OLIGARCHS, TRUE AND FALSE

By Vladimir Pribylovsky

Last week saw a scandal erupt in Moscow over an “anti-oligarch” report issued by the Council for National Strategy.

The Council for National Strategy (CNS) is an independent think-tank established last year, comprised of twenty-three experts from across the political spectrum. [1] Its president is Stanislav Belkovsky, seen by many as close to Boris Berezovsky. Belkovsky also writes for the nationalist Zavtra newspaper and is manager of a site, one which publishes scandalous political news, for the APN agency. But another council member, Sergei Markov, is well-known to be a “stalwart Putinist,” one of the leading theorists of “managed democracy.” Likewise, Valery Khomyakov, another member, is one of the leaders of the liberal Union of Right Forces, while Andrei Fedorov, yet another, is a statist with a “Putinist” background. So it would be a mistake to assume that the “anti-oligarch” report reflects the general opinion of this diverse body.

Some of the CNS experts immediately expressed their dissatisfaction with the report. Mark Urnov, head of the Ekspertiz foundation, called for the expulsion from CNS of Diskin, the main author, and of Belkovsky, for releasing the report under the CNS name. When his proposal was rejected, Urnov demonstratively walked out of the meeting. Some other CNS members admitted that they had read the report, but denied that they were co-authors.

The report alleges that representatives of “big Russian capital” are preparing “the transformation of the country’s state structure with the goal of achieving the personal merging of top business and executive power,” and that “the country is on the verge of a crawling coup by the oligarchs.” It also claims that “already by 2004 a new government can be formed, controlled by and answerable to the parliament. The leading candidate to head such a government, in a post affirmed under a new constitution, is considered to be Mikhail Khodorkovsky” [the head of the Yukos oil giant].

OLIGARCHY: RUSSIAN AND NEW RUSSIAN

The new usage of the terms “oligarchs” and “oligarchy” departs from the traditional Russian meaning of these words. In Russian, at least prior to 1997, “oligarchy” referred to the official power of a minority ruling elite. A dictionary edited by Vladimir Dahl, for example, defined “oligarchy” as “a form of rule, where power rests in the hands of a small group of elite oligarchs.” This definition corresponds to the approach of Plato and Aristotle, who were the first to identify the oligarchic form of rule. For them, oligarchy was a state structure where the right to occupy a state position was confined to those with property. To the extent that these are always in a minority, their government was rule by the few (from the Greek “oligoi” – few). A characteristic of oligarchy would be rule for the benefit of private interests, and not the general will.

In contemporary Russian journalism, oligarchy is taken to mean unofficial power, that is, plutocrats who, from behind the scenes, pull the strings of presidents, premiers, ministers and governors. A century ago a shadow government of this sort was called the “financial oligarchy,” a term first used by the French author under the pseudonym Lysis. The concept was picked up by the Austrian economist Rudolf Hilferding, and by Vladimir Lenin.

This type of plutocracy, which Hilferding and Lenin had called the “financial oligarchy,” was identified in 1997 by Boris Nemtsov in the abbreviated form “oligarchy,” in an article he wrote for Nezavisimaya gazeta (“Russia’s future: democracy or oligarchy”). When Alexander Solzhenitsyn or General Aleksandr Lebed called the Yeltsin government an “oligarchy,” they had in mind the Aristotelian meaning of the term–a small group of officials (Chernomyrdin, Chubais, etc.) who together formed a “collective Yeltsin.” They were not referring to the “seven bankers” headed by Berezovsky, who appeared in the spring of 1996 and claimed to be steering the government.

However, in public debate the meaning of “financial oligarchy” and “oligarchy” started to blur. This was abetted by the vigorous “anti-oligarch” campaign launched by Deputy Prime Ministers Chubais and Nemtsov. Meanwhile, the nomenklatura (that is, the actual oligarchs) were quite happy to see the invidious label pinned on the bankers, who were actually their junior partners in the business of rule. Some of the bankers did, admittedly, qualify for the label “oligarch” in the traditional sense, as holders of state office (and not because they were rich puppet-masters). Berezovsky and Vladimir Potanin moved into government office in 1996, as deputy secretary of the Security Council and first deputy prime minister, respectively. Roman Abramovich and Aleksandr Khloponin bought state offices (as governors) with their own money. Such other figures as Mikhail Khodorkovsky, Mikhail Fridman, Oleg Deripaska or Vladimir Gusinsky can at best be described as “financial oligarchs” in the Leninist sense.

WE ARE RULED BY BUREAUCRATS, NOT BUSINESSMEN

At other times and in other places financial oligarchs actually did rule the state, formally or informally (perhaps present-day Singapore is an example). But post-Soviet Russia (like nearly all the other post-Soviet states) [2], is collectively ruled by an administrative, bureaucratic nomenklatura oligarchy. The renowned maxim of Vladimir Putin, that oligarchs should be “equidistant from power,” is an oxymoron. One can no more talk of oligarchs equidistant from power than hockey-fans equidistant from hockey.

The oligarchs in Russia, Ukraine, Kazakhstan and some other post-Soviet states are divided into administrative-economic cliques and clans, both national and regional. In Russia today the most influential national clans are the “Old Kremlin,” the “New Peters” [3], “the Old Peters,” and the “Capital” clan (meaning Moscow Mayor Yury Luzhkov). Each clan has a bureaucratic component and an economic component. But in each grouping the administrative wing is the leading element, and the economic the subordinate. Some might suggest that Abramovich or Deripaska are “more important” than Chief of Staff Aleksandr Voloshin or Premier Mikhail Kasyanov. But no one is going to suggest that banker Sergei Pugachev orders around Defense Minister Sergei Ivanov, that banker Vladimir Kogan controls his associates, Anatoly Chubais and German Gref, or that Sistema director Vladimir Yevtushenkov pulls the strings of Mayor Luzhkov. Likewise, under Yeltsin, Security Council Secretary Oleg Soskovets was more influential than Deripaska, Chubais was more powerful than banker Aleksandr Smolensky, and security chief Aleksandr Korzhakov more influential than Berezovsky.

