Russia has never been ruled by oligarchs

Russia doesn’t really have an oligarchy at all, and never did. In the Yeltsin era, a group of leading tycoons received vast revenues from their property, but they weren’t an oligarchy. The bureaucracy held power in the Yeltsin era, just as it did in the Soviet era, and as it does now.

As elections approach, politicians and experts are increasingly inclined to ponder the possibility of political conflict arising from a change of administration. That scenario cannot be ruled out. Consequently, a question arises: what would various layers of society do in the event of a coup or any serious political clashes? Some experts and analysts are focusing their attention on Russia’s business community.

A group of heavyweight political analysts gathered at the Izvestia newspaper’s editorial office last week for another discussion of the “oligarch revanche” threat. Perhaps the only surprise at this event was the consensus that Mikhail Fridman is Russia’s chief oligarch – and thus the chief revanchist, being the right-hand man of Boris Berezovsky, who is striving to bring about an orange revolution in Russia. The oligarchs, who have neither forgotten anything nor learned any lessons, are forming a unified opposition corporation (regardless of where they are – Moscow, London, or Tel Aviv) and working together to develop a strategy for bringing down Putin and returning to power.

All other statements made at this meeting were standard fare: President Putin’s regime has taken power away from the oligarchs and returned it where it belongs – that is, to the state; it has defended Russia’s sovereignty (sold off by the oligarchs). Of course, it was also stated that business tycoons ought to stick to business, not meddle in politics. None of this would be interesting, if it didn’t reflect the ruling group’s chief ideological principle, intended to emphasize the advantages of the Putin regime as compared to the Yeltsin regime. Besides, people who believe these fairy tales aren’t confined to the ruling elite. Such is human nature: we want to see white knights slaying yet another dragon – for the sake of the people, the country, justice and order. In this case, the role of the dragon is played by mythical oligarchs.

They’re mythical because Russia doesn’t really have an oligarchy at all, and never did. This term, used to describe the group of Russia’s richest citizens, was invented by the left-wing opposition and promoted by the bureaucracy – in order to blacken the reputations of the “robber barons” and intimidate them with the prospect of “the people’s rage.” Properly defined, an oligarchy is a small group of people who control political power and most of the resources in any particular country. In the vast country of Russia, such a scenario is impossible. If a ruling clan controls oil production someplace like Gabon – that’s an oligarchy.

In the Yeltsin era, a group of leading tycoons received vast revenues from their property, but they weren’t an oligarchy: the Chernyi brothers and Boris Berezovsky, Alexander Smolensky and Mikhail Khodorkovsky, Vladimir Potanin and Kakha Bendukidze, Vladimir Vinogradov and Vladimir Gusinsky – none of them ever ruled Russia. Potanin was a deputy prime minister for a while, and Berezovsky was deputy secretary of the Security Council; but the former role was technical, mostly devoted to dealing with the troubled economy, while the latter was just a formality.

The “seven bankers regime” (semibankirshchina) was a term that arose after the presidential election of 2006. It referred to a group of bankers who supported the Yeltsin campaign in exchange for major assets. But they didn’t force the authorities to accept their money, after all; the authorities themselves asked them for money, then distributed the assets – not as a form of thanks, but in order to receive kickbacks without doing anything. It cannot be seriously asserted that oligarchs ruled Russia in the 1990s: after all, the influence of all the “oligarchs” taken together was still incomparably less than the influence of the Chernomyrdin-Vyakhirev group. And what about the Railroads Ministry? What about the Nuclear Energy Ministry – and RAO Unified Energy Systems? It was they, not the likes of Berezovsky or Fridman, who always had a grip on Russia’s vital arteries.

The bureaucracy held power in the Yeltsin era, just as it did in the Soviet era, and as it does now. Yes, big business did influence the authorities – both financially and politically – but the authorities influenced big business to a much greater degree. Business owners give money to officials and bureaucrats at every level, primarily in order to be able to operate at all; using those officials and bureaucrats to pursue political objectives is a long way down the list of reasons for paying bribes.

