FACING THE ELECTIONS: WHOM ARE PARTY FINANCES SERENADING?

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With eleven months to go before the parliamentary elections, the campaign industry is gathering momentum. As a rule, media analysis is looking at party policies and the chances, allies, and rivals of party leaders in the context of their financial capacities.

“Profil” magazine says: “Russia’s parliamentary elections have long since ceased to be simply a method of electing legitimate government bodies, an arena for battles between various ideologies and policy platforms. These days, elections are a kind of contest for lobbying power, between various business groups with their own interests.”

This dictates extreme pragmatism in approaches to the problem, especially since the notorious political apathy which has overcome voters makes the chances of a politician in Russia fairly slim – unless that politicial has the support of specialists. And that requires some rather substantial financial resources.

Hence, the outcome of the campaign will be decided by techniques rather than ideologies. Political consultants and pollsters will be required: a multitude of professional political consultants, PR specialists and media companies of all kinds have been patiently waiting for their hour to come, and they have not waited in vain.

Igor Mintusov, head of the Niccolo M political consulting center, notes in an interview with “Profil” that during the last elections, the political consulting industry saw a turnover of no less than $150-200 million. “There is no reason to believe that this sum will be any less in the forthcoming campaign.” It is understood that the “business aspect of Russian democracy” is no less important than the political aspect; in fact, they are closely interconnected.

In an article on the sources and conditions of funding for United Russia, “Yezehnedelnyi Zhurnal” says: “It is no secret to anyone that all parties in Russia (including the CPRF) are living on money provided by big business.”

Precisely this set-up was one of the essential conditions for the formation of Russia’s oligarchic system in the Yeltsin era. In those days, there was a simple exchange of money for shares of state power, and the political influence of business leaders was decisive. This would become especially apparent during election campaigns.

Once the new administration took power, the oligarchs were informed that they would all be kept at “an equal distance” from the Kremlin, while the people were given to understand that the days of oligarchy were over. However, very little essentially changed: as before, big business has to provide the resources for political events and PR campaigns at the Kremlin’s first request.

True enough, rather than being promised opportunities for political influence, the “new oligarchs” were only promised that they would not share the fate of Vladimir Gusinsky and Boris Berezovsky. Apparently, the warning made an impact: none of them dared to object.

To look at one particular case: according to the sources of “Yezehnedelnyi Zhurnal”, it was on instructions from the presidential administration that the YUKOS oil company “undertook the support of the Yabloko party six months ago”.

Matters were simpler with the Union of Right Forces (URF): the business sector itself is quite willing to support this party. However, no one has any doubts that should the Kremlin say the word, the URF would immediately be starved of funding.

“Yezehnedelnyi Zhurnal” explains: “The Kremlin needs to support various parties competing with United Russia at all elections, in order to create a democratic image for the benefit of the rest of the world.” Of course, no expenses will be spared for this purpose – especially if it’s somebody else’s money.

However, according to the sources of “Yezehnedelnyi Zhurnal”, towards the end of last year some business magnates began to show a certain amount of reluctance. Rumor has it that YUKOS chief executive Mikhail Khodorkovsky flatly refused to sponsor the Russia’s Renaissance party led by Gennady Seleznev.

Things got worse from there, reaching the point of disputes about funding for United Russia. Apparently, the new oligarchs declared that the Kremlin was demanding too much money – that collecting such a sum in the time available would be problematic. Moreover, they would prefer to be able to supervise how this money would be spent; and even to take part in compiling United Russia’s lists of candidates.

Actually, “an expert close to the Kremlin” indignantly denies the latter claim: “I don’t believe it for a minute – they would have been shot if they’d tried that.”

Nevertheless, according to “Yezehnedelnyi Zhurnal”, rumors of any kind of resistance from the tycoons, no matter how feeble, deserve the very closest attention. Alexander Ryklin, author of the article, emphasizes that even the appearance of conflict over party funding could be evidence that Russian business leaders still “remain the only force in society with which the regime is compelled to enter into any dialogue at all. Not a dialogue between equals, but still a dialogue.” This, at a time when no political parties, Duma factions, or regional leaders dare to contradict the Kremlin: “They are simply presented with the terms for their political survival, and they diligently comply with them.” No surprises here; everyone knows that he who pays the piper calls the tune.

However, even the sponsors sometimes encounter failure and frustration. According to the sources of the “Vedomosti” newspaper, none other than Mikhail Khodorkovsky undertook to persuade Yabloko leader Grigorii Yavlinsky to agree to form a single democratic coalition with the URF for the elections.

