Russia After Putin: Inherent Leadership Struggles

[Muzh]

Note, the issue with Tymoshenko was not her decades long theft of state property.  It was for abuse of office.  That she profited from actions personally was a sidebar.  What she did damaged the Ukrainian economy, and its people, significantly.

LMFAO

In that case we should start proceedings against George W. 

[OlgaH]

It's not really a show trial if the criminal is guilty.  That certainly is the case with Tymoshenko.

Not talking about Timoshenko.

While I agree that the criminals should be prosecuted, in the case of Khodorkovsky, it was more a show trial, more over knowing how the corrupted justice system operates... exaggerated facts and evidence, exclusion of the defence witnesses and experts, pressure on the judges and so on.

I tend to agree with the Paul Klebnikov (his article about Khodorkovsky case published in 2003) http://www.vedomosti.ru/newspaper/article/69073/

"Khodorkovsky's arrest is an example of selective justice, but is better than nothing....  His arrest doesn't represent a triumph of lawfulness... The law-enforcement system is very far from coming into being civilized..."

Paul Klebnikov was killed in Moscow in 2004

http://www.hudson.org/index.cfm?fuseaction=publication_details&id=3395

In an interview with the newspaper Izvestiya, seven hours before he was killed, Klebnikov compared the charges against Yukos with the behavior of the Sibneft oil company owned by Roman Abramovich, a Putin favorite. He concluded that in all respects - nonpayment of taxes, non-patriotism and political interests - the record of Sibneft was considerably worse than that of Yukos but Sibneft was prospering whereas Yukos was being driven into bankruptcy. The reason was that Khodorkovsky, unlike Abramovich, had demonstrated independence and, by financing opposition political parties, had contributed to political pluralism.

 

[Muzh]

Exactly.

[mendeleyev]

Ranetka, my point was about selective justice which in reality is no justice at all.

Вор должен сидеть в тюрьме. Do you know this quote Mendy?

Of course.










Unrelated note: A very cool movie from the Soviet period was Вор (Thief) and I wish it was available with English subtitles for your readers to enjoy. The story is about a single mother/war widow and her little boy at the end of the war. The boy dreams of his father who he never met. On the train they meet a man who sweeps the mother off her feet but he is a thief. You'll learn a lot about life at that time and especially about communal apartment living. Tables are turned at the movies end and the ending is hard to follow if you don't have some Russian language knowledge. Still, worth watching for those learning:

[Fashionista]

If we were to imprison all the serious criminals in Russia and Ukraine, no leaders would be left standing. That is why the charges in Ukraine against Yulia and in Russia against Mikhail are politically motivated. They may not the innocent as lambs but with foxes guarding the hen houses, the reason they have been jailed is not for the crimes they may have committed, but for removing them from political competition.

They are thus political prisoners.

I am not a political person. In the sense that I stay as far away from political discussions as humanly possible. I am simply interested in the meaning of this English expression, semantics, so to speak. To me, when a person says "political prisoner", he implies that this person is a dissident, a prisoner of conscience, practically someone like Sakharov. I don't know anything about Ukrainian affairs, but as far as I know Khodorkovsky was not a dissident of any sort, his idea of political system was the same as of those who imprisoned him. That system was his natural habitat, he was one of the few who created it, he benefited from it. He just crossed someone who had a better hand, that's all. Political prisoner? Very misleading (intentionally?). More like a wolf who lost his challenge to an alpha. Can you call that wolf a political exile? 

[OlgaH]

Russian economist flees in new sign of pressure on Putin critics

A prominent economist and government adviser has fled Russia after being questioned by state investigators, amid a growing clamp-down on groups and individuals critical or independent of President Vladimir Putin.

Some commentators said the departures could mark the start of a wave of emigration by Russia's best and brightest, like those in the 1970s and after the 1917 Bolshevik revolution.

http://www.newsdaily.com/article/7ac8b78f9bf29af3d48da9701d39f0b0/russian-economist-flees-in-new-sign-of-pressure-on-putin-critics

[OlgaH]

Amnesty International has declared Russian businessmen Mikhail Khodorkovsky and Platon Lebedev prisoners of conscience after the two men’s convictions on money laundering were today upheld by a Moscow court.

Khodorkovsky website.

http://www.khodorkovsky.com/

[OlgaH]

Vladimir Putin 'galley slave' lifestyle: palaces, planes and a $75,000 toilet

http://www.guardian.co.uk/world/2012/aug/28/vladimir-putin-palaces-planes-toilet

[Belvis]

Some commentators said the departures could mark the start of a wave of emigration by Russia's best and brightest, like those in the 1970s and after the 1917 Bolshevik revolution.

