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From The Socialist newspaper, 8 November 2003

Khodorkovskii arrest

'Oligarchs' And 'Bonapartes' - Capitalism In Post-Soviet Russia

Mikhail Khodorkovskii, head of the oil giant Yukos and one of Russia's richest men, was taken by armed men from his private jet. As a result billions of dollars were wiped off the Russian stock market the next day.
Khodorkovskii alone saw his personal wealth drop by $1.5 billion before trading was suspended. He was arrested on charges relating to tax evasion and fraud but as ROB JONES reports from Moscow, the case has far wider implications for Russian society.

WHEN FORMER KGB career officer Vladimir Putin became president he promised to deal with the so-called "Oligarchs" - the men who had used their influence during Boris Yeltsin's reign to become fabulously wealthy while the vast majority of the population was left struggling to survive below the poverty line.

This was said not out of any concern for social justice or fairness but because the new capitalist class saw the need to end the chaos and lawlessness of the Yeltsin era and consolidate a more stable form of society in which capitalist economic relationships would be regulated within a legal framework.

Putin's rule, however, involves large elements of 'Bonapartism', in which the President balances and manoeuvres between different sections of the capitalists. In this context, the arrest of Khodorkovskii has been presented as the victory of the so called "siloviki"(the armed forces and FSB-KGB - state security forces) over the "family" (the oligarchs and hangers on to the Yeltsin clique).

Putin quickly moved to retain a certain balance however after the head of the Presidential Administration Alexander Voloshin, seen as one of the highest placed members of the "family", resigned in apparent protest at the oil magnate's arrest. Instead of replacing him with one of the "siloviki", Putin appointed more neutral figures, undoubtedly to check the appetite of some of his political police friends.

Of course, socialists aren't shedding many tears over the fate of Khodorkovskii or his fellow oligarchs. Nevertheless they have been having a hard time lately. Boris Berezovskii has gone into voluntary exile in London while Vladimir Guzinsky is trying to escape extradition in Greece. Roman Abramovich has sold most of his holdings within Russia and decamped to the terraces of Chelsea. Even Potanin, who is seen as an ally of Putin is rumoured to be contemplating selling up. He apparently wants to buy Arsenal.

The oligarchs are the most visible and most distasteful face of the "New Russian" phenomenon that marked the restoration of capitalism in Russia over the last fifteen years. They schemed and stole, often using fraudulent methods to acquire state property and the huge natural resources within the Soviet Union.

Competitors were swept aside and workers who attempted to mobilise resistance were repressed. More often than not Mafia methods of threats, beatings and murder were used. For a whole decade, these people turned Russia into a copy of 1930s Chicago as they fought their war for control over Russia's huge wealth.

Western hypocrisy

The complaints by the Western press and governments that Khodorkovskii's arrest show that the rule of law has not yet been established in Russia are completely hypocritical.

The oligarchs have been responsible for huge crimes over the past 15 years and in a society which was genuinely ruled by law, every one of them would have long ago been put on trial and imprisoned. It is the hypocritical complaints of the Western leaders who want crimes when restoring capitalism to be amnestied.

Nonetheless, there is a widespread attack on democratic rights within Russia in the run up to December's parliamentary elections and next year's Presidential race. In what is being called "managed democracy" the parliamentary elections are being rigorously controlled. After the NTV TV Channel was taken out of Berezovskii's control last year, no significant independent TV station now exists.

The laws regulating media coverage have been rewritten so that in effect, journalists cannot criticise individual candidates. The rights of organisations and individuals to nominate or be nominated as candidates have been severely restricted, so that for example only parties with members in over half of the regions of Russia can participate.

Even the main Opinion Survey Organisation has seen its management forced out to ensure that in the election period, the "correct" forecasts help the governing parties. These measures have all been taken so that Putin can secure a clear majority in the Duma, so that there are no more attempts to block his neo-liberal reforms over the next five years.

And this is where the real reason for the attacks on Khodorkovskii become clear. Not only has Yukos been striking out independently from the Kremlin by trying to negotiate a merger with ExxonMobil, it has also been trying to buy votes in the Duma. Already, the main parties complain that they can not get a majority vote for any legislation if they haven't already discussed it with Khodorkovskii.

Now Yukos is payrolling the election campaign not only of the two pro-Western neo-liberal parties - The Union of Right Forces and Yabloko - but they are also rumoured to have made a $5 million "strategic alliance" with the Communist Party (CP). The former PR manager of Yukos is now working for the CP and a number of representatives of the oil industry are to be found in the top ten of the CP's electoral list.

This raises the spectre of Yukos controlling enough votes in the next Duma to block the plans of Putin to introduce further legislation, for example on pensions and housing reform.

Khodorkovskii's arrest has demonstrated that the apparent stability in society is only surface deep, maintained in place by an increasingly undemocratic regime. But even the reaction in society to this attack show that in the future, when Putin moves to directly confront the working class he may well provoke a more profound reaction.

From bureaucrat to billionaire

AT THE end of the 1980s Khodorkovskii was a Komsomol (Communist Youth) leader who used his position to accumulate starting capital.

He then established one of the earliest of the pyramid schemes by which the new rich fraudulently conned the mass of the population to risk their earnings and savings in funds which promised high returns but never delivered.

He was then in an ideal position to benefit from the notorious "loans for shares" privatisation pushed by the World Bank under which the best industries were speedily privatised by selling them at dumping prices sometimes ten times below their real value.

Khordovskii became the lucky owner of the Yukos oil company, now the fourth largest in the world with a personal fortune approaching $8 billion.

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In The Socialist 8 November 2003:

End The Occupation Of Iraq

Civil servants launch pay battle: End Low Pay

Firefighters Take Action

Tory Party Victory For 'Something Of The Right'

Postal Workers Win Important Victory

Lewisham: Socialist Party Standing In Council By-Election

Galloway Takes Road Of 'Popular Unity'

Police Racism - Caught Red-Handed

'Oligarchs' And 'Bonapartes' - Capitalism In Post-Soviet Russia


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