By Renfrey Clarke
MOSCOW — What was it that replaced "communism" in Russia? Democracy, someone said? Journalists who value their reputations no longer make that claim, except with extensive reservations. But it is often asserted that with "reform" and the advent of the market economy, progress is being made toward consolidating democratic forms of rule.
The truth is nowhere near so rosy. And in a blow to the remaining apologists for the "new Russian democracy", one of the people who really wield power in the country has now revealed plainly where authority resides.
In a startlingly frank newspaper interview, Boris Berezovsky, the head of a Russian vehicle, media and oil empire, explained that early this year the leaders of a series of Russia's largest financial-industrial clans teamed up to maximise their impact on the political process and on decision-making within the state machine.
Talking to the London Financial Times on October 30, Berezovsky revealed that the seven leaders of six major Russian banking, industrial and media groups met originally in January at the world economic forum in the Swiss town of Davos. One of their first decisions was to bankroll President Boris Yeltsin's re-election campaign — as Berezovsky put it, to forestall the "deadly danger" of a Communist or extreme nationalist victory.
Berezovsky related that the business group had pushed for former first deputy prime minister Anatoly Chubais to head a 10-person presidential re-election team. The business leaders paid Chubais' team US$3 million for their services. Berezovsky claimed that he could not recall who exactly had signed the cheque.
With Yeltsin's flagging re-election campaign under energetic management, the group had no trouble rounding up media support for their candidate. Between them, the seven business leaders controlled most of the national television system, as well as two of Moscow's major daily newspapers and numerous other press organs.
After the success in the elections came the direct push by the group into government. According to Berezovsky, the business leaders decided jointly that one of their number, Vladimir Potanin, should be put forward for the job of economic tsar in the new administration. Potanin heads Russia's largest private banking organisation, Uneximbank. In August, he duly received the cabinet post of first deputy prime minister in charge of economic matters.
Then on October 29, a Yeltsin decree brought Berezovsky himself on to the presidential Security Council with the post of deputy secretary. The Security Council is a body with ill-defined functions whose members are prone to be used by Yeltsin as trouble-shooters for dealing with specific problems of state. With considerable access to the president, the leading figures on the council wield important influence.
Coming at a time when Yeltsin was being readied for heart surgery, Berezovsky's appointment was widely seen as a payback by Chubais, now elevated to the enormously powerful post of head of the presidential administration, for earlier support. The move aroused immediate protests, partly because Berezovsky, like many Russian business leaders, has a shadowy past.
"This is the corporate, nomenklatura way of forming powerful structures", liberal political figure Grigory Yavlinsky complained. "Now there is an oligarchic, criminal, monopolistic power." Other observers were heard muttering that appointing Berezovsky to a senior post in the Security Council was like naming Al Capone to head the FBI.
Formerly a mathematician employed in vehicle industry research, Berezovsky became wealthy during the early 1990s by dealing in Russian and imported cars. In this mafia-infested area of trade, Berezovsky's firm LogoVAZ has gained a dominant position. People who know the Russian car market take it for granted that Berezovsky's success has not stemmed from business acumen and fair dealing.
Berezovsky's reputation took another blow recently when Aleksandr Korzhakov, Yeltsin's former chief bodyguard, stated that Berezovsky had asked him to have several prominent bankers and politicians assassinated. Korzhakov did not back up his charges, but the usually cautious Moscow Times described Berezovsky as "notorious nonetheless" and as "clearly an inappropriate candidate for the Security Council".
In the past few years Berezovsky has begun a concerted expansion into media ownership. His stable of publications now includes the once independent Moscow daily Nezavisimaya Gazeta and the popular journal Ogonek.
Early in 1995, Berezovsky played a key role in turning the main state television channel into a joint stock company named Russian Public Television (ORT); he is now one of ORT's deputy directors. Although ORT is 51% state owned, the prominent media analyst Ivan Zasursky notes that Berezovsky is reputedly the sole influence on the channel's policies. Berezovsky has also acquired many of the shares in the Moscow channel TV6, which is actively expanding its presence in the national TV market.
The "group of seven" business leaders also includes the chiefs of the Most and Menatep financial groups, both of which control extensive media empires.
In Russian business, it is axiomatic that making big profits depends primarily on having good connections within the state apparatus. The largest financial institutions draw much of their income from providing financial services to the state on highly favourable terms.
As the English-language Moscow Tribune noted on November 10, "Banks like Alfa Bank, whose directors Pyotr Aven and Mikhail Fridman are both members of Berezovsky's Magnificent Seven, are dependent on the steady rise of government deposits recycled into government treasury issues at rising interest rates".
In an era of depression, keeping this profitable cycle intact may be a matter of life or death for the financial institutions concerned. Hence the benefits for financial potentates of personally controlling what goes on in the government economic ministries.
For the chief executives of huge firms to move directly into high posts in the Russian government is, of course, nothing new; before becoming prime minister, Viktor Chernomyrdin was head of the vast Gazprom gas corporation. Nevertheless, Berezovsky's group does represent something novel in Russian political life.
Until now, there has been nothing within the "clan" system of Russian business to compare with the high-level coordination and purposefulness of Berezovsky's group. Also new is the startling concentration of media ownership, allowing the business leaders to mould public opinion with horrifying thoroughness.
But perhaps the most striking novelty is the group's brazenness. Here there is no lip service paid to democratic conventions, and no pretence that the power of capital is exercised through elected representatives.
Alongside groupings of economic oligarchs such as the one around Berezovsky, the parliamentarians who are supposed to make laws and guide the general course of public policy clearly have no meaningful power. With business magnates increasingly putting aside their incidental differences and uniting to ensure that the state machine serves their interests, it is absurd to talk of democracy being consolidated. On the contrary, the gains that were made during the years of relatively intense popular political activism from the late 1980s are now being attacked and dismantled.