (Vasil’eva
2016). Russian liberals widely discussed her lectures about patriotism which were
held in November 2013, where she pointed to the role of Stalin in Soviet history,
arguing that he unified the nation and used propaganda to promote the Russian
language and literature and that this contributed to the victory in the Great Patriotic
War.
In this paper, I am going to analyse the intensification of history wars in Russia.
Unlike many contemporary academics pointing out history wars between Russia
and its neighbours, my main argument is that Russia is conflicting not with its
neighbours but rather with its own past and its own future. The main objective of
this chapter is to explore how the collective memories of contemporary Russia
and their historical interpretations relate to concepts of national identity in the
post-Soviet lands. I will conclude with exploring possible ways of reconciling
national memories and historical narratives which include not only an idea of the
past but also an idea of the future.
The discourse of patriotism and nationalism is one of the most important in
contemporary Russian public consciousness. It has been used in different public
spheres, but education has always been expected to be the most essential instrument
for the propaganda of patriotic ideas. Moreover, to educate about patriotism in the
84 Victor Apryshchenko
Russian context means to educate about having pride in the past. Thus, patriotism
is directly connected with attitudes to the past and collective memory. The rela-
tionship between past, present and future has always been essential in defining
Russian identity. The political transformation and search for cultural identity in
contemporary Russia is accompanied by wars of competing memories – a process
that has been drawn on in the different types of conflict which have been going
on between Ukraine and Russia over at least the last few years. One striking
feature of the contemporary situation is that weaponising information has been
actively used in elaborating the process of Russian historical memory in terms of
challenging western narratives of the conflict in Ukraine.
Theories, collective memory, trauma and nostalgia are the theoretical foundation
of this chapter. In the 1950s, French economist Maurice Félix Charles Allais
introduced a theory where the image of the future and popular explications are
caused by the degree of people’s parting with the past (Allais 1953: 47–73). It
was during the same period that the theory of collective memory by French
sociologist Maurice Halbwachs was starting to influence European intellectual
imaginations about the past. Historical memory is understood here as a collective
cultural phenomenon which consists of individual and group images of the past
and develops in a particular social context. Historical memory, as it was considered
in contemporary memory studies, is a source and result at the same time as
collective identity (Halbwachs 2007a). Since any identity is a product of ‘self’ /
‘other’ opposition in synchronic or diachronic terms, to keep and reproduce
memory is one of the ways in which one can securitise identity. Halbwachs’ main
work, somewhat neglected in the middle of the last century, resurfaced, and has
now been at the centre of memory-studies since the 1980s. This period corresponds
with the development of critical security studies that inspired considerable research
into special cases such as the Holocaust, Gulag etc. Halbwachs offered the concept
of ‘collective memory’ as a social phenomenon which is required by any society.
When recognising this, he considered collective memory to be a basis for social
identity. Thus, social context was seen as a substantial part of the constructing
mechanism of memory (Halbwachs 2005: 8). Moreover, he argued that memory
can survive only because it leans for support on a social context, and collective
memory will disappear without the support of a social group (Halbwachs 1925:
143–145). Halbwachs also demonstrated how collective memory can produce the
frameworks for remembering and mnemonic discourses, so-called ‘cadres sociaux’,
where individual remembrances are situated. The ideas of Halbwachs started to
have an influence on young psychology scientists in the 1930s. Frederic Bartlett
(1932) pointed out how social factors have been connected with all types of
human psychological activity, including memory. However, Halbwachs conception
was forgotten for a few decades and only the 1950s brought a new wave of
interest in memory research.
Importantly, historical memory correlates with nation-building since certain
elements, perceived as important, are selected for the construction of the image
of the past. Benedict Anderson in his initial monograph has pointed out the con-
 Creating the history of the future 85
nection between nation-building and memory. From the methodological point of
view, I argue that historical memory has been one of the key elements of the
nation-building process which is full of conflicts in any historical context. When
mentioning ‘conflict’ I tend to consider it in its widest meaning – taking into
account hard conflict, as part of hard security strategies, including military opera-
tions, and European history, which, especially in the Modern period, demonstrates
a huge number of contradictions in Eastern and central Europe. Furthermore, it is
important to consider conflict in soft terms also. Conflicts of memory, which are
sometimes labelled ‘wars of memories’ by Pierre Nora in his seminal monograph,
have often been regarded as one of the forms of soft conflicts.
Pierre Nora also pointed out ‘lieux de mémoire’ – places where memory is
concentrated in a lot of symbols and forms and crystallised in special ceremonies.
Such places exist, he argues, only because there is no more memory among social
groups (Nora et al. 1978). He shares the idea of Halbwachs that collective memory
has a spontaneous and dynamic nature, and it is as open to new memories as it is
to oblivion. The process of altering memories is becoming the subject of
manipulation and appropriation (Nora 1989: 8). As Bernard Lewis wrote, some
events of the past can be re-constructed in the memory (Lewis 1975). At the same
time, this process of the ‘new appearance’ of the past can result in the oblivion of
other pages of history. Thus, memory and oblivion may be considered as two
sides of the same process. Finally, memory has always been accompanied not only
by oblivion, but also by so-called counter-memory, which was characterised by
Michel Foucault as opposite and fragmented (Foucault 1977). It is important to say
that counter-memory is able to deal not only with one separate event but often with
the image of the whole epoch. Especially, it is important for periods of social and
political change when one set of ideological frameworks is changed for another.
The particular form of memory wars is connected to nation-building when the
opposing sides aim to appropriate the past and connect it to particular meanings.
Moreover, historical memory can be considered as a fruitful space for histori-
cal myth-creating by means of professional historiography and popular historical
imaginations. Furthermore, subverting one’s past has been a consistent element
of historical imaginations. To write a national history always means to forget,
alter or even subvert the history of others – and your own as well. This is a process
that might be exaggerated in troubled historical periods such as the contempor-
ary Ukrainian situation. Thus, the context of historical memory is influenced by
political context.
The mythologisation of history is connected with a crisis of historical conscious-
ness. According to Jörn Rüsen, the crisis is a result of a clash between historical
consciousness and real experience which does not correspond with everyday
practice. At the same time, this collision produces not only a crisis of historical
imagination, but also an identity crisis (Rüsen 1993). The main way to overcome
the crisis is to construct a new historical narrative which will integrate separate
historical facts and explain the contemporary situation. Thus, contemporaneity is
provided with new meanings through new historical narratives.
86 Victor Apryshchenko
This chapter has not dealt with political and legal evidence, rather it has
examined how memory has been used in discussions about the political future and
how discourse on security has been utilised in memorial debates. As Jeffry Olick
and Joyce Robbins have mentioned, collective memory is not a thing, and we
should rather study different sets of mnemonic practices in various socials sites
(Olick and Robbins 1998: 112). In this chapter I am going to stress specific sets
of mnemonic practices in their connection with the securitisation process in
contemporary Russia as a reaction to the collapse of the Soviet Union. To realise
this goal, it is important to distinguish between collective memory and the politics
of memory or ‘Geschichtspolitik’. This originated from the German post-War
context and has been elaborated in a number of pieces of research (Frei 1996;
Wolfrum 1999). The former is connected with the Theodor Adorno concept of
‘re-working of the past’ (‘Aufarbeitung der Vergangenheit’). He had argued that
memory has to resist oblivion and that German Democracy should make a special
effort to conserve the tragedies of the past in popular consciousness (Adorno
1977). While the politics of history aims to form a particular image of the past,
historical memory may be considered a result of such kinds of efforts. Collective
and historical memory consists of popular imaginations of the past which are
embodied in the images of particular historical events and the popular evolution
of historical facts and processes.
As Tony Judt (1992: 99) argued, there is “too much memory, too many pasts
on which people can draw” in Eastern Europe. To conduct critical research into
collective memory means dealing with the narratives available to the public,
paying attention to particular political texts such as political programmes, the
speeches of members of the elite, etc. This research deals with narratives which
include both individual texts, such as interviews and commentaries, and texts
which express popular attitudes to the past. Historical exhibitions and their
evaluation by the public as well as visual and discursive symbols of the past are
significantly important among these. Much of these texts are reflected in the
trauma of the past and that is why they attract particular research interest for this
chapter.
Based on the methodology of Critical Discourse Analysis, it is crucially
important not only to sample information about the context of the texts (social,
political, psychological, etc.). It is even more productive to consider all texts as
co-texts, and thus apply analytical categories i.e. ‘collective memory’ and
‘patriotism’ sequentially on the text while using theoretical approaches to interpret
the meanings resulting from the research questions. This approach will open
perspective of extensive interpretation while returning to the question of the
operational character of collective memory in contemporary Russia and to the
problem of memory-trauma interplaying. As Michael Bernhard and Jan Kubik
demonstrated, most of the historical traumas in post-socialist Europe were
overcome in the process of the shaping of new memories (Bernhard et al. 2014).
The theory of cultural trauma (Alexander et al. 2004) is the main methodological
approach for research in the formation of a Russian historical identity. The
‘trauma’ here refers to the collapse of the Soviet Union and the reintegration of
 Creating the history of the future 87
previous links between the former Soviet republics, not as an institution or even
experience, but as a collective memory, a form of remembrance that is grounded
in the identity-formation of people. The dissolution of the Soviet Union, as it is
demonstrated in the Introduction of this volume, resulted in a number of attempts
to manage the crises and intersecting the crises phenomena. If so, the intersect-
ing of crises management should be considered as the outcome of the complication
of uncertainty.
Collective memory is to be operationalised as a response for crisis-prone
development. Authoritarian tendencies in some of the former Soviet states have
not only been a reaction to the political transformation and change of elites. In
some sense, authoritarianism can be understood as a way of dealing with the
trauma. There is a difference between trauma as it affects individuals and when,
as a cultural process, it influences social groups. As a cultural process, trauma is
mediated through various forms of representation and linked to the configuration
of collective identity and the reworking of collective memory. Based on an
emerging understanding of the storage and retrieval of memory we have windows
of opportunity for altering the closure or erasure of fearful memories in society.
The traumatic experience of transition from one type of society to another
can cause a mnemonic aphasia, which means that people can understand their
historical situation and have very rational goals for their future development, but
they have lost categories of both verbal and visual discourses through which
historical processes can be explained. The memory of such a society is broken
(aberrated memory), but not fully destroyed, and it simply requires restoration of
its lost elements. In such a context, memory can play an active role and it aims
to reconstruct the past according to particular social conditions, or safeguard the
present by means of conveying a selective past. According to Halbwachs, any
gaps which appear in the process of this activity are filled by perceived contem-
porary experience (Halbwachs 2007b: 53).
The trauma of forced servitude and of nearly complete subordination to the will
and whims of another came to be central to post-Soviet people’s attempts to forge
a collective identity out of its remembrance. In this sense, the collapse of the
Soviet Union was traumatic in retrospect, and formed a ‘primal scene’ which
could, potentially, unite all former Soviet people in a Russian Federation, whether
or not they had hitherto identified themselves as ‘Russian’. The collapse formed
the root of an emergent collective identity through an equally emergent collective
memory, one that signified and distinguished a race, a people, or a community
depending on the level of abstraction and point of view being put forward. It is
this discourse on the collective and its representation that is the focus of this
chapter.
The re-writing of traumatic experience has been possible only in the context of
social dialogue and it has been called a ‘work of memory’ by Paul Ricoeur (1995).
As chapters of this volume demonstrate (see the contributions in this volume by
Matveev, Yurchenko, Meißner and Kusznir), the opportunity of such dialogue is
quite limited, and new elites tend rather to authoritarian ways of dealing with
crises. In the collective memory paradigm, ‘work of memory’ includes any process
88 Victor Apryshchenko
of overcoming a traumatic past by means of therapeutic influence, such as social
dialogue towards the most painful parts of memory, critical rethinking of the past,
sorrow and reconciliation. But the most important thing is that the ‘work of
memory’ will only be effective if the social tradition that caused the trauma has
not been repeated in the present, i.e. the tradition is transformed into the memory.
In this context, the question raised by Halbwachs (2007a) – where does tradition
end and memory start – could obtain a new meaning.
Nostalgia, in this context, is one of those commodities which is more consum-
mating. This fact is connected with trauma and the crisis of identity, two things
which provoke an idealisation of the past and make it a most essential commodity.
According to V. Fischer, nostalgia can be understood as a meta-historical way of
appropriation of the past which is caused by different conditions of a particular
cultural context (Fischer 1980). A traditional social context, including hierarchism,
political particularism and a passion for retro-culture, is a fruitful context for
nostalgia. Nostalgia is also connected with historical memory and utopian
consciousness. It may be considered as a process in which the irreversibility of
history can be overcome and historical time may be transformed into mythologised
space.
The past, the present and the idea of the future is to be connected by means
of collective memory, which engages nostalgia as an aesthetic characteristic of
Russian imagination of the past. The trauma of uncertainty of the present and
requirements for the situating of contemporary Russia within European spatio-
temporal frames to which is added anguish over the past, makes for a cultural
mixture of memory, nostalgia and trauma. As Christopher Chase and Malcolm
Shaw demonstrate, there are three types of social conditions which can produce
nostalgia (Chase and Shaw 1989). First, a linear understanding of time where the
future is hard to be determined; second, a feeling of defectiveness of the present
which can provoke the discontent of the mass population and nostalgia; and, third,
the presence of material evidence (artefacts, architecture, images, etc.) which
correspond with popular explanations.

Texts: between fancies and reality

When considering a school textbook on history as a main tool of Geschichtspolitik,
I will argue that history as a school subject can be an influential tool in shaping
national identity (Barton and McCully 2005: 85–116; Clark 2004: 379–396;
Epstein 2009; Seixas 2004; Wertsch 2002). This, in fact, means that history
textbooks can be seen as a vehicle for teaching an ‘official’ history of a nation to
its youth (Foster and Crawford 2006; Hein and Selden 2000; Su 2007: 205–237).
Textbooks in history are an important resource for Geschichtspolitik. In recent
years, the Russian government has wanted more control over history classes in
schools and produced the idea of a unification of the taught curriculum. Russian
officials have presented the unification of history textbooks: history is the
ideologically obvious place to start shrinking the incredible plurality of school
texts that have proliferated since the 1990s. All school classes may be taught from
 Creating the history of the future 89
a ‘patriotic’ standpoint. In presupposing that history textbooks are meant to
inculcate in young people not only a knowledge of their national history but
awareness or acceptance of contemporary dominant/mainstream ideologies, I will
concentrate on two texts. The urgency of their appearance was connected with
the annexation of Crimea in 2014. At the same time, the annexation is considered
as a brilliant chance to discuss the imagined Russian future.
The first text is a conception of a school textbook published in 2014 and called
The History of Russia 2014–2045 aiming to apply “the educating potential of
history as a school subject for citizenship, patriotism and respectfulness towards
the past of your own country” (Voronin et al. 2014: 4). The ‘History’ has been
written by a few people, namely Sergey Voronin, Boris Yakimenko and a few
others. All are members of the Russian Historical Society, and the text was
published by Peoples’ Friendship University of Russia, which is an old and
famous Russian educational establishment. The Society itself was re-established
in 2012 and Sergey Naryshkin, Speaker of the State Duma, became its Chair. One
of the most famous initiatives of the Society was the idea of a single textbook of
history, which was widely discussed and resulted in the State Standard of History
and Culture, accepted in 2014 (Interfax Group 2016). The Society has its branches
in Russian cities and different sub-communities subordinated to the Society’s
ideology and mission. The Constitutional Congress of the Youth Branch of the
Russian Historical Society was organised by that University in 2014. Sergey
Voronin, one of the ‘History’ authors, is famous for another monograph published
in 2015: ‘The Main Mistakes of Our Time: from Reformation to Neo-liberalism’,
which discusses the evolution of liberalism as a concept and practice (Voronin
2015).
‘The History’ is a unique text in a number of senses. Even having the usual
school textbook structure and emphasising particular spheres of public life, it has
a very state-centric perspective. In terms of structure, ‘The History’ includes a
few parts, namely Introduction, Internal Politics, Foreign Policy, Army, Economy,
Education and Culture, Sport and Health Care system, and Religion. It looks like
a very traditional structure of a school text-book of the Soviet educational system.
The way in which this model is explained and represented in the text connects
with the fact that all processes are explained by the growing role of the state and
its institutions. Official bodies and institutions are proclaimed as the main
progressive forces which provide the most dynamic political and geo-political
changes. In post-Soviet Russia, where attempts to consider history in textbooks
as a process of socio-cultural development was made, this means there is a return
to traditional explanations.
But even more intriguing are the chronological frames of ‘The History’ which
look, at first appearance, to be like a signet or emblem. White (1990) notes that
both form and content in history writing are significant in the creation of meanings,
and how a story is told is as important as what is told in that story. Barthes (1970:
145–155) also argues that historians use ‘devices’ to make their writing sound
‘factual’ and ‘truthful’. Taking this line of thinking, ‘The History’ should attract
much attention. Pointing to 2014 and 2045, the authors determine a period of
90 Victor Apryshchenko
30 years which will be decisive in terms of Russian state might and the restoration
of its historical mission. 2014 is important in terms of territorial unification. In
2014, President Vladimir Putin:

Demonstrated to the whole world the example of independent political beha-

viour. Personal sovereignty, strategic thinking, ability to use a non-standard
decision for geopolitical problems. This is also connected with the overcoming
of political crises in Syria, Ukraine, the return of Crimea and opposition to
Western sanctions.
(ibid.)

At this point Russia “is becoming ‘the chief medical officer’ of Western
civilisation, introducing the concept of justice (справделивость) instead of liberal
concepts of right and freedom” (Ministry of Education and Science of the Russian
Federation 2014).
2045 is also important in geopolitical terms. “In 2045 Russia solemnly celebrated
the one-hundredth Anniversary of the Great Victory in the Great Patriotic War.
For this occasion, heads of states visited Moscow. In the same year the Russian
language finally becomes the second world language” (Voronin et al. 2014: 16).
The text itself is full of discourse on the ‘restoration’ which took place between
2014 and 2045. Although this restoration touched the whole public sphere, its
frameworks are determined by a geopolitical Renaissance. Thus, the overcoming
of ‘lost influence’ in terms of international might (ibid.: 22) or sport (ibid.: 31) is
a central motif of these three decades, according to ‘The History’.
The second text is “The Recommendations for school lessons on ‘Crimea and
Sevastopol: their historical value for Russia’ ” (Ministry of Education and Science
of the Russian Federation 2014), which was approved by the Russian Ministry of
Education on 22 April 2014, just a few weeks after Russia’s invasion of Crimea
and with ‘pro-Russian’ groups asserting their power in Eastern Ukraine. The
Recommendations were elaborated by an anonymous collective of authors which
is a typical situation for an educational document, while the structure of the
‘Recommendations’ for the school teachers is rather traditional as well. The topic
of these lessons is ‘Crimea and Sevastopol: Their Historical Role for Russia’. It
consists of recommendations for pupils of various ages and it emphasises in
particular the cultural elements of the history, Crimean nature and landscapes,
discusses writers who visited Crimea like Anton Chekhov, artists like Ivan
Aivasovskiy, and also military history and the heroism of Crimean people during
the Great Patriotic War. All of these look quite traditional, and some of these
materials were in use during the Soviet period in Soviet schools when Soviet
pupils encountered the nature and culture of the USSR republics.
It is important to consider how educational objectives are formulated. The first
of these includes “to develop interpretative skills in the social, economic and
political spheres and to form civic attitudes and a patriotic responsibility for
Russia’s future” and “to educate patriotism, civic consciousness and pride in your
country” (Ministry of Education and Science of the Russian Federation 2014).
 Creating the history of the future 91
Patriotic education is familiar for all those who were educated in the Soviet
Union, where a few organisations existed to educate and inculcate loyalty among
all generations to Soviet ideology and the regime. In contemporary Russia, the
Index of Patriotism has been introduced by the Russian Centre for Public Opinion
Research (ВЦИОМ). It can be evaluated between –100 and 100 rating, and is a
subject of special interest for state officials (Russian Public Opinion Research
Center 2016). One of the main lines of criticism among contemporary state
bureaucrats is directed at the loss of a state monopoly in the educational sphere.
To educate patriotism is understood as an education of loyalty to the state.
Even though elaborated in totally different genres, the texts aim at the same
goal – to construct the image of Russia as a superpower which has to deal with
overcoming the post-Soviet crisis. To manage this process they produce new
mnemonic frames of reference which include both the past and the future. Under
such terms, contemporary Russian ‘captivity of memory’ transforms into ‘captivity
of the future’, and memory itself becomes a development factor more for the
future than for the present. The contemporary does not exist in modern Russian
culture, which turns into either the past or the future. The category of the future
is considered in the text as a part of historical consciousness (Voronin et al.
2015: 5). Collective memory in this context plays an instrumental role with regard
to the image of the past and image of the future.

Instrumentalisation of historical memory

When considering the content of the ‘History’ and ‘Recommendation’, we can
find totally different ideas that Soviet boys and girls have learned. Exploring the
content of the ‘History’, it should be noticed that the traditional structure of the
text does not correspond with unusual genres and ideas. The first idea is a spatio-
temporal philosophy which is based on the new historiosophy. Time is to be
subordinated to human control, even in literary terms. According to the ‘History’,
in 2020 the state programme for the planning and appropriation of free time was
approved (ibid.: 15) and history as an academic discipline has changed its status.

At the beginning of 2018 there was a decision made concerning the rejection
of the ‘critical method’ in science. As Sergey Naryshkin mentioned, the key
problem of this method is its support for marginal and non-academic
viewpoints, and this critic does not see particular danger in science.
(ibid.: 28)

This quotation makes the intellectual dynamic clear: science should be replaced
by faith.
The relations between the past, the present, and the future is part of the new
historical vision presented in the text. This kind of temporal philosophy forms the
frame for the Russian image. How easily the authors deal with the past may be
compared only with how easily they deal with the future. There is a brilliant
passage at the very beginning of the text concerning how they consider the future.
92 Victor Apryshchenko
“There is no prosperous Russian society without a foreseeable future and without
a sense of security” (ibid.: 5). And then, “to shape the character of the national
idea and to set out the major problem for the Russian World means to consider
the knowledge of the future as a scientific task” (ibid.). An even stranger passage
is about the “Russian present as a future for another World” (ibid.: 16).
The passage about the new Crimea System of International Relations that was
settled in the summer of 2019 in Sevastopol (ibid.: 19) unifies temporal and
spatial imaginations into a general conception of the Russian future. The idea of
‘management’ is at the core of this development which is conceived of in rather
spiritual terms. The Orthodox Church itself gained new functions in the imagined
Russian future. The establishment of the Russian Orthodox Church is gradually
taking on the functions of the state, and the security arm of the state is protect-
ing the Orthodox establishment. A special section of the ‘History’ is devoted to
religion (Voronin et al. 2014: 35–37). The authors argue that the Church provided
few social activities including the establishment of the ‘Institute of Human being’
which educate people in new social and cultural values. In fact, the captivity of
the Church meant “the end of the secular epoch” (ibid.: 35). From both the text
of the ‘History’ writers and from Russian officials, such as those who organised
the exhibition and from Putin’s speeches, and of course from educational texts,
we are supposed to learn the God-given indivisibility of the East Slavic world
regardless of the modern Russian-Ukrainian border, the imperative of a strong,
united State and the role of Orthodoxy as a repository of Russia’s values as a
distinctive world civilisation.
The second idea which is promoted throughout the ‘History’ is the relevance
of social values which are supposedly deeply connected with moral values. The
emphasis placed on the role of elderly people and the care for pensioners should
be perceived not in terms of bio-politics, but as an element of moral consideration.
The fashion house for senior people and special state programmes for them are,
in fact, emphasising the cult of the past and those who carry the experience of the
past. The ‘socialisation of the elderly’ which is at the heart of the social programme
of the ‘History’ means an integration of the socialites of the past into future
development. The social programme as it is represented in the ‘History’ is
considered as moving back toward a Golden Age, and that is why the text itself
is considered to be Utopian.
There is an amount of cognitive level reflection in the text where the word
‘Utopia’ is mentioned only once. In the new Russia “literary Utopia has been
restored” – the authors proclaimed (ibid.: 27). This is the main dilemma of the text
– either the authors consider the text as Utopia or political programme, or, most
likely, both. But, in both cases, the text consists of a general image of the Russian
future and the longing for a new role for Russia is evident. It shows the painful
source for how we came to be here and what should be our future development.
And that is why it is about the full negation of previous experience and proclaim-
ing the position of new Russia.
When discussing internal politics, the authors tend to follow the utopian
genre, whereas in terms of international activity they demonstrate a Realpolitik
 Creating the history of the future 93
understanding and geopolitical way of thinking. It is important to notice that the
textbook ideology is based on the apposition to previous systems. It is about
the negation which is only at some points a transom to the opposition. When
arguing in favour of Russian values, the authors start with criticism of the consumer
society. “In the second decade of the 21st century the collapse of the liberal model
of consumption growth was established” (ibid.: 7). “Over the same period it was
evident that democracy has been perfected as a form of manipulation that has
been created by many things – including new phone models and ‘Internet opinion”
(ibid.: 7). So, here it is a strong critic of contemporary consumer society, which
must be replaced by the “power that was formed by the integration of tradition
and modernity, the East and the West” (ibid.: 11).
The dilemma of ‘justice’ in international relations is one of the most morbid
for the authors. The collapse of the Soviet Union, while not even mentioned in
the text, is a key point of discussion about the new Russian position. In the spring
of 2016, in his address to the Federal Assembly, Russian President Vladimir Putin
proclaimed the idea of ‘Democratic Truth’ and ‘True World Order’, argue the
authors (ibid.). It should be said that in his other publications, Boris Yakimenko,
who is one of the authors of the ‘History’, follows this idea of negation. Especi-
ally, he emphasises the ‘European narrative’, which should be replaced by the
Russian one. The final words of the ‘History’ are remarkable in this context –
“The End of Contemporary History. PAX ROMANA has been changed to PAX
RUSSIA”.
The difficult relations between Russia and other European countries are reflected
in various passages of the ‘History’. On the one hand, Russia sits opposite to the
West in terms of moral and Orthodox values. Since the Crimean annexation
contradictions between Russia and the West have been emphasised in different
contexts. Rabid anti-Westernism is the leitmotiv of the new ideology which has
been presented in many recent Russian public texts. In return for Russia ending
the cold war – “we did not lose it” (Filippov 2007: 363), America pursued an anti-
Russian policy and fomented colour revolutions in Ukraine and Georgia, turning
them into springboards for possible future attacks. “We are talking about the
failure of the course started by Peter the Great and pathetically continued by pro-
Western democrats after 1988. We are talking about a new isolation of Russia”
(ibid.: 419).
But, at the same time, Russia is considered as a part of European civilisation
and plays the role of saviour. The idea about international justice is based on the
ideology of the messianic role of Russia in the World. This includes the image of
Russia as source of justice, new meanings, and even as rescuer of European
civilisation.

Millions of people who live in Europe lost their life orientation, experienced
moral, psychological and ideological crises, finding themselves in frustrating
conditions and depression, pessimism, and waves of passion which were
dangerous to the same extent as economic and political challenges.
(Voronin et al. 2014: 8)
94 Victor Apryshchenko
Russia is seen as a repository of moral values, playing a ‘bridging role’ between
Europe and Asia. This saviour mission is very personalised and associated with
Vladimir Putin’s name. Putin “became ‘the man of the World’ and ‘the politician
of the World’, the locomotive that took European civilisation out of crisis following
a map and rules prescribed in Russia” (ibid.: 10). Crimea is just one of the
examples of that saviour role of Russia. The authors conclude that:

Thus, after the 60 years of passing Crimea to Ukraine, and after 360 years of
unification of Russia and Ukraine, the historical mistake which was made by
Nikita Khrushchev has been corrected, and the territorial integrity of our
country has been restored – it is an unprecedented event in the world history
of the last hundred years.
(ibid.)

The text is subordinated to this idea and includes a lot of repetitions about the
role of Russia and its multifaceted uniqueness. There is an absolutely brilliant
definition of culture among other things: “Culture that is a picture on the wall”
(ibid.: 8). Although considered by the authors as a clause with little significance,
it looks to be an important element of text conception. This picture can be removed
from the wall and replaced with another picture which will be more pleasant and
will satisfy the owners of that house. The past has been perceived as such a kind
of picture as well.
This type of historical idea forms the core of utilitarian/instrumental usage of
history. It is based on the appropriation of collective memory by certain social
or political groups. In terms of function, appropriated memory has become a
political recourse, moving from the sphere of culture to the sphere of politics and
security. Thus, the securitisation of memory means that its usage serves to over-
come particular crises, and memory itself is proclaimed as a recourse for future
development. Memory and the politics of memory are considered as a social and
political recourse for so called ‘transitional societies’ i.e. those which experience
the process of changing their social, political and ideological structures. The
‘surplus value’ of memory for politicians in such societies consists of social
mobilisation around particular political programmes.
In contemporary Russia after the collapse of the Soviet Union, the politics of
history has changed a few times, but the message of the exceptional messianic
role of Russian civilisation exists constantly. ‘The Recommendations’ for school
teachers demonstrate this process of the sacralisation of the past. The special
mission of Russia saved Crimea and guaranteed its development based on Russian
tradition. Special attention is paid to Christianity and this is important in terms of
the general idea that circulated in Russia before the annexation.

The Kievan prince Vladimir – Baptist of Russia, accepted Christianity from

the Byzantine church in Crimea Hersones . . . Thus, from that place the
Orthodox Church developed in Russia. That spiritual bond became stronger
 Creating the history of the future 95
through the creation of Russian Tmutarakan’s Kingdom in Crimea. From that
time, the Black Sea started to be named the Russian Sea in some Arabic
chronicles.
(Ministry of Education and Science of the
Russian Federation 2014: 2)

So it is not only about Messianism, but also about geopolitics. And, of course,
this is the explanation of contemporary Russian politics by means of appeals to
the past.
Both of the texts analysed in the paper corroborate this cultural mainstream.
Moreover, they were one of the first attempts to conceptualise in educational prac-
tices the new ideology of Russian culture. They are elaborated in totally different
genres – the first, an official document which is full of bureaucratic clichés; the
second, a literary text created by a number of professional historians from the
Centre of Historical Expertise and State Prognoses of the Russian Historical
Society. Both of the texts consider history as an applied discipline that has to be
used as an intellectual foundation for the state’s expansion (in terms of internal
and foreign policies). While ‘The Recommendations’ structured as a traditional
educational document that prescribes which historical and literary texts should be
implemented to develop a feeling of patriotism among pupils and what didactic
methods to be applied for this goal, ‘The History of Russia 2014–2045’ has
institutionalised a new genre that can be categorised as futuristic history which
explains the history of the future from the position of the future observer. Both of
the texts pretend to deal with historical facts but in reality use them in a very
contextual and reductive way.
To a certain extent, both of the texts appear both very contemporary and fashion-
able since both of them use contemporary forms and methods of representation of
materials. ‘The Recommendations’ advise organising round-tables and workshops
for pupils to discuss the historical role and development of the Crimea, whereas
‘The History’ attracts through its unusual genre. But in reality, in terms of content,
both are very traditional and conservative since they appeal to a simplistic and
binary understanding of history. In reality, ‘The History’ operates by constructing
the facts rather than by constructing the future that would demonstrate the role
of the historical facts for contemporary Kremlin ideologies. According to such
historical narratives, there was no other way for development except for the
unification of Crimea and Russia, a version of history that is made to reflect
Russian geopolitics in the region. Moreover, the future history of Russia as it is
represented in ‘The History’ legitimises Russian politics. In the same way, ‘The
History’ in reality is the text that explains the most desirable way for Russian
development in the next few decades according to Kremlin patriots. Operating
by means of fabrication of facts as well adding to the arsenal of contemporary
methods of the representation of the past, the Kremlin ideologists have created the
Russian future as a text (even in literary terms) which would aim to manage
historical memory.
96 Victor Apryshchenko
Nostalgia as memory and as future
The analysis of ‘Recommendations’ and ‘History’ opens new perspectives for the
research of contemporary Russian culture. First, Russian culture, seen through the
lens of historical memory, might be described as having a few characteristics such
as traditionalism, orientation to the past, and political engagement. Contemporary
historical consciousness provides an excellent chance to verify cultural stereotypes
and mechanisms in Russia. It looks both traditional yet advanced at the same time,
because it has been using quite modern techniques and methods to justify its
traditional values. It is very politicised and connected with a particular political
ideology. There is no neutral culture. It is based on consumerist values, and in this
context it is very contemporary. Finally, it includes a lot of messianic elements.
This is mostly evident from historical imaginations, but also from popular culture.
To emphasise Russian uniqueness is a particular element of Russian culture.
The collapse of the Soviet Union can be considered as having been like a flash-
bulb. Such memories differ from memories of more neutral events, not because
the details of the memory are preserved any better, but because we think they are.
It is the central memorial element which all other memorial components have
been structured around. With highly traumatic events, we think we have an incred-
ibly accurate memory of the collapse and its outcome (in this case). Since emotion
focuses your attention on a few details, at the expense of many others, Russian
identity thus deals with aberrated memory, considering it as a truth and translating
it into the historical consciousness.
Filippov’s Manual for History Teachers choice of period is suggestive: from
Stalin’s victory in the ‘Great Patriotic War’ to the victory of Mr Putin’s regime.
The period is important for understanding how post-Soviet crises can be
considered. The Manual for History Teachers celebrates all contributors to Russia’s
greatness, and denounces those responsible for the loss of empire, regardless of
their politics. The collapse of the Soviet Union in 1991 is not seen as a watershed
from which a new history began, but as an unfortunate and tragic mistake that
hindered Russia’s progress. “The Soviet Union was not a democracy, but it was
an example for millions of people around the world of the best and fairest society”
(Filippov 2007: 6).
Second, Russian historical consciousness, as such, demonstrates controversial
tendencies. On the one hand, a lot of debates deal with the mythologisation and
falsification of history and search for ‘true history’. It might be considered as a
‘return to positivism’, which is impossible of course. But, at the same time, texts
like ‘History’ disrupt this tendency – history might be presented in alternative
ways. Moreover, it is a well-known process of the flow of history towards myth.
A lot has been done to support this process, which consists of elaborating on
history by making use of diverse means, including contemporary media. Historical
memory shaping is also about the mythologisation of history. But the case of
‘History’ demonstrates an inverted process. That myth should become history.
All these elements of contemporary Russian culture, including historical
imagination, are not particularly new. They have been forming over at least the
 Creating the history of the future 97
last few decades as a reaction to the crisis of identity in the aftermath of the
collapse of the Soviet Union, but the Ukrainian crisis demonstrated the importance
and politicisation of history in contemporary Russia. Historical culture could not
be considered as part of the Ukrainian crisis. The Ukrainian conflict just promoted
the institutionalisation of some historical imaginations which are a typical part of
the modern nation-building process. But the ‘modernity’ of Russian culture in the
Globalised world and in the Post-information Era determines the search rather for
modern than pre-existing instruments. The culture which presents itself by means
of historical memory has been condemned to traditionalism and messianism as
well as isolationism, which are results more of political involvement than of
creative process.
2014 and 2015 became a crucial period in appeals to the past among Russian
officials. The Crimean annexation and Anniversary of Victory in the Great Patriotic
War determined the emphasis placed on people’s unity and common identity. The
discourse of the past came into the everyday language of Russian officials.
Vladimir Putin himself is a champion in terms of numbers of appeals to that
history. In December 2014, Putin delivered his annual Presidential Address to the
Federal Assembly, drawing heavily on history, even for him. The “historical
reunification of Crimea and Sevastopol with Russia”, he said, was one of “this
year’s landmark events”, because:

It was in Crimea . . . that Grand Prince Vladimir was baptised before bring-
ing Christianity to Rus. . . . even though its borders were not marked then, .
. . Christianity was a powerful spiritual unifying force that helped involve
various tribes and tribal unions of the vast Eastern Slavic world in the creation
of a Russian nation and Russian state. It was thanks to this spiritual unity that
our forefathers for the first time and forevermore saw themselves as a united
nation. All of this allows us to say that Crimea . . . and Sevastopol have
invaluable civilizational and even a sacral importance for Russia, like the
Temple Mount in Jerusalem for the followers of Islam and Judaism.
(Putin 2014)

References to the past are in all the texts of Presidential Addresses of Russian
Presidents, but their number and functions are different in the Yeltsin, Medvedev
and Putin speeches. Boris Yeltsin, who was the first President of Russian
Federation, paid a lot of attention to the representation of himself as political
leader who changed the path of history. In one of his speeches he pointed out: “I
have managed the main business of my life – Russia will never return to the past
and will move only towards the future. And I must not to prevent this natural path
of history” (Yeltsin 1999). Before very recent times, Vladimir Putin followed
Yeltsin who mainly made references to Soviet and post-Soviet history and only
three times mentioned events of the pre-Soviet period. But, since 2014, Russian
medieval history has started to be deployed very actively in political statements.
Nostalgia is one of the key elements of contemporary Russian historical culture
and it was a result of the post-Soviet crisis. At the same time, it has been an
98 Victor Apryshchenko
element of overcoming crises. Identity crisis, as Volker Fischer demonstrated,
produces the idealisation of the past. Scholars argue that nostalgia may be under-
stood as a meta-historical way of appropriation of the past which is caused by
particular historical context (Johannisson 2001). Malcolm Chase and Christopher
Shaw in their influential work identify three conditions for the development of
nostalgia: first, the way of understanding of temporality as a linear process where
the future is indefinable; second, the particular strong feeling of imperfectness of
contemporaneity which produces societal discontent and nostalgic attitudes
towards the past; and, third, the existence of any material artefacts such as
architecture, images, etc.) which correspond with popular expectations (Chase
and Shaw 1989: 1–17). Piason Natali Marcos demonstrates the connection between
nostalgia and political ideas as a particular means of the mythologisation of
history (Marcos 2004: 23–35). The nostalgia concept is also connected with the
idea of historical memory and utopian thought. In such conceptions, nostalgia
may be considered as a way to overcome the irreversibility of history and transform
historical temporality into mythological space (Boym 1999: 35).
While emphasising one or another period of history, the authors activate a
particular image of the past. The Recommendations do not deny Stalin’s repres-
sions, nor is it silent about the suppression of protest movements in Hungary and
Czechoslovakia. Responding to the recent Russian social context it justifies
Stalin’s dictatorship as a necessary evil in response to a cold war started by
America against the Soviet Union. “The domestic politics of the Soviet Union
after the war fulfilled the tasks of mobilisation which the government set. In the
circumstances of the cold war . . . democratisation was not an option for Stalin’s
government” (Filippov 2007: 36). The concentration of power in Stalin’s hands
suited the country; indeed, the conditions of the time “demanded” it.
Historical consciousness in contemporary Russia can be depicted as a rushing
between the uchronical utopia where ‘happiness’ exists on the ‘somewhere’ island
and the particular determination of a point of linear temporality. This kind of
choice between the ‘island’ and the ‘point’ demonstrates the activity of the Russian
elite to determine not only future goals but rather the activity of Russian intel-
lectuals towards the past. The uchronical, insular character of Russian historical
imaginations in contemporary Russia is connected with nostalgia about the epoch
of the late Soviet Union of the 1970s – the period which is considered to be in
contemporary imagination a serene time of intertiming when the practices of
political and everyday life were considered as having an invariable rhythm. Unlike
the utopian form of Russian consciousness, this form of historical imagination
may be classified as a ‘false consciousness’ that is based on antiquated models of
thinking.
While appearing to consider memory and history as an important political and
ideological battleground, Russian politicians allegedly seek to overcome the post-
Soviet trauma. The spectrum of the measure for this is quite wide and varies from
officially sponsored and centrally approved textbooks with the highly pronounced
statist interpretation of Russian history, to the attempts to establish the ‘regime of
truth’, using legislative means and the creation of a bureaucratic institution to
 Creating the history of the future 99
fight the ‘falsification of history’. At the same time, this leads to the spreading of
interpretations of past events that are detrimental to Russian interests, and there
is an urgent requirement to resolutely counter these unfriendly processes. The
new interpretations of the past, which have to overcome the trauma, suddenly
produce new crises. The Ukrainian crisis is only one of the recent examples.
Finally, the suffering nature of Russian memory is accepted by the public
because of the post-Soviet crisis. Collective historical imaginations based on
nostalgic feelings are an important element of contemporary Russian identity
which tends to overcome the crisis of post-Soviet disintegration. In the Russian
centralised and authoritarian political model, historical imaginations produced by
certain groups are considered as the ‘regime of truth’ and implemented in everyday
practices as a part of national identity. Personal remembrances are to be included
in the collective memory and should correlate with it. But incongruities between
individual and personal and the collective memory will produce new crises again
and again, providing the ground for revisiting particular memories. Russian
attempts to agree upon the future are doomed to fail.

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6 Ukraine
The dynamics of cross-cutting
cleavages during quadruple transition
Olena Podolian and
Valentyna Romanova

Introduction
Ukraine’s major ethnic, linguistic, regional and political cleavages, evident since
the dissolution of the Soviet Union, have been extensively discussed in the
academic literature (Balcer 2014; Barrington and Herron 2004; Batt 2002; Birch
2000; Katchanovski 2006; Sasse 2002). This discussion has often presented
Ukraine as a country that is divided between East and West.
The most obvious regional cleavage is indeed an East–West divide along the
Dnipro river. According to Huntington’s global formula of the ‘clash of civil-
isations’ (1993), the East–West divide makes Ukraine a cleft country: the
civilisational cleavage, which has run through the heart of the country for centuries,
is too strong to be overcome. This divide symbolises all possible differences,
including political identity, ethnicity, language, economics, religion, and
geopolitics. In brief, Right bank, or Western Ukraine, has been characterised as
more pro-Ukrainian in terms of political identity, more Ukrainian in terms of
ethnicity, more Ukrainian-speaking, and mainly agrarian, Catholic and pro-
European in terms of geopolitics. By contrast, Left bank, or Eastern Ukraine, has
been viewed as more pro-Soviet in terms of political identity, more populated by
ethnic Russians and more Russian-speaking, more industrial, Orthodox, and pro-
Russian in terms of geopolitics (for more on the myth of the ‘two Ukraines’, see
Ryabchuk 2001).
However, an increasing number of scholars regard the well-established division
of Ukraine into East and West as being oversimplified and call for a more fine-
grained approach. Barrington (2002) sees it as simplified and blurring the actual,
more complex than a ‘split into two’, picture of ‘many distinct regions in Ukraine’
(2002: 136). Wolczuk asserts that political identity is not uniform even through-
out the oblasts of nationally homogenous Western Ukraine (2002: 67–68), and
Rodgers concludes that political identity in more Russified and pro-Russian
Eastern Ukraine is not monolithic either (2008). D’Anieri (2007) confirms that as
there are Russian-speaking Ukrainians, as well as Russian-speaking Russians
in Ukraine, ‘Russian-speaking’ can denote the socio-economic dimension of
members of both the ethnic majority and minority. In terms of the socio-economic
dimension, Ukrainian regions often combine industrial and agricultural components
104 Olena Podolian and Valentyna Romanova
(Matsuzato 2001). As Wolczuk states, ‘there is not a single regional divide in
Ukraine, but many that overlap. Some differences reinforce distinctiveness,
whereas others weaken it’ (2002: 68).
This chapter contributes to this academic debate by critically investigating the
changing structure of Ukraine’s cleavages from the dissolution of the USSR until
the outbreak of Russian aggression. Our study challenges the widely held opinion
that Ukraine is divided between East and West and provides a more nuanced
picture of the dynamics of Ukraine’s internal divisions. Our analysis shows that
Ukraine’s regionalised structure of ethnic and linguistic cleavages, inherited from
the Ukrainian Soviet Socialist Republic (SSR), has not changed much during
political and economic transformations. That was until the Russian illegal
annexation of Crimea and its aggression in South-Eastern Ukraine. Our findings
confirm that since then the use of Ukrainian language and self-identification with
Ukraine have increased across all regions of the country. By contrast, the number
of those who consider Russian to be their native language has decreased.
The structure of the chapter is as follows. The literature review addresses
Ukraine’s ‘quadruple transition’, with a special emphasis on nation-building. The
empirical part of our study is based on the analysis of the most relevant public
opinion polls and statistics. Ukraine’s cleavages have been relatively stable since
the dissolution of the USSR. However, they have been continuously influenced by
Russian aggression. Having annexed Crimea in March 2014, Russia has intervened
militarily in the South-East of Ukraine and has overseen the creation of, and
provided ongoing support to, the so-called self-proclaimed DNR and LNR (Donetsk
and Luhansk People’s Republics) in Donbas since April 2014. They are acknow-
ledged by neither Ukraine nor the international community and have been treated
as terrorist organisations in Ukraine’s political discourse (although they have not
been acknowledged as such by the Verkhovna Rada, Ukraine’s Parliament).
On 27 January 2015, the Verkhovna Rada of Ukraine approved Resolution No
129–19 that recognised the Russian Federation as an aggressor and appealed to the
international community to recognise the so-called DNR and LNR as terrorist
organisations. In line with this, we use the official acronym used in Ukrainian
legislation, which designates them as ‘ORDLO’, i.e. the separate districts of
Donetsk and Luhansk oblasts (Resolution of Verkhovna Rada of Ukraine No
252–19). On 14 November 2016, the International Criminal Court officially
recognised that the situation in Crimea and Donbas amounted to an international
armed conflict between Ukraine and the Russian Federation. This was followed by
recognition in the Resolution of the UN General Assembly of 19 December 2017.

Literature review
The aftermath of the dissolution of the USSR and subsequent transformation in
independent Ukraine have been reflected in the processes of democratisation,
marketisation, state-building and nation-building. These four components of post-
communist transformation are addressed by democratisation studies. Claus Offe’s
seminal concept of ‘triple transition’ embraced marketisation, democratisation
 Ukraine 105
and state-building (Offe and Adler 1991). Taras Kuzio (1998, 2001) broadened it
into ‘quadruple transition’ by adding nation-building as an overlapping but
‘conceptually and historically different process’ to state-building (Linz and Stepan
1996: 20). Thus, the ‘quadruple’ concept of transition in post-communist states,
as suggested by Kuzio, along with state-building, i.e. the construction of an inde-
pendent state, includes nation-building, i.e. the formation of a political nation
(1998: 1–2). Nation-building is distinct from state-building as it involves formation
of a common identity and a shared feeling of common destiny as a political rather
than ethnic nation (Kolstø 1999: 1). For the purposes of this chapter we pay
special attention to the nation-building dimension.
Starting with Rustow’s seminal work (1970), most scholars of transition studies
claim that national unity should precede democratisation (Linz and Stepan 1996).
Accordingly, high levels of ethnic, regional and other types of diversity are
predominantly perceived as a crucial obstacle to national unity (Beissinger 2008:
85; Kubicek 2000; Solchanyk 1994) and hence a potential obstacle for democracy.
This claim also applies to Ukraine (Kuzio 1998; Solchanyk 1994). Returning to
Huntington’s understanding of cultural unity as a foundation of a civilisation that
overarches a national level, we find the following prediction:

In 1991 and 1992 many people were alarmed by the possibility of violent
conflict between Russia and Ukraine over territory, particularly Crimea, the
Black Sea fleet, nuclear weapons and economic issues. If civilization is what
counts, however, the likelihood of violence between Ukrainians and Russians
should be low. They are two Slavic, primarily Orthodox peoples who have
had close relationships with each other for centuries. As of early 1993, despite
all the reasons for conflict, . . . there has been virtually no violence between
Russians and Ukrainians.
(1993: 38)

By the notion of ‘close relationships’ between two nations this description

masks many historical tensions, conflicts and wars (cf. Dyczok 2000: 15–17),
hence cultural proximity is insufficient to predict a lack of national tensions
(Hughes and Sasse 2002: 23). Indeed, since the annexation of Crimea in March
2014 and due to the ongoing occupation of the Eastern parts of Luhansk and
Donetsk oblasts, this prediction appears to reflect neither the actual reasons for
previous stability in the relations between Russia and Ukraine nor internal
homogeneities of their national identities.
In this chapter, we study cleavages in Ukraine. We follow a classical definition
of a ‘cleavage’ by Stein Rokkan as representing a particularly strong and long-
term socio-economic and cultural, structural division, a ‘fundamental opposition[s]
within a territorial population which stands out from the multiplicity of conflicts
rooted in the social structure’ (Caramani 2011: 189; Rokkan et al. 1999: 7; 34).
In academic literature, there has been a longstanding consensus concerning
the salience of ethnic and linguistic cleavages for Ukraine’s transformation and
even its survival as a state (Popson 2002; D’Anieri 2007). Having analysed
106 Olena Podolian and Valentyna Romanova
the relationship between ethnic, linguistic and regional identities in Ukraine,
Barrington (2002) finds that regional cleavages affect public attitudes towards
democratisation and state-building, including the unity of the country. His principal
finding is that regional identities are more important than language and nationality
as well as demographic factors (such as economic situation, age, religious believer
status, sex, size of locality and level of education) (2002: 134, 136) and make a
difference in their own right.
However, this does not imply a solely negative interpretation. In fact, based on
the empirical data, more and more authors challenge the idea that various and
strong identities are conflictogenic. Contrary to Barrington, Popson reaches a con-
clusion that multiple regional divisions make a country more stable (2002: 196).
It is similar to D’Anieri’s conclusion in his study of societal divisions in the
context of the challenge of liberal democracy in Ukraine that, while regional
differences are salient, they ‘do not amount to the “great divide” some have
detected’ (2007: 108). If anything, regional differences are important for predeter-
mining electoral preferences rather than demonstrating any inclination to secession
(D’Anieri 2007: 123).
Hence, a few competing accounts for regional divisions are suggested in the
literature, in which a relationship between regional identity and other types of
identity is contested. On the one hand, Dergachov (2000: 81) states that regional
differences in Ukraine are less pronounced than socio-economic differences (i.e.
education level). On the other hand, regional identities are seen as traditionally
the strongest, in particular in the political orientations of the population in the East
and West of the country. Regional differences in Ukraine are also more numerous
than division between East and West and cross-cut with above functional divisions
(Barrington 2002; Liber 1998; Subtelny 1994; Wolczuk 2002). In addition, in the
Ukrainian context the regional cleavage embraces the centre-periphery cleavage
which further cuts across the established East-West divide (Protsyk 2013: 692).
We are aware that there are different approaches towards classifying Ukraine’s
macroregions (see Barringron 2002: 135–136; Bekeshkina 2017: 14). Most public
opinion polls that we refer to in this chapter identify the following five macro-
regions: Northern Ukraine (Zhytomyr, Kyiv, Chernihiv and Sumy oblasts, and the
city of Kyiv); Eastern Ukraine (Dnipro, Donetsk, Kharkiv, Luhansk and
Zaporizhzhia oblasts); Southern Ukraine (Crimea, Odesa, Mykolaiv and Kherson
oblasts), Central Ukraine (Kyrovohrad, Cherkasy, Vinnytsia and Poltava oblasts)
and Western Ukraine (Transcarpathia, Volynska, Rivne, Chernivtsi, Khmelnytsk,
Lviv, Ivano-Frankivsk and Ternopil oblasts). However, the project ‘Starting a
national dialogue in Ukraine’ (2015) developed a more nuanced framework of
macroregions and regions, based on regions’ historical and ethnographic proximity.
In this chapter, we use their classification (see Table 6.1).
In a later wave of research, the question was raised not only about type and
strength of these identities but also about influence of institutional arrangements
in managing potentially divisive identities. There is relative consensus that, even
though Ukraine inherited from the Soviet Union a suboptimal set of institutions
 Ukraine 107
such as a centralised administrative-territorial structure, it still managed to preserve
interethnic peace and societal stability (D’Anieri 2007; Hughes and Sasse 2002).
The latest trend in research interprets identity as being based not on language,
nationality or region. Identity is seen as an ideological or ideational construct.
Riabchuk addressed the proverbial thesis of ‘two Ukraines’, described by the
historian Roman Szporluk as the Russian/Russified one and the Ukrainian proper.
Szporluk defines Russian/Russified Ukraine as Donbas and the South, whereas
Dnipro’s Right Bank, parts of the Left Bank and the West are predominantly
ethnically and linguistically Ukrainian. Importantly, under the Soviet regime’s
urbanisation, Russification spread mainly into the large industrial cities of Donbas
and the South, whereas the countryside – even in these ‘Russian’ parts – remained
more Ukrainian (Subtelny 1994: 525). So even in this initial thesis of ‘two
Ukraines’ we can see some ambiguity between centre-periphery and urban/rural
cleavages as the basis for division. However, Riabchuk fills the thesis with a new
meaning: he claims that the main cleavage is not between ‘Russian’ and
‘Ukrainian’ Ukraines, but between two types of Ukrainian identity: non/anti-
Soviet and ‘European’ on the one hand and post/neo-Soviet and ‘East Slavonic’
on the other. Other identity factors such as ‘ethnicity, language, region, income,
education, or age’ correlate with it to a different degree (2015: 138). In a similar
vein, Torbakov speaks about socio-economic, ethno-linguistic and religious
cleavages as being accompanied by ‘differing attitudes towards Ukraine’s past
and its relations with Russia’ (2014: 200). Importantly for our understanding of
the influence of Russian aggression on cleavages, this ideological division can
explain differing loyalties more than any other individual identity dimension. An
ideational dimension is analytically separate from an ethnic, linguistic or political
one, let alone a regional or socio-economic one. It embraces such issues as a
nation’s past and its relations with significant ‘Others’; popular attitudes to
independent statehood; and domestic and foreign policy (Birch 2000; Popson
2002: 192; Protsyk 2013: 700; Torbakov 2014: 200). This cleavage overrides
ethnic and linguistic cleavages yet relates to the regional one (Birch 2000).
Despite the cleavages presented and the challenges associated with them, some
areas of nation-building such as historiography and instruction in Ukrainian have
been success stories (Moser 2014). Although the national historiography was
developed and taught in the 1990s in regions with different perceptions of key
historical events and developments, it was not opposed at any regional level. In
particular, the return to the historiographic models of the late nineteenth, early
twentieth century describing the longevity of the Ukrainian nation, as opposed
to the later Soviet official narrative of simultaneous development of ‘brotherly
peoples’, as well as the controversially perceived period of the Second World
War, have overall been favourably received across the country’s schools. This is
indicated by the choice of similar textbooks from the list of various textbooks,
accepted by the state, in different regions (Janmaat 2002; Kasianov 2002).
By way of summary, Riabchuk additionally provides an account of the relative
academic consensus that has emerged in Ukrainian studies:
108 Olena Podolian and Valentyna Romanova
(1) Ukraine is not sharply and unambiguously divided along ethnic or even
linguistic lines; (2) ethnicity, language, and political orientations correlate
but do not necessarily match; and (3) no clear dividing line can be drawn
across Ukrainian territory for a number of interconnected reasons.

