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La Stampa, July 22, 2003

War Between the State and Oligarchs Is Destructive for Russia

Interview with Grigory Yavlinsky

The leader of a liberal opposition party Grigory Yavlinsky does not seek to conceal the party’s relationship with Mikhail Khodorkovsky, as well as his scepticism about the oligarchs. Several weeks ago the famous economist, author of the "500 Days" reform programme, published his programme for dismantling "oligarchic capitalism". However, he is concerned about the YUKOS crisis, the flagship of "oligarchism" - "This is destruction, rather than dismantling."

He lists the negative consequences: "Stock market ratings abruptly fell, as YUKOS amounts to one third of the stock market index, investors are over-cautious, and the fruits of the round-the-world trip undertaken by President Putin over the past three years to convince the world to do business with Russia can on the whole be written off. The medicine turned out to be more dangerous than the illness."

The Italian newspaper "La Stampa" interviewed Grigory Yavlinsky on these developments.

Question: Do you mean that the YUKOS case is the beginning of treatment?

Yavlinsky: It is a warning to a company which became the flagship of the economy. In this way the state demonstrates to the company and all other companies that any attempt to become independent of the authorities will be punished.

Q: Many experts attribute these developments to political factors and the forthcoming December election to the State Duma and presidential elections next year.

Yavlinsky: Many people compare this situation with 1929, the curbing of the New Economic Policy plan and the beginning of total collectivisation, although the political context is certainly different today. Mikhail Khodorkovsky may well have had political ambitions. The political credo of the oligarchs is that power is the best business. And billionaire oligarchs who would like to engage in politics are considered dangerous.

Q: Are they really dangerous?

Yavlinsky: Just as any totalitarian regime strives to obtain weapons of mass destruction, so every oligarch strives for power. Oligarchs are not ordinary entrepreneurs: they have money, government ties and control over the mass media. There are only a few of them: however, 70 per cent of Russia's GDP is controlled by two or three dozen structures and the decision-making on the country’s development is taken by several hundred people. They are young and ambitious: their generation grew up convinced that everything can be bought for money. Some people consider them the engine that will drag Russia to a bright future, but I regard them as a product of the past. However, the frontal attack against Khodorkovsky presents a warning to the nascent civil society, a lesson that many have already learned.

Q: Do you mean that the widespread opinion that the oligarchs have privatised the state is erroneous?

Yavlinsky: In Russia government and business have merged like Siamese twins. Large-scale business cannot function without the aid of the government which is in turn fed by business. Oligarchs use the government in their inner competition, and the corrupt government uses them for its own interests, for consolidation and enrichment. In such a system corruption is already institutionalised, the entire bodies of the twins grow into each other, and a most complicated and dangerous operation will be required to cut them apart. It should be performed skillfully and with great care, avoiding any use of force and repressions and any attempts to revise the results of privatisation of the 1990s.

Q: Do you mean that anyone wants to do this?

Yavlinsky: The Russian people, for example. According to a recent poll, 77 per cent of the population would welcome either complete or partial revision of privatisation. This is reaction to the Bolshevik method of conducting privatisation. But somebody is ready to use these moods to create an atmosphere of hostility towards all new Russian entrepreneurs, without exception.

Q: Proceeding from ideological motives?

Yavlinsky: No, this has nothing to do with ideology, and there will be nationalisation. The reformers called themselves anti-Communists, but two very Marxist postulates were laid into the basis of privatisation: that primary accumulation [of capital] is always criminal and that the basis will somehow independently create the superstructure of society. This gave birth to a system which is permanently tempted to initiate a new re-division of property.

Q: But YUKOS became transparent and cared about its image, and planned to leave behind its past skeletons in the closet.

Yavlinsky: Many protagonists of the economy feel a need to come "clean": to run business with Western partners, enter politics from the main entrance, rather than the backstage, and finally, owing to the fact that any structure is seeking stability. This is what I proposed to President Putin in my "anti-oligarchic plan": legalisation of capital and amnesty for economic subjects, fiscal and even criminal amnesty, or course except for criminal vendettas: murders, acts of force, etc.

Q: To become honest and start a new life on Monday?

Yavlinsky: And begin gradual fundamental transformations. Today in Russia we have a system I define as "periphery capitalism": an extremely monopolised economy based on unofficial relations instead of law, where the state does not provide any guarantees or protection, we have a mutant economy which has a little of everything - capitalism and informal relations, the rule of law and rule of force, repressive policy and impunity for the corrupt. Attention! This is not a rotten system, it has its inner logic and stability, it is capable of reproduction and even some progress. But it cannot offer Russia any long-term future.

Q: However, the past years have demonstrated an improvement to economic indicators.

Yavlinsky: It would be incorrect to refute this fact. It is indeed true that for the first time in a decade the economy has demonstrated steady growth, achieving 19 per cent GDP over the past three years. But these achievements are fragile and largely based on a positive – although already disappearing – impact on the rouble’s devaluation in 1998 and favourable situation with oil prices. The Russian economy still remains distorted, with the raw materials sector, based primarily on Soviet-era infrastructure, accounting for 80 per cent of the economy. The budget has become deficit-free, largely due to a decision not to spend on social security, education and heath care that are vitally important for a civilised state. Thirty-five per cent of the population live in absolute poverty, almost half of Russia’s citizens can count only on semi-lumpen survival with a medieval growing of food in their kitchen-gardens. The distance between victorious reports on economic achievements and a devastating crisis can be covered in several months.

Q: What is the way out?

Yavlinsky: You cannot stop the economy and then turn a new page. Some system has already developed and we have to deal with it through gradual transformation rather than a complete break with the existing inefficient, but functioning mechanisms. It is impossible to overcome periphery capitalism without fundamental institutional transformation that would guarantee first of all the priority of human rights, including property rights, and protect them from encroachment by the authorities and the state. Liberalisation of society, justice and the mass media, the transparency of business and bureaucracy is required. Police, prosecutors and courts should not be used for economic and political blackmail and pressure.

Q: Who will perform this upheaval, given that you say the present system somehow suits everybody, except for over-ambitious oligarchs?

Yavlinsky: We have the following alternative: the push towards liberalisation and modernisation will come either from above or below. Russian civil society is weak.

Q: Over the YUKOS case Vladimir Putin has been accused of weakness and feebleness, maybe for the first time.

Yavlinsky: I think that the President is well aware of the situation. However, it can get out of control.

Q: The Russian myth about a good tsar and bad boyars has existed for over 300 years. Isn’t it sad that in 2003 we continue our speculations in these categories?

Yavlinsky: To a certain extent this is dictated by the real power system in Russia. On the other hand, if as a nation we put up with corruption, lies by the state and that on our behalf they wipe out cities in the Caucasus, allow for growing xenophobia and a lack of justice, then there is no alternative to the "kind tsar".

Q: Surely this is too naive?

Yavlinsky: Something of the kind already happened 15 years ago, the one thing nobody believed could happen: the Soviet system collapsed.

Q: Is Putin a "kind tsar"?

Yavlinsky: I leave it up to you to judge. The alternative is to continue living as we have been living until now.


See also:

Understanding Russia

YUKOS case

La Stampa, July 22, 2003

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