On August 7, 2024 a discussion was organized by the Center for Civic Initiatives \u201cSparapet.\u201d <\/p>\n\n\n\n
The topic of the discussion was “The conditions influencing the decision-making of the political elites, both ruling and those in opposition, and their impact on political changes.”<\/p>\n\n\n\n
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Possible factors of external influence on the decisions of the elites are the following:<\/p>\n\n\n\n
Main Speaker: Sociologist Arthur Paronyan<\/em><\/p>\n\n\n\n Control over Elites: The Financial System<\/strong><\/p>\n\n\n\n A series of processes in the U.S. and around the world have resulted in the U.S. gaining informational control over the global banking system. At some point, interested parties and individuals realized that this could be an effective tool for controlling elites worldwide and could be used to strengthen political influence over decision-makers in other countries, including hostile ones. This is a relatively new and underexplored situation in global politics. This system took shape in the 1990s and early 2000s, though its roots go back to the 1970s.<\/p>\n\n\n\n Genesis<\/strong><\/p>\n\n\n\n In the post-WW2 decades, the U.S. was characterized by a dual elite structure, where local and governmental elites limited each other\u2019s attempts to usurp state powers and positions. National firms, linked by a system of cross-presence on the boards of directors of the largest commercial banks, organized discussion\/lobbying groups in their circle, where joint positions on public policy were developed. They coexisted with regional and local banks and firms, which were protected from competition from larger structures by federal and state laws. These laws and regulations were enforced by local elites with political clout through their representation in Congress and state legislative assemblies.<\/p>\n\n\n\n This elite system transformed in recent decades due to the diminished ability of national banks to control companies and corporations, as well as a series of mergers in sectors like banking, telecommunications, media, utilities, retail, and agriculture. The first changes in antitrust policy began under Richard Nixon, but this process should be seen as gradually intensifying over time.<\/p>\n\n\n\n Each merger eliminated a firm with a vested interest (and some degree of political influence) in preventing further mergers or regulatory changes that would allow national enterprises to encroach on the privileges and markets of local companies. As smaller and local companies disappeared, intramural disagreements over state policy diminished, and the emerging consensus drove legislative changes. The banking and telecommunications \u201creforms\u201d of the 1990s failed to pass Congress in previous decades due to counter-lobbying by sectors with opposing interests. Mergers resolved these disagreements, as secondary sectors were incorporated into larger corporations (or merged themselves, forming new large companies), thereby sharing the industry\u2019s common interests. Deregulation then paved the way for new waves of mergers and acquisitions, further consolidating the elite in key industrial sectors.<\/p>\n\n\n\n Banks, with their interconnected board systems, were central actors in shaping corporate and state policy regarding business practices from 1945 to 1968. Their consolidation and changes in financial regulation and U.S. financial legislation symbolized and directed the overall transformation of American capitalism\u2019s structure. Bank mergers did not merely involve the takeover of smaller local banks by national ones. Rather, the administrations of Richard Nixon and Ronald Reagan catered to their sponsors (mostly outside the banking centers of New York and Chicago) by allowing regional banks to merge and acquire competitors. Reagan\u2019s reliance on Southern and Western states easily explains this bias. For Nixon, who initiated the changes, the orientation was somewhat conditional and spurred by his competitor in presidential politics. Nelson Rockefeller capitalized on the support of New York bankers and the political opportunities in the South that emerged due to the Democrats\u2019 noticeable shift towards civil rights in the 1960s.<\/p>\n\n\n\n The once-dominant national banks faced growing competition from regional giants created by merging smaller entities in the 1980s and 1990s. This competition and the weakening of federal regulation (demanded by both national and large regional banks) led national banks to focus their resources on more profitable banking investments, further distancing them from active involvement in managing industrial enterprises.<\/p>\n\n\n\n Non-bank firms gained access to a wide range of financial companies, turning to them for financing, which resulted in the rise of \u201cjunk bonds\u201d in the 1980s and hedge funds in the 1990s. Thus, bankers lost the ability to control firms in other areas, but federal deregulation allowed them to concentrate on more profitable financial engineering and speculation.<\/p>\n\n\n\n The consolidation within sectors simplified the takeover of government institutions and powers by these elites, narrowing the possibilities for self-governance by state entities and limiting U.S. presidents in implementing new programs.