New Year moods at the end of "a year of disappointments": towards new illusions


Only days remain until the end of 2004: a leap year, and a fairly painful year for Russia. All the political analysts who comment on the intentions and actions of the authorities, along with pollsters who study the mood of voters, are saying that moods in Russia are gloomy.

Yevgeny Kiselev, chief editor of the Moskovskie Novosti weekly, says: “Everyone is tired, no one gives a damn about anything, and there is now less hope of any changes for the better.”

To all appearances, this is more than the subjective feeling of a liberal journalist; in the same issue of Moskovskie Novosti, leading pollster Yuri Levada says that the level of hopes in Russia has sunk almost all the way back to what it was in 1999, a five-year low; and polls also show that levels of fear, confusion, and anger have risen significantly, returning to the highs recorded five or six years ago.

These observations stand in sharp contrast to poll results from the end of 2003, Levada notes: a year ago, “there was a flicker of hope that the sequence of difficult years (when each year seemed worse than the one before) had come to an end.” In late 2003 – for the first time in 17 years – optimistic assessments prevailed over pessimistic ones, according to polls done by the Levada Center.

This December, however, everything is back to how it used to be: in Levada’s opinion, the ratio of “bad” and “good” assessments of 2004 “is close to the situation observed in 1999-2000, when society had yet to recover from upheavals in the economy.”

Then again, the level of confidence in the president remains high, says Nikolai Popov in Novoe Vremya magazine: it has fluctuated between 70% and 75% all year. Evaluations of Vladimir Putin’s performance have been similar.

But when pollsters link their questions to specific issues, the answers of respondents present a less cheerful picture.

Only 8% of respondents say Putin’s efforts to eliminate poverty during his first term in office were successful.

Meanwhile, eliminating poverty tops the list of citizens’ hopes for Putin’s second term: this issue was named by 37% of respondents. And Novoe Vremya notes that the second most important issue is almost the same: “improving living standards.”

And yet only 3% of respondents believe there will be a real improvement in living standards within the next year or two. A further 11% hope this will happen within Putin’s second term.

Moreover, only 36% of respondents approve (with some reservations) of the government’s major social policy initiative – replacing in-kind benefits with money payments. The remainder of respondents disapprove of this to some degree.

Overall, as Yuri Levada notes, the impending monetization of benefits “is viewed by most of the public as a disaster.”

Polls reveal a rare level of unanimity in opinions about the YUKOS affair.

Two-thirds of respondents approve of the oil company’s owners being prosecuted, for various reasons: it’s time they were brought to account for concealing their profits (32%); this is a half-measure – they ought to be stripped of the public property they acquired unlawfully (15%); maybe the entire business community will now become more honest (12%).

However, only 7% of respondents link the YUKOS affair with Mikhail Khodorkovsky losing “power and political influence.”

Overall, 82% of respondents believe it’s impossible to make a large fortune in Russia by honest means. Given public attitudes like these, the authorities obviously have carte blanche for virtually any action at all in their confrontation with big business.

Kompaniya magazine, commenting on the outcome of the recent Yuganskeneftegaz auction that marked the complete destruction of Mikhail Khodorkovsky’s company, notes that the bidding took place in “a state carnival genre.”

First, the mysterious Baikal Finance Group (Baikalfinansgrup) company appeared on the stage; when Vladimir Putin was interviewed by German journalists the following day, it turned out that he alone knew anything at all about this company.

Baikal Finance Group was registered in the city of Tver. The hordes of journalist who rushed to Tver in search of the company’s registered business address found only the popular London Cafe. Conspiracy theorists immediately drew some far-reaching conclusions: “the London exile” must be involved, or “the richest person in England.” However, these conclusions were not confirmed.

Eventually, as many had predicted, the buyer turned out to be the state-owned Rosneft oil company, which is continuing preparations for a merger with Gazprom.

This entire confusing story prompted Kompaniya to recall the “loans for shares” auctions of the mid-1990s: “There’s the same baffling commotion of bidders, and shell companies, and patronage from the top for dubious deals.”

Back in 1995, this was precisely how the Laguna company, registered in the city of Taldom in the Moscow region, acquired YUKOS. The Menatep Bank was the guarantor in the deal. “And we all know how that turned out,” notes Kompaniya.

Moreover, as Kompaniya points out, it is important to bear in mind that those who took part in privatization in 1995-96 are now experiencing “the consequences of the slipshod way that glorious campaign was carried out.” And the fact that Russia’s business elite is now defenseless against the authorities “is a direct consequence of that undiscriminating approach.” On the other hand, says Kompaniya, the state hasn’t learned any lessons from that sorry tale either.

Yet there are quite a few lessons to learn. Kompaniya expresses the most important one as follows: “Even the very highest political patronage is not a permanent guarantee of security.”

According to Kompaniya, the campaign to destroy YUKOS and plunder its assets has been carried out “so crudely that all of those involved (even the security and law enforcement people) are now tainted by it, no less than the enthusiasts of 1990s privatization.” And the striking similarity between the processes of privatization and counter-privatization offers some grounds for assuming that “the latter process will not be conclusive.” The process of redistributing property may continue; there may also be further “purges of the ranks” of those seeking to take part in managing the most enticing assets. And “after the oligarchs, those who are persecuting the oligarchs” would be the most likely victims of these processes.

