POLITICS: The Disturbing New Hybrid of Democracy and Autocracy – Opinion

In Poland and elsewhere, rulers — and the oligarchs who help them — have figured out how to create a one-party state without the hassle of staging a coup. 

  By Anne Applebaum | The Atlantic

In 2015, Daniel Obajtek was the county commissioner of Pcim, a tiny district south of Kraków and north of the Polish-Slovak border. “County commissioner” is perhaps a grand-sounding title, but I can’t find a better one. In Polish, the term for the job he held is wójt, an old-fashioned word that means something like “village headman”. It signifies that you run something very small. Pcim, population 4,900, is very small.           

Today, Daniel Obajtek is the chief executive officer of PKN Orlen, the largest company in central Europe. Orlen runs oil refineries and gas stations in multiple countries, owns a range of energy assets, and is listed on the Fortune 500. It is also, in practice, a state company:

Although traded on the stock exchange, its largest shareholder is the Polish state treasury, which means that the Polish government gets to name its CEO. Obajtek was the choice of the current ruling party, the Law and Justice Party, and he has done well out of this decision. His personal wealth recently became a major news story in Poland – at least among independent, nongovernment media – because it now includes, among other assets, 38 properties, including houses, apartments, parcels of land, even a seaside pensjonat.

Obajtek says he acquired this real-estate empire legally, but the speed with which he did so has raised eyebrows, though it probably should not have. He is an oligarch, and in the hybrid democratic-autocratic political systems now emerging around the world, many newly minted oligarchs make their money at an extraordinary pace.

Until very recently, Poland didn’t have oligarchs. Of course, the country had some very rich people, including a number who got rich through corruption or deception. But they didn’t have that specific combination of characteristics that we have come to recognize as typical of the very wealthiest Russians, Ukrainians, Kazakhs, or Chinese.

In fact, contrary to popular belief, corruption is not necessarily the means by which modern oligarchs acquire wealth and property, if corruption is defined as actually breaking the law. Oligarchs are wealthy because they have friends in high places who arrange for them to be wealthy, and these arrangements can be perfectly legal. Obajtek, for example, is wealthy because the Law and Justice Party named him first to run one state company, and then another. Full disclosure: I am married to a Polish opposition politician who, when previously in office, never earned more than a standard civil-service salary.

Oligarch and oligarchy are very old words. Aristotle defined oligarchy as what happens “when men of property have the government in their hands.” Nowadays, the word has acquired new connotations, for in a full-blown 21st-century oligarchy, distinguishing men of property from the government isn’t easy, because they have become one and the same.

What truly defines the modern oligarch — and what makes him – or, more rarely, her – different from the typical well-connected rich person — is that his relationship with the state is not just close, but symbiotic. His business career exists solely because of his relationship with the autocrat or the ruling party. The regime knows this, and it expects favors in return. 

This new kind of oligarch appeared first in post-Soviet Russia. David Hoffman, the author of The Oligarchs: Wealth and Power in the New Russia — one of the first attempts to describe how the original Russian billionaires made their money — explains that their path to riches was different from that of Western tycoons. Even though plenty of wealthy people in America and Europe “feasted off both the government and private capital”, Hoffman writes, Russia’s first tycoons “drew their early sustenance almost entirely from one source: the state.” They never invented anything, never organized anything, never built anything. Instead, they were simply in the right place at the right time when things were being divided up. 

Gazprom, for example, now a very large private company run by an oligarch named Alexey Miller, was formerly known as the Soviet Ministry of Gas Industry. Its history is complicated; many in the West were pleased by its privatization in the late 1990s, and some made money out of it. But in 2000, soon after Vladimir Putin became president of Russia, the company revealed its true nature. Using financial pressure — and helped out by the arrival of armed, masked “tax police” at the company headquarters, and the arrest of its CEO — Gazprom acquired Media Most, then the largest independent media company in Russia and owner of NTV, a prominent independent television station. Immediately, Gazprom-Media fired and locked out staff, and closed several publications; the new editor of NTV arrived to take over at 4 a.m., surrounded by his own security detail. 

