The war in Ukraine is a theater for two competing development paths: Russia’s oligarchic capitalism and Ukraine’s burgeoning civil society. Western countries should mark this distinction, because oligarchic capitalism has increasingly taken root within their own systems of economic and political governance.
Meanwhile, Ukrainians have offered an alternative: people working together democratically to fashion a better collective future.
Following the breakup of the Soviet Union, oligarchic capitalism flourished in Russia and Ukraine. In the 1990s, informal power networks took hold in both countries, and some of these “clans,” as local analysts called them, mobilized to control key sectors such as internal security, energy and natural resources.
The keepers of these assets — the oligarchs — then became millionaires, or even billionaires, almost overnight, owing to the era’s corrupt privatization schemes. The clans ran their own kleptocratic resource-extraction and offshoring operations, while competing for control.
These webs of political-business-criminal relationships also ensnared Western leaders, helping to spread oligarchic capitalism globally. Consider former German chancellor Gerhard Schroeder, whose mutually beneficial relationship with Gazprom, a Kremlin-controlled natural gas conglomerate, began before he even left office.
From similar starting points, however, Russia and Ukraine have taken different paths. For its part, Russia pursued a strategic state vision (in which Gazprom played a big part) that was heavily dependent on infiltrating and corrupting Western institutions.
Since 2012, when Vladimir Putin began his third term as Russian president, the country’s clans and oligarchs have been firmly in his grip, helping cultivate political corruption abroad. While Gazprom operatives weaponized oil and gas, and corrupted Western politicians and parties to achieve dominance in European energy markets and distribution networks, “Kremligarchs” served as handmaidens of Putin’s foreign policy.
Meanwhile at home, Putin was slowly suffocating the independent media companies and non-governmental organizations (NGOs) established in the 1990s, leaving the security and intelligence organs (from which he hails) holding all the real power.
Whereas Russian informal power networks came to serve the state, Ukraine had no comparable arrangement, and it has remained a democracy (albeit a weak one) since gaining independence in 1991. In the absence of a “strongman ruler,” its competing clans and oligarchs enfeebled the state while promoting their own interests, as did the Kremlin through channels ranging from propaganda and cyberwarfare to corrupting Ukrainian officials.
Nonetheless, this weakening of the Ukrainian state created an opening for civil society and collaborative organizing. Owing to this space for mobilization from below, the Ukrainian state was newly empowered after Russia’s annexation of Crimea and incursions into eastern Ukraine in 2014. Since then, it has been able to impose some limits on the power of oligarchs, including those serving Kremlin interests.
Ukrainian civil society that has emerged over the past two decades embodies a collective commitment to national survival. Since last year’s invasion, Ukrainians have mobilized themselves repeatedly: to repair damaged homes, shelter internally displaced persons, and sustain the war effort as volunteer cooks, drivers and fundraisers. Since the war began, efforts organized mainly at the municipal level and coordinated with Kyiv have helped evacuate almost 7 million women and children to neighboring countries. Ukrainians are not only defending their homeland, they are also showcasing a sustainable and scalable political project.
The Ukrainian example is especially relevant to Western democracies, where a trend toward oligarchic capitalism has compromised the integrity of political, financial and educational institutions. The world’s financial centers, notably in Europe and North America, are awash in dirty money that is laundered and then channeled toward lobbying and political action.
Again, Schroeder exemplifies this corruption. After leaving office, he made millions from Russian energy interests, while Germany came to rely on Russia for more than half of its natural gas in the years leading up to the invasion.
The structures of oligarchic capitalism in the West are mostly homegrown. They are the creation of the hedge fund managers, lawyers and tax attorneys who deal in ill-gotten cash; the professionals who help inflate real-estate prices; and the public relations firms and universities that burnish kleptocrats’ images.
The rise of oligarchic capitalism in the West has perverted capitalism and eroded democracy. Wealth inequality has surged, trust in institutions has plummeted and anti-system movements have flourished.
Ukrainians can teach the West a lot about how to confront these challenges. While a (war-weakened) oligarchic capitalism persists there, the country’s civil society is pushing back more effectively than almost anywhere else. Even while under fire, Ukrainians continue to fight corruption through grassroots group-led efforts and state anti-corruption institutions.
Since 2015, the Ukrainian government has used online platforms to provide greater transparency regarding public procurement, and state officials’ assets and incomes. Following important financial-sector reforms, the National Bank of Ukraine has been able to nationalize or shutter several oligarch-owned banks.
However, the endurance of Ukraine’s reforms will largely depend on how oligarchic capitalism plays out in the West. For years, Ukrainian anti-corruption experts have pleaded with Western policymakers to dismantle the financial structures, practices and policies that sustain oligarchic capitalism around the world.
Russia’s war of aggression against Ukraine has further underscored the urgency of this task. That is why Ukrainian civil society leaders have stepped up their campaigning over the past year, meeting frequently with representatives of European and North American governments, NGOs and the media.
To be sure, Western civil society has also tried to shine a spotlight on the problem, although it has not yet benefited from the groundswell of civic attention and activism — or even the lukewarm elite backing — that can be seen in Ukraine.
However, make no mistake: The conflict between the two civilizational models — oligarchic capitalism and civil society — is as much about our own future as it is about theirs. The civil society for which the Ukrainians are fighting and dying must win on the battlefield — and then in our institutions.
Janine Wedel is a social anthropology professor at the Schar School of Policy and Government at George Mason University.
Copyright: Project Syndicate
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