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The Election is Not in Russia

realelection1122.jpgFor all the quiet murmurings of disapproval in Europe following the interference and eventual undermining of the OSCE’s election monitoring mission, it looks like the Kremlin has yet again escaped from the scene of the crime, squeaky clean. The election, it seems, has absolutely nothing to do with the votes of citizens within Russia’s borders, but rather is taking place in foreign capitals as Putin campaigns for international legitimacy. This was made exceptionally clear to me during a speech I made this week at an alternative investment summit about Russia for a corporate audience in London. I am of course exceedingly grateful to the organizers for the invitation to speak, and I found many of the offerings to be quite brilliant and valuable. Despite this, there was also an unfortunately pervasive sense of reluctance among my new colleagues to speak in honest and straightforward terms about the Russian reality.

For many of these people, Russia’s non-existent rule of law and conditional property rights translates into “untapped markets” and “exciting opportunities.” This eager and enthusiastic audience wanted to hear about advantageous tax structures, robust figures of consumer buying power, natural resource production, and FDI. They did not want to hear about political prisoners, state theft, high-level corruption, and were especially uncomfortable talking about the upcoming potemkin elections. Such an outlook is not that unusual for a business audience, but it seems especially reckless to me that so many investors would be willing to overlook the current enormous political risk with their portfolios on the line.Amazingly, one fairly brilliant Russian investment advisor proudly opened his talk with the argument that business must stay totally separated from politics in order to mitigate risk. I would in fact argue the exact opposite thesis – that the only way to cut risk is to have a healthy engagement of the private sector with government, demanding accountability and transparency on both sides.So far Russia’s real election beyond her borders is going swimmingly well: the gullible approval of this government’s exceptionalism, as demonstrated by the reactions at this investment conference, has a frighteningly contagious effect.Let’s put aside the fact the president has systemically watered down the country’s democratic institutions and constrained political choices by the manipulation of a variety of electoral rules. Let’s disregard for a moment the typical laundry lists of lawless conduct, and focus on the simple obligations of Russia’s membership in the OSCE.Long before Russia interfered with the election monitoring mission by refusing to issue visas, there was a long pattern of obstruction in these activities. A critical September report from the Spanish think tank FRIDE details Russia’s efforts to cripple the democracy promotion efforts of the ODIHR. Analyst Jos Boonstra writes: “The US and most EU countries want to emphasise human rights and democracy in the third dimension, while taking hard security issues up within NATO and to a lesser extent the EU. Meanwhile Russian intentions to further push a reform agenda were regarded as dubious; Moscow would seek to undermine the OSCE through reforms and downplay the work in the human dimension by pushing for institutionalisation. Their wish is to bring the ODIHR under the Secretariat’s remit and make every election observation report subject to PC scrutiny. This would leave the ODIHR broken-winged because the national representatives in Vienna decide by consensus – critical reports would be blocked by some CIS member states or by whoever was being criticised. EU and NATO countries harbour no illusions about obtaining a quick consensus on an ODIHR report on, let’s say, Russia’s presidential elections next year.

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Large gas pipeline deals are helping legitimize the dismantling of democracy in Russia

Despite this foresight, some of the most critical stakeholders in Europe have been duped by the Kremlin’s narrative of unfair double standards – the main argument being that because the United States has behaved so irresponsibly in recent years, it is OK for Russia to do it also. The most shocking example has come from former German Chancellor Helmut Schmidt, who was one of the original signatories of the Helsinki Final Act in 1975, the very commitments of which Russia is violating today. In his recent column in Die Zeit, Schmidt wrote that Putin is an “enlightened potentate” and that the United States poses a far greater threat to the world than Russia.Schmidt’s ringing endorsement of the Putinist authoritarian system is echoed all over Europe. Take for example the Italians – while PM Romano Prodi visits Moscow today to sign a $10 billion pipeline deal to keep Europe dependent on one supplier and smile for the cameras, the country’s leading energy executive and owner of stolen Yukos assets, Paolo Scaroni of ENI, incredulously gives his seal of approval: “We are not expecting from the next elections any particular repercussion,” said Scaroni, “the democratic process in Russia is by now stable, elections are being held and the constitution is being followed. We do not see Russia as one of the countries most at risk among those in which we work.“When leaders like Schmidt, Prodi, and Scaroni make statements like this, it is clearly understood that the Putin’s unconstitutional third presidency (call it a premiership if you want to) will be viewed as legitimate in Europe. In such circumstances we cannot point fingers at Kremlin abuses, nor blame state-controlled media or voter apathy for the result.The real election is happening in London, Paris, Rome, and even Washington, and so far it looks like a landslide. Perhaps Putin makes an ironic point when he complains that there is no election monitoring west of Vienna. Indeed the OSCE would be better off focusing its monitoring efforts where it really matters.