Since then, Gazprom-Media has absorbed many other media properties. Why does a gas company need to own newspapers and television stations?

The answer is that it is not an ordinary gas company, one that exists solely to extract and sell fuel. Gazprom is rather a gas company that, in addition to extracting and selling fuel, also helps ensure that Putin remains in power. Thus, it controls a large chunk of the press, pursues his foreign-policy initiatives — most notably the Nord Stream 2 pipeline, which will enable Russia to sell gas directly to Germany, cutting out transit across Ukraine — and funds his friends.

Dmitry Medvedev served on the Gazprom board from 2000 until 2008, during which time he also served as Putin’s chief of staff and as Russia’s deputy prime minister – he then served one term as president of Russia, before stepping back to let Putin run again. Miller, the current CEO, worked with Putin in the St. Petersburg mayor’s office in the 1990s. Gazprom makes space for family too: In 2018, it named Mikhail Putin, the president’s relative, as deputy chair of its management committee. 

In the two decades that have passed since Gazprom gained control of Media Most, political leaders elsewhere have followed Vladimir Putin’s lead and sought to create oligarchs, and oligarchic companies, of their own. Usually this happens in autocracies, where no one bothers to look too closely at rules about conflicts of interest or nepotism, even if such rules exist. But more and more, it happens in democracies too, especially in rickety democracies dominated by a leader who wants extra help to remain in power.

In Hungary, for example, Viktor Orbán created a small group of oligarchs by ensuring that state contracts went directly to them, and by loaning them money using state-controlled development banks. They then returned the favor. One has constructed a large soccer stadium in Orbán’s home town. Others — of course — bought up the media, which are now almost entirely under either state or, via oligarchs, ruling-party control.

Now Poland’s nativist ruling party has followed suit. Obajtek’s rapid rise doesn’t yet match that of the Hungarian oligarch Lőrinc Mészáros, who, when once asked how he had managed to grow his business faster than Mark Zuckerberg’s Facebook, responded, “Maybe I’m smarter.” Another time he said: “My fortune is thanks to three factors: God, Luck, and Viktor Orbán.” Still, Obajtek hasn’t been embarrassed to copy Gazprom. In December, Orlen announced that it would purchase Polska Press, a media company that controls, among other holdings, 20 regional newspapers, 120 weekly magazines, and 500 online portals. The company had been up for sale for some time. Unsurprisingly, no foreign or Polish investors thought that this would be a good moment to put money into local Polish newspapers.

The story unfolded in Poland the way all of these stories unfold: Within weeks of announcing the acquisition, the energy company began dismissing board members and firing editors in chief and replacing them with editors or activists who had previously demonstrated loyalty to the ruling party.

Orlen has also bought the most important Polish press-distribution agency, and launched its own media advertising agency, both of which could give it the power to support other pro-government media — and punish independent media — should it so desire. Following the Gazprom model, Orlen has also set about employing the friends and family of Law and Justice Party members.

The wife of one member of Parliament has, for example, been given several lucrative posts. Remember, the state treasury controls a portion of Orlen’s stock, and the state should therefore benefit from company investments. Instead, the company is investing in ruling-party propagandists. Try to imagine U.S. taxpayers’ money being spent propping up Fox News — or indeed MSNBC — and you can see why this angers people. One Polish court has already questioned the legality of the acquisition.

Orlen has justified its media expansion by talking about “synergies” and “diversification”. When I asked about the change of editors, as well as the sharply falling circulation of many of the new media properties, the company insisted that it “does not interfere” in “HR issues” at Polska Press.