In short, we are observing what Leonid Radzikhovsky, in the Versiya newspaper, describes as “a whirlpool of dollars in the economy.”

At one time, says Radzikhovsky, there was “robber-style privatization: with state property, which was falling apart, being handed out to insider businesspeople.” This has been followed by similarly robber-style nationalization: “with more or less successful private companies being handed out to insider businesspeople and/or state officials.” Those who currently have the upper hand in this unequal struggle are aiming to “control the money flows, surrounding the state-capitalist coporations with intermediary companies that will transfer part of foreign currency revenues to discreet Swiss bank accounts.” And then, “instead of having billionaires with hideous surnames like Khodorkovsky, there will be billionaires with fine-looking surnames.”

These new billionaires will differ from the universally-despised former oligarchs in one important way: “People like Khodorkovsky had the illusion of being the permanent owners of their property, so they did show some slight concern for the well-being of their companies. But the new owners know they are only managers. They will behave accordingly.”

Russia’s businesspeople believe this trend is already strong. In an interview with Ekspert magazine, MAIR company president Viktor Makushin says there are two basic reasons why the Russian business community is incapable of taking Russia to a leading position in the global economy.

Firstly, “most Russian companies have been founded on bribery or some form of fraud.” Secondly, in Makushin’s opinion, “business in Russia is 90% dedicated to servicing the state bureaucracy.” This fits in perfectly with the first reason.

Makushin goes on to explain that no business owner can make a single move without numerous exhausting consultations with state officials – in other words, without paying those officials “their share.” Any company that fails to do so will simply be driven out of business.

“That’s why most of the ill-informed business decisions seemingly made by the companies themselves are actually made by state officials – who are the real masters of the greater part of business in Russia.”

Unfortunately, says Makushin, “the ruling class in Russia today is the bureaucrat, unqualified and corrupt.”

All the same, according to Makushin, “the younger, more sensible, more intelligent people in Russia” have gone into the “efficient and constructive” part of the private sector in recent years. And now that “a process of turning society against private enterprise as a whole” is under way, this will inevitably have an impact on the overall situation in Russia: “Our citizens need to understand that the primary reason why Russia is doing so badly is because it is extremely poorly managed.”

Correspondingly, “only the real enemies of the people – enemies of a strong, prosperous Russia” are capable of setting out to destroy those few members of Russian society who have demonstrated in practice that they are capable of high-class management.

On December 28, the Vedomosti newspaper published a new open letter by Mikhail Khodorkovsky, written from the Lefortovo prison. The most famous arrestee of our times admits that it has now become impossible to save YUKOS: “The question now is what lessons the nation and society will learn from the YUKOS affair – with its culmination being the most senseless and economically destructive incident in all of Vladimir Putin’s time in power.”

For Khodorkovsky himself, according to the letter, parting with his property will not be too painful – thanks to his time in prison, which has “given me months of intense contemplation, and time to rethink many aspects of life.” During his months in a prison cell, the former head of YUKOS has realized that owning property, especially major property, does not make a person free: “As a co-owner of YUKOS, I had to devote enormous efforts to protecting that property… There was a great deal I did not permit myself to say, since speaking openly might do some damage to my property. There was a great deal to which I turned a blind eye and resigned myself – for the sake of my property, for the sake of preserving and expanding it. It was not just a case of me managing my property; the property was also managing me.”

But now, says Khodorkovsky, the situation has changed: “I have moved into a different capacity. I am becoming an ordinary person (a member of the upper middle class, in economic terms), for whom the priority is not having, but being. Not fighting for property, but for myself, for the right to be what I am. In this battle, there is no importance attached to places in rankings, bureaucratic connections, or advertising gimmicks. All that matters is yourself – your feelings, your ideas, your capabilities, your will, your mind, your faith.”

Yet it’s fairly difficult to imagine Khodorkovsky as just an ordinary Russian citizen, even “a member of the upper middle class.” His former colleagues are the first to find this hard to believe.

Alexei Kondaurov, Duma member (Communist faction) and former manager of the analysis directorate at YUKOS, says in an interview with Nezavisimaya Gazeta that “there are few individuals of Khodorkovsky’s caliber in Russia.” He says Khodorkovsky “has the potential to be a statesman, and he is a great Russian patriot.”

Kondaurov is sure that Khodorkovsky would be able to “become the leader of any kind of opposition movement – even a left-wing movement, strange as this may sound.”

And the fact that he used to head Russia’s largest company would be no obstacle, since “he is not without some left-wing views.” The fact that he upholds democratic values – liberty, civil rights, free enterprise – would be no obstacle either: “These days the leftists are also talking about these things.”

Kondaurov says: “Someone like Khodorkovsky would be in demand within any political movement; for one thing, he would be capable of engaging in dialogue with the authorities, not at the level of shouting, but with an in-depth understanding of economic, political, and other processes.”

