The Putinisation of Europe

By bne IntelliNews October 30, 2014

David O’Byrne, Kester Eddy and Nicholas Watson -


When Hungary’s Napoleonesque prime minister, Viktor Orban, declared in a grandiose speech in July that Vladimir Putin’s Russia is a more attractive political model than the liberal democracies of the West, it confirmed the worst fears of those who worry about the dark night of fascism once again descending on Europe.

Those countries, Orban explained, “capable of making us competitive are not Western, not liberal, not liberal democracies, maybe not even democracies.” Instead, he picked Russia, China, Turkey and Singapore.

Such a bald statement about something that hitherto had only been discussed on the fringes of the political discourse was a gift to neoliberal Atlanticists, who have been warning of a growing trend in Europe that bne identified in a piece about former Ukrainian President Viktor Yanukovych’s swing towards a Russian style of management in 2010: “The Putinisation of Ukraine”.

In Ukraine, what that entailed was a creeping authoritarianism, nepotism and cronyism, rampaging corruption by connected elites, and a growing disregard for civil rights and press freedom. However, Yanukovych’s Ukraine lacked specifically what had made Putin’s model so attractive in the first place: economic stability. In the decade after he came to power at the turn of the millennium, Putin delivered on 10-fold increases in many economic measures, such as incomes, size of the economy, stock market capitalisation and international reserves.

But after failing to build up domestic support, Yanukovych’s regime swiftly collapsed in the teeth of protests against his corrupt rule, the slumping economy and a turn away from Europe, forcing him to flee to Russia where he still apparently resides (though bne sources reported seeing him in Beijing this summer).

A purer form of “Putinisation”, where the emphasis is on establishing economic stability as cover for the less liberal aspects such as majoritarianism, appears to be taking root elsewhere in Europe. Orban identified Turkey, but others are seeing signs of it to greater or lesser degrees in Romania and Bulgaria (both EU countries) and EU wannabes Serbia, Macedonia and Montenegro. While there are huge differences among the leaders of these countries, there are also some striking similarities.

What connects the leaders in these countries is an idea that has taken root – and articulated by the current editor of The Economist no less in his book The Fourth Revolution: The Global Race to Reinvent the State” – that the “21st century has been a rotten one for the western model.” As Indian author and political essayist Pankaj Mishra explains in an article entitled “The western model is broken”, rather than every society being “destined to evolve just as the West did, where aspiring middle classes created by industrial capitalism will bring about accountable, representative and stable governments… one event after another in recent months has cruelly exposed such facile narratives.”

Thus the 21st century, rather than being “the end of history” as political scientist Francis Fukuyama declared in 1989, is actually proving to be a period of great economic and political upheaval characterised by mass carnage. In such uncertain times, people cry out for stability – a desperate yearning that these European leaders are successfully tapping into. And with many predicting for Europe a decades-long period of Japanese-style stagnation, it’s likely this will prove fertile ground for breeding more such leaders.

What particularly appeals to these strongmen of Europe has been the success of Putin's methods of maintaining control in the face of opposition and thus clinging onto power. December 2011 saw 100,000-strong crowds march in central Moscow for the first time in nearly a decade, but just two years on and Putin’s popularity is near an all-time high even as living standards begin to fall for the first time; as of the last week of October, Putin enjoyed an 86% approval rating, and even in Moscow where opposition against him is concentrated, more than 60% want him re-elected in 2018. The side effect of the battle in Ukraine is that it has crushed Russia's nascent opposition movement.

“The attacks against Putin are attacks against Russia,” an influential speaker said at this year's annual Valdai Club meeting in Sochi, where the press is forbidden from naming speakers. "The Russian people understand that if there is no Putin, there is no Russia.”

Sanctions are justified by their Western sponsors as undermining Putinism, but Andrew Kuchins of the Center for Strategic and International Studies in Washington said at the Valdai Club: "It's only encouraging Putinism."

Goulash Putinism

Hungarians are wont to boast that their country was the leading light for political and economic reform in the late communist era – enjoying the fruits of a more liberal, so-called 'Goulash Communism' for a decade or more pre-1990.