A spokesperson gave no other specifics about the takeover. “The transaction was thoroughly analysed both by our in-house experts and external advisors,” she wrote in an email, “with a due diligence exercise undertaken to investigate the target’s financial, legal and tax affairs … Our acquisition of the publishing house is thus primarily a business move expected to deliver economic benefits.”

In fact, its purchases are a useful reminder, in an era when so-called neoliberal economics has become deeply unfashionable, of just how illiberal state companies can be. This much was obvious when communism collapsed in 1989; recent events in Poland, Hungary, and Turkey should once again demonstrate this dynamic for those who have forgotten. A national railroad or power company can make sense if, like public media in some well-run countries, it can be surrounded by a culture of strict, apolitical control. It’s hard, for example, to imagine Amtrak buying up local newspapers in the United States and turning them into narrowly partisan vehicles on behalf of either political party. But in places lacking a nonpartisan ethos, public ownership can be easily corrupted.

There’s a bigger story here too. The Orlen saga is a warning not just about state companies, but about democracy, a political system that nowadays rarely disappears the way it used to do.

In order to undermine a democracy, you no longer need tanks on the streets or colonels bursting into the presidential palace. You can create your one-party state very slowly, over many years, just by massaging the rules, shifting money around, putting pressure on courts and prosecutors, eliminating unpleasant media, and above all by creating the oligarchs who will fund your projects, block your enemies, enable you to use state money to enrich your party or your family. This method is much more lucrative, and much less stressful than the old-fashioned coup d’état, and it’s coming to a democracy near you. 

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Comments

  • brandli62  On 06/13/2021 at 3:46 pm

    One more excellent article by Anne Applebaum for The Atlantic illustrating the fragility of democracy in Eastern Europe. The article carries important lessons for democracy in Guyana. Worth reading!

  • Clyde Duncan  On 06/14/2021 at 12:56 pm

    Protecting Democracy and Containing Autocracy

    Michael Hais, Doug Ross, and Morley Winograd | The Brookings Institution

    DEMOCRACY HAS BEEN UNDER INCREASING ASSAULT IN THE U.S. OVER THE COURSE OF THIS CENTURY.

    Sixty percent of white working-class Americans agreed with the statement that “because things have gotten so far off track in this country, we need a leader who is willing to break some rules if that’s what it takes to set things right.”

    Although only 40% of all Americans felt that way in 2017, almost 47% of them voted in 2020 to support a candidate for president who exhibited blatant authoritarian behavior. For the first time since the 1930’s, the competition between democracy and autocracy to determine how we will be governed in the future is in doubt.

    The view that this authoritarian threat can be defused by converting those who would abandon the Constitution “to get things done” through persuasion and empathy is contradicted by both social science and electoral fact.

    STUDY AFTER STUDY HAS DOCUMENTED THAT EFFORTS TO CHANGE POLITICAL OPINIONS THROUGH RATIONAL ARGUMENT AND THE DEPLOYMENT OF FACT CHANGES FEW MINDS AND OFTEN HARDENS OPINIONS INSTEAD.

    Nearly one hundred court rulings and the certification of the 2020 election results by all 50 states still leaves 77% of Republicans questioning the legitimacy of President Biden’s election based on supposed voter fraud.

    IF THERE ARE WORDS, FACTS, OR EMPATHY THAT CAN CHANGE THOSE VIEWS, NO CREDIBLE EVIDENCE TO SUPPORT THE STRATEGY HAS BEEN PRESENTED.

    A more hopeful strategy can be found in the contest between the U.S. and the Soviet Union after World War II. In his now famous “X article” in the July 1947 issue of Foreign Affairs, U.S. diplomat George Kennan publicly proposed defending democracy using a strategy of “CONTAINMENT”.

    Rather than aggressively pushing to overthrow the Soviet Union or believing that the Stalinist regime could be “charmed or talked out of existence”, Kennan argued that an authoritarian Soviet Union “be contained by the adroit and vigilant application of counter-force at a series of constantly shifting geographical and political points.”

