Monday, Dec 15, 2003
A mandate for nationalism
By Vladimir Radyuhin
The victory of pro-Kremlin parties in the recently concluded parliamentary elections of Russia is likely to fuel a further offensive against the oligarchs.
THE CRUSHING defeat of pro-Western liberal parties at the hands of nationalists in the December 7 parliamentary elections in Russia has strengthened the hand of the President, Vladimir Putin, in dismantling the system of "oligarchic capitalism" built by his predecessor, Boris Yeltsin. For the first time in Russia's post-Communist history, radical liberals have been shut out of Parliament. The Union of Rightist Forces (SPS), led by the architects of the Yeltsin reform, Yegor Gaidar and Anatoly Chubais, got less than four per cent of the vote, short of the five per cent minimum needed to win seats in the State Duma, the Lower House of the Russian Parliament. The high wave of public disillusionment with the results of the reform has also buried the other main liberal party, Yabloko, even though it advocated socially-oriented economy and was sharply critical of the "bandit capitalism" built by the free-market radicals.
The four parties that have made it to Parliament reject the Western-type economic liberalism and profess nationalism. The Kremlin brainchild, United Russia, that secured half the seats in the new legislature, basically has no ideology, apart from pledging unswerving support to Mr. Putin, and, by extension, to his crackdown on Russia's richest businessman, oil tycoon Mikhail Khodorkovsky, arrested in October on charges of tax evasion and fraud in the acquisition of public assets. The other two big winners, the ultra-nationalist Liberal Democratic Party of maverick Vladimir Zhirinovsky and the left-wing Rodina or Motherland bloc, campaigned under the slogans of "social justice" and total (Zhirinovsky) or partial (Rodina) revision of murky privatisation deals. The nationalist anti-liberal backlash is a natural reaction to Yeltsin's "oligarchic capitalism," the product of a sweeping sell-off in the mid-1990s of Russia's fabulously rich commodity sector to a handful of Kremlin-connected businessmen. The new oil and metal moguls became the main pillar of the Yeltsin regime. Their economic power merged with political power after they bankrolled Yeltsin's re-election in 1996. About 20 "oligarchs," as they are called in Russia, have come to control well over half of the Russian economy. As their wealth multiplied, the economy fell to pieces, with the gross domestic product contracting by 50 per cent and a majority of the population sinking to poverty.
The growing financial clout of the oligarchs encouraged them to seek more political power. Mr. Khodorkovsky, head of the oil giant Yukos, whose personal wealth is estimated at $8 billion, poured millions of dollars into election funds of SPS, Yabloko and the Communist Party, in an effort to gain control of the State Duma, in the parliamentary polls. According to the Centre for Political Technologies, big and medium businessmen and their lobbyists accounted more than a half of most party lists. Mr. Putin saw this as a direct challenge to his plans to tighten control over the new legislature, and it is significant that all the three parties financed by Mr. Khodorkovsky were big losers, with the Communist faction shrinking from 117 to 51 deputies and the two liberal parties thrown out of Parliament. The victory of pro-Kremlin parties is likely to fuel a further offensive against the oligarchs. Speaking after the vote, Mr. Putin accused private corporations of exploiting loopholes in legislation "for their own economic interests" to the detriment of the state.
The post-election scenario will also see the further eclipse of the Yeltsin clan. The Kremlin Chief of Staff, Alexander Voloshin, a leading member of the clan, resigned shortly after the detention of Mr. Khodorkovsky. The Prime Minister, Mikhail Kasyanov, another Yeltsin protégé, is expected to be the next to go, either before or after the presidential election next March. Mr. Putin's campaign to dismantle oligarchic capitalism has a crucial security dimension that the Kremlin has played down for political reasons.
The arrest of Mr. Khodorkovsky disrupted a multi-billion deal for the purchase by Exxon Mobil of up to 40 per cent in Yukos, which at that time was finalising a merger with another Russian oil major, Sibneft. Exxon Mobil is believed to have bought up earlier more than 13 per cent of Yukos' shares traded on the stock market. If the deal had come through, Exxon Mobil and British Petroleum, which had earlier acquired a controlling share in the Russian oil company, TNK, would have controlled 150 to 160 million tonnes of Russian oil production, or one-third of the country's annual output.
"By any standards this would have amounted to the loss by Russia of its sovereignty," says Sergei Lopatnikov, a political expert. "If Yukos became part of an American consortium, it could rely on the political, economic and military might of the U.S. Government in any conflict with the Russian state." Characteristically, the media in the United States decried Mr. Khodorkovsky's arrest as a "blow to democracy" in Russia, and denounced the Russian parliamentary poll as "a lamentable step back to authoritarian rule," while the U.S. Ambassador to Moscow, Alexander Vershbow, voiced concern over a growing role of those in Russia who do not care for the country's integration into Western institutions and long-term strategic partnership with the U.S.
Mr. Putin is certainly against Russia's integration as a commodity appendage of the West. The results of the December 7 elections showed that Russians share this view, and Mr. Putin indicated that he would take into account the nationalist shift in the public mood. "It is crystal clear to me that election results reflect people's actual sympathies... reflect realities of our political life," he told a Cabinet meeting a day after the vote.
The resurgence of nationalism opens the way for Mr. Putin to press for redistribution of the nation's natural resource wealth from the handful of oligarchs to the impoverished population by closing tax-evasion loopholes in the legislation and increasing the tax rate on all extractive industries.
Copyright © 2003, The Hindu.