New York Press www.nypress.com Volume 16, Issue 45 November 2003 Oligarchs R Us Deep politics swirl behind the arrest of Mikhail Khodorkovsky. By Matt Taibbi
There is big news brewing in Russia this week, and America is being sold a line of goods about what’s happening there. The coverage of the arrest by the Vladimir Putin administration of "businessman" Mikhail Khodorkovsky has featured such grossly, shockingly transparent propaganda that it could hardly have been worse during the Cold War. What’s more, some of my old friends—they know who they are—are participating in it.
This story, about the politically motivated arrest of Khodorkovsky, the Croseus-rich tycoon who heads the oil company Yukos, is in fact an important story for the ordinary American. The clash between two of the world’s baddest gangsters—Putin and Khodorkovsky—is also a great symbolic battle, each side representing one of the two great remaining pretenders to global rule.
Putin represents the past, which also happens to be the American present: the fictional democracy, in fact a ruthless oligarchy of corporate interests, with the state as the castrated referee.
Khodorkovsky represents the future: no referee. Which is why our media establishment has chosen to take up arms for him. They are making his case into an open referendum on the neo-con revolution that until now has been fought in a largely clandestine manner here at home.
The backstory to this scandal is far too involved to get into in any detail here, but the outlines are as follows. Khodorkovsky is one of about a dozen major "entrepreneurs" who emerged from the collapse of the Soviet Union to dominate the Russian economy. A series of corrupt privatization deals organized and overseen by American advisors basically ensured that ownership of the assets of the Russian state would go to this small handful of crooks.
The basic story is that the U.S., in conjunction with the Yeltsin administration, decided to create a super-wealthy class of oligarchs who would ruthlessly defend their assets against any attempt to renationalize the economy. In return—and this is the key point—they were to support, financially, the ruling, Western-friendly "democratic" government. It is through such machinations that we were able to bring about a compliant Russian state, wholly dependent on corporate support, that would answer the bell whenever we needed something ugly out of them—for instance their assistance in our bombing of their traditional allies, the Serbs.
The key moment in this story was the winter of 1996. Polls showed that Yeltsin was certain to lose a reelection bid against the idiot communist Gennady Zyuganov. So the state, in conjunction with U.S. advisors, sold off the crown jewels of the Russian economy to these crooks for pennies on the dollar. In return, these beneficiaries massively funded Yeltsin’s reelection campaign. This is how Khodorkovsky, then the chief of a bank called Menatep, came to control the precious Yukos empire that is now under siege. It was given to him. His bank was put in charge of the auction for 78 percent of the company, and he actually excluded other bidders at will. He "paid" around $300 million (whether or not he ever paid even that money is still a matter of dispute) for his controlling 78- percent stake. The company is now valued at about $15 billion.
That doesn’t begin to tell the Khodorkovsky story. Even in the group of fantastic individuals who participated in this mass robbery, he stands out. He is the Bad Bad Leroy Brown of Russia. You know that opening scene in Goodfellas where Ray Liotta says, "All my life, I wanted to be a gangster"? Just imagine the fleshy, bespectacled Khodorkovsky slamming that trunk shut. In a nation of mobsters, he is king, a stone-cold ruthless genius. It would take a hundred thousand pages to detail all of his schemes, but they make the work of Professor Moriarty seem like a game of Chinese checkers.
I’ll set down one example, from a story I did many years ago about Russian minerals company called Avisma, which eventually filed suit against its owners here in the States, naming Khodorkovsky’s Menatep as the chief villain. Menatep (allegedly, I have to say in America) bought the company, then forced its directors to sell its commodities to a Menatep shell company called TMC at pennies on the dollar. TMC then sold the goods (mainly titanium) to Western investors at cost. To make matters worse, TMC then (allegedly) induced Avisma to buy materials from them above cost. Readers are invited to imagine what words like "forced" and "induced" mean in this context. In the end, nothing was left but a skeletonized carcass. Any Brooklyn restaurant owner who has been taken over by the Lucchese or Gambino families will recognize this technique.
This was what was described as "the encouraging emergence of market capitalism" in the new Russia, and for many years it was cool with everybody—the press, the Russian state, the American diplomatic effort. Until this year, that is, when Khodorkovsky broke the rules of the gangster-arrangement implicit in the new Russian state. He decided he no longer wanted to pay the piper—Putin. Instead of ponying up the agreed-upon tribute, he started making noise about wanting to be president himself in 2008, and then, even worse, he started to fund opposition parties.
