Page 35 - bneMag February 2021_20210202

bne February 2021 Cover story I 35
At the end of the communist experiment in 1991 the East was supposed to start resembling the West as it increasingly adopted western liberal democratic values, but what has actually happened is that the West is increasingly starting to resemble the East.
The oligarch problem
government’s taxes on the people and business; oligarchs became expert
at setting up schemes to extract an economic rent on any activity. The upshot was inefficient and overly expensive goods and services that have acted as a drag on growth ever since.
More recently in some countries a new generation of “real” businessmen have emerged that do “real” business. The high volume-low margin retail sector, for example, has never appealed to oligarchs, as you can’t charge economic rents. This new generation make up
the new flock of millionaires and billionaires, but the old guard are too well entrenched, and to confuse things some of them are investing into the
new businesses too to let the younger generation do the work, as many Yeltsin- era oligarchs are in at least their 60s now.
Today Russia is a mixed bag with
both real mega-wealthy businessmen and oligarchs. And the oligarchs' star has waned after Russian President Vladimir Putin took over, as his first act was to eject them from the corridors
of power, along with their corrupt proxies in the Federation Council,
the upper house of Parliament.
While Russia is tarred as a kleptocracy, the irony is that Putin is the only one of the Commonwealth of Independent States (CIS) leaders that has made
Ben Aris in Berlin
Andrew Meier had a good joke about the problems post-
Soviet countries face with their oligarchs in his book “Black Earth”:
if the two questions that dominated the Soviet-era were “What is to be done?” (Lenin’s famous pamphlet of the same title) and “Who is to blame?” (as nothing in the Soviet Union worked and someone got shot for it), after
the collapse of the Soviet Union the question becomes: “What is to be done about those who are to blame?”
The chaos of the 1990s created the oligarch class. They were the fastest
to react and pick up the extremely valuable assets that had fallen to the ground amongst the rubble of the collapsing totalitarian system to literally make millions of dollars overnight.
Legend has it that Russia’s uber- oligarch Roman Abramovich made
his first million when he managed to divert a train full of crude oil from its destination to some internal refinery in the backwoods of Russia’s regions and sent it instead to the Baltic ports and on to the international markets in 1992.
Once a businessman had several million dollars in his pocket while everyone
around him was plunged into poverty then anything became possible.
But these men are not good for the country. They are a corrupting influence as they buy their way – or worse – into the possession of their assets and are
in the business of controlling state assets and the men that control them.
Boris Berezovsky, another of the original seven oligarchs from the
“Legend has it that Russia’s uberoligarch Roman Abramovich made his first million when he
managed to divert a train full of crude oil to the Baltic ports and on to the international markets”
Yeltsin-era, famously said it was not necessary to privatise a company, only to “privatise its revenues.” Of course this includes not paying any tax.
As time passed the game became more sophisticated. The people remain the biggest source of wealth in any country and access to that wealth is via the
a successful attempt to break the control of the oligarchs at his famous “oligarch meeting” in 2001, where he told them “keep what you have got, but stop the stealing,” and bring power back into
the hands of government officials.
Of course since 2000 the pendulum in Russia has swung too far the other
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