These include: “(a) the proverbial West and East are quite heterogeneous
within, (b) the lands between them are even more heterogeneous and versatile,
and (c) there is no popular will in Ukraine for any division” (2015: 138).
The above-mentioned quadruple transition as a model for analysis of political
and economic transformation in Ukraine, triggered by the dissolution of the Soviet
Union, is suitable for studying the post-Soviet ‘intersecting crises phenomena’.
This is highlighted in the introduction to this book. This framework is particularly
helpful for identifying the role of cleavages in democratisation and for considering
the effects of external factors on the trajectory of Ukraine’s transition. The case
of Ukraine is particularly interesting in this context. It gives us an opportunity to
find out how crises can stimulate the dynamics of interdependent domestic
cleavages, including ethnic, linguistic and political cleavages.
This chapter considers the main cleavages in national identity. These include:
ethnic and linguistic cleavages1, which have been studied the most; regional
cleavage as connecting both ethnic and linguistic cleavages; and ideational
cleavage as an emerging trend in the research.

Ukraine’s quadruple transition in brief

Until the Russian aggression of 2014, Ukraine’s democratisation was peaceful.
This was the case both with the mass protests of 2004, known as the Orange
Revolution, and with those of 2013–2014, known as Euromaidan or the Revolution
of Dignity. At the same time, we confirm that the processes of political
transformation, including state-building and nation-building, have been affected
by Ukraine’s regional differences. The core of Ukraine’s nation-building, i.e. the
process of formation of a political nation (Popson 2002: 193), is associated with
language policies.
Following the dissolution of the Soviet Union, Ukraine has been a de facto bi-
lingual state (Arel 1995; Kulyk 2011), with one state language – Ukrainian, and
two languages spoken on a day-to-day basis – Ukrainian and Russian. Along with
this linguistic cleavage, Ukraine inherited from the Soviet Union the institutional
framework that regulated language policy. According to the last Soviet-era 1989
Law ‘On Languages in the Ukrainian SSR’, Ukrainian was a state language, while
Russian was a language of international communication. Although Ukrainian had
a de jure superior role, Russian was very actively used in public and private life.
In line with that law, the 1996 Constitution established Ukrainian as the only state
language and declared that Russian and other national minority languages were
respected and protected (Article 10). Apart from Russian, the 1996 Constitution
granted all national minorities the right to be taught in their native language or to
study their native language in state and communal education establishments and
in national cultural societies (Article 53).
 Ukraine 109
In 2012, a highly controversial Law ‘On the Foundations of State Language
Policy’ was approved by the national parliament and signed by the president. The
2012 Law introduced the status of regional or minority languages. These are
defined as languages that are traditionally used within particular areas by the
citizens of the state, who represent a group. Potentially 18 languages could obtain
a new status and be used in schools, universities, by the civil service, courts,
media and in advertising. However, many experts proved that in fact the 2012
Law favoured Russian language over other minority languages and even over
Ukrainian, therefore having disunited Ukraine rather than promoted national
reconciliation (Moser 2014). As Khmelko (2007) predicted, the changes in
language policy appear to be highly sensitive for the Ukrainian public, since they
activate latent conflicts and provoke new ones. One of the first laws passed by the
post-Yanukovych government in February 2014 attempted to repeal the 2012
Law. However, that law was not signed by the then acting president and is still
formally valid.

Ukraine’s cross-cutting cleavages and their dynamics

As Hughes and Sasse specify following Lijphart, cross-cutting cleavages are one
of the key mechanisms for moderating ‘ethnicisation’ of politics, for example
through institutionalised political parties (Lijphart 1977). However, in order for
cross-cutting cleavages to have a moderating effect, they need to meet certain
qualifications such as not to coincide with each other and to have a different
intensity and socio-economic context (Hughes and Sasse 2002: 7). Kravchuk and
Chudowsky (2005) find that the level of economic well-being of people in Ukraine
is regionalised in a way that does not necessarily correspond to the East-West
dividing line. For example, how one votes in national elections depends on econo-
mic situation in a particular region. Therefore, they claim that socio-economic
cleavages in Ukraine are regionalised in a complex rather than simplistic way and
cut across ethnic and linguistic cleavages (2005: 131–133).
Our analysis clearly demonstrates that the dynamics of Ukraine’s internal
divisions is more nuanced than a straightforward ‘East vs. West’ divide.
After the dissolution of the Soviet Union and until Russia’s aggression, ethnic
and linguistic cleavages were relatively stable. However, since the conflict erupted
in 2014, the structure of the linguistic cleavage has changed dramatically.

Ethnic cleavages
Upon the dissolution of the Soviet Union, the newly proclaimed Ukrainian state
inherited the territorial structure of the Ukrainian SSR: the Autonomous Republic
of Crimea, 24 oblasts and two cities with a special status – Kyiv and Sevastopol.
The 1996 Constitution proclaimed the unitary status of Ukraine and confirmed
the asymmetrical autonomy of Crimea. Likewise, Ukraine inherited the structure
of ethnic cleavages of the Ukrainian SSR. Ukraine became home to representatives
of almost 130 nationalities or ethnic groups (the 2001 all-Ukrainian population
census). It remains ethnically heterogeneous, i.e. a multinational, state (Popson
110 Olena Podolian and Valentyna Romanova
2002: 191). Ukraine hosts the largest ethnic minority in Europe – about eight
million of Russians (17.3 per cent of overall population). 60 per cent of this
minority is not historical. It was formed, between the 1960–1980s, by economic
migrants from Russia who came to the industrial East of the country (Barrington
2002: 135), in a way that was similar to what happened in the Baltic states. Never-
theless, in accordance with the European organisations’ standards, the Russian
minority is granted full national minority rights (Articles 10, 11, 53, 119 of the
Constitution of Ukraine). Other ethnic groups in Ukraine include Belarussians
(0.6 per cent), Moldovans (0.5 per cent), Crimean Tatars (0.5 per cent), Bulgarians
(0.4 per cent), Hungarians (0.3 per cent), Romanians (0.3 per cent), Poles (0.3 per
cent), Jews (0.2 per cent) and others (1.8 per cent) (the 2001 all-Ukrainian popu-
lation census).
The structure of ethnic cleavages is regionalised. Ethnic Russians form sizeable
minorities in many of the Southern and Eastern regions (see the table below). In
broad terms, ethnic Moldovans and Bulgarians are concentrated in Odesa oblast,
Hungarians – in Transcarpathia, Romanians – in Chernivtsi oblast, and Poles – in
the Halychyna region. The highest number of ethnic Ukrainians is in Western
Ukraine, with Ternopil and Ivano-Frankivsk oblasts being the most mono-ethnic.
The number of ethnic Ukrainians also tends to be high in central Ukraine, with
the highest number found in Rivne oblast. By contrast, in Eastern Ukraine, which
borders Russia, the number of ethnic Ukrainians is relatively low, while the
number of ethnic Russians is very high. However, the highest number of ethnic
Russians is found in Southern Ukraine and in Crimea (65 per cent), particularly
in the city of Sevastopol (90 per cent).
From the end of the Soviet rule until the Russian annexation of Crimea and
aggression in Donbas, the ethnic structure of Ukrainian society has not changed
much. If we compare data from the 1989 and 2001 censuses, we discover that
the most obvious shift refers to the proportions of ethnic Ukrainians and ethnic
Russians. The percentage of Ukrainians has increased from 72.7 per cent to 77.8
per cent, whereas that of Russians has decreased from 22.1 per cent to 17.3 per
cent. Moreover, Khmelko (2007) finds that ethnic identities in Ukraine can be
dual, i.e. fluid. According to his research, in 1995 only 58 per cent of those adult
respondents who claimed to be ethnic Ukrainians came from Ukrainian families
which were mono-ethnic for at least two generations. Khmelko (2007) adds that
only about 10 per cent of those who claimed to be ethnic Russians came from
Russian families which were mono-ethnic for at least two generations. About a
third (28 per cent) of those who claimed to be ethnic Russians came from hetero-
ethnic families, including 19 per cent from Russian-Ukrainian families. Inter-ethnic
marriage, language usage and urbanisation are among the factors which contribute
to mixed ethnic self-identification.
We expect the next census to demonstrate more shifts as a result of the
annexation of Crimea by Russia and the ongoing conflict in South-Eastern Ukraine.
But some differences are already evident. Before the Russian annexation of
Crimea, Crimean Tatars mainly lived in Crimea. Since then over 20,000 Crimean
Tatars have left the peninsula, mostly for Kyiv and Lviv, but also for other parts
 Ukraine 111
of Ukraine. A related shift of the ethnic cleavage, generated by Russian aggres-
sion, is associated with internally displaced persons. These are people who had
to leave their homes in South-Eastern Ukraine and Crimea for another region in
Ukraine. According to the official statistics, more than a million people (1,026,177
at the time of writing) had to do so. These internally displaced people most often
settle in the government-controlled parts of Donetsk and Luhansk oblasts, the
neighbouring oblasts (Zaporizhzhia, Dnipro) and Kyiv. There is no accurate data
yet which would allow identification of the major implications for the ethnic
cleavage. However, we presume that such implications may include the increase
of ethnic Russians in the respective regions.

Linguistic cleavages
Since Ukraine’s independence, linguistic identities have been relatively stable. In
1989 only about 66 per cent of the population in Ukraine claimed that Ukrainian
was their native language (the 1989 all-Ukrainian population census). According
to the most recent 2001 census, 67.5 per cent identified Ukrainian as their mother
tongue, while 29.6 per cent identified Russian as their mother tongue. Similarly,
public opinion polls between 1997–2004 (Panina 2005) show that there were
62–64 per cent of those who declared their native language to be Ukrainian, while
about 34–35 per cent claimed it was Russian.
As with the structure of ethnic cleavages analysed above, the structure of the
linguistic cleavage and language preferences2 in Ukraine is heavily regionalised
(Kubicek 2000). While people in Central and Western Ukraine speak mainly
Ukrainian, the residents of Southern and Eastern regions mostly prefer Russian.
In Western Ukraine, the overwhelming majority (95.4 per cent) speaks Ukrainian
at home, with almost the polar opposite being the case in Eastern Ukraine, where
81.5 per cent of population speak Russian in their households. In Central Ukraine
76.2 per cent of respondents are Ukrainian-speaking, while 70.9 per cent in
southern oblasts are Russian-speaking (Stegnii 2008: 41).
Returning to the findings of Khmelko (2006), we recall that in Ukraine people
might identify themselves with two ethnicities and two language groups at the
same time. 20 per cent of Ukrainians and 40 per cent of Russians acknowledged
their dual national identities. The subsequent 2004 study of the KIIS reveals that
bi-ethnic (Russian-Ukrainian) groups were more likely to be represented by
Russian-speaking Ukrainians. Further research by Kulyk (2011) proves that
numerous ethnic Ukrainians are Russian-speaking.
Ethnic and linguistic cleavages affect public preferences regarding language
policies (Khmelko 2006). However, one’s declared native language is not a good
predictor of a preference for a state language status (only Ukrainian or also
Russian), as the following paragraphs demonstrate.
Since 2014 the number of those who consider Ukrainian, as well as those who
consider both Ukrainian and Russian to be their native languages, has increased.
At the same time, the number of those who consider Russian to be their native
language has decreased. In 2015 the majority (60 per cent) of citizens considered
112 Olena Podolian and Valentyna Romanova
Ukrainian to be their native language, 15 per cent – Russian, 22 per cent –
both Ukrainian and Russian, while 2 per cent considered another language to be
their native language. By way of comparison, in 2006 52 per cent of citizens
considered Ukrainian to be their native language, 31 per cent – Russian, 16 per
cent – both Russian and Ukrainian, 1 per cent – other languages. This trend is valid
for both official and everyday use. Vorobiov (2015) stresses that numerous Russian
speakers switch to Ukrainian ‘as a badge of self-identification’. While in 2005 42
per cent of Ukrainians claimed that they spoke mostly Ukrainian at home, by 2011
the figure had risen to 53 per cent. By 2015 almost 60 per cent of the population
apparently preferred to use Ukrainian in everyday communication. This illustrates
the previous findings of Kulyk (2011) that Russian-speaking Ukrainians are the
most volatile group with regards to native language and language use.
In addition, public attitudes towards language policies have changed significantly
since the outbreak of the Russian aggression. Research demonstrates the decline
of public support towards the policy of having two state languages and the rise of
the popularity of the idea of Ukrainian being the only state language. In 2015,
after Euromaidan, the majority (56 per cent) of respondents wanted Ukrainian
to be the only state and official language in Ukraine, in contrast to 25 per cent in
2005, after the Orange Revolution. A quarter (24 per cent) of respondents claimed
to want Ukrainian to be the state language throughout Ukraine and Russian to be
the official language in some regions of Ukraine, in contrast to 20 per cent
in 2005. By way of comparison, in 2015 only 14 per cent respondents wanted two
state languages – Ukrainian and Russian, which marked a significant decline in
comparison with 37 per cent in 2005.
The regional diversity of public attitudes towards language policies has changed,
too. In 2015 in the West and the Centre the overwhelming majority (81 per cent
and 75 per cent) wanted Ukrainian to be the only state language (an increase from
77 per cent and 50 per cent), and 15 per cent in the West and 16 per cent in the
Centre would have preferred Russian to be an official language in some regions
of Ukraine, which marked no change since 2007 in the West (15 per cent). As few
as 2 per cent in the West and 4 per cent in the Centre supported the idea of two
state languages, whereas in 2007 there were twice as many supporters of such an
option in the West (5 per cent) and five times more supporters in the Centre (21
per cent). In the South, 37 per cent of respondents wanted Ukrainian to be the only
state language in Ukraine, demonstrating a significant increase since 2007, when
their number was 25 per cent; 30 per cent of respondents wanted Russian to be
an official language in some regions of Ukraine, as opposed to 21 per cent in
2007; and 23 per cent of respondents supported two state languages, marking a
twofold decline in comparison with 46 per cent in 2007. In the East, 34 per cent
of respondents wanted Ukrainian to be the only state language in Ukraine, in stark
contrast to 13 per cent of respondents in 2007. The number of those who wanted
Russian to be an official language in some regions of Ukraine increased from 31
per cent in 2007 to 34 per cent in 2015. So far there is a lack of research to explain
this phenomenon. We understand that numerous internally displaced people from
 Ukraine 113
Donbas, who used to have preferences with regards to language policies, left their
homes after the outbreak of the military conflict in the South-East of Ukraine and
settled in other regions of Ukraine. Thus, the structure of language preferences
may have changed due to that. At the same time, the number of those in the East
who supported the notion of having two state languages significantly dropped:
from 50 per cent in 2007 to 25 per cent in 2015.
Since 2014, the number of those who consider Ukrainian, as well as those
who consider both Ukrainian and Russian to be their native languages, has
increased. Also, the number of people who speak Ukrainian on a daily basis
has increased. Moreover, public preferences towards having two state languages
have declined, most sharply in the South and the East. Nowadays more people in
Ukraine support the notion of having Ukrainian as the only state language.
Our findings prove that linguistic identity does not automatically determine
public support for particular language policies, though it can partly correlate with
it. This conflicts with some earlier findings that attitudes towards language policies
are influenced by language identities, i.e. identification with a language or lan-
guages (Kulyk 2011).

Political identities: ideational divides

The dynamics of political identities deserves special attention. Here we understand
political identity mainly as the relationship between local and national ident-
ities. Political identities have been significantly affected by the legacies of
dissolution of the USSR.
Namely, the formation of state identity co-existed with regional identities,
principally differing between the regions that were parts of the Russian Empire
and the Soviet Union prior to 1939, on the one hand, and regions that were
annexed by the Soviet Union during and after the Second World War from Poland,
Romania and Hungary, on the other. Since Ukraine’s historical regions used to be
parts of different states in the past, Ukraine faced territorial challenges from some
of its regions such as Crimea, Donbas and Transcarpathia, rather than clear-cut
ethnic challenges. Only in Crimea did this lead to Russians’ ethno-political
mobilisation in the early 1990s until a constitutional arrangement for Crimea’s
autonomy under the guidance of the OSCE was reached in 1996 (Hughes and
Sasse 2002: 26).
This pattern persisted after the Orange Revolution in 2004: while highlighting
the growth of national identity, academics acknowledge the strength of regional
identities. By 2012 some shifts had occurred. According to the survey conducted
by the Institute of Sociology of the National Academy of Sciences of Ukraine,
nearly a half (48.4 per cent) of the citizens of Ukraine prioritised their national
identity. Local identities scored 28.9 per cent, while regional identities scored 7.6
per cent. This can be partially explained by the ongoing state-building efforts in
Ukraine, some policies of which, such as language and education (history teaching),
are referred to in this chapter.
114 Olena Podolian and Valentyna Romanova
The most pronounced changes of national identity occurred after Euromaidan
and the Russian aggression. Moreover, after the outbreak of the war, national
identity has prevailed over local and regional identities in most regions of the
country.
Public opinion polls conducted after Euromaidan showed that identification
with the Ukrainian state as compared to local and regional identifications grew
significantly. The number of people who identify themselves primarily as citizens
of Ukraine grew from 54 per cent in December 2013 to 73 per cent in December
2014 (Bertelsmann Transformation Index 2016 – Ukraine Country Report).
Likewise, in 2015, most respondents identified themselves as Ukrainians (Starting
a national dialogue in Ukraine, 2015). Throughout Ukraine, 67.5 per cent identify
themselves, first of all, as citizens of Ukraine; 12.2 per cent identify themselves
with the region they live in; and 10.8 per cent with the settlement they live in. In
the West there are 96 per cent of those who, first and foremost, identify themselves
as Ukrainians, whereas in Donbas only 61 per cent of people identify them-
selves as such. Only 9 per cent of people in Ukraine identify themselves as
Russians, although officially there are 17 per cent of ethnic Russians, according
to the 2001 census; out of these 31 per cent live in Donbas, 11 per cent in the East

Table 6.1 National vs. regional and local identities in Ukraine (in percentage terms)

Citizen Resident Resident

of of the of the
Ukraine region settlement
one one
lives in lives in
UKRAINE 67.5 12.2 10.8
Macroregions/regions
NORTHERN UKRAINE
Polissia (Zhytomyr, Kyiv, Chernihiv and Sumy oblasts) 72.7 7.1 10.3
The city of Kyiv 79.9 7 6.3
EASTERN UKRAINE
Nyzhne Prydniprovya (Dnipro and Zaporizhzhia oblasts) 77.8 6.8 7.3
Donbas (Donetsk and Luhansk oblasts) 37.8 35 10.2
Slobozhanshchyna (Kharkivska oblast) 69 10.5 6.5
SOUTHERN UKRAINE
Black Sea Region (Odesa, Mykolaiv and Kherson oblasts)3 59.3 14.7 17.5
CENTRAL UKRAINE
Centre (Kirovohrad, Cherkasy and Poltava oblasts) 76.3 6.2 13.2
Podillia (Khmelnytsk and Vinnytsia oblasts) 68.7 13 7.6
WESTERN UKRAINE
Halychyna (Lviv, Ivano-Frankivsk and Ternopil oblasts) 87.9 3.5 3.3
South West (Transkarpathia and Chernivtsi oblast) 37.8 22.3 26.8
Volyn (Volynska and Rivne oblasts) 75 7.2 9.2
Source: ‘Starting a national dialogue in Ukraine’ (2015).
 Ukraine 115
and 9 per cent in the South. Obviously, the decrease in declaring Russian nationality
is affected by the annexation of Crimea and occupation of ORDLO, which are
areas with the highest number of ethnic Russians (Hryniv and Chekh 2017). As
the table on p. 114 demonstrates, the number of those who identify themselves as
Ukrainian is the highest (87.9 per cent) in the Halychyna region (Lviv, Ivano-
Frankivsk and Ternopil oblasts). By contrast, the lowest levels (37.8 per cent) of
national identity are found in Donbas (Donetsk oblast) and the South-West
(Transcarpathia and Chernivtsi oblast).
The attitude towards Ukraine’s independent statehood deserves special attention
in this context. Since Ukraine’s independence, the level of its support has increased.
However, significant regional differences in this regard are still evident. According
to the 2015 public opinion poll conducted by the Razumkov Centre (2016),
68 per cent respondents claimed to support Ukraine’s independence at a
hypothetical referendum (87 per cent respondents in the West, 77 per cent in the
Centre, 57 per cent in the South, 56 per cent in the East and only 44 per cent in
Donbas). As far as we can see from the 2006 public opinion poll conducted by
the same institution (Razumkov Centre 2007), only 59 per cent respondents
claimed to support Ukraine’s independence should a hypothetical referendum
have taken place in 2006.
Finally, it is important to consider not only public opinion polls but also expert
estimations. According to the latest Bertelsmann Transformation Index’s country
report on Ukraine (2016), ‘The Ukrainian nation-state is accepted by all relevant
actors and groups in Ukraine, apart from Crimea and the territories in the east of
the country under the control of pro-Russian insurgents.’ In line with surveys’
data above, ‘identification with the Ukrainian state reached its peak after the
Euromaidan protests’, undermining the Kremlin’s assumption about the loyalty
of Russian-speaking Ukrainians to the Russian state (Bertelsmann Transformation
Index 2016 – Ukraine Country Report: 7).
Thus, we argue that the most pronounced changes of national identity occurred
after Euromaidan and the outbreak of Russian aggression. The level of support
for Ukraine’s independence has increased, despite the still significant regional
differences in this regard. Moreover, the balance between national and local
identities in Ukraine has changed. In line with the above trend observed since
2012, the number of those who identify themselves first of all with Ukraine has
increased, while the number of those who identify themselves first and foremost
with the locality or the region they live in has decreased.

Conclusion
This chapter has analysed Ukraine’s major cleavages as well as how and why they
have changed since independence, particularly in the aftermath of the Russian
aggression.
Our study of the theoretical approaches and empirical evidence demonstrates
that Ukraine’s linguistic, ethnic, political and ideational cleavages, which have
been inherited from Soviet times, have a cross-cutting and dynamic nature.
116 Olena Podolian and Valentyna Romanova
First, we confirm that the newly proclaimed Ukrainian state inherited the
regionalised structure of the ethnic cleavages of the Ukrainian SSR. It did not
change much despite political and economic transformations in Ukraine until
the annexation of Crimea by Russia and the outbreak of the ongoing conflict in
South-Eastern Ukraine. We expect the next all-Ukrainian census to demonstrate
further shifts in the ethnic cleavage due to the consequences of those events. We
also expect to see a growth in the number of Crimean Tatars throughout Ukraine,
but mainly in the southern oblasts and in Kyiv. Furthermore, we expect to see a
growth in the number of ethnic Russians, who left Crimea and Eastern Ukraine
as internally displaced persons and settled in the neighbouring regions and
in Kyiv.
Second, we find that until the outbreak of Russian aggression, the regionalised
linguistic cleavage was relatively stable. However, since the conflict erupted in
2014, the structure of the linguistic cleavage has changed dramatically. The
number of those who consider Ukrainian, as well as both Ukrainian and Russian
to be their native languages, has increased. The number of those who consider
Russian to be their native language has decreased. Public attitudes towards
language policies have also changed significantly since the outbreak of Russian
aggression. Research demonstrates the decline of public support towards the
policy of having two state languages and the rise of the popularity of Ukrainian
as the only state language.
Third, our study confirms that the most pronounced changes of national identity,
and ideational identities in broader terms, occurred after Euromaidan and the
outbreak of Russian aggression. The levels of support for Ukraine’s independent
statehood and of identification with Ukraine, rather than the locality or the region,
have increased, despite clear significant regional differences in this regard.
By doing this, we contribute to the academic debate on the nature of Ukraine’s
dividing lines and confirm that since the dissolution of the USSR the structure of
Ukraine’s cleavages has been most affected by Euromaidan and the ongoing
Russian aggression. Our study supports the argument discussed above: while
clearly being diverse, Ukraine is not deeply divided along ethnic or even linguistic
lines. Ethnicity, language and political orientations correlate but do not necessarily
match and reinforce each other. These cleavages are cross-cutting; hence
Riabchuk’s observation that ‘no clear and indisputable dividing line can be drawn
across the Ukrainian territory’ (2015: 139) is supported by the analysis of the
literature and surveys in our study. Finally, our analysis of the literature and
surveys undermines any attempts to apply a ‘civil war’ prism for the analysis of
the current Russian aggression in Ukraine still present among certain Western
academics and media.

Notes
1 Socio-economic and religious cleavages have been left out due to the scope of the
chapter.
2 Domestic and international researchers apply nuanced approaches towards studying
linguistic identities and language preferences in Ukraine, including measuring native
 Ukraine 117
language, or mother tongue; language use (language for everyday use, language used
at home), preferences in respect of particular language policies, etc. In this chapter, we
refer to a wide range of pollsters’ and academics’ approaches and compare the most
relevant research findings and public opinion polls that measure linguistic identities
and language preferences in Ukraine.
3 Crimea used to belong here but is left out in this table due to its current annexation by
the Russian Federation.

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7 Ethnic divides in the Baltic states
Political orientations after the
Russian–Ukrainian crisis
Joakim Ekman and Kjetil Duvold

Introduction
The fall of the Berlin Wall in November 1989 and the subsequent dissolution of
the Soviet Union in December 1991 paved the way for a whole range of
democratisation processes in Central and Eastern Europe, and a range of state-
and nation-building processes throughout the post-communist region. For the
Baltic countries, the collapse of the Soviet Union entailed a return to national
independence after decades of enforced communist rule. At the same time, the
legacy of the Soviet period included large Russian-speaking minorities, most
notably in Estonia and Latvia (presently some 25–26 per cent in each country),
but to some extent also in Lithuania (presently some 6 per cent). Previous research
has demonstrated significant differences in political orientations between the
titular populations and the Russian-speaking minorities in the region (e.g. Duvold
2006; Ehin 2007; Ekman and Linde 2005; Lühiste 2008; 2013; Rose 2005).
Drawing on a collection of public opinion surveys conducted in Estonia, Latvia
and Lithuania in 2014–2015, the present chapter contributes to the research litera-
ture by updating and expanding the empirical basis of contemporary studies
of public opinion and ethnic divides in the Baltic states. More specifically, by
contrasting political orientations – including perceptions of external threats –
among the ethnic majority populations to corresponding attitudes among the
Russian-speaking minorities in the three countries, the chapter depicts the contem-
porary political culture of the Baltic states. This culture has been shaped by three
contradictory processes: the dissolution of the Soviet Union; followed by national
independence; and the closely intertwined political and economic transformations.
In this volume, these three processes are referred to as the post-Soviet ‘intersection
crisis phenomena’, encompassing, for example, regime changes, authoritarian
backlashes, political apathy, political disaffection, and ethnic tensions throughout
the post-Soviet space. In this chapter, the focus is on the magnitude of the ethnic
divide in the Baltic context, before and after the 2014–2015 Crimea crisis.
The chapter unfolds as follows: in the next section, the contemporary political
context is outlined, highlighting in particular on instances of ethnic tension since
the independence of the Baltic states. This section is followed by a brief pre-
sentation of the opinion data applied in the chapter, collected in the spring of
122 Joakim Ekman and Kjetil Duvold
2014 and in the fall of 2015. In the third section, the empirical analysis is
presented, and the chapter concludes with a discussion about the threat perceptions
and widespread political discontent in the Baltics, and the potential risk of social
unrest related to the political development in Russia and the crisis in Ukraine.

The political context

The analysis of public opinion data in the present chapter will focus on both
internal and external aspects of the contemporary political culture of the Baltic
states, covering attitudes towards what the political system delivers in terms of
output, such as welfare, jobs, and security. In order to understand the political
context that may shape popular opinion, the following section will outline
attitudinal differences and potential conflicts between the ethnic groups in the
three Baltic states. Since the restoration of national independence, we have
witnessed signs of increased attitudinal differences, notably in Estonia and Latvia,
between the titular populations and the ethnic minorities.
In Latvia, the ethnic cleavage has been salient throughout independence and,
just like in Estonia, centered on the issue of citizenship and language rights.
Between 1991 and 1994, post-war immigrants in Latvia were left in a state of flux,
having no defined citizenship rights. Only in 1994 was a law on citizenship
passed, denying some 600,000 people citizenship. The subsequent naturalisation
process has been fairly slow, and some 252,000 people (as of January 2016) are
still officially registered as non-citizens (Office of Citizenship and Migration
Affair 2016).
As for language rights, the 1992 language law stated that Latvian is the official
state language. Russian became just another foreign language e.g. in Latvian-
speaking schools, and following a reform in 2004–2005, instruction in minority
schools were obliged to be primarily in Latvian (Latvian Law on Education
2016). In 2010–2011, the nationalist Latvian Alliance launched an initiative to
collect signatures to force a referendum on Latvian schools, proposing that state
finances should be available only for schools teaching in Latvian exclusively. The
initiative failed, but as a response, the Russian-speaking community collected
enough signatures in order to force a referendum on changes to the constitution
that would recognise Russian as an official second language. The referendum was
held in February 2012, but failed to pass (Auers 2013). Almost 75 per cent voted
against the proposed changes to the constitution. It should be noted that a large
part of the Russian-speaking community, being non-citizens, could not vote in
this referendum. At around 70 per cent, the turnout was quite high, indicating
strong emotions about Russians and the Russian language – and Russia itself –
among many Latvians (cf. Grigas 2014: 9–11).
In Estonia, the 1992 citizenship legislation also left most ethnic Russians
without citizenship. The naturalisation process requires a minimum of five years
residence in the country, an oath of loyalty, and – like in Latvia – the passing of
a language test and a test of knowledge about history and society. The process
of naturalisation has been somewhat faster than in Latvia: in 2016, there were
 Ethnic divides in the Baltic states 123
1.35 million people living in Estonia, of which 82,000 were so-called ‘aliens’
(non-citizens) and another 91,000 were Russian citizens (Estonian Ministry of
the Interior 2016). As in Latvia, school tuition in Russian is a controversial issue.
The amendment to the 2000 law on basic schools and upper secondary schools
states that Estonian is the language of instruction in upper secondary schools. At
the same time, the law defines the ‘language of instruction’ as the language in
which at least 60 per cent of the teaching of the curriculum is given. In other
words, it is still possible to teach some subjects in Russian (Lagerspetz and Vogt
2013).
The linguistic divide is further amplified by media consumption, which tend to
follow the ethnic division: Latvians and Estonians have ‘their’ newspapers and
TV stations and the Russian-speakers have ‘theirs’. Or more precisely: the Russians
tend to watch TV channels from Russia. Quite often, reporting on politics, social
issues and events in the world differs markedly between these different sources
of information. In other words, the ethnic groups live in different worlds (Auers
2013: 96–98). Furthermore, Russia has deliberately sought to maintain strong ties
to the Baltic Russians and Russian-speakers, for example by funding various
cultural, academic and veteran organisations, communities, unions and funds in
the Baltic states, with a pro-Russian orientation (Grigas 2014: 6).
In both Estonia and Latvia, ethnic tension has also made itself present in
different interpretations and commemorations of events during World War II. In
Estonia, such a controversy became headline news in April 2007, during the
so-called ‘Bronze Night’. The Estonian government had decided to relocate a
monument dedicated to the Soviet soldiers of the Second World War, from central
Tallinn to a military cemetery in the city’s outskirt. The decision provoked violent
street riots, in which many Russian-speaking adolescents participated (Smith
2008). According to Estonian perceptions, Moscow organised at least some of the
protests that turned into riots (Grigas 2014: 7).
As for Latvia, the ethnic dividing lines surface every year when war veterans
and nationalists celebrate March 16 with a parade in the heart of Riga,
commemorating the Latvian soldiers who fought against the Soviet Union
(alongside Waffen-SS units). In recent years, the parade has been accompanied
by controversy and counter-demonstrations organised by ‘anti-fascists’ from the
Russian-speaking community. A few weeks later every year, on May 9, tables are
turned as the Russian-speakers commemorate the Soviet victory in Europe, an
evented perceived as a provocation by Latvian nationalists (Auers 2013).
In Lithuania, the potential for ethnic conflict was always less salient. Because
of the comparatively low level of post-war immigration from other areas within
the Soviet Union, the population was rather ethnically homogenous from the very
outset of independence; and consequently, Lithuania introduced the most liberal
citizenship requirements among the three newly independent states (cf. Duvold
2006). From the early 1990s, there have been occasional incidents related to
historical antagonism in Polish-dominated districts, but at a rather modest level
(Duvold and Jurkynas 2013). By way of example, in 1997, the Lithuanian Minister
of Education questioned the existence of non-Lithuanian schools in the country.
124 Joakim Ekman and Kjetil Duvold
Thus, although less of a manifest problem, there might still be latent ethnic
conflicts waiting to surface in Lithuania as well. Since the mid-2000s, the Russian-
speaking minority issue has been replaced by a Polish issue, as the Electoral
Action of Poles in Lithuania (EAPL) virtually merged with the Russian Alliance,
as an electoral coalition, dominated by the EAPL, portraying itself as the party
for all ethnic minorities in Lithuania (Grigas 2014: 11–12).
In 2014–2015, the risk of ethnic tensions increased as a result of the Russian
military intervention in Ukraine. The Russian military intervention provoked
strong reactions in the EU and the USA, raising speculations about a new Cold
War. When Barack Obama visited Tallinn in September 2014, he assured the
Baltic states that NATO would protect them from any possible Russian aggression
(Obama 2014). In the fall of 2014, the Russian political rhetoric turned even
harsher; top politicians openly expressed concerns about the way the Russian-
speaking minorities supposedly were treated in Estonia and Latvia, and in an
interview on Swedish television in November 2014, Putin’s envoy Sergei Markov
explicitly stated that the small Baltic states had every reason to be afraid, hinting
at the possibility of a ‘Ukrainian scenario’ also in the Baltic states (Dagens
Nyheter 2014). It is not unimaginable that such threats will lead to further deteriora-
tion in the relations between the Russian-speaking minorities and the national
majorities in the Baltic states, and the controversial statements have certainly been
harmful to the prospects for security cooperation in entire Baltic Sea region.
The tension brought about by the Russian intervention was evident in the 2014
veterans’ parade in Riga, on March 26, when security was particularly tight.
Concerned voices pointed out the risk that the instability in Ukraine would spark
ethnic tension also in Latvia and Estonia (BBC 2014). Moreover, in the aftermath
of the Crimea crisis, accusations of deliberate Russian attempts to stir up
resentment among the Russian-speaking communities in Latvia and Estonia have
become more frequent. In 2014, Latvia’s Foreign Minister referred to ‘massive
propaganda, even an information warfare’, that was channeled through Russian-
speaking media in Latvia. In the spring of 2015, Lithuania’s Foreign Minister
went public with the accusation that Russia is presently waging a ‘hybrid war’ in
order to destabilise the Baltic states, calling on the EU to counteract Russian
intimidations, including a military build-up close to the borders of Lithuania,
violations of Lithuania’s overland airspace, and alleged cyber-attacks on
Lithuanian websites (International Business Times 2015; Jermalavičius 2016).
As a response, in all three Baltic states, news reporting in Russian has been
introduced, as part of the public service, in order to counteract information com-
ing from sources like the televised news service Russia Today (RT). Still, it is an
uphill battle, as Russian TV channels remain popular, and only among Russian-
speakers in the region (Ruin 2016).

Public opinion data

The data utilised for this chapter were collected as part of an ongoing research
project at Södertörn University, Sweden, funded by the Foundation for Baltic and
 Ethnic divides in the Baltic states 125
East European Studies (Stockholm): European Values under Attack? Democracy,
Dissatisfaction and Minority Rights in the Baltic States. In the spring of 2014, a
series of opinion polls were conducted among the majority populations and the
ethnic minorities in Estonia, Latvia and Lithuania. In each country, around 1,000
people from the majority population were included, alongside 500 people from
the different ethnic minority groups. In the fall of 2015, a similar follow-up
survey was conducted in Latvia.1
Turning next to the actual empirical analysis, we will start with an overview of
political dissatisfaction, as a way of understanding the potential risk of ethnic
tension within the three Baltic states. Are the ethnic minority groups more
dissatisfied with their respective political systems than the majority groups, and
if so, what does this imply for the future? What are the challenges to peaceful
coexistence between the majority and the minority groups in Estonia, Latvia and
Lithuania? Subsequently, we turn to a similar analysis of the external dimension,
i.e. the way external factors may affect ethnic relation in the Baltic context. More
specifically, this dimension may well be related to attitudes towards Russia and
post-Crimea threat perceptions.

The internal dimension: political dissatisfaction

In Table 7.1, we have outlined respondents’ views on what Norris (1999) have
referred to as the ‘performance of democracy’, or quite simply the ‘output’ of the
political system, in terms of jobs, welfare, security, political inclusion, equal treat-
ment, respect for minority rights, and so on (cf. Almond and Verba 1963; Easton
1965). For the present study, we are chiefly interested in attitudinal differences
between the ethnic groups in our sample.
In Latvia and Estonia, we find a systematic difference between the groups when
it comes to attitudes towards the functioning of the political system. On nearly all
items included in Table 7.1, the minority groups – the Russian-speakers – are
more dissatisfied than the ethnic majorities. There are widespread feelings of
being treated unfairly by the government, of having no real influence on politics,
and that politicians do not really care what ordinary people think. As many as 91
per cent of the Russian-speakers in Estonia – and 86 per cent in Latvia – feels a
lack of political influence. Nine out of ten Russian-speakers in both countries also
feel that elected politicians do not care, and seven out of ten within the minority
groups agree that there is no respect for human rights. In short, the minority groups
are distinctly critical about the way democracy works in Latvia and Estonia,
including the performance of the police, the educational system and – in particular
– the health care system. Admittedly, there are substantial levels of political
dissatisfaction among the majority populations as well, not the least when it comes
to perceived lack of political influence and lack of system responsiveness; but on
the whole, Table 7.1 depicts an ethnic cleavage in contemporary Estonia and
Latvia (cf. Berglund et al. 2013).
When it comes to Lithuania, we also find widespread dissatisfaction with what
the political system delivers, among both the ethnic minority and the titular
126 Joakim Ekman and Kjetil Duvold

Table 7.1 Performance-related political dissatisfaction (per cent)

Lithuania Latvia Estonia

Majority Minority Majority Minority Majority Minority
People like me are 82 77 75 81 61 79
treated unfairly
People like me have 77 82 73 86 74 91
no influence
Politicians don’t care 82 84 83 91 66 89
Elections are not fair 42 28 33 44 24 39
No respect for human 64 71 51 77 31 73
rights
Dissatisfied with 57 56 58 68 44 60
democracy
Police is not effective 38 39 38 37 35 42
Health care is not good 62 70 74 75 57 68
Education is not good 53 58 46 57 31 65
Source: Baltic Barometer (2014). See Appendix for variable specification.

population. Compared to Estonia and Latvia, the ethnic divide is less clear, and
the lasting impression of Table 7.1 is that of a more generally widespread political
dissatisfaction in Lithuania.
To summarize, Table 7.1 depicts three societies with more than just latent
ethnic divides. The general tendency is clear: the Russian-speaking minorities are
more dissatisfied with what their respective political system delivers. It should
nevertheless also be pointed out that Estonia differs somewhat from the two other
countries in the sense that there is less dissatisfaction and greater political trust –
in some cases even among the Russian-speakers.
In Table 7.2, this notion of an ethnic divide when it comes to political dissatis-
faction is confirmed. The table maps out the respondents’ evaluation of the present
situation, compared to previous historical eras. The question is inspired by the
kind of questions that were included in postwar West German public opinion
surveys, where respondents were asked about which period Germany and the
Germans had been best off: in the postwar West German democratic political
system, in Nazi-Germany, in the Weimar Republic, or even earlier (cf. Conradt
1980; Noelle-Neumann and Köcher 1997). In the Baltic opinion poll from 2014,
the respondents were asked: ‘Thinking about the modern history of (this country)
– in the 20th and 21st centuries – when would you say (this country) has been
best off?’ The response options were: in the interwar era; during the Soviet era
(1940–1991); from the restoration of independence up until EU-membership
(1991–2004); and today/present time (since 2004 and onwards).
 Ethnic divides in the Baltic states 127

Table 7.2 When was this country best off? (per cent)

Period Estonia Latvia Lithuania Mean

Majority Minority Majority Minority Majority Minority
Interwar era 20 2 31 14 7 3 13
Soviet era 11 56 27 66 35 59 42
1991 to 2004 31 20 22 13 25 18 22
Present time 38 21 19 7 33 20 23
Source: Baltic Barometer (2014). See Appendix for variable specification.

Table 7.2 basically documents lack of confidence in the contemporary era

throughout the region. Starting with the majority populations, it is only in Estonia
where a relative majority (38 per cent) opts for the present situation as the best
time for the own country. In Lithuania, we find almost as many who feel that the
present situation is preferable (33 per cent) as those who feel that the Soviet era
was the best time (35 per cent). In Latvia, only 19 per cent agree that the present
time is the best period in the modern history of the country; rather, the most
common response option is actually the interwar era (31 per cent), possibly
reflecting a widespread notion of the interwar era as a time of state-building and
charismatic leaders (cf. Gerner and Hedlund 1993: 57–58). Another 27 per cent
of ethnic Latvians opt for the Soviet era as the best time (Table 7.2).
Looking at the attitudinal differences between the groups in Table 7.2, a clear
ethnic divide may be observed. In all three countries, the decidedly most popular
response among the Russian-speaking minorities is the Soviet era. Differences are
significant: where about 60 per cent of the minorities in the region think that the
Soviet era was the best time, only 11 per cent of ethnic Estonians agree, alongside
27 per cent of ethnic Latvians and 35 per cent of ethnic Lithuanians. Thus, the
minority groups seem to be consistently more dissatisfied than the majority groups
with the situation in their own country after independence from the Soviet Union.2

The external dimension: EU and Russia

We have so far identified attitudinal differences that consistently point to an
ethnic divide in the Baltic states. Political dissatisfaction is directly related to the
nationality issue. What about the external dimension? Do the majority populations
and the ethnic minorities share a common view of the outside world, including
outside security concerns?
Table 7.3 sheds light on different public perceptions of the EU. Here, two mea-
sures have been contrasted. One question reads: ‘Taking everything into
consideration, would you say that (your country) has on balance benefited or not
from being a member of the European Union?’ The other measure asks respondents
about the extent to which they agree or not that ‘the EU tends to interfere too
much in our domestic affairs’.
128 Joakim Ekman and Kjetil Duvold

Table 7.3 Perceptions of the EU (per cent)

Lithuania Latvia Estonia

Majority Minority Majority Minority Majority Minority
We have benefited 71 62 59 34 79 58
from the EU
EU tends to interfere 55 54 81 84 69 69
too much
Source: Baltic Barometer (2014). See Appendix for variable specification.

As for attitudes among the majority populations, what we find in the Baltic
states is something that one might label pragmatic euroscepticism. Quite a few of
the respondents (59 to 79 per cent) agree that their own country has in fact
benefited from EU membership. At the same time, quite a few also agree that the
EU tends to interfere too much: 55 per cent in Lithuania, 69 per cent in Estonia,
and 81 per cent in Latvia (Table 7.3).
Among the minority groups, the pattern is somewhat different. In Latvia, anti-
EU sentiments are particularly visible. Only 34 per cent of the Russian-speakers
in Latvia are ready to admit that the country has benefited from being a member
of the EU, and no less than 84 per cent feel that the EU tends to interfere too
much. Latvia is thus the most eurosceptical country in our sample, where the
general verdict seems to be that the EU does more harm than good. Among
the Russian-speaking minority in Estonia, we find a similar pattern, albeit with
lower levels of EU-criticism (Table 7.3). As for the Russian-speakers in Lithuania,
we find the same kind of pragmatic euroscepticism that we also found among the
majority populations in Lithuania and Estonia: quite a few feel that the EU tends
to interfere too much in domestic affairs, while at the same time acknowledging
that Lithuania has benefitted from EU membership. To sum it up, the ethnic
minority groups are consistently less willing than the majority groups to acknow-
ledge the importance of EU membership. However, as for feelings of the EU
interfering too much, there are no distinct differences between the ethnic groups
within each country (Table 7.3).
In Table 7.4, we have explicitly asked the respondents about ‘real threats to
peace and security’ in their respective societies. The crisis in Ukraine, the Russian
annexation of Crimea and the war in Donbas have of course accented the perception
of Russia as a particularly severe threat in the Baltic states. It should be kept in
mind that the data in Table 7.4 was collected in the spring of 2014, more or less
at the same time – in February and March 2014 – as the Crimean crisis started.
From the horizon of the Baltic political elites, the events confirmed the notion of
Russia as a distinct military threat.
When it comes to attitudes towards Russia, Table 7.4 clearly demonstrates
sharp attitudinal differences between the ethnic groups. Some 64 per cent of the
ethnic Estonians – and 58 per cent of ethnic Lithuanians and 42 per cent of ethnic
 Ethnic divides in the Baltic states 129

Table 7.4 Threat perceptions in the Baltic states (per cent)

Lithuania Latvia Estonia

Majority Minority Majority Minority Majority Minority
Russia 58 20 42 5 64 4
USA 16 31 15 25 8 18
National minorities 25 14 22 4 15 3
Immigrants 23 24 27 28 16 13
Emigration 48 25 28 23 47 14
Criminals 74 65 70 61 44 57
Terrorists 59 57 46 47 30 58
Source: Baltic Barometer (2014). See Appendix for variable specification.

