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Putin's Power Grab

By Anne Applebaum
Posted Tuesday, Aug. 1, 2000, at 9:00 PM ET

Just for the record, here are a few quotes, taken from a range of Western and Russian newspapers, describing what happened at the meeting late last week between Russian President Vladimir Putin and 20 Russian "oligarchs," the hyperwealthy Russian businessmen who control vast swathes of the country's natural and financial resources, much of which they obtained through illegal or highly suspect means.

The Kremlin's press service claimed the discussions had established that "the authorities would not review the outcome of privatisations." This, for the uninitiated, is code for: "The authorities will not prosecute that very large number of hyperwealthy Russian businessmen who obtained their hyperwealth through illegal or highly suspect means."

Boris Nemstov, the liberal politician who organized the meeting, said that this news was met with approbation and relief: The oligarchs are now "sick of being oligarchs. … [T]hey want to be law-abiding taxpayers."

Oleg Kiselyov, the head of Impexbank, said, "Before us sat a most reasonable and capable man, a man able to understand the situation."

Izvestia newspaper (yes, it still exists; one of the oligarchs owns it) heralded the new era of "pragmatism," in which businessmen would no longer "stupidly" involve themselves in politics.

Everyone, reported the Moscow Times, emerged from the meeting smiling and joking and looking generally relieved. The Washington Post even opened its article on the meeting with the sentence, "President Vladimir Putin reassured edgy business tycoons today … ," and several went on television over the weekend to demonstrate, enthusiastically, how reassured they felt. All of which heralds a new era in Russia: Government and business will now stay at a proper distance from one another. Rule of law has been re-established. No one will be unfairly arrested. No one will receive unfair favors. The oligarchs want to pay taxes just like everybody else. Right?

Er … not so sure about that. For the record, I would like to note the following discrepancies which I observed while in Moscow, in the days following the meeting.

One of the businessmen at the meeting had been due to attend a conference on the day following the meeting, a conference at which he would certainly have been asked to tell a group of Russian politicians and Western experts what had actually happened. Pleading illness, he failed to show up.

Another businessman, a junior partner of one who was at the meeting, told me that the president had been late. In the half-hour that they spent waiting for him, according to his boss, the 20 oligarchs, most of whom are individually worth the GDP of a small African country, were so nervous that they were unable to sustain a conversation: "These were frightened men, let me tell you."

A third businessman, one who has been heavily involved in helping President Putin to write his economic program, simply laughed when I showed him the Moscow Times report, noting its generally cheerful spin. "If you believe that, you'll believe anything."

More to the point, there were a few absent faces at the meeting. Missing, for example, was Vladimir Gusinsky, until recently a paid-up member of the oligarch club, now residing in Spain. Gusinsky was, unexpectedly, recently arrested, accused of possessing an illegal fortune, slapped in prison for three days—and then, equally unexpectedly, released. The TV news channel which he owns (the only one, until now, to broadcast criticism of Putin) hasn't enlightened us as to what happened to him, perhaps because, as the rumor mill claims, it has already been sold to someone else, perhaps in exchange for Gusinsky's freedom.

Also absent from the meeting were Boris Berezovsky and Roman Abramovich, two of Russia's wealthiest men, both of whom have been thought to be rather closer to the Kremlin than some of the others. Why weren't they there? No explanation.

Here is what I suspect has really happened: Perhaps openly, perhaps more subtly, the hyperrich have now been given the distinct impression that those who agree to abide by the Kremlin's will—to contribute money to the right slush funds, to keep their TV stations safely in line with government policy—will prosper and will not be prosecuted for past offenses. Those who don't—Gusinsky didn't—will be subject to prosecution, loss of business, even worse. As Berezovsky himself has famously noted, "Every major businessman has had to break the law at some point to stay in business," which means all of them are potentially arrestable, and therefore blackmailable, if one can put it that way. Don't be surprised to see all of them dutifully lining up to support the president in the months to come.

Is this, then, the return of the rule of law? No. Will it be greeted as the return of the rule of law in the West? Yes. Will anyone object in Russia? Not much. Nearly 75 percent of Russians, in one recent poll, advocated the renationalization of private property on the grounds that most private companies were effectively stolen. Nobody will object if a few rich businessmen get slapped around, however arbitrary the slapping-around process might be. Thus has Putin eliminated one of the pillars of nascent democracy in Russia: an independent business community. He hasn't had to prosecute all of them, just one or two—and that was enough to scare the rest. Pretty good for a mere four months in office.

Next column: the elimination of political parties.

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Anne Applebaum is a Washington Post and Slate columnist. Her most recent book is Gulag: A History.
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Reader Response from The Fray:


Applebaum is right. Putin is bringing rival power centers under control. Sort of like what the U.S. government is doing with antitrust & tobacco-liability suits.

--Konstantin Tsiolkovsky

(To reply, click here.)


Putin's the best shot Russia's got. Give him some time. Give him some trust. Lend him some money. Put up a nation of shopkeepers where none ever existed at least equal to the one China produced in a decade, and yes, make the oligarchs (a) pay taxes (b) support liberal demcracy with their contributions (c) hire people into real jobs beyond security-inclined law-of-the-jungle thuggery.

--John Anderson

(To reply, click here.)


Why should putting these scoundrels on a tighter government leash be any more threatening to democracy than continuing to let these robber barons run amok over what is left of the Russian body politic and economy? What absurd calculus makes these gangsters part of a functional and sustainable political and economic order in Russia? Applebaum doesn't say. What seems to escape her is the fact that these men have helped to discredit capitalism and parliamentary rule in Russia and thereby helped to strengthen those who would bring back central planning or worse. Putin, for all his faults, should be praised for taking the action he has; he's the best hope for the rule of law in a long time.

--Erik Grimmer Solem

(To reply, click here.)

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