Foreign Policy Research Institute A Nation Must Think Before it Acts Playing Both Sides: How Oligarchs in Eastern Europe Maintain Power and Control
Playing Both Sides: How Oligarchs in Eastern Europe Maintain Power and Control

Playing Both Sides: How Oligarchs in Eastern Europe Maintain Power and Control

This article is an excerpt from Mitchell Orenstein’s new book, The Lands in Between

Geopolitical competition between Russia and the West has polarized politics in the vulnerable lands in between Russia and the European Union, breaking voters and parties into pro-Russia and pro-Western camps. But there is a paradox. In this context of geopolitical competition, sharp polarization, and “civilizational choice,” the big winners in domestic politics are the ones who play both sides. This is a dangerous game. Some win and some lose. All play it differently. But the ability to profit from both sides is a surprisingly common feature of the power brokers who dominate these divided societies.

Here is how it works. In polarized politics, competing sides offer different ideological visions. In the case of the pro-Europe camp, it is the vision of a state ruled by law, individual freedoms, and self-expression. In the case of the pro-Russian side, it is a vision of traditional Christian culture, family values, and Orthodox spirituality. Obviously, individual interests come into play. Those who speak European languages and have a higher degree of education may support pro-EU parties. Those who live and work in Russia may support a pro-Russian orientation. However, both sides in this struggle combine an appeal based on values with an economic message: Believe in Europe and enjoy prosperity. Believe in a unity of Slavic or Orthodox people and enjoy the patronage of the Russian state.

Yet in polarized societies, neither side can thoroughly dominate. There is always a significant minority that is aggrieved. This introduces a certain volatility into political life. To maintain control, the most successful politicians—or business people—do not pin their flag to one side or another, but find a way to diversify their appeal and cater to all sides.  Think of it this way: if you were running a company that wanted to dominate the media market in the lands in between, it would be helpful to own newspapers and TV stations on opposite sides of the civilizational divide. To take a pure ideological position would be to cede market share to someone else. The same is true in politics. The most successful politician is the one who wins votes—or campaign contributions or economic support—from both sides. This requires sacrificing ideological consistency.

While political parties traffic in ideas—selling the idea of a Ukrainian, Georgian, or Belarusian nation or the ideals of rule of law or good government—power brokers prioritize material concerns. They are concentrated on achieving real gains in the here and now. As David Cadier and Samuel Charap point out, both Russia and the EU share a “willingness to subsidize political loyalty.” Russians pay good money for compliance with their wishes and desires. The EU also devotes substantial sums to supporting programs of international development that bring these countries closer to Europe. In the polarized politics of “civilizational choice,” many politicians and party leaders gravitate to one side or the other out of deeply held beliefs. However, paradoxically, the leading politicians and businessmen in this environment are the ones who win resources from both sides by pursuing a dangerously ambiguous or flexible approach.

There are plenty of fascinating examples in the lands in between. Each is characterized by distinctive characteristics, strategies, and circumstances. While the Western media tend to focus on its pro-Western heroes like Mikheil Saakashvili, who imposed liberal reforms on the Republic of Georgia, before later losing power and even his Georgian passport, it has less to say about his successor as major domo of Georgian politics, Bidzina Ivanishvili. Yet Ivanishvili has dominated Georgian politics for many years and he is no hero.

Ivanishvili is the most powerful Georgian oligarch. He lives in a 108,000-square-foot modernist compound situated on a hill above the capital city of Tbilisi. He made his money in Russia, starting in the 1990s as an importer of computer and phone equipment. He founded a bank and participated in voucher privatization, acquiring ore and metals companies and rising in the Forbes ranks of global billionaires. He is a Russian oligarch who, during his election campaign in 2011-12, made a point of arguing that Georgia needed to normalize relations with Russia after the 2008 Russo-Georgian war, which he blamed on Saakashvili. He told the British daily Telegraph, “The government encourages hysteria about Russian aggression. They want to frighten people, and use it [the Russian issue] as part of a political game. But we will be obliged to forge relations with Russia whether we like it or not. We should not forget that Russia is our biggest neighbor and we should use that.”

