Publication: Prism Volume: 2 Issue: 9

Russia’s Top Bankers Dream of a Red-White Accord

By Dmitri Glinski

Last week several prominent representatives of the Russian big business made a concerted attempt to influence the outcome of presidential elections. They stepped forward with a public appeal, pointing to the "catastrophic" consequences of the winner-take-all strategy allegedly pursued by both sides in the Yeltsin-Zyuganov contest. Blaming both Communists and the present regime for a secret desire to "impose their rules of life" on the rest of the country, and warning of "a spirit of violence," business leaders addressed various elite groups and urged them to push political rivals for "major mutual concessions" and "strategic settlements institutionalized by law."

The initiators of this move made impressive efforts to maximize its publicity. It was repeatedly advertised in advance as a major event, and its authors staged separate meetings with selected journalists a day before its official publication — with particular attention paid to pro-Communist newspapers. As a result of this carefully orchestrated campaign, the final text was published on April 27 by almost all leading newspapers, breaking the informal rules of Russian journalistic practice — a funny reminder of the good old times when not a single editor could avoid printing a Central Committee resolution.

What Makes Them So Anxious About Elections?

The business profile of the declaration’s authors and the interests standing behind them are worth attention. The bulk of them are heads of Moscow banks and financial groups – MOST (Vladimir Gusinski), Vozrozhdenie (Orlov), Oneksimbank (Potanin), Stolichny (Smolenski), Alpha group (Fridman) and Menatep (Khodorkovski). Two other signatures belong to managers of second level oil companies (Yukos and Sibirskaia). The automobile industry is represented by its top brass — namely, by the highly visible and controversial personality of Boris Berezovski (head of financial and industrial group LogoVAZ) and his close ally Nikolaev (AvtoVAZ).

It is widely known that the Russian banking sector is shrinking and, according to many experts, stands on the edge of a painful crisis, while the automobile industry has long been in a state of paralysis, due to high costs and lack of investment. Yet most of the signators of the appeal have managed to sustain and enlarge their businesses in this inauspicious and volatile atmosphere. It is widely known that the driving force of their prosperity were informal networks of personal ties with powerful courtiers in the Kremlin. In recent years, prominent government officials all but openly assumed the role of patrons for specific financial groups and companies, supplying to business transactions a warranty unavailable under the law. Thus, the non-governmental financial sector benefited from the bankers’, especially the MOST group’s alliance with Moscow mayor Luzhkov. The head of LogoVAZ Berezovski enjoys the patronage of Deputy Premier Oleg Soskovets. The oil sector is traditionally associated with the name of Viktor Chernomyrdin.

Building a Protectionist State: New Russian Rich Need Help from the Communists

This manifesto of business leaders is a typical piece of Russian political discourse. It is remarkably elusive on the mechanisms of the proposed settlement, but very explicit and clear-cut on the ideological side. On this score, the keywords of the document are "statehood", "patriotism," "great power" and "national interest." This array of emotionally loaded symbols is offered as a supposedly sufficient basis for the vaguely conceived bargain between the ruling establishment and the opposition forces.

As a matter of fact, there is little new in the proposals per se. Since 1991, the Yeltsin regime repeatedly turned to the use of nationalist symbols as a substitute for the uninspiring neoliberal ideology — and as a way to outmaneuver the opposition camp. What is new in this document is the feeling of tremendous insecurity that apparently grows out of a sober assessment of Yeltsin’s electoral possibilities. There is no doubt that such well-informed organizers of his campaign as Soskovets and Luzhkov have a realistic assessment of its prospects, the upbeat reports of VTsIOM pollsters notwithstanding. Yet another remarkable feature is the unprecedented willingness of big business to embrace a statist ideological agenda and to assume the mantle of peacemaker in the reconciliation drive between "the Red" and "the White."

