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Russia’s transformation from a component part of the
communist USSR into the independent sovereign state with a
market based economy has been fraught with debilitating
problems ranging across the political, social and economic
issues of the state. While there are myriad factors and
explanations involved in unravelling the complex nature of
this change, the oligarch group emerging as the leading
entrepreneurs in the post-communist society had a
significant effect on the way the process developed.
Regrettably for Russian society and state, it was not a
beneficial experience. Putin’s attempts to push through
reform in order to reverse the decline in Russia’s society
and economy can be seen to have some success, and has made
decisive progress in reversing social and economic decline.
However due to the nature of Russia in the 21st
century these reforms have been predicted to potentially
take several decades to properly bite, as well as
understanding that not all of Russia’s current woes can be
laid on those who took advantage of a weak state and
faltering economy. In addition, there is some suspicion
that the process of targeting certain areas to reform and
bring into federal control are motivated more by personal
political aspirations and desires rather than an attempt to
apply these reforms impartially. |
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"Democratic Choice of
Russia" (1997 poster) |
Of course the key group in crony capitalist practise were the so
called oligarchs, a collection of extremely wealthy individuals that
were able to amass astounding ownership of industry and service
institutions as a result of the collapse of government authority and
capabilities during the privatisation drive. Their ability to
sustain the system of capitalism as it existed in Russia came about
through extensive media holdings and control of the industries that
did not suffer the ravages of exposure to the free market.
Naturally this led to a degree of influence over Russian politics
and society nearly unsurpassed in any other state. Industrial
holdings are best demonstrated through a measurement of industrial
ownership to GDP; at the beginning of privatisation, 37 individuals
controlling 23 leading companies in Russia accounted for 30% of
total national GDP (Rutland; 2008, p1054).
Likewise, the dominance of the Russian media by two major oligarchs,
Berezovskii and Gusinskii, held extraordinary sway over the
progression of politics, with the power to make or break
governments. Yel’tsin’s re-election campaign in 1996 required not
only financial support but also the endorsement of the media to
transmit a favourable campaign. In exchange for this support, Yel’tsin was forced to grant concessions over licensing to the
oligarchs.
Additionally, internal market development is of a high
priority in forming a market economy; the existence of crony
capitalism had prevented “a broader base system of private
ownership”, hindering the full potential of economic development
(Chubarov; 2001, p209).
Putin’s March 2000 election victory was won with the backing of the
same oligarchs that supported Yel’tsin, but the attitude towards
them was much different. It was no secret that publicly Putin was
not enamoured with the oligarchs, and privately was reported to
positively loathe them (Truscott; 2004, p194). The meeting with the
leading oligarchs following his election clearly laid out his
position towards them; provided that they stayed out of politics,
they would be granted de facto recognition of the legality of their
acquisitions. Development towards a more pluralist internal market
has been negatively affected by such deals with the oligarchs; far
from being liquidated, they have grown tremendously in both numbers
and in private accumulation of wealth, despite their continued poor
image in they public eye (Aslund; 2006, p47).
Yet broadly such policies can be seen to be mostly effective, as the
Kremlin’s authority has been effectively reasserted, seen in the
majority of oligarch’s acceptance of reforms at their expense, such
as effective renationalisation of major revenue industry, namely the
energy sector. Oleg Deripaska’s purchase of 70% of the Russian
aluminium industry has been bound by a reciprocal agreement for him
to support and modernise failing domestic automotive industries (Sakwa;
2008, p298). Furthermore Putin has managed to bring the majority of
Russian television media under state control; table 7.2 in White
et al shows that out of six channels, two are supportive of
Putin, one supports Moscow’s mayor, and the other three avoid
controversial and political content, aiding in the suppression of
subversive journalism (White; 2005, p124).
