September 21, 2007

Russian Corporatism

This ran in the Wall Street Journal yesterday and was circulated on the esteemed Johnson's List. It is so intriguing, I felt it deserved quoting in its entirety.

The Board Members of Russia, Inc.

By Garry Kasparov

It has been both amusing and disturbing to watch the Western media chase its tail after the appointment of Viktor Zubkov to the post of Russian prime minister.

Amusing because these are the same experts and pundits who wrote countless articles discussing whether the next prime minister, and potential successor to President Vladimir Putin, would be Sergei Ivanov or Dmitry Medvedev. The world press fell for this KGB sleight of hand like children before a birthday-party magician.

As close to Mr. Putin as those two inconsequential cronies were, they have been supplanted by someone even closer. The only thing that matters in a mafia structure like the one Mr. Putin oversees is loyalty. Criminologists, not Kremlinologists, are required to understand the Putin administration.

As the March 2008 presidential election nears, Mr. Putin is surrounding himself with an ever-tighter inner circle. In February 2005, in these pages, I wrote that Mr. Putin could, like a modern Caligula, appoint his horse to the cabinet if he so desired. He opened the stable door by bringing in Messrs. Medvedev and Ivanov, and the sudden appearance of Mr. Zubkov is much more horse than dark horse.

It is infuriating that even now the so-called Russia experts are analyzing Mr. Zubkov's statements -- as if they are relevant to what is really going on in Russia. The media has been operating under an entirely false rationale. There are no public politics in Russia under the Putin regime. Indeed, democratic politics are dead in Russia and Mr. Zubkov represents the flowers on the grave. There is no pressure from the public so there is no need to manipulate, convince or appease the electorate. The coming elections are sure to be a charade and the media is under tight control. Who cares about Mr. Zubkov's political biography?

What is important, as ever, is business. Mr. Zubkov is a senior member of the St. Petersburg "Ozero," or Lake, the joint-ownership group of a small real-estate project whose members are today in charge of the most lucrative state-generated businesses in Russia and of channeling their revenues into private accounts. Former St. Petersburg gasoline mogul Vladimir Smirnov controls the nuclear tech deals with Iran, Gennady Timchenko is the largest "independent" oil trader in Russia, and Mikhail Kovalchuk has recently been put at the head of a $5 billion government-backed nanotechnology project.

Now an Olympic Corporation with a budget of $12 billion has been set up for the Sochi Winter Olympic Games of 2014. The parliament is considering giving this entity the power to expropriate property without a court order. The list could go on. This is Mr. Putin's famiglia, and they no longer have to worry about their public image.

The Russian government is increasingly irrelevant to Mr. Putin and his chosen few. The state apparatus has been subverted to serve a corporate apparatus that operates above the law and behind the scenes. The Putin regime has steadily channeled funds into state-controlled corporations that serve the ruling clique. It is a super-oligarchy that has largely superseded the state.

Money is what matters, not the cabinet sideshow on television.

The Russian budget has already been approved for the next three years, locking in the continued "privatization" of the state. Mr. Putin doesn't need a third term as president when he can continue in his true role as capo di tutti capi.

As journalist Yulia Latynina recently noted in Novaya Gazeta, we have a two-party system in Russia: the Oil Party and the Gas Party. Gazprom and Rosneft now have their own security forces, further allowing them to operate independently of whatever administration exists in the Kremlin next year. The ruling factions will continue to fight with each other and protect their own. The various departments of this multilevel criminal organization -- judiciary, defense ministry, etc. -- will also continue their internal battles for funds.

In blunt remarks to the foreign press last weekend in Sochi, Russia, Mr. Putin made this remarkable statement: "We will participate in any debate with our partners, but, if they want us to do something, they must be specific. If they want us to resolve Kosovo, let's talk Kosovo. If they are worried about nuclear programs in Iran, let's talk about Iran, rather than talking about democracy in Russia."

This is an open invitation to foreign leaders to do business with a "sovereign managed democracy" in Russia. It says, "Let's make a deal and stop wasting time with the principles of individual rights and democracy upon which your nations are based."

Could it be made any clearer? Yes, actually. Mr. Putin went on to say the West should drop its "foolish Atlantic solidarity" in order to make progress with Russia.

All the masks have been removed and the curtain has been raised. The Putin Democracy Show is over.

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