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The fall of a tycoon stuns Serbia

Tycoons in Eastern Europe are well known not only for their lavish lifestyles (complete with yachts and private jets), but also for the power that they exercise through their cozy relations with those in government. The term "oligarch" is often associated with the group of Russian post-perestroika businessmen who made their fortune during Boris Yeltsin's tenure in the Kremlin. But such figures are no strangers to the Balkans, either. No man in Serbia (and perhaps in all of Southeast Europe) deserves the label more than Miroslav Miškovic, the owner of the Belgrade-based conglomerate Delta Holding.

There was a time, not that long ago, when Miškovic -- the country's wealthiest man and its largest private employer -- was considered to be virtually untouchable politically. But last week, in a stunning twist, Miškovic fell from the heights of Forbes Magazine's billionaire list to the crime section of the local press. On December 12, he was arrested, along with his son Marko and eight other people, on charges of abusing several privatization deals for road construction and maintenance companies. According to Serbian prosecutors, he is suspected of illegally obtaining more than €30 million, and has been remanded in custody for 30 days.

Miškovic's arrest on charges of corruption is a major coup for Serbia's new government, particularly for its forceful deputy prime minister, Aleksandar Vucic. A former hard-line nationalist, Vucic -- the head of the ruling center-right ruling Progressive Party, Minister of Defense, and secretary of the National Security Council -- is perceived by many to be the most powerful man in Serbia. A former MP for the Radical Party (whose leader Vojislav Šešelj sits in the Hague tribunal accused of war crimes), Vucic has successfully reinvented himself as a corruption slayer.

Miškovic's arrest is sure to be welcomed by many Serbian voters, who have waited for a long time for their government to take action against corruption. If the Miškovic case goes to court, and if the trial is perceived to be fair, this will undoubtedly bolster Serbia's effort to join the European Union. But if Serbian courts show no greater sense of political independence than their Russian counterparts, the trial of Miškovic might come to resemble the saga of jailed Russian businessman Mikhail Khodorkovsky.

Khodorkovsky, once Russia's richest man, has been in prison since 2003 after running afoul of President Vladimir Putin. Khodorkovsky, like Miškovic, was hardly an example of moral rectitude before his arrest. But because Khodorkovsky's trial was so clearly tainted by a political agenda, the oligarch's prosecution transformed him from a bad guy into a martyr.

Miškovic got his start in the business world in the early nineties. After a short stint in politics in 1990 (as a deputy prime minister in the era of Serbian strongman, Slobodan Miloševic), he launched the Delta M Company. The company soon became Serbia's largest conglomerate, holding a dominant stake in retail, agriculture, finance, and real estate.

According to a 2010 study by the German Friedrich Ebert Foundation, Miškovic is merely the most notorious of a number of Serbian oligarchs who made a fortune by closely guarding the country's retail sector from foreign competition while inflating prices for the country's impoverished consumers.

"One could describe [the oligarchs] as war profiteers," Michael Ehrke, of the Ebert Foundation's Belgrade office, told Radio Deutsche Welle. "Those who profit during a war are also interested in war itself. One could describe them as persons who certainly did nothing to stop this war."

In June 2006, the United States considered recommending that Miškovic be banned from entry into the U.S. under a provision targeting "individuals who engage in egregious corruption to the detriment of U.S. national interests." Three years later, in 2009, he was dining with U.S. Vice President Joe Biden, invited to a state dinner in Belgrade along with former Serbian President Boris Tadic. For many Serbs the invitation highlighted Tadic's cozy relationship with Miškovic.

If Miškovic prepared the way to his ascendency during the Miloševic era, he continued to flourish after its collapse by changing tactics -- specifically by buying influence through the financing of political parties. In 2007, Forbes Magazine named Miškovic as the richest man in Serbia, with a fortune estimated at €1 billion. According to a 2009 State Department cable released by WikiLeaks, Miškovic's operations may have accounted for more than five percent of Serbia's GDP.

Dozens of Serbian politicians are suspected of receiving monthly allowances worth tens of thousands of euros from the tycoon. Following Miškovic's arrest, Vucic has called on Miškovic to reveal his political backers for his own good.

