Corruption, crony capitalism, and Russia's near-demise - 2007

Let's place the great Vladimir Putin in a proper light by comparing him to his two predecessors - Yeltsin and Gorbachev. The West loved Gorbachev because he killed the Russian Bear. The West loved Yeltsin because he allowed foreign scavengers to devour what had remained of the Russian Bear. The West now hates Vladimir Putin because he has resurrected the Russian Bear. The following is more-or-less what the West misses so much in Russia. They had it so good in the 1990s.


The Legacy of Boris Yeltsin - Corruption, crony capitalism, and Russia's near-demise

Communism wounded Russia, grievously, almost irreparably – and Yeltsinism delivered the death blow. The legacy of Boris Yeltsin, who presided over what Paul Klebnikov described as "one of the most corrupt regimes in history," is, quite literally, the death agony of the Russian nation. As David Satter pointed out in the Wall Street Journal: "Between 1992 and 1994, the rise in the death rate in Russia was so dramatic that Western demographers did not believe the figures. The toll from murder, suicide, heart attacks and accidents gave Russia the death rate of a country at war; Western and Russian demographers now agree that between 1992 and 2000, the number of "surplus deaths" in Russia–deaths that cannot be explained on the basis of previous trends–was between five and six million persons."

The Yeltsin era was marked by a precipitous fall in living standards, but some prospered. Given privileged access to "privatized" state property, the clique around Yeltsin amassed fantastic wealth. The one who perhaps profited the most was Boris Berezovsky, whose methods were described by Klebnikov: "Using his access to the highest officials of the Russian government and his reputation as a close friend of the Yeltsin family, Berezovsky hammered away at the privatization projects that would put key state industries in his grasp."

Yeltsin's clique, which included his daughter, was known as "the Family" – not as in "family values," or the Partridge Family, but as in the Russian equivalent of The Sopranos. The rule of the commissars had been succeeded by the reign of the gangsters, criminal elements who seized control of the national economy and engineered a complete takeover of the state apparatus, not for any ideological motive or ostensibly "patriotic" purpose, but simply to enrich themselves. Their strategy made use of the "shock therapy" approach to privatizing the economy as advocated by Harvard professor Jeffrey Sachs. The process was set up to favor Yeltsin's courtiers, who paid rock-bottom prices in a rigged auction. The industrial base of the Russian economy was sold off for a song: the whole process amounted to a spree of looting such as hadn't been seen since the sack of Rome.

Yeltsin didn't seem to notice, which is hardly surprising, since he was drunk for most of his tenure in office. And in Yeltsin's Russia, vodka was the only commodity that was cheap and plentiful. If this was an effort to calm the roiling currents of post-Soviet politics and anesthetize the populace while the oligarchs made off with the nation's assets, it didn't entirely accomplish that goal. There was an anti-Yeltsin upsurge in 1993, and the Duma threatened to impeach the Russian president: in response, Yeltsin declared the parliament dissolved and sent in his tanks to take the building, which was ringed by tens of thousands of anti-Yeltsin demonstrators.

This is the guy who is now being hailed as a great democrat and admirable leader by the Clintons, two of the old crook's biggest enablers. Bill Clinton and his cronies funneled billions in American "aid" to Yeltsin 's kleptocracy, most of which disappeared down a rabbit hole and eventually wound up in the oligarchs' foreign bank accounts. Putin is routinely blamed for the Chechen war, yet this too is part of the Yeltsin legacy. It was Yeltsin who started that war, invading Chechnya in 1994 to protect the interests of certain criminal gangs in Moscow and other major Russian cities, who had a falling out with their Chechen brethren in the homeland. Describing the group around Yeltsin who pushed for war, Gen. Aleksandr Lebed bitterly declared: "This is not the party of war. This is the party of business."

Having consolidated its hold on power, the Yeltsin clique, with Berezovsky's funding and support, proceeded to divvy up the spoils, including cementing their domination of the "private" media. Organized crime networks replaced the state security services as centers of power, with Berezovsky and his fellow oligarchs at the apex of it all. Using strong-arm tactics and engaging in not a few assassinations, the oligarchs – Berezovsky, Mikhail Khodorkovsky, Vladimir Gusinsky, and Leonid Nevzlin, among others – drove rival gangs out of business and established their economic and political supremacy. The oligarchy decimated the economy, demoralized the Russian people, and dissolved the rule of law in the acid of corruption and criminality. Is it any wonder that Yeltsin's death is hardly being mourned in Russia? I would venture a guess that more than a few cups are being raised to his demise.