    The foundation of his proposal was the belief that the contradictions inherent in Soviet party rule would ultimately lead to collapse of the system or at least its considerable mellowing if denied opportunities for expansion.

    EMPLOYING CONTAINMENT RATHER THAN CONVERSION AS A STRATEGY FOR PREVENTING THE DEVELOPMENT OF AUTHORITARIAN GOVERNANCE HERE AT HOME OFFERS A SERIES OF POWERFUL ADVANTAGES:

    THOSE PROPOSING AUTOCRACY OVER DEMOCRACY REMAIN A MINORITY.

    Over sixty percent of Americans believe the 2020 presidential election was fair.

    Containment does not rely on changing the political opinions of millions of Americans, a proposition which ought to be pursued, but for which no credible action plan exists.

    DEFENSE OF DEMOCRACY DOESN’T REQUIRE CONVERTS, ONLY HOLDING THE LINE.

    In the present day, the foundation that supports a domestic containment strategy is more concrete than Kennan’s speculative assertion that the Soviet Union would inevitably collapse under its own contradictions. It rests on the existing political and cultural views of the rising electoral generations of Millennials (Gen Y), born in the last two decades of the 20th century and Plurals (Gen Z), born in the first two decades of this century.

    Demographics are not an “invisible hand” insuring the victory of liberal democracy over autocracy. However, on the research-based assumption that current cultural and civic generational views are usually an indicator of a generation’s future outlook, the polled opinions of our two newest generations provide some long-term optimism.

    We start with the view that fears of white displacement and of new cultural values that are undermining the perceived essence of “Americanism”, NOT economics, are the major drivers of those most willing to work outside inherited constitutional rules and norms.

    ANXIETY AND ANGER OVER THE COMING LOSS OF A WHITE MAJORITY are reflected in opinions about racial diversity that vary widely by generation. Sixty-two percent of Plurals and 61% of Millennials think that increasing racial and ethnic diversity is good for America, compared to 48% of Boomers and 41% of the even older Silent generation. Plural Republicans are also much more likely than their older GOP counterparts to agree with this statement.

    IT IS TIME TO ABOLISH THE ELECTORAL COLLEGE

    Similar generational gaps exist on the issue of whether immigrants are a benefit or a burden to the country with 75% of Millennials saying they are a benefit compared to 52% of Boomers and 44% of Silents.

    A majority (53%) of both younger generations believe that “people of different races marrying each other” is a good thing as opposed to 30% of Boomers and 20% of Silents — further evidence that the ascending electorate is hardly afraid of the pollution of white culture and blood by “others”.

    While it is not always true that as the generational “twig is bent, the tree’s inclined”, the attitudes towards race of America’s two youngest generations offer hope that time may be on our side in pursuing a containment strategy.

    A CONTAINMENT ACTION AGENDA

    A domestic containment strategy offers a number of actions that those who want to defend democracy can take now, without having to wait for demographics to defeat domestic authoritarianism.

    ON THE DEFENSIVE FRONT:

    WHILE RESPECTING EVERYONE’S CONSTITUTIONAL RIGHTS, THE MINORITY MUST NOT BE ALLOWED TO OVERRULE THE EXPRESSED WILL OF THE MAJORITY:

    Securing majority governance and blocking authoritarian minorities from taking federal power requires minimizing gerrymandering; eliminating voter suppression; reforming, if not eliminating, the Senate’s filibuster rule; and making campaign financing as transparent as possible.

    Social media algorithms need to be reshaped or at least accompanied by “middleware” as part of reforms to Section 230 of the Communications Decency Act of 1996. This will help social media consumers assess the reliability of the source of what they are seeing and encourage exposure to differing points of view.

    Further experiments with independent governance structures for determining the acceptability of political content on social media platforms, similar to the one Facebook has deployed, should also be encouraged.

    A CLEAR LINE MUST BE DRAWN BETWEEN VIOLENCE AND PEACEFUL PROTESTS.

