Re: Slavonica

Tue, 14 Jul 1998 15:42:43 +0200
Dr. R.J. Barendse (r.barendse@worldonline.nl)

Dit is een meerdelig bericht in MIME-indeling.

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Thanks for the various interesting papers on the situation in Russia =
etc. I have a couple of remarks both on the previous discussion and on =
the paper which Arno Daastol urged everybody to read:

1.) As to the question of how 12 people got their hand on some $ 4 =
bilion aid to Russia, I read in the Dutch newspaper `De Volkskrant' that =
this mainly goes back to the 1995 elections when the Russian oligarchy =
gave extensive financial support to Yelzin's campaign in return for =
being allowed the proceeds from `privatized' companies.=20

Indeed, this already was the case during the conflict between Yelzin =
and the Russian parliament, when again Yeltzin appears to have had =
massive financial support from the oligarchy in return for selling them =
the assets of state-companies. In fact, I even heard that during the =
attempted coup in 1980 and the `fight for the white house', men were =
walking around in the crowd of the `democrats' (never more than a few =
thousand in a city of 11 milion anyway) liberally distributing dollars =
to everybody. This money was - I heard - appearantly mainly derived =
from the Russian maffia, the `Organizatija', but you may wonder how much =
derived from foreign `aid'.=20

For foreign aid is appearently distributed by Yeltzin (and =
Chernomirdin) for buying political support, through the media, or - and =
more importantly - by assuring jobs to potential voters. Thus - for =
example - during Yeltzin's visit to the former Communist bastion of =
Volgograd. I don't think, by the way, that Yeltzin is very different =
from other Russian politicians in this respect - it is more or less the =
accepted way of doing things in Russia. The reformed Communist Party =
still disposes of the funds of the old communist party which it uses to =
buy support, and it now seems clear that the oligarchy also funded the =
Lebed campaign, in return for him supporting Yeltzin during the second =
round of the election.=20

I don't think much will change whoever comes to power - if Lebed =
were to come to power, more money would probably go to former generals =
of the Moldavia army, if the communists came to power more money would =
go to industries run by the former Nomenklatura - as is already the case =
during the recent change of the cabinet. Political support is bought =
and, conversibly, leverage on the market is bought by political support. =

And, indeed, this is not new. Russian politics has always had a =
strain of gangsterism where local strongmen support politicians - if =
need be with arms - in return for financial - and other - favours where =
such deals are brokered by (criminal) middlemen or by `state-merchants' =
. If I don't go back all the way to the state-merchants (the Gos'ti) in =
the 17 th century who also doubled as middlemen in the market for =
political support (they actually have a lot in common with the present =
oligarchy) or go back to local strongmen in that century like the =
Khovantsin family - kind of 17 th century's Lebeds - I mention them =
since are the subject of THE classic work on the grim world of Russian =
politics (the opera `Khovantsina' of Modeste Mussorgsky, which everybody =
interested in Russian politics should ponder on).=20

Even if I don't go back that far I might still refer back to the =
`Uzbek maffia' and the activities of Breznev-family in the 1970's or =
perhaps to Beria and his financial/military/political NKVD - empire in =
the 1930's.=20

Probably western observers have too much been misled by =
`Kreminology' which assumed the USSR was a monolithic `totalitarian' =
power-structure centred on the Kremlin. To understand Russian politics =
they should perhaps refer more to the literature on the =
Nazi-dictatorship which is now being caracterized as a `polycratic =
anarchy of overlapping competences'. If seen in this light there's =
nothing new under the sun.=20

The fault here is rather with the western donors (yes - and the IMF) =
who assume they are giving to the `government'. While the `government' =
is really but one of many groups vieing for power and influence - aid is =
invested in Russia for buying support by one group.=20

Maybe - this is part of some devillish complot by the IMF to =
undermine the Russian state as R.K. Moore argues, but I rather think the =
IMF has no idea either of what is going on in the Kremlin, let alone =
outside Moscow. I would rather think it is desparately looking for =
somebody to carry out its magnificient `structural adjustement policies' =
too. Most IMF-`advisors' only know what they have seen on TV, and, once =
in Moscow for a few days don't venture much further than `Hotel Rossia' =
- cheap booze, cheaper girls - as indeed do the western correspondents =
from whom they get their information.=20