Whence this paradox? One, and, perhaps, the most obvious explanation is, again, insecurity. The private interests and state institutions in Russia are so tightly interwoven, the well-being of the leading Russian "capitalists" so intrinsically depends on the power game and political leverage of their patrons in the executive branch that any personal changes on top of the bureaucratic pyramid may have grave impact on many multi-million fortunes of the "new Russians". From this standpoint, it is not the Communist victory but the loss of power by Yeltsin and his cronies that breeds panic. Thus, it seems more prudent to induce the ruling clans into sharing power with the Communists in an orderly way, into making all sorts of ideological concessions, rather than playing a risky game of democratic elections that may end up in the revamping of the entire executive branch.

Yet there is another underlying consideration at a much deeper level. The simple fact is that Russian big business intrinsically needs a powerful protectionist state. Russian capitalism was historically statist, from the time of Peter the Great, since it always grew out of the central bureaucracy rather than out of societal grass-roots. It is even more so today. The Russian internal market is shrinking due to the low purchasing power of domestic consumers, while the lack of business culture and ineffectiveness of Russian industrial institutions act as barriers between them and the global markets. Credible political leverage is the sine qua non condition for the post-Soviet big business to sustain and expand both domestically and globally. Bankers and industrial managers already have plenty of back-channel influence in the state institutions. But practice shows that this influence does not work as long as the state itself remains impotent. Hence the urgent need for the "new Russians" to restore effective executive institutions domestically and the requisites of great military power on the global scale.

After a decade of painful attempts to reform the country, Russian business and political elites are hanging in a social void. Below them, no middle class of small private owners has emerged. The old vertical chains of command transmission do not work, since old rulers lost their credibility as patrons and the new social order lacks moral legitimation. A dangerous and ever-growing gap separates the Moscow establishment from the rest of society. Paradoxically, the only institution that performs successfully is the resurrected Communist party. It proved its exceptional capacity for low-cost mobilization in past and present electoral campaigns. A pro-Communist nucleus, mobilized by tradition and the feeling of protest, exists in virtually every other village and urban district of Russia, while most other parties are poorly organized, volatile and Moscow-centered. Some people realize that, in fact, those old chains of ideological loyalty to the party were the only force that held together the Soviet state in the absence of a legal and civic culture. Russian semi-capitalist semi-bureaucratic elites desperately need to coopt the human and organizational resources of the Communist party and to use them as building bricks of a new Russian state. This is why those elite groups are genuinely interested in a historic reconciliation with the party which they abandoned and destroyed five years ago. They also feel that time is short and that, unless a bargain is drafted before June 16, they may have either to surrender, or to break the rules of the game and cancel the electoral results, with unpredictable consequences.

Cartel of Elites: The End Product of Reforms?

At the level of federal politics, the Communists and "party of power" appear to be mortal enemies. This is a necessary condition for them to keep their followers. But one can never rule out that at some point both sides will find that none of them has enough guts for a decisive victory, that none of them has a sound modernization strategy to take responsibility for the development of the country, and that each of them needs the enemy’s resources for its own survival. Then, one might observe t he emergence on the Russian scene of an elite settlement, known as "consociationalism" (a term coined by A. Lijphardt), where leaders of seemingly antagonistic groups privately agree to share power over a splintered society.

Needless to say, this model does not resemble the embodiment of democratic ideals and principles. Nor is it conducive to the development and social reforms that Russia so desperately needs. Instead of using the organizational resources of the Communists to reinvigorate the state, it may add to the dispersion of power and responsibility and lead to a further alienation between elite and society. For better or for worse, there are too many Russians who dislike both the Communist past and the Yeltsinist present and would hardly accept a mixture of both. They do believe that Russia is able to become a modern state, which would rely upon a strong middle class and vigorous civil society. On the presidential ballot, many of them will cast votes for alternative candidates, such as Grigori Yavlinsky or Svyatoslav Fyodorov. The appeal for a power-sharing agreement between Communists and "the party of power" tacitly assumes the omnipotence of elites and the political irrelevance of this "third force." It remains to be seen whether this assumption is confirmed by reality.