Did the oligarchs place some of their own people in the Duma, the Cabinet, and the presidential administration? Undoubtedly. They placed them there in order to safeguard themselves against the likelihood of having their offices searched by state investigators, supported by armed and masked security guards; they placed them there to get an advantage over their competitors (there were no other ways of doing so, and there still aren’t any other ways). But denationalized assets were handed over to the “oligarchs” by state officials, in pursuit of a simple goal: let those guys who understand business increase the revenues from factories and oil-wells – they’ll still give the money to us, after all.

Yes, certain ambitious “oligarchs” did decide that they controlled state officials, rather than the other way round. But those “oligarchs” rapidly found themselves elsewhere – some in London, some in Israel, and some in far less comfortable locations. But the facts are indisputable: the “oligarchs,” and big business in general, were generated by the bureaucracy and never played any independent role in Russian politics. Certain individuals and companies attempted to play politics – but they lost the game, instantly and hopelessly. Who remembers the first “oligarch,” Tarasov, back in the late Soviet era? Where is Vinogradov now? Where are the Chernyi brothers? Borovoi, the first stock market player – where is his influence now? Why did Bendukidze sell his Russian assets and move to Georgia? For various reasons, all these people displeased the authorities; and they were demolished, just as rapidly and efficiently as Gusinsky, Berezovsky, or Khodorkovsky. If Russia really had an oligarchy, it wouldn’t have allowed members of the corporation to be picked off one by one. Removing a real oligarchy from power would have required a real civil war, like the 1930-32 events in Brazil.

An oligarchy is a stable group that understands and defends its interests, builds the political system of the state in accordance with them and forms a comfortable social and economic environment for itself like in Salvador or Gabon. Russian “oligarchs” have never constituted a unified group. Besides the famous letter from 13 business tycoons, entitled “A way out of the impasse” and addressed to the main candidates at the presidential elections of 1996, big business hasn’t undertaken any joint political actions in Russia. After the conflict about the loans-for-shares auction for privatization of Svyazinvest in 1997, the main business groups quarreled conclusively and launched media wars against each other. After that, joint actions bu the business community were limited to some collective open letters in defense of the arrested Gusinsky and Khodorkovsky.

Big business has never established a political party expressing its interests in Russia (small groups like the Business Development Party don’t count). Leaders of the Union of Right Forces were naive to think that business would support them. They were wrong, and the parties that had better prospects in elections received support. These were Unity, Fatherland and CPRF. Businessmen provided support to them not due to personal likings but protecting their capital. Businessmen have different political preferences. Some of them like communists, some others like liberals and some are indifferent to politics. Attempts to establish public organizations of businessmen like the Russian Union of Industrialists and Entrepreneurs, Business Russia and others did not lead to success either. They do not have real support of the business community and are almost unnoticeable in politics and public life.

Moreover, some of the people who are commonly considered oligarchs feel themselves perfectly well in the incumbent system of power. For example, there’s Basic Element CEO Oleg Deripaska and Chukotka Governor Roman Abramovich. Their fortunes have appeared as a result of informal relations with the authorities and bureaucratic non-marketing capitalism is a natural habitat for them. Is it possible to consider LUKoil, a part of the Oil and Gas Ministry of the USSR privatized by the top-ranking officials of the ministry to be a private company seriously? It is possible with reservations because the management of LUKoil has retained Soviet mentality. The oil “oligarchs” who strive to get affiliated with international corporations and open up Russia’s markets – what do they have in common with Deripaska, who wants to keep the domestic market closed?

There is no threat of an “oligarchic revanche” in Russia, because there is no oligarchy. Big business in Russia has never become an independent factor in politics and society. After the collapse of communism, Russian society was left divided and unstructured. Societal layers and groups are highly amorphous, disorganized, unaware of their political, economic, social and group interests. That’s why party-building has failed in Russia; that’s why there’s no independent trade union movement; that’s why community organizations only exist on paper.

The only organized force in contemporary Russia is the bureaucracy: greatly expanded since the Soviet era, controlling both political power and money. The leaders of Gazprom, Rosneft, RAO Unified Energy Systems, Russian Railroads, RosOboronProm, affiliated ministries and state agencies, a few lesser structures – that’s the oligarchy of our times, the political-financial-industrial conglomerate known as “Russia, Inc.” Clashes between bureaucracy clans over redistribution of property and financial channels are entirely possible – but only within the corporation. As yet, there is no real force capable of challenging Russia, Inc. And all talk of “oligarch” conspiracies is a myth.