The “Vedomosti” source inside Russian Joint Energy Systems said: “Since the URF is funded by practically all the notable oligarchs, while Yabloko is funded by Khodorkovsky alone, we decided to ask the investor himself to conduct negotiations.” The YUKOS chief executive isn’t at all pleased about the fact that “the two parties to which he contributes money are fighting each other – this makes his investment pointless”.

According to “Vedomosti”, Interros chief Vladimir Potanin and Alfa-Group owner Mikhail Fridman also took part in negotiations with Yabloko.

“Moskovskie Novosti” comments that business leaders were greatly alarmed by the idea of their money ($300-500 million for United Russia’s campaign) being used to create “a pro-Kremlin majority capable of crushing anything in its path” for the Duma after the next elections. Obviously, this would increase the political risks of doing business, reducing opportunities for lobbying and the possibility of influencing the regime at all.

Yavlinsky was offered second place on a combined Yabloko/URF electoral list at the parliamentary elections, and subsequently the prospect of becoming the “sole democratic candidate” in the presidential election. He was even promised that his conditions would be met: Anatoly Chubais would quit the URF. However, none of this helped. The Yabloko leader would not agree.

In commenting on Yavlinsky’s decision, “Vedomosti” cites some recent VTsIOM poll figures: in October, 8% of respondents were prepared to vote for Yabloko, in November the figure was 9%, and in December it was 7%. Meanwhile, the URF’s support figures fell: 11% in October, 10% in November, and 5% in December.

Gleb Pavlovsky, head of the Effective Policy Foundation, considers that YUKOS executives were very sensible in not threatening to cut off funding for Yabloko unless it joined forces with the URF. If Khodorkovsky had refused further sponsorship, Pavlovsky believes that Yavlinsky could “easily find money on the free political market”.

In short, the democrats have once again failed to reach agreement.

Offended URF activists told the “Gazeta” newspaper: “We won’t forget this.”

URF leader Boris Nemtsov provided “Gazeta” with some official comments: “We regret that our efforts, together with the efforts of some representatives of the business elite, did not find understanding among Yabloko leaders. We consider this to be a serious political error on the part of Grigorii Yavlinsky.”

Nemtsov was cut to the quick. “We are prepared to negotiate, on any terms. They are not prepared to negotiate at all. It’s just like Maskhadov and Putin.”

On the other hand, however, Yabloko representatives had repeately stressed that they would not object to including the names of Boris Nemtsov and Irina Khakamada on Yabloko’s electoral lists – on the condition that the URF party agrees to acknowledge that “the presence of these two figures in its ranks has been a serious mistake on the party’s behalf”, as “Moskovskie Novosti” put it. Obviously, the URF leaders would never consent to that.

Nevertheless, according to “Vremya Novostei”, both parties have attempted to estimate how many votes they might potentially win if they joined forces. URF co-leader Irina Khakamada believes that a combined effort would collect no less than 16% of the vote. Yabloko representatives essentially agree with this figure; however, they believe it could only be achieved by an alliance based on Yabloko’s policy platform. Yabloko analysts say: “Since democratic voters are sensitive and perceptive, a crude mechanical combination of the two parties into one bloc would yield no more than 5%, at the expense of losses for both sides.”

Senator Leonid Nevzlin, a co-owner of YUKOS, told “Vedomosti” that both parties would do well to at least agree “to stop their PR battles in the media and seek new votes not at each other’s expense, but at the expense of non-democratic political movements”.

Valery Vyzhutovich, an observer for “Moskovskie Novosti”, takes a look at possible consequences of a Yabloko-URF coalition – if it should go ahead.

Vyzhutovich believes such a democratic coalition would receive powerful financial support, but would lose freedom of action – primarily in terms of being free to criticize its main rival, United Russia.

And the oligarchs, once they gain a fairly influential Duma faction “of their own”, might attempt a comeback in big-time politics: “After being barred from it for four years…”

But it is likely that the Kremlin would benefit most of all: “The presence in the lower house of parties representing the entire political spectrum, including liberals, would give the Russian government the image of a democracy in the eyes of other nations.” And the oligarchs, as the creators of the unified democratic party, would be held accountable for ensuring that its political decisions are balanced and well-considered. Therefore, Vyzhutovich concludes that the attempt to united the URF and Yabloko was most likely coordinated with the Kremlin.

