The de-oligarchization of Ukraine, Moldova and Georgia: the EU condition for advancing the European perspective. Analysis by Dionis Cenuşa



After 8 years since the signing of the Association Agreements, the EU is determined to face head-on the problem of the oligarchy in Ukraine, Moldova and Georgia...


Dionis Cenuşa, Senior Contributor

The European institutions demand that Ukraine, Moldova and Georgia remove oligarchic influence from national decision-making processes. This approach is part of the political conditions on the fulfillment of which the transformation of the European perspective into a viable accession process depends. In the opinions of the European Commission on the status of a candidate country for accession, it is recommended that the three countries initiate a process of "de-oligarchization" in order to move forward. The problem of the oligarchs is not at all random. The phenomenon of oligarchy in decision-making has had destructive effects on the democratic institutions of each of the three countries (IPN, May 2021). Georgia exemplifies the negative consequences that the oligarchic factor continues to have. Because of this, the European Union was forced to give Georgia only the status of a potential candidate. As a result, the Georgian state was separated from the "associated trio" and placed in a category of countries against which the EU has reservations and applies preconditions, the overcoming of which is unlikely without a change of ruling party.

Unlike the complicated situation in Georgia, where the government is accused of revolving around oligarch Bidzina Ivanishvili, Ukraine is trying to subordinate local oligarchs and Moldova wants to hold them accountable for past crimes. Legislation against oligarchs, approved by Volodymyr Zelensky at the end of 2021, is already in force and aims to identify oligarchs and limit their ability to interfere in the act of governing. In Moldova, leaders suspect that runaway oligarchs and their enablers (Vladimir Plahotniuc, Ilan Shor and others) are not only sabotaging structural reforms through the old system, but also planning subversive actions against the government, exploiting public discontent and multiple crises. So, the political motivations in Ukraine and Moldova regarding de-oligarchization differ. In the first case, it is about creating a balance in the process of political governance and, respectively, eliminating the oligarchs' spheres of influence over the Ukrainian economy and politics. In the second, the sense of political survival and security seems to prevail. However, the Moldovan oligarchs seek legal impunity and protection of economic resources, not integration, albeit forced, into the legal economic framework, as seen in the case of Ukraine.

The targeting of Eastern European oligarchs has an innovative character, which has not previously been applied to other candidate countries or countries with a European perspective. The European institutions take this step because local circumstances allow it. In Ukraine, Russian aggression makes the government increasingly accountable and increases international credibility risks for the government and the quality of the reforms it implements, including in the dimension of countering oligarchic interference. The Moldovan authorities consider themselves immune to the influence of oligarchic actors, being seen as interested parties in cleaning state institutions of the remnants of the informal governance of the last decade. Since all political forces in Georgia with political potential also have a pro-EU orientation, the EU abandoned its reserved tone towards Ivanishvili, whose influence is comparable to that which resembles the reality of a "captured state".

Sanctioning the oligarchs

Ukraine has taken the greatest number of steps in the direction of de-oligarichization. Initially, the anti-oligarchy law was seen as a tool aimed at pro-Russian oligarchs, led by Viktor Medvedciuk, a former leader of the opposition forces. He is currently in custody and being investigated for treason. In April, the Lviv Court of Appeal seized 154 assets identified as Medvedciuk's property. Although it is in the process of evaluation at the Venice Commission since the fall of 2021, the anti-oligarchy law is applied anyway, and some oligarchs, such as Rinat Akhmetov, gave up their media monopoly in order not to be included in the "black list" of Ukrainian oligarchs.

Moldova is still dealing with the political and economic fallout from fugitive oligarchs and their enablers (Vladimir Plahotniuc, Ilan Shor). Their economic resources, the connections left in the country, but also the political instruments available, maintain the risk of their return in the event of a far-reaching political crisis. The actions of political destabilization of the country, undertaken by the fugitive oligarchs, correspond to the geopolitical interests of Russia. In July, representatives of the US Congress invoked the Magnitsky Act in their request to President Joe Biden to impose individual sanctions on Vladimir Plahotniuc, Ilan Şor, and Veaceslav Platon. This would entail not only a travel ban (applied in Plahotniuc's case since 2020), but also an asset freeze. The decision would be made at the end of 2022.

The sanction of the Georgian oligarch Bidzina Ivanishvili was often invoked in the Georgian public space, but the European Parliament took the first official step. In a resolution adopted on the eve of the presentation of the EU verdict on candidate country status, the EU legislator stressed that Ivanishvili must be sanctioned. His influence is destructive both politically and economically, with repercussions on the independence of the judiciary and the viability of democratic institutions (persecution of journalists, members of the opposition, etc.).

Commitments of Ukraine, Moldova and Georgia with a view to de-oligarchization

Most of the actions with a view to de-oligarchization were announced by Moldova. According to the Action Plan, adopted within the National Commission for European Integration in August, a mechanism will be developed to exclude the oligarchic factor from the political, economic and public sphere. Foreign experience and the recommendations of the Venice Commission will be taken into account. The Central Electoral Commission and the Broadcasting Council will participate in the de-oligarchization process with the aim of purging the financing of political parties and eliminating influence over the media, respectively. More than that, the assessment of state companies in relation to oligarchic influence is expected. Some measures are scheduled until November-December 2022, others will be implemented until June 2023.

Ukraine implements the law against the oligarchy in force since September 2021. At the meeting of the Committee for European Integration of the Verkhovna Rada in August, compliance with EU requirements, including in the field of de-oligarchization, was discussed. Thus, the National Security Council and the Government will prepare the "registry of oligarchs" in order to enforce the law. At the same time, the Ukrainian authorities are awaiting the recommendations of the Venice Commission, which will most likely be accepted by Kyiv so as not to prejudice the dialogue with the EU on the candidacy status.

In Georgia, things are rather on hold. The evaluation of the fulfillment of the EU conditions was moved to 2023, instead of the deadline of December 2022 originally set together with that of Ukraine and Moldova. The Georgian authorities have not ruled out drafting a de-oligarchization law, but a clear political will and a viable action plan are lacking. European politicians equate this process with the "de-Bidzination and de-Ivanishvilization" of Georgia, and representatives of civil society believe that the creation of independent institutions in the field of the rule of law will alone contribute to the de-oligarchization of the country.

In lieu of conclusions…

After 8 years since the signing of the Association Agreements, the EU is determined to confront head-on the problem of the oligarchy in Ukraine, Moldova and Georgia. Until now, Brussels has been reluctant to call for fighting the oligarchy so openly in the context of macro-financial aid conditionality or in political dialogue.

The prospect of joining the EU has changed the parameters and intensity of bilateral relations. On the one hand, the EU has not only the interest, but also the obligation, to become more demanding in the face of factors that destabilize state institutions, without which accession to the EU is impossible. On the other hand, the three countries must fulfill all the necessary conditions if they really want to reach the stage of accession negotiations in the tangible future.

Dionis Cenuşa, Senior Contributor
Dionis Cenușa is a political scientist, researcher at the Institute of Political Sciences at Liebig-Justus University in Giessen, Germany, MA degree in Interdisciplinary European Studies from the College of Europe in Warsaw.
Areas of research: European Neighborhood Policy, EU-Moldova relationship, EU's foreign policy and Russia, migration and energy security.
Follow Dionis Cenușa on Twitter

IPN publishes in the Op-Ed rubric opinion pieces submitted by authors not affiliated with our editorial board. The opinions expressed in these articles do not necessarily coincide with the opinions of our editorial board.

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