"It's important to find out whom he financed," Vucic told the daily newspaper Politika, adding that at least some 20 senior politicians were on the take. According to Vucic, some politicians were getting a monthly allowance from Miškovic in the amount of €30,000 to €50,000.

Bringing a man of such wealth, resources, and political influence to justice would be hard even in more established democracies than Serbia's. The endless corruption trials in Italy against former Prime Minister Silvio Berlusconi attest to the challenges involved. Serbia is a country where, only a decade ago, Prime Minister Zoran Dindic was assassinated in the middle of Belgrade by a sniper. When he was detained, Miškovic allegedly told the police that Vucic would not live to see the evening.

Vucic's stand against the sleaze and corruption that oligarchs have cultivated in Serbia is commendable. The challenge will be to avoid making the case against Miškovic look like a political vendetta against the oligarch and the politicians he financed. The Khodorkovsky affair serves as the perfect cautionary tale: The trick is to bring down the oligarch without destroying the justice system at the same time.

Photo by ALEXA STANKOVIC/AFP/Getty Images

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Capriles survives an opposition rout

On Sunday, Venezuela's voters went to the polls to elect state governors and legislators. Amid low turnout, the candidates affiliated with ailing President Hugo Chávez's PSUV party won 20 of 23 states (although the election in Bolívar state is still being contested).

For Venezuela's opposition, this result was a disaster. The opposition camp lost five of the eight governorships that it had previously held and failed to win any new ones. There were, however, a few silver linings for the anti-Chávez forces.

Just two months ago, Chávez defeated Governor Henrique Capriles in the presidential contest by 10 percentage points, beating him in all but two states, including Capriles' home state of Miranda. Coming off the heels of that defeat, some people even projected that the opposition could be completely shut out. Complicating the forecast even further was the fact that the president spent the week before the election fighting for his life in a Havana clinic. (He seems to be pulling through, for now.) The news of his renewed illness has galvanized his supporters.

If that was the expectation, then the opposition outperformed it. Not only did it win three states, it also posted gains in some larger, more important states than those that Capriles carried in October.

This comes as little consolation to the opposition camp, presumably, considering what they lost. Coming into these elections, there were eight governors on the opposition side (although three of them were elected on Chávez's coattails but joined the opposition later). Crucially, the opposition lost races in two key states: Zulia, the country's most populous, and Carabobo, the third most populous.

Yet the anti- Chávez forces can find some solace in the results. Most importantly, Capriles survived an onslaught of government advertising to beat Chávez's candidate, former Vice President Elías Jaua in the race in Miranda. This was, arguably, the most important race of the night, as a loss by Capriles would have put a stop to his claim to leadership of the opposition.

Capriles' win, together with the losses incurred by other political forces, means he is the clear front-runner to become the opposition candidate in case an election to replace Hugo Chávez has to be called. According to Venezuela's constitution, a new election has to be called within the following thirty days in the event of a president's death. Since Capriles has already campaigned across the country, he has the necessary name recognition to compete. His victory in Miranda also gives him the necessary political capital. The other two elected governors are Capriles allies with little name recognition outside their home states, and there have been no suggestions that they are looking to challenge him.

Moreover, even though the chavista forces proved they could win elections without Chávez (the president did not campaign for his other candidates), the low turnout is a warning sign. The roughly five million votes the PSUV candidates received are much lower than the 8.2 million Chávez got in October. They are also much lower than the 6.6 million votes Capriles picked up in October.

The stage seems set for the next phase, whatever it may be and whenever it may come. From what is known about the president's health, it is highly likely that Venezuelans will have to go to the polls to elect a new president in the next twelve months. With Sunday's results, Vice President Nicolás Maduro (the man Chávez has named as his successor) is the favorite to win.

But these latest elections have also clarified the picture for the opposition. It also has a candidate, one that is well known, tested, and battle-ready.

Capriles beat a former vice president in 2008 to win his first term as governor. Last Sunday, he defeated another of Chávez's former vice presidents. As he told the press after his win, he's "beaten two, and there may be another one coming down the road."

It's good that he seems eager for a fight. If he does end up going after Maduro, there will be a lot riding on his shoulders. After Sunday's bloodbath, he's the best that the opposition has got.

Photo by LEO RAMIREZ/AFP/Getty Images