Publication: Monitor Volume: 4 Issue: 185

It is by now clear that Russia’s “oligarchs”–a term generally referring to a small group of politically-connected bankers who became industrial magnates thanks to the country’s controversial privatization program–have been hit hard by the economic crisis. According to a study made by analysts of the Russian agencies, the amount of foreign money leaving Russian banks may total US$10-12 billion, which, according the news agency, is 18-21 percent of their total resources. As of August 1, 1998, nonresidents had US$16.1 billion in Russian commercial banks (Russian agencies, October 7).

The big bankers who became oil barons–including Mikhail Khodorkovsky, who founded Bank Menatep and now heads the Yukos-Rosprom financial-industrial group, financier Boris Berezovsky and Uneximbank chief Vladimir Potanin–have reportedly found common cause with First Deputy Prime Minister Yuri Maslyukov against Finance Minister Mikhail Zadornov, who is pushing for new taxes on oil exports as a way to help balance the budget (see the Monitor, October 6). The energy barons–who include, along with the banker-magnates, the heads of giant oil companies like LUKoil chief Rem Vyakhirev–are pushing for a loose monetary policy of the kind likely to be pursued by Maslyukov and Central Bank chairman Viktor Gerashchenko. This is no surprise: Many of these bankers made their first big money through currency speculation and arbitrage during the hyperinflation of the early 1990s (when Gerashchenko was also Russia’s central banker). In addition, a depreciating ruble is profitable for raw materials exporters. Their profits are in hard currency, while their expenses are in devaluating rubles.

According to some observers, however, the oligarchs’ strategy of allying with Maslyukov in a bid to oust Zadornov may boomerang. Removing Zadornov, the most market-oriented official in Prime Minister Yevgeny Primakov’s government, may give Maslyukov, Gerashchenko and other officials a freer hand to impose strict state controls over foreign trade. One of the items in a recently leaked anticrisis plan attributed to Maslyukov had a variety of Soviet-style measures, including the mandatory sale to the state of hard currency earned through exports. If instituted, it would in all probability be done in a way favorable to the state and highly unfavorable to the exporters. As Moscow-based analyst Andrei Piontkovsky put it: “Maslyukov joined the government to take revenge upon the raw material producers who grew fat during the years of pseudo-reforms, and in this new conflict where the oil and gas oligarchs no longer enjoy the political ‘krysha’ or protection, of [ex-Prime Minister Viktor] Chernomyrdin, they don’t stand a chance” (The Moscow Times, October 8).