However, Ivanishvili and his Georgian Dream Party did not mean to abandon Georgia’s Western orientation, which many see as central to Georgia’s future economic success. Instead, he emphasized that he would continue to seek closer relations with the EU and NATO, while at the same time improving relations with Russia. He told the Guardian, “Our policy is European and Euro-Atlantic integration. There is no substitute for NATO.” While this may seem contradictory, Ivanishvili was able to put an end to the Russian embargo on Georgian agricultural products in 2013 and normalize business ties with Russia, despite continued Russian land-grabs and occupation of parts of the country. Personally, Ivanishvili sold most of his Russian holdings after entering politics, but retained a sizable share of Gazprom stock. He also showed up prominently in the Panama Papers as the holder of an offshore company. Yet Georgia has not relinquished its Western aspirations under his rule and signed a DCFTA [Deep and Comprehensive Free Trade Agreement] with the EU in June 2014. This seemingly contradictory set of policies is underpinned by public opinion. “Georgians overwhelmingly desire a good political relationship with Russia,” and supported close relations with the United States (71 percent), EU (65 percent), and Russia (54 percent) in a poll conducted soon after the Russo-Georgia war in 2009. Presumably, Georgians on both sides of the divide can find something to love and to hate about their leading oligarch, who, after winning election as prime minister in 2012, resigned in 2013 to once again stand behind the scenes. In 2018, he was forced to return to lead his Georgian Dream Party after a power struggle broke out within its ranks between the prime minister and mayor of Tbilisi. His chosen candidate, Salome Zourabichvili, won the presidency in 2018 with 60 percent of the vote.

Ivanishvili is one of the most dramatic examples of a power broker in the lands in between, in part because he lives in a James Bond-style futurist mansion and owns a $1 billion art collection, but he is not alone. Many leading politicians in the lands in between manage a similar balancing act, earning fortunes in business with Russia while running a pro-EU government, or vice versa.

These power brokers try to achieve the unachievable: attaining closer ties with the West while maintaining friendly relations with the regional superpower, Russia. For smaller states, it is sometimes said that agility and responsiveness are natural advantages as they seek to navigate the minefield of great-power politics. It is not only a necessity, but an opportunity that may be richly rewarded. The EU provides billions of euros of assistance that can be channeled by leaders. Russia offers business deals and rich payoffs to its political allies. As geopolitics becomes more polarized and violent, the amount that the EU and Russia area willing to pay for compliance tends to increase, while careful balancing becomes more difficult to achieve for the lands in between. How do oligarchs, presidents, and other power brokers walk that line?

For power brokers in the lands in between, flexibility is the ultimate resource. In a recent academic take on this subject, Stanislav Markus and Volha Charnysh investigated the political activities of oligarchs in Ukraine. In an article entitled “The Flexible Few,” they found that oligarchs—super wealthy and often politically connected business leaders—benefit from flexibility. While some become governors (or presidents) and adopt political roles themselves, these positions do not enhance an oligarch’s personal wealth. Oligarchs do best when they remain in the background, providing donations to one or more parties. This allows them greater flexibility to hedge their bets between different parts of the political spectrum or to change positions as circumstances change. Markus and Charnysh point out that many of the same oligarchs that fared extremely well under the pro-Russian Yanukovich regime also have fared extremely well under the pro-EU Poroshenko regime. Indeed, there has been very little change in the lineup of Ukrainian oligarchs between 2012 and 2016. Since the Crimea invasion, most oligarchs in Ukraine adopt pro-EU messages and promote pro-Ukrainian parties and even militias. However, this does not mean that they will do the same tomorrow. Their allegiance is, first and foremost, to their own power. Flexibility is a great asset in a highly polarized and volatile political climate.