ORDER, THEN LIBERTY:

The Colour of Money: When the system they had supported collapsed, they acted quickly and made themselves millions. Now, under Putin, Russia is finally hitting out at those one-time communists who took their nation’s spoils. (Angus Roxburgh, 01 February 2004, Sunday Herald)

Russia’s billionaire tycoons have hit the headlines for various, usually nefarious, reasons. They’re in exile, in prison, they’re prey to murderers and accused of murder, they buy football clubs and TV stations … but almost all have the most unlikely roots, deep in the old Soviet system which banned the very capitalist activities at which they have become so adept since its demise.

They have come to symbolise the new Russia – a wild-west state where crime, wealth, politics and business intertwine.

* Boris Berezovsky – the first Russian to enter Forbes’ list of the world’s richest men, now granted asylum and a new name in the UK to evade extradition to Russia and an inevitable prison sentence.

* Roman Abramovich – reclusive oil baron, owner of Chelsea Football Club, and as of last Friday, under investigation for his business dealings as governor of one of the world’s most remote and inaccessible regions - Siberia.

* Mikhail Khodorkovsky – another oil magnate, in prison awaiting trial on charges of fraud and tax evasion.

* Vasily Shakhnovsky, who once worked in the Moscow mayor’s office, and became a manager and shareholder of Yukos-Moskva, part of Khodorkovsky’s empire

* Anatoly Chubais – the politician who oversaw Russia’s mass privatisation scheme, and now chairman of the country’s most powerful electricity company. He is certain to become phenomenally rich when its privatisation is completed.

Russia’s so-called “oligarchs” almost all started out as academics, scientists, mathematicians, or even functionaries in the Soviet Union’s communist system. When the economy hurtled towards total collapse in the late 1980s, and most of the population fell into despair and poverty, these men spotted their chance and grabbed it with both hands. Some entrepreneurial spirit burning within their Soviet souls alerted them to cracks in the system, which they picked at and widened until the system fell apart, leaving them perfectly placed to build palaces out of the rubble. [...]

It was the oligarchs’ meddling in politics that got Putin’s goat. During the Yeltsin years they gained enormous influence, through the media and directly in the Kremlin. Some, like Berezovsky, were inside the Yeltsin coterie, others were outside. Even though Putin himself was helped to power by Berezovsky’s ORT television station, the president vowed to crush them – politically and, if need be, financially. It was when Khodorkovsky openly supported parties opposed to Putin that the authorities decided to investigate his tax affairs and had him arrested.

In doing so, the president has been treading on thin ice, for by taking steps to curb their political influence he is also taking a sledgehammer to some of the supporting walls of the Russian economy. Putin is adamant, however, that the rule of law must apply to tycoons as it should to everyone else, and the arrest of Khodorkovsky is a warning to all other businessmen that tax evasion, fraud and embezzlement will not be tolerated – even if the culprits have contributed to the revival of the Russian economy.

The establishment of a reliable and universal system of justice is a necessary precursor of a healthy democracy. Whether these are the limits of Mr. Putin's ambitions will determine whether he is the great man Russia so badly needs or merely another in its too long line of petty dictators.The challenge for American policymakers is that even if he's the former he'll need to use antidemocratic methods to achieve his ends and if he's the latter we won't know until too late.

Posted by Orrin Judd at February 1, 2004 9:56 AM