The economy is now being run by an oligarchy with political support =
(really a Nomenklatura in disguise though granted with the approval of =
the Harvard business-school now rather than the Party-school) And, =
likewise, whole sectors of it have simply ceased paying taxes to the =
`government' . They now pay, say, protection racket to the Organizatija =
- why should they pay to the `government' if the `government' gives =
nothing in return ? And I don't think this will change very much in the =
forseeable future either.=20

2.)Chudovski claims that `assets of Russian state-companies are =
being sold to western multinationals' - are they ? Sure, the only =
company which really counts in Russia, Gazprom, is trying to attract =
western investors and is trying to work with western oil-companies but =
it is hardly really being sold to them. As I hear most western investors =
are extremely reluctant to invest in Russia. I believe twice as much =
foreign capital has been invested in Hungary than in the entire CIS now. =
Just like the IMF the foreign investors are also on the look-out for a =
reliable partner=20

But again this is nothing new. It reminds me somewhat of the =
situation during World War I when the British and French enterpreneurs =
and governments also had to deal with local `buzzinesmen' (as such =
shadowy figures are now called in `Anglo-Ruski') to fetch thousands of =
tons of French or British munition, riffles, food, medicine etc. etc. =
from Murmansk to Petrograd. Virtually all of this `disappeared' somehow =
with historians still unable to figure out what happened to it.=20

I really doubt whether foreign investment is going to make much of =
an impact on Russia anyway, not because the infrastructure is not there =
- as Daastol claims, but because there is TOO MUCH of it. The kind of =
investments Russia would need are, for example, investments in drilling =
for oil in the Arctic seas off the Kola-peninsula, entertaining and =
building new gas-pipes in Tjumen - imagine an Artic tundra about as vast =
as the whole of western Europe, covered with gas-wells and pipe-lines as =
far as they eye can reach - or in mining in Northeastern Siberia - a =
region as large as the entire USA covered in dense taiga with 2000 meter =
high mountains, subject to frequent earthquakes - and, mind you, all of =
this in permafrost conditions.=20

Now, all US oil -companies, combined, already had difficulties =
building the Alaska pipeline which is a minor project compared to the =
Baikul-Amur Magistral railroad of the Soviet area - or, again, remember =
the problems with the tunnel under the Canal - a minor project compared =
to these investments in Russia. Moreover, much of the Russian industry =
is built on a scale which completely dwarves anything known to western =
investors - thus, the Magnitorsk ironworks alone produced more steel =
than the entire UK. To modernize the steel-industry in Magnitogorsk =
alone would require funds which are completely beyond the US or European =
steel-manufacturers. =20

Basically, even to modernize the Russian industry (and, remember the =
USSR was the world's foremost producer of an endless array of goods =
ranging from oil to cement, from natural gas to tractors, from steel to =
diamonds or coal) entails investments on a scale which are simply not in =
the range of private industry. And, furthermore, these would be =
investments on the very long run and the present global financial =
climate is not very conducive to this.=20

The only thing western firms are appearently willing to invest in =
are commercial enterprise (selling say Danish cheese, Guzzi-shoes or =
Benneton-watches in Moscow's former GUM or along the Nevski - Prospect =
in Petersburg - not of course in Russia's provinces where the shops are =
still as empty as in the Soviet-period) with profits on the very short =
term.

Since the massive structural investments needed are simply beyond =
the means of private western investors and certainly beyond Russia's new =
'buzzinesman' - they can only be provided by the Russian state. I use to =
joke that in Russia capitalism is the longest road from socialism to =
socialism because all these massive enterprises can simply not be run by =
private enterpreneurs. Nor can they in the `West'. Even in Britain under =
Attlee's labour government, for example, the coal-industry which needed =
massive restructuring had to be taken over by the state because no =
private enterpreneur could raise the funds required - as even the =
quary-owners themselves were willing to admit.

