| The recent attacks by government officials on big business
split Russian society into two uneven parts. The malicious majority is
delighted at what it considers to be the beginning of the restoration of
fairness. An alarmed minority fears acts of repression which are unpredictable
in terms of their scale and duration. Politicians and experts are forming
ranks, either attacking or defending the oligarchs. We see a harsh clash
of two ideologies, each of which (as is the way with ideologies) is strong
in "truth", but vulnerable when checked against obvious facts.
The "truth" on the attacking side is that the privatization
results are definitely unfair, and that these abuses were committed during
privatization, some of them criminal. The oligarchs' control over many
government decisions has truly grown to ominous proportions. However,
the vulnerable point of these "privatization avengers" is that
their actions are backed by the interests of apparatus clans seeking to
redistribute property to benefit other oligarchs. The government's actions
are both selective and unfair, reminiscent of something halfway between
a political hit and a crime world shakeout; which will result in the collapse
of the Russian stock market, a deterioration in the investment climate
and capital flight.
The vulnerable point of the persecuted oligarchs is that their billions
in wealth stand out like Mont Blancs above the gorges of destitution,
the lowlands of poverty and the very modest hills of the middle class.
The monstrous nature of Russia privatization is clearly demonstrated by
the fact that in England, the birthplace of capitalism, the richest person
today is the current governor of Chukotka.
It is pointless to take offence at sentiments calling for the state
“to take it away and divide it up." Respect for extreme wealth
is a rare thing in any country, but it is fundamentally out of the question
in Russia, where the divide between social classes has reached a monstrous
scale. You cannot force people to respect property that was shamelessly
seized before their very eyes, and in "particularly large amounts"
at that. It is quite another matter to assign the blame for this state
of affairs. Of course the oligarchs are partly to blame for buying access
to resources for a pittance. However, the state is even more to blame
for handing out the rights to that access.
Big business is "guilty" of behaving aggressively, but the
state is also guilty for not establishing proper rules of the game (through
anti-corruption legislation, laws governing lobbying, etc.). The difference
is that the oligarchs are under no obligation to behave otherwise, while
the state is. "Equidistance" to the oligarchs has produced nothing
more than a demonstrative flogging of the recalcitrant ones, but has not
been embodied in any institutions or legislation. Instead of creating
laws that separate government from business, the president's team is pursuing
violations of "concepts." But sorting out concepts always turns
into a fight that is settled by force, not law. The idea of revisiting
the outcome of privatization is dangerous primarily because it would once
again be carried out on the basis of concepts and not law. Consequently
the strongest would prevail, rather than the most honest.
However, for their part the oligarchs have to realize that it is impossible
to leave the current state of affairs unchanged. They cannot brush aside
the idea of revisiting the outcome of privatization. Russian society would
not accept that taboo for the simple reason that the wildness and impropriety
of Russian privatization unfolded before their eyes. There is only one
solution to this dilemma: the idea of revisiting the issue must be countered
by the idea of compensation for the losses suffered by society as a result
of privatization. The social responsibility of business in Russia cannot be limited to simple charity.
It should also involve acknowledgment that the colossal revenues reaped
by big business include an enormous proportion obtained through unfair
division of property. Some of that proportion should be given back to
society. But it should be returned through civilized and not barbaric
methods. A slogan of "Rob the robbers!" opens the door to civil
wars and dictatorships; it is absolutely unacceptable in a rule-of-law
state.
Compensation differs from revisiting the issue in that it can be implemented
by civilized, legal methods; it entirely precludes steps such as nationalization,
expropriation, etc. A model for this kind of compensation can be borrowed
from foreign practice. In July 1997 the British Parliament created a new
tax, the Windfall Tax. The gist of the measure was this: companies that
derived a major benefit from the 1980 privatization carried out by the
Thatcher government would pay a one-time amount equal to 23 percent of
the difference between the value of the privatized property in 1997 and
its sale price in 1980. In this way English "oligarchs" were
forced to share with society the wealth that had been "blown their
way by the wind."
The analogy to contemporary Russia is obvious. Introducing a one-time
tax on the outcome of privatization (a compensation tax) could be the
start of a gradual process of rehabilitating large incomes and great wealth
in the eyes of society and creating greater respect for the institution
of property. This implies a special law that would be passed as part of
a package of legislation, including an amnesty for parties to privatization
deals and possibly also a tax amnesty. The budget revenue from this tax
would be used to tackle the most urgent social problems, for example the
problem of poverty.
Such a package of legislation could satisfy both Russian society and
big business, which in exchange for compensation would receive guarantees
of security. In this way the history of privatization could be considered
a closed page in Russian politics. This approach was first formulated
by Grigory Yavlinsky and published
in Russia and abroad in the summer and fall of last year, and was raised
again on numerous occasions by YABLOKO spokesmen in public debates during
the 2003 election campaign. Now the idea has shown up in the recently
adopted platform of the Rodina (Motherland) bloc. This idea may gain support
in the near future from other forces and the approval ofthe Russian political
class.
Essentially this offers a civilized alternative to the current impasse
between government officials and business. At the end of the day the government
needs stability, which is unthinkable without at least a minimum social
consensus.
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