Johnson's Russia List
#7391
30 October 2003
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A CDI Project
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#17
The Times (UK)
October 30, 2003
Putin's creed: Stalinism without socialism
By Anatole Kaletsky
Is Russia moving back towards some form of Stalinist dictatorship? Or is
the transition from communism to capitalism now irreversible, as almost
everyone so recently believed? In the immediate aftermath of a political
and economic upheaval, such as the one set off by the arrest of Mikhail
Khodorkovsky, Russia's most powerful and richest businessman, the easy
answer to such questions is "only time will tell". In this case, however,
one can be clearer: the answer to both my opening questions is "yes".
Russia probably is reverting to an authoritarian society, in which the
President and his immediate entourage believe that they are entitled to
keep a tight rein on political activity, as well as maintaining a monopoly
of power. But the decay of liberal democracy will certainly not bring back
communism: it will probably do the Russian economy no great harm.
Dictatorship could even make the country more of a magnet for Western
investment, in the same way as it has in China.
Idealistic linkage so often suggested by Margaret Thatcher and Ronald
Reagan between free markets and "free peoples" was never more than a
rhetorical device. History has seen plenty of liberal democracies with
highly regulated economic systems and there have been even more examples of
tyrannies that have run their economies on broadly free-market capitalist
lines.
To judge by recent events, Russia may well turn its back on the experiment
with democracy initiated by Mikhail Gorbachev and then subverted by the
corruption and anarchy under Boris Yeltsin. But even if this happens, there
is no reason that its economy should suffer or Western investors take
fright. It is laughable to suggest, for example, that oil companies that
have thrived on relationships with corrupt dictators in the Middle East,
Nigeria or Indonesia, would suddenly pull out of Russia because it ceases
to be a flourishing democracy or because civil liberties come under threat.
Putin may want to make Russia an orderly one-party state by taking control
of the media and making sure that concentrations of wealth are not
transformed into rival centres of power. But a reversion to communism plays
no part in this scheme. Putin is intelligent enough to understand that
communism as an economic system was a complete and irrevocable failure that
condemned Russia to a century of backwardness and a catastrophic loss of
influence in the world. The last thing he wants is to restore centralised
control over the economy or natural resources.
Indeed, Russia under Putin has arguably moved further from any kind of
socialism or social democracy than the US or any other major country.
Russia now has a lower ratio of government spending to GDP than any OECD
country. Its flat-rate tax system, with absolutely no element of
progressivity, is almost identical to the "idealistic objective" proposed
by the most extreme economic libertarians on the US Republican Right.
Putin's heroes are clearly not Lenin or Stalin. If he wants to imitate
anyone it is probably Deng Xiao Ping, who introduced capitalism and private
enterprise to China while safeguarding the Communist Party's monopoly of
power. Another more sinister role model may be General Pinochet in Chile.
When Putin's mood is milder he probably imagines that he might be able to
emulate on an infinitely grander scale a thoroughly pro-Western and benign
authoritarian, such as Lee Kuan Yew, Prime Minister of Singapore.
There seems to be no great worry about Russia's economy after this week's
events. Whatever happens to Khodorkovsky - whether he is imprisoned for
years or eventually freed and exiled; whether he is made to sell his stake
in Russia's biggest oil company or it is expropriated by the State - Russia
will remain for years the fastest growing economy in Europe, as it finally
adapts to the market system and begins to exploit its natural resources and
its intellectual wealth. The collapse of the Moscow stock market on Monday
was the least significant consequence of Khodorkovsky's arrest.
The real worry is not Russia's economic performance, but its political
development and its pro-Western orientation. For the shadowy siloviki
(roughly translating as "wielders of power from the security apparatus")
who have been tightening the screws on Khodorkovsky and other dissenters
are also the people who have been pushing Putin away from the West on
issues such as Iraq.
The most obvious message conveyed by Khodorkovsky's arrest is that wealth
and economic influence offer no protection against coercive state power.
This notion that wealth should not put you beyond the reach of the
authorities may appear to be a bedrock of any law-governed society, but
there is a world of difference between applying the principles of due legal
process and arbitrarily persecuting individuals who are politically
troublesome. Every Russian who shares in the collective memory of Stalin's
purges and show trials has a perfect understanding of this distinction,
even if some of Putin's Western apologists do not.
Khodorkovsky, whatever his past financial misdemeanours, is not being
persecuted because of the way he acquired his wealth. The fact is that all
the robber barons who now control the Russian economy got rich in the same
way. They bribed, cheated, stole and, in some cases, murdered their way to
wealth.
Why, then, make an example of Khodorkovsky? Since the end of the legalised
looting of the Yeltsin era, Khodorkovsky has turned himself into a model of
probity and business legitimacy. The company he created, Yukos Oil, was one
of the first Russian businesses to publish Western-style audited accounts,
to pay taxes on time and to deal fairly with minority shareholders and
foreign investors. In his personal activities, Khodorkovsky emphasised his
determination to reinvest his wealth in Russia, rather than ferret it away
in Swiss banks; he gave generously to unfashionable charities; he supported
cultural and scientific exchanges with the West and created a programme for
Russian students at Oxford modelled on Rhodes scholarships.
Why, then, did Putin target this model oligarch? Western politicians and
businessmen purport to be mystified. The US State Department and Exxon said
that they needed to study the situation more closely. Lord Browne of
Madingley, the chief executive of BP, who has invested billions in other
Russian oil fields, said yesterday that "it is still impossible for us to
tell what the deep motivation is" for this arrest. But for anyone who does
not need to worry about staying on the right side of the Putin Government
there is no mystery at all.
Khodorkovsky was arrested not because of the way he made his money, but
because of the way he chose to spend it. His generosity extended well
beyond charities to political movements. Khodorkovsky financed all three of
Russia's opposition parties, mainly the liberal Yabloko and the pro-market
Rightists, but also recently the Communists. He supported pro-Western
think-tanks that were critical of the Russian Government's economic and
foreign policies. He opposed the war in Chechnya.
He recently acquired several newspapers. And he was said to have political
ambitions, possibly including a run for the presidency in 2008, when Putin
is required to stand down, unless Putin decides to revise the Russian
Constitution, which on present form, he well may.
Khodorkovsky's independent liberal nexus came nowhere near to challenging
Putin's political control. The parties he supported financially will
struggle to secure even the 5 per cent vote they need to win any
representation in the new parliament. As for the idea that impoverished
Russians would elect as President the country's richest robber baron, this
was widely dismissed in Moscow as a joke. But, for Putin and the siloviki
around him, it seemed to be unacceptable as a matter of principle that
there should be any independent media and any centres of political activity
outside Kremlin control. In the end it comes down to the question of
whether the Russian State can tolerate political independence.
I will give the last word to Boris Berezovsky, the dominant oligarch of the
Yeltsin era, who now lives in London as an exile, after handpicking Putin
for the presidency and then becoming too powerful for his own good. He
summarised the Khodorkovsky affair like this: "Every totalitarian system
fights against independent people. And, for sure, people who have a lot of
money are more independent than people who don't have a lot of money."
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