At the Mercy of Liberals, Oligarchs and KGB Men

"Russia is moving towards liberalization at a pace unheard of in any other country. "

By Yulia Latynina

        President Vladimir Putin announced at last week's news conference that Russia is moving towards liberalization at a pace unheard of in any other country. Absolutely true. Russia's 13 percent income tax is Europe's lowest, the portion of hard currency earnings that businesses are obliged to sell to the state has dropped from 75 percent to 50 percent, other taxes are being lowered and meek attempts have even been made to unify customs duties.

    Although, if you say that Russia is a country where liberals rule, you will be grossly mistaken. There are people stronger than liberals in Russia. Namely, the oligarchs.

    It is wonderful that all the heretofore adopted liberal measures do not bother the oligarchs. (Take, for example, the super low income tax.) But there are two things that do bother oligarchs: fair trade in state property and honest bureaucrats.

    And one can hardly notice any changes to the traditional Russian ways of selling off state property. The Val Gamburtseva oil field was sold to Severnaya Neft oil company for $7 million, while other companies offered up to $100 million. The Kovdor mining and processing plant was sold to MDM group for $17 million, while it could have brought about $100 million. The Kuznetskugol coal mining company became part of Yevrazholding without much noise or competition.

    Although, if you say that Russia is a country where oligarchs rule, you will also be grossly mistaken. There are people stronger than oligarchs in Russia. Namely, those who enjoy the president's trust: former KGB officers and "new St. Petersburgers."

    Unlike the oligarchs, the president's trusted men are absolutely invincible. Let's imagine the president receives some extraordinary compromising materials regarding them. Will a resignation, not to say a trial, follow? Hardly likely. In the existing framework, financial mischief is illegal, but too ordinary.

    Let's recall how last winter searches were conducted in St. Petersburg's Promstroibank, which is led by Putin's ally Vladimir Kogan. Rumor had it that then-Interior Minister Vladimir Rushailo was seeking compromising materials about the "St. Petersburg team." One can assume he found it: The interior minister would not have openly broken in to the bank if he was not sure what he was going to find. But it was not St. Petersburgers who were punished, but Rushailo himself, in part for violating the rules of the game.

    Incompetence on the part of the trusted men would not be reason for resignation either. Rumor has it that during the Kursk submarine tragedy, it was the Security Council that reported to Putin that the Kursk would surface any minute. The result? The head of the Security Council became defense minister.

    The president's seven envoys have all failed to fulfill the task of electing Kremlin-favored governors. Here, the leader is Far East representative Konstantin Pulikovsky. His nominee Gennady Apanasenko managed to come third in a two-man race. Mr. None-of-the-Above came in second.

    The reason behind the president's trust is clear. The "new KGB men" are radically different from "capitalist ministers" such as Rushailo, Mikhail Lesin or Vyacheslav Soltaganov. It is not generally the case that they are more honest. They are simply too narrow-minded to completely corrupt the economy.

    Instead, they constantly slip the president plans for various commissions: a commission for reconsidering certain privatization cases, a commission for tracing money hidden abroad, etc.

    Luckily, there is an even stronger force standing against these people's plans to drive the Russian economy to happiness — liberals. …

    Yulia Latynina is a journalist with ORT.

 

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