Brightest thieves I think. It's enough to see their income declarations and salaries of their subordinates. As a rule they have pretty good fortune by time these bright men decide to emigrate.
As for political prisoner Khodorkhovsy I remember as in 1990s one oil baron in interview was puzzled why he pays 2 times higher taxes than Yukos per a barrel.

[Gator]

LMFAO

In that case we should start proceedings against George W. 

There are plenty around in both parties who were responsible, many of them a long time before GeorgeW took office.  So when assigning blame, anyone who voted or was eligible to vote should first look in the mirror.

[Gator]

I do not understand some black and white opinions here.  No one can claim that Russia and Ukraine follow the rule of law and apply it fairly.   In my opinion every FSU politician is black with a few maybe endeavoring to emerge as something gray. 

[Boethius]

No country applies the rule of law absolutely fairly.

[OlgaH]

Some commentators said the departures could mark the start of a wave of emigration by Russia's best and brightest, like those in the 1970s and after the 1917 Bolshevik revolution.

http://www.newsdaily.com/article/7ac8b78f9bf29af3d48da9701d39f0b0/russian-economist-flees-in-new-sign-of-pressure-on-putin-critics

Brightest thieves I think. It's enough to see their income declarations and salaries of their subordinates. As a rule they have pretty good fortune by time these bright men decide to emigrate.
As for political prisoner Khodorkhovsy I remember as in 1990s one oil baron in interview was puzzled why he pays 2 times higher taxes than Yukos per a barrel.

and what would your facts be to call Sergei Guriev a thief?

The brightest thieves are stay and operate in Russia and don't have too many problems under Godfather's protection if they don't demonstrate their political ambitions, do not support oppositions and do not talk too much about human rights.  Russia is heaven for them until they cross the line. When it happens the Godfather will have another piece of meat to throw to the general public waiting for "justice" in the country with oppressed rights and freedoms, after he just put on his new clean gloves enjoying the public popularity.   

So, who is that oil baron your mentioned? 

[Belvis]

So, who is that oil baron your mentioned? 

Andrey Vavilov, the Chairman of the Board of Severnaya Neft.

[OlgaH]

As for political prisoner Khodorkhovsy I remember as in 1990s one oil baron in interview was puzzled why he pays 2 times higher taxes than Yukos per a barrel.

Andrey Vavilov, the Chairman of the Board of Severnaya Neft.

Oh yes, Andrey Vavilov, another interesting persona. He was  the Chairman from 2000 till 2002.

The large oil companies offered more than $100mil of bonuses for the oilfield Val Gamburtsev license, but Vavilov's Severnaya Neft got it only for $7 mil.  Ai da Vavilov. It must be love

There is a lot of interesting articles about his activity and the investigations of his activity. Don't you think Vavilov got so lucky getting off lightly (легкий испуг) despite all the charges against him 

But when Khodorkovsky in 2003 during a live televised broadcast pointed to Putin "that the $600 million price paid for purchasing of Severnaya Neft by Rosneft was excessive, thus implying that some parties close to the Kremlin had improperly benefited from the transaction", Khodorkovsky got in full program 

Here is about the oil companies taxes (2000)

http://2000.novayagazeta.ru/nomer/2000/36n/n36n-s02.shtml

According to the Institute of Financial Studies Yukos was the largest taxpayer in 2001: $45.7 taxes  per ton (Rosneft- $38.4 and  Lukoil - $34.1)

http://www.ng.ru/economics/2003-07-14/1_ukos.html

Andrey Vavilov
http://www.rumafia.com/person.php?id=1386

[Belvis]

Ok, I support your hint to put Vavilov in jail for corruption and slander against Khodorkovsy.
Пусть сменит Михаила на нарах.

[mendeleyev]

Khodorkovsky was not a dissident of any sort, his idea of political system was the same as of those who imprisoned him. That system was his natural habitat,

Reading his writings over the years makes me realize that one of the qualities that makes him a threat to the status quo is his mind.

As others have written, the only difference between him and some of the others is that he didn't just quietly get rich and stay out of the Kremlin cross-hairs. Instead, he became politically active in ways that threatened the system and thus he had to go to prison.


Lets go back to the collapse of the Soviet system:

The Soviet State and various Republics were bankrupt, thus leaving the RF and the remaining Republics in the same boat. Perhaps you remember when workers like teachers were paid in things like vodka, soap and cigarettes.

Factories were either barely functioning or outright broken. Whole industries, even including many oil companies, were facing collapse. So the state and several republics did what entities do when facing such extraordinary cash deficits: they SOLD stuff at kopeks to the dollar (pun intended).