I’ll give Putin this: He has balls. Unlike Boris Yeltsin, who dropped to his knees for every greasy hood with a dollar for eight consecutive years, Putin decided to make an example of Misha. In America, we settle these disputes by giving the F-117 contract to a different company. In Russia, the methods are a little different: an untimely car accident, an exploding briefcase, a mysterious fatal illness contracted after a routine phone conversation. Absolutely the most civilized of these options is imprisonment and seizure of assets. This is the route Putin took with Khodorkovsky. In response to the latter’s decision not to abide by the laws of gangsterdom, Putin decided, for once, to enforce the laws of the state.
How anyone can find morality in any of this is beyond me. But it is not beyond the New York Times, and it is not even beyond the Boston Globe. These papers, along with the vast majority of Western media outlets around the world, have cast this smarmy fight over assets long ago stolen from the Russian people as a battle between the evil forces of nationalization and the good, industrious representatives (Khodorkovsky) of the people-friendly market economy. Here is how Steven Lee Myers of the Times described the resignation of Kremlin chief of staff Alexander Voloshin, who has apparently thrown in his lot with Khodorkovsky:
"On Mr. Voloshin’s side is a coterie of aides who favor greater freedom for the economy. On the other are those advisors who, like Mr. Putin himself, served in the K.G.B. or other security services and favor a stronger role for the state…"
Myers leaves out here the fact that Khodorkovsky himself, like most of the tycoons, is a creature of the security services, having once been a chief of the Komsomol in Moscow. He goes on:
"That faction, known collectively as the siloviki—or as Chekists after the old Soviet-era word for intelligence operatives—is widely believed to have initiated or supported the prosecutorial assault on Yukos, though exactly why remains unclear."
This is outright bullshit. Everyone in Russia knows why. It’s because Yukos didn’t pay the piper. This is typical of the Times, casting mafia disagreements in the garb of an ideological dispute. For a dozen years now, in that paper, anyone who disagreed with the neo-con laissez-faire corporate tribe aligned with U.S. interests has been a Soviet throwback. It is worth noting that just three years ago, when Putin was the same blunt thug he is today, the Times went to great lengths to portray him as the next Thomas Jefferson. He was on our side then.
Alongside the Myers piece, the Times ran an editorial entitled, "Crime and Punishment for Capitalists." The piece was written by Leon Aron, the author of one of the most shameless blowjobs in the history of biographical art: Yeltsin: A Revolutionary Life. In the piece, Aron actually details many of the same facts I’ve set down here, but he argues, against all available fact, that the tycoons are actually wonderfully productive people who are doing their darndest to lift Russia to its feet. The piece is full of righteous sentences like the following, condemning Putin: "No one knows how far they will take their campaign against economic vitality…"
The papers have gone so far as to portray Khodorkovsky—a man whose name causes grown men to spit uncontrollably in every part of the Russian empire—as an anti-Soviet martyr along the lines of Andrei Sakharov. The Globe, normally the most sensible source of Russia coverage, even ran an AFP photo showing a woman holding a sign that reads, "Free Khodorkovsky."
The "pro-Khodorkovsky" demonstration that this woman was a part of is the kind of thing that no journalist with any shame would ever touch. In Russia, it is well-known that "spontaneous" demonstrations on behalf of elitist monsters are usually paid productions. I once went to a demonstration of "Moving Together," the so-called Putin Youth movement, in which the attending kids were given tickets to see Shrek in return for appearing. At another, a demonstration on behalf of Vladimir Zhirinovsky’s neo-fascist LDPR party, demonstrators were given free beer. They even gave me some. The LDPR has the best parties in town.
Many of us who spent the 90s in Russia became aware over time that the aim of the United States was to create a rump state that would allow economic interests to strip assets at will. The population in this scheme was to be good for consuming foreign goods produced abroad with Russia’s own cheaply sold raw materials. The aim was a castrated state, anarchy, a vast, confused territory of captive consumers, cheap labor and unguarded oil and aluminum.
Some of us who came home after seeing this began to realize that the same process is underway in the United States: the erosion of the tax base, the gradual appropriation of the tools of government by economic interests, a massive, disorganized population useless to everybody except as shoppers. That is their revolution: smashing states everywhere and creating a scattered global nation of villas and tax shelters, as inaccessible as Olympus, forbidding entry even to mighty dictators.
That’s what this Khodorkovsky business is all about—preserving that dream. Ask yourself what other reason there could be for the American press to defend a thief with eight billion dollars.
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