3.)And, contrary to what Daastol thinks this is NOT a new situation =
- I would urge him to study the NEP-period in the 1920's more closely =
when - granted, briefly - the Bolsheviki experimented with a free =
market.NEP failed not primarily because of the Bolsheviki's animosity =
towards the `bourgeoisie' (who, in any case, were only a =
quasi-bourgeoisie - pretty much like the contemporary `buzzinesman' - =
first getting rich on first WWI, then Civil War, speculation) or the =
`Kulaks'. But because on the one hand the Kulaks were getting rich =
quickly by withholding stocks of grain from the cities, and, on the =
other, because nobody was willing to make risky investments in the =
infrastructure - steel, railroads, electrification - needed for the =
industrialisation of Russia. So that, while commerce was booming, even =
much of the damage done to the industry of the Czarist period was still =
not repaired.=20

Whatever one thinks about Stalin's methods (and there was a broad =
agreement among the Bolsheviki on the aims to be achieved) without the =
forced industrialisation and, yes, the collectivisation of agriculture =
Russia might have remained in the same state of economic and =
institutional turpour as it is in now.=20

But on a much lower level - for, in the period of count Witte - who =
Daastol so admires - in the beginning of this century the industrial =
growth did not even keep pace with the growth of the population. And, =
anyway, lest we forget - the Czarist regime paid for this by exporting =
Ukrainian grain while the population of the Ukraine was starving - as =
much as did the Bolsheviki. For I would not defend the Bolshevik regime =
but it should be remember that the Czarist regime was not a very =
pleasant regime either.=20

But, to end with a cheery note, during his recent visit to Moscow =
and while the press kept on nagging about the Lewinsky-case president =
Clinton made one sensible remark. The Russians, he reminded us, have a =
flair of getting themselves into seemingy unsolvable problems (just =
study the Velikie Smut, the Razkol, or the Opritchnik in the 16 th - 17 =
th century or not so long ago the terrible defeats suffered in =
july-november 1941) so that everybody has given up already - and then =
making an equally incredible recovery, while the situation seems =
completely hopeless to outsiders. In many ways they are the most =
remarkable people in the world.

Dozvedanije

R.J. Barendse

International Institute Asian Studies - Leiden University

From `Upside-up' in Amsterdam instead of `Down under' in Canberra.

r.barendse@worldonline.nl

=20

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Thanks for the various interesting papers on the situation = in Russia=20 etc. I have a couple of remarks both on the previous discussion and = on the=20 paper which Arno Daastol urged everybody to read:

1.) As to the question of how 12 = people got=20 their hand on some $ 4 bilion aid to Russia, I read in the Dutch = newspaper=20 `De Volkskrant' that this mainly goes back to the 1995 elections = when the=20 Russian oligarchy gave extensive financial support to Yelzin's = campaign in=20 return for being allowed the proceeds from `privatized' companies.=20

Indeed, this already was the case = during the=20 conflict between Yelzin and the Russian parliament, when again = Yeltzin=20 appears to have had massive financial support from the oligarchy in = return=20 for selling them the assets of state-companies. In fact, I even = heard that=20 during the attempted coup in 1980 and the `fight for the white = house', men=20 were walking around in  the crowd of the `democrats' (never = more than a=20 few thousand in a city of 11 milion anyway) liberally distributing = dollars=20 to everybody. This money was - I heard  - appearantly mainly = derived=20 from the Russian maffia, the `Organizatija', but you may wonder how = much=20 derived from foreign `aid'. =

For foreign aid is appearently = distributed by=20 Yeltzin (and Chernomirdin) for buying political support, through the = media,=20 or - and more importantly - by assuring jobs to potential voters. = Thus - for=20 example - during Yeltzin's visit to the former Communist bastion of=20 Volgograd. I don't think, by the way, that Yeltzin is very different = from=20 other Russian politicians in this respect - it is more or less the = accepted=20 way of doing things in Russia. The reformed Communist Party still = disposes=20 of the funds of the old communist party which it uses to buy = support, and it=20 now seems clear that the oligarchy also funded the Lebed campaign, = in return=20 for him supporting Yeltzin during the second round of the election.=20

I don't think much will change = whoever comes=20 to power - if Lebed were to come to power, more money would probably = go to=20 former generals of the Moldavia army, if the communists came to = power more=20 money would go to industries run by the former Nomenklatura - as is = already=20 the case during the recent change of the cabinet. Political support = is=20 bought and, conversibly, leverage on the market is bought by = political=20 support.