Now for each transaction there is a buyer and a seller. The buyer bought something which at that point was often near worthless in its present state but still had potential. It is easy to look back now and marvel that those who became wealthy purchased whole industries at low prices, but we must remember that a business is only worth what someone is willing to pay/risk given its condition at the time of sale.

Did sweetheart deals happen? (Clue: this was the former Soviet Union--hell yes they happened.) We get upset over the buyers but nobody wants to talk about the sellers. Buying and selling always takes two parties.

What we have in Russia now are a bunch of old citizens, bless their hearts and I do admire and love them by the way, but many of those pensioners suffer from selective economic amnesia: they've forgotten the condition of those industries and instead pretend that those businesses were worth something; as if the buyers scooped up a brand new factory at full production yet paid next to nothing.

Back then your grandmother was laughing at the fools who paid money for such broken industries. Today she's pissed off that they got rich but she didn't.

Here in 2013 we have young Russians who have no memory of those days other than riding their tricycles yet they believe that surely Babushka is correct. She has also forgotten that much of the industry sold off in those cash hungry days was in a condition to be sold at kopeks on the dollar.

Everybody wants to throw the buyers in jail but nobody remembers the sellers. Hmm, for each buyer there was a seller. If the buyer was a thief, then what does that say about the seller who gave it away at prices next to nothing?

Hint: usually the seller was the State or one of the Republics. Often the sellers were strapped for cash and made cheap deals and sold off state assets to pay salaries, keeps schools running, fund hospitals, etc.  But you and I know that many of those sellers sold and pocketed part of the deal themselves, leaving the ordinary people with nothing.
 
No smart business person would have paid fair market prices back then for run-down, tired and mismanaged industries. So, who should go to jail, the buyer or the seller?

I find it curious that in Russia today there are plenty of folk who want to lynch the buyers, but nobody is talking about lynching the sellers. I'll tell you why: because the sellers are sitting in power today and if anyone is going to jail it will be the buyers who bailed them out back then when the state needed cash.

Not much was worth a fair price in those days. Very few goods, except perhaps for oil, were worth taking to international markets. Then even oil needed Western partnerships in order to get to market.

If your parents had money and permission to travel, they bought shoes in Italy but not the CCCP; cars and trucks were best made in places like Germany and Japan, not the CCCP.  Did you purchase Soviet sand toilet paper because it felt soft and gentle or because that was the only sand toilet paper available? We could talk batteries or condoms or lightbulbs but the truth is that those who had money and could afford to buy foreign products did so because of quality.

The Soviet Union was bankrupt and broken, no matter the fairy tales and fantasies floating around in Gennady Zyuganov's wrapped mind. Who is ultimately to blame? Two liars named Lenin and Stalin for starters, and the others just continued to build on the quicksand. Quicksand eventually collapses and communism did what it always does--rises to a level high enough in corruption that it collapses under its own weight but unfortunately buries good people along with the bad.

Bluntly, if any buyer deserves to go to jail, then so do the sellers.

One thing I do admire about Vladimir Putin was his recognition that Russia was about to be owned by the West if this mad selling and buying was to continue. So he brought it back inside Russia's house so to speak, and gathered it all under Russia's roof (another intended pun) so that Russia would be owned by and controlled by Russia.

Other than that however, he is one of the sellers.

[mendeleyev]

Footnote:

Both Khodorkovsky and former President Medvedev have broached the subject of renegotiating past deals, taking into account the risk factors and the investments necessary to revive industries and factories that were sold during those post-Communist days. Several Oligarchs have indicated that they might be willing to sit down and talk and for a time it was an policy idea for then-President Medvedev.

Today there appears to be no interest by the government and the reasons while complex are also revealing. Many in the government today or in the "shadow of the Kremlin" are strange relationships where the seller is the left hand and the buyer is the right hand if you understand what that means. In those cases neither seller or buyer, really one and the same, is interested in renegotiating anything.

So we come full circle back to the reality that the only buyers persecuted/prosecuted are those with political agendas that differ from those in power.

[Fashionista]

Mendy, I am not sure where you are getting your information, I am not getting mine from my "babushka". My granny is in her 90s, and although she lived through the perestroika and what followed, I doubt she has a good grasp of what happened. I would never tell her all the details of my personal experiences, that's for sure. She can tell pretty interesting stories about what she called "the liberation of Poland"    and the Finnish campaign, because she volunteered to serve in the Red Army and fudged her birth certificate, but I digress.