    Law enforcement must deal vigorously and visibly with the threat of violence from that element of the authoritarian minority that is prepared to use force to pursue its political objectives. As profiles of some of those charged with insurrection on January 6 reveal, nearly ninety percent were not tied to extremist groups and were difficult to distinguish from your next-door neighbor.

    Prosecution and imprisonment of those who would turn to violence, whether a Proud Boy or the pharmacist down the street will be critical to deterring attempts at political change outside the rules of democratic governance.

    Containment also requires sustained and continuous push back against authoritarian views, just as Kennan argued in his memo on containing communism. While waiting for more democratically-inclined generations to seize the electoral stage:

    LIES AND DISTORTIONS OF REALITY MUST BE RESPONDED TO VIGOROUSLY AND PERSISTENTLY.

    The election was not stolen, immigration advocates are not motivated by white replacement, whites are NOT subject to more discrimination than blacks. All those in the public eye, including commentators as well as elected officials, must be held to account whenever they spread such falsehoods.

    Institutions as effective as the National Democratic Institute has been in spreading the idea of democracy worldwide must be created to increase young Americans faith in democracy here at home.

    While most young people have no sympathy for authoritarian views, they are far from convinced that constitutional democracy is the best form of governance to make the societal changes they seek based on what they have experienced in their lifetime.

    Above all we must demonstrate democracy works, since gridlocked governing will undermine faith in our democratic system no matter what else we do.

    Containment offers a realistic strategy for preventing an authoritarian minority from taking power electorally or extralegally. It buys time until those generations with stronger ties to democratic values assume majority power and protect our democracy until they do.

    Finally, it allows the champions of democracy — conservative and liberal, Democrat and Republican – to act forcefully together without depending on changing the views of others to prevail.

    That the strategy worked to win the Cold War is no guarantee that it will work in our domestic struggle with authoritarianism. But it offers the most realistic option before us for winning this war.

  • Clyde Duncan  On 06/14/2021 at 12:58 pm

    This is worth repeating here:

    WHILE RESPECTING EVERYONE’S CONSTITUTIONAL RIGHTS, THE MINORITY MUST NOT BE ALLOWED TO OVERRULE THE EXPRESSED WILL OF THE MAJORITY:

    Securing majority governance and blocking authoritarian minorities from taking federal power requires minimizing gerrymandering; eliminating voter suppression; reforming, if not eliminating, the Senate’s filibuster rule; and making campaign financing as transparent as possible.

    • Brother Man  On 06/14/2021 at 1:20 pm

      I could care less about the decaying empire that is America. The putrid smell of death of the beast has reached the globe.

      Don’t waste your time pontificating about its impending descent into authoritarianism. I’m sure your time can be spent productively elsewhere.

    • brandli62  On 06/14/2021 at 4:26 pm

      Thanks, Clyde for your posts. I share your views about the US senate and the filibuster rule. This is on top of the fact that the senate disproportionally favours scarcely populated rural states. Wyoming, like California, has two votes in the senate. The former has population of 0.5 million, while California has almost 40 million inhabitants.

  • Clyde Duncan  On 06/14/2021 at 5:08 pm

    brandli62: It might help if they get rid of the Electoral College …..

  • Dennis Albert  On 06/14/2021 at 10:48 pm

    Poland is a racist s-hole country which is two-faced: They dislike immigrants, yet their own racist people live illegally in the UK to take away jobs from the British.

    Poland is also a EU member, a supposedly globalist agenda fronted by George Soros, the Rothschilds, every citizen in Israel including the unborn and a DC pizza shop.

  • brandli62  On 06/15/2021 at 3:19 pm

    Dennis, your gibberish about Poland makes no sense is factually wrong with regard to your perceived “Jewish conspiracy”. Neither Soros nor the Rothschilds have any influence in Poland. Polish politics are driven by catholic conservative and national conservative policies.

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