Londongrad: From Russia with Cash; The Inside Story of the Oligarchs. Mark Hollingsworth

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СКАЧАТЬ Russia had reached another precarious stage in its complex history. It had difficulty trading its vast resources and was short of food, while its banking system suffered from a severe lack of liquidity. Its former foe the United States - in Russia referred to as glavni vrag (the main enemy) - was watching events eagerly. Within weeks, advisers from the International Monetary Fund (IMF) and the World Bank teamed up with powerful Russian reformist economists close to the Kremlin to persuade Yeltsin to introduce an unbridled free-market economy involving the mass privatization of state assets. It was a dramatic process of ‘reverse Marxism’ implemented at speed.

      This was to become Russia’s second full-scale revolution - though this time from communism to capitalism - in three generations. ‘Russia was broke. There was grave doubt in late 1991 that they could feed their population in the coming year,’ explained James Collins, former US Ambassador to Russia.’The government had lost control over its currency because people were printing it in other republics. The policy of what became known as “shock therapy” was discussed internally [in the US government] and nobody stood up and said “no, don’t do that”. The whole system was falling apart and was best summed up by my predecessor Ambassador Robert Strauss who said, “It’s like two pissants on a big log in a middle of a river going downstream and arguing about who was steering”.’

      The first wave of privatization came in the form of a mass voucher scheme launched in late 1992 - just nine months after Yeltsin assumed the presidency. All Russians were to be offered vouchers to the value of 10,000 roubles (then worth about $30, the equivalent of the average monthly wage). These could, over time, be exchanged for shares either in companies that employed them or in any other state enterprise that was being privatized. To acquire the vouchers, citizens had to pay a mere 25 roubles per voucher, at the time the equivalent of about 7 pence.

      In the four months from October 1992, a remarkable 144 million vouchers were bought, mainly in agricultural and service firms. The Kremlin presented this ambitious scheme as offering everyone a share in the nation’s wealth. Yeltsin promised it would produce ‘millions of owners rather than a handful of millionaires’. It may have been a great vision but it never materialized. Russia’s citizens were poor, often unpaid, and many had lost their savings as inflation soared and the rouble collapsed. Moreover, after seventy years of communism, most Russians had no concept of the idea of share ownership. There wasn’t even a Russian word for privatization.

      There were, however, plenty of people who understood only too well what privatization meant and the value of the vouchers. They started buying them up in blocks from workers. Among those cashing in was Mikhail Khodorkovsky - who would later become the richest man in Russia. Street kiosks selling vodka and cigarettes began doing a brisk trade in vouchers. Stalls began to appear outside farms and factories offering to buy them from workers. Hustlers started going from door to door.

      Even though holders were being offered far less than the vouchers were worth, most exchanged them for cash to pay for immediate necessities. Russia became a giant unregulated stock exchange as purchasers were persuaded to trade their vouchers for prices that were nearly always well below their true value. They would exchange them for a bottle of vodka, a handful of US dollars, or a few more roubles than they had paid for them. It proved a mass bonanza for those prepared to prey on a country suffering from mass deprivation.

      Hundreds of thousands also lost their vouchers in ‘voucher saving funds’. Some funds were little more than covert attempts by companies to buy up their own shares for a song. Members of the old KGB power elite often laid claim to mines and enterprises in what became known as ‘smash-and-grab’ operations. For a nation ignorant of the concept of shares and unable to appreciate the potential value of their vouchers, people were easily encouraged to part with their stakes. For the winners it was easy and big money.

      Instead of a share-owning democracy, a newspaper poll in July 1994 revealed that only 8 per cent of Russians had exchanged their vouchers for shares in enterprises in which they worked. Moreover, because the assets being sold were massively undervalued, the successful purchasers obtained the companies for well below their real value. Indeed, the 144 million vouchers issued have been estimated to have valued the assets at a mere $12 billion. In other words, much of the country’s industrial and agricultural wealth was being sold for a sum equivalent to the value of a single British company such as Marks & Spencer.

      In just two years, by the beginning of 1995, around half the economy, mostly in the shape of small- and medium-sized businesses, had been privatized. The next crucial issue in the ‘second Russian Revolution’ was how to privatize the remaining giant state-owned oil, metallurgical, and telecommunications industries that were still operated by former Soviet managers - the ‘red directors’, the Soviet-era bosses renowned for their corruption and incompetence who had managed the state firms - many of whom were laundering money and stashing away revenue abroad. Russia was still mired in a severe economic crisis with plunging share prices and rampant inflation. The indecisive and capricious Yeltsin was ill, often drunk and rarely in control, while the state was running out of money to pay pensions and salaries.

      Taking advantage of the growing crisis, a handful of businessmen dreamed up a clever ruse that appeared to offer a solution. This was a group that had already become rich by taking advantage of the early days of Mikhail Gorbachev’s perestroika (restructuring), which, for the first time in the Soviet Union, allowed small private enterprises to operate. Led by a leading insider, Vladimir Potanin, the cabal offered Yeltsin a backroom deal known in the West as ‘loans for shares’. This was an arrangement (coming at the end of the voucher privatization scheme) whereby they would lend the government the cash it so desperately needed in return for the right to buy shares in the remaining state enterprises. In effect, Yeltsin was auctioning off the state’s most desirable assets. If the government subsequently defaulted on repaying the loans - which the scheme’s architects knew was inevitable - the lenders would keep the shares by way of compensation.

      For Yeltsin, the plan provided much needed cash while on paper it did not look like the mass giveaway it turned out to be. Between 1995 and 1997, more than twenty giant state-owned enterprises, accounting for a huge share of the country’s national wealth, were offloaded in this way. In return, the government received a total of some 9.1 trillion roubles, about £1.2 billion at the time. One of the main beneficiaries of this deal was Boris Berezovsky.

      Boris Abramovich Berezovsky was born in Moscow in January 1946 to a Jewish family. An only child, his father was a construction engineer and his mother a paediatric nurse. Berezovsky’s family were not members of the Communist Party and his upbringing was modest and for a time - when his father was unemployed for two years - he experienced poverty. ‘I wasn’t a member of the political elite,’ he later said. ‘I am a Jew. There were massive limitations. I understand that perfectly well,’ he told an audience of journalists at London’s Frontline Club in London in June 2007.

      A mathematics whizz kid, Berezovsky graduated with honours from Moscow State University. In early 1969 he joined the Institute of Control Sciences, where he gained a PhD and worked for more than twenty years. Intelligent, precocious, and energetic, he is also remembered for being intensely ambitious. ‘He always raised the bar to the highest notch and went for it,’ a close colleague recalled. ‘He was always in motion, always racing towards the goal, never knowing or fearing obstacles…His mind was always restless, his emotions ever changing, and he often lost interest in what he had started.’ Another friend from this period said, ‘He has this attitude which he has maintained all his life - never stop attacking.’

      This was corroborated by a fellow student, ‘He was a compressed ball of energy…Constantly in motion, he was burning with plans and ideas and impatient to make them happen. He had an insistent charm and a fierce burning desire and he usually got what he wanted.’

      As a scientist, Berezovsky wrote more than a hundred research papers on such subjects as optimization theory and decision-making. He was a director of a laboratory that researched automation СКАЧАТЬ