Kondaurov is sure that it would be good thing for Russia if Khodorkovsky became part of the government: “I have no doubt that he could form a worthy coalition team of professionals; and since he also has a proven track record as a skilled crisis manager, I don’t rule out the possibility that his talents may soon be in demand.”

And Khodorkovsky himself doesn’t seem ready to confine himself to contemplating current events from a distance.

In his open letter, published in Vedomosti, he says: “The destruction of YUKOS shows that the bureaucrats, now unleashed, are not guided by the interests of the state as such, eternal and therefore powerful. All they know is that the mechanism of state exists in order to serve their interests, while its remaining functions are temporarily (or permanently) abolished as unnecessary. They don’t have the slightest respect for the state; they view it solely as a mechanism for achieving their personal goals.”

These words are so similar to what Viktor Makushin said in his Ekspert interview that they might almost be viewed as expressing the consolidated viewpoint of the Russian business community.

Khodorkovsky says: “The YUKOS affair is not a conflict between business and government. It is a politically and commercially motivated attack by one company (represented by state officials) on another. The state, in this particular case, is a hostage to the interests of certain individuals wielding the powers of state officials.”

Under the circumstances, the state, like a company, inevitably becomes the injured party – since “dull, unconstructive bureaucrats who act on the principle of ‘for me, for me, and again for me’ are incapable of governing the country properly.” Thus, Khodorkovsky also argues that poor government is the main cause of Russia’s problems – both current and future problems.

“Government is always based on the assumption that the rulers and the ruled have some common motives,” says Khodorkovsky. “These motives may vary – from building communism to simply acquiring wealth. But these motives must exist, and they must really be common to all.”

But “Russia’s bureaucrats” are incapable of offering society any comprehensible motives for cooperation; in fact, they don’t even understand why this is necessary. “And that is precisely why they are consistently destroying all the mechanisms that might enable Russian citizens to express themselves: elections at all levels, free market competition, freedom of public expression, and so on.”

In Khodorkovsky’s view, this striving for total uniformity and obedience, and the elimination of the last remaining opportunities for ordinary citizens to influence the situation in Russia, will inevitably lead to major social upheavals in future.

Khodorkovsky warns: “Very soon, the only force capable of counteraction to this all-devouring bureaucracy will be the furious, shapeless mob. It will go out on the streets and say: ‘You promised us bread and circuses – so where are they?!’ And the bureaucrats won’t be able to get away with waving a bundle of paperwork under the nose of the mob. Then there will be unmanageable democracy, with its innumerable troubles and suffering. That is what we really ought to fear.”

And the authorities do seem to fear this. Above all, however, they fear those who predict this kind of problem.

It’s futile for Khodorkovsky to try to reassure those who “fear that I might seek revenge on them.” It’s futile for him to use irony: “These simple souls attempt to judge everyone else by their own standards. They can relax: I have no intention of becoming a Count of Monte Cristo (or an apartment building manager either). Breathing the springtime air; playing with my children, who will attend an ordinary Moscow school; reading good books – all this is far more important, right, and pleasant for me than dividing property or settling scores with my own past.”

But Khodorkovsky’s letter does not give the impression that he is meek and ready to forgive everyone for everything; and therefore, unfortunately, it is unlikely to have any positive impact on the fate of the famous prisoner.

Overall, there is no shortage of gloomy predictions as the “year of disappointments” draws to a close. As the papers never tire of reminding us, this reflects the general outlook in Russia.

What’s more, as Nezavisimaya Gazeta reports, if we believe official statistics, this pervasive depression doesn’t seem to be connected with economic indicators or other objective factors: “The objective indicators are on the rise – but people’s moods are getting worse.”

Not surprisingly, assessments like these have had an impact on people’s expectations of 2005. Towards the end of 2003, 74% of respondents were optimistic in looking ahead to 2004; now the share of optimists is down to 55%, while the share of pessimists has risen from 21% to 39% in the course of a year.

Nezavisimaya Gazeta explains that the discrepancy between overall economic growth and the lack of growth in real incomes is starting to cause significant discontent.

Vladimir Petukhov, research director at the National Public Opinion Research Center (VTsIOM), says that in recent months “there has been a change in what people want from the authorities.” Everyone used to expect the authorities to ensure “stability and order”; but now people want a more active social policy.

Neither are foreign policy developments provide any reason for optimism. The events in Georgia, Abkhazia, Ukraine, and Iraq leave the impression that Russia is steadily losing ground, in the former Soviet Union and worldwide. “We are starting to feel vulnerable from without as well as from within,” says Petukhov.

In Moskovskie Novosti, Yuri Levada says: “Hopes that the coming year will be better than this year are at the lowest level since 1999, while fears that it might be worse are at the highest.”

The wise Levada says we should take Faulkner’s advice: be prepared for the worst, but leave room for pleasant surprises.

“It would be good if the latter don’t turn out to be new illusions,” says Levada.

Let’s hope for the best – that’s the most appropriate thing to do on New Year’s Eve.