Latvians – acknowledge Russia as a distinct threat. The corresponding figures

among the minorities are significantly lower: 20 per cent in Lithuania, 5 per cent
in Latvia and 4 per cent in Estonia. Thus, to the average Russian-speaker in the
Baltics, Russia is not considered to be a threat. The pattern is reversed when it
comes to attitudes towards the USA, even if the differences are much less
pronounced: USA is considered to be a threat above all by the Russian-speakers,
and not so much by the majority populations. A similar pattern is detectable when
it comes to national minorities. Still, this is not really considered to be a major
problem. Only about 15 to 25 per cent of the majority populations think about
national minorities as a threat, whereas the minorities themselves to a much lesser
extent are ready to agree (14 per cent in Lithuania, and three to four per cent in
Estonia and Latvia).
It should again be pointed out that the data in Table 7.4 was collected in the
spring of 2014, well before the European refugee crisis in 2015 and onwards.
Immigrants and refugees were thus not really considered to be a major threat at
that point in time. In fact, people leaving the country was considered to be a more
significant threat, especially according to ethnic Lithuanians and Estonians.
Furthermore, the most severe contemporary threats were related to crime and
terrorists. It is quite likely that the more recent refugee crisis has had an impact
on attitudes towards perceived threats.
A follow-up survey conducted in September 2015 may indeed shed some light
on this change. In this survey, respondents in Latvia, Hungary and Bulgaria were
also asked about threats to national security. In Table 7.5, we have compared
the figures from Latvia in 2014 and 2015, revealing a growing sense of threat the
following year – after the Russian annexation of Crimea and towards the beginning
of the refugee crisis. Fear of immigration as well as terrorism is clearly on the rise
within both groups. Where the two groups clearly differ, however, is when it
comes to evaluate the threats of the two Cold War superpowers: the Russian-
speakers clearly sense a much greater threat posed by the USA than by Russia.
Moreover, larger shares of them are afraid of the USA after the escalation of
tensions following the conflict in Ukraine. Curiously, also more ethnic Latvians
130 Joakim Ekman and Kjetil Duvold

Table 7.5 Threat perceptions in Latvia in 2014 and 2015 (per cent)

Latvians (majority) Russian-speakers (minority)

2014 2015 Change 2014 2015 Change
Russia 42 75 +33 5 5 0
USA 15 23 +8 25 40 +15
National minorities 22 18 –4 4 2 –2
Immigrants 27 50 +23 28 47 +19
Criminals 70 71 +1 61 61 0
Terrorists 46 61 +15 47 68 +21
Source: Baltic Barometer (2014) and Post-Crimea Survey (2015). See Appendix for variable
specification.

appear to be afraid of the USA, although the two groups strongly diverge in their
perceptions of a US threat. The largest difference, however, concerns perceptions
of Russia. The Russian-speakers were not more afraid of Russia after Putin’s
actions in Ukraine. The majority population of Latvia, however, is clearly more
alert regarding a possible threat from Russia. Three-quarters of them think Russia
poses a threat to Latvia’s security; an increase by 33 percentage points. Of course,
such fears would seem to be not totally unfounded; the Baltic states remain of
strategic interest to Russia, possessing ice-free ports and a pathway to the West
(cf. Grigas 2014).

Concluding remarks
In this chapter, we have employed descriptive opinion data to detect attitudinal
differences between the ethnic majority and minority populations of the Baltic
states. We first took into account perceptions of regime performance (Table 7.1)
and found clear, albeit unsystematic differences between the two core groups in
Estonia and Latvia (but less so in Lithuania). However, we can also detect
differences between Estonia and the other two countries, in the sense that Estonians
are generally somewhat more satisfied with the political performance of their
country than Latvians and Lithuanians feel about their respective countries.
Inter-ethnic differences are more clearly spelt out when it comes to external
threats: in particular, the Baltic majority and minority populations perceive Russia
in very different ways (Table 7.4 and 7.5). We can also detect different perceptions
of history: while ethnic Estonians think contemporary times are the best for the
country and somewhat more mixed perceptions among Latvians and Lithuanians,
the Russian-speakers overwhelmingly think that the Soviet period was the best
(cf. Table 7.2). Hence, the most striking differences between the eponymous
Baltic populations and the Russian-speaking minority populations concern space
and time: they strongly differ regarding the historical and contemporary location
of the Baltic states – in the borderland between Russia and the West. After 25
years of independence, this state of affairs has not led to breakdown or even major
 Ethnic divides in the Baltic states 131
divides regarding perceptions of the domestic performance. But it is a moot
question whether integrated national communities can be established when the
groups fail to agree on basic issues related to identity and belonging.
On top of this come the post-Crimea political reality and an unpredictable
Russian government. While direct military aggression from Russia seems unlikely
for the time being, an escalation of Russia’s hybrid and information war on the Bal-
tic states remains a challenge. As demonstrated in this chapter, there would seem
to be potential for stirring civil unrest by fuelling social tensions. The challenge for
the future, in order to decrease the potential positive reception to Moscow’s
‘protection’ policy, would be to further integrate the Russian-speakers into the
Baltic communities, making them a normal part of the political life in the three
states.

Notes
1 The data collection (Baltic Barometer 2014) is directly inspired by a series of opinion
polls conducted in the Baltic states and Central and Eastern Europe in the 1990s,
under the leadership of Richard Rose (cf. Rose et al. 1998; Rose 2005). More
specifically, the data collection from 2014 may be seen as a sequel of the surveys New
Europe Barometer 2001 and the New Baltic Barometer VI from 2004 (Centre for the
Study of Public Policy at the University of Strathclyde, UK, in collaboration with
the research Conditions of European Democracy at Örebro University, Sweden). The
survey from 2014 replicated key parts of the questionnaire from 2001 and 2004,
but also added a number of questions concerning respondents’ attitudes towards
minority groups in society, the former financial crisis, the country’s history, and the
respondents’ attitudes towards democracy. The new questionnaire was tested in a pilot
study in the three countries in January 2014, and was slightly revised afterwards.
Opinion institute Saar Poll Ltd in Estonia was hired as coordinator with the task of
harmonising the data collections in the three countries, as well as to implement the data
collection in Estonia (February 11 through March 5). In Lithuania, the fieldwork
was carried out by VILMORUS (February 21 through March 19), and in Latvia the
research project contracted TNS Latvia to do the fieldwork (February 8 through
March 9). In the fall of 2015, TNS Latvia did a follow-up study (Post-Crimea Survey
2015), to capture post-Crimea attitudes among Latvians and Russian-speakers in
Latvia.
2 It should be noted that this particular measure (Table 7.2) has not been previously used
in opinion surveys covering the Baltic states (cf. Rose 2005). Thus, we cannot know
whether the seemingly low support for the current political situation has to do with
recent trends. It is nevertheless tempting to interpret the figures as at least partly a
result of the financial crisis in 2008–2010, which hit all the Baltic states severely, but
Latvia in particular.

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134 Joakim Ekman and Kjetil Duvold
Appendix: variable specification

Measures of performance-driven political dissatisfaction

(The percentages displayed in Table 7.1 are the sum of responses 3 and 4 in the
questions listed below.)
To what extent do you agree or disagree with the following statement: under our
present system of government, people like you are treated equally and fairly by
government? (1) Definitely agree; (2) Somewhat agree; (3) Disagree somewhat;
(4) Definitely disagree.
Under our present system of government how much influence do you think people
like you can have on government? (1) A lot of influence; (2) Some influence; (3)
Not much influence; (4) No influence.
How many elected politicians care about what people think? (1) Most politicians
care; (2) About half care; (3) Less than half care; (4) Hardly any care.
Would you say that the most recent election of parliament was conducted fairly
or not? (1) It was a fairly conducted election; (2) To some extent fairly; (3) Not
very fairly; (4) Not at all fairly.
How much respect do you think this country’s government has for individual
human rights? (1) A lot of respect; (2) Some respect; (3) Not much respect; (4)
No respect at all.
On the whole, are you very satisfied, fairly satisfied, not very satisfied, or not at
all satisfied with the way democracy works in our country? (1) Very satisfied; (2)
Fairly satisfied; (3) Not very satisfied; (4) Not at all satisfied.
How would you evaluate the work of the police in preventing crime in your
community? (1) Very good; (2) Fairly good; (3) Not so good; (4) Bad.
How would you evaluate the current system for health care in this country? (1)
Very good; (2) Fairly good; (3) Not so good; 4) Bad.
How would you evaluate the current educational system in this country? (1) Very
good; (2) Fairly good; (3) Not so good; (4) Bad.

Measure of political dissatisfaction (Table 7.2)

Thinking about the modern history of (this country) – in the twentieth and twenty-
first centuries – when would you say (this country) has been best off? (1) Interwar
era; (2) Soviet era (1940–1991); (3) From the restoration of independence up until
EU-membership (1991–2004); (4) Today/present time (since 2004).

Measures of EU support (Table 7.3)

Which one of the following two statements is closest to your opinion regarding
globalisation?
 Ethnic divides in the Baltic states 135
Taking everything into consideration, would you say that (your country) has on
balance benefited or not from being a member of the European Union? (1)
Benefited; (2) Not benefited.
To what extent do you agree or disagree with the following statement: the EU
tends to interfere too much in our domestic affairs. (1) Strongly agree; (2)
Somewhat agree; (3) Somewhat disagree; (4) Strongly disagree. The percentages
displayed in Table 7.3 are the sum of responses 1 and 2.

Measure of threat perceptions (Table 7.4 and 7.5)

Do you think any of these pose a real threat to peace and security in this society?
(1) Big threat; (2) Some threat; (3) Little threat; (4) No threat. The percentages
displayed in Table 7.4 and 7.5 are the sum of responses 1 and 2 for each category:
Russia; USA; National minorities in our society; Immigrants/refugees from other
societies; Emigration/people leaving our country; Criminals operating within this
country; Terrorists.
Part III

Crises of resource
accumulation
8 Stability’s end
The political economy of Russia’s
intersecting crises since 2009
Ilya Matveev

Introduction
In his now famous article, Claus Offe presciently argued that the very nature of
the ‘triple transition’ in postcommunist states (simultaneous transition to demo-
cracy, market economy and a nation-state) was likely to result in multiple
contradictions (Offe 1991). Perhaps nowhere was it as evident as in Russia, where
the decade of the 1990s saw unprecedented political, economic, and social
upheavals. In the 2000s, however, the tensions and contradictions were seemingly
subdued. Under the banner of ‘stability’, time itself seemed to slow its pace in
Putin’s Russia; hence the frequent comparisons with Brezhnev’s zastoi, another
period ‘of a historical pause, of floating in the void’ (Prozorov 2009: 93).
By the end of the decade, however, the artificial calm was wearing off. In
2008, Putin’s finance minister, Alexey Kudrin, was still arguing that Russia was
‘an island of stability’ in the sea of the world crisis (RT International 2008);
a year later economic crisis reached Russia – and hit hard. Economic problems
were compounded with political ones when, in 2011, tens of thousands went to
the streets in Moscow and other cities to protest election fraud and announce that
the state’s ‘non-intrusion pact’ with society was now over (Petrov et al. 2014).
The advance of history continued on Russia’s borders with the Euromaidan
uprising in Ukraine, to which Russia reacted in a way that unleashed the new,
‘geopolitical’ crisis, this time not confined to Russia alone (though one that had
profound consequences for the Russian state and society). Finally, in 2014, Russia
was again thrown into an economic crisis, with the first signs of recovery emerging
only in the end of 2016. What to make of this rapid accumulation and condensa-
tion of crises since 2009? This chapter explores the mutual overdetermination of
economic, political and ‘geopolitical’ crises; it pays particular attention to the
restructuring of the state as a result and response to the multiple crisis phenomena;
it also envisions crisis narratives as constitutive of crisis phenomena themselves.

Crisis, contradiction and overdetermination

Building on Offe’s insights, the editors of the present volume see multiple crises
as a permanent feature of the post-Soviet states. They trace such crisis-prone
140 Ilya Matveev
development to the consequenses of the dissolution of the Soviet Union as well
as problematic political and economic transformation of the successor states.
Furthermore, they see these spheres as interconnected, ‘meaning that the trans-
formation of one sphere affects the remaining three’. I fully agree with such
characterisation of the post-Soviet states. However, by studying one country –
Russia – I take a more conjunctural approach, investigating specific crises that
emerged there since 2009 and their interconnectedness.
The theory particularly suited for the analysis of such conjunctural inter-
connectedness of crises is the theory of overdetermination, developed by Louis
Althusser in the 1960s. For Althusser, the fallacy of ‘inverted Hegelianism’ in
Marxist thought consisted in treating the complexity of concrete social formations
as a mere reflection of a single contradiction on the level of the ‘base’, i.e the eco-
nomy. Instead, Althusser came up with an understanding of a social formation
as a ‘structured, complex unity’ of contradictions that are endowed with separ-
ate existence, yet are ‘overdetermined’, i.e. mutually constitutive of each other
(Althusser 2005: 101, 199). In Stephen Cullenberg’s words:

Overdetermination is a theory of existence that states that nothing exists in

and of itself, prior to and independent from everything else, and therefore all
aspects of a society exist only as the result of the constitution (mutual
determination) of all of society’s other aspects.
(Cullenberg 1999: 812)

In effect, studying crises as overdetermined requires an investigation of their

interplay, i.e. specific ways in which they constitute each other in a given historical
conjuncture.
The nature of this overdetermination in the realm of the political requires a
particular attention to the restructuring of the state. Marxist scholars have long
argued that the state has a strategic role vis-à-vis crises in capitalist societies.
According to Jurgen Habermas and Claus Offe, the state has a (limited) capacity
to mitigate economic crises that are ‘displaced’ into the state apparatus (Habermas
1975: 46; Offe 1976). More broadly, according to Nicos Poulantzas, the state
both secures the conditions for the reproduction of a capitalist social formation
and ‘condenses’ contradictions and struggles ‘in a necessarily specific form’
(Poulantzas 1978: 132). Thus the restructuring of the state is both a response to
and a reflection of the contradictions in society.
Building on the insights of state-theoretical research, Colin Hay adds a new,
discoursive dimension to the relationship between crisis and the state. For Hay,
crisis is not an objective condition; rather, it is a discoursive construction that
creates the necessary conditions for the radical transformation of the state (the
new ‘state project’). Thus, Hay draws a clear analytical distinction between
‘failure (an accumulation or condensation of contradictions) and crisis (a moment
of decisive intervention during which those contradictions are identified)’ (Hay
1999: 324). For Hay:
 Stability’s end 141
There is no simple correspondence between crisis as a narrative of systemic
failure on the one hand and the nature of the contradictions and ‘symptoms’
of failure recruited to a crisis narrative on the other. Within such a conceptual
schema, failure and crisis are thus relatively independent of one another.
(Hay 1999: 324)

In other words, crisis is a narrative mobilised by a certain political force that

integrates existing social contradictions as ‘symptoms’ of a deeper malady that
requires immediate treatment. Such treatment takes the form of the radical
transformation of the state (the new ‘state project’).
In order to conceptualise crisis as a moment of decisive intervention, Hay refers
to Offe’s notion of a ‘structural mode of political rationality’, i.e. ‘a response to
systemic failure in which the very institutional form of the system of reference,
in this case the state, is fundamentally transformed’ (Hay 1999: 328). In contrast,
a ‘conjunctural mode of political rationality’ is ‘a response to systemic failure in
which a solution is sought within the pre-existing and largely unmodified structures
of the state regime, generally in the absence of a crisis narrative’ (Hay 1999: 329).
Nevertheless, according to Hay, even such ‘minor tinkering’ can, in fact, prove
decisive once a certain ‘tipping point’ is reached: a relatively minor intervention
can either enhance the stability of a system or exacerbate its latent contradictions
(Hay 1999: 325).
These theoretical insights on the overdetermination of crises, the relationship
between crisis and the state, and crisis as discoursively mediated process will
serve as methodological pointers for further analysis. However, they need to be
specified in light of Russia’s path-dependent transformation since 1991.

Involution, peripheralization and Bonapartist reaction:

Russia in 1991–2008
Scholarship on post-Soviet Russia, while never homogeneous, has neverthe-
less been captivated by the ideas of the ‘transitology’, with their teleological
implications. There has been an outgrowth of theories that Michael Burawoy
called ‘deficit models’, as they explored the causes of Russia’s ‘failure’ to build
either democracy or liberal capitalism (Burawoy 2001: 270). In contrast,
Burawoy suggested his own theory of involution to capture the specificity of post-
Soviet Russia’s historical development without measuring its ‘success’ or ‘failure’
in reaching a certain endpoint. For Burawoy, Russia’s ‘great involution’ was
the opposite of Karl Polanyi’s ‘great transfomation’. Economically, it meant the
formation of Weber’s ‘speculative, adventure, booty capitalism’ in the sphere
of exchange that siphoned off the resources from the sphere of production
without re-investing in it (Burawoy 2001: 279). Socially, it meant the ‘decommo-
dification’ of labour (in the form of non-payment of wages) and the move toward
subsistence strategies in a ‘network society’ that featured reciprocal ties between
households, but lacked institutions (Burawoy 2001: 281, 284). Politically,
142 Ilya Matveev
it meant the ‘recomposition of the party-state into a neo-feudal polity’ (Burawoy
2001: 270).
A similarly holistic, non-teleological theory of Russia’s post-Soviet development
that was more focused on politics and the state was suggested by Georgi
Derluguian. While Burawoy was inspired by Polanyi, Derluguian relied on
Immanuel Wallerstein and other world-systems theorists (though both owe much
to Max Weber). For Derluguian, the weakening and disintegration of the Soviet
developmental state led to Russia’s peripheralisation (Derlugian 2005: 15–16,
222–228). The driving force behind this process was neopatrimonialism,
understood as a ‘reactive strategy, pursued by bureaucratic elites and ascendant
political interlopers’, that consisted in ‘a practice of corrupt patronage that relies
on the privatisation of state offices’ (Derluguian 2005: 15). According to
Derluguian, the defining features of post-Soviet neopatrimonial polities were: the
emergence of ‘comprador oligarchies that monopolise the nexus between global
economic flows and the local extraction of resources’; state degeneration due to
patrimonial practices; economic decay and the ‘defeat and demoralisation of the
self-conscious social groups we usually call ‘civil societies’; manipulated elections
and ‘occasional bouts of political violence’ (Derluguian 2005: 15–16).
While both involution and peripheralisation can be seen as objective tendencies,
they have acted as relative, not absolute constraints on Russia’s historical
development. In ‘a spiral of path dependency and path shaping’ (Jessop 2015: 56),
events can change agents’ strategic orientations, resulting in the transformation
of the very structures that constrain agents’ behaviour. The 1998 crisis in Russia
is a case in point. It triggered the changes in the nature of Russian capitalism,
ultimately resulting in the transformation of the state-form as well.
It was a crisis of the economic system that emerged in Russia in the 1990s. In
line with Burawoy’s analysis of Russia’s parasitic ‘merchant capitalism’ in the
sphere of exchange that siphoned off the resources from the sphere of production
(Burawoy 2001: 279), powerful economic players avoided investment in the real
economy, instead engaging in financial speculation, with short-term government
bonds playing a particularly important role (see also Nesvetailova 2005: 246–247).
The government, in turn, had to rely on borrowing precisely because it was unable
to effectively tax big businesses. This created a vicious circle of weak state
capacity, speculation and debt. In 1998 the whole system collapsed, resulting in
the reorganisation of the economic activities of big business.
On the one hand, after the 1998 crisis the oligarchs could no longer profit from
short-term government bonds. On the other hand, those of them who had previously
acquired assets in the export industries greatly profited from the devaluation of
the rouble and rising raw materials prices. Thus the 1998 crisis ‘finished the
process of pushing virtually all [the oligarchs] into the real economy as their
priority area of operation’ (Fortescue 2006: 107; see also Clarke 2007: 62). This
led to the new scramble for industrial assets in 1998–2002, with business groups
colluding with regional authorities in order to get the most lucrative companies
(Volkov 2008; Yakovlev 2014). But it also led to the reassessment of the oligarchs’
interests in relation to the central state.
 Stability’s end 143
According to Andrey Yakovlev, business players developed an understanding
that ‘an economy cannot exist without a state, but a state cannot function without
taxes’ (Yakovlev 2014: 13). This led to a highly cooperative pattern of negotiations
between economic and political actors resulting in the adoption of the new tax
code in 2001 (Luong and Weinthal 2004). More broadly, according to Yakovlev,
big business developed the need for a strong state because a strong state could
protect it from the negative outcomes of economic crises in the future, such as ‘a
substantial redistribution of power and property’ (Yakovlev 2006: 1054; see also
Yakovlev 2014: 13)1. In effect, the demand for state consolidation was the product
of the development of Russian capitalism after the 1998 crisis. In the words of
William Tompson:

Having acquired vast fortunes under Yeltsin largely as a result of their success
in exploiting the state’s weakness, [the oligarchs] had much to gain from
Putin’s drive to rebuild the state . . . For Russia’s new rich, state-building and
structural reform were intended to consolidate the victories they had won in
the 1990s.
(Tompson 2005: 188)

Vladimir Putin, elected as Russian president in 2000, saw the reconstitution of

the state as his main priority. His project bore strong resemblance to Bonapartism,
as decribed by Marx in his work The Eighteenth Brumaire of Louis Bonaparte.
This was manifested by Putin’s counterrevolutionary rhetoric of the ‘return to
order’, his reliance on the passive support of the atomised masses, but beyond all
by his quest for state autonomy. According to Marx, ‘Only under the second
Bonaparte does the state seem to have made itself completely independent’ (Marx
1975: 122). In fact, ‘an enormous bureaucracy, well gallooned and well-fed’ was
by far the most important idée napoléonienne (Marx 1975: 129). In Marx’s
description, under Louis Bonaparte the bureaucracy finally achieved autonomy
from society and became the basis for his personal rule. The parallel with Putin’s
much-discussed ‘state-building’ project is obvious2.
On the other hand, as Marx pointed out, Bonaparte’s personal rule was ultimately
beneficial for the bourgeoisie: ‘[t]o preserve [the bourgeoisie’s] social power
intact its political power must be broken. . . . in order to save its purse it must
forfeit the crown’ (Marx 1975: 67). The same can be said of Putin’s rule. In Simon
Pirani’s words:

The state disciplined the oligarchs in the interests of the property-owning

class as a whole, and restored to itself the functions it lost in the chaos of the
1990s. Its power is not an end in itself, but a means of managing post-Soviet
Russian capitalism and integrating it into the world system.
(Pirani 2010: 1)

According to Jacob Rigi, ‘The Yeltsin government was a government of

oligarchs, while the Putin government is a government for oligarchs’ (Rigi 2005:
144 Ilya Matveev
202). The simple truth of this statement is manifested by the rapid rise of the
number of billionaires in Russia: from zero in 2000 to 87 in 2008, second only to
the United States (Kroll 2008)3.
Putinism was similar to Bonapartism in another respect as well, namely, the
nature of mass support for the regime. Marx claimed that small-holding peasants,
Louis Bonaparte’s main base, constituted a class only insofar as they shared the
same conditions of existence; yet politically, they did not constitute a class:
‘[T]here is merely a local interconnection among these small-holding peasants,
and the identity of their interests forms no community, no national bond, and no
political organisation among them’ (Marx 1975: 124). Thus, Marx famously
argued, ‘They are . . . incapable of asserting their class interest in their own name,
whether through a parliament or a convention. They cannot represent themselves,
they must be represented’ – represented by Louis Bonaparte (Marx 1975: 124).
To what extent Russian society fit Marx’s description of small-holding peasants
in Louis Bonaparte’s France is debatable. What is clear, however, is that the
‘Bonapartist’ mode of political representation was deliberately – and ultimately
successfully – constructed in Russia around the notion of ‘Putin’s majority’, i.e.
the majority of the population that lacks its own voice and can only be represented
by Putin4. The features of this mode of representation are discernible in the
analyses of the support for ‘delegative democracy’ in Russia (Hale 2011) or the
‘plebiscitarian’ nature of Putin’s rule (Hanson 2011).
In 2000–2008, the new system seemed to work, aided, of course, by high oil
prices. The economy showed rapid growth. Open social tensions were easily
resolved, as in the case of the protests against the neoliberal welfare benefits
reform in 2005 (Wengle and Rasell 2008). Yet, despite the fact that the changes
since the 1990s were very real, the tendencies that Burawoy described as involution
and Derluguian described as peripheralisation were modified, but not reversed in
the 2000s.
Economically, investment in industry increased from the very low level of the
1990s, but most of this investment was in:

piecemeal re-equipment and reconstruction of existing facilities to maintain

or expand existing production capacity in a favourable market environment,
rather than in the construction of new plants which will be able to produce to
world cost and quality standards and actively expand the market.
(Clarke 2004: 420)

This, according to Simon Clarke, indicated that ‘the driving force of capitalist
development in Russia has not yet become endogenous’, still being dependent
on high oil prices (Clarke 2004: 420). Unlike other rapidly growing economies
such as China and India, economic growth in Russia was not driven by invest-
ment (Tabata 2009: 684). Gross capital formation in 2000–2008 on average
amounted to 21.5 per cent of the GDP, compared to 40.3 per cent in China and
30.8 per cent in India5. On the other hand, ‘illicit financial flows’ from Russia in
2000–2008 amounted to $427 billion, second only to China (Kar and Curcio
 Stability’s end 145

16

14

12

10
Russia
8
India
6 China
4

0
2000 2001 2002 2003 2004 2005 2006 2007 2008

Figure 8.1 GDP growth (annual per cent)

Source: World Bank.

50

45

40

35 Russia
India
30
China
25

20

15
2000 2001 2002 2003 2004 2005 2006 2007 2008

Figure 8.2 Gross capital formation (per cent of GDP)

Source: World Bank.
146 Ilya Matveev
2011). Low investment, high capital outflow and continuing dominance of
natural resource exports testify to the persistent peripheral nature of Russian capi-
talism6.
Politically, the ascendancy of the state helped to reproduce patrimonial practices
instead of uprooting them. Putin’s declared goal was to build an effective
administration based on the so-called vertikal’ vlasti (‘power vertical’). However,
according to Vladimir Gel’man, the new system turned out to be far from an
army-like chain of command; instead, it was based on the distribution of favours
on each level of the ‘vertical’. Corruption was not a side effect, but rather an
indispensable part of the ‘vertical’s functioning (Gel’man 2015: 7)7. It would be
a gross oversimplification to reduce all new economic policies, such as the
expansion of state ownership and the creation of state corporations in 2004–2008,
to the simple logic of patronage and corruption, as some authors, including
Gel’man, tend to do. I agree with Neil Robinson’s diagnosis: the failure to
transform the economy and overcome hydrocarbon dependency in 2000–2008
testifies to the fact that one cannot speak of a developmental state or ‘a state-led
model for development’ in Putin’s Russia (Robinson 2011: 435). Instead, elements
of neoliberalism and elements of developmentalism co-exist in a rather incoherent
manner within Putin’s Bonapartist neopatrimonial state.
Socially, the period of 2000–2008 saw rapid improvement of many indicators
due to economic growth. For example, the share of the population with income
below the subsistence minimum dropped from 29 per cent in 2000 to 13.4 per cent
in 2008. Furthermore, the period witnessed the emergence of new solidarities,
such as the housing movement and militant trade unionism at the factories
belonging to multinational companies (Clément 2015). However, many negative
trends that emerged in the 1990s persisted in the 2000s. Natural population growth
was registered for the first time only in 2013: depopulation continued throught the
2000s. Average life expectancy surpassed the 1990 level (69.2 years) only in
2011. Per capita GDP increased, but so did inequality: GINI coefficient rose from
0.395 in 2000 to 0.421 in 2008. Inequality was particularly spectacular if measured
by wealth, not by income.
Despite the artificial calm of ‘stability’, the period of 2000–2008 was just as
ridden with contradictions as the previous decade. Since 2009, these contradictions
burst into the open.

From the economic crisis to the ‘winter of discontent’:

Medvedev’s interregnum
Global economic turbulence hit Russia harder than other countries: GDP declined
by 8 per cent in 2009, compared to 4 per cent on average in OECD countries
(OECD 2014). The reason for this lies in the features of Russian capitalism, as it
developed in the 2000s. Anastasia Nesvetailova usefully disentangles its inner
workings, going beyond the usual reference to the dependence on oil exports. For
Nesvetailova, Russian capitalism in 2000–2008 was characterised not only by
(1) the dominance of hydrocarbon exports that financed the country’s ‘imported
 Stability’s end 147
development’, but also by (2) financialisation that acted as a boost for domestic
demand and (3) offshorisation as the mode of integration into global capital
markets by (recycled) Russian capital (Nesvetailova 2015: 5). Fueling the growth
in 2000–2008, these factors contributed to the economic decline in 2009. This
decline was driven not only by the collapse of exports, but also by the exposure
of major companies and banks to foreign borrowing (Robinson 2013: 456).
Russia’s response to the crisis was in many ways similar to that of other
countries: the government sharply increased public spending in order to alleviate
the effects of the crisis. The total value of stimulus package was equivalent
to roughly 12–13 per cent of GDP in both 2009 and 2010 (Robinson 2013: 459).
The stimulus could be seen as effective: despite the sharp contraction in 2009,
Russia returned to the trajectory of growth next year, posting 4.5 and 4.4 per cent
increases in GDP in 2010 and 2011, consequently. However, 2011 saw unprece-
dented political protests. Was there a connection between the economic and
political crisis and, if yes, how can it be conceptualised?
The issue of the direct impact of the 2009 economic crisis on the political
attitudes of the Russian population is unclear and subject to debate (see Chaisty
and Whitefield 2013). Furthermore, the 2011–2012 protests were not driven by
economic demands: as Daniel Treisman points out, the protesters ‘seemed to be
motivated by ideas rather than bread-and-butter issues, a desire for justice and
dignity rather than for higher wages’ (Treisman 2014: 384). However, a connection
between the 2009 economic crisis and 2011–2012 protests can be established
using Colin Hay’s theory of the narrativity of crisis. Neil Robinson has already
laid the basis for such an interpretation. He argues that:

Part of the reason for the lukewarm response [to the economic recovery]
might also be that narratives about the handling of the crisis and its aftermath
developed that portrayed government action as less than successful and
warned of more crisis. No matter what any individual Russian’s experience
of crisis might have been, the discursive frame through which crisis has been
explained by political elites was a negative one. These narratives seem to
have been produced at all levels of Russian politics and society, from within
and without government, by experts, by politicians and by social actors, both
organised and disorganised.
(Robinson 2013: 463–464)

Indeed, crisis narratives did not come only from the critics of the regime.
Newly elected president Dmitry Medvedev himself framed economic problems
that emerged in 2009 as symptoms of a wider crisis besetting Russia’s political
and economic model – a model that, as Medvedev forcefully argued in his
programmatic article, needed to be changed, not simply reproduced (Medvedev
2009). Medvedev’s narrative of the crisis was directly tied to ‘modernisation’, his
overarching reform project (the new ‘state project’, in Hay’s terminology). Thus
Medvedev and his team attempted to recast the crisis as ‘a moment of decisive
intervention’ (Hay 1999: 317).
148 Ilya Matveev

110

105

100

95

90

85

80
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011

Figure 8.3 Quarterly GDP growth

Source: Rosstat.

90%

80%

70% Pun's approval

60%

50% Medvedev's
approval
40%

30% The country is

March 2009

December 2009
March 2010

December 2010

December 2011
March 2011
June 2009

June 2010

June 2011
September 2009

September 2010

September 2011

moving in the right

direcon'

Figure 8.4 Poll numbers

Source: Levada.ru.
 Stability’s end 149
However, this ‘decisive intervention’ never came, not least due to Medvedev’s
own political weakness in the shadow of Putin and his inability to launch
comprehensive reforms8. In effect, through his criticism of Russia’s political
and economic model Medvedev helped to perpetuate the notion that Russia was
‘in crisis’ – without truly acting on that crisis. This, in Robinson’s argument,
helps to explain why both Putin’s and Medvedev’s approval ratings as well as the
‘index of trust that the country is moving in the right direction’ did not recover
despite the beginning of the economic recovery in late 2009 (Robinson 2013:
461). Frustration with the government’s performance after the crisis, in turn,
formed the backdrop for the 2011–2012 protests9.
The new movement, however, was overdetermined by other factors as well.
Margarita Zavadskaya and Natalia Savelieva list the various causes of the
2011–2012 protests, apart from the economic crisis: (1) the ‘job swap’ between
Medvedev and Putin at the United Russia’s party congress in November 2011,
where Putin announced his intention to run for the presidential office again to the
shock and dismay of many Russian citizens; (2) United Russia’s shrinking support
among the young and educated voters; (3) appearance of new counter-publics, for
instance, in the social media (Zavadskaya and Savelieva 2015). To this list they
add the impact of the December 2011 parliamentary elections themselves: the
shared experience of electoral fraud acted as a catalyst for street protests10. I now
turn to the role of the movement ‘for fair elections’ in the unfolding events.

From the political to ‘geopolitical’ crisis: Putin’s third term

Although mass protests in Moscow and other Russian cities in 2011–2012 failed
to achieve their stated goals, they have triggered profound changes in the regime’s
mode of operation, shaping the contours of Putin’s third term. The hallmark of
the previous years has been pervasive depoliticisation, nurtured by the authorities
themselves. The protests, however, signified that the terms of society’s relationship
with the state have changed: the authorities could no longer rely on the apathy and
indifference of the population (Petrov et al. 2014; see also Zhuravlev 2014). In
response, the regime initiated a politicisation of its own, going on a broad ideo-
logical offensive in the spirit of reactionary conservatism and traditionalism
(Lipman 2013; Robinson 2014). This new, ‘ideological’ mode of operation was
reflected in the restructuring of the state on all levels. For example, the Presiden-
tial Administration, de facto center of power within the Russian state system,
saw the creation of the new Directorate of Social Projects, tasked specifically
with ‘patriotic’ ideological indoctrination. The new Directorate coordinates the
ideological work of the government, NGOs, schools and universities, cultural
institutions, as well as other Directorates of the PA (Surnacheva 2013). Apart
from ideology, the regime has increasingly relied on repression, engaging in what
Vladimir Gel’man called ‘politics of fear’ (Gel’man 2016). The new repressive
turn was also reflected in the restructuring of the state, with coercive bodies like
the Investigative Committee growing in importance.
150 Ilya Matveev
Russia’s actions in Ukraine in 2014 were a conjunctural response to a specific
set of events in the neighbouring country. However, this response was shaped by
the politics of Putin’s third term. On the one hand, the dismantling of the regime
of ‘tandemocracy’ that existed in 2008–2012 led to the weakening of Medvedev
and his team and the strengthening of various siloviki factions (Treisman 2013).
The latter were instrumental in shaping Russia’s strategy both in Crimea and in
Eastern Ukraine. On the other hand, the new ideological offensive allowed certain
people to get closer to power, such as businessman and self-declared Orthodox
patriot, Konstantin Malofeev, who turned out to be connected to the key people
involved in the Ukrainian events (Weaver 2014).
Domestically, Russia’s actions in Ukraine reinforced the tendencies that emerged
during Putin’s third term. In his 2014 address to the parliament Putin described
the ‘historical reunification of Crimea and Sevastopol with Russia’ in a highly
ideological language of nationalist populism (Kremlin.ru 2014). State-controlled
media greatly amplified this message. Putin’s approval rating as well as the ‘index
of trust that the country is moving in the right direction’, while remaining stagnant
in 2012–2013, climbed back to their pre-crisis levels. Political opposition was
marginalised as ‘fifth columnists’ and ‘national traitors’. The regime achieved a
new kind of stability, yet it was something of a stability of crisis. As Gleb
Pavlovsky perceptively argued in a series of articles, the new system relied on the
constant production of mediatised conflicts (Pavlovsky 2014a, 2014b). Emotions
that have previously been displaced from the public sphere were forcefully
returned to it. Instead of downplaying the crisis or recasting it as an opportunity
for reform, as Medvedev’s administration did, Putin’s post-Crimean ideological
apparatus amplifies the crisis, yet seeks to displace it away from Russia’s borders:
it is always a crisis of Ukraine, the EU, the international order, but not of Russia
itself. Such symbolic displacement, however, does not resolve the very real
contradictions that continue to accumulate in the country.

The persistence of crisis

The political changes during Putin’s third term took place against the backdrop
of economic stagnation and decline. After two years of restorative growth, the
second quarter of 2012 saw the beginning of economic slowdown. In 2013, GDP
grew only by 1.3 per cent, despite historically high oil prices. The model of
capitalism based on natural resource exports, low investment and high capital
outflow hit the ceiling. According to Standard & Poor’s, the rapid growth in
1998–2008 was based on the expansion of the utilisation of existing productive
capacity: from 55 per cent in 1998 to almost 80 per cent in 2008. The crisis
witnessed the drop in capacity utilisation; however, by 2012 it returned to pre-
crisis levels. The economy faced acute shortage of productive capacity (Standard
& Poor’s, 2013, see also IMF 2013). Economic stagnation was coupled with
financial fragility. According to Nesvetailova, the signs of the banking crisis were
already present in early 2014 (Nesvetailova 2015: 11). The sanctions against
Russia and the cut-off of Russian banks from international capital markets as well
 Stability’s end 151
as the sharp decline in oil prices in the last quarter of 2014 collapsed the rouble
and turned stagnation into a full-blown crisis. The recession lasted for seven
quarters in a row; 0.3 per cent growth was only registered in the last quarter of
2016. Even the authorities themselves admit that the crisis is, at best, replaced
by stagnation which could last for years if not decades (Kuvshinova 2016).
Importantly, economic problems are overdetermined by the ‘geopolitical’ crisis,
but not directly caused by it: Russia’s economic model showed clear signs of
exhaustion well before the confrontation with the West in 2014.
The recession of 2014–2016 resulted in social tensions. According to the Center
for Social and Labour Rights, the monthly number of industrial actions, including
strikes, doubled since 2014 (Biziukov 2016). Industrial workers protest against
the non-payment of wages. Austerity measures in the public sector lead to the
protests of public employees, such as the hunger strike of ambulance workers in
Ufa and the work-to-rule strike in the Moscow health care system in 2015.
Furthermore, while trying to increase budget revenue, the government introduces
new taxes and fees. This has already led to a massive, country-wide protest of
long-haul truck drivers. More generally, there are signs that the ‘rallying around
the flag’ effect is wearing off: Putin’s approval rating remains high, but the
number of those who believe that ‘the country is moving towards a dead-end’ has
increased from the post-Crimean low of 22 per cent to 33 per cent in March 2017
(Levada.ru).
Faced with the continuing economic crisis, the state remains within the
‘conjunctural mode of political rationality’ (Hay 1999: 329). There is no shift
towards the implementation of a comprehensive reform project that would
represent the ‘structural mode of political rationality’. Two such projects exist:
one by Alexei Kudrin, who supports neoliberal structural reforms, and another by
Sergei Glaziev, who argues for a highly interventionist, state-led development
policy. Both economists have influence over the government: Kudrin was recently
nominated as vice president of Putin’s Economic Council, while Glaziev serves
as Putin’s economic adviser. Yet neither is allowed to proceed with the imple-
mentation of the reforms that they suggested. The situation resembles what Hay,
following Gramsci, calls ‘catastrophic equilibrium’, in which ‘the symptoms of
failure are readily apparent and widely perceived, yet no sense of crisis is mobilised
and no decisive intervention is made’, or, in Gramsci’s words, ‘the old is dying
yet the new cannot be born’ (Hay 1999: 327).
Politically, the regime seems to be prepared for the new economic situation:
the space for political contestation as well as inter-elite rivalry is dramatically
narrowed, while nationalist mobilisation replaces economic development as the
source of regime’s legitimacy. However, continuing economic failure sets the
scene for the accumulation of contradictions that could lead to unexpected
outcomes. Faced with declining budget revenues, the government forces the
regions to bear the brunt of expenses on education and health care, imposing
severe austerity on these sectors. According to a Higher School of Economics
analyst, “[s]ince 2013–2014, the federal budget has been consistently withdrawing
from financing these spheres” (Akindinova 2013: 3). Furthermore, high-level
152 Ilya Matveev
experts and government officials, including Minister of Economic Development
Alexey Ulyukaev, have long been preparing the ground for the ‘inevitable’ rise
of the retirement age (Interfax.ru 2016a). Perhaps even more importantly, in the
name of budget consolidation the government encroaches on Russia’s vast informal
economy. In October 2016, Minister of Labour and Social Protection Maxim
Topilin suggested that formally unemployed working-age citizens should pay a
special annual tax of 20,000 roubles (320 USD), calculated as a sum of income
tax and social benefit fees on the officially defined minimum salary (RIA Novosti
2016). The government’s justification for the new tax is that millions of Russians
who are employed informally should nevertheless contribute to the financing of
public services, such as education and health care, that they are entitled to use11.
Topilin’s proposal is one of the measures developed in order to generate new
sources of budget revenue from Russia’s expansive ‘garage economy’ that,
according to some estimates, employs 30 million people, or 40 per cent of the
working-age population (Pismennaya and Arkhipov 2016). Such measures could
be explosive politically. Combined with intensifying austerity and persistently
bleak economic prospects, they could lead to the new political crisis, this time
articulated with social demands.
The first signs of such crisis are apparent in the anti-corruption protests of
26 March and 12 June 2017. Unlike the 2011–2012 movement, the current protests
are focused not on defending democratic procedure, but on changing the whole
political-economic order than has emerged in Russia in the 2000s and was
cemented by corruption. The protesters in 2017 directly confront the beneficiaries
of this political-economic order: corrupt bureaucratic and oligarchic elites. The
future of the new movement is hard to predict, yet it clearly reflects a shift in the
public mood and the tactics of opposition leaders.

Conclusion
While speaking at the first cabinet meeting after the parliamentary elections in
September 2016, Putin, quite strangely, mentioned the ‘so-called stability’ that
the Russian voters chose the other day (Interfax.ru 2016b). This small linguistic
slip was quite symbolic: apparently, even for Putin ‘stability’ was nothing but
‘so-called’. In 2016, the catchphrase of the 2000s could only be pronounced with
the invisible quotation marks around it. Clearly, a lot has changed since 2009.
In the 1990s, Russia was in a deep, multi-faceted crisis. However, a certain sta-
bilisation was achieved during Putin’s first two terms: the resurgent Bonapartist
state redistributed export profits, allowing both the oligarchs and its own officials
to accumulate offshore wealth while overseeing a steady increase in the living
standards of the population. Support for the regime was based on pervasive
depoliticisation. Politics became virtual: ‘managed democracy’ was a staged demo-
cracy, a political theatre conducted by the administration of the president without
much enthusiasm in the audience.
The 2008–2009 crisis was the first blow to this new political-economic order.
Economic contraction in Russia was the worst in G20 countries. While the state
 Stability’s end 153
managed to restart growth rather quickly by using the accumulated currency
reserves, the society did not believe that the crisis was truly over. To some extent,
the authorities themselves were responsible for this outcome: newly elected
president Dmitry Medvedev tied the effects of the 2008–2009 crisis to his own
project of ‘modernisation’, yet the changes that he promised did not follow. Thus
Medvedev and his team contributed to the narrative that Russia was in crisis –
without taking decisive action to resolve this crisis.
Frustration with the government’s performance after the crisis formed the
backdrop for the 2011–2012 protests. In effect, political crisis was overdetermined
by an economic one, but cannot be reduced to it. The protests were triggered by
a chain of events – Putin’s sudden announcement that he planned to return for the
third term, fraudulent parliamentary elections in December 2011. The new mass
movement brought politics back to the country beset with depoliticisation. After
an initial period of indecision, the regime responded with repression and an
ideological offensive. The breaking point came in 2014 when Russia annexed
Crimea and intervened in Eastern Ukraine. Domestically, these actions reinforced
the main tendencies of Putin’s third term – the strengthening of siloviki and
ideological mobilisation.
Putin’s third term was not only a period of political change – it was also a
period of economic stagnation and renewal of crisis. Neil Robinson quite correctly
predicted in 2011 that the 2008–2009 international crisis ‘may be for Russia the
precursor to the crisis of its own economic model’ (Robinson 2011: 452). Russia’s
peripheral capitalism exhausted its potential for growth. Western sanctions and
the collapse of oil prices in 2014 were the last straw, but the real causes of the
crisis were deeper.
The regime, preoccupied with its own survival, retreated to the tactical mode
of operation – both domestically and in the international arena (though after 2014
domestic and foreign policy have been closely intertwined). While the political
challenge of the 2011–2012 protests was successfully handled, consistently bleak
economic prospects set the scene for the accumulation of contradictions that
could potentially make the situation unmanageable for the regime.

Notes
1 Furthermore, those businessmen who built their fortunes through clientelistic ties with
government officials in the 1990s were not the only ones who operated in Russia:
others engaged in genuine business activities and created new companies on the model
of ‘free entrepreneurship’. This ‘non-oligarchic business community’ also needed a
strong state to finally set the rules of the game (Yakovlev 2006: 1054).
2 On Putin’s ‘state-building’, see Hashim 2005; Taylor 2011.
3 It should be added that Marx captured the ambiguous position of the state in relation
to the bourgeoisie in Louis Napoleon’s France: ‘the sword that is to safeguard [the
bourgeoisie] must at the same time be hung over its own head as a sword of Damocles’
(Marx 1975: 67). The same can be said of Putin’s Russia: while the Russian state
clearly has a class character, i.e. it is a capitalist state and specifically a state of big
capital, it can also act as a ‘predatory state’ (Gans-Morse 2012), especially in relation
to small and medium businesses.
154 Ilya Matveev
4 For the details on the construction of ‘Putin’s majority’, see Rogov 2001; Pavlovsky
2014a, 2014b.
5 Author’s calculations based on the World Bank data: http://databank.worldbank.org/
data/reports.aspx?source=2&series=NY.GDP.MKTP.KD.ZG&country=RUS,IND,
CHN#.
6 Anastasia Nesvetailova draws attention to a telling symptom of Russia’s continuing
economic peripheralization: throughout the economic boom of 2000–2008, the country
was bleeding R&D cadres (Nesvetailova 2015: 7–8). Indeed, according to Rosstat,
R&D personnel shrunk from 890,718 in 2001 to 745,978 in 2009, including the loss
of 56,717 researchers.
7 In her penetrating analysis of ‘sistema’ (informal governance in Putin’s Russia)
Alena Ledeneva reveals the material ‘hooks’ of this system: kickbacks, black-cash
salaries, bonuses, property acquisition at discounted prices, lifestyle privileges
(Ledeneva 2012: 41).
8 See, for example, an investigation of Medvedev’s failure to reform the police (Taylor
2014).
9 In retrospect, Valentina Feklyunina and Stephen White were right to argue that ‘by
linking their claim on legitimacy to heightened expectations of change, the Russian
authorities may face an even more serious legitimacy deficit in the future if the
promised change does not take place or if the scale of this change is not perceived as
sufficient by key groups in the society’ (Feklyunina and White 2011: 402).
10 Arguing a similar point, Ilya Budraitskis claims that parliamentary elections gave birth
to non-parliamentary politics (Budraitskis 2014).
11 A similar measure has already led to mass protests in the neighbouring Belarus.

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9 The making of Ukraine’s
multilevel crisis
Transnational capitalism, neoliberal
kleptocrats, and dispossession
Yuliya Yurchenko

Introduction
The unexpected multilevel crisis in Ukraine, topped by a hybrid civil armed
conflict (hereinunder: armed conflict), posed many questions about its causes and
consequences. Indeed, it appears puzzling how a society with historically low
rates of ethnic and civil conflict could degenerate into armed clashes within a
space of a few months. The devil is in the detail; and geopolitical tensions in the
country’s global vicinity on their own do not suffice to wreck social fabric in a
short space of time. There must be preconditions; increasing inequality, poverty,
erosion of social welfare support net, omnipresent corruption, lawlessness,
criminality and impunity of the police, security forces, and the judiciary, conspicu-
ous and insatiable oligarchy are among the more serious. And indeed, the conflict
should have been expected in the light of the ‘strange normality’ of conflicts
generated by the phenomena of ‘intersecting crises’ – political and economic
transformation in the context of dissolution of the USSR – in the post-Soviet
space as the Editors of this volume underline. What we are witnessing in Ukraine
is an ongoing systemic failure of the state to effectively perform its administrative
and governing functions; analysis of social dynamics and reasons behind that
failure are the focus of this chapter.
Since 1991, neoliberal marketisation prescribed by IMF and EBRD set the
economy onto a path of dangerous destabilisation while eliminating ideological
alternatives. The prescription was a combination of inherent systemic problems
of transition modelling and (neoliberal) markets and the neglect of the role and
importance of existing social institutions in the target locales, combined with
treatment of states as units defined by numerical descriptors e.g. GDP, demographic
data, etc. Degenerative consequences of the above range from constitutional
inconsistencies and malfunctioning of state institutions to socio-economic depri-
vation mentioned earlier and widespread anomie (Durkheim 1897). More
specifically speaking, the multilevel crisis in Ukraine resulted from a combination
of: (1) the ill-conceived “transition” modelling that led to (2) institutionalisation
of kleptocracy, (3) emergence of rival capitalist and associated ruling bloc rival
fractions, (4) virtualisation of politics (Wilson 2005, 2014) with effective manu-
facturing of social divisions and dispossession of the masses and (5) simultaneous
160 Yuliya Yurchenko
exposure to the renewed imperialist geopolitical clashes between US/EU and
Russia. In order to understand why Ukraine’s transformation took this turn one
needs to, as I argue in this chapter, go beyond state-centrism typical for foreign
policy and IR analyses and turn to political economy of social forces instead.
The chapter provides an analysis of the multilevel crisis in Ukraine by zooming
in on those social forces involved in its making. The state as unit of analysis in
such an approach is replaced with the state-society(-capital) complex (elaboration
on Cox 1981, 1987) and an effective study of structural crystallisation of agency
of social forces in the apparatus of that complex. In doing so, I argue that the
ongoing conflicts in Ukraine are rooted in the systemic unevenness of the state-
society-capital complex, effective socio-economic inequalities and are closely
linked to structural ruptures necessitated by relocation of agency within and
between social blocs, classes, and their fractions. To that end, class formation
through accumulation by some and dispossession of other, class fractional rivalry,
and power shifts within the ruling bloc will be made the centre of discussion.
Accumulation of capital is shown to be the locomotive process that fuels oligarchic
need for manufacturing socially destabilising dynamics in Ukraine.

