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Thursday, September 13, 2007

Latynina on the Horror of Russian Corporatism

Writing in the Moscow Times, hero journalist Yulia Latynina exposes the horror of creeping Russian corporatism, a venal bacterial sapping the nation's already feeble blood supply like million toxic leeches:

The parties are all ready for the upcoming campaign season. I'm not talking about those running in the elections made official by President Vladimir Putin's decree in Rossiiskaya Gazeta. I mean the more important parties in the endless campaigns to win money and influence.

Moscow's Tverskoi District Court, for example, froze the assets of oil company Russneft on Aug. 9. Why? Two people were trying to get hold of Russneft -- Igor Sechin, deputy chief of the presidential administration and chairman of state-owned oil major Rosneft, and Oleg Deripaska, the Kremlin-friendly tycoon who heads the holding company Basic Element. With Putin's blessing, Deripaska wants to buy Russneft.

Deripaska would likely sell Russneft to the state later. So why arrest the shares?

One reason may have been concern that, should either of the first deputy prime ministers, Dmitry Medvedev or Sergei Ivanov, become president, Deripaska might turn around and sell Russneft to a company controlled by Sechin. Preventing Deripaska from selling after the elections could diminish Sechin's political clout.

This analysis suggests that the battle for Russneft is not just commercial in nature: At stake is the political influence of people within Putin's political circle -- influence measured in the billions of dollars.

There was also the arrest of Vladimir Barsukov, a wealthy businessman and reputed former crime boss, in August in St. Petersburg. The city deserves the epithet "the criminal capital" not because it is full of bandits, but because bandits comprise the city's business and political elite. Judging by the composition of the group that orchestrated Barsukov's arrest, it looks like a major victory for Sechin's siloviki over those of his enemies' clan.

Not just businesses but entire regions are being snapped up: Putin installed a governor with connections to Gazprom in the Sakhalin region and one with ties to state monopoly arms exporter Rosoboronexport in the Samara region.

New state corporations are hastily being created, complete with generous perks and privileges for their managers. Putin is handing state corporations to his friends at about the same pace that Catherine the Great handed out estates.

This is the real campaign where the battle is not for votes but for billions. Nobody knows who Putin's successor will be, but everybody understands that under any successor there will be a fundamental change in the way property and influence are distributed. Ahead of this, each Kremlin clan is trying to pocket as many assets from state and private sources as possible, acquiring those seized by the government in the hope that they will add to their political clout --measured in billions of dollars. Thus, regardless of who the next president is, he will have to reckon with this imposing force capable of squashing, buying and even destroying.

And the leaders of the official political parties, like A Just Russia's Sergei Mironov and United Russia's Boris Gryzlov, have no more place in this high-stakes campaign than the gaudily dressed women of 19th-century palace balls had in the Battle of Austerlitz. What has to be understood is that the State Duma has become a cipher: not because it does not include any opposition parties, but because powerful clans don't do business there. Having accrued their wealth and status clandestinely, they despise publicity -- even in the form of operating through the political parties they have in their pockets. Whether Rosneft gains control of Russneft will not be decided by United Russia. Similary, Mironov will not determine if Rosoboronexport acquires the Magnitogorsk Iron and Steel Works.

If you want to know the real political lay of the land, don't look at the Duma. Better to look at who was recently jailed in Lefortovo prison or the verdicts passed down by Moscow's Basmanny District Court.

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