181. From Russia with sadness
I learned textual (not spoken) Russian 40 years ago when the firm I
worked for (Courtaulds), were building a textile factory in Russia and we
had to do some technical translations of our procedures. I didn't get
very far with the Russian language, but enough to read a little Pushkin
and Turgenev and to appreciate the economical beauty of Russian writing,
their feeling for the countryside but, above all, the proclivity to
sadness that pervades that country. In those days, being young and naive,
I had great hopes for Russia and used to read about their accomplishments
with great excitement. However, a lot of water has passed under the
bridge since then. Four years ago, I hosted the Moscow Academic Choir as
it passed through Bath and gave a wonderful concert here, and I got to
know a few Russians quite well. Indeed, three of them work for me via the
internet and I know what a wretched life many people have over there,
even those who have high professional qualifications.
Following on from Mark Franchetti's interview with Yelena Trebugova that
I posted a couple of days ago, we now have an account of the way that
Putin is dealing with the oligarchs. I have no particular brief for them,
except for those who have made it on the basis of enterprise alone
without the swindle of Yeltsin's shares-for-loans scheme. This was done
with, seemingly, the best of motives, in order to race quickly into a
free enterprise economy so that the Communists would never be able to
re-establish control. Well, perhaps they succeeded in this and perhaps
Russia will never be a communist regime again. But it looks dreadfully
likely that the ploy didn't succeed in neutralising the dreaded KGB
secret police, now called the FSB, of which Putin was a former
operative.
I have the awful feeling that Russia is inexorably heading back to the
police state. In the following, some of the business leaders are
determined to be confident, even nonchalant, but there's a deep anxiety
there. It seems to me that, even if Putin means every word he says about
respecting the present (hitherto limited) property rights gained since
the communist days -- and I doubt this -- the momentum within the FSB
towards the degree of control that their predecessors used to have in
Stalin's time is now unstoppable.
Keith Hudson
<<<<
RUSSIA'S NERVOUS OLIGARCHS LEFT HANGING ON BY THE KREMLIN
Phone lines linking Putin to the tycoons are to be cut -- and they will
be restored only for those in favour
Arkady Ostrovsky
The Russian business elite is nervous.
During the next few days the Kremlin will cut off 28 special telephone
lines that connect Moscow's most influential private business tycoons to
the Kremlin. "This happens every couple of years," one source
close to the Kremlin said. The question this time is who will get back
the special vertushka telephone sets with the hammer and sickle
stamped in the middle of the dialing ring? "This will be a strong
indicator of who is in and out of favour," one business leader
explains.
His comments indicate the anxiety that has beset the Russian business
community since the arrest and detention last month of Mikhail
Khodorkovsky, former head of Yukos and Russia's most politically
ambitious oligarch. "The only safe business at the moment is to be
out of business," one tycoon jokes.
Most of the oligarchs are putting on a brave face, saying that the arrest
of Mr Khodorkovsky has not affected their investment plans. But privately
"everyone is talking about who is next". Some companies, such
as Russian Aluminium, are pushing ahead with their ambitious
multi-million dollar investments, but others are more cautious. One of
Russia's leading financiers says his company has just pulled out of a
$300m deal. "There is no denying that the positive investment trend
of the past few years has changed," he says. "It is a big
mistake to expect business to struggle against the regime. If you don't
like the regime, you simply leave. My family and my children are already
abroad. If I feel any threat to my own security I will get on the first
flight out of here. There is more to life than business."
To safeguard their interests, most Russian business leaders profess
loyalty to Vladimir Putin, the president, and promise not to get involved
in politics like their former colleague Mr Khodorkovsky. "I was not
a dissident then, I am not about to become a dissident now," one
businessman says. The sense of obedience was on full display this month
when Mr Putin attended the congress of Russian Union of Industrialists
and Entrepreneurs. "This congress of businessmen reminded me of a
Soviet-style Communist party congress," an observer said. Mr Putin
was greeted by eight standing ovations and none of the businessmen chose
to mention Yukos or Mr Khodorkovsky by name. Even some foreign
strategists have been told by their bosses not to rock the
boat.
"I am convinced that the arrest of Mr Khodorkovsky has nothing to do
with the questions of the oil sector, market economy and private property
rights," said Victor Vekselberg, head of the Renova holding company
that this year sold its stake in the TNK oil company to BP. Vladimir
Potanin, head of the Interros holding company that controls Norilsk
Nickel, the world's biggest nickel producer, said "The Russian
president has clearly explained that there should be a line between
business and power. I and many of my colleagues understand this line and
have no intention of crossing it."
Most oligarchs are trying to dissociate themselves from Mr Khodorkovsky.
They say he called the wrath of the Kremlin on himself and should answer
for his actions. "Khodorkovsky did not follow the rules established
between Putin and big business. He [Khodorkovsky] wanted to get involved
in politics. We tried to warn him against it, but he had made up his
mind," another business tycoon says. Peter Aven, head of Alfa Bank,
the biggest private bank, says "It is crucial to separate the arrest
of Khodorkovsky from property rights. There is nothing tragic in the
arrest of any country's richest man. Far more vital is what is going to
happen to the shares in Yukos which have been seized by the
prosecutors."
Mr Putin and several government officials have stressed that the
investigations of Mr Khodorkovsky will not lead to the revision of the
privatisation results.
But business tycoons are worried. "I am not worried that Putin
himself will start attacking other oligarchs, but I am worried that
either my competitors or some overzealous bureaucrat will start a
provocation," says Mr Potanin. "Russia is like a dry forest on
a hot day. One match and a gust of wind are enough to set it
ablaze."
But despite Mr Putin's attempts to placate business opinion and efforts
by the oligarchs not to alienate the Kremlin, few of those who benefited
from the country's chaotic privatisation in the 1990s feel secure. The
return of a vertushka to the Kremlin may provide some comfort - or
it may not.
Financial Times 25 November 2003
Keith Hudson, Bath, England,
<www.evolutionary-economics.org>
