Feb 06/06 - The Venezuelization of Russia: an true insider's perspective
PMBComments: this is a very blunt and troubling article by Andrei Illarionov, who until December was Putin’s very outspoken economic advisor (and until a few months before, also point man for G-8 matters).
Those of us who do business in
The mayor question that one must ask when reading such a dire report is: Will Russia be able to move forward and occupy a place among the prosperous democracies of the world, or will it soon join the ranks of those willing to kick the board of a game they have not been able to excel at? PMB
International Herald Tribune
February 4, 2006
By ANDREI ILLARIONOV
A new model of
State-owned companies have become the assault weapons of this corporate state. Having mastered the main principle of state-corporatism — "privatize profit, nationalize loss" — they have turned to taking over private-sector companies, sometimes at cut-rate prices. Their victims include major industrial companies like Yuganskneftegaz, Sibneft, Silovye Mashiny, Kamov, OMZ, and Avtovaz.
Companies that are still in private hands resemble ever more closely their state-owned siblings. Any request from the state — whether it's a donation to a project or the sale of the company itself to "correct" buyers — is fulfilled. The fate of Mikhail Khodorkovsky, the chief executive of the Yukos oil company who is now in a penal colony after falling out with the Kremlin, is known to all.
Meanwhile, a guiding principal of
It is not only economic freedom that has disappeared in
Politically, the corporate ideology may seem unclear: it does not look communist, or liberal, or nationalistic, or imperial. Instead, it is an ideology of "nash-ism," or in English, "ours-ism," in which subsidies, credits and powers are handed out to those who are "nashy."
This ours-ism does not know national or ethnic boundaries. The former chancellor of a foreign country is made a member of the corporation and becomes "our man in
The entire might of the
The point of the new model is to redistribute resources to "our own." The rule of law is only for civilized countries. Fair business practices are only for countries that want to catch up with the developed world. Good relations with foreign neighbors are necessary only if
Is it only in
So from a historical point of view, there's nothing particularly novel about the new Russian model. But choosing it today, at the outset of the 21st century, is nothing other than deliberately choosing the third-world model. More precisely, the model of a very specific group of countries in the third world whose long-term prospects are well known no matter how much money they get from oil, no matter how many pipelines they control at home and abroad, and no matter what saccharine stories they tell on TV.
It is a historical dead end. No country that has set off on this road has become richer or stronger or more developed. Nor will
In a democracy, political change is linked to a change of rulers, which occurs regularly and at minimal social cost. In countries with limited freedom, a change of rulers also occurs — as with the "velvet revolution" in
Measures that the corporation has taken to prevent a similar revolution make change highly unlikely in
It is difficult to say when or how this change of power will occur. For those who cannot accept a corporate state, or the Venezuelization of the economy, or the degradation of social life, the current situation seems nauseating: before there can be a deed, there must be a word, and the most important mass media are under the corporation's control.
But one can start one's own separation from such a state through a campaign of non-participation. In this way, working from below, one can begin to restore civil, political and economic freedoms, freedoms that were offered to Russian citizens in 1905, 1917 and again in 1991, but squandered. If we succeed, we may get a new
Andrei Illarionov was an economic adviser to President Vladimir Putin of