I, on the other hand, remember the wild 90s very well, as I, like many other young people at that time was among those who were involved in starting up new small businesses.  I was not the business owner, god forbid, normally guys were the ones who dealt with all the important issues of Russian style business for obvious reasons.  There were three of us, two girls and the owner, and we ran a pretty small and by those standards an innocent and legitimate operation. Specifically, we sold bootleg copies of movies and cracked videogames. My role was to screen and rate them and take care of sales. Many of those "movies" were simply imported porn, and that was a pretty unusual job for a young romantic girl who was raised in a physics/math professor's family. I will never put that "professional" experience on my resume, but the concept of morals and business ethics was fuzzy back then, where fuzzy is a code word for non-existent.  The role of the owner was to make sure we had a solid "roof". That meant dealing with local gangsters and the police (militsia), who were gangsters in uniform. 

Why am I telling you this? First off, because I was involved in "businesses" Russian style during Eltzin's "reforms" and I happen to know a thing or two about it. There was nothing like freedom to operate that I now enjoy in the West, not even close. If you made any money, any money at all, you had to pay up, or "делиться". It was not "sometimes", it was THE RULE. If the business was becoming too profitable, it was taken from you just like that, brains or not.  I happen to know a few guys who graduated from Fiztekh, MGU and NGU, and who attempted to run businesses in Russia in the 90s (long before Putin came to power), some of them are my very close friends.  Basically they all ended up emigrating and making a great life in the West, and their explanation of their decision was that they were moving into the income level that was becoming too dangerous for "personal health", as they put it.  In that respect, the emigration of the brightest and the best started long before Putin came to power. You should talk to these people, they have some impressive stories. Compared to their stories my experience is nothing.

What's my major point? Nobody, I repeat, nobody, could have amassed billions of dollars quickly without strong backing from the higher-up government "families"and "siloviki".  How business savvy you were didn't matter, your brains didn't matter, your brains, if too profitable, could have been sprayed all over the wall in a matter of a second, and that was the end of your business career, simple.  People were killed for a lot less, remember those metal doors and window grilles? In fact, it happened so often, that the expression "контрольный выстрел в голову" has become a casual basis for humorous Russian folklore and numerous jokes.  Newspapers didn't even bother to print about some lower level professional assassinations, because they were not newsworthy, just another case of "another one biting the dust".

I have no knowledge of fire sales of government property back then, have never heard of it. The government wasn't strapped for cash, they were printing money with no limitations, hence hyperinflation, and I remember the times when 5000 rubles were worth less than a dollar.  A kitchen appliance could cost a million rubles.  I don't know about cases of paying teachers' salaries with vodka and cigarettes either, they, the teachers, should have been so lucky, as that was hard currency.  Sometimes factory workers got their payments with what they produced but that's another thing.  I guess the teachers were paid with new knowledge of this dog-eat-dog world, so to speak . The salaries were not paid on time for a different reason.  It was profitable to hang on to someone else's money as they were not indexed with hyperinflation.  One could simply convert them into dollars and return in a month having about a half of the sum left in their pockets. The "wire transfers" back then took from 2 weeks to a month, as if money were wire transferred from out of the solar system.

Instead of fire sales (not sure where you learned about that one) we had the process called privatization, which was quickly dubbed "прихватизация" because of the underhanded ways it was done.  We were handed so called "privatization vouchers", supposedly "shares" of all the total Russia's assets.  People were free to exchange them for bonds or shares of any enterprise they wanted. The majority did, it's not like they didn't care to invest, and the price of those shares went to zero pretty much over a period of a few months to a couple of years. End of story.  Those of us who sold them for nominal value at the start made more money.

Then oligarchs emerged. Very few people know how that happened, it had nothing to do with being business savvy or anything like that.  Clearly, the ``buyers`` and the ``sellers`` were the same group of people. Didn't matter what you knew, but who you knew.  Every time there was a business miracle in Russia, the only thing people had to look for was his communist party/Komsomol/militsia/KGB connections, not his fascinating thinking process. I'll leave this exercise to curious readers, I don't follow nor do I care to remember names of Russian oligarchs, past or present. Of course, after everything was concentrated into the hands of a small clique, not surprisingly, they went after each other's jugulars.  There is no honor among thieves.  Some won, some lost, who cares. 

But hey, if someone wants to believe into Russian billionaires who amass billions on Mondays, fight corruption on Tuesdays and look for cure for cancer on Wednesday, I can't help it.  All I am saying, anti-Putin propaganda is not the opposite of pro-Putin propaganda, it's still propaganda.  The opposite of pro-Putin propaganda is presenting things as they happened.