“Vedomosti” also reports on another “important political task” (besides supporting the URF and Yabloko) which the Kremlin is said to have given to Mikhail Khodorkovsky.

Rumor has it that Alexander Voloshin has entrusted YUKOS with blocking the formation of any election alliance between the Communists and Boris Berezovsky. It is said that both sides have an interest in the idea of YUKOS acquiring “a large stake in the CPRF”: Khodorkovsky aims to diversify his political assets, while Communist leader Gennadii Zyuganov is seeking to fill the campaign coffers and remove some rivals among senior party members. This would involve replacing Gennadii Semigin, who is essentially the treasurer of the People’s Patriotic Union.

According to the sources of “Vedomosti”, the position of People’s Patriotic Union executive committee chairman is supposed to go to Alexei Kondaurov, a former KGB major-general, currently heading an analytical department at YUKOS.

But rumors are fickle, and everyone interprets them in their own way.

“Novaya Gazeta” reports that political analysts are currently divided on this issue: “Some claim that Semigin was the channel via which Boris Berezovsky’s money reached the Communists.” Others are convinced that Semigin was hired by the Kremlin administration “in order to privatize the CPRF”.

Although Communist leaders have repeatedly denied having any links with Berezovsky, “Novaya Gazeta” still considers that the party has taken money from the former oligarch – via Semigin. “Indirect evidence for this assumption: having gained access to substantial financial resources, this party functionary started playing his own game within the CPRF.”

“Novaya Gazeta” says Semigin managed to create “a team loyal to himself within the People’s Patriotic Union and the CPRF, at the federal level and in regional branches”. CPRF regional branch leaders were delighted to accept offers to head regional branches of the People’s Patriotic Union: these positions come with a salary, whereas the usual practice in the Communist Party is to work for the sake of ideas alone. “And since people usually hold paid jobs in higher esteem than unpaid jobs, the influence of the People’s Patriotic Union on the mindset of CPRF apparatchiks is starting to prevail over party regulations.”

Of course, CPRF leaders could not fail to be disturbed by this situation. “Novaya Gazeta” reports: “The Communist newspapers took aim at the People’s Patriotic Union and Semigin personally. Sovetskaya Rossiya and Zavtra published an expose entitled ‘Operation Mole’.”

Semigin was accused of creating a parallel “hierarchy of power” in the left-wing movements – and, more importantly, of collaborating with the Kremlin administration, especially with Vyacheslav Surkov, Alexander Voloshin’s deputy in charge of party-building.

However, Sergei Glaziev stepped forward in Semigin’s defense. Glaziev has gained popularity after the Krasnoyarsk territory elections, and is co-chairman of the People’s Patriotic Union coordinating council.

Glaziev wrote in “Pravda”: “From the ‘Operation Mole’ article, readers were surprised to learn that the leaders of the CPRF and People’s Patriotic Union are not focusing on developing and implementing a winning strategy that would unite all constructive patriotic forces. Instead, they are engaged in conspiracy theories, and another witch-hunt is starting.” The main result has been “confusion in our ranks”.

Glaziev indignantly recalled Communist Party purges and trials of the 1930s; he accused CPRF leaders of using the principles Goebbels used in propaganda (“the more monstrous the lie, the more it resembles truth”); and finally he asked the key question – whose interests do such allegations serve?

Glaziev wrote: “By undermining our supporters’ trust in the popular-patriotic movement, the authors of that article, intentionally or otherwise, are obstructing the unification of all patriotic forces into one mighty fist. If this continues, our leftist movement could face a split – or at least a drastic curtailment of its capacities to consolidate society and achieve the Victory this nation so sorely needs.”

Some articles have reported a drastic escalation in the power-struggle between the “irreconcileable” and pro-Kremlin wings of the CPRF.

The “Inostranets” weekly says it is hard to assess the validity of allegations that Semigin is a “provocateur” trying to “split” the leftists; however, it is undoubtedly true that Semigin supports “constructive cooperation with the Kremlin”, while at the same time providing the CPRF with “significant services in terms of attracting sponsorship”.

According to “Inostranets”, the People’s Patriotic Union, being a fairly diverse organization, has no overall “determination to achieve a crushing victory by the radical opposition against the ‘anti-social regime’ – rather, it hopes to work out some form of peaceful coexistence with that regime.”

The sources of “Inostranets” report that the Kremlin has a cunning plan to prevent Zyuganov’s victory: replacing him as CPRF leader with Alexander Kuvaev, presently the secretary of the Moscow city committee of the CPRF.