The IFIs, transnational capital, and ill-conceived

“transition” modelling
Socially erosive dynamics are stirred by social forces who, in capitalist societies,
are in a state of permanent conflict-struggle over the means of production and social
reproduction. On the level of capital, these conflicts constitute accumulation rivalries
between originally domestic and foreign capitalist class fractions who drive
transnationalisation of the global economy. The latter is a key process that is often
mislabelled as ‘globalisation’ yet is in fact neoliberal transformation of the mode
of governance of states, society, and capital that simultaneously combine uneven,
essentially skewed and preferential liberalisation or restriction on movement
of people, goods, and services through and around nation-states i.e. trans-nationally.
In that respect, Ukraine’s transformation is intimately linked to the wider neo-
liberal restructuring of global political economy since 1970s. The neoliberal turn of
the latter is embedded in the policy approaches of the international financial
institutions (IMF, WB, and EBRD) and US and EU lobbies (ERT and ACC).
Transnational historical materialism as an approach is highly useful in explaining
how, in the case of Ukraine through the process of privatisation (i.e. primitive
accumulation of capital), oligarchic groups and Financial Industrial Groups (FIGs)
were formed (i.e. concentration of capital); how from the body of employees of
the same State-Owned Enterprises (SOEs) few turned into oligarchs and the rest
into workers/unemployed/dispossessed (i.e. capitalist and working class-in-itself
formation respectively); how and why new political parties and movements
emerged representative of or in alliance with concrete oligarchs (i.e. class-for-
itself formation), in support of different directions of foreign policy e.g. global
west versus east, etc. The method allows us analyse how public consciousness
transformed to (consensually) accept concrete new regime, reforms, and people
 The making of Ukraine’s multilevel crisis 161
in charge by utilising the concept of passive revolution i.e. gradual and consensual
transformation of social order without meaningful inclusion of the interests of the
subject or affected social groups, that is achieved partly by the process of
trasformismo where political forces strategically align despite their differences
until differences are submerged in the initially dominant group’s framework
(Gramsci 1971: 57–59). Westernisation/EU-isation in all its forms – marketisation,
cultural assimilation, etc. – is precisely the process of passive revolution and
trasformismo. An example of the two is the fractioned masses who protested the
rule of corrupt oligarchs in the winter of 2013–2014, voting the same oligarch into
power a few months later only to be subjected to more dispossession and forced
to sacrifice lives fighting their own compatriots in the east of Ukraine.
Social forces are central to our analysis so particular care is required when
delineating the categories of analysis. Readers of scholarship on Eastern Europe
are only too familiar with terms such as ‘clans’ and ‘elites’. Here, I propose to set
them aside. Their assumed essential homogeneity obscures contradictions and
frictions within what they bundle as social groupings. They also fail to explain
situations when those groupings cooperate, thus impeding potential clarity and
compromising validity of the final analytical results. Fluid categories are needed
to achieve precision in analysing fluid social contingencies such as societies
undergoing major transformations i.e. Ukraine under scrutiny. The transnational
historical materialist method suggests we start with a situation as a unit of analysis
i.e. Ukraine’s civil and armed conflict, and identify who is interested, why, and
who is not, in concrete outcomes of concrete scenarios of its making. Next, we
identify their belonging to specific class fractions, classes, and historic blocs
depending on positioning in class alliances, the system of ownership of the means
of production, and ideological/ideational consciousness if very short-lived, such
as during the Maidans of 2004–2005 and 2013–2014. The latter form what
Gramsci called ‘historic blocs’ – a ‘unity of opposites and distincts’ (1971: 137),
‘complex, contradictory and discordant ensemble of the superstructure [that is]
the reflection of the ensemble of the social relations of production’ (ibid.: 366).
Contradictions and the reactionary nature of the Maidan protest bodies, as historic
blocs, is thus a direct reflection of the fact that Ukraine’s (political) economy is
an ensemble that is complex, contradictory, and discordant. The ongoing nature
of protests in the country that I address in this chapter also means that internal
contradictions in that historic bloc still have not been reconciled. And that for a
new, stable, hegemonic historic bloc/social consensus to be formed ‘an appropriate
political initiative is . . . necessary’ to ‘change direction’ of forces that need to be
absorbed (ibid.: 168).
Transition to market or marketisation as a policy-making dogma was necessi-
tated by the underlying belief held in the mainstream discourse that there is a need
to help the newly independent countries to the “true path” of social evolution as
neoliberal economists saw it. One of the most famous and influential mani-
festations of that sense of an historic necessity was Francis Fukuyama’s The End
of History (1989 and 1992). Fukuyama’s article, followed by the book, became a
self-fulfilling prophecy for the new states that emerged. Such vision left little
162 Yuliya Yurchenko
room for alternative scenarios in the face of ‘liberal democracy’ as the form of
statehood, neoliberal capitalist market as the economic system, and the culture-
ideology of consumerism as the model of a societal consciousness.
The article by Jeffrey Sachs’ of Harvard University in The Economist on Janu-
ary 13, 1990 titled ‘What Is to Be Done?’ according to Gowan became a watershed
moment in the above discourse (1995: 3) What was to be done, Gowan explains,
boiled down to ‘creating an international environment in which the domestic
aspect of [Sachs’ neoliberal] policy [advocated in the above-mentioned article]
would become the only rational course for any government to pursue’ (Gowan
1995: 4). The economic upheaval that followed the ‘shock therapy’ (i.e. one of
the names that Sachs’ approach obtained in the post-Soviet states) inspired by
the above is widely documented elsewhere (for detailed analyses of the impact
of the ‘shock therapy’ onto the Central and Eastern European countries see:
Amsden, Kochanovich, and Taylor, 1998; Anderson, Wiessala, and Williams,
2001; Desai, 1995; Ellman, Gaidar, and Kolodko, 1993; Kolodko, 2000; Mason,
1996; Poznanski, 1997 and 2001; to mention a few).
Dahrendorf already addressed criticism of the economic theory of transition, or
transitology (hereafter used interchangeably) in 19901. He argued that (1) the
newly emerged states did not reject communism for capitalism (and thus do not
need assistance in the construction of it) and (2) the existing social institutions in
the post-Soviet space are to be respected and the institutionalisation of the new
ones must occur through openness, debate, compromise, and such. To that, Sachs’s
response stipulated an impossibility of successful reform without western planning
(Gowan 1995, 6).

Capitalist class formation and kleptocracy in independent

Ukraine
The main tenets of marketisation reforms of post-1991 history of Ukraine and its
societal transformation have been shaped by the processes of accumulation by
dispossession (Harvey 2003: 137–182), or privatisation, of previously state-owned
enterprises. It is an ongoing process and leads to the redrawing of the boundaries
of the spheres of influence in the ruling and capitalist blocs and to changes in the
balance of power in the SSC complex. Social transformations do not happen
automatically. They are carried out by social forces: aligning, competing,
consenting, co-opting, etc. The same applies to Ukraine’s uneven marketisation.
Formation of the ruling and capitalist class fractions of independent Ukraine
began during Gorbachev’s Perestroika. The soviet economic system was over-
bureaucratised, corrupt, and inefficient, and by the mid-1980s the USSR was
ridden by a shadow economy that compensated for consumer goods supply failures
of the state (Aron 2011; Shelley 2003). The shadow schemes ran under the
patronage of security forces and apparatchiks – they formed the so-called ‘criminal-
political nexus’ (Godson 2003; Shelley 2003). Many of the present-day
oligarchs-politicians (Kolomyskyy, Boholyubov, Poroshenko, Tymoshenko,
Ivanyushchenko, etc.) started their path in that conjuncture.
 The making of Ukraine’s multilevel crisis 163
Class is ‘a real historical relationship . . . [the existence of which rests on the
social basis of the way] in which people are positioned in production processes’
which creates potentiality for classes but ‘does not make classes’ (Cox 1987:
355). Moreover, ‘since the form of state has been found to be determining
influence on the development of modes of production relations, the orientation of
classes toward the state, their channelling into political action, is a crucial historical
question’ (Ibid.). A few modes of social relations of production exist in parallel
in any society at any given time, Cox argues, class itself is affected by several
factors. So, (1) not every group forms a class but sometimes remains ‘a latent or
potential class’; (2) ‘dominant or subordinate groups from two or more modes if
social relations may combine to form a class’; (3) various modes of production
relations are linked in a manner of domination-subordination hierarchy that
leverages class orientations of partaking agents; and (4) ‘the classes formed
around the dominant mode of social relations of production have a predominant
influence over the formation and orientation of classes derived from subordinate
modes, including the opportunity to form a hegemonic relationship with these
other classes’ (ibid.: 356). A class formation process ‘is not a given, determined
historical process but a very fluid one – a dialectic of opportunities created by
changes in the structure of production and of praxis evolved in response to those
opportunities’ (ibid.: 389). Changes in the ruling class fractions occur when
there are structural shifts in the productive base and in the dominant modes of
production that call for effective shifts in the comprehensive concepts of control,
e.g. from the “euthanasia of the rentier” to neoliberalism on the global economy
level since 1980s and from state socialism to neoliberal kleptocracy in the post-
Soviet Ukraine.
Fractioning of the Soviet power apparatus played a vital role in the dissolution
of USSR. As a whole, ‘political elite . . . was fragmented and lacked moral
cohesion’ (Lane and Ross 1999, 90). By the late 1980s there were four main
fractions in the nomenklatura: (1) the conservators of the old regime, (2) those
who obtained their privileged position due to the new General Secretary personally,
(3) those preparing for their prospects of enrichment via perestroika reforms, and
(4) those making careers – political and economic alike – on more local levels, in
separate republics of the USSR (an opportunity made possible by partial
devolution). The second and third were not interested in preserving the system in
any form and effectively undermined the support for Gorbachev that he needed
to further his democratisation reforms into societies of member republics
(Kudryachenko 2006: 375). It will be they and other elements of the nexus who
will form the core of the ruling bloc of independent Ukraine.
Economic and effective socio-political problems that necessitated Perestroika
simultaneously fuelled nationalist independence and devolution movements
in the soviet republics and undermined the authority of the Community Party in
populace. The party’s attempts to resolve shortages of supply by allowing partial
private economic activity via cooperatives did not become the qualitative reform
they were planned to be but instead sped up the USSR demise. Pro-Perestroika
and anti-regime movements fuelled by poor socio-economic condition of workers
164 Yuliya Yurchenko
now were setting the scene for what was to come with dissolution of USSR.
Worker protests in Donbas over poor working conditions and multiple goods
supply shortages became a crucial push towards formalisation of Ukraine’s inde-
pendence in the late 1990s. Some of these movements will survive and become
political parties e.g. Narodny Rukh (Eng. People’s Movement; similar in ideology
and function to Polish Solidarnost), some will be squashed or systematically
instrumentalised in the power games of their eventual capitalist ‘masters’2, e.g.
the miner movements.
The default nature of Ukraine’s independence meant that, in the early 1990s,
its ruling bloc was formed primarily of neo-nomenklatura and president Kuchma
cronies from Dnipropetrovsk. Towards the end of the 1990s, the first serious shift
in the ruling bloc occurred due to the emergence of oligarchic capital mostly from
the industry and resource rich regions of Dnipropetrovsk and Donetsk which
formed in the process of privatisation and by then emerged as a fractioned class-
for-itself. By the late 1990s, that class actively sought gaining and/or maintaining
control over the state both by proxy of political parties, and through direct
participation in the political process (Varfolomeev: 1998). Effectively, they sought
continuous preferential access to the State-Owned Enterprises (SOEs) privatisation
and embezzlement of state assets and revenue through creation of virtual spaces
of accumulation, or, as I call them elsewhere, (Yurchenko: 2013), ‘black holes’
in the country’s economy. The end of Kuchma’s regime of nomenklatura klepto-
cracy opened the door not only to a possibility of political change but also to the
intensification of the ongoing capitalist class fraction rivalry on the levels of
national economy and the state. Two class fractions became most pronounced in
the power competition, fraction of Donetsk and Dnipropetrovsk capital and their
Financial Industrial Groups (FIGs) associated with Rinat Akhmetov (System
Capital Management) and Taruta and Mkrtchan (Industrial Soyuz Donbas), and
Pinchuk (Interpipe Group), Kolomoyskyy and Boholyubov (Privat Group)
respectively as well as the previously dispossessed of her share in the accumula-
tion process Tymoshenko (KUB, and then YeESU) and her rival Firtash
(EuroTransGaz, and later RosUkrEnergo and Group DF). That rivalry became the
main cause of the protracted post-Orange Revolution political crisis that, among
other developments, effectively led to the Party of Regions victory of a Parlia-
mentary election in 2007.
Two regional forces (and their fractions) dominated Ukraine’s ruling bloc until
the Bloody Winter of 2013–20143– Dnipropetrovsk and Donetsk – which will be
the focus of my study. Both the ruling and capitalist forces of independent Ukraine
have not been limited to those two, however, they present our main analytical
concern due to their overwhelming dominance in the country’s ruling bloc. The
period of 1991–1998(9) was characterised by clear dominance of the
Dnipropetrovs’k bloc led by presidents Kravchuk (1991–1994) and then Kuchma
(since July 1994) and Prime Minister Lazarenko. The bloc was composed of the
neo-nomenklatura and the capitalists in-the-making who emerged from the milieu
of the criminal-political nexus and Komsomol. During that period, the first
 The making of Ukraine’s multilevel crisis 165
oligarchic capitalists emerged in the spheres of gas, oil, lubricants and fuel trade
with Lazarenko, Tymoshenko and Pinchuk in the lead through KUB and later
YeESU companies (Bogatov 2007; Kovaleva 2007). Simultaneously and often
through brutal criminal activity, a rival capitalist class fraction was in formation
in Donetsk oblast (Kovaleva 2007). In 1996, the Constitution of Ukraine was
adopted, making it a Presidential Republic and thus maintaining centralised control
in the hands of the presidential administration (Verkhovna Rada 1996) i.e. Kuchma
and his cronies from Dnipropetrovs’k primarily.
During the period of 1998(9)–2004, the growing leverage of the Donetsk
bloc in both economic and political spheres of Ukraine became noticeable. This
included appointments of Prime Ministers Azarov and Yanukovych and the
increasing number of appointees from Donetsk in the state administration
structures. The ascendant regional force formed through primitive accumulation
of the SEOs and concentration of capital in the FIGs. By the late 1990s, those
forces emerged as class-fractions-for-themselves and formed the Party of Regions
– among others – to pursue their interests in the sphere of the political. The
gradual shift of power from the Dnipropetrovsk neo-nomenklatura to the Donetsk
fraction commenced with the money laundering scandal which involved Lazarenko
(then PM), Tymoshenko and YeESU loss of gas market control, and Kuchma and
Pinchuk class fraction compromise with the Donetsk forces. Late in 2004, prior
to the presidential election, the Constitutional reform was adopted that shifted the
power over to Parliament to guarantee the Party of Regions/Donetsk agency in
the decision-making process in case of their candidate, Yanukovych’s, defeat
in the election.
Late in 2004, the power struggle of the rival capitalist fractions-for-themselves
in the presidential election resulted into a two month long civil protest that became
known as the Orange Revolution. It was led by the presidential candidate,
Yushchenko, and his backer, Tymoshenko, (backed by fractions of Donetsk – ISD
of Taruta and Mkrtchan – and Dnipropetrovsk – Privat Group of Kolomoyskyy
and Boholyubov – capital and Ukraine’s western partners, USA and EU) after the
electoral fraud by the Donetsk presidential candidate, Yanukovych’s, cronies
(backed by the outgoing president Kuchma, SCM of Akhmetov, Interpipe Group
of Pinchuk, and Russia; Wilson 2005; D’Anieri 2007). Conflicts in the Parliament
were dominated by the Party of Regions with opposition parties, the rival capital
fractions that backed them, and the inability of president Yushchenko to main-
tain allegiance with his previous supporters i.e. the contemporary opposition
forces and Tymoshenko led first to the latter’s loss of the PM seat and later in the
appointment of Yanukovych the PM. In the Parliamentary election of 2007,
the Party of Regions won the majority of seats and the formal power centralisation
by the Donetsk bloc of ruling and capitalist forces commenced. The Donetsk bloc
began to usurp power in the country. Following the Parliamentary election of
2007 and the formation of a coalition with Yushchenko’s party Our Ukraine,
Tymoshenko once again was appointed the PM but as the Global Credit Crunch
effects hit the Ukraine’s economy and Tymoshenko’s rivalry with Firtash over the
166 Yuliya Yurchenko
gas markets manifested itself in the so-called ‘gas wars’ with Russia, she began
to lose her popular support as the PM. The latter aided Yanukovych to win the
Presidential election in 2010 whose presidency, supported by the Party of Regions’
parliamentary majority, facilitated the usurpation of power in the country by the
Donetsk capital. That, among others, included (1) the vertical concentration of
power in the hands of the president through the reversal of the Constitutional
reform of 2004 that once again changed Ukraine into a Presidential republic and
made the parliament accountable to the president and (2) the adoption of a law on
the judiciary and the courts (Verkhovna Rada July 2016 [2010]) that ‘represented
at one and the same time both an instrument for gaining and imposing power over
the judiciary [by the president] and an attempt to improve the administration
of justice’ (Foglesong and Solomon, 2001). Growing discontent in society and
numerous protests across the country. In sum, in the process of first primitive (still
ongoing) accumulation and then simultaneous concentration of capital, rival
emergent capitalist class fractions began to institutionalise as the new ruling bloc
having gradually replaced neo-nomenklatura. The new ruling bloc, by the end
of the 1990s, has only a trace of old apparatchiks and was mainly constituted of
ex-Komsomol entrepreneurs of Perestroika, ‘red directors’, and (ex-)criminals
who now constituted the ascending capitalist/oligarchic class of Ukraine and
began to engage in political life directly or indirectly, via party sponsorship and
proxy/fake politicians/political ‘projects’. Their main political goal was further
accumulation of capital via appropriation of state property and tax payers’ money.
In such conditions, the fight for electoral support was most often based on
ideologically vacuous populist promises and culturally sensitive issues of religion,
ethnicity, and language. ‘Political technologists’ (often from Russia) designed
the most vicious division of electorate into ‘two Ukraines’ that began during the
Yanukovych-Yushchenko campaigns: Ukrainian language vs Russian, EU
orientation vs ties with ‘our brothers’ Russians, etc. (Dyczok 2005, 2009; Wilson
2005; 2014). The two Ukraine’s now became a self-fulfilling prophecy. The lines
of division artificially imposed on society were exacerbated by detrimental socio-
economic effects of neoliberal kleptocracy that eventually led to Maidan in
2013–2014 and now an undeclared, nameless war where Ukraine’s citizens are
fighting each other together with military, own and Russian, and mixed foreign
backing.
Concentration of power by the Donetsk capitalist class fractions and their
simultaneous institutionalisation as the ruling bloc of Ukraine was achieved
through a series of legislative reforms, attempts at ‘manufacturing [popular] con-
sent’ (Herman and Chomsky 1988) by faking democracy (Wilson 2005), and
coercion through suppression of counter forces described by some as ‘competitive
authoritarianism’ (Levitsky and Way 2010), neoliberal and kleptocratic in its
essence. On the level of the state, the most decisive were the changes to the
Constitution of Ukraine and the judiciary reform. The former changed Ukraine
from a Presidential republic to a Parliamentary one in 2004 and back to the
Presedential in 2010 (Radio Svoboda 2010). The latter was implemented in July
 The making of Ukraine’s multilevel crisis 167
2010 without the Venice Commission recommendations and ‘significantly
[reduced] the power of the Supreme Court and [increased] the authority of the
High Council of Justice, a body criticised for the lack of independence’ (Human
Rights Watch 2016). One crucial component in the ascent of the current ruling
bloc was the institutionalisation of lawlessness through which the criminal-
political nexus prevailed, only now with security forces and state administrators
being at service of gangsters-turned-oligarchs. The above is evidenced by the
administrative pressure on the capitalist class fractions rival to the ruling bloc,
return of lawlessness i.e. raiding, telephone justice and selective justice, and
prosecution of the political rivals i.e. Tymoshenko and Lutsenko among others.
Transparency International too document that apart from a brief improvement in
2005–2006, the Corruption Perception Index score was on the rise since 1991 and
by 2011 Ukraine’s was rated 152nd out of 183 countries surveyed making it the
lowest rating to that date (Transparency International 2016). There has been a
minor shift in recent years and now Ukraine is 130th and the corruption perception
index has improved slightly from 23 to 27 (scale from 0 to 100; TI 2011, 2016).
The unemployed and the youth also had their place and utility for the regime of
neoliberal kleptocracy. So, between 1994 and 2000 ‘4.9% of the organised crime
personnel were unemployed while 18 to 24 year olds were the largest age cohort
making up for almost one third of the membership’ (Kulik 2001: 19).
Attempts of foreign businesses to penetrate the Ukrainian market were not
sporadic. On the contrary, business, and industrial associations – transnational,
EU and US – have worked closely with executive and legislative authorities both
at home and in Ukraine to protect their investment interests since 1992 when the
first IMF loan was approved and the American Chamber of Commerce established
its branch in the country (Yurchenko 2013). Through IFIs, companies and
hierarchically organised structures of policy and lobby groups transnational(-
ising) capital has been permeating policy-making worldwide (Apeldoorn 2005;
Carroll 2010; Fennema 1982; van der Pijl 1982, 1998). Nevertheless, despite
consolidated attempts of western capital to seize control of Ukraine’s market,
the most profitable enterprises are in the hands of Ukraine’s own oligarchic
FIGs (Yurchenko 2013). In fact, foreign capital was mainly “permitted” to enter
where the domestically originated had little interest in entering. This especially
concerns initial stages of capital accumulation (ibid.). Domestic capital control
over the largest enterprises, however, did not mean protectionism and growth
but, on the contrary, led to the inward orientation of the economy and neoliberal
kleptocracy where state subsidies to oligarchic FIGs combined with offshoring of
revenue and tax evasion (Pekhnyk 2007; Yurchenko 2013). All at the expense
of socio-economic destitution of the increasingly fragmented masses.
Yanukovych’s administration was built on concentrating power and capital in
the hands of his Donetsk cronies helped by continuing foreign policy flirtations
with east and west alike, securing IMF loans to feed the dissipating economy, and
negotiating gas import discounts in exchange of Russia’s fleet access to the port
of Sevastopol and the Black Sea (Sakwa 2015). The poor state of an economy
168 Yuliya Yurchenko
which had been robbed by oligarchs in power was justified through the ‘politics
of blaming’ of poperednyky (Ukrainian for ‘those who came before us’) and the
Europeanisation reforms that one day would bring a better future for all. In reality,
economic problems stemmed from the regime of neoliberal kleptocracy which
now was in full swing with an ex-criminal running the country. Yanukovych is a
prime example of the crime-politics ties: twice convicted, pardoned, closely
linked to security services, jettisoned to governor, Prime Minister and then
President posts (Kovaleva 2007). His ‘Family’ and cronies – Akhmetov, Boyko,
Ivanyushchenko, etc. – are also oligarchs with security forces serving their needs
even if it means beating protesters, imprisoning opponents, and facilitating
corporate raiding (Kovaleva 2007; Plokhy 2015; Sakwa 2015; Wilson 2005,
2015). The multi-vectoral foreign policy game started by Kuchma, however, was
reaching its crescendo as the time to sign the trade agreement with the EU was
approaching. The Deep and Comprehensive Free Trade Area (DCFTA) Agreement
has been popularly sold as that which would bring Ukraine significant economic
and social benefits, raise standards of life, wages, guarantee the rule of law, etc.
(EC 2016). However, its main objective is significant and largely the one-sided
liberalisation of trade with the EU which would make the last of the public assets
available for privatisation and commercialisation and give foreign capital
preferential treatment. In an attempt to stop this rapprochement of Ukraine and
EU, Putin threatened to raise prices on gas and thus jeopardise the survival of
Ukraine’s heavily energy dependent, intensive, and inefficient industry that makes
up over 20 per cent of GDP (Aslund 2013). Under the pressure of industry-
owning oligarchy, Yanukovych refused to sign the treaty at the Third EU Eastern
Partnership Summit in Vilnius in late November 2013. Long term consequences
of Ukraine’s rulers’ short-term approach to politics were about to spill out in the
deepest multi-level crisis in the country’s independent history.

The effects of kleptocracy: disenfranchisement,

fragmentation, and the utility of the dispossessed
People who poured onto the streets in late 2013 did not do so to lay their dignity
at the gates of Europe as the name ascribed later to the revolt suggests, i.e.
Revolution of Dignity. It was a sign of their refusal to accept yet another lie, not
of their desperation to join the EU and its ephemeral ‘European values’. Instead,
sociological data shows that it was the beating of the protesters that led to the
escalation of the mass protests across the country and to counter protests – anti-
Maidans (Bereshkina and Khmelko 2013). Both were accompanied by the rather
undignified accusation of virtual performative support for the west or the president
and his party respectively (Wilson 2014). According to a survey conducted
by Bekeshkina and Khmelko from Democratic Initiatives Foundation and Kyiv
International Institute of Sociology on 7–8 December, of 1,037 randomly selected
Maidan participants, 92 per cent did not belong to any parties or NGOs. Three
most commonly named reasons for joining the protest were: 1) police repressions,
especially the beating of protesters on the night of 30 November (70 per cent of
 The making of Ukraine’s multilevel crisis 169
respondents), 2) the president’s refusal to sign the Ukraine–EU association
agreement (53.5 per cent) and 3) a desire to change life in Ukraine (50 per cent).
Only 5 per cent said they joined the protest in response to political opposition
leaders’ call to do so (2014). The protests against police brutality and the
president’s refusal to sign the DCFTA with the EU, as too can be concluded from
the data, were reactionary; a counter-hegemonic movement without an ideological
component or a single organising political force. Political parties’ and politicians’
presence in the Maidans was highest at the start of the protests (before 19 January
2014) at over 40 per cent while this significantly dropped towards the end when
violence escalated to 20 per cent between 10 and 23 February 2014 (CSLR 2014).
The right-wing elements capitalised on that in the immediate aftermath of the
police beatings and organised as a defence force at the Maidans in the absence of
any other (Ishchenko 2016). And indeed, the Maidans were many, diverse, and
lasted from 21 November 2013 to 23 February 2014; out of 3,950 protests 3,235
were linked to Maidans and 365 anti-Maidans. A brief hope for a chance of a
systemic change in the country upon Yanukovych’s escape was further stolen
from the fragmented dispossessed as an effect of Russian military intervention in
Crimea in March 2014. The dispossessed divided masses of what they were led
to believe was two separate Ukraines now were led to a civil armed conflict.
Divided into Maidan/pro-west and anti-Maidan/pro-Yanukovych blocs with their
multiple subgroups they clashed with each other and the security forces (mostly
as a reaction to violence; CSLR 2014) throughout the Bloody Winter on multiple
occasions that included beatings and armed confrontations, while the police often
were an inactive onlooker and/or an inciter of violence (Plokhy 2015). On the
May Day 2014, the clashes led to what is now known as the Odessa Massacre
where some 100 persons were burned alive in a barricaded building (Plokhy 2015;
Sakwa 2015). The event marked the point of no return in the civil armed conflict
that many now were beginning to call a war – a reality reinforced by the incursion
of Girkin’s army into Donbas and proclamations of independent republics in
Donetsk and Luhansk.
Fearing prosecution and the loss of assets and state control, oligarchs utilised
the country’s urgent need for legitimate representatives in power to push for
snap presidential and then parliamentary elections in the months that followed
(Plokhy 2015). The rule of oligarchy was once again restored with Poroshenko
becoming president and key state administration positions being given to the
cadre aligned with oligarchy. The main change in the ruling bloc was not the
displacement of the reign of capital as Maidan protests demanded, but erosion
of the centralised control and influence that the Donetsk bloc enjoyed in the
country since 2007–2010 (Forbes 2014; Yurchenko 2013). The Party of Regions,
the Donetsk capital party, ‘saw massive defections from its ranks and the
pro-Yanukovych majority collapsed in the Rada’ in the winter of 2014 (Shevel
2015: 159) and the party did not take part in the snap election that followed. While
their MPs made it into the new parliament through constituency votes and the
newly-formed pro-Russian Opposition Bloc party, their leverage in the parliament
was weakened (ibid.: 162). The regional composition of the state apparatus
170 Yuliya Yurchenko
became more mixed (ibid.; Forbes 2014) marking renewed intensification of
oligarchic rivalry.
The fragmented dispossessed, on the other hand, were left with their many
Ukraines split apart by territorial lines – the east, west, ex-Ukrainian Crimea,
divided Odessa, rebellious South, separatist Donbas – and the lines of social
consciousness. Divided by the greed of their rulers and geopolitical ambitions of
global neighbours, driven by socio-economic destitution they were left to fight
over their last remaining seemingly inalienable properties i.e. identity, language,
right to exist. Now they are asked to give up those last ones too. The country’s
fragmented dispossessed have their use value for the regime of neoliberal
kleptocracy as workers, soldiers, protesters, voters, and gangs while being system-
atically disenfranchised. By mid-2016 the armed conflict in the east claimed more
than 9,000 lives, displaced over one million people, and further deepened overall
socio-economic condition in the country. In the areas of conflict or former conflict
hundreds of thousands of civilians ‘have limited access to basic sustenance and
services’ leading to food insecurity in the regional “breadbasket” for the first time
in decades that for the first quarter of 2016 ‘was the only European country to
require and receive assistance from the World Food Programme’ (WFP
2016). Overall, ‘1.5 million people in eastern Ukraine are food insecure, including
290,000 severely so and in need of immediate food assistance’ (ibid.). The
situation is further complicated by the government stopping support to public
services in some areas which ‘includes funding to schools and hospitals, as well
as the payment of social benefits and pensions’ (ibid.).
In a nation where population declined from 52 million in 1991 to 44 million
people in 2014 some ‘2.6 million Ukrainians have fled the war in the east initiated
by Russian-backed separatists’ by the end of 2015 (Gienger 2015). The IDMC
estimate that of them 1,476,226 are internally displaced persons who are in turn
‘a composite of two figures: IDPs in Ukrainian government-controlled areas and
IDPs within Crimea’ (IDMC 2015)4. As of 28 August 2015, the Ministry of Social
Policy had registered 1,459,226 IDPs in areas under government control (Ministry
of Social Policy, 28 August 2015). The majority fled eastern Ukraine while around
20,000 had fled Crimea (State Emergency Service 2014). The NGO Crimean
Diaspora estimates between 50,000 to 60,000 people have fled Crimea, though
not all have been registered (Crimea Diaspora, 3 August 2015). According to the
United Nations refugee agency in October 2015 they were able to ‘raise only 56
per cent of the $41.5 million it says is needed to serve Ukraine’s 1.5 million
internally displaced people’ (Gienger 2015). The crisis extends beyond the IDPs
and overall ‘5 million people [needed] $316 million of humanitarian aid [in
2015], and only 45 per cent of that has been funded or pledged’ (Gienger 2015).
State support is meagre and internally, too, those in need primarily rely on the
support from volunteers for manpower and donations for food, clothes, medicines,
funds, etc. the neglected relying on the dispossessed and burdened by mounting
socio-economic problems – prohibiting utility bills, unemployment, low wages
and wage arrears, cuts to social services and demands of sacrifice of life.
 The making of Ukraine’s multilevel crisis 171
Conclusion
The ongoing conflicts in Ukraine that may appear ideological, ethnic, or linguistic
are often ideational/political, effective and manipulated rather than causal, and
can be interpreted as structural ruptures necessitated by the relocation of agency
within and between social blocs, classes, and their fractions. The underlying
conflicts are class formation and accumulation struggles between foreign and
domestic capital i.e. oligarchs, EU, US, and Russian business and their indirect
engagement in Ukraine’s policy making via various forms of advisory and financial
‘support’. Maidan protests too were not ideological but counter-ideological
movements as I discussed above. There was no class in-itself or for-itself in a
historical materialist meaning of the term. However, there was and still is a his-
toric bloc. It is still amorphous but it’s growing stronger. The right-wing elements
traceable and influential at Maidans (Ishchenko 2016) and celebrated as ‘patriots’
are becoming a sacrificial animal for the accumulation needs of oligarchs which
led people to protest in the first place. That sacrifice is now manifest in the dis-
posable attitude of the current rulers to the volunteer battalions that they struggle
to control.
Maidan of 2013–2014 was against the injustice brought on by neoliberal
kleptocracy, corruption of the judiciary, predatory militia, and widespread state
asset embezzlement in the midst of deteriorating conditions of life. It was a
culmination of a discontent that brewed for over 20 years and, both in the east and
west of the country, it had grassroots origin and included organised labour, miners
too. The discontent over rising prices for food (58 per cent) and communal
housing fees (54 per cent), loss of work (34 per cent) and wage and pension
arrears (32 per cent), corruption (27 per cent) and crime (20 per cent) – that is
what unifies Ukraine’s people (Bereshkina and Khmelko 2014). Not EU, nor
NATO; despite their growing popularity as a response to the current crisis.
Ukraine–EU association agreement is a carrot that now does not match the stick
anymore.
The combination of neoliberal marketisation and politically empowered
kleptocratic and internally heterogeneous ruling(/capitalist) bloc of Ukraine have
created the combustive atmosphere in the country that has not gone away with
Yanukovych’s escape. Instead, the rule of neoliberal kleptocrats has entrenched
even deeper. The war in the east of the country now serves as a sanction for
further anti-social austerity reforms that will further untie the hands of oligarchs
while keeping IMF and the EU satisfied. All this comes at the expense of further
state dependence on foreign debt and effectively makes its government more
susceptible to external meddling in domestic policy-making in addition to making
Ukraine’s economy increasingly vulnerable. The above developments are
underlined by growing public disapproval of the official Kyiv manifest in the
ongoing and growing number of protests in the country as the Centre for Social
and Labour Research surveys show (ibid.). The second Maidan has not brought
the change that many have already died for, the third one that is brewing in the
country may.
172 Yuliya Yurchenko
Notes
1 In Gowan, Neo-Liberal theory and practice for Eastern Europe, 5–6. For details see:
Jeffrey Sachs, Poland’s jump to the market economy (Cambridge, MA: MIT Press,
1993); Jeffrey Sachs, Understanding “shock therapy” (London: Social Market
Foundation, 1994); Ralf Dahrendorf, Reflections on the revolution in Europe: In a letter
intended to have been sent to a gentleman in Warsaw, 1st ed. (New York: Times Books,
1990).
2 Donbas oligarchs were branded ‘the masters of Donbas’ in mass media since mid-1990s.
3 I refer to the events known as ‘the Revolution of Dignity’ as ‘the Bloody Winter’. The
latter is my personal term suggested and preferred to the former as I consider it to be a
misnomer. First, there was no revolution. Second, there certainly has not been a revolution
of dignity. And lastly, the conduct of the involved actors in the events of the winter
2013–2014 needs to be scrutinised and investigated in the guise of too many unresolved
crimes (murder, beating, torture, kidnappings, etc.) the very existence of which pits into
question appropriateness of ‘the Revolution of Dignity’ as a name.
4 It must be taken into account that ‘methodologies used to produce these two figures are
different’ (ibid.).

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10 Ukraine’s frozen transformation
State capture, nationalising policies
and shifting geopolitics
Klaus Müller

Introduction: from independence to a ‘New Cold War’

Three times during the last 25 years, Ukraine has attracted worldwide attention;
three times the concurrence of mass movements and power struggles within the
ruling classes went hand in hand with shifts in the geopolitical landscape. A first
wave of protests made use of the new liberties of Mikhail Gorbachev’s Perestroika
ending any hopes for a new treaty on a reformed Soviet Union. In the late 1980s,
national movements changed the political constellation to the effect that, on
December 1st 1991, the population in all parts of the country opted for a sovereign
Ukraine. A week later, the Soviet Union broke up – an event that entered the
history books as the official end of the Cold War.
A second wave of political activism set in when the hoped-for fruits of
independence failed to materialise. In 2004, the victorious ‘Orange coalition’
promised a definite break with the Soviet past. For the first time in its history,
as two enthusiastic western observers pointed out, “Ukraine imprinted itself on
the political consciousness of the world” (Ash and Snyder 2005: 1). However, the
Orange government, inaugurated in January 2005, drowned soon afterwards
in mutual accusations of corruption and treason. In 2009, as a result of the global
financial crisis, Ukraine’s economy slumped by 15 per cent (IMF 2017: 202). The
following year the looser of the Orange Revolution of 2004, Viktor Yanukovych,
was re-elected as president.
A third major protest movement started on 21 November 2013. Again, it was
initiated by worsening socio-political conditions with inflation, poverty,
unemployment and corruption on top of the list of complaints (IFES 2013: 2–3).
In contrast to 2004, the Maidan-upheaval of 2014 did not follow the script of a
‘velvet revolution’ which had generated much sympathy in western media.
Militancy was seen as a legitimate means to overthrow a deeply unpopular head
of the state.
The global dimension of the events of 2013/2014 was obvious from the very
beginning. From an early stage of the Maidan uprising, western politicians
were deeply involved in framing the protests as more than an internal Ukrainian
affair, namely as a geopolitical choice between European values and Russian
authoritarianism. This was a significant change on the side of the United States
176 Klaus Müller
and the EU. During the 1990s, the U.S. administration had taken a rather cautious
approach. In the last days of the Soviet Union, President Bush senior had warned
the government in Kiev not to play the national card on its road to sovereignty
(Plockhy 2014: 51–59). The fragile nature of the new Ukrainian state, its contested
history and the regional and cultural cleavages of the society were known all too
well – and confirmed in all elections since independence again and again. If the
elites in Ukraine, Russia and the West would not refrain from divisive policies a
break-up of Ukraine, a Yugoslav civil war scenario and a clash with Russia
appeared as a real possibility (Huntington 1996: 165–168).
The salience of this scenario was confirmed in a dramatic way by the Russian
annexation of Crimea in March 2014 and the subsequent events. Moscow used
the secessionist mood on the peninsula to prove its principal opposition against a
geopolitical swing of Ukraine into the Western alliance. To pre-empt any further
secessionist ambitions in the eastern parts of the country, the provisional
government in Kiev launched an ‘Anti-Terror Operation’ against militant ‘anti-
Maidan protests’ in the Donbas region, a confrontation which quickly escalated
into civil war. Over the next two years, this war, with more or less open engagement
of outside actors from Russia and from the West, cost the lives of 10,000 victims,
destroyed towns, villages and industrial sites.
“What has caused the Ukraine crisis?” This is the opening question of Serhii
Plokhys’ new history of the country, which the author answers in the concluding
pages by pointing the finger at Russia’s aggression against the ‘pro-European
revolution’ in Kiev (McNabb 2016; Plokhy 2015: xx and 353f.). In fact, a ‘new
cold war’ lens defines the dominant view of western observers and politicians: a
reinvigorated Russia which, since ancient times, preferred brute force over
international law, treaties and negotiations, tries to take back the lost territories of
its former empire (Grigas 2016). In a wider perspective, Vladimir Putin’s
machinations in Ukraine are only one of the gambits in his ‘war against the West’:
“The EU and NATO are Mr. Putin’s ultimate targets” (Economist 2015: 9).
Moscow’s version of the events in Kiev is no less dramatic: a western backed
‘fascist coup’ had toppled Ukraine’s legitimate government and threatens the
Russian speaking minority in the eastern parts of the country. The Maidan-
uprising is seen as another application of the American grand strategy of ‘regime
change’ by ‘colour revolutions’, a strategy which started in Serbia, touched
Ukraine first in 2004, spread to Georgia and Kyrgyzstan, its final destination
being not Kiev, but Moscow.
Both accounts fail to identify the decisive factors which led post-Soviet Ukraine
in a dead-end situation. Attempts to explain the country’s malaise with reference
to a bad Russian neighbourhood miss the defining conditions of Ukrainian politics
since the early 1990s (for an overview see Becker as well as Yuchenko in this
book).
Instead, coming to grips with the Ukrainian failure after 2013 requires one to
dissect the interplay between the geo-political gambling of the country’s elites
and ill-considered interventions by outside actors, which I will analyse in this
paper. A closer look reveals that the ‘new cold war’ narrative deflects from severe
 Ukraine’s frozen transformation 177
diplomatic failures. The situation in Kiev spiralled out of control in early 2014,
first of all, because of a lack of diplomatic insight. The negotiators of the European
Commission knew that the Association Agreement (AA) was a deeply divisive
issue in Ukraine, not only between Yanukovich and his opponents, but also
among the population. The negative spill-over effects to Ukrainian-Russian eco-
nomic relations were too evident and too massive to be treated merely as
transitional costs. That the EU’s Common Security and Defence Policy, part and
parcel of the AA, would challenge Russia’s declared security interest was too
obvious, not to anticipate a reaction. Furthermore, European politicians knew at
least since 2008 that the overwhelming interest of the U.S. administration was to
bring Ukraine into NATO, irrespective of Russia’s counteractions. Alternatives
to the road into disaster were not explored.

Fallout of the soviet dissolution: the case of Ukraine

The first time that developments in Ukraine had an impact on global politics
followed from the secessionist dynamics in the late Soviet Union. The Ukrainian
politics of national mobilisation took the mass movements in the Baltic states as
a model. Like the Baltic states, Ukraine was no longer prepared to feed into a
descending system which redistributed wealth to Central Asia and the Caucasus
republics. With the highest density of large-scale industry in the Soviet Union,
Ukraine saw itself in an excellent position to stand on its own feet. Not only for
economic reasons: since the late 1980s, especially in the western parts of the
country, independence was seen as the way to rehabilitate a long supressed
national culture.
In its early stage, the independence movement was driven by intellectuals,
poets, ecologists and students who created a broad-based forum for protests
against the unreformed Communist Party of Ukraine (CPU). Initially designed as
a Democratic Front in Support of Prerestroika, it used the changing opportunity
structures of the decaying Soviet Union to sharpen its focus on cultural
independence. Organisationally consolidated as the Popular Movement of Ukraine
for Restructuring (Rukh), supported by student protests, demonstrations and
labour strikes, the opposition extended its agenda from cultural matters to the
question of how to bring the resources and production facilities under national
control (Kubicek 2008: 126–134).
The more Gorbachev’s authority over the Soviet Republics dwindled, the more
sympathies certain groups of the CPU developed for the idea of a Ukrainian
national economy. The decisive step was made by Leonid Kravchuk, secretary of
the Central Committee: within a year he switched from a fierce critic of Rukh’s
‘destructive nationalism’ to the leader of an independent state. In July 1990, the
Ukrainian Supreme Soviet adopted a Declaration of Sovereignty, claiming control
over legislation, the currency and banking system and promoting Ukrainian as the
official language. On 24 August 1991, three days after the aborted coup in
Moscow, a futile attempt to restore the power of the centre, the leadership in Kiev
declared full independence. Kravchuk’s metamorphosis from a leading communist
178 Klaus Müller
into the spearhead of national independence payed off: parallel to the independ-
ence referendum on 1 December 1991 he became the first elected president of
Ukraine.
Ukrainian politics of the following years was occupied by balancing the different
agendas of the broad but heterogeneous coalition which had backed independence.
Nationalist activists, mainly in the western parts of the country, grasped the
chance to realise their imagination of a ‘thousand years old Ukraine’. The political
cadres in Kiev used independence as a way to stay in power. The interests of the
‘red directors’ and the work force of their factories, predominantly in the eastern
industrial centres, were served by the privatisation into Ukrainian hands. Crimea
proclaimed itself as an independent and autonomous republic within Ukraine in
September 1991. Farther-reaching aspirations of a sovereign Republic of Crimea
were blocked by Kiev before a referendum could take place in August 1992.
The policies which grew out of this constellation did not follow the expectations
of the dominant theory of post-communist transformation, as proposed by western
advisers, the World Bank or the International Monetary Fund (IMF). A ‘transition
to the market’ did not take place. Five years after independence, the World
Development Report 1996, From Plan to Market, placed Ukraine in the least
successful group of countries in transition (World Bank 1996). Together with
Belarus and the new central Asian states, Ukraine slipped into hyperinflation
(4,700 per cent in 1993), did not attract foreign investments and reached the low
point of economic decline only in 2001. After ten consecutive years of
deterioration, the real GDP of 2000 landed at 43 per cent of its value from 1990
(World Bank 2002: 5).
Over the same period, the former nomenklatura consolidated its grip on the
privatised industries and captured the core institutions of the state, the legal
system and the media. What appeared to western observers as proto-democratic
competition was infighting between rivalling factions of the new ruling class. This
almost ultra-stable constellation of power survived the ‘Orange Revolution’ for
now well-understood reasons (Beissinger 2013). The Maidan unrest and the first
post-Maidan elections signalled an internal shift of power without breaking up the
oligarch system (Müller 2014). However, the recalculation of geopolitical benefits
in the context of the EU’s offer to join its Neighbourhood Policy worked, in fact,
as a game changer.

Behind the Maidan façade: shifting rent seeking coalitions

With the European Association Agreement, ready to sign, free travel to the West,
inward investments and membership in the Western community seemed to be
imminent. When Yanukovich’s last minute refusal to sign the agreement killed
all hopes, frustration turned into anger. The protest wave, which unfolded in late
2013 was perceived in western media as new start of an even stronger civil
society. U.S. historian Timothy Snyder characterised the revolt as a classical
people’s revolution to topple a despotic President (Snyder 2014). Repression by
the police and resistance by ever better organised oppositional groups determined
 Ukraine’s frozen transformation 179
the course of events. In January 2014, Vitali Klitschko, one of the ‘pro-European’
contenders for new presidential elections, warned of a civil war. The last negotiated
compromise which had offered a way out of the escalation was mediated the
French, German and Polish minister of foreign affairs and consented by the
Maidan council of the protest groups on 20 February. According this agreement,
a new inclusive government had to be set up, the power of the President would
be curtailed, the constitution of 2004 restored and early presidential elections
scheduled for December 2014.
Much to the surprise of outside observers, things developed in a radically
different way. A militant minority, led by a commander of the Maidan ‘self-
defence’, threatened to storm the Presidential palace. When Interior Ministry
troops and the riot police left the scene, Yanukovich realised that his fate had been
determined in backroom deals and decided to take a run. Maidan activists,
members of parliament, including defectors from the Party of Regions, unseated
the absent president and set up a provisional government days later. Democratic
legitimation was postponed to presidential elections in May 2014 and early voting
for a new Parliament in October the same year.
After Yanukovich’s removal, the real powerholders of Ukraine took initia-
tive: ‘pro-western’ as well as ‘pro-Russian’ oligarchs, economic and political
entrepreneurs at the same time. Gas oligarch, Dmitry Firtash, organised a secret
meeting with Petro Poroshenko, the driving force behind the Maidan uprising,
and Vitali Klitschko in Vienna to pre-arrange the regime transition in Kiev:
Poroshenko as presidential candidate, Klitschko standing for Major of the capital
(Walker 2016). To provide for his own future, Firtash started an Agency for the
Modernisation of Ukraine for which he invited retired western politicians and
intellectuals. And even the ‘easternmost’ oligarch and patroniser of Yanukovich,
Rinat Akhmetov, had a part to play in the transfer of power in March 2014: to tell
his client that his time is up (Wilson 2014: 96).

Changing geopolitical constellations

Russia and Ukraine: geopolitics meets oligarch corruption

Ukraine has always found itself in geopolitically troubled waters. Ever since
efforts of state-building during and after World War I, the integrity of the country
could not be taken for granted. Its borders were repeatedly defined and redefined
by various outside powers or by the Soviet rulers. During communism, the
economic, social, ethnic and cultural fabric of the society had been deeply
transformed. Against this background the idea to base the newly independent state
on the myth of a centuries-old history of Ukrainian state-building was rather
ambitious. Attempts to consolidate the Ukrainian state by comprehensive policies
of ‘Ukrainisation’, as announced by Kravchuk in 1992, have run into predictable
risks. “Ukraine is faced with the choice of surviving as a political entity or
becoming like Bosnia”, as the historian Roman Szporluk characterised the
country’s ‘Dilemmas of Nationhood’, warning that anti-Russian sentiments would
180 Klaus Müller
not only threaten the social fabric of Ukraine but also endanger cooperation with
the powerful neighbour (Szporluk 2000: 330). Nevertheless, the differences
between the ‘two Ukraines’ became only divisive after being exploited for
competing elite projects. This not only applied to domestic policies but especially
to the geopolitical manoeuvrings of the powerholders.
If the shape of Ukraine was conditioned by geopolitical power relations, it was
not predetermined. This structured contingency is perfectly described by Kennedy:

As a global struggle over Ukraine’s future began to unfold, major geopolitical

actors (‘Putin’,’Europe’, ‘NATO’, ‘America’) had levers to pull: military
threats and deployments, both overt and covert, economic threats to withhold
access to financial services or energy resources, media arguments about
history and the reasonableness of their behaviour. . . . Each of these actors
was constrained, pressured, and persuaded by a range of commercial and
social actors, from media commentators to energy conglomerates, with their
own levers to pull. All were vulnerable to a shifting situation within Ukraine
itself, in which an unstable array of forces struggled for momentum.
(2016: 65–66)

The first decade of Ukraine’s independence allowed its leader enough time to
define its foreign relations. However, over time, Ukraine’s foreign policy strategies
as well as the interests of outside powers shifted considerably, and it is important
to understand the changing constellation which tilted Ukraine’s fragile condition
after 20 years of independence towards civil war and international confrontation.
During the 1990s, outside actors did not queue up to intervene into a “mythic
state” which had not yet defined its direction (Cowley 1994: 10). The IMF was
cautious to assist a country where hyperinflation had peaked at 10,000 percent in
1993 and which was not able to install an appropriate policy framework. Above
all, the U.S. and Russia shared the overarching interest to denuclearise Ukraine,
Belarus and Kazakhstan, as codified in the START-I treaty which had been
negotiated already between Reagan and Gorbachev. The connected Lisbon
Protocol from May 1992, according which all nuclear weapons had to be
transferred for destruction to Russia was realised in 1994 – against considerable
resistance from Ukrainian nationalists.
Beyond START I, in Moscow’s understanding an achievement of a negotiated
end of the cold war, Russian politics in the 1990s hardly had the means to interfere
into Ukraine’s internal affairs. Absorbed by the breakdown of central authority,
threatened by secessionist ambitions in its southern and eastern regions, Moscow
tried to maintain a minimum of cooperation in economic policies in the post-
Soviet space. Virtually no successor state of the Soviet Union was able to conduct
an independent economic policy. But when Kiev tried to overstretch the credit
lines for its industries by printing ruble notes on its own, the Russian central bank
pulled the plug. The breakdown of the ruble zone finished the last institutionalised
policy coordination between Russia and Ukraine. Russia continued subsidising
the Ukrainian economy with energy far below world market prices as well as
 Ukraine’s frozen transformation 181
procurements to its industries in exchange for concessions on the status of the
strategically significant naval base Sevastopol. Territorial claims made by several
Russian and Ukrainian nationalist groups on parts of the neighbouring country,
be it on eastern Ukraine, Novorossia or Crimea, be it on the Kuban or Don region,
were background noise to ongoing debates between the governments. Persisting
conflicts between the two countries were less about borders (Trenin 2001: 168)
but about reliability in security matters which seemed to be solved by a long-term
lease of Sevastopol.
In Moscow’s view, two channels seemed very effective in influencing policy
makers in Kiev: the voting power of the East-Ukrainian population, and the
opportunities for self-enrichment of the Ukrainian elites. Into the new millennium
conflicts between the countries were negotiated in form of bilateral dialogues on
the level of the presidential administrations or by the presidents in person. Until
2004, Kuchma and Putin met 24 times. Given these high-level contacts there was
little interest to use the Ukrainian opposition to influence Kiev’s politics: “Between
1992 and 2005 both sides refrained from aggressive measures, which would have
risked a break of relations” (Burkovskyj and Haran 2010: 334).
This constellation corresponded well to the formula of a ‘multi-vector policy’
as used by the first two Ukrainian presidents: sometimes indicating ‘equidistance’
to the West and the East, sometimes preferences to one or the other side. Andrew
Wilson characterised this strategy as a Titoist balance game: “both to extract
resources from Russia and the West alike, and to excuse their lack of reforms”
(Wilson 2014: 15).
For more than a decade the powerholders in Ukraine managed to align their
economic interests and foreign policy objectives. On the one hand, relations with
Russia were formalised in several agreements on the status of the Russian Black
Sea fleet in Sevastopol and a Memorandum on Security Assurances of 1994
according to which Russia, the U.S. and the United Kingdom confirmed the
borders of sovereign Ukraine. Notwithstanding several contentious issues, Ukraine
and Russia managed to find a modus vivendi as codified in the above-mentioned
Treaty on Friendship, Cooperation and Partnership of 1997 which, in spite of
earlier designs on Sevastopol, was ratified by the Russian Duma in December
1998 (Trenin 2001: 164–170). Maintaining good relations with Moscow kept up
the flow of subsidised energy and thus the associated rents into the pockets of
those who negotiated the contracts and controlled the intermediary firms. The
main figures in this group, Rinat Akhmetov and Dmytro Firtash, were associated
with Russia. The ‘eastern vector’ kept political and business networks between
Ukraine and Russia going, often using opaque constructions, mafia relations and
secret service agents – with private benefits but public vices as its effects:

The political system created certain ‘windows of opportunity’ for access to

energy rents, influenced those who had access to these rents, and also how
these rents would be recycled into the political system. This led to the
strengthening of certain political actors with an interest in maintaining both
certain ‘bad institutions’ (institutions permitting widespread corruption and
182 Klaus Müller
lack of transparency) and a situation of energy dependency through which
their access to energy rents could be most easily guaranteed.
(Balmaceda 2008: 140)

The ‘European Choice’, on the other hand, was promoted by those favouring
access to western markets and striving for upward mobility into the global capitalist
class, as masterly managed by Petro Poroshenko and Viktor Pinchuk. For the
most part elite decisions in Ukraine were based on their own interests, not those
of outsiders, less driven by ‘European values’ than by ‘European value’ (Buckley
and Olearchyk 2013).

