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The Oligarchs: Wealth and Power in the New Russia. (Political booknotes: russian toward capitalism).

THE OLIGARCHS: Wealth and Power in the New Russia by David Hoffman Public Affairs, $30.00

EXACTLY A DECADE AGO, THE world looked to post-Soviet Russia, then in its infancy, with a great sense of hope and possibility. Freed from the shackles of Communism, embracing democracy and market economics, Russia in the 1990s promised to be an era of rebirth. No one thought that this would be easy, but from the perspective of 1992, it looked as if Russia had all the right ingredients to succeed: a populace eager for political and economic freedom, a vibrant leader in Boris Yeltsin, and a group of young, committed, Western-oriented technocrats ready to embark on bold reforms.

Of course, as is often the case with Russia, history unfolded harshly. Far from becoming a stable democracy and market economy, Russia turned into a sort of Wild West of unbridled capitalism, where corruption reigned supreme and many aspects of life seemed to come straight out of a bad gangster movie. By the turn of the century, Russia's politics, like its economy, seemed bankrupt. Yeltsin, once the world's white knight, had come to personify his country: big, blustery, and not very healthy. Most of his bright reformers had been driven from office in disgrace. And in Washington, those American policymakers and pundits who had once looked toward Russia with optimism were reduced to presumptuous finger-pointing about how and why Russia was "lost."

This sad story comes to life in David Hoffman's sprawling new book, The Oligarchs. Hoffman, who spent the decade in Moscow as one of The Washington Post's most respected foreign correspondents, focuses on the so-called "winners" of Russia's nosedive--the six business heavyweights who maneuvered to dominate Russia's politics, economy, and media. In the tradition of other recent American journalist-chroniclers of life in Russia, such as Hedrick Smith and David Remnick, Hoffman provides us with a vivid tableau of these men and their lives, showing how their ambitions shaped society and, in the end, brought Russia to the brink of collapse.

Hoffman's perspective is clearly critical of the oligarchs, but unlike other books about them, his is not a screed. In fact, what makes his work different is that, in a way, he humanizes them. In the finely sketched personality profiles of the six men in the book's opening, Hoffman shows how the roots of

Russia's current condition stretch back to the Soviet era, when men like Boris Berezovsky and Vladimir Gusinsky were anonymous entrepreneurs who exploited loopholes in the Soviet economy to make fast money. Through them, we see the Soviet collapse from well below the heights of Gorbachev and perestroika as a tale of regular Joes who figured out how to out-crook a crooked system. It may seem like an obvious point now, but the fact that the legacy of Soviet corruption directly shaped Russian corruption is one that often gets lost.

This also helps explain why the course of Russian "reform" took the direction that it did. Much has been made about the fact that, in the early 1990s, Yeltsin and his aides chose to force privatization rather than first establish new regulations and reliable rules of the game, creating a kind of market anarchy that allowed the oligarchs to thrive. Hoffman clearly agrees that in retrospect this was a profound mistake, but he helps us understand the reformers' position better. After seven decades of Soviet central planning, they were determined to destroy the old state system, not recreate one. Freedom came first, rules later. Unfortunately, the reformers forgot that politics abhors a vacuum, and the oligarchs stepped in and set their own rules.

Hoffman's tale of the oligarchs' rise through ehborate Ponzi schemes and backroom machinations is dizzying. The book brims with fascinating anecdotes, all of them well told. As usual, Hoffman has done his reporting admirably, and he takes us behind the scenes to the oligarchs' meetings at the Logovaz club in Moscow's Sparrow Hills (sessions eerily reminiscent of the famous five-family pow-wow in The Godfather), and inside Yeltsin's innermost Kremlin cirdes. We see how the oligarchs first plotted to buy up state assets during privatization, corruptly engineered Yeltsin's reelection as president in 1996, and worked to assert their influence by dominating national media outlets. In all, Hoffman describes a Russia where virtually no line exists between public or private, oligarch or government, criminal or legal.

So, as many Russians now ask, kto vinovat? Who is to blame? Hoffman shies from fingering a single culprit, and the explanation is certainly too complex to find one. By making their fortunes on the backs of common Russians, the oligarchs themselves are a pretty unsympathetic lot. But had they not existed, would things have been any different? At one point, Hoffman resorts to a bit of historical determinism, suggesting that Russia's troubles were inevitable because it lacked a tradition of the rule of law.

Interestingly, Hoffman barely mentions one group of people many accuse of undermining Russian reform: Western policymakers, especially those in the Clinton administration. As someone who served in that administration's State Department, I am, of course, grateful. But the fact is that it did make some mistakes--particularly in not pushing Yeltsin harder to establish institutions and rules to regulate its economy--along with wiser moves, such as funding programs to help develop Russia's civil society and, most important, working to make its nuclear arsenal smaller and safer. Even with this mixed record, the claim that the Clinton administration somehow "lost" Russia is bunk. What's clear in Hoffman's book is that Russia took the path that k did not so much because of outside influence but because of profound pressures and flaws from within.

For those interested in the future of this puzzled and puzzling country, Hoffman's book could not have come at a better time. His story ends with the rise of Vladimir Putin, who has defined his presidency by discrediting the oligarch era. In fact, in late January, just weeks before this book was published, the Kremlin forced TV-6, Russia's last independent national television network, off the air. Owned by Boris Berezovsky, TV-6 had been a constant thorn in Putin's side, and its suppression is considered by many to be the final nail in the oligarchs' coffin. But Russia's problems are far from solved. Tragically, by eliminating the oligarchs through undermining the freedom of the press, Putin has simply replaced one ill with another.

DEREK CHOLLET is a Bosch Public Policy Fellow at the American Academy in Berlin.
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Author:Chollet, Derek
Publication:Washington Monthly
Article Type:Book Review
Date:Mar 1, 2002
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