<\/p>\n\n\n\n Collateral Profit<\/strong><\/p>\n\n\n\n The shortcomings of this new reality became apparent in the early 2000s. One of the significant consequences was a drastic reduction in corporate tax revenue to the American budget. While this tax accounted for 35% of the budget in the mid-20th century, by the late 2010s, it contributed no more than 8%. Transnational companies, by registering their subsidiaries in various parts of the world, skillfully concealed their profits. Google, Netflix, Amazon, etc., reported no profits. Pepsico even received tax refunds due to its reported losses! The phrase \u201cProfit is accounting\u201d migrated from the accounting sphere to political parlance. The American political establishment faces the challenge of creating an effective taxation system. Taking advantage of its dominant position and involving Europe, the U.S. has adopted a series of laws forcing openness, including the banking systems of other countries.<\/p>\n\n\n\n At some point, political structures came to understand that this level of informational control could be an effective tool for blackmail and, consequently, for controlling elites in hostile countries as well.<\/p>\n\n\n\n Magnitsky Act<\/strong><\/p>\n\n\n\n The Magnitsky Act was a trial balloon in this regard, targeting Russia. The Act is named after Sergei Magnitsky, a lawyer for Hermitage Capital who died in prison after exposing a scheme of budget embezzlement by high-ranking Russian officials. Whether this was true or not, it was an exclusively internal Russian matter. However, the UK and the U.S. simultaneously passed their Acts and compiled lists of those responsible without a court ruling. Based on these lists, those included faced numerous restrictions, primarily financial\u2014accounts, assets, and other means were frozen.<\/p>\n\n\n\n Subsequently, during the conflict in eastern Ukraine, the entire West compiled sanctions lists against individuals. All these lists were drawn up by executive authorities without publicly clear, and explicit criteria. In the media, this was explained as a strategy to create a rift among the Russian elites. In other words, it was an attempt to influence the decisions of Russia\u2019s top leadership.<\/p>\n\n\n\n Other Examples<\/strong><\/p>\n\n\n\n Mass protests in Armenia in 2018 led to a regime change. Incumbent President Serzh Sargsyan resigned, explaining his decision with the strange statement, \u201cNikol was right, and I was wrong.\u201d Much larger protests in Belarus, for example, did not lead to a change of power. It can be confidently stated that a change of power is primarily a matter of the \u201cgoodwill\u201d of the incumbent authorities. The motivation for top officials could be Western blackmail: step down and keep your money. The Ukrainian case supports this view. Former President Yanukovych, paradoxically, did not fall under Western sanctions.<\/p>\n\n\n\n Discussions:<\/strong><\/p>\n\n\n\n After the report, a discussion ensued with former leaders of the judiciary and tax authorities, auditors, political scientists, sociologists, political analysts, lawyers, and former employees of international organizations.<\/p>\n\n\n\n During the discussion, the following main points were made:<\/p>\n\n\n\n Conclusion<\/strong><\/p>\n\n\n\n The best option is when representatives of a country\u2019s highest authorities do not have property or bank accounts abroad. This protects them from external blackmail. Another example is the most influential person in Georgia, Bidzina Ivanishvili, whose money was frozen in the West. However, under his leadership, Georgia continues to increase its level of sovereignty despite pressure from the West.<\/p>\n\n\n\n Banking secrecy is no longer protected, which has various reasons, one of which is the avoidance of corporate tax by transnational corporations. Another reason is the fight against terrorism, for which banking transparency is required. This is a demand of the Organization for Economic Cooperation and Development, which has pursued a policy of banking transparency since 2001. Armenia has also joined this initiative, and banking secrecy is no longer protected in Armenia. Now, any investigator can request such data from the Central Bank, which previously was only possible by court order. There have been cases where such data, being part of an investigative secret, were leaked (referring to the annual financial turnover).<\/p>\n\n\n\n One of the main indicators of a country\u2019s independence is the personal independence of decision-makers, that is, the political elite. The example is a former Ukrainian President Viktor Yanukovych, who handed over power in 2014 and freely moved to Russia. The Ukrainian revolution condemned him as a corrupt leader, but he was not subjected to sanctions, likely because he transferred power and left. It can be assumed that a similar condition was placed before Serzh Sargsyan in 2018, which he fulfilled and thus avoided sanctions.<\/p>\n","protected":false},"excerpt":{"rendered":" On August 7, 2024 a discussion was organized by the Center for Civic Initiatives \u201cSparapet.\u201d The topic of the discussion<\/p>\n\n