Forward presence: American strategising in the post-Soviet space

The ‘western vector’ toward the U.S. was laid down by the NATO-Ukraine
Charter and practically demonstrated by participation in NATO exercises as well
as the invasion of Afghanistan and Iraq. In economic affairs, the EU offered
Ukraine a Partnership and Cooperation Agreement in 1999 and included the
country into its European Neighbourhood Policy (ENP). While the EU condition-
alities run into some resistance from the business sector (Wolczuk 2008), the
‘western vector’ opened the doors for new actors in the political arena.
Independence allowed:

The western diaspora to influence developments within Ukraine directly and

openly, either as diaspora returnees or as advocates for Ukrainian interests in
western capitals. The Soros Foundation established a council of advisors to
the Ukrainian president that consisted mainly of diaspora Ukrainians.
(King 2010: 143)

During the 1990s the influence of diaspora Ukrainians was kept in check, but
it received new momentum after the Orange Revolution. Viktor Yushenko revived
the internally divisive, externally confrontational anti-Russian interwar national-
ism, still alive in the exiled communities, and elevated the leader of Ukrainian
fascism, Stepan Bandera, to a hero of the nation. To be sure, anti-Moscow rhetoric
had been used by Kravchuk “as a unifying element as well as an excuse to by-pass
economic reform” (Kuzio 1998: 55), and Kuchma had declared the intention to
join NATO in 2002. But it needed Yushenko to insist on a clean break with
Russia: NATO membership and the withdrawal of the Black Sea fleet were set
at the top of the agenda. This seemed quite realistic: On the night before the
NATO-Summit 2008 in Budapest, the USA offered Yushenko the prospect of a
Membership Action Plan which would lead directly to membership. Only strong
opposition by the German and French leadership blocked this avenue around
usual NATO procedures; nevertheless, a more distant perspective was kept open
(Sakwa 2015: 4).
The difference between George H.W. Bush’s cautioning speech in Kiev in
1991 and G.W. Bush’s full-bodied invitation to NATO characterise the journey
 Ukraine’s frozen transformation 183
of US geopolitics in the post-cold war world. At the same time, they bear witness
to the increasing disaffection between the American and the Russian leadership.
Bush senior had already moved away from the common understanding of a
negotiated end of the cold war in his Presidential Address of 28 January 2002, in
which he celebrated that ‘America won the cold war’. This not only implied that
Russia was referred to find its place in a US led ‘new world order’, it was also a
rejection of Gorbachev’s vision of a common security structure with an enhanced
role of the United Nations. US geopolitics followed the idea of a post-Soviet
power vacuum which had to be filled, a conception propelled by a circle of com-
mentators and advisors which were already sceptical of Reagan’s rapprochement
with Gorbachev. In their view it seemed quite natural that the United States would
act as a hegemon, now unrestrained by the Soviet adversary.

The end of the Cold War was taken by Americans as an opportunity not to
retract but to expand their reach, to expand the alliance they lead eastward
toward Russia, to strengthen their relations among the increasingly democratic
powers of East Asia, to stake out interests in parts of the world, like Central
Asia, that most Americans never knew existed before.
(Kagan 2002: 86)

This point of view is elaborated in the recent strategy paper of the Center for a
New America Security with the conclusion of military assistance to the Ukraine
(Campbell et al. 2016).
Unilateralism as foreign policy doctrine was not just a ‘moment’, advertised by
hawkish commentators as an opportunity for the U.S. to restructure global power
relations into its favour (Krauthammer 1991; Skidmore 2011). Primacy in inter-
national affairs became the new norm in the secret draft of the Defense Policy
Guidance from February 1992, parts of which were leaked to the New York Times.
This strategy paper was guided by the dominant consideration “to prevent the
re-emergence of a new rival, either on the territory of the former Soviet Union or
elsewhere that poses a threat on the order of that posed formerly by the Soviet
Union” (New York Times 1992). Part of this strategy was the intention to bring the
East-central European states into the European Community and NATO as fast as
possible. The posture towards post-communist Europe and the post-Soviet Space
was a regional articulation of a global strategy, which Reuben Steff termed a “form
of strategic maximalism”: The long dreamt-of global ballistic missile defence
system (BMS) would install “a one-way deterrent capability that would deny other
states the ability to deter the US from projecting power” (Steff 2013: 79).
According to this two-pronged ‘forward presence strategy’ the U.S. administra-
tion revoked the assurance given by foreign minister James Baker to Gorbachev
not to extend NATO to territories east of the river Elbe (Shirfrinson 2016). This
assurance was also the position of NATO in May 1990 as explained by its general
secretary at that time, Manfred Wörner: “The very fact that we are ready not
to deploy NATO troops beyond the territory of the Federal Republic gives
the Soviet Union firm security guarantees” (Wörner 1990). The withdrawal of this
184 Klaus Müller
reassurance, officially justified by the lack of a formalised agreement and the
dissolution of the Soviet Union, was nevertheless a violation of the pre-contractual
conditions of trust – with long-lasting repercussions on the foreign policy establish-
ment of post-Soviet Russia. It was well known that even the most ‘Atlanticist’
politicians in Russia, liberal reformer Chubais, foreign minister Kozyrev and the
West’s favourite president Yeltsin, were strongly opposed to the eastern
enlargement of NATO, since it would be a springboard to nationalistic, anti-
reform forces in Russia and risk a ‘cold peace’ in relations with the West.
Nevertheless, Western leaders laid down their strategy of NATO enlargement.
The U.S. and its allies ignored warnings of this kind since Russia appeared no
longer as an international actor. The West proclaimed an open-door policy for
new members, first formulated in 1995 and realised in two rounds of enlargement
in 1999 and 2004 (Pouliot 2010: 148–193). Moreover, the U.S. was not prepared
to include BMS into its strategic dialogue with Russia. Though much hope was
invested in the Nobel Peace laureate, Barak Obama basically retained the intention
of US primacy. He softened the language and tried to find new ways of
multidimensional cooperation in mutual interest as symbolised by the now
legendary ‘reset’ of bilateral relations. In practice, this meant that Russia was
invited to find its place in a liberal world order under conditions defined by the
US. The two salient points, NATO expansion and BMS, were excluded from any
possible new agreement (Steff 2013: 103–115).
Against this background, the struggle about the geopolitical status of Ukraine
was a different matter for the powerholders in Kiev, for the U.S., and for Russia,
while the EU adopted an ambiguous stance for a long time. Ukraine’s ‘European
choice’, at the cost of mutual relations with Moscow, was the outcome of a decade
long power struggle between elite fractions: a shift in rent seeking opportunities
from Russian energy subsidies to European structural funds. The corrosive effect
of Russian energy subventions to Ukraine is well known. Lesser-known is the fact
that single-bid procurements favouring firms connected to the governments and
donations in exchange for state contracts are common practice of the EU’s new
member states in general (Economist 2016). The persistence of state-capture,
corruption and politicised legal institutions in post-Maidan Ukraine underlines
that ‘democracy’ was never more than a rhetorical device. Focused on their own
interest, disregarding the ‘bi-vectoral’ attitudes of the population, Kiev’s ruling
class turned down the chance to use Ukraine’s location and cultural resources to
function as a “gateway state”, which could “convert former barrier boundaries
to borders of accommodation” (Cohen 2015: 54–55).
Democratising Ukraine was also not on top of the American agenda. From
Washington’s perspective, Ukraine was, first and foremost, another theatre to
demonstrate its power to define the hierarchy of states. The American project since
the 1990s was to secure its special status, privileges and dominance against a group
of rising powers in an emerging post-hegemonic world order. ‘Revanchist Russia’
became the code name for the challenges of a reconstructed Russian state and
economy to which the U.S. reacted with status-denial: Russia was denied a special
interest in its ‘near abroad’, responsibilities for Russian minorities in the neigh-
 Ukraine’s frozen transformation 185
bouring states, or essential securities interest in its neighbouring regions. Massive
military assistance to Georgia, promoting coloured revolutions and supporting
alternative candidates were part of an approach to delegitimise the Russian
leadership. Ukraine became the most spectacular battleground of the strategy of
status-denial: “While undeniably taking things to another level, the Ukraine crisis
is really a symptom of deeper differences between the sides” (Contessi 2016:
270, Fn. 11).
These deeper differences refer to the geopolitical core, and – from the Russian
point of view – to the non-negotiable layer of the Ukrainian crisis. Washington’s
‘forward presence strategy’, designed to create ‘strategic depth’ by pushing NATO
presence up to the Russian borders, clashes with Russia’s essential security interests,
which insists on a neutral Ukraine as buffer state. The conflict that would rise from
this constellation was known for some time. Experienced American politicians and
advisers from cold war times warned against this scenario again and again. Henry
Kissinger, Zbigniew Brzezinski and George Kennan saw the confrontation coming
and advised to offer Russia a ‘Finland option’ regarding Ukraine:

Mutually respectful neighbours with wide-ranging economic relations with

Russia and the EU; no participation in any military alliance viewed by
Moscow as directed at itself but expanding its European connectivity. In
brief, the Finnish model is ideal for Ukraine, the EU and Russia in any larger
east-west strategic accommodation.
(Brzezinski 2014; for a more differentiated tableau of
‘Ukraine as Finland’ see Gaddy and Ickes 2014: 12)

The U.S. chose a different strategy, that of intentional nonunderstanding.

Disregarding Russian security interest, it presented Ukraine’s quest for NATO
membership as a sovereign choice of a sovereign nation. It ignored the basic
mechanism of coalition formation in security matters, namely that increased
security of some states may affect the security perception and trust of non-
members in a negative way. When Russia realised that the institutional devices it
was offered, membership in the G8 or the NATO-Russia council, would not give
it a voice in matters of collective security, it refused to accept for itself a subordinate
role. The defining step out of an American-led ‘new world order’ was taken by
Putin’s protest against unipolar ambitions in a world of rising new powers at the
Munich Conference on Security Policy in January 2007. A statement which was
nearly common sense among political scientists of the time, but when voiced by
Putin, was received as an aggressive transgression of status (for the Russian
foreign policy reorientation since 2005 and under the impression of the Ukrainian
crisis, see Tsygankow 2016, 233–255 and 264–265).

De-bordering the EU: geopolitics by stealth

Theoretically, European leaders could have agreed with Putin’s critique of
American unilateralism. The consolidation of the EU by a common currency was
186 Klaus Müller
intended as a defence against U.S. dollar hegemony; France and Germany had
risked conflict with Washington over the U.S. invasion in Iraq and had blocked
a fast track of Ukraine and Georgia into NATO. Moreover, the EU presented its
package of combined institutional, political and economic reforms under greater
democratic control, which were implemented in its new post-communist member
states, as a more sensitive alternative to the imperative Structural Adjustment
Programmes of the IMF. Practically, however, the EU had adopted the revisionist
history of a ‘victory in the Cold War’ in its Security Strategy from 2003. This
document portrayed the history of European integration as well as the end to the
East-West confrontation as result of strategic determination: “The United States
has played a critical role in European integration and European security, in
particular through NATO. The end of the Cold War has left the United States
in a dominant position as a military actor”. Given its seize, economic weight and
its permanent liaison with the U.S., the paper stated, “the European Union is
inevitably a global player” (EU 2003: 1).
Against this background, the EU started not only its Eastern Enlargement
but also developed its European Neighbourhood Policy (ENP), in the words of
the responsible Commissioner Štefan Füle “the most powerful transformative
instrument after enlargement” (Füle 2013b). This special set of policy instruments
was designed to avoid a new dividing line between the ‘ins’ and ‘outs` of enlarge-
ment by bringing those bordering states into the orbit of EU regulations which
were not yet or would never become full members. Not to be affected by trouble
spots in the south and east, the EU intended to create stability in its geographical
environment (European Commission 2004). The scope of this strategy was nothing
if not ambitious. Based on the assumption that compliance with European stand-
ards would create growth, promote human rights, democracy and civil society,
the relatively small sum of 12 billion euros was earmarked for transforming 16
countries in Northern Africa, the Caucasus and the former Soviet region during
the period between 2007 and 2013.
The complexity of criteria for convergence to ‘European values’ made a straight-
forward evaluation of reform programmes unlikely from the very beginning. The
focus of the EU typically oscillated between economic interests, democratic
progress, and security considerations. In the case of conflicting aims, functional
criteria almost always trumped norms and values (Kostanyan 2017: 39–49). To
become aware of the EU’s overrated capabilities, simply consider the breakdown
of the Mediterranean Neighbourhood and the misjudged ‘Arab Spring’. Also in
the Eastern Neighbourhood, the EU suffered from the illusion of its transformative
‘soft power’.
The EU could have known that Kiev’s ‘European Choice’ was more a mode
of speech than reality. Ukraine’s long history of shirking IMF conditionalities
gave some indication of the reliability of its leadership. Despite all promises
to reform the energy sector in line with EU rules, the elites never delivered
appropriate policies (Wolczuk 2016). How would it be possible to transform
a country with more than 50 per cent of its economic activity in the informal
sector with the help of the ‘most advanced agreements of its kind ever negotiated
 Ukraine’s frozen transformation 187
by the European Union’, an “extremely complex legal instrument” (van der Loo
2016: 319)?
Naïveté combined with strategic calculations prevented a realistic assessment
on both sides. For one thing, Brussels had no special method to interact with
states which represent neither advanced industrial countries, nor accession or
development countries. Moreover, it tends to transform political into technical,
legal or administrative problems and has great difficulties to understand environ-
ments, which are not receptive to its normative aspirations. But then, why should
state-capturing elites abandon their domestic rent seeking opportunities in favour
of a common market, which would lay bare the competitive disadvantages of
most of their industries? How could an appeal to values break deep seated power
structures? On the other hand, hardly any Ukrainian politicians understood the
implications of thick catalogues of regulations on which the EU’s understanding
of ‘free trade’, in fact a geo-economic forward strategy, is based.
Since the start of ENP, enough evidence was available that the relative success
of its Eastern Enlargement could not simply be extended into the post-Soviet
space. A report of the European Council of Foreign Relations warned that:

Behind the headlines the story is just as bleak: politics in the ‘neighbourhood’
is a toxic mixture of authoritarianism and stalled democracy, ongoing
secessionist tensions continue to stoke fears of violent conflict, and the
economic crisis is wreaking havoc throughout the region.
(Popescu and Wilson 2009: 1)

Severe limitations of ENP could be observed on several levels: there were few
indications that the incentives of the programme would promote democracy in the
invited countries in general. Moreover, is was not clear how the projected Enhanced
Free Trade Area with Ukraine could address the structural characteristics of the
country, its regional heterogeneity and the deep linkages of its industrial sector to
the post-Soviet space. The way the EU pushed forward its agenda up the “Vilnius
fallout” (Lehne 2014: 9) gave rise to the impression that the EU overplayed its –
at any rate never clearly stated – geopolitical ambitions.
First, in terms of political modernisation: in contrast to many well-worded
‘Progress Reports’ on democracy and civil society, experiences with the included
countries tell a different story. Anxious to announce success stories of its policy,
the European Commission tended to exaggerate the effects of the many signed
agreements and protocols on human rights, anticorruption, freedom of expression,
the rule of law etc., while it underreported the lack of implementation and
reversals. Painful as it appears from today’s perspective, in 2010 the EU con-
gratulated Yanukovich to a fair victory in the presidential elections. A balanced
evaluation of the first six years of the programme seems underwhelming: “the
effectiveness of EU democracy promotion in Eastern ENP countries in the period
2004–2010 appears to get close to nil” (Buscaneanu 2015: 265). Unimpressed by
the growing critique of its Neighbourhood Policies and “despite turbulent political
and economic conditions” (European Commission 2013), it pressed forward with
188 Klaus Müller
an agreement which contradicted better knowledge about the regional impact of
free trade areas and custom unions.
Second, from an economic point of view, the adoption of the AA turns Ukraine
into a member of a custom union which, by definition, disrupts trade and productions
networks with outsiders. EU regulations, product directives and standardisation
rules applied in Ukraine function as barriers against goods and investments from
the post-Soviet region. Moreover, the complexity of the economic part of the AA,
the Deep and Comprehensive Free Trade Area (DCFTA), has a considerable price:
it burdens the already weak Ukrainian economy to the same effect as would a
massive tax hike. The costs of institutional harmonisation, of the implementation
of rules and practices in nearly all branches of the state and across most sectors of
the economy, had been discussed for some time. Dimitrov (2009: 42) estimated
the price of harmonisation for Ukraine at 32 billion US Dollars. The most detailed
cost-benefit scenario so far confirmed that heavy losses are to be expected over
the short and medium term while the promised boost of productivity and invest-
ments is ‘heavily conditional’ on political circumstances. Regionally differentiated
costs of adaption are amplified by the fact that the more sophisticated industries
in eastern Ukraine will suffer most from broken cross-border linkages to Russia
(Beckouche et al. 2016: Ch. 4.4). Kiev, on the other hand, with a per capita income
already eight times as high as in the low-income regions and the location of the
expanding regulatory bureaucracies, will be the clear winner in an already over-
centralised country (Adarov and Havlik 2017: 70).
In this sense, demands from the Ukrainian side for compensation were hardly
outlandish, but came too late and were promptly swept aside by the EU: gradual
access to the EU markets alone should compensate for losses in trade with its
eastern partners. When the last-minute negotiations in Vilnius led to nothing, the
EU bypassed the Ukrainian government to side with the Maidan protesters who
“are writing the new narrative for Europe.” The European Commission, as its
President continued, “has the right and the duty to stand by the people of Ukraine
in this very difficult moment, because they are giving to Europe one of the greatest
contributions that can be given” (Barroso 2013). In fact, the EU privileged the
‘Euro-Maidan’ over the clear majority of the population who saw no problems
with Russia and rejected the choice between west and east (IFES 2013: 3).
Knowing about the ‘turbulent political and economic conditions’ in the ‘Eastern
Neighbourhood’, the EU has ignored the internal cleavages in Ukrainian politics
and upholds its geopolitical agenda, i.e. governance beyond its borders. Imple-
mentation costs and overcomplex conditionalities are hidden in a document full
of ambiguities and contradictions – “a fascinating subject for legal scholars but
an extreme difficult legal instrument to implement” (van der Loo 2016: 319). The
geopolitical thrust was wrapped in imprecise language, which Füle used to state
that Ukraine’s road is “not a choice between Moscow and Brussels” (Füle
2013b: 3). This was true only as far as he left Ukraine no other alternative than
to except what is on the table; in front of the European Parliament he made the
exclusive character the AA explicit: membership in the Customs Union with
Moscow is not compatible with the DCFTA (Füle 2013a: 2).
 Ukraine’s frozen transformation 189
This was in line with the strictly bilateral character of the ENP, which ignores
wider regional interests of its aspirants and denies outside actors a voice (Lehne
2014: 7–9). Repeated commitments to a future area of free trade from Lisbon to
Vladivostok are subject to the characteristic reservation that DCFTA is the measure
of all things and therefore non-negotiable. In Brussel’s self-understanding, the
eastward expansion of its mode of governance is no affront to the Customs Union,
but an invitation also to Russia to modernise its economy along EU-guidelines.
But why should Russia follow ‘road maps’ which are projected in Brussels and
are in conflict with its self-image not as a ‘neighbour’ but as partner of equal
standing?
The geopolitical strategy implied in the EU’s posture towards the Ukrainian
conflict is less a mission in democracy than the mode of ‘post-territorial’ aspirations
on which the ENP has been based from the very beginning. As a normative pro-
ject, based on universal values, the EU has by definition no geographical limits.
The flip side of the normative language of freedom, democracy and prosperity are
clearly defined interests in the eastern periphery. Because of the double character
of the ENP, namely to socialise the elites in the co-opted countries into ‘European
values’ and ‘good practices’ and to govern from the outside by a broad set of
‘conditionalties’, the EU has been characterised as a “normative empire” (Del
Sarto 2016). Russia observed the ‘widening’ of the EU with some sympathies,
until it realised that the postmodern concept of ‘de-bordering’ implies normative
claims also on what it regards as its internal matters. Moscow’s scepticism rose
when it became aware of the EU’s growing military ambitions, first under the
name of a European Security and Defence Policy, later in ever closer forms of
cooperation with NATO (Light et al. 2003: 60–65).
In this way, the never clearly exposed ‘hardening’ of ENP in which free trade
was just one dimension of a wider political agenda, added a geo-strategical layer
to the regulatory competition between Brussels and Moscow over Ukraine.
Presented to the public as a clash of values with the EU as the ‘force for the good’,
it became more and more difficult to come down to a rational mode of conflict
solution (Korosteleva 2016: 366).

Outlook
The enduring power structures of Ukraine, the geo-political constellation and the
failure of European preventive diplomacy do not bode well for the future of
the country. More than three years after the internal and external tensions which
beset the country since its independence escalated, its future is captured in the
fatal outcomes of post-Maidan politics.
First, the anti-oligarch impulses of the Maidan which could have found
resonance in the eastern parts of the country, turned into a military campaign of
nationalist militias “for complete liberation of Ukrainian lands from Russian
occupants” (Marlin 2016: 284). The population in the eastern territories, widely
considered as “descendants of ‘Muscovite occupiers’” (Petro 2016), has been cut
off from pensions, supplies and medical treatment. The challenge to restore an
190 Klaus Müller
inclusive political society has become a remote possibility. Second, the real
‘national question’, namely that of structural political and economic reforms, was
cast aside by ‘pro-European’ as well as ‘pro-Russian’ forces. Systemic reforms
were not on the agenda of the rent-seeking elites, who prefer to redistribute the
assets of Yanukovich’s ‘family’ according to the new balance of oligarchic power
while anticipating future EU-funds. What started as a ‘revolution of dignity’
reached deadlock in Ukraine’s “corrupt counter-revolution” (Leshchenko 2016).
Third, radical nationalists, either in parliament or in militant formations, exert a
veto power over the implementation of the Minsk II Agreement, thus far the only
negotiated way out of the Ukrainian crisis (Kramer 2016). The constitutional
changes for a measure of regional self-government as provided for in this document
are counteracted by presidential claims to install or dismiss the heads of regional
councils himself. Misconceptions of federalisation prevented a power-sharing
agreement, if this approach is not downright condemned as capitulation to Moscow
(Marlin 2016: 284–290). Under these circumstances, no internal solution to the
Ukrainian crisis is in sight. Quite the opposite, the Kiev government made its best
effort to draw the West into its vain strategy of military victory.
The United States and the EU stabilised Ukraine’s instable constellation, without
addressing its structural problems. They welcomed post-Maidan Ukraine into the
circle of western nations, explained the escalation by Russia’s drive to take over
the country if not the whole former Soviet sphere. While influential lobby groups,
notably the Atlantic Council and NATO functionaries, argued for a massive
military backup of Ukraine, President Obama preferred to avoid an escalation
of the civil war, particularly a direct confrontation with Russia, and stood by
Minsk II as the best achievable solution. The weapons of choice against Russia’s
annexation of Crimea and support for the rebellion in the east are sanctions for
selected Russian politicians and business people and limited military assistance
for Ukraine. Future U.S. administrations, incalculable as they are, will hardly step
back from America’s grand strategy. Quite the opposite, the U.S. seems determined
to push for the biggest military build-up in thirty years. If it will redirect its
attentions to more urgent hot spots of its global power projection than distant
Ukraine is an open question.
The EU strongly condemned Russia’s role since 2013, but was cautious in
supporting military options. Instead it became more directly involved in the
policy of sanctions, which was not only intended to change Russia’s behaviour,
but also to demonstrate ‘solidarity’ against an external aggressor. Since the
EU-Russia summit as well as the NATO-Russia Council had been downgraded
and Russia been disinvited from the G7 meetings, institutionalised dialogues were
substituted by several negotiation formats, especially the Minsk II process. The
stagnation of this process, however, indicates that sanctions are not achieving
the desired result for several reasons: first, they put pressure only on Russia, while
giving a carte blanche to Ukraine’s irresponsible elites and militias. Second, as an
historical fact, economic hardship has never forced Russia to give in (Gaddy and
Ickes 2014: 6); today it rather feeds off Russian nationalist forces who in fact
nurture revisionist dreams.
 Ukraine’s frozen transformation 191
Finally, it was not the best idea to foster European solidarity by ‘othering’
Russia. In early 2014, the EU could have referred to its argumentation from 2008
and excluded any future NATO membership of Ukraine. The EU, however, missed
the chance to regain diplomatic initiative and handed the public presentation of the
escalating conflict over to NATO and its Russophobe eastern members. Recreating
Russia as an essential enemy falls behind the interactionist view of the historical
Cold War, which above all allowed both sides to overcome the bloc confrontation
(Garthoff 1994: 767–778). The fateful consequences are evident: considerations of
a ‘Eurodeterrent’, a credible EU ‘nuclear forward deployment’ against a country
which spends less on military than France and UK combined (Fisher 2017).
Russia has hardly the resources to enter a new arms race, but it has the patience
to play the long game. That it would answer to the US-missile shield with its own
forward presence by stationing nuclear missiles around Kaliningrad was to be
expected. In 2016, the economy had absorbed the shocks from sanctions and oil.
Against wishful thinking by western observers, Putin’s position is not threatened
by liberal opponents, but rather by nationalist hardliners. One could even speculate
as to whether Putin would have survived a non-intervention in Crimea, given the
broad consensus in the population, including ‘moderate nationalists’ like Alexei
Navalny. The reintegration of Crimea into Russia is a ‘fact on the ground’, which
no future Russian government would renounce.
Ironically, the failures of the Ukrainian power elites as well as the ill-considered
role played by foreign actors were laid bare by the most recent proposals for a
way out of the deadlock. In December 2016, Victor Pinchuk, a leading backer of
the present government, admitted that “Ukraine must make painful compromises
for peace with Russia”, namely to grant Eastern regions autonomy and forgo
NATO membership (Pinchuk 2016). Even if a solution along these lines could be
found, even if Ukraine would reinvent itself as a gateway state between West and
East, a bitter taste would remain: under these conditions, the extremely costly
Ukrainian conflict could have been prevented from the very beginning.

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11 Decline of the demos
Latvia, the face of New Europe
and austerity’s return1
Jeffrey Sommers

Neoliberal capitalism, devoid of external and internal political threats, has been
free to discard embedded liberal compromises with labour since the collapse of
the Soviet bloc. Yet, liberal capitalism seems incapable of producing stable social
relations, let alone conditions for ensuring the reproduction of society (Gray
1998). Contra the previous contention of Francis Fukuyama that liberalism
constituted the “end of history” (Fukuyama 1989), we see that history remains
restless and still quite in motion. Liberalism does not organically evolve toward
social democracy as Fukuyama contended, but instead toward the dictatorship of
capital and concentration of financial power, as was observed in the mid-
nineteenth-century and again in 1920s Europe (Polanyi [1944] 1985), and it
appears today as well. Indeed, rather than social democracy, liberalism’s most
recent stop (if there is one) seems to be located in austerity (Blyth 2013) and ever
widening inequality (Piketty 2014).
Social and economic orders give hints of moving toward counter movements
generationally. Stability gives rise to new contradictions in entropy-like fashion,
resulting in counter movements that fix new patterns of accumulation and
governance in place to replace the eroding effectiveness of older configurations
of power. This recasting of power, in turn, itself eventually generates new
instability and thus new orders. Many have attempted to theorise the process and
mechanisms driving the counter movements of disequlibrium/equilibrium/
disequilibrium, from figures such as Joseph Schumpeter to Arnold Toynbee and
Nikolai Kondratiev. Andre Gunder Frank, Barry Gills and Giovanni Arrighi have
noted patterned shifts of much longer duration – over a century (Arrighi 1994;
Frank and Gills 1993). Immanuel Wallerstein has noted shifts of even longer time
frames, such as feudalism, which lasted many centuries (Wallerstein 1995). Such
movements can arise out of the dissolution of an old order, but with the loss of
dynamism resulting in an ossification of the existing social system, thus breaking
the circuits of change.
Today, labour finds itself in a weakened position, with no certainty of improved
prospects going forward. Even among some of the world’s wealthiest economies,
millions find themselves now part of what Guy Standing calls a ‘precariat’ of
people living in informal or non-employment whose day-to-day existence is
tenuous at best (Standing 2012). Meanwhile, another group constitutes what
196 Jeffrey Sommers
Charles Woolfson has termed an austeriat, those who because of austerity policies
are thrown into unemployment and virtual destitution driving them to emigrate.
The return of these conditions in the twenty-first century is removed from the
experience of nearly all Europeans except its most elderly inhabitants with memo-
ries of the inter-war years (Juskka, Sommers, and Woolfson 2014). Undreamed
of only a decade ago, many Europeans have experienced the widespread return
of what Karl Marx described as ‘immiseration’ and ignoring Adam Smith’s
caution that “no society can surely be flourishing and happy, of which the far
greater part of the members are poor and miserable” (Smith [1776] 2005). Today’s
body politic only reveals vestigial elements of the social democratic and corporatist
compromises known in the twentieth century. The logic of liberal capitalism
starved rather than fed democracy. The only question remaining is how long the
current pattern of precarity, inequality and bureaucratic rule by finance (governing
through private and government sectors alike, thus rendering the categories of
private and public increasingly moot) will last? Will dialectical forces create
counter movements capable delivering new social orders, or will the current
system merely harden into a new permanent norm? States, such as Latvia may
show the way, as the bearers of New Europe’s neoliberalism.
History repeats itself, the first time as tragedy, the second time as farce, as Karl
Marx noted of France’s two truncated revolutions later usurped by dictator-
ships. In a third instance of revolution disappointed, we had the collapse of the
Soviet bloc, where liberation was followed by the tragedy of austerity policies and
accompanying social decay. The revolutions of 1989–1991 that supposedly
cleansed the Soviet bloc of bureaucratic rule were intended to align the states of
East Europe with the ‘West,’ but in the end merely replaced them with the central
planning of financial institutions in the ‘really existing democracies.’ Thus was
born the ‘New Europe,’ as Donald Rumsfeld termed East Europe, whose crescendo
of ever more extreme neoliberal economic policies ended with a crash in the
financial crisis of 2008. This was followed by the imposition of austerity policies
previously unmatched in their severity at least since the 1920s. The epicenter of
this new economics and their ‘anti-society’ policies (bearing in mind Margaret
Thatcher’s statement that ‘society’ does not exist, not to mention her society
dissolving policies) were the three Baltic states. Among these, Latvia imposed the
most radical austerity program and captured the attention of global policy and
opinion makers. The cycles of alternating government and individual debt that
sustained economies since the 1980s had reached an impasse. Perhaps, it was now
thought, a real austerity program, such as that evidenced in Latvia, posed a final
solution for the world’s ailing post 2008 crisis economies.
In the Soviet crisis conditions of the 1980s, the West presented an attractive
alternative to ‘really existing socialism.’ They projected an image, if not reality,
of social democracy as a counter model to Soviet communism. When citizens of
the Soviet bloc turned their ear to the United States in the 1980s, they heard
echoes of the order created during Franklin Delano Roosevelt’s rule and the social
movements of the 1930s that accompanied it. Yet, the face of this system in the
1980s was Ronald Reagan, whose impact of the New Deal would not be fully felt
 Decline of the demos 197
until the twenty-first century. Thus, people in Soviet Latvia conflated the still
existing mass-based prosperity of the United States, forged in the New Deal, with
the University of Chicago free-market rhetoric being introduced into public
policy discourse during Reagan’s America. Moreover, the anti-statism of the
Reagan/Thatcher era was appealing to anti-Soviet activists, who often became
political leaders in the post Soviet bloc. While the foundations of social democracy
were being rapidly eroded by Thatcher’s policies beginning in the late 1970s,
closely followed by Reagan’s starting in the early 1980s, the contours of this new
order in its full economic outlines only became fully visible by the twenty-first
century. Indeed, it may be no mistake that the UK, the first place neoliberal
policies were introduced in Europe under Thatcher, is the first place to have seen
a protest vote against them with Brexit (regardless of how ideologicallly confused
that opposition was).
Indeed, the high tide for social democracy was reached at the peak of Soviet
power. This timing was no coincidence. As Finland’s post-war President, Urho
Kekkonen reputedly remarked, “the Soviet Union created a worker’s paradise
[long pause], just not in the USSR, but in Finland.” What was meant, of course,
was that the ideological, if not military, threat of an alternative to economic
liberalism had focused Western Europe’s political and economic elites on the
project of creating a sustainable capitalist order based on a ‘social compact’ with
the then strongly organised working classes. In short, it was the existence of
the Soviet bloc in the East, which created a reasonably civilised capitalism in the
West. Absent that ideological alternative from the East, the contradictions of
capital accumulation present in the late 19th and early 20th centuries re-appeared
with new virulence and with them many of the same economic and social
challenges that existed before the ‘short twentieth century’ (1917–1989/1991)
returned with renewed force.
The peril of an ideological alternative to unrestrained capital provided an open-
ing for worker struggles in West Europe to make economic and social gains
following the establishment of the USSR and even more so during the Cold War.
In the case of Germany, Scandinavia and much of West Europe generally2, this
took the form of economies that balanced power among labour, industry and
government. Finance capital opposed this arrangement, but given the larger
realities of the time there was little choice but to reach an accommodation. This
model proved ephemeral as the collapse of the Soviet bloc acted as a solvent
washing it away. The economic crisis of the 1970s and subsequent weakening of
the Soviet bloc created a channel for the return of liberalising currents that by the
late twentieth and early twenty-first centuries had swept away many of the gains
of the preceding era of Europe’s Social Model. A generation after the Soviet
collapse figures such as Mario Draghi, the President of the European Central
Bank, in 2012 doubled down on austerity and declared Europe’s Social Model
dead, or in his words: “already gone” (Blackstone, Karnitschnig and Thomson
2012). In effect, this was not a victory for liberal politics so much as a victory of
neoclassical economics as policy over the classical economic tradition.
198 Jeffrey Sommers
Latvia’s neoliberal regime had a pedigree that could have only emerged from
the USSR. The collapse of the USSR provided the economic and political openings
for a new order that could bury the Cold War consensus regimes of the West (or
what the editors of this volume reference as ‘intersecting crisis phenomena’) thus
permitting a reversion to liberal economies of the type advocated by Friedrich von
Hayek and Milton Friedman. Rather than stabilising these societies in the
post-Soviet period, neoliberal policies compounded problems inherited from
the Soviet era. Referencing former President Barack Obama’s chief of staff
and current mayor of Chicago, Rahm Emmanuel’s remark to “never let a crisis
go to waste”, the hyper-liberal economic polices incubated in Latvia and the
Baltic state generally, could then be imported (in part) to West Europe given
the opening presented by the 2008 crisis, thus fully rolling back Europe’s ‘Social
Model.’

Anatomy of austerity: spatial fixes to the global economy

Austerity policies have their roots in the economic slowdown that began with the
decline of profits in the global economy of the late 1960s and 1970s. This
manifested itself in a global crisis of declining manufacturing profits by the 1970s
that brought the great economic gains of the post World War II period to an end
(parts of East Asia excepted). The basic causes were too much industrial capacity,
ever-increasing labour costs (both wages and benefits), anti-colonial movements,
and resource shocks (oil, etc.). The result would be a period of experimentation,
planning and opportunism in the coming decades to restore profits and stability.
This required rolling back the challenges to profits and reorganising the global
system away from one based on national economic development toward one
centered on financialisation and outsourcing production to low-cost labour
countries and integrating their output into global production chains (see also
Joachim Becker in this book). It also required expanding markets for multinational
corporations and reducing commodity prices. Reorganising the global economy
required sophisticated offshore financial structures to evade national capital
controls for tax avoidance. Opening up the Soviet bloc as a new terrain for export
of West European consumer goods and the import of commodities and capital
from the former Soviet space, made important contributions to the restoration of
global profits and economic growth in the 1990s (but already underway in the
1980s) and after.
With the emergence of Latvia’s Second Republic following the collapse of the
USSR in 1991, Latvia came to play a vital role in this system as an offshore
banking center to oligarchs emerging from the break-up of the Soviet Union.
During both Czarist and Soviet periods, Latvia was among the most advanced
industrial areas in their respective domains. This was especially the case during
the Soviet period when Riga lost its significance as an international port. From
polymers for the Soviet space program, to metallurgy, to electronics, computers
and software, Latvia was a leading industrial and technological center within the
USSR. Riga was roughly at parity with Helsinki in terms of development and
 Decline of the demos 199
living standards to about 19703. In the 1970s and 1980s, however, the gap in
wealth between Riga and West European cities grew as the USSR declined4.
Meanwhile, more Latvians traveled abroad on business or cultural exchanges,
thus permitting them to see the higher living standards enjoyed by the middle
classes of the NATO bloc nations. Thus, the increasing wealth of the West, stag-
nation of the East as oil revenues collapsed and labour shortages emerged, and
the still recalled experiences of Stalinist terror and deportations both during WWII
and immediately after, combined to propel forward a movement for independence
from the USSR by the mid 1980s.
Latvian independence occurred during the twin, yet related, movements of neo-
liberalism and Russian rejection of communism. From the Soviet side, a cleavage
by the 1970s was emerging between the Communist Party and the KGB. The
latter increasingly saw the former as inept and wasting Russia’s resources. Chekists
came to view themselves a meritocratic elite whose careers rose on talent.
Meanwhile, they perceived the Communist Party as corrupt, lazy and possessing
a misguided ideology. Yuri Andropov was the first of their number to assume
control of the country in November 1983. He intended to introduce significant
economic reforms that would have created ten economic zones in competition
with each other (Karcev 2012). But he was sick and passed within fifteen months
without realising much change. Meanwhile, Gorbachev’s reforms of the 1980s
saw the economy and social order generally unwind at an accelerated pace. It was
during the chaos of the mid to late 1980s that KGB views hardened against the
communist party and its ideology.
Certain factions of the KGB responded to this turmoil by quietly assuming
control over state assets. The methods employed would have tremendous import
as the neoliberal model was spreading and seeking to divert the natural resources
of the Soviet Union from domestic use to global markets. Oil, gas and metals
would be thrown onto global markets in a ‘spatial fix’ (Harvey 2005) to the global
crisis of accumulation5. Global commodity prices would be driven down from
their 1970’s peak and sustained at low levels into the 1990s. This in part fueled
and sustained the economic boom in the West in that decade.
The Soviet Union needed a trained cadre of KGB specialists who could tap into
the world of offshore banking. While increasingly bureaucratised, the Communist
Party through a combination of inertia and needing to maintain appearances of
still being a revolutionary state, financially supported political left movements the
world over. This required making recourse to offshore banking structures. Chekists
came to view these financial transfers as wasting Russia’s national patrimony.
Rather simplistically they, of whom Vladimir Putin was among their number,
maintained that Russia could find renewal if shorn of the naïve ideological
imperatives of the Communist Party (Parfitt, 2014). What was needed, from their
perspective, was more an Augusto Pinochet Chilean like realism. Thus, in the
chaos of the late 1980s Chekists who managed the state’s overseas bank accounts
simply privatised them (Dawisha 2014). These accounts provided part of the
initial seed capital that was used for privatising many of the assets of the dissolved
Soviet Union in the early 1990s. This, in turn, set up the offshore financial
200 Jeffrey Sommers
structures used to enable the ‘spatial fix’ and continued reorganisation of the
global system.
This restructuring of global economy along financialised lines created a special
role for Latvia in the ‘New Europe’ as a major offshore banking sector. Latvia
would be recast as a two-way conduit transferring the vast equity of natural
resources and production of metals from Russia, Kazakhstan, Ukraine, et al., to
global markets. It then took the cash paid for those resources and washed them
back from the East to banks and equity markets in London and New York, thus
fueling London and New York’s gentrified rise in the 1990s.
Already a site for illicit transfer of Soviet oil and metals to world markets
before independence, Latvia became a major destination for oligarch hot money.
The Latvian port of Ventspils was the largest export terminal for Soviet oil,
providing foreign exchange that was an embezzler’s dream. Figures such as the
notorious Grigori Luchansky (later persona non grata in several countries) of
Latvia, cut his chops in corruption as a Provost at the University of Latvia, and
relieved from his duties in the early 1980s for selling off university furniture on
the black market. Luchansky graduated from these humble beginnings to become
a billionaire. That climb to riches began by selling off Soviet oil secured at state
cost and then sold to world markets at global prices. His company Nordex (later
headquartered in Vienna) became one of the world’s most notorious money
laundering operations (Kyiv Post 1991). Americans were involved, such as
Luchansky’s partner, the late Marc Rich (later pardoned by Bill Clinton). The
Latvian government signaled its intentions to defend this offshore banking sector
at all costs (including imposing austerity on its people after the 2008 financial
shock) when it bailed out Latvia’s biggest offshore bank, Parex, at the cost of
slashing social expenditures. European Commission and IMF authorities gave a
massive foreign loan for Latvia that in part enabled the government to function
after bailing out Parex and thus its correspondent (offshore) accounts and continued
payment of above-market interest rates to “favoured” (read: ‘well connected’)
customers. Indeed, the decision to use EU and IMF bailout funds to ensure Latvia
meets balance of payment obligations (foreign debts) and to bailout banks as
needed. Joaquin Almunia, the European Commissioner for Economic and
Monetary Affairs, explicitly stated in a letter dated January 26 2009, to Ivars
Godmanis, Latvia’s Prime Minister, that the money was not to be used to “promote
export industries,” or “stimulate demand” in the economy (Almunia 2009).
Latvia’s largest domestic bank before the 2008 financial shock, Parex, captured
in miniature the rags to riches stories of the new rich that emerged from the break-
up of the USSR, and thus merits describing its origins to divine the character of
this new post-Soviet elite and the new political economy it enabled. The bank was
owned by two enterprising former Komsomol (communist youth league) members,
Viktor Krasovitsky and Valery Kargin. They began their enterprise by carrying
bags of cash in the late 1980s by train to trade on the small arbitrage that existed
on the value of the Soviet ruble between Moscow and Riga. They were then
granted the first private currency exchange licence in the Soviet Union. In short
order they then became one of the chief offshore banks handling billions of
 Decline of the demos 201
dollars of offshore accounts of oligarchs throughout the former Soviet Union
(Lieven 1993). Eventually, Parex grew to have branches throughout much of
Europe and even Japan, with their accounts and ATM cards becoming a favourite
of CIS (Common Wealth of Independent States) and West African warlords as a
favoured spot to deposit cash with no questions asked. Indeed, in 1992, Parex
even advertised that, “we exchange all currencies and ask no questions”.
Although not in the league with London, New York and Zurich as kleptocratic
capital flight centers, Latvia has carved out a substantial niche in the global money
laundering tax evasion system that facilitated the development and maintenance
of the spatial fix to the long crisis of global capital accumulation. According to
Bloomberg:

As non-European inflows into Cyprus stagnate, about $1.2 billion flooded

into Latvia in the first half of the year [2012]. Non-resident deposits are now
$10 billion, about half the total, regulators say, exceeding 43 per cent in
Switzerland, according to that nation’s central bank.
(Eglitis 2012, August 29)

These are big amounts given that Latvia only has 1.88 million people and $28.2
billion annual GDP fourth of Switzerland’s population and roughly only a tenth
of its GDP. But, these deposits represent only a small share of the cash Latvia
handled in transit en route to points West (mostly New York in the 1990s and then
London post 9/11) via offshore ‘companies’ designed to evade oversight and
taxation. It was this economy that Latvia’s people were forced to bailout by their
government and austerity the instrument used to effect that action.
Thus, austerity was not the only a means to restoring this small Baltic state’s
economy to macroeconomic ‘balance.’ Placed in a broader political economy
context, austerity was also a centrally important part of maintaining the ‘spatial
fix’ to the long economic crisis of global economy since the 1970s. As an offshore
banking and offshore ‘companies’ center it facilitated capital flight from the entire
former USSR.