Understanding the Yeltsin legacy and its catastrophic effect on Russia is key to grasping the Putin phenomenon. Although the former KGB officer who rose from obscurity to become the most formidable Russian leader since Peter the Great owes his present job to Yeltsin, the Yeltsin clique didn't fare so well at the hands of their fallen leaders' designated successor. Putin turned against "the Family" and drove most of the oligarchs out of power and into exile, where they are even now scheming to make a comeback. The ersatz "privatizations" arranged under the previous regime were overturned, to a large extent, and the "entrepreneurs" of the Russian Mafia were reined in, if not eliminated entirely, to the point where they no longer threatened the state's monopoly on coercion. The reintegration of formerly state-controlled assets into the "private-public" arrangements mapped out by the Putin administration is widely seen in the West as evidence that Russia is "backsliding." Similarly, the takeover of major mass-media outlets by pro-Putin businessmen is cited as proof that Putin represents a new "authoritarianism." Yet all that has happened is the passing of power from the oligarchs to the latter-day czarists of Putin's United Russia party.

Gregory Yavlinsky, the liberal parliamentary leader, had this to say about Yeltsin's regime: "The government that was formed was without any clear ideology. It was neither red, nor white, nor green. It was based solely on personal greed. You got a system that was corporatist, oligarchic, and based on monopolized property rights and semi-criminal relationships."

With the oligarchic and semi-criminal elements purged by Putin, what remains is the corporatist structure, which is now in different hands. Railing at the Russian president from their posh places of exile in Londongrad, Switzerland, and the French Riviera, the oligarchs' indictment of Putin boils down to one principal complaint: they are no longer in power. Flush with cash, and intent on revenge, exiled oligarchs such as Berezovsky pour their money into phony "human rights" front groups that regularly denounce Russia's "reversion" to authoritarianism. Some, like Andrew Illarionov of the Cato Institute, go so far as to accuse Russia of launching a military bid to regain its lost empire and advise the West to "consider itself in a new Cold War-like era."

The goal of this rather motley crew is to restore Yeltsinism without Yeltsin, but the oligarchs and assorted "dissenters" – ranging from Eduard Limonov and his National Bolsheviks to Illarionov and chess-champion-turned-politician Gary Kasparov – have little support outside the editorial offices of Western newspapers and U.S. government agencies engaged in "democracy promotion." The "color revolutions" that occurred in former Soviet satellites such as Ukraine and Kyrgyzstan have faded to black, and Putin's popularity in Russia has so far foiled the oligarchs' attempts to subvert the country from within. Berezovsky has to content himself with calling for the violent overthrow of the Russian government from his palatial London headquarters, hoping that the professional regime-changers in Washington and London will lend a sympathetic ear and, perhaps, some material support.

In the meantime, however, with the ill-gotten gains of several oligarchs stashed in Swiss bank accounts and sloshing around Londongrad and Washington, there are plenty of think-tank presidents who wouldn't mind getting a cut of that particular action. Expect the propaganda assault on Putin's Russia to get more vociferous and the drumbeat to "do something" about the rising "threat" of Russia to get louder and more serious. Yeltsin's legacy to Russia – poverty, privation, and a renewed adversarial stance by the West – is the "gift" that just keeps on giving.


Godfather of the Kremlin: The Decline of Russia in the Age of Gangster Capitalism

Mr. Paul Klebnikov makes a rather unusual declaration at the beginning of his book by stating that what is about to be read may be difficult to believe. As this work is non-fiction the comment would seem misplaced. However once the reading has begun it not only proves to have been appropriate, but is a fact you will keep reminding yourself of. The Author relates what is arguably the greatest theft in History, and if he had decided to change some detail, he could have had an outstanding novel. That the events he relates actually took place makes for a reading experience no novel can compete with. I have been following Mr. Klebnikov's stories in Forbes, since December of 1996 when he introduced Mr. Boris Berezovsky as Russia's Godfather. That first article in Forbes brought the wrath of Mr. Berezovsky to bear on Forbes and the Author, but he continued with his research and lived to write this book. Whatever his personal motivation was, and continues to be, is remarkable. This man worked for years on the home field of a variety of people who were capable of removing him from the living, with a glance, and without any fear of consequence to themselves.