Nemtsov’s concept of “oligarchy” is a mixture of Lenin’s bogeyman and Berezovsky’s unrealized ideal. Lenin believed that rule by the “financial oligarchy” was a key feature of the “highest stage of capitalism.” Perhaps that will indeed be Russia’s future, as the CNS report predicts. But it is not its present reality.

It would not be a surprise, for example, if it suddenly turned out that a co-owner of Sibneft, Base Element and MDM was none other than Mr. Voloshin; of the Alfa group Premier Kasyanov; and of Lukoil–let’s say, the president himself. Cooperation with the state authorities is the “best practice” in Russian business.

The administrative oligarchy created the business magnates, controls them, and by lifting a finger can wipe them off the face of the earth.

That is why the business magnates are burrowing into the executive branch, one after the other getting themselves elected as governors: They want to become real oligarchs.

CONSPIRACY THEORY

The CNS report rather subjectively divides the oligarchs into two groups–the clean and the dirty, based on whether or not they interfere in politics. It suggests a list of “dirty” oligarchs (Khodorkovsky, Abramovich, Fridman, Deripaska, Potanin, Andrei Melnichenko) and a list of clean “non-oligarchs” (Yevtushenkov, Kakha Bendukidze, Oleg Kiselev, Anatoly Karachinsky).

There are some grounds for regarding this document as an ideological-propaganda diversion emanating from one of the clans, in which the economic wing is much weaker than the administrative (such as the “New Peters” Chekists), and aimed against their rivals (say the “Old Kremlin” or “Family”), whose economic wing is publicly exposed. This would be insurance for Putin–not that he is really threatened.

Recall that in fall 2000 there was a similar hullabaloo–in the other direction, against the Chekist clan. Rumors started circulating about the imminent replacement of Kasyanov as prime minister by Sergei Ivanov (then secretary of the Security Council). At that time the paper Stringer published an article: “Anti-Putin. The obvious necessity to remove the president.” It was allegedly based on a top secret, leaked document entitled “Tactical basis for transferring power from the president to his successor while at the same time strengthening the state’s role in society.” The plan involved appointing an “Andropov 2” as prime minister, then naming him as presidential successor, as Yeltsin did Putin. In the event, of course, nothing of the sort transpired.

Another possible interpretation of the CNS document would be that it is a provocation from Putin’s dastardly foe, Boris Berezovsky, aimed at discrediting both of the main pro-Putin clans so as to intensify their mutual rivalry and hostility. It is also not hard to find prototypes for such a diversion: The campaign waged by the Berezovsky media in late 2000 against the “spooks” and their backer–banker Sergei Pugachev–with the goal of exacerbating the tensions within that group.

One can also see the CNS text as a diversion against Kasyanov, since it portrays him as a creature of the anti-state “mineral” oligarchs, but also suggests that they are nervous that he could betray them at any moment.

There are two other peculiarities in the document worthy of note. Khodorkovsky is mentioned ten times, and his Yukos company twenty-five times. In second place is Abramovich (nine times) and his Sibneft (twenty-two times). Fridman and Potanin rate only four mentions, and their companies Alfa Group, ten, and Interros, two. Deripaska gets three mentions, his Base Element, five. Clearly, the document is fingering Khodorkovsky and Abramovich as leaders of an anti-Putin conspiracy that wants to turn Russia into a parliamentary republic under Prime Minister Khodorkovsky. To this end Khodorkovsky has already supposedly bought up just about all the political parties, including the Communists.

Contrary to what Diskin said on the television program “Itogi” on June 1, Khodorkovsky has not said that he is financing the Communist Party (as he has with regard to the Union of Right Forces and Yabloko). He has said only that one of his Yukos partners sympathized with the Communists and had made a personal contribution to them. Khodorkovsky probably had in mind Aleksei Kondaurov, the former head of Yukos security. Others suggest he was referring to Sergei Muravlenko, who last year sponsored the Renaissance Party of State Duma Speaker Gennady Seleznev.

In addition, one should also note the document does not contain a single mention of Vagit Alekperov or his Lukoil concern. It is strange indeed that such a voluminous text analyzing the role of business elites crawling into politics does not mention a figure like Alekperov. Here is a man who greeted the New Year in 2001 alongside President Putin in a private party at the Petersburg apartment of businessman Vladimir Polomarchuk, and whose company (at considerable cost) closed down the opposition television station TV 6.

One can interpret this silence in various ways. But it cannot be an accidental oversight.

1. Joseph Diskin, Valery Khomyakov, Dmitry Oreshkin, Valery Fedorov, Andrei Fedorov, Andrei Ryabov, Mark Urnov, Sergei Markov, Leonid Smirnyagin, Vladimir Rubanov and others.

2. In Aristotelian terms, some have evolved into a “polis” (such as the Baltics) while others (Turkmenistan, Uzbekistan) have degenerated into tyranny.

3. Referring to two waves of Putin allies recruited from St. Petersburg.

Vladimir Pribylovsky is president of the Panorama analytical information agency, which can be found on the web at www.panorama.ru.