Austerity: the myth of public support

The economic crisis in Latvia presented the opportunity to test, in real time, a
heretofore never implemented economic policy called internal devaluation. What
previously was merely an academic debate regarding a proposed alternative to
deal with economic crises was now about to be tried out on real people. The
reason for controversy was that internal devaluation had never been used because
it was known it would create significant economic pain. It was thought that no
political party could survive the fallout from its implementation. Standard practice
for dealing with economic crisis had been to use currency devaluations. In short,
when economies are revealed to be weak and uncompetitive with imports
exceeding exports, standard economic theory counseled reducing the value of
one’s currency relative to other nations. The advantages are that this reduces the
202 Jeffrey Sommers
purchasing power of foreign goods by making them more expensive, while making
one’s own goods for export cheaper. This increases exports and rebalances the
economy. Internal devaluation, by contrast proposed a writ large reduction in
living standards by slashing wages. Rather than merely targeting imports, internal
devaluation would make all goods and services more expensive by decreasing
wages and government benefits. The means to achieving this would be massive
cuts to public employee pay (roughly 30 per cent in Latvia’s case) and massive
reductions in public expenditures. This in turn would squeeze private sector
businesses, thus leading them to reduce wages.
Why would any country do this to its own people, and why would the experiment
be of such interest to policymakers at a North Atlantic wide level? One reason
was to proceed towards euro accession – a policy eagerly embraced by Latvia’s
elite, but with polls showing a majority of its people against it. Latvia’s bid to join
the euro was improved by maintaining macroeconomic stability and a stable
currency peg to the euro. Second, Latvia’s policymakers (head of Central Bank
and many others in government) had big mortgages denominated in euros, not the
Latvian currency. For example, the head of the Central Bank, Ilmars Rimsevics,
had a 750k euro mortgage – worth roughly $1 million USD at the time of the crisis
(Lapsa 2010). His salary was paid in the local currency, the lat. Any devaluation
of the Latvian currency, therefore, would have resulted in an increase of his
mortgage payment in proportion to the amount by which the Latvian currency was
devalued. Third, the measure was popular with many Latvians given people had
lost their savings multiple times to devaluations and banking crises since the
collapse of the USSR.
Yet, what enabled Latvia to survive the crisis was not its austerity policies, but
rather EU and IMF bailouts (a ‘credit card’ of sorts). Relatively low public-sector
debt (8.4 per cent of gross domestic product on the cusp of the crisis in 2007) also
provided some protection from bond traders tempted to attack its currency (Trading
Economics 2017 July 31). Latvia’s problem, in short, was not government debt,
but private-sector debt; chiefly mortgages, which were often secured not only by
the collateral of the property itself, but also by the personal liability of entire
families daisy-chained into the loans as joint signatories. Indeed, on non-
performing loans the borrower was still responsible for debt-service payments
even after a mortgage they could no longer pay resulted in the property being
confiscated by the bank. In short, borrowers who missed a few payments sometimes
had their homes sold off by the banks, but the borrower was still responsible for
the full payment of the mortgage thereafter regardless. The net effect of these
policies was to create a neo-serfdom where borrowers were prevented from
ditching their mortgaged underwater properties. If they pulled up stakes and left,
not only would they lose their property, but also see their extended family’s co-
signers consigned to debt penury as well. Banks insisted on these stringent
repayment regimes that replicated in effect the very structures of serfdom from
which Latvians thought they had escaped in the early nineteenth century. For this,
the Swedes thanked Latvia for taking on a Stockholm Syndrome view of the
crisis, thus having it fall on the sword of austerity to protect Swedish Banks from
 Decline of the demos 203
collapse and the Swedish government and people from financing massive banking
bailout. In short, the poor (Latvians) were subsidising the rich (Swedes) in a
pattern that has again come to be all too common in the twenty-first century.
In the past decade Swedish banks took their largest profits from their Baltic
operations in a kind of Viking reprise of their Baltic raids in centuries past. The
opportunities for windfall profits were enormous. The Baltic capital of Tallinn
had Europe’s best preserved ‘old city.’ Meanwhile, the other Baltic capital of
Riga had the greatest density of Art Nouveau buildings in Europe. For bankers,
this presented a veritable El Dorado. At the time of independence from the Soviet
period in 1991, these properties were free of any debt. Thus, this presented an
opportunity for Swedish banks to load these properties down with mortgages and
extract massive profits from properties previously unburdened by any debt (Hudson
2014). The global ‘carrying trade’ of US dollars at low interest rates fueled the
Baltic (and global) property bubble. Created to sustain the US economy following
the 2001 recession, the policy was orchestrated by the Chair of the United States
Federal Reserve, Alan Greenspan (otherwise known as ‘Maestro’ by journalist
Bill Woodward) and represented a surge of cheap money onto global markets
looking for investment outlets. Meanwhile, the Baltic states joined the EU in May
2004. This was a long-sought goal of Baltic state nationalists seeking to secure
their independence from future Russian revanchist ambitions. Moreover, this
would open EU markets to Baltic state products, while also giving them greater
access to EU-wide financial institutions and increasing the perception of safety
for offshore money deposited in the banks of the Baltic states.
After EU accession, the availability of so much low-cost Scandinavian
investment capital and confidence in the future of these new EU property markets
combined to inflate one of the world’s largest property bubbles. Indeed, at its
peak, the per square meter price of property in this once remote corner of the
USSR seaside community of Jurmala, equaled prices in Monaco. Trained to
believe the market prices assets correctly, few questioned the meteoric rise of
property prices that should have been recognised as well in excess of any
underlying economic fundamentals6. The coming real estate crash was inevitable
and the collapse of US finance in September 2008 hit Latvia hard.
By November of 2008, a run on deposits ensued at Parex Bank threatened to
destroy not only Latvia’s banking sector, but that of Sweden’s as well, as a run
on deposits was forming at Sweden’s SEB bank in Latvia. Had this wound not
been cauterised by a massive public bailout of Parex, Swedish banks in Latvia
could have collapsed with Scandinavian, if not European-wide, implications, for
which the Swedish taxpayer likely would have been on the hook. To be fair, the
Latvians expected this gratitude to be returned by both euro accession in 2014 and
continued Swedish liquidity supplied to the Latvian economy. This was done in
due course, but whether either of these was good for Latvia is contestable. Thus,
we saw in the wake of the collapse of the short twentieth century ending in the
collapse of the USSR previously indentured populations under serfdom returned
to subservience to old feudal patterns of power rendering the wealth of the Baltics
states open to Scandinavian exploitation. While its people might formally own
204 Jeffrey Sommers
title to their land, for many this was rendered merely a simulacrum by its de facto
ownership by foreign banks owning not only the mortgages, but, as previously
mentioned, with claims on the property of entire families as co-signatories to
property.
Yet, what of the contention that Latvia’s people supported austerity as distaste-
ful, yet necessary? Since the implementation of austerity Latvia’s parliament has
polled approval ratings in the single and low double-digits. Yet the government
has survived two elections. How is one to read this? Chiefly by ethnic politics.
Saskanas Centre (Harmony Center) was the biggest political party opposing the
austerity model – albeit often without voicing agreeing on any alternative program
at the time. Moreover, the party (as with most in Latvia) contained its quota of
grabbers and neoliberals as most of Latvia’s parties have. They largely represent
ethnic Russians and had no chance of winning given its focus on rights for
Russian speakers in a country where nearly every ethnic Latvian family had at
least one relative sent to Siberia during the Stalin-era deportations. Other powerful
parties were run by post-Soviet oligarchs. They were rightly seen as being in
league with Russian interests. So the only political force with relatively clean
hands (largely as a consequence from being out of power) were the austerians.
While most voters disliked their economic policy, a majority was convinced that
they were best able to resist Russia’s embrace. Economic issues were a distant
second to fear of Russia for many Latvian voters. Thus, it was that a program of
internal devaluation and austerity could be sustained in an electoral democracy.
That said, for a short period of time, Latvians strongly protested austerity. On
January 13, 2009, in the dead of winter, 10,000 in Riga protested against austerity
and corruption7. Teachers, nurses and farmers held demonstrations in the months
following. The national police were called to suppress protests over the closure
of a hospital in Bauska; fearing local police might not do what was “required.”
Police detained one economist for two days for his critical remarks on the
economy, meanwhile there is evidence a foreign economist in Riga critical of
Latvian economic policy had his phone tapped. Latvia is by no means a police
state, but neither is it innocent in matters of controlling public opinion either.
Latvia’s policymakers in the main are neither saints nor sadists. Indeed, some
genuinely cared about the country’s future. Their then Prime Minister (and now
European Commissioner for the Euro) that led the austerity charge, Valdis
Dombrovksis, was by all accounts a comparative paragon of integrity – although,
there existed a conflict of interest given that his spouse ran a property development
company that would be adversely impacted by currency devaluation. Dombrovskis
came under the policy counsel of the Swedish economist and consultant Anders
Aslund, who sought to salvage his place in history as the one of the chief
counselors to the failed shock therapy program in Boris Yeltsin’s Russia. A policy
victory with austerity in Latvia could clean the slate and rehabilitate his role in
history, not to mention lead to lucrative policy contracts.
Too many of Latvia’s policy elites, however, take a view of the poor that leap
off the pages of Ayn Rand’s Atlas Shrugged. This is especially true of Central
 Decline of the demos 205
Bank, which has dominated economic policy management since Latvia’s inde-
pendence in 1991. For Latvia’s policymakers, the internal devaluation and austerity
program became something of a vanity project. Coming of age during the 1980s
when the USSR was crumbling and the US neoliberal model ascendant, they fully
internalised market fundamentalism as a rigid dogma counterposed to Soviet
ideology. To see their austerity model heralded by the IMF and European Central
Bank was seen as vindication of their worldview, and repudiation of the putdowns
heaped on them by chauvinistic occupiers in the past.
While the 30 per cent of the population that held mortgages were less free to
exit the country as previously described, after protests against austerity subsided,
many Latvians resigned themselves to the country’s austerity policies and left. In
short, apathy and political disaffection were significant forces. Demographers
estimate that 200,000 departed in the past ten years – roughly 10 per cent of the
population. They also estimate that at least 200,000 have left Latvia the past
decade (Hazans 2012). Moreover, birth rates declined from already low numbers.
Thus, the austerity model cannot be reproduced in most sizeable country, as it
would result in potentially millions of emigrants with no country large enough to
absorb them.
Why did so many leave Latvia if it were the economic success its advocates
claim? For many, the struggles to replace Soviet rule was followed by decades of
corruption and broken promises that suggested political engagement was pointless.
After the brief, but significant, protests of 2009 against austerity, Latvians gave
up and voted with their feet and exited the country. Latvia experienced the full
effects of austerity. Birth rates plummeted during the crisis – as is the case almost
everywhere austerity programs are imposed. It continues having among Europe’s
highest rates of suicide, road deaths and alcoholism. Violent crime was high,
arguably, because of prolonged unemployment and police budget cuts. Moreover,
a soaring brain drain moves in tandem with blue-collar emigration, but which is
lessoning at the worst of the crisis has ended. In short, society itself is collapsing
under the weight of austerity policy.
The moral for Europeans is that austerity model can work in highly circum-
scribed situations. A country has to be small enough (a few million people) for
other nations to absorb émigrés seeking employment abroad. Such a country
should be willing to have its population dramatically decline, especially its prime
working-age cohort. In Greece, this could only worsen an already serious
demographic challenge. Politically, it helps to be a post-Soviet economy with a
fully flexible, poorly unionised labour force. Above all, its cultural and policy
elite needs to put an almost blind faith in ‘free market’ central planners. It must
also have serious ethnic divisions that can distract voters from complaints against
austerity. It’s difficult to imagine how austerity on this magnitude could be
sustained without all the above factors at play, although in Greece, bullying from
the European Central Bank succeeded in sustaining austerity even after Syriza
was elected. That said, the Brexit vote reveals another form of continued protest
against austerity policies prevalent in so much of the EU.
206 Jeffrey Sommers
On balance, the Latvian model has done much harm. Demographically, in
terms of its future, one can even argue that the country is being euthanised. The
fact this point is even debatable hints at the huge costs and risks the country has
undertaken with its neoliberal program since 1991 and deepening austerity
following 2008. To be fair, one must also give the Latvian government their
due. After the calamitous crash following 2008, their economy eventually returned
to growth. Yet, much Latvian growth was linked to unsustainable clear-cutting of
timber to satisfy West European demand. Other sectors grew too, such as food
exports, as global grain prices were high between 2007–2013, and even now after
some slight decline still well above pre-2007 levels. There was also some rebound
of its small manufacturing sector. Transit and the emergence of a new Silk Road
is yet another growth area. And, lastly, there was the revival of offshore banking
and servicing of ‘mailbox’ companies for tax evasion.
One must also note that Latvia’s options were restricted by the limitations
imposed by Article 123 of the EU’s Lisbon treaty. This removes currency
autonomy and public credit creation for national development. The treaty locks
countries like Latvia into an embrace of private credit markets that forces
governments to pay rents to bankers rather than financing their own development
where possible. What additionally holds production back more than anything are
regressive tax policies that place Latvia’s tax burden on labour rather than capital.
Thus, this makes the tax portion of labour’s cost more expensive, preventing
advantages that could accrue from lower labour costs without reducing labour’s
wages. Meanwhile, speculators get a free ride on taxes as labour picks up the
tax bill.
Latvia’s growth, however, is tenuous. It is exceptionally dependent on a rogue
financial offshore industry that destroys wealth in other countries. Production is
also disproportionately geared to exports, even for a small country. Thus, victory
laps on recovery, let alone advocacy for others to follow the Latvian path, are
premature at best, and reckless at worst given the social costs of austerity and the
continued dependence on hot money flows from abroad.
In short, austerity in Latvia may have repaired the country’s macroeconomic
balance sheet, but the social costs have been exorbitant, so high, in fact, that the
demographic viability of this nation is now open to question.
While the Latvian model is not exportable generally, might it deliver economic
recovery in the highly specific conditions of its own country? Too early to tell.
Some 51 per cent of the country is forested, and half that state owned, thus,
accelerated deforestation is one way to maintain their economy. Another, is the
expansion of the offshore banking sector, which keep growing right into the
present – 2016. What is possible, however, is that even if it does, the price paid
for it might be too few people to sustain the country into the future. Europeans
should reject Latvian austerity as a model to emulate. Instead, they should engage
a wholesale reorganisation of European Union rules facilitating national
development to liberate its member states from usurious ties to European banks
currently delivering its people into penury.
 Decline of the demos 207
Conclusion
Margaret Thatcher remarked there was no such thing as society, and then pursuant
to that statement undertook policies assuring that her assertion would reflect
reality. That vision of a privatised economy taking little heed of social concerns
came to find its greatest resonance in the post-Soviet Baltic states. Latvia’s
experiment in austerity returned this small nation to visibility on the international
stage as much of the world looked to reconcile their neoliberal economic policies
of recent decades with the economic crisis those policies produced. The solution
selected to defend that order was austerity. Rather than appearing from nowhere,
neoliberalism and austerity took root in the soil of a changing global political
economy in which several seemingly discrete interests came into alignment.
Represented, on one hand, was the usual complement of new post-Soviet leaders
‘always ready’8 with their rote recitation of economic catechisms emanating from
the American Midwest freshwater school of economics. On the other hand were
oligarchs from the East who in reality formed a mosaic of seemingly disparate
factions for a kind of contemporary Molotov/Ribbentrop Pact. Western bankers,
neoliberal economists and policymakers, along with former Chekists and
Komsomol members now turned oligarchs, congealed into a de facto alliance. In
short, neoliberalism did not produce enlightened, fair market economies, but
instead kleptocracies with increasing inequality and unending volatility, albeit
with strong, yet uneven, economic growth to date.
Austerity delivered poverty so deep as to cause an exodus of Old Testament
proportions out of Latvia. Global policymakers heralded the resolve of Latvia’s
government in implementing austerity. Yet, the results seem an incongru-
ous victory if social sustainability is the chief metric for measuring success.
Terming this impoverishing policy a triumph rivals Tacitus’ characterisation of
Rome’s imperial military victories, put in the mouth of the Celtic chieftain
Calgacus before the battle of Mons Graupius: “They make a desert and they call
it peace.”
Abba Eban, borrowing from Winston Churchill, remarked “nations always do
the right thing after exhausting all other options.” After the economic crisis of
2008 laid bare neoliberalism’s contradictions many supposed there would be a
policy correction towards more society sustaining economies. The implementation
of austerity despite neoliberalism’s failures leaves one to question Eban’s assertion
of the inevitability of selecting better policy after all the wrong options have been
tried. Instead, in the main, those earlier bad choices were doubled down on after
2008. Among the casualties is Europe’s Social Model, which formed the basis for
the relatively humane societies constructed in Europe’s social democracies
following World War II. With the fall of the Soviet bloc, history seems to be
resetting itself, not to a liberalism that ‘evolved’ into free societies, but back to
the economic and social patterns of the massive inequality that existed prior to
1917. Latvia is indeed leading the way to a ‘New Europe,’ but one that is also old.
Referencing that Dickensian past, Latvia may prove to be a ‘ghost of Christmas
future’ warning for what lies ahead unless Europe changes course.
208 Jeffrey Sommers
Notes
1 Significant selections for this chapter also appear in Jeffrey Sommers and Charles
Woolfson, The Contradictions of Austerity: The Socio-Economic Costs of the Neoliberal
Baltic Model (Routledge, 2014).
2 Not to mention Japan and the US to a certain extent.
3 Incidentally, this was roughly when North and South Korea were still at development
parity.
4 By the 1970s, big oil revenues reduced pressures for the Soviets to innovate. Moreover,
the labour dependent (factor accumulation) Soviet growth model faltered and available
rural labour for industry became scarce. By the 1980s, oil price collapses led to efforts
to innovate, but it was too late.
5 Oil and gas were already exported in large quantities under Soviet rule, but the collapse
of the USSR permitted the export of more metals. Moreover, less domestic use of oil
made up for some of the declining Russian oil production in the 1990s.
6 Indeed, the author met the head of the real estate division of the largest Swedish Bank
in Latvia while at the Japanese Embassy in Latvia in June of 2006. Asked why they
continued making real estate loans when it was clear a property bubble was in place,
she responded by suggesting my naivete in assuming the ability of servicing loans was
the chief consideration for making them. Instead, she informed me, it was simply a
matter of getting bonuses in the present for making loans. Long-term loan performance
simply was not a consideration.
7 Including the author who was present.
8 Motto of the Communist Young Pioneers.

References
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[January 21, 2009]. Accessed at: www.fm.gov.lv/faili/bildes/preses_relizes/dok/
Almunia_letter-ENG.pdf.
Arrighi, G. (1994). The Long Twentieth Century. London: Verso Press.
Aslund, A. and Weisbrot, M. (2012). “Latvia’s Recession and Recovery: Are there Lessons
for the Eurozone?” Center for Economic Policy Research. April 11. Available at: www.
youtube.com/embed/g6reqmmzWIE [Accessed: July 8, 2013].
Blackstone, B., Karnitschnig, M. and Thomson, R. (2012). “Europe’s banker talks tough;
Draghi says continent’s social model is ‘gone,’ won’t backtrack on austerity.” Wall Street
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proquest.com/docview/923084133?accountid=15078 [Accessed: October 19, 2015].
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Press.
Dawisha, K. (2014). Putin’s Kleptocracy: Who Owns Russia? New York: Simon &
Schuster.
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Harvey, D. (2005). The New Imperialism. Oxford: Oxford University Press.
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45–62.
Hudson, M. (2015). Killing the Host. London: ISLET.
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Wallerstein, I. (1995). After Liberalism. New York: The New Press.
Part IV

Crises of political
power
12 Chechnya
A study of a post-Soviet conflict
Emil Aslan Souleimanov, Jasper
Schwampe and Sofie Bedford

Introduction
Chechnya, a tiny republic of around 17,000 square kilometers located on the
northern edges of the Greater Caucasus mountain range, has become a symbol
of post-Soviet turmoil and war. Civil unrest, religiously-inspired extremism and
terrorism, economic decline and criminality, and incessant insurgency and counter-
insurgency has plagued this North Caucasian republic since the early 1990s. Most
of Chechnya’s destruction is caused by two subsequent invasions by Russian
armies and the ruthless violence deployed by them since the mid-1990s to the
mid-2000s. Yet the roots of the conflict date back to the gradual dissolution of
the Soviet Union at the turn of the 1980s and 1990s. Back then, what has come
to shape Chechnya’s political landscape – and its relations with Moscow –
crystallised as Chechnya along with the rest of the Soviet successor territories
slipped into deep economic and political crisis. Indeed, the dissolution of the
Soviet Union paved the ground for separatism as newly established Chechen
elites sought to fill the power gap left after the withdrawal of Soviet authorities.
The crisis of political legitimacy was coupled with an unprecedented economic
crisis, an outcome of the decline of Soviet centralised economy and Chechnya’s
efforts to secede from the rest of Russia. Against this background, as the following
lines show, the outbreak of hostilities between the Russian center and its Chechen
periphery became inevitable, which ultimately resulted in what came to be known
as the First Russian-Chechen War (1994–1996).

Historical background
For much of their history, the Chechens lacked centralised authority. Nor did they
have a state of their own, with feudal elites being rudimental and much of Chechen
society split into dozens of competing clans, unions of clans, and independent
village communities. Governed by the councils of elders, Chechens, predominantly
inhabiting the mountainous valleys of the northern side of the Greater Caucasus,
considered themselves free men who used adat, customary law, to organise their
internal affairs. A patriarchal society with deeply embedded codes of honor,
retaliation, and hospitality, the Chechens largely lacked private ownership, were
214 E. Souleimanov, J. Schwampe and S. Bedford
occupied with agriculture and cattlerearing, and engaged in frequent raids against
their neighbours (Jaimoukha 2004; Souleimanov 2007).
It was not until the eighteenth century that the Chechen clans came in contact
with a state stricto sensu, with Russian Empire’s advances southward – to Persia’s
and the Ottoman Empire’s holdings to the south of the Greater Caucasus –
trespassing Chechen-inhabited territory. In the late eighteenth century, the first
organised rebellion, led by an ethnic-Chechen Sheikh Mansour, against Russia’s
colonisation of the vast area between the Black Sea and the Caspian Sea
commenced. Although effectively put down in the 1790s, this rebellion was the
first in a series of subsequent anti-colonial rebellions that shook Chechnya and
the North Caucasus in the first half of the nineteenth century. In 1859, following
a decades-long devastating war that saw dozens of thousands of locals perished,
Chechen lands were ultimately incorporated into the realm of the Romanov
Empire (Blanch 1960; Zelkina 2000). This longest war in Russia’s history did not
result in the complete subjugation of the highlanders though. Despite being
fiercely suppressed, rebellions continued periodically well into the 1940s,
intensifying every time central authority weakened and surviving the Russian
Empire by almost three decades. Accused of collaboration with the advancing
Nazi armies, the Chechens, along with other North Caucasian ethnic groups, were
deported en masse by Soviet authorities to Central Asia in 1944, with their
republic abolished and parts of its territory granted to neighbours. The Chechens
and their ethnic kin, Ingush, were only allowed to return to their homeland in
1957. During the deportation, around one third of the entire Chechen population
perished, with the deportation becoming a tragic focal point of modern Chechen
identity (Campana 2012; Williams 2000).
Since their return to homeland, Chechens were treated with suspicion as a
potentially disloyal group, with Soviet authorities – including the secret service,
KGB – having a particularly strong presence in the republic (Souleimanov 2007).
In the late 1950s, violent incidents took place between Russians, now a dominant
group in Grozny and other cities, and the returning Chechens. Until the 1980s, in
contrast to the Soviet affirmative practice of nurturing ethnic elites and putting
them in decisive positions in respective ethnic republics, an ethnic-Russian was
always appointed leader of Checheno-Ingushetia. Key positions in this multi-
ethnic republic with strong presence of Russians, Ukrainians, Tatars, Armenians,
and Jews were generally distributed to non-Chechens. Chechens were not allowed
to return to some strategically important wooded areas of the mountainous republic
to forestall further insurgencies. In the late 1980s, with perestroika-triggered
liberalisation taking effect, the once strict control over the republic and its
population loosened, with Chechens beginning to play a bigger role in their ethnic
homeland (Souleimanov 2007: 71–94).
Accordingly, in June 1989, Doku Zavgayev became the first ethnic-Chechen
Secretary of the Communist party’s regional branch. Zavgayev’s win over the
ethnic-Russian candidate Semenov, who had been proposed by the Communist
party’s central committee in Moscow, was considered a huge success for the
 Chechnya 215
Chechen democratic movement (Sokirianskaia 2009; Tishkov 2001). With
Zavgayev in power and a subsequent softening of state-censorship the historical
strains of the Chechen-Russian relationship became part of the public political
discourse. According to Sokirianskaia (2009: 154) this ‘caused an unprecedented
rise in the awareness of past grievances and an intensification of the shared sense
of historical injustice.’ While Zavgayev himself envisioned an independent state
of Checheno-Ingushetia within the Russian Federation, other parts of the Chechen
elite around the former Soviet airborne general Jokhar Dudaev politicised these
grievances to push for more far-reaching independence.

Dissolution of the USSR

The gradual dissolution of the USSR paved the way for what came to be known
as the separatist Chechen Revolution. In the process of the weakening of Soviet
institutions, a power vacuum emerged. Since the late 1980s, ethnic-Chechen
elites, such as Zavgayev and Dudayev, assumed increased control over the North
Caucasian republic, taking over key state functions – those of ensuring public
security, policing the population, and administering territory – from the emaciating
local Soviet authorities.
In the weeks following the failed Communist coup d’etat attempt of August 21
1991 against the Gorbachev regime, more than 100,000 protesters congregated in
Grozny. They demanded the resignation of Zavgayev who had failed to denounce
the plotters. Following this wave of public outrage Zavgayev was forced to resign
and Dudaev was declared the President of the independent Chechen Republic.
The declaration of independence on September 17 1991, led the Chechen
Revolution to its endpoint (Derluguian 2000; Sokirianskaia 2009; Splidsboel-
Hansen 1994).1
Headed by Dudayev, now the dominant figure in the Chechen political circles,
the ultimate dissolution of the Soviet Union at the turn of 1991 and 1992 provided
a novel impetus to de facto Chechen independence, with Russian military units
leaving the country, Soviet institutions gradually disbanded, and thousands of
ethnic-Russians and members of other ethnic minorities leaving the rebellious
republic (Gall and de Waal 1998).
While the Chechen political elite around Dudayev sought to strengthen their
grip over the republic, Chechnya’s clan-centered society and ambitious local
strongmen complicated Grozny’s efforts to establish centralised control over much
of the country. First, a state of anarchy was soon born out of the ruins of Soviet
statehood, with authority being lost in between the withering Soviet institutions
on the one hand, and emerging Chechen institutions on the other hand. No uni-
form legal code existed during the period of de facto Chechen statehood. Instead,
Chechens were torn apart between previous Soviet legal code, emerging secular
“Ichkerian” law, the ancient Chechen customary law, and partially also the Islamic
law, sharia. The lack of a uniformly accepted legal code made Grozny’s efforts to
cement its legitimacy – and police the republic – harder (Souleimanov 2007).
216 E. Souleimanov, J. Schwampe and S. Bedford
Second, and relatedly, individual Chechen clans, led by respective strongmen,
were quick to claim control over their “familial” areas, while refusing to acknow-
ledge the superior authority of Grozny.2 In fact, following the initial euphoria
introduced by the withdrawal of Russian troops from Chechnya – and what many
regarded as the long-yearned-for restoration of Chechen statehood – clan loyalties
gained momentum in that members of individual clans found themselves affected
by traditional clan loyalties substantially more than by the vague idea of Chechen
statehood (Lieven 1998). In the situation of socio-economic insecurity and political
turmoil that emerged following the dissolution of the Soviet Union, clan-centered
loyalties were reanimated as Chechens turned to family and clan for protection
and survival. Members of various Chechen clans competed with each other for
access to Chechnya’s limited economic resources and power. Soon, warring
factions established themselves in Chechnya’s various areas, with their leaders
assuming control over their respective areas and refusing to acknowledge the
central authority of Grozny. Most refused to be taxed or administered by
Grozny, either, solely acknowledging over themselves the “authority of Allah”
(Souleimanov 2007).
Some of these local strongmen, for instance, Bislan Gantamirov of Urus-Martan
and Umar Avthurkhanov from the Nadterechny region, initially having sided with
the separatist Chechen elites, soon became antagonised to Dudayev. Especially
Gantamirov, who had been released from Russian prison, started to wrangle with
Dudayev for the control of the oil production in Urus-Martan after the latter had
tried to centralise it (Sokirianskaia 2009: 161, 195). In 1993, Avthurkanov,
Gantamirov, and their armed men, alongside other indigenous anti-Grozny groups,
eventually turned into Moscow’s “fifth column”. On December 16 1993 they set
up the ‘Temporary Council of the Chechen Republic’ in the Nadterechny region
and called for establishing it as the highest organ of government in Chechnya
(Sokiranskaia 2009). Reportedly, Russian authorities eager to cultivate, arm and
organise internal Chechen dissent to throw Dudayev’s regime down militarily
supported the council with over 1,500,000 rubles (Sokirianskaia 2009; Wilhelmsen
2010). Besides economic and clan dynamics, Sokirianskaia (2009: 195–199)
highlights that regional opposition towards Grozny was also fuelled by structural
factors. Urus-Martan and Nadterechny both had large contingents of seasonal
workers with jobs in Russia. The local population was thus more ‘russified’ than
in other parts of Chechnya. Furthermore, as opposed to Chechen highlanders, who
predominantly worked in the agricultural sector, the inhabitants of lowland regions
such as Urus-Martan and Nadterechny lived from regular salaries. This made
them more dependent on a well-functioning state. Hence, when it became clear
that Dudayev was not able to effectively streamline government processes, the
initial support for him declined rapidly (Sokirianskaia 2009).
Third, although Russian elites under President Boris Yeltsin initially prioritised
dealing with internal economic and political affairs, they soon came to realise the
importance of regaining control over the rebellious North Caucasian republic.
Losing Chechnya (and Tatarstan), as many believed in the early 1990s, would
have led to the gradual disintegration of the Russian Federation. To make sure
 Chechnya 217
Russia did not follow the fate of its Soviet predecessor, Moscow strategists started
paying particular attention to Chechnya as the “domino effect” caused by Chechen
separatism might have led to other ethnic republics secede from Russia (Lapidus
1999). This having been said, the dissolution of the USSR, coupled with the clan-
based organisation of Chechen society, was instrumental in paving the way for
future conflicts along the tribal fault-lines and the centre and periphery relationship.

Political crisis
The dissolution of the Soviet Union led to multiple crises in Russia. One of those
crises was related to establishing the political identity of the Russian successor
state: was it to be a Western-style democracy, a multi-ethnic empire, or a nationalist
state primarily governed by the Russians in the interest of the Russians? (Chafetz
1996). Coupled with the growing economic crisis which hit the Russians badly in
the early 1990s, this identity crisis soon led to the strengthening of revanchist
forces across Russian society. The euphoria for creating democratic institutions,
befriending the United States, and achieving a quality of life comparable to
western standards that had characterised Russian society in the late 1980s was
replaced by Soviet nostalgia with concomitant anti-American and anti-Western
resentments (Buszynski 1995; Mendelson and Gerber 2005).
Antagonised by widespread corruption, crime, unemployment, and poverty,
Russians yearned for stability and security largely associated with the Soviet past.
Many wanted their country, Russia, to be again taken seriously on the international
scene – and longed for the return of the Soviet-time grandeur (Krickovic 2014).
Throughout 1993, ultranationalists were gaining momentum, followed by the
increased rise of the Communist Party. In the first ever elections to the State
Duma in December 1993, the ultranationalists of Vladimir Zhirinovsky (LDPR)
emerged with 23 per cent vote, followed by pro-regime Vybor Rossii (15.5 per
cent) and the Communist Party (12.5 per cent) (Slider et al. 1994). In order to
regain popular vote, Yeltsin, urged by his increasingly revanchist entourage,
apparently decided to wage a “small and victorious war” for the sake of restoring
Russia’s territorial integrity. In fact, Pavel Grachev, the then-minister of defence,
reportedly ensured the Russian president of the military takeover of Chechnya
being a matter of several days for a couple of airborne brigades (Grammatikov
1998; Szászdi 2008).
Not least, Moscow was fearful of the purported “domino effect” in that the
actual granting of independence to one secessionist entity would inevitably lead
to other ethnic republics seceding from Russia (Evangelista 2004). While Yeltsin
initially appealed to federal republics to “get as much sovereignty as they could
handle” (Hiatt 1933) in an attempt to acquire the sympathies of ethnic leaders, the
Soviet Union was increasingly seen as seen as example not to be followed should
Russia’s territorial integrity remain intact. While Moscow and Tatarstan managed
in February 1993 to find a mutually acceptable solution to Tatarstan’s demands
for more economic and political autonomy, Chechnya with its staunch elites was
seen as a particularly dangerous case (Dunlop 1998; Hughes 2001). In fact, the
218 E. Souleimanov, J. Schwampe and S. Bedford
dissolution of the Soviet Union created a legacy that both Moscow and Grozny
found uneasy to cope with in the early 1990s. In the first half of the decade, a
political crisis between the legislative and the executive branches of government
unfolded in Chechnya. At the centre of the conflict lay different interpretations of
the concept of sovereignty. While Dudayev and his inner circle envisioned an
independent Chechen state with limited interdependence with Russia, a number
of more moderate MPs around the Parliament Chair Khussain Akhmadov favoured
keeping a mutual budget and staying within the ruble zone. The ensuing power-
struggle between presidency and parliament almost completely paralysed the
state-building process. In addition to that, Dudayev’s attempts to establish a firm
presidential regime were blocked by Akhmadov’s adamant stance towards the
preservation of parliamentary checks and balances. The power-struggle intensified
throughout spring 1993 and culminated in June 1993 with Dudayev ordering the
armed forces to storm Grozny City Hall and disperse the parliament. In the
following months Dudayev amplified his efforts to consolidate power by
appointing the hard-line separatist Zelimkhan Yandarbiev as Vice-President and
cracking down on civil opposition (Sokirianskaia 2009).
The ultimate inability to strike a deal with Dudayev who refused, at least
publicly, to acknowledge Chechnya’s status as an integral part of the Russian
Federation, contributed to Russian resolve. However, it appears that Dudayev has
called to his Russian counterpart to carry out face-to-face negotiations, hinting at
the possibility of reaching a compromise solution should Chechnya have been
given a special status of a republic freely affiliated to Russia (Heiden 2000).
Reports imply that some Chechen elites still were willing to become part of a
financial or military union with Russia, insisting on the necessity to have horizontal,
not vertical, ties with Russia. Yet Dudayev’s rhetoric vis-a-vis Moscow was
extremely ambiguous and at times controversial as he risked alienating many
fellow Chechens who insisted on full independence. So, while signalling to
Moscow he was willing to strike a compromise deal on one occasion, he made
public statements reassuring Chechens of Chechnya’s sacred independence days
later (Souleimanov 2007). As a reaction of Dudayev’s ambivalence towards these
issues Avturkhanov’s pro-Russian Temporary Council unilaterally declared
Chechnya a part of the Russian Federation in June 1994. After receiving logistic
as well as military support from the Russian Army, the opposition’s militias
headed by Avturkhanov and Gantamirov attempted to oust Dudayev on November
26th 1994. However, the coup attempt ended in a disaster. Dudayev’s loyalist
forces decisively defeated the opposition in Grozny and took several Russian
service-men as hostages. Deprived of the possibility to influence the situation in
Chechnya by using local proxies, Moscow decided to embark on a large-scale
military operation in Chechnya. The First Chechen War started on December 11
1994 with Russian air-raids against Chechen airfields and other military targets
(Sokirianskaia 2009).
However, the invasion was poorly organised and executed. After barely being
able to occupy Grozny after a month of costly fighting in January 1995, the
Russians were pulled into a prolonged guerrilla war against a committed force
 Chechnya 219
of local separatists. While Dudayev was killed in a Russian air-strike in April
1996 the Chechen forces under his successor Aslan Maskhadov were able to
re-take Grozny in a surprise raid in August 1996. The cease-fire ending the battle
for Grozny and the subsequent signing of the Khasav-Yurt Peace Accords effect-
ively ended the war on the 31 August 1996. Russian troops withdrew from Chechnya
in a move that was widely considered as Moscow’s acknowledgement of its
embarrassing military defeat at the hands of a much inferior force (Kumar 1996).

Economic crisis
The deepening economic crisis of the early 1990s was instrumental in shaping
Russia’s long-standing political crisis which, among other things, ultimately led
to Russia’s invasion of Chechnya. Yet economic factors, largely emanating from
Russia’s economic crisis and its need to secure old and establish new sources of
income, appear to have been an additional factor contributing to the armed con-
flict in Chechnya. Most importantly, the dissolution of the Soviet Union brought
about a novel geopolitical situation, with Russian influence in the post-Soviet
area weakened, and the South Caucasian and Central Asian states willing to
strengthen their newly-attained independence. For the elites of the Caspian littoral
states with their enormous sources of oil and natural gas, the prospects of exploiting
these resources were seen as key to these post-Soviet successor states’ economic
and political survival (Bahgat 2002; Croissant and Aras 1999). Azerbaijan,
followed by Kazakhstan and Turkmenistan, intensified efforts to attract foreign
capital in order to exploit and transport their natural resources. Yet as Russia was
economically weak, it was disable to participate in the ambitious and costly
energy projects aiming to build pipelines linking the South Caucasus and Central
Asia, two landlocked areas, to Western and world markets.3 Cognizant of the fact
that the influx of Western capital would gradually attract Western – particularly
US – political and economic presence in its “near abroad”, Moscow sought to
prevent these energy projects from happening. In the meanwhile, backed by the
United States and its key Western allies, Azerbaijan advocated for the construction
of an alternative oil pipeline from Baku via Georgia to Turkey’s Mediterranean
seaport of Ceyhan to reduce Moscow’s grip over this strategic area (Cornell
2005). Moscow thus focused on reviving the pipeline that had existed since the
Soviet times: the Baku-Novorossiysk pipeline, for the transit of the Caspian oil to
outside world through Russian soil. As a transit country, Russia would maintain
control over an important source of revenue for Azerbaijan and other post-Soviet
states, which would strengthen Russia’s political grip over this strategically
important area.
Yet as the Caspian energy projects unfolded through the 1990s, there was
an important obstacle on the ground that made Moscow’s plans for reviving the
Baku-Novorossiysk route: de facto independent Chechnya, through which
the pipeline crossed (Ashour 2004). Hypothetically, Moscow could have built an
alternative route – from Russian-hold Dagestan to the Stavropol province – in
an attempt to bypass the Chechen segment of the pipeline. But doing this would
220 E. Souleimanov, J. Schwampe and S. Bedford
have been too costly. Moreover, in the eyes of foreign investors, the turmoil in
the neighbouring Chechnya would have still been considered a strong disadvantage,
prompting them to concentrate on competing non-Russian routes (Ashour 2004).
Although hard evidence is missing on this factor of Moscow’s decision-making,
the need to regain control over the Chechen segment of the pipeline appears
to have figured as an additional factor contributing to Moscow’s commitment to
bringing Chechnya back under its jurisdiction (Said 2007). Another factor, dis-
cussed by some observers, was Moscow’s willingness to regain control over oil
wells located in Chechnya (Shermatova 2001; Shermatova 2003). Yet Chechen
oil deposits contained rather unimportance source of oil, hence this explanation
of Russia’s intrusion to Chechnya seems unlikely.
Contributing to Moscow’s decision to invade Chechnya possibly was
Chechnya’s becoming a criminal safe haven in the early 1990s. In fact, enjoying
impunity, criminal groups established strong presence in Chechnya, carrying out
their activities in Russia proper. While the cases of Chechen criminal bands
carrying away cars from the neighbouring Russian republic of Stavropol
became a routine in the early 1990s, increasingly potent Chechen organised crime
groups operating in the cities of Russia proper were out of reach of Russian – and
Chechen – authorities with their “headquarters” scattered across Chechnya. The
cause of “Chechen aviso”, with Chechnya-based Chechen criminals capable of
ripping off dozens of millions of dollars from Russian banks based on false
documents shook early post-Soviet Russia (Galeotti 2002). In Chechnya, a tiny
country of a million with high unemployment rates, criminal activities became
increasingly profitable, with Russian authorities growing increasingly determined
to put an end to these practices. Apparently, these economic considerations played
an additional role in Moscow’s decision to invade Chechnya in 1994 (Dishman
2001; Galeotti 2001).
However, economic factors did not only affect the Russian-Chechen relation-
ship, but also had major influence on the interactions between the Chechen
government and the (pro-Russian) opposition in the lead-up to the First
Chechen War. In 1991, Russia imposed an economic blockade on Chechnya,
while Dudayev cancelled Chechnya’s payments into the Russian Federation’s
overall budget. By doing this, he attempted to secure the local oil industry’s
revenue for his state-building policies. Yet, despite such actions, Chechen
agricultural and industrial production declined rapidly between 1992 and 1994.
In 1992, Chechnya and Ingushetia experienced an industrial decline of 32 per cent
(18.8 per cent in Russia). The next year the decline already reached 64.4 per cent
(16.2 per cent in Russia). Crucially, the Chechen oil industry was particularly
affected by the crisis and decreased by almost 60 per cent between 1992 and 1993.
Russian economists linked this decline to the abovementioned exodus of the
Russia-phone population that had dominated the oil producing sector (Dunlop
1998: 126). Throughout 1992–1994 Dudayev consistently struggled to get the oil
industry and its diminishing returns under government control. However, this
brought him in direct confrontation with local strongmen like Gantamirov who
allegedly exported oil from Chechnya to the Russian Federation (Sokirianskaia
 Chechnya 221
2009). Accordingly, the economic crisis did not only paralyse state-building
efforts, but also kindled and subsequently fuelled intra-Chechen resource conflicts.
The Russian government showed to be only all too eager to capitalise on these
conflicts.

Conclusion
Chechnya’s declaration of independence on September 17 1991 was not extra-
ordinary in the light of the ‘parade of sovereignty declarations’ taking place at
the time. As a consequence of the Soviet Union shaking in its foundation, and
eventually dissolving, it was just one of numerous national calls for sovereignty
or independence heard among the Russian republics, and elsewhere on the former
Soviet territories. However, in the case of Chechnya this led to a downward
spiral of particularly violent and destructive development commencing with the
First Russian-Chechen War (1994–1996). History provides vital background
to the understanding of this devastating turn of events. The conflictual relation-
ship between the Russians and the Chechens is lengthy and prevalent. The
nineteenth-century Caucasian wars, the 1920 and 1930 uprisings against Soviet
rule and, not least, the 1944 deportation laid the foundation to a perception of
the Russian nation and its state apparatus as the arch enemy of the Chechen
people and the cause of all its suffering. Nonetheless, the outbreak of the war was
less related to historic grievances than to political and economical predicaments
of the Soviet Union’s demise. Crushing Chechnya’s independence struggle became
symbolically important for a weak Russia in political and ideational turmoil
attempting to restore its dominance over center- periphery relations within its
federative borders. Moreover, Chechnya’s perceived strategic importance for
Russia as well as the growing threat from organized crime in the republic fortified
the Russian leaders determination to terminate the Chechen secession endeavor.
At the same time, the political immaturity and capricious inconsistencies of the
Chechen leadership, unsuccessfully struggling with the unfamiliarity of inde-
pendent rule and the impact of a severe economic crisis, facilitated the Russian
invasion. The two years of war subsequently led to long term extensive turmoil
and immense misery, not only for the Chechen population but also for those in
surrounding North Caucasus republics as instability is increasingly spreading
throughout the region.

Notes
1 Interestingly, the narratives of the nineteenth-century insurgencies, the 1944 deportation,
and the Soviet-time discrimination featured prominently in the mythology of the
emerging Chechen Republic of Ichkeria. Cf. Campana (2009).
2 The period of second de facto independence of Chechnya (1996–1999) unfolded along
these same lines of tribal loyalty and anti-centralization sentiment, coupled with Salafi
ideology. Cf. Souleimanov (2005).
3 In addition, elites of the Caspian littoral states largely sought to bypass Russia to
reduce its influence on their statehood.
222 E. Souleimanov, J. Schwampe and S. Bedford
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13 Azerbaijan between post-socialist
crisis and fragile stability
Hannes Meissner

Introduction
This chapter focuses on the conflict-laden process of political and economic
transformation in post-socialist Azerbaijan. As in other peripheral post-Soviet
states, the rulers of this country have always been eager to declare their commit-
ment to establishing universal standards of democracy, the rule of law and a
market economy, at least in the long-run. In reality, however, formal and informal
politics are largely driven by the particularistic interests of the ruling elite, which
aims to promote its business interests and rent-seeking by retaining power and
preserving the constellation beneficial to it. This chapter pays particular attention
to the general implications of this constellation for stability and crisis. It argues
that the country has always been in a state of social, political and economic crisis.
As its root causes go back to the legacies of the Soviet (and pre-Soviet) era and
the period in which the Soviet Union dissolved, the constellation can be classified
as a “post-socialist crisis”. However, until recently, the availability of petrodollars
has helped the ruling elite stave off its immediate effects. This money has been
used to finance strategies of repression and maintain patron-client relationships.
At the same time, while mobilising public support, the government stressed the
primacy of stability and national strength secured by authoritarianism. Democracy
is depicted as a threat, associated with instability and conflict. With the reduced
inflow of petrodollars, signs of crisis have recently come to the surface again,
manifesting themselves in socio-economic dislocation and tensions within the
informal political system.
In order to shed light on this constellation, this chapter looks at the role of the
ruling elite in this specific context. Accordingly, the two guiding questions are:
(1) What has the role of the ruling elite in political and economic transformation
been? (2) What strategies do they employ to preserve their power? The line of
analysis is as follows. Section two is dedicated to the process of political and eco-
nomic transformation since national independence. This has mainly been driven
by the ruling elite’s particularistic interests and the legacy both of the Soviet
Union and the way it dissolved. In order to fully understand this constellation, it
is necessary to take a look, inter alia, at the particularities of the ruling elite, their
composition and their historical roots. Part three analyses the power strategies
226 Hannes Meissner
used by the elite. These consist of a triangle of repression, clientelism and the
mobilisation of popular support. Part four concludes the chapter by answering the
questions raised above.

The role of the ruling elite in political and economic

transformation
The concept of clientelism describes best the particularities of the ruling elite of
Azerbaijan. Clientelism is a mutual relationship between a person or group of
people ranked higher in the social or political order and an entourage seeking
protection and particular advantages (Heinritz 2008: 43). In the regional context,
scholars discuss clientelism as a consequence of the Soviet and pre-Soviet legacies.
As Fairbanks highlights, “clientelism is one of the most important aspects of
politics in the Soviet Union, and the Soviet Union is one of the most important
cases of clientelist politics in the modern world” (Fairbanks 1996: 347). One of
the reasons is that the Soviet system preserved traditional personal relationships.
At the same time, the centralist, top-down structure of institutions and procedures,
as well as the lack of checks and balances, proved conducive to patronage.
Consequently, high-ranking members of the Nomenklatura privatised official
positions and material goods in order to hand them down to their clientele in
exchange for loyalty (Meissner 2011: 6).
The basic roots of today’s clientelist system go back to 1969, when Moscow
appointed Heydar Aliyev as Secretary General of the Communist Party of
Azerbaijan. Back then, Aliyev recruited his own clientele, including fellow KGB
officers, as well as relatives and friends. The latter were part of regional networks,
meaning so-called “clans” gained major influence at that time (Lussac 2010: 18;
Suny 1996: 380). However, since the turn of the millennium, clan loyalties have
increasingly lost out to commitments governed by mutual business interests.
Patriarch Heydar Aliyev’s death in 2003 and the transfer of power to his son
Ilham accelerated this development. Given this background, the literature speaks
of a shift from clan politics to “bureaucratic oligarchy” (Safiyev 2017). With
regard to the contemporary elite structure, country experts identify three basic
groupings. They are the “old guard”, the “oligarchs” and the ruling “family”
(Guliyev 2011: 123–124). In times of economic crisis, the president aims to
centralise the informal system in order to strengthen his and his family’s role and
weaken actors in his immediate circle of power. Although there are no imminent
signs of the informal power system weakening, growing financial straits have at
least created a need to take action.
Until recently, the immediate circle of power around Ilham Aliyev consisted of
seven groups centred on key individuals. Two are first and foremost political
actors, two others are active in the business sphere and the final three unite(d)
political and economic power. Ramiz Mehdiev, chief of the presidential
administration and Ramil Usubov, minister of the interior, have major political
influence. They are described as “the backroom boys” in the spheres of cadre
 Azerbaijan 227
policy and suppression. They are part of the “old guard”, and Mehdiev is said to
belong to the Nakhchivan network. The other five players are all associated with
big holdings. The exact structure of these holdings remains unclear, but the ruling
family is said to have decisive influence in all of them, owning 70 to 80 per cent
of the shares. Kamaladdin Heydarov, minister of emergency situations, is connected
to GILAN Holding. The national aviation company Jalal and the Silkway Holding
are associated with Jahangir Askerov and his wife Zarifa Hamsayeva. The PASHA
Holding is connected to the family of Mehriban Pashayeva, the first lady. (Meissner
and Leitner 2016) Ziya Mammadov, who is involved in the ZQAN Holding, used
to be minister of transportation and was as such a major beneficiary of the
redistribution and embezzlement of petrodollars. In February 2017, the president
dismissed him. There was no official statement on this move. However, the dis-
missal was preceded by attacks on his business empire and partners (cf. Azeridaily
2017). Since 2015, Ilham Aliyev has repeatedly stressed problems in the transport
sector, such as the general decline of the transport business, the impediments to
investment and the failure to establish Azerbaijan as a logistics hub.
The power of the Aliyev network did not go unchallenged. There was a critical
juncture shortly before and after the dissolution of the Soviet Union. When the
Nagorno-Karabakh conflict broke out again in the late 1980s, it mobilised and
emotionalised the broader public. This further catalysed the emergence of a
nationalist opposition, which united in the Popular Front Movement. During their
one year in power from 1992 to 1993, these forces established the basic framework
of a democracy, the rule of law and a market economy. As one of the former
leaders of the movement highlighted, the Popular Front was part of a larger
reform movement in the space of the (former) Soviet Union. The movement’s
economic programme was inspired by those in Russia and the Baltic states
(Meissner 2013: 123). However, reforms remained incomplete in Azerbaijan, as
the movement’s period of government was short, and the reform process was
impeded by political turmoil, war, the government’s lack of experience and the
movement’s heterogeneity. This finally lead to the resumption of power by the
old elite around Heydar Aliyev in a coup d’état.
In the years that followed, Heydar Aliyev and his party of government preserved
the new framework on the surface. In fact, however, the country gradually slid
back into authoritarian conditions, albeit providing more political and economic
stability. Democratic institutions and the opposition were continuously weakened
(Auty 2004). Officially, the new old leader announced his strong commitment to
establishing a democracy, the rule of law and a market economy. In reality,
Heydar Aliyev was reactionary, striving to re-establish authoritarianism as far as
possible and control market reforms to promote the ruling elite’s hidden business
interests. However, at the beginning, Heydar Aliyev had to act more carefully in
this regard, due to a relatively strong opposition, watchdog structures in society
and a lack of financial resources. With regard to the latter, Azerbaijan depended
on the support of inter- and transnational actors in order to attract investments to
resume national oil and gas production.
228 Hannes Meissner
After the transfer of power to his son Ilham in the manipulated elections of
2003 (OSCE 2003: 1), authoritarianism continued to increase. There were several
reasons for this. First, Ilham Aliyev is more authoritarian and technocratic by
nature, while his father was a charismatic leader, maintaining more liberal spaces.
Second, the quasi-dynastic transfer of power went hand in hand with a certain
destabilisation of the power system from inside and outside – a problem Ilham
Aliyev replied to with increasing repression. When patriarch Heydar Aliyev died,
disagreements within the ruling elite erupted, and certain power shifts took place.
At the same time, the opposition and parts of the population saw a window of
opportunity to achieve a change of government. The successful Rose Revolution
in Georgia in 2003 further nourished such hopes. In 2003 and 2005, fraudulent
elections lead to mass demonstrations, ending in brutal suppression by a massive
police force (cf. Alieva 2007: 53).
Although the readiness to imitate democracy has continuously decreased ever
since, the government still claims to be democratic. A major part of their strategy
is to orchestrate reforms in some isolated areas. These are regularly tailored to
maximize the symbolic effect, while at the same time not pose any real threat to
the ruling elites’ hidden interests. For example, while the government successfully
met transparency standards in the field of oil and gas income as well as with
regard to the State Oil Fund, corruption and rent-seeking are present on the
outgoing side in the area of public spending via the state budget (Meissner 2015).
Besides, the marginalisation of the independent opposition first forced its leaders
into civil society; then the government started neutralising them again in 2003 by
jailing activists, adopting increasingly restrictive laws and blocking activists’
bank accounts (Human Rights Watch 2013). However, officially, civil society
organisations have been able to apply for financial support from the state since
2008. In practice, this fosters a pro-government orientation (Meissner 2013:
164–165).
In order to understand the main drivers of political and economic change in
Azerbaijan since independence, it is necessary to look beneath the surface at
informal politics. In fact, the ruling elite’s first and foremost aim is rent-seeking
and the pursuit of their business interests (Meissner 2011; 2012). Consequently,
they strive to preserve their power. In this regard, the logic, structures and practices
are a continuation of the informal politics of Soviet times. It is noteworthy that,
in the late 1980s, Heydar Aliyev became a symbol of corruption and the abuse of
power in the national press. The rule of clientelist networks in combination with
the republic’s oil abundance gave Azerbaijan one of the highest corruption
rankings in the Soviet Union. (cf. Leeuw 2000: 132–133). Vaksberg notes that
there is considerable evidence that the Nakhchivan clan controlled the illegal
distribution of oil and petrol in Soviet Azerbaijan. The so called “petrolmafia”
was said to be one of the biggest mafia organisations in Azerbaijan, and Heydar
Aliyev was at the top of the system (Vaksberg 1991: 174).
When Aliyev regained political power as president in 1993, the old networks,
among them the Nakhchivan clan and the Yeraz clan, expanded their monopolistic
power over the entire economy, including the oil sector and the financial system.
 Azerbaijan 229
In most cases, this happened in hidden ways, as the owners of companies are not
publicly listed in Azerbaijan. However, in some cases, Heydar Aliyev’s intentions
could be observed openly. This was the case when he appointed his son Ilham as
vice president of SOCAR. Through this act, the Aliyev family secured its control
over state oil policy. The family gained additional influence through the pri-
vatisation process in general, but also by granting licences while building up the
national oil sector and the associated transport system in particular (Lussac 2011:
18). In this regard, the low rates of economic diversification and the past state
control over the economy proved conducive to the clientelist exertion of influence.
As a leaked U.S. cable emphasises, “today’s Azerbaijan is run in a manner
similar to the feudalism found in Europe during the Middle Ages: a handful of
well-connected families control certain geographic areas, as well as certain sectors
of the economy” (Wikileaks 2013). Among the key people, Kamaladdin Heydarov
is the economically most powerful. His father was a member of the Nakhhchivan
clan and, as such, a close ally of Heydar Aliyev. As chairman of the State Customs
Committee, Kamaladin Heydarov gathered massive wealth, since significant illicit
payments were paid up the food chain. The Heydarov family is active in agriculture,
construction business, real estate, food processing, textiles, tourism, chemicals,
banking and insurance. The family of the first lady Mehriban Pashayeva (“the
Pashayev family”) is geographically rooted in Baku and the Absheron peninsula.
They are less rich than Heydarov, but, thanks to their political status, are the
single most powerful family in Azerbaijan. PASHA Holding is a conglomerate
including Pasha Bank, Pasha Insurance, Pasha Construction and Pasha Travel. In
addition, the family owns a local TV station and a mobile phone provider. They
are also active in the cosmetics industry (Meissner and Leitner 2016: 7). However,
these are only two of the biggest business players in Azerbaijan. There are many
other actors at lower levels of the informal pyramid. Almost all of them are
connected to patrons higher up in the system, providing them with security in
exchange for a share of profits. As Safiyev highlights, not having such protection
entails the high risk of expropriation (Safiyev 2017).
Economically, high-ranking members of the ruling elite benefit from the wealth
of the country in different ways. Here, there is often a blurry line between legality
and illegality with regard to their money-making schemes. On the one hand, they
are capitalist entrepreneurs. On the other, they benefit from different forms of
corruption and rent-seeking (Meissner 2012: 8). Taking a closer look at rent-
seeking activities, there are two features characteristic of the country. First, since
oil revenues are more or less transparent, rent-seeking takes place indirectly, by
embezzling public investments through the state budget, the state oil fund and the
national oil company SOCAR. Second, the construction sector plays an important
role.1 In the past, ministers could run their ministry like absolute rulers, embezzling
money from the state budget assigned to them. However, today there are signs
that in times of economic crisis due to diminishing oil revenues, President Ilham
Aliyev has tightened the reins, as he fears public unrest and power struggles
between rival factions. The transportation minister Ziya Mammadov was not
the first “victim” of this. In autumn 2015, Ilham Aliyev dismissed the country’s
230 Hannes Meissner
national security minister, Eldar Mahmudov; a wave of dismissals of subordinates
followed. It is difficult to trace the reasons for this move, since the ruling elite is
like a black box. In public, Ilham Aliyev did not give any reasons for his actions
(Reuters 2015). According to rumours, Mahmudov had embezzled money from
the National Bank of Azerbaijan and was not able to pay back the sum in time.
Other sources indicate that Ilham Aliyev had begun to question his client’s loyalty.
Whatever the reasons, there are clear signs that the president has recently pruned
opportunities for enrichment, while the government has increasingly sought to
implement nationally important infrastructure projects in a responsible manner.

