Days before the hotly contested Ukrainian presidential election on March 31, incumbent Petro Poroshenko’s party faces credible allegations of voter bribery. It’s not hard to guess what will happen next. The oligarchic clique will steal the election, and in response, international observers will accuse local authorities of vote-rigging. But instead of addressing the symptoms of democratic backsliding, it’s time to treat the root cause: informal power.
Moldova offers a textbook example. Oil and banking tycoon Vladimir Plahotniuc bankrolls the country’s second-largest political force and has forged alliances with other parties to consolidate power. Although Plahotniuc exerts total control over parliament, law enforcement and the courts, he has no interest in running for office. His nickname in Moldova is “the puppeteer,” and the elections last month only strengthened his hold on the country.
Moldova has a per capita gross domestic product of just $3,226. Plahotniuc’s wealth is estimated at $3 billion, making him a million times wealthier than the average constituent. Unsurprisingly, true power resides with him, not with elected officials. The same applies to two other countries bordering Russia: Georgia and Ukraine.
When I was president of Georgia, our country was lauded as the top reformer in the world. Today, Georgia has its own Plahotniuc: Bidzina Ivanishvili, the chairman of the ruling party. He has a known net worth of $4.9 billion, equivalent to nearly one-third of the country’s GDP. How he accrued this wealth — in Russia, of course — is dimly understood. Ivanishvili rules Georgia as his fiefdom, with loyal courts and a repressive security apparatus.
Ivanishvili’s political engagement is not driven by his vision for Georgia’s future. One would be hard-pressed to describe his party’s platform, policy proposals or any substantive achievements since he came to power in 2012. Rather, Ivanishvili viewed his party as yet another investment — and he is reaping the returns. Exerting informal control over public institutions, the oligarch has monopolized Georgia’s economy. Transparency International recently singled out Georgia as an egregious example of “state capture.”
Ukraine, larger than Moldova and Georgia, has more than one oligarch. The wealthiest is Rinat Akhmetov, a steel magnate whose factories have sustained Kremlin-backed separatists in the Donbas region of eastern Ukraine. Akhmetov has forged an unholy alliance with the Ukrainian president, a fellow billionaire. Poroshenko, closely linked to an investment firm with a stake in Akhmetov’s energy company, appoints members to the regulatory committee that sets energy prices. When the committee (chaired by a former executive at Poroshenko’s company) passed energy subsidies in 2016, the biggest beneficiaries were, naturally, firms linked to Akhmetov and Poroshenko himself.
Moldova, Georgia and Ukraine share another challenge: They are partially occupied by Russia, and their aggressive neighbor is often blamed for their failures in democratic development. Russian President Vladimir Putin fears nothing more than the prospect of flourishing democracies in his backyard.
But instead of fighting back, the Moldovan, Georgian and Ukrainian elites are doing Putin’s work for him. This may come as a surprise, since all three governments are ostensibly pro-Western. They make up the European Union’s Eastern Partnership and contribute troops to NATO missions. Moreover, voters in these countries generally support transparency, democracy and closer ties with the West. This is why oligarch-backed ruling parties are careful to pay lip service to “Euro-Atlantic integration” even as they fail to execute the reforms necessary to realize this goal.
It’s no coincidence that all three puppeteers made their fortunes in Russia. Their business interests supersede national interests. Putin is not known for charity; any oligarch who made billions in Russia is in crippling debt to the Kremlin. Although the Northern menace cannot be overestimated, the greatest enemy lies within. A captured state is a weak state, vulnerable to foreign aggression. And for many under informal rule, the only path out of poverty — besides criminality or nepotism — is emigration. Brain drain leaves a smaller and hungrier population at home, so oligarchs can buy votes more cheaply than ever. Putin could not be more pleased with this vicious cycle.
Why should the West care? Moldova, Georgia and Ukraine receive billions in aid from the E.U., the United States and the International Monetary Fund, to which the United States is the largest donor. This funding is intended to support anti-corruption reforms, and recipient governments are required to make progress on these initiatives for continued disbursements.
In reality, the “reform-for-aid” cycle is hardly so straightforward. Georgia is the world’s largest per capita recipient of U.S. aid — and one of the world’s most dramatic examples of democratic backsliding. Ukraine has received nearly $13 billion from the IMF, on top of nearly $2 billion in direct assistance from U.S. taxpayers, since 2014 — despite the Poroshenko administration’s failure to fulfill its commitments to fight corruption. In Moldova, where more than a billion dollars (about 12 percent of the economy) was apparently stolen from the central bank, the absence of meaningful reform does not inspire confidence that the $183 million in IMF loans will be used as intended.
The United States must treat corruption as the national security threat it is, and uphold American values in countries that benefit from American support. In captured states with shadow rulers, corruption cannot be eradicated by targeting officials alone. Oligarchs must also be sanctioned. Plahotniuc, Ivanishvili and Akhmetov are not legitimate businessmen; they are subsidiaries and shareholders of their own governments.
By ensuring the correct use of aid, sanctions on informal power brokers would defend the interests of U.S. taxpayers while strengthening democracies in Eastern Europe. Only by breaking the oligarchs’ stranglehold to build strong democracies from within can the people of Georgia, Ukraine and Moldova defeat Putinism. This victory will be felt the world over.
Mikheil Saakashvili served as president of Georgia from 2004 until 2013.