Twenty years later, critics argue that with the election of the first straight Fidesz government under Viktor Orban, they became the first of the new EU members to disassemble those reforms and institutions that were so painstakingly built up since the collapse of communism, and usher in a new era – which might be equally be called 'Goulash Putinism.'

Orban returned to power in 2010 – he'd been prime minister in 1998-2002 as head of a coalition – with a promise to end corruption. Indeed, graft, along with the “failed economic policies” of the previous eight years of Socialist rule, were the mantras repeated by Fidesz politicians and its slavish rightwing media in the year up to elections in 2010.

Orban returned to power with much international good-will, certainly from the European conservatives, most of whom focused on his famous “Russians-go-home” speech from 1989 rather than his clear aversion to pillars of centre-right economic policies, such as equity markets and recognition of regulated price mechanisms (eg. on household energy) in his previous tenure.

But within weeks of taking the reins of power – buttressed by an all-powerful constitutional majority in parliament – his “special taxes” were applied retroactively to the financial, telecommunications, utilities and retail sectors – all of which were dominated by subsidiaries of large foreign companies. The pretext was “the economy, teetering on the brink of collapse, inherited from the Socialists” an argument that has become the common narrative, despite the fact that economic growth had restarted in the second half of 2009.

As the Orban-era progressed, opposition politicians and intellectuals, and even moderate Hungarian conservatives, have becomes alarmed at what they see as the prime minister's rushed drive to “renew” the country. “Orban repeatedly used and uses private members' bills to fast track legislation: this is a parliamentary loop-hole which avoids [otherwise mandated] consultations with affected parties and government bodies,” says Bernadett Szel, co-leader of the green LMP party.

The democratic process was put into reverse and affected all aspects of life: Fidesz-loyalists were inserted into each and every institution, including the courts, state-controlled media, supposedly independent watchdogs, churches, education, security services and even the constitution itself – a new 'fundamental law' was rammed through parliament in 2011 with no cross-party consultation and minimal parliamentary debate.

Meanwhile, as the European Commission and Western powers, not least the US, began to scrutinise and critique the mass of legislation, independent media and observers began to draw attention to what they said was systematic abuse of power, with large state contracts being awarded to companies close to Fidesz.

In March, 2012, Transparency International in Budapest warned in a report that the “Hungarian state” had been “captured by private interest groups” and that there was a “symbiotic relationship between the political and business elite” and that doubts regarding the genuine independence of watchdogs was “common.” The government protested that the report was not objective, and failed to take notice of a host of recently introduced anti-corruption measures. These included a new public procurement act and a “far more transparent” tendering process for EU funds, along with Hungary joining the International Anti-Corruption Academy for the first time.

However, while such legislation looked excellent on paper, a combination of hard-working domestic journalists, human-rights NGOs and several (often naïve) whistle-blowers, continued to reveal evidence of carefully planned, mass cronyism. Examples included the so-called "trafik fiddle" (the allocation of licenses for newly created, state-controlled tobacco retail outlets given, in many cases, to Fidesz supporters) and carefully selected farmers winning the right to lease large tracts of state-owned arable land at knock-down rates.

But what, for government critics, was perhaps the most outrageous, in-your-face example of government hypocrisy was the case of Andras Horvath, a specialist tax inspector, who, after trying to report his suspicions to the prime minister's office – and failing to get a result – went public in November 2013 with what he said was evidence of a multi-million euro, cross-border VAT fraud in foodstuffs such as sugar. Horvath lost his job and faced police investigation as a result.

In the same month, Balint Magyar, a former liberal education minister and leading dissident from the communist era, published a book entitled “Hungarian Octopus – the post-communist mafia state”.

According to Magyar, the Orban government, with its two-thirds parliamentary majority, is unique within the EU. “Even in the other EU post-communist countries, Bulgaria, Romania, Slovakia, etc, there is corruption, but there is a system of rotation. Hungary is the only country where one political force could totally expropriate power,” says Magyar. “Orban has power without control."