Power strategies: clientelism, the mobilisation of support

and repression
The distribution of material goods and public offices in exchange for loyalty is
also a power strategy. Since clientelism is characterised by relationships of mutual
obligations, it establishes informal power systems. In this regard, the informal
order of Azerbaijan has often been described as a pyramid structure in which the
different levels are bonded by patron-client relationships. The president is the key
figure. He is the central and final arbiter of a system uniting different and, to a
certain degree, rival networks. To date, Ilham Aliyev has managed to keep this
system stable. This is in part due to the fact that he removes allies as soon as they
develop political ambitions and/or cause scandals which can no longer be kept
from the public. However, as the aforementioned leaked U.S. cable highlights, in
this system, conflicts are kept to a minimum by a central agreement to divide the
spoils and refrain from interfering in each other’s sphere. “The families also col-
lude, using governmental mechanisms to keep out competitors” (Wikileaks 2013).
Spoils are not only available at the highest levels of the informal system.
Corruption is structurally rooted, affecting almost all spheres of public life. Most
government institutions are badly affected.2 Corrupt practices go back to Soviet
(and pre-Soviet) rule and can be found in many post-Soviet countries in similar
forms. It is a centralised system of bribes in which people pay money in order to
get their matters arranged more quickly and more effectively or to gain material
advantages. Besides, public positions are sold. Parts of that money then flows
upward in the informal pyramid system that pervades the public sector. How-
ever, in Azerbaijan, such practices have obviously lost their importance, since
the ruling elite are less dependent on these sources of income today. The influx
of huge oil (and gas) incomes since 2006 has opened up new, and enhanced
old, business and rent-seeking opportunities (Meissner 2015: 6). In this overall
context, corruption has been used to stabilise power. As local civil activists point
out, corruption creates systemic uncertainty. As people have no option but to get
involved in illegal activities, they become vulnerable. As a local journalist
highlights, “corruption is like a chain, capturing everyone” (Meissner 2013: 140).
Azerbaijan can be classified as a hybrid regime, increasingly sliding towards
authoritarianism. However, it is not in the scope of this text to determine the exact
 Azerbaijan 231
modality of this constellation by drawing on established regime criteria (cf. Merkel
2000: 24). The aim is instead to describe essential power strategies employed by
the government. In Azerbaijan, there are many such strategies. Some of them are
targeted at mobilising popular support. At the same time, they go hand in hand
with strategies of repression that suppress public criticism and opposition. These
strategies combine soft and hard power.
In the course of mobilising popular support, the government draws on a national
consensus which has two dimensions: first, the “primacy of political stability and
socio-economic development” (Babayev 2009: 160) over democracy and, second,
national claims with regard to regional power ambitions and the Nagorno-Karabakh
conflict with Armenia. The “primacy of political stability and socioeconomic
development” (hereafter, “primacy”) asserts the necessity of guaranteeing political
stability in order to initiate economic progress. The proclaimed goal is to generate
prosperity and wealth for every citizen. Democratisation, in contrast, is considered
a subordinate and long-term objective only. The “primacy” serves as a source of
legitimacy for the government’s preservation of power and is proclaimed to the
population in a mantra-like manner. In this context, the government also empha-
sises that the “primacy” is a manifestation of the unity of the population’s wishes
with government policies. Babayev even speaks of an “Azerbaijani state ideology”
in this context (ibid.).
In the past, related slogans could regularly be found in public spaces in Baku.
They were often attached to newly constructed infrastructure projects, but have
begun to disappear over the last couple of years. The government continues to use
the “primacy” as an important political tool. In particular, it draws on it before
elections, when it is under greater pressure to justify its power. At the same time,
a new facet has gained importance. The new argument is that, against the back-
ground of threatening developments in the world, political stability in Azerbaijan
is a major achievement by the government, outweighing any (minor) deficiencies
in civil liberties and pluralism. The alternative would be to run the risk of sliding
into political turmoil and war, as has happened in other countries in the post-
Soviet space (Ukraine) and the Arab world. As Ilham Aliyev announced in a
public speech “despite the growing trend of military and political conflicts and
unrest in the world in recent years, the public and political stability in Azerbaijan,
the atmosphere of confidence between the government and the people has further
enhanced” (Azernews 2015). In addition, state media have stressed that Western
countries are also in crisis. For example, a 2012 report broadcast by the state
channel AZTV depicted Frankfurt, Germany’s business capital and home of the
European Central Bank (ECB), as a place of increasing poverty, drug-addiction
and sex slavery, substantiating the claims with camera shots from the railway
station district and the Occupy protest camp in front of the ECB (Frankfurter
Rundschau 2012).
The government seeks systematically to delegitimise claims of democracy
put forward both by international and domestic actors. Regarding external calls
for free and fair elections and the decentralisation of government structures, a
232 Hannes Meissner
government representative stressed to the author, that “they (foreign governments)
would not understand the local reality.” Their measures would instead lead to
destabilisation and disintegration. In fact, “the last 15 years have proved that
the Azerbaijani way is better than what the international community provides for
us.” As he put it, this is the reason why the government “ignores” them (Meissner
2013: 155). Concerning local actors, the government emphasises that the opposi-
tion delegitimised itself in the long-run when it failed to govern the country in
the early 1990s. As the above-cited government representative further asserted,
both the opposition and the population lack democratic maturity. “A baby cannot
drive a car. First, the mind has to develop. It has to learn how to walk and
speak. . . . It is the same with the society of Azerbaijan” (ibid.: 156).
In order to generate popular support, the government also emphasises the new
strength the country has gained. Its propaganda stresses that its successful economic
strategy ensures the country’s independence “eternally, inevitably and steadily”
(Babajev 2009: 162). At the same time, the government claims that the country
is now a regional power, while classifying its neighbouring countries as “back-
ward”. Such comparisons are made in particular with regard to Armenia, which
the government claim is a “poor, isolated and half-independent” country and an
“outpost of Russia” (Babayev 2009: 162). While Armenia was once in a position
to attack Azerbaijan because of their economic parity, Azerbaijan’s economic
growth has re-established national security (Copley 2007: 145). In 2010, Ilham
Aliyev proudly announced that the Azerbaijani defence budget was higher than
the entire Armenian state budget for the first time (Azernews 2010).
Rhetorical sabre rattling regularly goes hand in hand with military operations
that risk thawing the frozen conflict. In April 2016, the worst military clashes
since 1994 took place. While the governments of Armenia and Azerbaijan accuse
each other of being responsible for the escalation, the Azerbaijani government
(like its Armenian counterpart) benefits politically from the development, as it
distracts from the current crisis (cf. Economist 2016). A publication by Open-
democracy links the event to the Panama documents, in which the ruling family
play a prominent role. “Just 24 hours before the scandal hit headlines in April
2016, Azerbaijan’s special forces attacked Nagorno Karabakh” (Opendemocracy
2016). In public, however, Ilham Aliyev declares Azerbaijan’s fundamental desire
for a peaceful resolution while stating that the country would be ready to liberate
the territories by military means at any time. As Aliyev recently declared, “the
provocation staged by Armenia in April and the counter-attack operation carried
out by the Azerbaijani army showed to Armenia and the whole world that the
Azerbaijani army is among the strong armies.” Accordingly, the national consensus
was that “a second Armenian state in Azerbaijan’s historical lands” is intolerable
(Azernews 2016).
As a country, rich in oil and gas resources, Azerbaijan’s socio-economic
progress, its armament and its ruling elite’s self-confidence are directly related to
the significant – but diminishing – revenues flowing into the country. Drawing on
the “lack of democratic pressure assumption” of theories of the rentier state, Ross
(2001: 332–337) suggests several causal mechanisms whereby ruling elites use
 Azerbaijan 233
their rents for power strategies aimed at achieving greater independence from
the public. There are three mechanisms which deserve particular attention
in the present context: the “spending effect”, the “group formation effect” and the
“repression effect”.
The “spending effect” posits that, instead of gaining legitimacy through free
elections, governments can purchase legitimacy through the expenditure of revenue
on popular social welfare measures, on subsidies and on creating more employ-
ment opportunities in the public sector. Unaware of the short-sightedness of
these policies and the economic dislocation they cause, the population rewards this
policy with popular support for the government. The “spending effect” is geared
towards the population as a whole. By contrast, the “group formation effect”
specifically targets the development of independent social groups: the government
uses its resource revenues to buy them off and/or co-opt their leaders. While these
two effects merely draw on soft power strategies, the “repression effect” is based
on a hard power strategy. Here, high revenues allow governments to strengthen the
security apparatus, which is used to stifle any democratic aspirations.
In reality, it is difficult to evaluate the exact share that the individual effects
have on the country’s slide towards authoritarianism. However, local experts see
them as relevant, although there are also other reasons: one is Ilham Aliyev’s lack
of charismatic leadership qualities compared to his father. In terms of the “spending
effect”, it is striking that specific symbolic subsidies do not play a key role. In
sharp contrast to Soviet times, living costs in Baku are quite high in relation
to average income. The older generation still remembers low prices and socialist
welfare measures provided by the state. Instead, the wider socio-economic context
plays the crucial role. The state budget steadily increased in the years after 2003
because of high oil prices and rising oil exports, particularly after the opening of
the Baku-Tbilisi-Ceyan Pipeline in 2006. Consequently, state welfare measures
went up, too. This led to a significant decrease in poverty, while nominal wages
in the bloated state sector increased. Between 2006 and 2007 alone, wages rose
between 60 and 75 per cent, depending on the branch (State Statistical Committee
2009: 132–133).3 Wage rises before elections and additional cash payments to
state officials are more specific examples of how the government purchases sup-
port and legitimacy in this context.
On closer examination, it is striking that the country’s oil and gas incomes only
just avert deep socio-economic crisis. Between 2006 and the beginning of the
world economic crisis in 2008, Azerbaijan experienced an enormous resource
boom with GDP growth rates of 34.5 per cent in 2006 and 25.1 per cent in 2007
(World Bank 2010). As a result, the government more than doubled pensions
and sick leave benefits between 2007 and 2009 (cf. State Statistical Committee
2009: 138). However, the initial level was very low, so pensioners and families
without a breadwinner still faced difficulties in making ends meet at the end of
this period: (BTI 2010: 14) in 2009, a gap remained between the highest level
of monthly social benefits (80 USD) and the minimum cost of living (100 USD).
Although the poverty rate dropped significantly from 49.0 per cent in 2001 to
13.2 per cent in 2008 (State Statistical Committee 2009: 142), one must remember
234 Hannes Meissner
that the (urban) population’s new-found prosperity has always been modest.
Instead, a small rich, urban class has emerged that is part of clientelistic networks
with access to the highest levels of the informal power system. “Inequalities
in society have grown rapidly as economic growth is unevenly distributed” (BTI
2010: 11).
The general view among civil society activists and foreign diplomats in Baku
is that the “group formation” effect traditionally played a major role in the
weakening of the opposition and civil society. However, it is difficult to provide
hard evidence of this. The importance of the mechanism lies in its usefulness for
controlling independent actors, while maintaining the appearance of public freedom
and pluralism. A Baku-based activist depicted a characteristic strategy in this
regard. It is directed at journalists, civil society representatives, oppositional
politicians and academics as soon as they become publicly visible. Preferring soft
power, the ruling elite first offers the activist a sum of money. If the activist
refuses, they sometimes increase the amount. Should the person reject the offer
again, they have to fear repression. Among the population, plenty of cynical
stories circulate of how formerly critical opposition politicians suddenly started
to acclaim government policies, while they were now able to afford a modern
campaign office or the business of relatives was running smoothly. However, in
recent years, the “group formation effect” has lost importance, while the
government increasingly employs hard repression.
The security apparatus has always been the most important pillar of the regime.
Repressive measures are usually coordinated by the Ministry of the Interior,
which controls the police. There is no specific data available on how the size of
the security apparatus has increased with the increased use of the “repression
effect”. However, it is no secret that the police are more present on the streets of
Baku today than they used to be. A local civil society expert estimates that the
number of policemen in Baku doubled or even tripled in the years after 2003
because of the new opportunities open to the state. In 2009, ten per cent of
the state budget was spent on defence and a further six to seven per cent on the
security apparatus. Although this share more or less remained the same compared
to earlier years, the state budget increased significantly. While it amounted 0.5
billion USD in 1995, it increased to 1.5 billion USD in 2003 and 13 billion USD
in 2009 (Meissner 2013: 170). At the same time, the government raised the
security forces’ wages disproportionally.
The rise in wages before the rigged 6 November 2005 parliamentary elections
was widely regarded as a measure to purchase unconditional loyalty (Ismail
2005). In 2003, large-scale demonstrations took place in Baku when Heydar
Aliyev transferred power to his son in rigged presidential elections. The govern-
ment reacted with brutal suppression, allowing it to stabilise its power once again.
However, in Georgia (2003), Ukraine (2004) and Kirgizstan (2005), electoral
fraud ended in revolutions. Against this background, the ruling elite were extremely
nervous in autumn 2005. The peaceful demonstrations of 26 November 2005 with
more than 10,000 participants (Chivers 2005) were again brutally crushed.
 Azerbaijan 235
The event marked a critical juncture. Ever since, public demonstrations have
been rare, since the police disperse even small scale events and arrest the
participants (Yevgrashina 2010). With the increase in repression, the mobilisation
of popular support lost importance. However, as local observers highlight, during
crises, the government increases its rhetoric of responsible and accountable
economic management. This was already the case in 2009 after the beginning of
the world economic crisis. As local observers reported, one of the consequences
of the decline of oil prices from approximately 140 to 40 USD per barrel was
that the government showed more commitment to its citizens again (Meissner
2013: 180).
After years of comparatively low economic growth,4 the country dropped into
recession in 2016. Because the government failed to successfully diversify the
economy during the resource boom, low oil prices and the decrease in oil output
have hit the country significantly. In Azerbaijan, socio-economic progress depends
to a high degree on the redistribution of petrodollars. This is one of the reasons
why it turned out to be unsustainable. As a result, the underlying structural deficits
characteristic of post-Soviet countries came to the surface again. After years
of perceived progress and prosperity, the country finds itself in a post-socialist
crisis as conceptualised by the editors of this volume. However, in Azerbaijan,
the crisis is further aggravated by withdrawal symptoms. According to the spending
effect, this threatens the stability of the political system.
It is almost impossible to determine the exact impact the power strategies have
on the society, let alone the importance of the individual strategies in relation to
each other. According to the characteristics of an authoritarian environment, in
the context of the mobilisation of support, communication channels are one-way
and stability is to a high degree enforced through repression. The result is a
political and social constellation of fragile (short- and mid-term) stability. Since
the beginning of the economic crisis, rising prices and unemployment have
prompted protests in several smaller towns, although such incidents remained “a
rarity under Mr Aliev’s tight watch” (Economist 2016).
Traditionally, the potential for urban protest is relatively high in Azerbaijan for
historical reasons (cf. Alieva 2009: 28; 2007: 18). However, there is also significant
tolerance of hardship, as people always draw comparisons to the period of state
failure in the early nineties when their standard of living was much worse. In fact,
most urban citizens are aware of the basic problems of the country, such as
authoritarianism and corruption. In contrast, in the countryside, where traditional
patterns of thinking and living still prevail, political awareness is less developed.
For a long time, oil-driven socio-economic progress veiled the true dimensions of
the grievances. According to a local civil society expert, this was reinforced by
the fact that the government aims to provide the urban population a secure
framework in which they can build up their wealth. As a result, the government
received sufficient support. Likewise, in the past, surveys have indicated that
Ilham Alivey would have won slight victories in presidential elections even
without electoral fraud (Musabayov and Shulman 2009: 8).
236 Hannes Meissner
The massive crackdown on demonstrations in 2005 – the second since 2003 –
marked a critical juncture. In the following years, apathy increasingly permeated
the opposition. Among the population, feelings of anxiety spread, as the suppression
of the demonstrations made the consequences of open criticism visible. As a local
opposition leader puts it, fear has prevailed ever since, even among opposition
members and dissatisfied people (Meissner 2013: 171). As a government critic –
who is in exile today – explains, the trend of retreating into the private sphere is
not only driven by a fear of physical harm and imprisonment, but also by the
arbitrary punishment of uninvolved family members (ibid.). In fact, there are
numerous reports that relatives have lost their jobs or places at state universities.
For this reason, even in private conversations, people tend to be extremely cautious
and unpolitical. At the same time, there is a strong feeling of resignation. As a
young local student puts it, the previous generation fought for democracy and
freedom. This would be senseless today as “everybody is tired” (ibid.)

Conclusions: Azerbaijan between post-Socialist crisis and

fragile stability
Azerbaijan is as a hybrid regime, increasingly sliding towards authoritarianism.
At the same time, political life is dominated by informal structures and practices
of a clientelist network made up of the country’s ruling elite.
With this in mind, this chapter raised the question of the role of the ruling elite
in political and economic transformation since national independence. It high-
lighted that the elite’s particularistic interests have been the main drivers of
transition. Since independence, they have used all their power to re-establish
authoritarianism as far as possible and control market reforms to promote their
hidden business interests. As politics and business form a unified whole, the
ruling elite control the national economy. They misuse public resources for private
consumption and to secure their power by authoritarian means. Notwithstanding
this, officially the government still present themselves as democrats committed to
the standards of an open market economy. In reality, however, reform measures
remain symbolic as they only take place in isolated areas and do not pose any
threat to the ruling elites’ hidden interests. As the chapter further highlighted, this
constellation goes back to the legacy of the Soviet Union and the manner of its
dissolution. As a result, the country has always been in a state of social, political
and economic crisis. Consequently, Azerbaijan’s vast oil and gas incomes have
not been used to overcome the structural roots of the crisis, but rather to paper
over its immediate effects.
Drawing on these insights, part three dealt with the question of the ruling elite’s
strategies to preserve their power. It highlighted that they consist of a triangle of
mobilising popular support, repression and clientelism. Clientelism involves the
redistribution of oil (and gas) incomes to stabilise the informal power system,
while conflicts are kept to a minimum through a central agreement to divide the
spoils. While this mechanism is directed at the ruling elite, there are several power
strategies towards the population. Measures for mobilising popular support go
 Azerbaijan 237
hand in hand with repressive strategies aimed at suppressing public criticism and
opposition; thus soft and hard power are variously applied. Here, again, the
country’s abundance of natural resources plays a crucial role. Drawing on Ross’s
(2001) causal mechanisms, the section highlighted the role of the “spending
effect”, the “group formation effect” and the “repression effect” in the ruling
elite’s drive for greater independence from the public. While the “spending effect”
is directed at purchasing support with public expenditure, the “group formation
effect” refers to the co-option of independent actors. The “repression effect”
refers to the fact that high resource revenues allow governments to strengthen
the security apparatus. In the course of the mobilisation of popular support, the
government draws on a national consensus, which basically contains two dimen-
sions: first, the “primacy of political stability and socio-economic development”
over democracy and, second, national claims with regard to regional power
ambitions and the Nagorno-Karabakh conflict with Armenia. However, it is almost
impossible to determine the political effects this strategy has in practice, since
communication channels with the population are one-way. To a certain degree,
the national consensus is orchestrated. At the same time, it is a matter of fact that
many people support it. The “primacy”, for example, is related to the traumatic
experiences of state failure and civil war after national independence. The failed
Arab Spring and political turmoil and civil war in Ukraine currently help underpin
the “primacy”.
Since national independence, Azerbaijan has undergone a period of high
instability characterised by state failure and civil war as a consequence of the
dissolution of the Soviet Union. This was followed by an era of increased stability.
As this chapter has argued, the influx of petrodollars played a decisive role in this
regard. They helped cover the underlying structural political and socio-economic
deficits inherited from Soviet (and pre-Soviet) times. As the government failed to
overcome this legacy, the country has always been in a state of “post-socialist
crisis” as conceptualised by the editors of the volume. In this regard, Azerbaijan
offers a revealing case study, since its huge oil (and gas) revenues have produced
dynamics different to those in the country’s resource-poor counterparts in the
post-Soviet space.
Today, with the global oil price crisis and the decrease in oil output, which have
led to a severe socio-economic crisis in Azerbaijan, the country’s stability is at
risk again. The president has tried to counteract this threat in three different ways.
He has, first, centralised the informal power system by strengthening his role in
the country’s clientelist network. Second, strategies directed at gaining popular
support have become more important again. Today, at least on a symbolic level,
the government is showing more commitment to initiating long-term socio-
economic development. Third, the government has further enhanced repression.
As a result, civil society has been neutralised. At the same time, the country has
no real opposition anymore that could play a decisive role in regime change.
However, whether these measures can protect the country from growing instability
remains to be seen. Given their lack of broad popular support, authoritarian
countries can only enjoy short- or mid-term stability at best. In recent years, cases
238 Hannes Meissner
both from the Arab world (Egypt, Syria, Libya etc.) and the post-Soviet space
(Georgia, Kirgisistan, Ukraine, etc.) have shown how fast the slide from fragile
stability to crisis and even war can be.

Notes
1 For detailed information on the underlying corruption and rent-seeking strategies, see
Meissner 2011: 8; 2012: 138–139.
2 There are only some isolated areas kept free from corruption, such as the State Oil
Fund, the State Exams Committee, the Diplomatic Service and a recently established
agency for public service delivery, ASAN.
3 The inflation averaged 11.3 per cent for 2006 and 20.98 per cent for 2007 (World Bank
2010).
4 2011: 0.1 per cent; 2012: 2.2 per cent; 2013: 5.8 per cent; 2014: 2.8 per cent; 2015:
1.1 per cent (ADB 2016).

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14 Kazakhstan’s political and
economic development and the
role of the ruling elites
Julia Kusznir

Introduction
In his study of the causes of the ‘colour revolutions’, Hale concludes that these
were the result of the collision of a formally institutionalised governmental system
with an informal, personalist system regulating access to power. The exercise of
power was based on selective guarantee of privileges to loyal supporters of the
president. Hale describes this regime as “patronal presidentialism” (Hale 2005:
137–138). The political regimes in Russia, Ukraine and Kazakhstan share these
patterns. Moreover, they possess similar experiences of nation-building and the
transition to a market economy, while all face the challenge of establishing
democratic institutions and practices. Furthermore, the implementation of liberal
economic reforms in these countries led to the rise of a specific group of economic
actors, the so-called ‘oligarchs’. However, neither the Russian scenario, in which
the ‘oligarchs’ were able to influence the state’s policy directly in the 1990s, nor
the ‘Ukrainian scenario’ (where ‘oligarchs’ were important actors in the ‘orange
revolution’ that led to a change of the political system), could prevail in
Kazakhstan. Its political regime persists as one of a variety of political regimes
in the post-Soviet area. The Ukraine conflict might, however, change this situation.
This article analyses whether the ‘colour revolition’ or ‘Ukrainian scenario’
could be a possible outcome in Kazakhstan. The first part of the paper gives an
overview of the country’s political and economic development and describes the
main characteristics of the current political regime. The next part concentrates on
the emergence of the Kazakhstani ruling elites, their main interests and their role
in the Nazabayev’s power vertical. The chapter concludes with an evaluation of
the influence of political, economic and geopolitical factors that could destabilise
the regime following the Ukrainian crises.

Main characteristics of Kazakhstan’s political regime

The political and economic reforms announced by the Kazakhstani ruling elite in
the early 1990s triggered significant changes in politics and society. The first free
presidential and parliamentary elections were held and the first constitution
adopted. Western researchers of transformation and transition described these
242 Julia Kusznir
developments as the “beginning of democratic development” (Cummings 2005;
Olcott 2002; Murphy 2006). However, the internal disputes between the supporters
and the opponents of the reforms within the ruling elite led to open conflicts that
granted the president new leeway for action. As a result, the newly elected
president Nursultan Nazarbayev succeeded in gradually reorganising the power
relations in his favour by manipulating parliamentary elections, dissolving the
parliaments and amending the constitution.
Because the policy of the Central Committee of the Communist Party of the
Soviet Union made it impossible for leading functionaries in the Union republics
to gain access to the top (leading) positions in Moscow, there was practically no
elite change at the national level in the post-Soviet republics. As a consequence,
the president gave key positions to former high-ranking party officials, many of
whom were his relatives and confidants. Thus, he formed a circle of loyal persons
around him. In this way, the representatives of the former Soviet nomenclature
were able not only to survive under new circumstances, but also to strengthen
their positions in the new state structures. Consequently, there was a high degree
of continuity in the political elite (Ashimbayev 2004; Cummings 2005; Murphy
2006).
In addition, the president initiated new administrative reforms that ultimately
led to the dismantling of the horizontal and vertical division of power. In turn, this
brought about a centralisation of power, meaning that the legislative is now also
subordinate to the executive – i.e. it is dependent on the president. Nazarbayev
possesses, for example, sweeping powers to dissolve parliament, appoint and
dismiss the prime minister, and select a third of the members of the Senate (the
upper house of parliament) and all the members of the Assembly of People of
Kazakhstan, a body representing ethnic minorities. He also chooses the chair of
the Central Election Commission. In addition, he is able to appoint the heads and
key members of the military and security services and the heads (akims) of all
regions, major cities and the capital (Constitution of the Republic of Kazakhstan
1995, Article 44, 87).
In response to the ‘colour revolutions’ in Georgia, Kyrgyzstan and Ukraine in
2004–2005, the Kazakhstani government, step-by-step, strengthened control over
channels of information, increased supervision of local and international NGOs
and transformed the party system. Accordingly, the opposition movements need
to be officially registered as a political party or public association with the ministry
of justice. Potential opposition candidates face various forms of repression,
including fabricated criminal cases or arrests. As a result, a number of political
parties have dissolved or disappeared forever. One prominent example is the case
of the leader of the country’s opposition, Vladimir Kozlov, a member of
“Democratic Choice of Kazakhstan”. The party was disbanded in February 2005
before the presidential elections. After that, Kozlov co-founded another opposition
party, “Alga” (Forward), and became their leader in 2007. The ministry of justice
refused to register this party officially and Kozlov himself was imprisoned in
2012 for seven and a half years until his release in 2016 on parole (Baidildayeva
2017); his property was also confiscated. In 2015, another prominent party – the
 Kazakhstan 243
Communist Party of Kazakhstan – was banned under a controversial court ruling.
Currently, the Kazakhstani legislature is preparing a bill that would make it
impossible for independent candidates to take part in presidential elections. In this
way, President Nazarbayev would only face opponents that are loyal to the regime
(Baidildayeva 2017).
Furthermore, a new ideology was formulated that considerably strengthened
the personal cult around President Nazarbayev as the “guarantor of stability and
order”. His presidency is associated with the multi-ethnic state’s political stability,
increased prosperity and economic modernisation. In 2010, a law titled “Leader
of the Nation” was adopted which introduced a new mechanism of sharing power
in Kazakhstan. The president enjoys immunity from prosecution, has no limits on
his term in office and rules over a parliament that consists of the ruling party ‘Nur
Otan’ (Freedom House 2012). This party is classified by scholars as a ‘party of
power’ because of its close relationship with the executive and the limited
opportunities for political participation (Isaacs 2011: 38). The almost unlimited
power and control over all political areas, as well as a high level of popularity
among the population, enabled the president to win the presidential elections five
times. In this way, Nazarbayev, the former chairman of the Communist Party,
succeeded not only in achieving political “rebirth”, but also ensuring a long-term
consolidation of ultra-personal power as the “father of the nation”. This has
shaped the development of the political regime and hindered the democratic
institutionalisation of the state structures.
Civil society is underdeveloped in Kazakhstan because of the low level of
political engagement and cooperation between NGOs in society (Savchenko
2015). The ruling elite neglects essential aspects of democracy such as the rule of
law, respect for human rights and freedom of speech. Civil society activists are
constantly suppressed or arrested following protests (Human Rights Watch 2016).
Moreover, the state has been co-opting non-governmental organisations (NGOs)
and public associations. Every new NGO needs the approval of local authorities
and to be registered with the ministry of justice. Although dissatisfaction with the
political regime among the population is expressed in several ways, this cannot
be articulated or organised in a targeted way (Cohen 2008; Henderson 2011).
Satpajew and Umbetalijeva (2011: 3) sum the situation as follows:

There are parties, but no party system. There is a parliament but no inde-
pendent legislature. There are courts, but not a constitutional state. There are
NGOs, but not a civil society. The dominant role is played by informal power
groups.

Although the media in Kazakhstan is privately owned, it is firmly under the

control of financial groups affiliated with the Nazarbayev regime. In 2014, state
officials closed down the last three independent media outlets (Freedom House
2015). Because all institutions of power, including the parliament, the Central
Electoral Commission as well as the military and security apparatus are under
control of president Nazarbayev and the ruling “Nur Otan” party, there are no
244 Julia Kusznir
independent institutions which could provide an effective system of checks and
balances and ensure a stable transition of power when Nazarbayev resigns. The
authoritarian stabilisation of power exposes the current political system to the risk
of political crisis.

Kazakhstan’s economic transition

The government gave priority to liberal economic reforms and the establishment
of a market-oriented economy integrated into the world economy along the
principle of ‘economics first and politics later’. Relying on foreign direct
investment, the main focus was on the development of the domestic energy sector.
In 2014, total foreign investment in Kazakhstan’s economy reached 211.5 billion
US-Dollar. More than 60 per cent of this was invested in the energy sector. Since
1992, crude oil production has been continuously increasing, reaching 78 million
tonnes in 2016, about 2 per cent of world production. According to the
government’s plans, oil production should rise to 130 million tonnes. This would
place Kazakhstan among the ten largest oil producers in the world (Global Risk
Insights 2016).
The first economic reforms, inspired by the ‘shock therapy’ philosophy that
was popular in the post-Communist countries in the early 1990s, were implemented
between 1994 and 1997. They declared a free-market economy, free competition
and private property. The rapid implementation led to a steep decline in output
and hyperinflation. As a result, the first economic reforms succeeded in liberalising
and privatising the economy, but they not in stabilising it (Fredborn Larsson
2010).
High revenues from oil and gas exports ensured the recovery of the country’s
GDP in the late 1990s. Especially since 2000, oil exports have contributed to
Kazakhstan’s continuous economic growth, which averaged at 8 per cent GDP
between 1998 and 2006, and increased macroeconomic stability. In 2000, the
National Fund of the Republic of Kazakhstan (NFRK) was established which
operates both as a stabilisation and as a saving fund. At the end of December
2011, the Fund’s total assets were almost 45 billion US-Dollars (Heinrich and
Pleines 2012). The global financial crisis 2008–2009 hit Kazakhstan’s economy
badly. GDP grew by only 1.2 per cent in 2009. However, the NFRK helped to
stabilise the economic crisis by, for example, keeping inflation and exchange rates
under control (Heinrich and Pleines 2012; Kalyuzhnova 2011). The two years
after 2009, GDP again made greater gains, at over 7 per cent per year. However,
the 2014–2016 economic slowdown ended this, partially because of the fall in oil
prices on the world market.
Based on its highly developed energy and agricultural sectors, the economy of
Kazakhstan is the largest among the Central Asian states and, after Russia, the
most dynamic in the post-Soviet space. In addition, Kazakhstan has a well-
developed industrial infrastructure, a well-educated population and a rapidly
rising middle class.
 Kazakhstan 245
Foreign policy
Since the beginning of the 1990s, Kazakhstan has been pursuing a multi-vector
approach allowing the country to balance its foreign relations with a variety of
global players (Russia, the US and China). The multi-vector policy helps, on the
one hand, avoid dependency on one power and, on the other, preserve autonomy
and control over domestic energy assets and transportation routes and maximise
rents (Smith Stegen and Kusznir 2015). The Nazarbayev government has
strengthened its military and economic ties with Russia and became a member of
the Eurasian Economic Union (EEU) led Russia (Kusznir 2015). It has developed
an energy partnership with China, and maintains good economic relations with
the United States and the European Union. The Ukraine conflict, however, has
challenged Kazakhstan’s foreign policy, placing the country in a difficult position
between Russia, on the one hand, and the EU and the US, on the other. The
Kazakhstani government tries to maintain good relations with Russia while also
avoiding a diplomatic confrontation with the Western countries and Ukraine
(Roberts 2015; Schlager 2014). Therefore, the continuation of the Ukraine conflict
will demand new strategies in Kazakhstani foreign policy. This could change the
current status of foreign relations significantly.
The Kazakhstani government has been using different methods and mechanisms
to maintain economic and political stability. In December 2012, President
Nazarbayev announced the strategy “Kazakhstan – 2050” (also called the ‘2050
Strategy’) which aims to bring Kazakhstan into the ranks of the world’s top
30 most developed countries by 2050. The plan includes economic diversification
and the creation of a favourable investment climate for the private sector.
Moreover, new mechanisms will be developed that should decentralise power on
a central and regional level, including the direct election of regional governors
(Keene 2013). In 2013, private pension funds were restructured into a single
pension fund under state control. This helped balance property rights and
investment opportunities and strengthen administrative discipline and information
transparency (Laruelle 2016a; Tutumlu 2016).
In 2014, Nazarbayev initiated again a number of institutional reforms to
decentralise the political system. According to regional experts, these reforms
should prepare the political system to withstand Nazarbayev’s departure. The
“100-Step Plan Toward a new Nation” includes several areas, such as: 1) estab-
lishing a professional government apparatus to create a more effective and
professional public service; 2) strengthening the rule of law by expanding trial by
jury and increasing defendants’ rights; 3) supporting entrepreneurship, improving
the transparency of the tax system and strengthening protections for investors
in order to facilitate industrialisation and economic growth; 4) promoting identity
and unity, including an improvement of health and education provision, and
5) creating a transparent accountable government, by implementing measures to
increase the openness and accountability of state departments and agencies and
engender greater public involvement in decision-making processes. This should
eventually reduce the level of corruption (Idrissov 2015; Kazinform.kz 2015).
246 Julia Kusznir
So far, Kazakhstani officials have been slow in implementing the measures
necessary to reduce the dependence on revenues from exports of raw materials
and the potential risks of Dutch disease (Heinrich and Pleines 2012; Laruelle
2016a).
Despite the genuine popularity of the president among many citizens who
support him as the guarantor of political stability, rising prosperity and ethnic
harmony, public protests have taken place. This demonstrates how unstable
Nazarbayev’s regime could become. In September 2012, a protracted labour
dispute took place in Zhanaozen in the oil-rich Mangistau region. This ended with
the police firing at striking oil workers and their supporters, killing at least 15
people. Consequently, the authorities arrested and jailed protesters. At the same
time, they tightened restrictions on labour rights and declared independent unions
illegal, while also cracking down on members of the regional administration
(Freedom House 2012). In spring 2016, peaceful protests by residents of the
hinterlands and provincial cities over land reforms, calling for the president to
resign, took place in various towns without police intervention. Some experts
have seen this as sign of public frustration with the Nazarbayev government and
evidence for the fragility of public support for the state’s initiatives and policy
(Freedom House 2017).
Alongside the new ideology and the country’s economic success, the ruling
elites promote a patriotism based on the Soviet legacy of the “friendship of
people” connected to the idea of the “small motherland” and President Nazarbayev
as the ‘father of the nation’ and guarantor of inter-ethnic concord in the country
(Diener 2016; Laruelle 2016a). This has helped avert ethnic confrontation so far.
However, the Ukraine crisis and Russian policies of “protecting” ethnic Russians
and “compatriots” (sootechestvenniki) outside Russia have evoked fears among
the Kazakhstani ruling elites of a similar scenario arising in Kazakhstan to Crimea
and the Donbas. Notably, more than 20 per cent of the total population of 17.2
million are Russians and Russian is still the main language next to Kazakh
(Schlager 2014; Shenkkan 2016).
At the same time, another important trend in Kazakhstani society is the growing
activity of Kazakh-speaking groups. The Ukrainian crisis, economic relations
between Kazakhstan and Russia, and China’s expansion into Kazakhstan’s
agricultural sector emboldened these groups to criticise the government (Laruelle
2016a; 2016b). “In the near future, Kazakhstan’s ‘Kazakhness’ will probably be
the most dynamic identity trend to be incorporated, in one way or another, into
state policies and could potentially challenge the political status quo” states
Laruelle (Laruelle 2016: 8). Although Kazakhstan is currently far away from a
‘Ukrainian scenario’, the Ukrainian crises could inspire both Russian and Kazakh
nationalists.
Another growing problem is the rising disparity and poverty in society. Since
the economic recession in the 1990s, unemployment and low wages have been
one of main social problems that facing the government. Continued economic
growth has helped reduce income poverty from 35 per cent in 1999 to 8 per cent
in 2009. However, the unequal distribution of economic revenues between
 Kazakhstan 247
Kazakhstan’s regions and growing cost of living still remain huge, unresolved
social problems (de Pedro and Ryskeldi 2016).

The composition of the Kazakh ruling elite

Several studies of the Kazakhstani elites have shown that different groups emerged
within the national ruling elite (Kolumbaev et al. 2005; Kusznir 2012; Peyrouse
2016; Satpaev 2007). According to Satpaev, the main pressure groups within the
Kazakhstani ruling elite are represented by two blocks that consist of the president’s
‘inner circle’ and his ‘outer (distant) circle’. The ‘inner circle’ includes the
president’s family, which is the most important and influential group (Satpaev
2007: 290–292). Since 1996, his eldest daughter Dariga Nazarbayeva has
controlled the state news agency Khabar. Over the years, she has held different
political positions, including Vice Chairman of the Mazhilis and Deputy Prime
Minister. Since 2016, she has been the head of the Senate’s International Affairs,
Defence and Security Committee. Her (ex)husband, Rakhad Aliyev, held important
positions such as deputy head of the national security service. Nazarbayev’s
second son-in-law, Timur Kulibayev, became financial director and vice-president
of KazakhOil, and later deputy president of KazMunayGaz, formed from the
merger of the two national oil companies KazakhOil and KazTransOil. In 2008,
KazMunayGaz was integrated into the national welfare fund “Samruk-Kazyna”,
which owns – wholly or partially – many important companies in the country.
Although the state is officially the main shareholder in the fund, the Nazarbayev
family controls its financial and organisational activities. Kulibayev was named
deputy CEO and held this position until 2011. Consequently, over the last two
decades Nazarbayev’s family members were able to seize control over the most
strategic economic and financial resources in the country. These include assets in
the oil and mining sector and transportation network, national media and security
sector (Satpaev 2007: 291–292).
The ‘inner circle’ includes a number of individuals who have direct access to
the president and occupy positions of great importance for the country’s politics
(the security apparatus, executive and presidential administration). The ‘inner
circle’ is also made up of technocrats, high-level officials and government
administrators (Akims) (Satpaev 2003: 294), many of whom are former members
of the nomenclature.
The regional experts Kolumbaev, Ospanov and Sadovnikova have analysed
142 biographies of state officials who between 1991 and 2002 occupied the
posts of the Vice President of the RK or were heads of the Administration of
the President, the Government, the Supreme Council, the Senate, the Mazhilis,
the Supreme and Constitutional Courts, the Prosecutor General’s Office, the
National Security Bureau, the National Bank and the ministries. They concluded
that, despite the emergence of new channels for the recruitment of employees
in the public administration at the beginning of the 1990s, the administrative
elite consisted mainly of former members of the nomenclature (41.5 per cent).
Since then, individuals have come and left the administrative structures, but the
248 Julia Kusznir
composition of the political elite has not changed radically. Social changes and
economic transition to the market economy opened opportunities for outsiders to
become members of the Kazakhstani political elite. They also created alternative
opportunities for the former Soviet elite to preserve their status and privileged
position in Kazakh society. Consequently, there is a high level of reproduction
of the former Soviet political elite (Kolumbaev, Ospanov and Sadovnikova
2005).
The ‘distant circle’ consists of representatives of the large private financial and
industrial conglomerates established during the economic transition of the 1990s
– the so-called ‘newcomers’. Market reforms and economic success increased
competition among the elites: the newcomers from various backgrounds, also
known as mladoturki (Young Turks) or the “New Kazakhs”, took control of a
number of economic branches. They entered business while they were in their
twenties and studied at famous Soviet universities or abroad. They were often
members of the Komsomol, the Communist youth organisation. Between 1997
and 1998, several key posts in politics were granted to the “newcomers”, e.g.
Mukhtar Ablyazov, in order to put supporters of privatisation in crucial positions
and push the state policy forward. He was appointed Minister for Energy, Industry
and Trade. In this way, many ‘newcomers’ became important members of the
presidential ‘power vertical’ by virtue of their knowledge and administrative
skills.
On the grounds that only professional businessmen could successfully imple-
ment the economic reforms in the regions, the ‘newcomers’ were appointed as
regional governors (Kusznir 2012; Ostrowski 2010). They emerged as a new
economic elite, known as ‘oligarchs’, which benefited from the economic and
political reforms (Junisbai 2010; Ostrowski 2010; Schmitz 2003). Generally, they
pursue their aims individually or in the name of their groups and they compete
with one another fiercely. Neither the political opposition nor civil society
organisations have a veto in politics. The economic actors, however, occupy
political positions in the executive branch, are active members of the ‘party of
power’ ‘Nur Otan’ and serve as parliamentary deputies. Exercising indirect control
over the parliament and ministries, they form strategic alliances with the political
elite and build hierarchical networks, which have been described as a ‘symbiosis
of politics and the economy’ (Kjarnet et al. 2008). Therefore, they play an import-
ant role in Kazakhstan’s policy. Ashimbayev (2004) described this process as
follows:

The period 1999–2001 can be characterized as oligarchic capitalism, whereby

economic power in the country was passed to a number of business groups
that control banks, factories, newspapers, television channels, pipelines,
individual ministries and security service.