The dysfunctional, amoral, nothing is out of bounds world, that was Boris Yeltsin's Russia, truly is difficult to get your mind around. Some minor details that will prepare you for the real story; when Gorbachev was still in power the government budget received 25% of its revenues from where, from the Government monopoly on Vodka! The ruble of Gorbachev was worth approximately one U.S. dollar. At the close of 1992 one dollar would cost 415 rubles, and when Yeltsin finally left office in an alcoholic haze, if you wanted a dollar you needed 28,000 rubles! The "Voucher Auctions" that took place in 1993 and 1994 would not have been condoned much less implemented by a student with a semester or two of Economic study. Gazprom, which owns one third of the planet's Natural Gas, was "auctioned" for $250 million dollars, the truer value, if valued as a Western Company, would have had its gas reserves alone valued at between $300 and $700 BILLION. These numbers do not take into account that the company was basically a monopoly supplier to the entire former Soviet Union, and much of Western Europe as well.

To put a more familiar face on these numbers, at the very lowest estimate, you could have bought Exxon and had $12 billion left over, at the high end you could have bought General Electric, the most valuable company as I write, and since you might be thirsty after the effort, you could pick up Coca Cola with the change left from the GE purchase. You will learn how Mr. Berezovsky privatized the cash flows of companies like Aeroflot, companies he did not own, and by using little money, if any at all, and if he needed any the seller, The Government would supply it. He was not the only man to take advantage of Yeltsin and his hand picked group of incompetents but he surely was the master at the game.

This book will leave you stunned. How much to buy the election for Yeltsin, read the book, how often Yeltsin was sober, the facts will alarm you, how Tanya his beloved daughter who knew nothing that qualified her for Government, became the power behind her Father, often doing the bidding of Mr. Berezovsky, who are you ready for this, was appointed to the Government by good old Yeltsin himself. The wholesale rape of Russia's assets is worse than any damage that Russia has ever been through. Those who dared to challenge the system of "Kleptocracy" were easy to identify, they were either already buried, were bleeding, or about to be assassinated. You played by the rules of thieves or you were removed, it was that simple.

I have read many metaphors in other places that compare the Mafiyas' in Russia today to the Robber Barons of this Country of a century or more ago. Anyone who puts forth this argument is painfully ignorant of History. It is true that the men who carried the sobriquet Robber Baron were not individuals whose paths you would have wished to cross, for as businessmen they were ruthless. That is where the comparison ends, for the bottom line is that they built this country, and while there were times violence took place it is only the inept that would compare it to the thousands murdered, and the millions who died as the result of Russia being taken apart and given away. Russia was eviscerated with the Government's consent and its participation, and the consequences to the citizenry at large had not been as premeditative in their design or as destructive since Stalin. I liked this quote from a top Russian Official, "it is very difficult to determine whether it's incompetence or embezzlement".


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Dear reader,

Arevordi will be taking a sabbatical to tend to personal matters. New blog commentaries will henceforth be posted on an irregular basis. The comments board however will continue to be moderated on a regular basis.

The last 20 years or so has also helped me see Russia as the last front against scourges of Westernization, Globalism, American expansionism, Zionism, Islamic extremism and pan-Turkism. I have also come to see Russia as the last hope humanity has for the preservation of classical western civilization, Apostolic Christianity and the traditional nation-state. This realization compelled me to create this blog in 2010. Immediately, this blog became one of the very few voices in the vastness of cyberia that dared to preach about the dangers of Globalism and the Anglo-American-Jewish alliance, and the only voice preaching the strategic importance of Armenia remaining within Russia's orbit. From about 2010 to 2015 I did monthly, at times weekly, commentaries about Russian-Armenian relations and Eurasian geopolitics in general. It was very difficult as I had no assistance in this endeavor. The time I put into this blog therefore came at the expense of work and family. But a powerful feeling inside me urged me to keep going; and I did.

When Armenia finally joined the EEU and integrated its armed forces into Russia's military structures a couple of years ago, I finally felt a deep sense of satisfaction and relaxation, as if a very heavy burden was lifted off my shoulders. I finally felt that my personal mission was accomplished. I therefore felt I could take a step back, as I really needed the rest. Simply put: I have lived to see the institutionalization of Russian-Armenian alliance. Also, I feel more confident now that Armenians are collectively recognizing the strategic importance of Armenia's ties with Russia. Moreover, I feel satisfied knowing that, at least on a subatomic level, I had a hand in the outcome. As a result, I feel a strong sense of mission accomplished. I therefore no longer have the urge to continue as in the past. In other words, the motivational force that had propelled me in previous years has been gradually dissipating because I feel that this blog has lived to see the realization of its stated goal. Going forward, I do not want to write merely for the sake of writing. Also, I do not want to say something if I have nothing important to say. I feel like I have said everything I needed to say. Henceforth, I will post seasonal commentaries about topics I find important. I will however continue moderating the blog's comments section on a regular basis; ultimately because I'm interested in what my readers have to say and also because it's through readers here that I am at times made aware of interesting developments.

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