And, indeed, this is not new. = Russian politics=20 has always had a strain of gangsterism where local strongmen support = politicians - if need be with arms - in return for financial - and = other -=20 favours where such deals are brokered by (criminal) middlemen or by=20 `state-merchants' . If I don't go back all the way to the = state-merchants=20 (the Gos'ti) in the 17 th century who also doubled as middlemen in = the=20 market for political support (they actually have a lot in common = with the=20 present oligarchy) or go back to local strongmen in that century = like the=20 Khovantsin family - kind of 17 th century's Lebeds - I mention them = since=20 are the subject of THE classic work on the grim world of Russian = politics=20 (the opera `Khovantsina' of Modeste Mussorgsky, which everybody = interested=20 in Russian politics should ponder on).

Even if I don't go back that far I = might still=20 refer back to the `Uzbek maffia' and the activities of = Breznev-family in the=20 1970's or perhaps to Beria and his financial/military/political NKVD = -=20 empire in the 1930's.

Probably western observers have = too much been=20 misled by `Kreminology' which assumed the USSR was a monolithic=20 `totalitarian' power-structure centred on the Kremlin. To understand = Russian=20 politics they should perhaps refer more to the literature on the=20 Nazi-dictatorship which is now being caracterized as a `polycratic = anarchy=20 of overlapping competences'. If seen in this light there's nothing = new under=20 the sun.

The fault here is rather with the = western=20 donors (yes - and the IMF) who assume they are giving to the = `government'.=20 While the `government' is really but one of many groups vieing for = power and=20 influence - aid is invested in Russia for buying support by one = group.=20

Maybe - this is part of some = devillish complot=20 by the IMF to undermine the Russian state as R.K. Moore argues, but = I rather=20 think the IMF has no idea either of what is going on in the Kremlin, = let=20 alone outside Moscow. I would rather think it is desparately looking = for=20 somebody to carry out its magnificient `structural adjustement = policies'=20 too. Most IMF-`advisors' only know what they have seen on TV, and, = once in=20 Moscow for a few days don't venture much further than `Hotel Rossia' = - cheap=20 booze, cheaper girls - as indeed do the western correspondents from = whom=20 they get their information.

 The economy is now being run = by an=20 oligarchy with political support (really a Nomenklatura in disguise = though=20 granted with the approval of the Harvard business-school now rather = than the=20 Party-school) And, likewise, whole sectors of it have simply ceased = paying=20 taxes to the `government' . They now pay, say, protection racket to = the=20 Organizatija - why should they pay to the `government' if the = `government'=20 gives nothing in return ? And I don't think this will change very = much in=20 the forseeable future either.

2.)Chudovski claims that `assets = of Russian=20 state-companies are being sold to western multinationals' - are they = ? Sure,=20 the only company which really counts in Russia, Gazprom, is trying = to=20 attract western investors and is trying to work with western = oil-companies=20 but it is hardly really being sold to them. As I hear most western = investors=20 are extremely reluctant to invest in Russia. I believe twice as much = foreign=20 capital has been invested in Hungary than in the entire CIS now. = Just like=20 the IMF the foreign investors are also on the look-out for a = reliable=20 partner

But again this is nothing new. = It reminds me somewhat of the situation = during World War=20 I when the British and French enterpreneurs and governments also had = to deal=20 with local `buzzinesmen' (as such shadowy figures are now called in=20 `Anglo-Ruski') to fetch thousands of tons of French or British = munition,=20 riffles, food, medicine etc. etc. from Murmansk to Petrograd. = Virtually all=20 of this `disappeared' somehow with historians still unable to figure = out=20 what happened to it.

I really doubt whether foreign = investment is=20 going to make much of an impact on Russia anyway, not because the=20 infrastructure is not there - as Daastol claims, but because there = is TOO=20 MUCH of it. The kind of investments Russia would need are, for = example,=20 investments in drilling for oil in the Arctic seas off the = Kola-peninsula,=20 entertaining and building new gas-pipes in Tjumen - imagine an Artic = tundra=20 about as vast as the whole of western Europe, covered with gas-wells = and=20 pipe-lines as far as they eye can reach - or in mining in = Northeastern=20 Siberia - a region as large as the entire USA covered in dense taiga = with=20 2000 meter high mountains, subject to frequent earthquakes - and, = mind you,=20 all of this in permafrost conditions.