They also controlled the privatisation of the national companies and the sale of
national firms’ assets to foreign investors.
 Kazakhstan 249
State-owned enterprises under the leadership of newcomers have played a
central role in Kazakhstan’s economic structures. Many members of the economic
elite were opposed to radical political reforms. However, the liberalisation of the
economy and the differentiation of the economic elite beyond the political elite
created the basis for competition, criticism and an oppositional attitude towards
the regime. The formation of such groups produced independent bases of power,
which weaken the state’s political and economic monopoly. These groups are not
homogeneous; in fact, competing economic, administrative and regional interests
exert considerable pressure on the central executive power. As a result, President
Nazarbayev faces the problem of integrating the diverging political and economic
elites (Cumming 2005; Isaacs 2010; Schmitz 2003).
The entry of Nazarbayev’s family members into different economic sectors
(energy and finance) created competition for influence between the “newcomers”
and the president’s relatives. Some of the ‘newcomers/oligarchs’ could not accept
the increasing influence of the ‘family’ and demanded that the president formalise
the ‘rule of games’. In order to protect their political and economic interests, they
founded in 2001 the party “Democratic Choice of Kazakhstan” (DCK), which the
president perceived as a disloyal opposition party despite its very limited criticism.
In response, the state initiated, for example, an investigation of tax evasion by
Ablyazov that resulted in his imprisonment and later exile from Kazakhstan.
Consequently, the DCK was prohibited (Junisbai A., Junisbai B. 2005; Kusznir
2012). Political organisations and movements established by the business elite
have been used predominantly as an instrument between the business groups.
They do not represent the interests of one specific group and are disconnected
with the society (Umbetalieva 2002).
The division of power and responsibility between different informal groups
(large-scale manufacturers and technocrats) loyal to the president provide the
basis for a highly personalised system of rule. This creates an informal structure
of power that is not founded on an institutional distribution of authority, but rather
on the informal transfer of political power and property rights to loyal groups,
with the president playing the role of a mediator and judge. The regional expert
Cumming emphasises that:

This authoritarianism, moreover, rather than resulting simply from top-down

coercion, is the product of a high level of negotiation, bargaining and co-
optation by the incumbent elite. Initial decisions on formal constitutional and
statutory provisions were only the framework in which leading political
actors competed to shape the authority of specific institutions.
(Cummings 2005: 140)

The interests of the ruling elite are thus disguised as those of the state, and the
allocation of public positions often takes place via informal networks based
on patron-client relations rather than on the basis of public policy decisions. The
public administration exhibits a high level of corruption. This is systematic, and
250 Julia Kusznir
the existing legal system in practice usually defends the privileges of the ruling
elites. Some of the business elite groups have tried to fight against corruption to
strengthen their own position in Nazarbayev’s power vertical. The former head
of the state company Kazatomprom, Mukhtar Jakakhiv, for instance, was arrested
and lost his influence as a result of such activity (Satpajew and Umbetalijewa
2011: 2). Consequently, the elite rotation is dependent on the personnel policy of
President Nazarbayev. (ibid.: 3)
Elite rotation in Kazakhstan usually takes place through the restructuring and
creation of competing self-organised economic agencies, civil activities and ethno-
religious associations. This includes the co-option of the business elites into the
power vertical through appointments, dismissals and reappointments to leading
posts in the executive and the national holdings. In this way, the president, on the
one hand, rewards his supporters with economic and financial gains and career
mobility. On the other, he maintains extensive personal control over functionaries
and state resources and removes alternatives to his authority. As my previous
research on the composition of the Kazakhstani oil elite has shown, most of the 50
members of the Kazakh energy companies whose biographies I analysed only
worked as ministers, presidential advisers or directors of national energy companies
for two or three years on average. They often lost their post due to suspicions of
corruption and other administrative violations. Some were repeatedly granted key
political positions by the Kazakhstani president, only to be dismissed again. After
losing their jobs, they often returned to the companies they had managed earlier or
founded their own consultancies which offered foreign investors help in entering
the Kazakhstani market (Kusznir 2011: 104–105). Additionally, a number of
mechanisms for controlling business elites were established in politics, economics
and the media. These include the wealth fund ‘Samruk-Kazyna’, the media-holding
‘Nur -Media’ and the National Chamber of Commerce ‘Atameken’ for middle and
large entrepreneurs. This system of control allows intensified control over political
and economic elites in all social spheres (Satpajew and Umbetalijewa 2011: 5).
Many scientific studies have investigated the president’s personnel policy and
the formation of group/clans formation in Kazakh policy using three different
explanatory approaches: (1) nationalities and ethnic politics; (2) region and
regional affiliation; and (3) clans and their composition. Although many of the
studies on the composition of the Kazakhstani elite emphasised the importance
of clans for elite recruitment, there is no clear agreement on the definition,
composition and general meaning of the term “clan”. The clans are defined, for
instance, as larger groups of relatives or groups of descendants who have developed
a great sense of belonging together, mutually support each other economically
and politically, or move their family members into political and economic positions
and thus try to preserve power in the family. The business clans, however, function
on the basis of patron-client relationships. Here, the traditional division into three
tribal territorial groups within the ethnic group of Kazakhs – the so-called hordes
(zhuzy) or regional affiliations play a secondary role. These clans serve the
exchange of resources, information and favours. They are largely asymmetrical.
The influence of a business clan depends above all on the economic resources and
 Kazakhstan 251
the personal relations of its representatives to the president. Isaac explains this as
follows:

The phenomena of clan politics reflects a wider degree of political and

economic factionalism that has arisen through the extractive policies of the
centre. Factionalism, therefore, is not necessarily based on kinship identities
and familial relations, but rather on a broader variance of factors, most
notably economic cleavages and community based networks.
(Isaak 2010: 5)

Conclusions
The Kazakhstani political regime has managed to balance the intra-elite
competition through the establishment of different methods of control over elite
groups, including repression, dispossession of powerful businessmen and
technocrats, their dismissal from their positions in the administrative structures,
and co-option through political promotions and economic and financial rewards.
Therefore, they have an enormous interest in preserving the established political
system and support its alleged stability. However, remarkable changes are taking
place in the constellation of the elites and in Kazakhstani society at large. High-
ranking functionaries with a nomenclatura background are getting older and
retiring. They are being replaced by much younger functionaries who are more
pragmatic and less loyal to the regime. The growing young and well-educated
middle class is demanding new opportunities and new rules of the game guaranteed
by the rule of law and greater transparency. And they could start moving against
the Nazarbayev regime when he leaves office, which might, in turn, create a
political crisis.
Although the Nazarbayev regime has enjoyed genuine domestic popularity
over decades because of the improvement of living standards and sustainable
development of a multi-ethnic society, the global economic crises has weakened
domestic economic growth. Low oil prices and sanctions against Russia –
Kazakhstan’s main trading partner – have already worsened the economic
downturn and had a negative impact on Kazakhstan’s economic environment.
The growing activity of Chinese investors and Chinese workers could also change
the geopolitical balance. This could also provoke a political crisis. Thus, the
country’s future economic and political development depends on whether it will
be able to continue its multi-vector foreign policy.
Additionally, corruption carries the potential for unrest in the country in the
future by creating a crisis of legitimacy for the regime. Repressive policies against
rising radicalism and growing ethnic Russian and Kazakh nationalism could also
lead to additional political conflict. Furthermore, the on-going repression of the
independent media and NGOs, as well as the opposition parties and trade unions,
could create new opportunities for forces to against Nazarbayev’s rule.
Consequently, the Kazakhstani ruling elites could experience a ‘colour revolution’
or ‘Ukrainian scenario’ which would change the political landscape significantly.
252 Julia Kusznir
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15 The Ukraine conflict as a
result of post-Soviet crises
development
Felix Jaitner, Tina Olteanu, Tobias Spöri

Intersecting crises phenomena

The edited volume deals with multiple crises in the post-Soviet space. The
contributions shed light on crises-prone development in key countries (such as
Russia and Ukraine) and sub-regions of the former Soviet Union (the Baltics,
South Caucasus and Central Asia) since 1991. Three distinct processes stand in
the centre of the analysis: (i) the dissolution of the Soviet Union and the (ii)
political and (iii) economic transformation. We do not claim that these processes
have developed or affected these countries uniformly. The 15 successor states of
the Soviet Union, ranging from the Baltic EU member states to authoritarian
regimes in Central Asia, are diverse in terms of their starting point in 1991 and
the subsequent developments. Our contribution identifies common dynamics all
successor states share. These intersecting crises phenomena have emerged from
the three contradictory processes and created several contested fields: crises of
belonging, crises of resource accumulation and crises of political power.
The developments in Ukraine since 2014 are of particular interest. The majority
of academic contributions on the Ukraine conflict explains the emergence of the
conflict by geopolitical characteristics by focusing on key actors such as NATO,
USA, the EU and shifts in the Russian foreign policy under Putin. Other contri-
butions identify primarily domestic factors such as the ongoing power struggles
within the Ukrainian elite being responsible for the emergence of the conflict. Our
approach puts the Ukraine conflict in a regional context, i.e. we take the larger
picture of the developments in countries formerly belonging to the Soviet Union
into account. This allows us to highlight similar patterns of all successor states
since the dissolution of the Soviet Union.

Mapping post-Soviet crises

The first three contributions provide overviews and discuss general trends since
the dissolution of the Soviet Union and its trajectories. Dieter Segert stresses the
reasons for the breakup of the Soviet Union and lays out political and economic
consequences that still prevail as recurring elements of crisis in domestic and
foreign politics. David Lane compares the economic and political developments
256 Felix Jaitner, Tina Olteanu, Tobias Spöri
in the post-Socialist new member states of the EU to post-Soviet countries, which
are not part of the EU enlargement process. He argues that the EU has served as
a model for political and economic integration, thus the recent crisis in Central
and Eastern Europe relates primarily to the “political and economic contradictions
of the European Union” (56). Apart from the Baltic states, he locates the crisis in
the remaining post-Soviet successor states in the constellation of “hybrid state”
and “market uncoordinated capitalism” (56). Becker assesses the converging and
diverging results of the economic transformation in Russia, Belarus and Ukraine,
taking the specific political/economic elite nexus into account. He comes to the
conclusion that the “Ukrainian state has the least degree of autonomy vis-à-vis the
big domestic capital groups” (75). In Russia the “political role [of the oligarchs]
has been clipped” over the transformation (76), while oligarchs did not evolve in
a comparable way in Belarus.
Especially Lane and Segert include the perspective of citizens, their loss
of well-being through the transformation and their assessment of the winners of
transformation: the political elite. According to them, the high level of citizens’
frustrations and disappointment does not necessarily lead to an increase in political
instability (outlined for Russia under Putin and Belarus in this volume) since the
elite manages or channels discontent by citizens. As Becker argues for Belarus,
authoritarian rule has been a successful development strategy so far regarding
managing public dissatisfaction
The subsequent contributions are in-depth case studies and stress the develop-
ments in several successor states including Ukraine, Russia, Azerbaijan, the
Baltics and Kazakhstan. The case studies deal with particular post-Soviet crises:
crises of belonging, crises of resource accumulation and crises of political power.

Crises of belonging
The dissolution of the Soviet Union in 1991 heavily shaped the sphere of collective
memory and identity politics that was aggravated by a process of state-building.
On the one hand, these contribute to a reconfiguration around historical narratives
of identities and belonging. The section shows how the successor states differ in
terms of the perception, the reflection and the remembrance of the Soviet Union.
On the other hand, ethnic cleavages and territorial claims are fortified by a blurry
understanding of culture and historical entitlements. Whereas in some countries
the Soviet Union is regarded as a period of limited national sovereignty and
associated with political repression, others stress the success in economic and
social development or the global political and military significance of the Soviet
Union. The second cluster of contributions addresses the relevance of ethnicity
and belonging as well as the potential to exploit these latent (e.g. the Baltic states)
or erupted conflicts (e.g. Ukraine, Russia).
Viktor Apryshchenko highlights the spontaneous and dynamic nature of col-
lective memory. He sketches how memory politics through schoolbooks in Russia
have become a mechanism to overcome the “trauma” stemming from dissolution
of the Soviet Union. A nostalgic picture of the past and an (inherent) utopian
 Ukraine conflict 257
future are portrayed in this state-driven educational material. Through this lens,
the Ukraine conflict is not only an expression of such trauma; it is also an instru-
ment to legitimise the annexation of Crimea as a natural act of religious and
cultural unification. The annexation also showcases Russia’s rising geopolitical
power. In this sense, state-induced collective memory has contributed to both –
perceiving the dissolution of the Soviet Union as a traumatic collective memory
and triggering a collective process of grievance and renewal. Especially the latter
legitimises current and potential conflicts.
Olena Podolian and Valentyna Romanova deal with the dynamic nature of
identity politics in Ukraine. The alleged ethnic and linguistic cleavages between
a “Russian East” and an “Ukrainian West” are deeply rooted in the contemporary
history of the country. Those cleavages, however, have gained importance since
the emergence of the Ukraine conflict. The crisis of belonging is thus not a cause
but rather a consequence of the conflict in Ukraine.
Joakim Ekman and Kjetil Duvold dissect public opinion polls in the Baltic
states and trace the differences between members of the titular nation and the
Russian minority. As Lane and Segert, the authors detect generally high levels of
political dissatisfaction in the contemporary period (2014–2015). Additionally,
they point out a severe divide between majorities and minorities regarding the role
of the Russian Federation in the Ukraine conflict: Russia is seen as a major threat
by ethnic Lithuanians, Latvians and Estonians but not by the Russian minority of
each country. It remains open to what extend this divide can lead to “civil unrest
by fuelling social tensions” once escalated by “Russia’s hybrid and information
war” (131).
All three contributions address different dynamics of how identity politics
shape the post-Soviet space, be it as process of change and (re-)configuration, be
it as a strategy by political actors. The multiple crises of the post-Soviet space
have destabilised existing identities while new ones have emerged.

Crises of resource accumulation

The contributions of the subsequent section deal with the interconnectedness of
political regime stability (or instability) and resource accumulation of an oligarchic
elite. Ilya Matveev analyses “Putin’s Bonapartist neopatrimonial state” (146)
based on the export of natural resources, oligarchic wealth accumulation and a
slight improvement of living conditions for the masses that came under pressure
through the economic crisis of 2009. He links the different protest waves to the
economic stagnation and frustration to the regime’s performance that turns out to
be incapable of reform. While the international sanctions as a result of the Crimean
annexation have perpetuated the ongoing economic crisis, the official ideology
diverts the responsibility to the international realm.
In a similar vein, Yuliya Yurchenko traces the economic and political deve-
lopment in Ukraine as struggle for political power between rivalling oligarchic
blocks with support from Western businesses and institutions. She argues that the
“fragmented dispossessed” (169) – the protesters on the Maidan who protested
258 Felix Jaitner, Tina Olteanu, Tobias Spöri
against the kleptocratic oligarchs – did not gain any agency from the protests, nor
did it result in a counter hegemonic class formation.
Klaus Müller contributes to the discussion on the Ukraine conflict by analysing
the geopolitical post-Maidan dimension through the lens of political economy. He
questions the “transformative power” of the EU in Ukraine from two perspectives:
the primarily negative effects of the Association Agreement on the Ukrainian
economy and the willingness by domestic actors to give up rent-seeking for the
sake of a closer ties to the EU.
Jeffrey Sommers discusses the neoliberal turn in Latvia and the effects of the
economic crisis since 2008. He dissects how the former Soviet elite built up an
offshore banking sector. Moreover, Sommers reconstructs how (and why) Latvia
was bailed out by the government together with the EU and IMF. He also describes
the harsh effects of the austerity policy on society resulting in emigration and
apathy.
All these contributions deal with the interconnectedness of the political and
economic elites in different post-Soviet countries. From the perspective of poli-
tical economy, they outline how the kleptocratic grip of oligarchs on the economy
has rendered these countries vulnerable to conjoined economic and political crises.
Yurchenko, Müller and Sommers also depict Western actors and institutions as
facilitators of the current economic system while societies remain fragmented.
Even though all countries under scrutiny have seen major protests in recent years,
this has not (yet) lead to a formation of a new centres of power. This dynamic
rather vaporized as a result of repression, identity politics or emigration.

Crises of political power

The contributions in this section focus on the multiple crises in the post-Soviet
region from the perspective of consolidating political power in hybrid political
regimes. Emil Aslan Souleimanov, Jaspar Schwampe and Sofie Bedford analyse
the case of Chechnya where the struggle for independence from the Russian
Federation resulted in war. They trace the causes back to a set of multiple crises
originating in domestic Russian political and economic sphere.
Hannes Meissner identifies clientelism and corruption as most important
strategies by Heydar Aliyev to deal with inner elite competition in Azerbaijan. As
for the legitimacy of the regime in the public sphere, stability and economic
growth are highlighted as central achievements while democracy is seen as a less
relevant asset. In the case that the symbolic narrative is not capable of preventing
public unrest, repression has become more severe.
Julia Kusznir examines the strategic consolidation of political and economic
power under President Nazabayev in Kazakhstan and his authoritarian recon-
figuration of the state including related areas such as the media and the NGO
sector. Similar to the case of Azerbaijan, political stability and economic growth
contribute to the regime’s stability although the ongoing economic crisis and the
rise of Kazakh nationalism might have destabilising effects.
 Ukraine conflict 259
In comparison to other countries, political power in Azerbaijan and Kazakhstan
is not based on an oligarchic but on a personal network around the president.
Similar to what Matveev finds for the first Putin government, popular support of
the regimes in South Caucasus and Central Asia were generated through rising
living standards.

Post-Soviet crises – between stability, instability and uncertainty

The key term of the edited volume – post-Soviet crises – triggered some debate
among the contributors. Segert shares the diagnosis of crisis-prone development
and refers in particular to crises of social inequality stemming from the trans-
formation process. Sommers argues in a similar way by emphasising the negative
effects of austerity measures for the population. Lane highlightes the dimensions
“uncertainty” as well as unintended and “unexpected” dynamics of the transform-
ation (Chapter 3). Becker is at unease with the term proposed by the editors from
the perspective of political economy as he observes only “prolonged periods of
instability and recurrent significant crisis . . . in countries of the periphery and
semi-periphery” (62). Crises, in his understanding, would imply a previous period
of stability, which was not the case in the successor states of the Soviet Union.
Matveev refers to the relation between stability and latent contradictions while
crisis is understood as the “visibility of such contradiction”. In his understanding,
stability does not mutually exclude the absence of crisis but rather indicates a
different facet of crises itself. Apryshchenko points out that the crisis of Russian
collective memory, i.e. a crisis of historical consciousness, facilitates authoritarian
tendencies. Podolian and Romanova claim that the cleavages in Ukraine have
existed since the dissolution of the Soviet Union. The Ukraine conflict, in particular
Russia’s role in the conflict, fostered the saliency of those cleavages to a great
extent. Similar to Ukraine, Ekman and Duvold highlight crisis-prone cleavages in
the Baltic states. Tensions between ethnic Estonians and Latvians and the domestic
Russian minority in particular, have existed since the independence in 1991 but
gained momentum over the Ukraine conflict. The contributions by Meissner and
Kusznir point to a similar understanding. Both cases, Azerbaijan and Kazakhstan,
are examples of relative stable political regimes in a permanent latent crisis
situation where the leaders have to control inner-elite competition and are also
challenged by a growing potential of societal upheaval. The contributions by
Yurchenko, Souleimanov et al. and Müller illustrate the intersecting character
of crises in their case studies. They link the “multiple” crises (see Yurchenko in
this volume) to the three dimensions of intersecting crises phenomena. Russia and
Ukraine are two showcases for the consequences of the three contradictory
processes of post-Soviet development: the dissolution of the Soviet Union in 1991
and the political and economic transformation. The contributions to the edited
volume highlight the interconnectivity of the processes. In addition, they
demonstrate – despite all given differences – the common pattern of crisis-prone
post-Soviet development. Some countries appear to be in a constant situation of
260 Felix Jaitner, Tina Olteanu, Tobias Spöri
political or economic crises since the dissolution of the Soviet Union. Others
are rather instable and experience cyclical fluctuation of crises as the conflict in
Ukraine shows.

Patterns of post-Soviet crises

The contributions, heterogeneous in terms of perspectives and sub-regional foci,
demonstrate the connections between political and economic causes of crises.
Against this backdrop we can determine several fields of crisis-prone development
in the region.
Identity politics experience a revival in different shades and forms. This process
is perpetuated by political actors, societal polarisation and unintended dynamics.
Even if ethnic tensions are not virulent at a given time, they can (re-)appear and
unfold. The dissolution of the Soviet Union has thus opened space for crises of
belonging. The clear division between the “titular” nationality and minorities is
closely linked to the nation-building process after 1991.
The oligarchic or clientelistic structure of the closely connected political and
economic spheres have resulted in an economy-driven elite that is dominated by
particularistic interests. The political elite has only peripheral links to its electorate.
Variations can be found in the specific nature of these ties: in some cases, the
political sphere dominates the economic (Russia) or vice-versa (Ukraine). In any
case, the interconnectivity is a symbiotic relation for the actors involved.
Several authors of this volume discuss the peripheralisation process of the post-
Soviet space, which entails two main outcomes: an economic peripheral position
of post-Soviet states on the global level as well as peripheral development within
the 15 post-Soviet countries. In economic terms, the rapid transformation from a
planned to a market economy fostered the peripheral integration of the post-
Soviet space into the world-market. All countries share a substantial decline in
industrial production and an increase in social inequality. In resource-abundant
countries the exploitation of natural resources counterbalanced the sharp economic
decline since 1991. At the same time, the profits remain mainly in oligarchic or
clientelistic networks, whereas the biggest share of the population only lives on
wage incomes. Moreover, economic development in resource-extractive economies
strongly depends on high commodity prices on the world-market. Controlling
significant equity stakes the state is also closely tied to the resource-extractive
mode of development, e.g. Azerbaijan, Kazakhstan, Russia, Turkmenistan and
Uzbekistan. An exception is Belarus, where the state has secured the countries´
industrial base through strong regulations and equity stakes. Moreover, Russia
and Ukraine have preserved parts of their industrial sectors (arms industry,
machine building, car production in Russia).
The second outcome of the peripheral crises-prone development is social
instability. The peripheralisation process of the post-Soviet space has reinforced
two social cleavages: social inequality and the nexus between Oligarchs and
political elite. In times of economic crises these cleavages quickly unfold in
political crises, assuming different forms, such as widespread protest, changes of
 Ukraine conflict 261
government or even civil war. Political and economic instability foster uneven
development dividing a country into prospering regions (centre) and the “inner-
periphery”.
Most of the contributions deal with protest which frequently occurs in the post-
Soviet space. Müller and Souleimanov et al. refer to protest right before or after
the dissolution of the Soviet Union in 1991. Those protest movements were
triggered by Gorbachev’s Perestroika at the end of the Soviet Union or by the
independence movements, which failed in the Chechnyan case. The protest waves
in Ukraine in 2004 and 2013/2014 as well as protest in Russia in 2011/2013 draw
particular attention of the contributions. In the Ukrainian case, Becker, Müller and
Yurchenko determine three factors being mainly responsible for the emergence
of protest in Ukraine: the high level of social inequality, the dominant role of the
oligarchs and forms of corrupt or authoritarian governing. Similar to Ukraine,
several contributions emphasise economic hardship as one of the crucial factors
why protest emerges. Meissner states that protest in Azerbaijan was triggered by
rising prices and high unemployment rates whereas Sommers refers to the
consequences of the austerity measures in Latvia. The mentioned reasons for
protest in Russia range from protest against electoral fraud to economic demands
as shown by Becker and Matveev. In terms of latent crisis, Ekman and Duvold
present the case of the relocation of a monument dedicated to the Soviet soldiers
of the Second World War, which spark protest in particular among the Russian
minorities.
The concept of intersecting crises phenomena grasps the crisis-prone relation
of different societal spheres and processes in the post-Soviet space. The patterns
of post-Soviet development are clear signs of latent crises that can erupt at any
given time and manifest as an acute crisis, be it as social unrest, inner elite
conflicts over resources and power or regional clashes. In particular, concerning
clashes or conflicts, the post-Soviet space has experienced several conflicts such
as the breakaway territory of Transnistria in Moldova in 1992, unresolved conflicts
in Georgia (Abkhazia, South Ossetia) or between Armenia and Azerbaijan over
the Nagorno-Karabakh region. Finally, the two Chechen wars (1994–1996 and
1999–2009) have transformed the Russian north Caucasus into a highly militarised
area.
The erratic nature of the dissolution of the Soviet Union is still a major legacy
that contributes to this amalgam while the transformation and the economic crisis
have cemented the peripheral development of the post-Soviet space.
With regard to the concept of intersecting crises, Ukraine is as a prototype of
post-Soviet crisis-prone development. The dissolution of the Soviet Union lead to
a contested nation-building process, which especially evolves around the
politicisation of language and contested memories regarding the Soviet Union.
During the transformation process, the country suffered from steep economic
decline. In contrast to Azerbaijan, Belarus, Kazakhstan or Russia, the Ukrainian
state did not manage to regain autonomy from the Oligarchs. Despite formal
democratic procedures, the changing governments rather reinforced forms of
corruption, authoritarian governance and did not take sufficient steps to fight
262 Felix Jaitner, Tina Olteanu, Tobias Spöri
increasing social inequality. The ongoing conflict in Ukraine may have developed
into a conflict with international involvement. However, we argue that it is rooted
in the manifold domestic crisis-phenomena stemming from the dissolution of the
Soviet Union and the transformation process. Peace in Ukraine and the prevention
of conflicts in the post-Soviet space are only possible if the region’s multiple
crisis-phenomena are acknowledged and tackled seriously.
Index
Page numbers in bold indicate figures or tables
Abkhazia 26, 261
accumulation: of capital 10, 55, 57, 61,
160–164, 167, 197, 201; crisis 10, 199,
255–257; primitive 65, 165–166;
“regime of accumulation” 62–66,
71–72; resource 10, 57, 71–72, 199,
255–257
Afghanistan 18, 182
Akhmadov, Khussain 218
Akhmetov, Rinat 164, 168, 179, 181
Aliyev, Heydar 10, 226–229, 234, 258
Aliyev, Ilham 226–233
Aliyev, Rakhad 247
Almunia, Joaquin 200
Andropov, Yuri 199
anti-Russia/n 33, 93, 179, 182
Arab Spring 186, 237
Armenia 23, 26, 42–43, 44, 46, 47, 49,
231–232, 237, 261
Association Agreement (AA) 68, 73, 169,
171, 177, 178, 258
austerity 71, 151–152, 171, 195–198, 200,
201–202, 204–207, 258–259, 261
authoritarianism: in Azerbaijan 225, 227,
228, 231, 233, 235–236; competitive
authoritarianism 166; in Kazakhstan
249; new authoritarianism 30, 64; in
Russia 87, 175
Avthurkhanov, Umar 216, 218
Azarov, Mykola 165
Azerbaijan 7, 10, 26, 42, 219, 225–238,
256, 258–261
Baltic states 4, 10, 17, 23, 31, 32, 39–40,
44–45, 48, 110, 121–131, 177, 196, 198,
201, 203, 207, 227, 255–257, 259
Bandera, Stepan 182
Belarus 7, 9, 20, 23, 29, 32, 42–43, 46, 47,
49–50, 54–55, 57, 61, 68–75, 110, 178,
180, 256, 260–261
Beltransgaz 70
Berlin Wall 121
Black Sea 95, 105, 114, 167, 181–182,
214
Boholyubov, Gennadiy 163–165
Brexit 197, 205
Brzezinski, Zbigniew 185
Bulgaria 28, 40, 51, 110, 129
Bush, George H.W. (Senior) 182
Bush, George W. 31, 182
business networks 181
capitalism: chaotic 56; competitive 39,
56; global 40, 43, 44, 55, 56; liberal
195–196; market 23, 53; merchant 142;
national 56; post-Communist 30; post-
Soviet 17, 23, 26, 29–30; Russian 22,
26, 142–143, 146; transnational 159;
Western 55
Caspian Sea 214
Caucasus 4, 26, 45, 177, 186, 213–214,
219, 221, 255, 259, 261
Central Asia 3–4, 26, 32, 42, 44–46,
48–49, 177–178, 183, 214, 219, 244,
255, 259
Checheno-Ingushetia 214–215
Chechen war see Russian-Chechen war
Chechnya 3, 10, 26, 213–221, 258, 261
China 8, 39, 43, 47, 144–145, 245–246
Chorodkovskij, Mihail 8, 66
Chubais, Anatoly 24, 184
citizenship 6, 10, 89, 122–123
264 Index
civil society 18, 39, 55, 61, 178, 186–187,
228, 234–235, 237, 243, 248
clan 67, 161, 213–217, 226, 228–229,
250–251
class: bourgeois 55; capitalist 23, 54, 64,
160, 162, 166, 181; entrepreneurs/
businessmen 8, 23, 25, 30; middle 7,
29, 54, 63, 71, 199 244, 251; political
24; property-owning 143, ruling 175,
178, 184; social 55; “state class” 70;
urban 234; working 197
cleavage: ethnic 103–104, 107–111,
115–116, 122, 125, 256–257; linguistic
103–105, 107–109, 111, 115–116, 257;
regional 103, 106, 176
clientelism 10, 226, 230, 236, 258
Cold War 17, 31, 40, 93, 124, 129, 175,
183, 186, 191, 197–198: post-Cold War
world 182
Colour/Coloured revolution see Revolution
Common Security and Defence Policy
(CSDP) 177
Commonwealth of Independent States
(CIS) 39, 40, 42, 56
Communist Party: Azerbaijan 226;
Chechnya, regional branch of 214;
Kazakhstan 243; Soviet 20–21, 55, 64,
199, 214, 242; Russia 27, 33, 69, 217;
Ukraine 177
Conference on Security and Cooperation
in Europe (CSCE) 40
conflict: armed 2, 159, 161, 169–170, 219;
forgotten 1; frozen 1–2, 232; post-
Soviet 1–3
conflict in Azerbaijan 225, 227, 231–232,
236–237: see also Nagorno-Karabakh
conflict in Belarus 69
conflict in Central Asia 3–4, 26, 32
conflict in Chechnya 3, 213, 217–219,
221,
conflict in Georgia 7, 26, 261
conflict in Kazakhstan 241–245, 251
conflict in Lithuania 123–124
conflict in Russia 64, 66–68,
conflict in Transcaucasia 3, 26
conflict in Transnistria 3, 26, 32, 261
conflict in Ukraine 2–5, 10, 71–74, 84, 97,
105, 109–110, 113, 116, 159–161,
169–171, 181, 255, 257–260
corruption 10, 69, 146, 152, 159, 167, 171,
175, 179, 182, 184, 200, 204–205, 217,
228–230, 235, 245, 249–251, 258, 261
Corruption Perception Index (CPI) 167
Council for Mutual Economic Assistance
(Comecon) 18, 40
counterrevolution/ary 143, 190
Crimea 31, 33, 72, 89–90, 92–95, 97,
104–106, 109–111, 113, 115–116, 121,
124–125, 128–131, 150–151, 153,
169–170, 176, 178, 181, 190–191, 246,
257
Crimean Tatars see Tatars
criminal-political nexus 165
crisis: crisis narrative 139, 147, 141;
crisis-prone 2–4, 7, 9–10, 40, 87, 139,
255, 259–261; economic 8–9, 22, 66,
139–140, 146–147, 151, 187, 197, 201,
213, 217, 219, 221, 225–226, 229,
235–236, 258, 261; everyday 4;
financial 41, 56, 69–71, 76, 175, 196;
intersecting/intersection 1, 3–4, 5, 9–10,
87, 108, 121, 139, 159, 198, 255; latent;
multilevel 159–160, 168; multiple 1, 10,
139, 217, 262, 255–259; permanent 3;
post-Socialist 225, 235 socio-economic
233, 237; transformation 3, 56;
Ukrainian crisis 83, 97, 99, 121, 185,
190, 241, 246
Cyprus 40, 201
Czechoslovakia 18, 46, 98
Czech Republic 28, 31, 40, 51–52, 54
Dagestan 219
decommodification 141
Deep and Comprehensive Free Trade Area
(DCFTA) 168–169, 188–189
democracy: competitive 39, 51;
consolidated 61; electoral 40, 44,
54–55, 204; delegative 144; liberal 41,
53, 106, 162; managed 152; staged 152
demonstration(s): Azerbaijan 228,
234–236; Latvia 123, 204; Ukraine 177
dependency approach 61
deprivation 159
development: economic 6–8, 28, 48, 61,
198, 241, 260; geopolitical 3; societal
3–4, 8–9; socio-economic 231, 237
diaspora 170, 182

dictatorship 33, 98, 195, 196
dilemma of simultaneity 3
dissatisfaction 52, 125–127, 243, 256–257
dissolution: Czechoslovakia 18; Soviet
Union 1–10, 17–19, 22–24, 26, 30–32,
64, 87, 103–104, 108–109, 116, 121,
140, 159, 163–164, 177, 184, 213–219,
227, 236–237, 255–262; world order
195; Yugoslavia 18, 33
Dnipropetrovsk 67–68, 164–165
Dombrovksis, Valdis 204
Donbas(s) 1–3, 73, 104, 107, 110,
113–115, 128, 164, 169–170, 176, 246
Doneck see Donetsk
Donetsk 105–106, 111, 114, 115, 164–169
Donetsk People’s Republic (DNR) 104
Draghi, Mario 197
Dudayev, Jokhar 215, 216, 218–220
Duma see Russian Duma
Eastern Europe 27–28, 30, 61, 66, 86, 121,
161: Central and Eastern Europe 40, 45,
162, 256
economic development see development
economic growth 62, 144, 146, 198, 207,
232, 234–235, 244–246, 251
economy: Azerbaijan 228–229, 235–236;
Baltic 201; Belarus 69–70, 73, 75;
capitalist 23, 43, 61; global 39, 56, 160,
163, 198, 200–201; grey 25; informal
152; Kazakhstan 244, 248–249; Latvia
201, 203–204, 206; market 20–21, 24,
27–29, 42, 51, 57, 61, 139, 225, 227,
236, 241, 244, 248, 260; mixed 28;
planned 8, 24, 28; political 10, 139,
160–161, 200–201, 207, 258–259;
post-socialist 205; private 26, 207;
Russia 8, 24, 26, 57, 65, 70–71, 142,
144, 146, 150, 152, 184, 189, 191;
shadow 162; socialist 22; Soviet Union
21, 76, 213; Ukraine 66, 68, 73, 161,
164–165, 167, 171, 175, 177, 180, 188,
258
election(s) 6, 26, 126, 233: Azerbaijan
228, 231–235; Belarus 69; Kazakhstan
241–243, 245; Latvia 204; Russia 26,
139, 142, 149, 152–153, 217; Soviet
Union 21; Ukraine 67–68, 109,
164–166, 169, 176, 178–179, 187
Index 265
elite: Azerbaijan 10, 225–230, 232–234,
236–237; Baltic 128; bureaucratic 23,
142, 152; business 64; Chechnya 213,
215–218; economic 6, 9–10, 40, 54, 197,
256, 258; international 3; Kazakhstan
241–243, 246–251; Latvia 202, 204;
national 6; political 6, 9–10, 40, 54, 57,
147, 163, 197, 256, 258, 260; post-soviet
200; Russia 7–8, 98, 178, 216; Soviet
Union 18, 21, 214, 258; Ukraine 33,
176, 181, 184, 190–191, 255
“end of history” 161, 195
Enhanced Free Trade Area 187
Estonia 29, 40, 121–131, 257, 259
etacratism 54
ethnic: belonging 6, 9, 131; divide 121,
123, 126–127, 205; multi-ethnic 5,
17–19, 32, 214, 217, 243, 251
ethnicity 103, 108, 111, 116, 166, 256
ethnicisation 109
EU-isation 161
Eurasian Economic Union (EAEU) 42–43,
57, 72–74, 245
Eurasianism 56–58
Euro-Maidan see Maidan
European Bank for Reconstruction and
Development (EBRD) 27, 42, 159–160
European Central Bank (ECB) 197, 205,
231
European Council of Foreign Relations
(ECFR) 187
European Neighbourhood Policy (ENP) 2,
178, 182, 186–18, 189
European Union (EU) 39–42, 53–54,
56–57, 127, 186, 206, 245, 256
European integration 186
Financial Industrial Groups (FIGs) 65,
160, 164–165, 167
Finland 197
“Finland option” 185
First World War 32–33, 179
Firtash, Dmytro 164–165, 179, 181
foreign: capital 66–67, 70, 167, 171, 219;
debt 63, 71, 171, 200; investment 178,
220, 244, 248, 250; policy 9, 31, 72, 89,
95, 107, 153, 160, 167–168, 180–181,
183–185, 245, 251, 255; trade 8, 25, 63,
200
266 Index
foreign direct investment (FDI) 56, 63, 69,
244
France 144, 179, 182, 186, 191, 196
fraud: electoral fraud 139, 149, 153, 165,
228, 234–235, 261
frozen conflict see conflict
frustration: political 149, 153, 178, 246,
256–257; social 27
Füle, Štefan 186, 188
G8 185
Gaidar, Yegor 24
Gantamirov, Bislan 216, 218, 220
“gas wars” 166
Gazprom 70
geopolitics 2–3, 7, 10, 30–31, 40, 67–68,
73, 75, 89–90, 93, 95, 103, 139, 149,
151, 159–160, 170, 175–176, 178–180,
182–185, 187–189, 219, 241, 251, 255,
257
Georgia 2, 7, 17, 23, 26, 31–32, 42, 44,
56, 75, 93, 176, 185–186, 219, 228,
234, 238, 242, 261
Germany 19, 27, 32, 39, 50, 86, 126, 179,
182, 186, 197, 231
Geschichtspolitik 86, 88
globalisation 44, 160
Godmanis, Ivars 200
Gorbacev, Michail 17–22, 24, 41, 43, 64,
162–163, 175, 177, 180, 183, 199, 215,
261
Greece 205
Greenspan, Alan 203
Gross Domestic Product (GDP) 8, 26, 28,
44–46, 48–50, 52, 54, 61, 70–75,
144–148, 150, 159, 168, 178, 201–202,
233, 244
Gulag 84
Heydarov, Kamaladdin 227, 229
Human Development Index (HDI) 28–29,
45–46, 49–50, 54
Human Development Report 29,
46–49
human rights 19, 125, 186–187, 243
Hungary 28, 40, 46, 51–52, 54, 98, 110,
113, 129
hybrid war 124
hyperinflation 24–25, 178, 180, 244
identity: Chechen 214; collective 87;
crisis of 88, 97–98; ethnic 33; identity
6, 9, 256–260; national 10, 32, 56, 83,
99, 114–116; political 103; regional 42,
106, 108; Russian 84, 86, 96, 99;
Ukrainian 33, 107
immigration 123, 129
inequality: economic 9; social 7–9, 22, 52,
259–262
Ingush/Ingushetia 214–215, 220
instability: economic 76, 261; political 9,
75, 256; societal 7
institutions: democratic 217, 227, 243;
economic 55–57; financial 24, 67, 160,
196, 203; state 6, 57, 159
International Monetary Fund (IMF) 27, 71,
74, 159, 167, 171, 178, 180, 186, 200,
202, 205, 258
Intersecting crises phenomena see crisis
intervention: decisive 140–141, 147–151;
military 124, 169
Investigative Committee: Russia 149
involution 141–144
Ivanyushchenko, Yuriy 163, 168
Janukovyč see Yanukovych, Viktor
Jelcin see Yeltsin, Boris
Kargin, Valery 200
Kazakhstan 7, 10, 29, 42–44, 46–48, 50,
56–57, 180, 200, 219, 241–261
Kekkonen, Urho 197
Kennan, George 185
Keynesianism 74–75
Khasav-Yurt Peace Accords 219
Kiev see Kyiv
Kirgizstan see Kyrgyzstan
Kissinger, Henry 185
kleptocracy 10, 159, 162–164, 166–168,
170–171, 201, 207, 258
Klitschko, Vitali 178–179
Kolomojskij, Ihor 68
Komitet gossudarstwennoi besopasnosti
pri Sowjete Ministrow SSSR,
Committee for State Security (KGB)
199, 214, 226
Komsomol 165–166, 200, 207, 248
Kozlov, Vladiomir 242
Kozyrev, Andrei 184

Krasovitsky, Viktor 200
Kravchuk, Leonid 109, 164, 177, 179,
182
Kremlin 95, 115
Kuban region 181
Kuchma, Leonid 164–165, 168, 181, 182
Kulibayev, Timur 247
Kyiv 106, 109, 111, 114, 116, 168, 171,
Kyrgyzstan 7, 42, 44, 176, 242
Latvia 10, 40, 44, 46, 49, 50, 121, 122,
123–131, 195–207, 257–259, 261
Lazarenko, Pavlo Ivanovych 164–165
legacies 9, 27, 56, 113, 225–226
legitimacy 5–7, 24, 69, 151, 213, 215, 231,
233, 251258
Lithuania 40, 44, 51, 121, 123–131, 257
Livanov, Dmitry 83
Luchansky, Grigori 200
Luhansk People’s Republic (LPR) 104
Luhansk 104–106, 111, 114, 169
Lukashenka, Aleksandr 32, 69, 73–76
Lutsenko, Yuriy 167
Lviv 106, 111, 114, 115
Mahmudov, Eldar 230
Maidan 1, 7, 68, 108, 112, 161,166,
168–169, 171, 175–176, 178–179, 184,
188–190, 258: post-Maidan 10, 178,
184, 189–190, 258
Malofeev, Konstantin 150
Mansour, Sheikh 214
Mariupol 2
market reform 24–25, 51, 227, 236, 248
marketisation 42, 43, 44–45, 104, 159,
161–162, 171
Markov, Sergey 124
media 6, 10, 65, 67, 96, 109, 116,
123–124, 149–150, 172, 175, 178, 180,
231, 243, 247, 250–251
Medvedev, Dmitry 66, 97, 146–147, 148,
149–150, 153–154
Mehdiev, Ramiz 226
Membership Action Plan (MAP) 182
memory politics 256
minority: ethnic 103, 110, 125, 128;
language 109; militant 179; rights 110,
125; Russian(-speaking) minority 110,
124, 128, 176, 257, 259
Index 267
Minsk II 190
Mkrtchan, Oleg 164–165
modernisation 7, 9, 30, 32, 34, 147, 153,
179, 187, 243
Moldova 7, 26, 32, 42, 56, 59, 75, 110
Moscow 4, 22–23, 33, 59, 90, 123, 131,
139, 149, 151, 176–177, 180–182,
184–185, 188–190, 200, 213–214,
216–220, 226, 242
Munich Conference on Security Policy
185
Nagorno-Karabakh 26, 227, 231–232, 237,
261
Nakhchivan clan 227–228
Narodny Rukh 164
Naryshkin, Sergey 89, 91
nation 6, 29, 32, 42, 83, 88, 97, 105,
107–108, 170, 182, 185, 190, 199, 201,
205–207, 221, 243, 245–246, 257
nation-building 5, 10, 84–85, 97, 104–105,
107–108, 121, 241, 260–261
nation-state 61, 115, 139, 160
nationalism 5–6, 29, 32–34, 83, 177, 182,
251, 258
Nazabayev, Nursultan 10, 241, 258
Nazarbayeva, Dariga 247
near abroad 22, 184, 219
Neighbourhood Policy see European
Neighbourhood Policy
neoliberalism 146, 163, 196, 199, 207
network society 141
New Deal 196–197
new world order 183, 185
Nomenklatura 20, 32, 163–164, 178, 226:
Neo-Nomenklatura 164–166; see also
privatization
non-governmental organisation (NGO) 10,
149, 168, 170, 242–243, 251, 258
normality 1, 159
North Atlantic Treaty Organization
(NATO) 2, 31, 40, 124, 171, 176–177,
180, 182–186, 189–191, 199, 255:
accession 2; enlargement 184;
NATO-Russia Council 31, 185, 190;
NATO-Summit 2008 182; NATO-
Ukraine Charter 182
nostalgia 27, 51, 84, 88, 96–98, 217
Novorossia 181
268 Index
Obama, Barak 31, 124, 184, 190, 198
Odessa 2, 33, 169–170
offshore 152, 198–201, 203, 206, 258
oligarchs 6–8, 10, 22, 25–26, 30, 65–68,
70, 72–73, 75–76, 142–143, 152,
159–161, 163, 167–169, 171–172, 179,
198, 201, 204, 207, 226, 241, 248–249,
256, 258, 260–261
opposition 34, 66, 69, 84, 90, 93, 105,
150, 152, 165, 169–170, 176–177,
181–182, 197, 216, 218, 220, 227–228,
231–232, 234, 236–237, 242, 248–249,
241
Orange revolution see revolution
Organisation for Economic Co-operation
and Development (OECD) 146
organized crime 221
Orthodox Church 92, 94
Orthodoxy see Orthodox Church
overdetermination 139–141
Parex 200–201, 203
Party of Regions (Ukraine) 164–166, 169,
179
patriotism 83–84, 86, 89–91, 246
Perestroika 8, 18, 21, 23–24, 31, 162–164,
166, 175, 214, 261
peripheralization 141–142, 144, 154, 260
peripheral 62–64, 106–107, 189, 213, 217,
221, 259: capitalism 146, 153;
development 1, 9, 260–261; economy
63; integration 9, 260; semi-periphery
62–63, 259; states 225
petrodollars 225, 227, 235, 237
Pinchuk, Victor 164–165, 181, 191
Poland 28, 31, 33, 40, 51, 54, 113
political power 4, 10, 24, 39, 42–43, 43,
64, 143, 228, 249, 255–259
political regime 10, 241, 243, 251,
257–259
political turmoil 216, 227, 231, 237
Popular Movement of Ukraine for
Restructuring (Rukh) 32, 177
popular support 29, 166, 226, 231–233,
235–237, 259
Poroshenko, Petro 163, 169, 179, 181
poverty 7, 9, 29, 54, 56, 62, 159, 175, 207,
217, 231, 233, 246
precariat 195
Pre-Soviet 20, 32, 58, 97, 225–226, 230,
237
Primakov, Jevgenij 65, 71–72
privatization 7–8, 23–26, 28–29, 42–43,
43, 54, 56, 58, 64–67, 69–70, 73, 76,
142, 162, 164, 168, 178, 248:
nomenklatura 22, 26, 32; process 6–8,
28, 64, 160, 164, 229; pro-privatization
forces 64; voucher-privatization 26, 65;
Progress Report 187
propaganda 22, 33, 83, 124, 232
property rights 245, 249
Pro-Russian 90, 103, 115, 123, 169, 179,
190, 218, 220
protectorate see Russian protectorate
protest movement 98, 175, 261
pro-Western 67, 72, 93, 179
public support 7, 18, 112–113, 116, 201,
225, 246
Putin, Vladimir 2, 29, 31, 54, 56, 65–66,
90, 92–94, 96–97, 124, 130, 139, 143–
144, 146, 148, 149–153, 168, 176, 180–
181, 185, 191, 199, 255–257, 259
Reagan, Ronald 180, 183, 196–197
recession 8, 28, 56, 62, 70–71, 73–75, 151,
203, 235, 246
redistribution 28, 51, 56, 143, 227, 235–
236
reform 6, 8, 17, 19–23, 29, 31, 40–41, 46,
55, 68, 73, 122, 143–144, 147, 149–151,
154, 161–163, 168, 171, 181, 199,
227–228, 236, 242, 245–246, 257:
agenda 68; constitutional 165–166;
democratic 8; economic 21–22, 29, 182,
186, 190, 199, 241, 244, 248; legislative
166; market 24–25, 51, 227, 236, 248;
neoliberal 9; political 186, 190, 248–249
regulation theory 61–62
rent-seeking 54, 178, 184, 187, 190, 225,
228–230, 238, 258
repression effect 233–234, 237
revolution 19–20, 23, 57, 67, 172, 178,
190, 196, 234: Chechen Revolution 215;
Colour/Coloured revolution 93, 176,
185, 241–242, 251; October Revolution
18; Orange Revolution 33, 67, 108,
112–113, 164–165, 175, 178, 182, 241;
Passive Revolution 161; pro-European

Revolution 176; Revolution of Dignity
30, 108, 168, 172; Rose Revolution 228;
Velvet Revolution 175
rule of law 6, 168, 187, 225, 227, 243,
245, 251
Rumsfeld, Donald 196
Russia 2–4, 7–10, 19–20, 22–26, 28,
41–46, 48,52, 53, 54, 56–57, 59, 61, 64,
64–70, 72–76, 83–84, 86–98, 104–105,
107, 109–110, 116–117, 122–125,
127–133, 129–130, 139–144, 145,
146–147, 159–154, 165–167, 176–177,
179–185, 188–191, 199–100, 204,
213–221, 232, 241, 244–246, 251,
255–261: post-Soviet Russia 19, 89,
141, 143, 184, 220
Russian annexation 110, 128–129, 176
Russian Black Sea fleet 181
Russian Empire 32, 113, 214
Russian-Chechen war 213, 221
Russian protectorate 2
Russian-speaking 103, 111–112,115,
121–131, 130
Russification 103, 107, 216
Saskanas Centre (Harmony Center) 204
Scandinavia 197, 203
secession 32, 106, 221: secession dynamic
5; secessionist ambitions 176–177;
secessionist movements 73
Second World War 8, 32, 107, 113, 123,
198, 207, 261
secret service agent 181
separatism 19, 213, 217
Serbia 176
Sevastopol 90, 92, 97, 109–110, 150, 167,
181
Shevchenko, Olga 3–4
shock therapy 8, 24, 69–70, 162, 172, 204,
244
Siberia 204
social inequality see inequality
socialism 20, 34, 56, 58: consumer 23, 34;
state 17, 19–20, 22–23, 26–28, 34, 43,
44, 50–51, 53–55, 163
Solidarnost 164
South Ossetia 26, 261
Soviet republic(s) 48, 61, 87, 163, 177,
242
Index 269
Soviet Union (USSR) 1–7, 9–10, 17–20,
22–24, 26, 30–34, 39–42, 44, 46, 48,
50–51, 56, 59, 61, 64–65, 86–7, 90–91,
93–94, 96–98, 103–104, 106, 108–109,
113, 116, 121, 123, 127, 140, 159,
162–164, 175–177, 180, 183–184,
197–203, 213, 215–219, 221, 225–228,
236–237, 242, 255–256, 259–262
spending effect 233, 235, 237
spill-over effects 177
stability 31, 54, 56–57, 62–63, 66, 76, 105,
139, 141, 146, 150, 152, 186, 195, 198,
217, 225, 235, 237–238, 243, 251,
258–259: economic 61, 69, 76, 227,
245; fragile 235; political 9, 27, 61, 227,
231, 243, 245–246, 257–258;
macroeconomic 202, 244; societal 107;
stability-paradigm 8; stability-era 10
Stalin 32, 83, 96, 98, 204
Stalinist terror 199
START-I (treaty) 180
state: post-Communist 40, 56, 105, 244;
post-Socialist states 23, 51, 54, 57;
post-Soviet states 7–8, 62, 72, 75, 139–
140, 162, 219, 225, 260; state-building
30, 32, 34, 104–106, 108, 113, 127,
143, 153, 179, 218, 220–221, 256;
state-capture 184, 187
State-Owned Enterprises (SOEs) 69, 160,
162, 164, 248
statism 54, 57, 197
Sweden 124, 202–204, 208
Switzerland 201
Tajikistan 26, 42, 44
Tallinn 123–124, 203
Taruta, Serhiy 164–165
Tatars 214, 216–217: Crimean Tatars
110–111, 116
Tatarstan 216–217
Thatcher, Margaret 196–197, 207
Transcarpathia 106, 110, 113, 115
transformation 1–4, 6–10, 20, 23–28, 30,
39–44, 43, 46, 49–56, 53, 58, 64, 69,
73–74, 76, 104–105, 115, 140–142,
160–162, 178, 241, 256, 259–262:
economic 1–2, 4, 7–9, 26–27, 29, 42,
104, 108, 116, 121, 140, 159, 225–226,
255–256, 259; political 1–2, 4, 6, 26,
270 Index
84, 87, 104, 108, 116, 121, 140, 159, 229–230, 245: administration 176–177,
225–226, 255, 259; social 42 183, 190
transition 23–25, 29, 39, 42, 45, 56, 58, unrest 34, 122, 131, 178, 213, 229, 231,
61, 87, 94, 103, 105, 108, 159–162, 251, 257–258, 261
172–179, 236, 241, 244, 248; triple Usubov, Ramil 226
transition 104, 139; quadruple Uzbekistan 7, 26, 42, 46, 47, 49–50, 55,
Transition 103–104, 108 59, 260
transitology 141, 162
Transnistria 2–3, 26, 32, 261 Vasi’leva, Olga 83
transparency international 167 Venice Commission 167
trasformismo 161 Verkhovna Rada 104
trauma 10, 84, 86–88, 96, 98–99, 237, Vinnica Clan 67
256–257 Visegrád 40
Treaty on Friendship, Cooperation and Voronin, Sergey 89
Partnership 181
Treaty of Rome 42 Warsaw Pact 18, 40
Turkey 31, 219 Western alliance 176
Turkmenistan 7, 42, 49–50, 55, 59, 219, Westernisation 161
260 World Bank 27, 75, 178
Tymoshenko, Yulia 163–165, 167 World War I see First World War
World War II see Second World War
Ukraine 1–5, 7–10, 23, 25, 28–34, 41–42, Wörner, Manfred 183
44, 46, 49–54, 56, 59, 61, 66–68,
70–76, 84, 90, 93–94, 103–117, 114, Yandarbiev, Zelimkhan 218
122, 124, 128–130, 139, 150, 153, Yanukovich, Viktor see Yanukovych,
159–171, 175–191, 231, 234, 237–238, Viktor
241–242, 245–246, 255–262 Yanukovych, Viktor 33, 109, 165–169,
Ukraine conflict see conflict 171,175
Ukrainian crisis/crises see crisis Yeltsin, Boris 8, 18, 23–24, 26–27, 31, 34,
Ukrainian elite see elite 41, 56, 97, 143, 184, 204, 216–217
Ukrainian fascism 182 Yeraz clan 228
Ukrainian scenario 124, 241, 246, 251 Yugoslav Civil War 176
uncertainty 27, 40, 42, 56, 63, 66, 87–88, Yushchenko, Viktor 165–166, 182
230, 259 Yushenko, Viktor see Yushchenko,
unilateralism 183, 185 Viktor
United Kingdom (UK) 181
United Nations Development Programme Zagayev, Doku 214–215
(UNDP) 59 Zhirinovsky, Vladimir 217
United States 18, 29–31, 144, 175–178, Zyuganov, Gennady 27
180–186, 190, 196–197, 203, 217, 219,