Russia’s oligarchs fall to earth, state power grows

MOSCOW – In their heyday Russia’s oligarchs, a group of brash quick-witted young entrepreneurs who became billionaires overnight in the 1990s by acquiring state companies for a song, had the power to make or break governments.

But the once mighty oligarchs have been vanquished by President Vladimir Putin, who is expected to storm to a second term win in presidential elections this month. The result will be a state unchallenged in presiding over the nation’s destiny and business leaders who no longer walk tall.In 1996 the oligarchs bankrolled Boris Yeltsin’s victorious presidential campaign against a resurgent communist movement and in the dying days of Yeltsin’s rule were widely seen to be the dominant power in the land.Their often arrogant pronouncements were followed obsessively in the media despite growing public resentment towards a handful of men who wielded control over large swaths of Russian industry.All that changed when Putin became president four years ago, determined to restore the state’s tarnished authority.Since then, Putin has tightened his grip on power.And, in a further sign of his confidence over the March 14 election, he sacked his entire government last month.Many analysts see the arrest in October of oil tycoon Mikhail Khodorkovsky on tax fraud charges as the opening of the final act in the Kremlin’s taming of big business.”I think it’s quite a settled issue.There are not many business people around now who want to lock horns with the Kremlin,” said the manager of an influential Moscow-based investment bank who asked not to be named.Khodorkovsky fell foul of the Kremlin by persuading members of the State Duma to vote down government legislation to increase taxation on oil company profits.Analysts believe he also had his eyes on a bid for the presidency in 2008.What is surprising about the affair is that Khodorkovsky, the former chief executive of oil company YUKOS, appeared to ignore an informal bargain struck by Putin with the oligarchs at the start of his rule.The oligarchs were solemnly warned to stay out of politics.With a tradition reaching back to the time of the tsars of highly centralised executive power, it was only a matter of time before the oligarchs were reined in, say analysts.”Russia does not have checks and balances to have a greater diffusion of power.If you have a diffusion of power in Russia you end up with anarchy because the system cannot regulate it,” said an investment banker.One by one, Putin has picked off business tycoons he sees as threatening his grand design of reasserting state power.There is more than a little irony here since Putin himself was a public relations creation of the Kremlin — a political unknown moulded by the then Kremlin insider Boris Berezovsky and others into being a fitting heir to Yeltsin.Despite their fall from grace, Russia’s oligarchs still control the economy, notably the main oil and metals companies that have ridden an export boom fuelling the country’s fast growth.Despite the new submissive mood among the oligarchs, none is sure whether the Kremlin’s wrath is fully spent.An employee of Roman Abramovich, an oil billionaire who owns London soccer club Chelsea, says his boss likes to quote an old Russian saying.”Never say that you will never go to jail or end up begging on the streets.”- Nampa-ReutersThe result will be a state unchallenged in presiding over the nation’s destiny and business leaders who no longer walk tall.In 1996 the oligarchs bankrolled Boris Yeltsin’s victorious presidential campaign against a resurgent communist movement and in the dying days of Yeltsin’s rule were widely seen to be the dominant power in the land.Their often arrogant pronouncements were followed obsessively in the media despite growing public resentment towards a handful of men who wielded control over large swaths of Russian industry.All that changed when Putin became president four years ago, determined to restore the state’s tarnished authority.Since then, Putin has tightened his grip on power.And, in a further sign of his confidence over the March 14 election, he sacked his entire government last month.Many analysts see the arrest in October of oil tycoon Mikhail Khodorkovsky on tax fraud charges as the opening of the final act in the Kremlin’s taming of big business.”I think it’s quite a settled issue.There are not many business people around now who want to lock horns with the Kremlin,” said the manager of an influential Moscow-based investment bank who asked not to be named.Khodorkovsky fell foul of the Kremlin by persuading members of the State Duma to vote down government legislation to increase taxation on oil company profits.Analysts believe he also had his eyes on a bid for the presidency in 2008.What is surprising about the affair is that Khodorkovsky, the former chief executive of oil company YUKOS, appeared to ignore an informal bargain struck by Putin with the oligarchs at the start of his rule.The oligarchs were solemnly warned to stay out of politics.With a tradition reaching back to the time of the tsars of highly centralised executive power, it was only a matter of time before the oligarchs were reined in, say analysts.”Russia does not have checks and balances to have a greater diffusion of power.If you have a diffusion of power in Russia you end up with anarchy because the system cannot regulate it,” said an investment banker.One by one, Putin has picked off business tycoons he sees as threatening his grand design of reasserting state power.There is more than a little irony here since Putin himself was a public relations creation of the Kremlin — a political unknown moulded by the then Kremlin insider Boris Berezovsky and others into being a fitting heir to Yeltsin.Despite their fall from grace, Russia’s oligarchs still control the economy, notably the main oil and metals companies that have ridden an export boom fuelling the country’s fast growth.Despite the new submissive mood among the oligarchs, none is sure whether the Kremlin’s wrath is fully spent.An employee of Roman Abramovich, an oil billionaire who owns London soccer club Chelsea, says his boss likes to quote an old Russian saying.”Never say that you will never go to jail or end up begging on the streets.”- Nampa-Reuters