The drift towards Putinisation reached a chilling peak on October 17 when US embassy in Budapest announced that a group of Hungarians will be banned from entering the US – mirroring the personal sanctions applied to Putin's inner circle – without specifying the reason for the bans. However, the local press reported that included on the list are representatives of the National Tax and Customs Administration (NAV) and several Fidesz prominent figures. The row has even pulled in Victoria Nuland, the foul-mouthed US Assistant Secretary of State for European and Eurasian Affairs, who is better known for handing out cookies on Maidan in Kyiv at the height of the recent revolution there, who met with Peter Szijjarto, Hungary’s new minister of Foreign Affairs and Trade to discuss the bans in October.

Nuland roasted Hungary in a speech at the start of October for contesting liberal democratic ideas, inflaming nationalist sentiment and crushing the freedom of speech. Replace the word "Hungary" for "Russia" and she could have used the same speech for having a go at Putin again.

"Although the US has not revealed the reasons behind the ban it has imposed, it is most likely linked to the issue of Hungarian companies avoiding paying VAT in the foodstuff sector," wrote Andrzej Sadecki in a note for the Centre for Eastern Studies (OSW). "American company Bunge, an important cooking oil producer in Hungary, has been complaining that this practice makes it impossible for it to be competitive on the Hungarian market. For several months accusations have been appearing that NAV is favouring companies linked with the Fidesz business base."

Sultan of paranoia

Turkish Prime Minister Recep Tayyip Erdogan is another that seems to have been infected with Putinism. During his first five years, Erdogan gave the strong impression that his Justice and Development Party (AKP) was both capable and committed to forging a new Turkey deserving of EU membership.

A far cry then from the increasingly authoritarian and paranoid administration seen today, where officials openly blame rising opposition on a shady "parallel state" and Erdogan's top advisors warn that the country's enemies are trying to kill the PM using "telekinesis."

Many point to the Ergenekon and Balyoz trials of 2008-12 as when it began to go wrong. Those trials saw hundreds of military and civilian officials jailed on charges of plotting to overthrow the government. Emboldened by having effectively neutered the all-powerful military, the government's attention turned to civil society, with many previously independent institutions seeing wholesale staff changes including the state media, which became little more than a government mouthpiece.

In the private sector, questionable changes of ownership have seen many media companies transferred to more government-friendly owners. Other media groups chose voluntarily to rein in their coverage, with unexplained sackings of writers and broadcasters openly critical of Erdogan or the government becoming a common occurrence. The fact that the state was banging up journalists to the point where Turkey now has more journalists in jail than any other country has also encouraged self-censorship.

The "Gezi" protests of mid-2013, in which brutal police tactics left 11 dead and around 8,000 injured, provided further excuse for more brazen government attacks on civil society, with Erdogan choosing to blame social media and subversive groups for inciting discontent.

On the latter he may have a point. His acrimonious split with powerful Islamic preacher Fetullah Gulen, whose Hizmet movement is reportedly strongly represented among senior police officials, is widely understood to have resulted in the police graft probes launched in late 2013, which forced the removal of four senior ministers and the subsequent leaks of dozens of recordings of phone calls implying corruption at the highest levels of government. In response, the government ordered the blocking for several months of YouTube and Twitter through which the leaks were disseminated.

Cronyism and corruption have always been a problem in Turkey, but even the most cynical of observers have been shocked both by the level of graft alleged and the resulting wholesale purges of alleged Gulen supporters in the police and judiciary.

Russia is regularly described as a kleptocracy, as part of the Putin model is to keep a group of powerful state officials close to him and allow them to enrich themselves in return for loyalty. The word has yet to be applied to Turkey, although the distinction between the two countries is getting increasingly difficult to see.

Markedly less shocking though has been the subsequent shelving of the graft probes and Erdogan's increasingly strident rhetoric about the threat from "the parallel state" – a euphemism for Gulen supporters within the state bureaucracy.

The threat of more damaging revelations appears to have inspired recent draconian new internet laws that allow websites to be blocked within minutes without a court order, as well as planned new security laws which make it simpler for police to put phone taps on suspects. And here Erdogan has gone beyond even Putin, who has tightened the state's control over the internet but shied away from actually closing down websites or actually interfering with the freedom of speech online by overt means.