This idea sounds paradoxical: after all, Kuvaev, unlike Zyuganov, has a reputation as “an irreconcileable Bolshevik”. However, those in the know say Kuvaev is supporting Semigin in the current conflict; Semigin has regularly provided the Moscow city committee with “significant financial support”. There are reports that Semigin himself came up with the idea of replacing Zyuganov with Kuvaev: “Yes, Kuvaev does act like a real hard-line Leninist. All the better. He’ll be able to challenge Zyuganov on his own turf.”

In any event, observers consider that for the Kremlin, “the idea of having its own man at the head of the Communists, in the guise of an irreconcileable opponent of the regime, is not all that unreasonable.”

To return to the question of YUKOS funding the Communist Party: the “Konservator” newspaper reports that unlike the idea of funding Russia’s Renaissance, led by Gennady Seleznev, the CPRF funding idea has drawn some interest from YUKOS chief executive Mikhail Khodorkovsky.

Leaks to the media indicate that the investment program looks approximately as follows: YUKOS would guarantee the CPRF funding of around $10 million a year. The agreement would be valid for five years, starting from January this year. Extra $10 million installments would be paid in pre-election seasons, autumn 2003 and autumn 2007. Thus, total investment in the Communist Party would be $70 million.

In return, the CPRF would offer YUKOS ten slots on its electoral lists: five for the federal elections, and five in the regions. To big business, the prospect of having input into candidate selection for such a popular party is very attractive. Moreover, Zyuganov – as the “seller’s agent” – would apparently give an undertaking not to use the resources of “alternative sponsors”. This is a clear reference to Boris Berezovsky.

According to the sources of “Konservator”, YUKOS seriously intends to run the CPRF’s election campaign; it will set up its own campaign team for that purpose, headed by leading political consultant Anton Surikov.

This same team was responsible for the election victory of Gennady Khodyrev, now governor of the Nizhny Novgorod region.

YUKOS analysts have already calculated that the Communists could have won 5-7% more votes than they did in the last elections – had they used modern campaign techniques.

This deal would be very advantageous for Zyuganov: with the help of YUKOS, he hopes to get rid of overt and potential rivals, and become the real master of his party at last.

However, “Konservator” says Zyuganov is taking a grave risk: “Many people in Khodorkovsky’s team believe that over the next years the CPRF is destined for a transformation along the lines of ‘socialism with a human face’. And the face is unlikely to be Zyuganov’s – it will probably be that of Sergei Glaziev, with his reputation as a leftist intellectual.” According to “Konservator”, Glaziev will lead the Communist Party into the elections of 2007, and by then all that will remain of the CPRF will be its “brand name”.

It is said in YUKOS that the pre-election popularity rating of the CPRF is currently a lot higher than that of United Russia, the pro-Kremlin party.

“Konservator” emphasizes: “This circumstance makes gaining control of the CPRF – in its present form – a priority task for the Kremlin as well as for its actual and potential opponents.”

However, “Nezavisimaya Gazeta” advises its readers not to place too much faith in opinion polls.

At the moment, poll results do indeed look reassuring for the Communists. According to the National Public Opinion Research Center (VTsIOM), if the elections were held this Sunday, the Communists would get as many votes as United Russia – 27%; the LDPR (a party renowned for its ability to seek and find sponsors) would get 9%; Yabloko would get 7%, and the URF would get 5%.

Poll results from the Public Opinion Foundation (FOM) look similar: 24% each for the Communists and United Russia, 6% for the LDPR, 6% for Yabloko, and 3% for the URF.

However, “Nezavisimaya Gazeta” points out that it’s no secret for the party bosses that pre-election polls don’t always coincide with actual election outcomes. The deciding factor at the final stage – the last couple of months before voting day – is strong financial management.

“Conflicts arising in the course of battles for control over huge sums of money are capable of negating the effectiveness of any PR campaign, even the most expensive.”

U.S. Commerce Secretary Don Evans recently remarked in an interview with “Kommersant” that “free trade is the foundation of democracy”.

One thing is clear: as “Nezavisimaya Gazeta” so insightfully puts it, “the layout of forces in the lead-up to December 2003 is by no means as obvious as top pollsters make it out to be.”

In other words, it’s still unknown who will have the last laugh. And Boris Berezovsky has repeatedly proved that he has a definite – if rather singular – sense of humor.

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