Phew, a long post, took me a while, not typical of me

[mendeleyev]

Fashionista, I used the term grannies because I run into them all the time and that attitude is prevalent. Yes, I'm very familiar with those vouchers and frankly, most Russian citizens were not prepared to make financial decisions in the new economy after decades of communism.

I agree with most of what you wrote.

We still have a problem however: for every buyer there was a seller. Printing money and hyper inflation was indeed a chilling problem but so was finding hard convertible currency to use outside of the CIS.

[Gator]

Mendy,  Good post.
 
Fashionista,   Thank you for taking the time to write your post.  It reminded me of the stories I heard when dating my ex-wife in Moscow in 2002-2005. 
 
I had some long conversations with people who had stories to tell about the transition of wealth.   My ex-wife's husband was one of those who played the "get rich quick" game but lost (he went missing and has never been found).   
 
These story tellers mentioned that all workers received "shares" in the newly created companies owning the factories where they worked.  Were these "shares" the same as what you termed" privatization vouchers?"  Anyway, I was told that workers had no understanding for "shares" and quickly sold them for peanuts, only those with the most shares got something as valuable as a refrigerator.
 
Somebody had money - money to buy the shares, money to upgrade facilities, money to loan to those who wanted to play the game.   I was told about small factory owners borrowing money to upgrade their factory and then losing the factory when they could not repay the loan. 
 
Where did this money come from?  Where did Mendy's buyers get money?  Although they were buying factories for kopecks on the dollar, they still needed a lot of kopecks.  I heard many theories.  One theory is that the insiders knew the transition was coming and were skimming funds long before the money was needed.  Another theory is that the government printed money and  gave it to the hand picked winners.  Another theory is money came from "investors" from outside Russia.     Any other theories? 

[OlgaH]

Yes, I'm very familiar with those vouchers and frankly, most Russian citizens were not prepared to make financial decisions in the new economy after decades of communism.

yes, Mendeleyev, you are correct. Many Russians really did not know what to do with the vouchers and how and where to invest them.

http://www.rg.ru/2012/08/15/vaucher.html

Viktor Gerashchenko, the ex Chairman of the Soviet and then Russian Central Bank: "Nothing came out of that idea for the population majority. Very often the plants' management were buying the vouchers from their workers at paltry price becoming the owners of the enterprises."

[OlgaH]

Where did this money come from?  Where did Mendy's buyers get money?  Although they were buying factories for kopecks on the dollar, they still needed a lot of kopecks.  I heard many theories.  One theory is that the insiders knew the transition was coming and were skimming funds long before the money was needed.  Another theory is that the government printed money and  gave it to the hand picked winners.  Another theory is money came from "investors" from outside Russia.     Any other theories?

You also can look for the business dossiers, there actually enough information. Personally I never heard about "the printed money and given the hand picked winners". To me it more sounds as a "folk tales".

Here is also an interesting read

"The "loans for shares" scheme of 1995-6—in which a handful of well-connected businessmen bought stakes in major Russian companies—is widely considered a scandal that slowed subsequent Russian economic growth."

http://www.nber.org/papers/w15819.pdf?new_window=1

[Fashionista]

We still have a problem however: for every buyer there was a seller.

I might have an understanding where we don't understand each other  . You look at this as a westerner, with a deeply rooted respect for business transactions, signed agreements etc. Therefore you see sellers on one side and buyers on the other, and binding agreements in between. 

Do you know what the biggest shock for Soviet people was when they watched Western movies? Not the cars, not the wealth, they could appreciate it to some extent. It was the fact that close relatives lended each other money and sold each other property, that was very hard to understand. If you have the money/property that you are ready to dispose of, just give it to your son/mother/father/brother/sister, that would be the normal thing to do. 

Now, back to sellers/buyers. In the same spirit, those were not business transactions in the western sense. First off, technically, the sellers did not sell what they owned. The transfer of property was simply a collusion to divide and own, the amount of money on the contract didn't matter, it was just a number. The sellers and buyers were not on different sides of an agreement, they were a group of good friends deciding who they are going to eat for lunch. Their formal capacity (a business owner or a government offcial) was immaterial, just a title on a piece of paper. Certainly, those who because of their utmost stupidity and arrogance broke the unwritten code were "casted out".   

Generally, money don't mean in Russia exactly what they do in the West even now, and back in those times even more so. It's the control, relationships and influence that matters. You can have lotsa money in Russia and still be treated like a worm. But that's a much longer conversation than I can afford going into now, gotta go prepare for that Canada Day picnic. 

[mendeleyev]

I understand and have observed with what you're saying here. Thanks for your further explanation.

I hope that our understanding is only that and not a barrier to the respect we have for each other. Also, hope your Canada Day celebration goes wonderfully!