All this should hurt Erdogan's popularity at the polls, but doesn’t. Some 51% of the vote that saw him installed as Turkey's first elected president was significantly higher even than the 43% the AKP received in local elections in March.

Having made little secret of his ambition to rule Turkey as an executive president, but lacking the two-thirds majority in parliament needed to make the necessary constitutional changes, it now remains to be seen whether the AKP can garner sufficient support in next year's general election.

On current showing, creeping authoritarianism notwithstanding, few are betting against it succeeding.

You looking at me?

In Serbia, the unrelenting march of Aleksandar Vucic’s Serbian Progressive Party toward being the preeminent party of power is starting to cause some concern.

Prime Minister Vucic has been carried to the top by a wave of cynicism after years of isolation and stagnation following the Balkan Wars in the 1990s. A former information minister for Slobodan Milosevic, the PM is a man who gets things done: establishing peace in Serbia’s former province of Kosovo, arresting and jailing the businessmen who have looted the country, undertaking (or at least seeming to) painful economic reforms.

Yet he is prickly and increasingly shows certain Putin-like traits. He has berated underlings on television in stage-managed humiliation sessions and likes to be caught on camera doing daring deeds such as rescuing children in blizzards. This has inevitably led to some scorn and ridicule, which either he or his flunkies then overreact to, such as apparently cyber-attacking websites, and pressuring editors of newspapers and owners of television stations to tone down the criticism.

bne met him when he was deputy prime minister in 2013 and found a young man (he's 44) in a worrying hurry. His manner of speaking, adopting a grave tone when mentioning Kosovo, declaring "I don't care" in a loud voice with a steely stare when asked whether the Serbian people might not sign up to the pace of change he's pushing, are all done in the manner of someone whose character formation is struggling to keep pace with his meteoric rise. Like an extremely tall, slightly baby-faced Travis Bickle practising phrases in the mirror.

Unlike Orban and Erdogan, who are fighting cultural wars and stoke nationalism to undermine their enemies at home and abroad, Vucic has so far avoided making any conspirational accusations against the EU and US. On the contrary, Vucic is trying to drag his country into the EU and is juggling the difficult task of pleasing traditional partner Russia and the US at the same time.

Due to his attempts to reach out to old foes in Kosovo and Albania, Vucic is clearly being afforded some slack by the EU. But Hungary and Turkey are increasingly coming under the microscope in Brussels.

However, in general the EU is proving, unsurprisingly, to be a paper tiger in all these developments. In October, Stefan Fule, the outgoing European Commissioner for Enlargement and European Neighbourhood Policy, admitted to bne that the Commission has few powers to correct backsliders such as Hungary, though he said tougher measures for violators are being prepared.

“We should be first of all stringent in our own cases to make sure there are no double standards,” he said, referring to the increasingly widespread feeling that Brussels often tells its members to do as it says, not as it does.

In October, the European Parliament held a debate late about the situation in Hungary regarding democracy, rule of law and human rights. Inevitably, this ended up in a ill-tempered shouting match as MEPs representing the Liberal group, the Social Democrats and the Greens raised questions concerning the independence of the judiciary and media freedom in Hungary, while MEPs of the European People’s Party and other conservative representatives accused the left of mounting accusations against the Fidesz government in light of their successive defeats in Hungarian elections.

Given German Chancellor Angela Merkel's Christian Democratic Union is a leading member of that European People’s Party, some would argue there's little chance of the EU doing anything substantive about Orban anytime soon. That is likely to only encourage others to follow his lead.



The Putinisation of Europe

Related Articles

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

EU, US partly suspend Belarus sanctions for four months

bne IntelliNews - The Council of the European Union (EU) has suspended for four months the asset ... more

bne:Chart - CEE/CIS countries perform particularly well in World Bank's "Doing Business 2016" survey

Henry Kirby in London - Central and Eastern Europe and the Commonwealth of Independent States’ (CEE/CIS) countries performed particularly well in the World ... more