Now, all US oil -companies, = combined, already=20 had difficulties building the Alaska pipeline which is a minor = project=20 compared to the Baikul-Amur Magistral railroad of the Soviet area - = or,=20 again, remember the problems with the tunnel under the Canal - a = minor=20 project compared to these investments in Russia. Moreover, much of = the=20 Russian industry is built on a scale which completely dwarves = anything known=20 to western investors - thus, the Magnitorsk ironworks alone produced = more=20 steel than the entire UK. To modernize the steel-industry in = Magnitogorsk=20 alone would require funds which are completely beyond the US or = European=20 = steel-manufacturers.        

Basically, = even to=20 modernize the Russian industry (and, remember the USSR was the = world's=20 foremost producer of an endless array of goods = ranging=20 from oil to cement, from natural gas to tractors, from steel to = diamonds or=20 coal) entails investments on a scale which are simply not in the = range of=20 private industry. And, furthermore, these would be investments on = the very=20 long run and the present global financial climate is not very = conducive to=20 this.

The only thing western firms are appearently = willing to=20 invest in are commercial enterprise (selling say Danish cheese, = Guzzi-shoes=20 or Benneton-watches in Moscow's former GUM or along the Nevski - = Prospect in=20 Petersburg - not of course in Russia's provinces where the shops are = still=20 as empty as in the Soviet-period) with profits on the very short=20 term.

Since the massive structural = investments=20 needed are simply beyond the means of private western investors and=20 certainly beyond Russia's new 'buzzinesman' - they can only be = provided by=20 the Russian state. I use to joke that in Russia capitalism is the = longest=20 road from socialism to socialism because all these massive = enterprises can=20 simply not be run by private enterpreneurs. Nor can they in the = `West'. Even=20 in Britain under Attlee's labour government, for example, the = coal-industry=20 which needed massive restructuring had to be taken over by the state = because=20 no private enterpreneur could raise the funds required - as even the = quary-owners themselves were willing to admit.

3.)And, contrary to what Daastol = thinks this=20 is NOT a new situation - I would urge him to study the NEP-period in = the=20 1920's more closely when - granted, briefly - the Bolsheviki = experimented=20 with a free market.NEP failed = not=20 primarily because of the Bolsheviki's animosity towards the = `bourgeoisie'=20 (who, in any case, were only a quasi-bourgeoisie - pretty much like = the=20 contemporary `buzzinesman' - first getting rich on first WWI, then = Civil=20 War, speculation) or the `Kulaks'. But because on the one hand the = Kulaks=20 were getting rich quickly by withholding stocks of grain from the = cities,=20 and, on the other, because nobody was willing to make risky = investments in=20 the infrastructure - steel, railroads, electrification - needed for = the=20 industrialisation of Russia. So that, while commerce was booming, = even much=20 of the damage done to the industry of the Czarist period was still = not=20 repaired. 

Whatever one thinks about Stalin's = methods=20 (and there was a broad agreement among the Bolsheviki on the aims to = be=20 achieved) without the forced industrialisation and, yes, the=20 collectivisation of agriculture Russia might have remained in the = same state=20 of economic and institutional turpour as it is in = now. 

But on a much lower level - for, = in the period=20 of count Witte - who Daastol so admires - in the beginning of this = century=20 the industrial growth did not even keep pace with the growth of the=20 population. And, anyway, lest we forget - the Czarist regime paid = for this=20 by exporting Ukrainian grain while the population of the Ukraine was = starving - as much as did the Bolsheviki. For I would not defend the = Bolshevik regime but it should = be remember=20 that the Czarist regime was not a very pleasant regime either. =

But, to end=20 with a cheery note, during his recent visit to Moscow and while the = press=20 kept on nagging about the Lewinsky-case president Clinton made one = sensible=20 remark. The Russians, he reminded us, have a flair of getting = themselves=20 into seemingy unsolvable problems (just study the Velikie Smut, the = Razkol,=20 or the Opritchnik in the 16 th - 17 th century or not so long ago = the=20 terrible defeats suffered in july-november 1941) so that everybody = has given=20 up already - and then making an equally incredible recovery, while = the=20 situation seems completely hopeless to outsiders. In many ways they = are the=20 most remarkable people in the world.

Dozvedanije

R.J. Barendse

International Institute Asian Studies - Leiden=20 University

From `Upside-up' in = Amsterdam instead of=20 `Down under' in Canberra.

r.barendse@worldonline.nl

  =

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