Wednesday, 24 December 2008

The Oligarchs?

The thing about writing is that you often don't feel like it. When it comes to bloggin, well, writers block looks like a walk in the park, coz for me, it's often more ideas that I believe deserve a blog post than it is writing the post itself.

Yet one of those things that stopped me the other day, is that New York City is back on top of the list of the city with the most billionaires, regaining that position from Moscow. Especially that all these oligarchs really piss me off because it's just the result of an exploitation of a system that is not open enough, and if it wasn't for their political connections they wouldn't be dreaming of this kind of money. (Yeah ok, dating a Russian hottie who was also stupid as fuck and wanted the shinny things contributed to my dislike of the oligarchs, but anyway).

It all started with Anatoly Chubais (I think it was him), who introduced just a small clause into the Communist party manifesto (or the equivalent of whatever constitution they have), which allowed the establishment of small business desks for individuals. Of course this was done the communist way, with businesses being given one name, and numbered like "Communist Bank 1", "Communist Bank 2" etc... yeah, it looked like communism unchanged, but those who knew the system, like Khodrovsky, knew how to exploit it. Once, Gorbachev, who history will one day recall as a great leader, not one who failed in the communist realm, but someone who understood that the fall of the USSR was imminent and he just let it happen. He didn't care it happened on his watch (in 1989, there was more firepower and army troops in Moscow to smash the protesters, but Gorbachev didn't really see the point in that). Well come capitalism into Russia, when the government decided to sell of its state owned businesses, factories, resource etc, the oligarchs were already very well positioned, with the rubles (which they then miraculously switched to dollars) and the small "businesses" that Chubais allowed, as well as their political connections to buy out the state at a something that the word "bargain" is just too weak to describe. Think adding zeroes to your bank account with a scratch of a pen. It's like you have an auction, yet the only bidders are those making the sale, and want to get it for the cheapest possible.

It's really simple. The government under the communist state, had already footed the bill to build all the infrastructure, the pipelines, the roads, the factories and steel mills, etc, and then simply was too bankrupt to run it themselves. It just needed someone with a little cash, to lubricate the process and get the wheel turning again. Surprisingly (not really) those with the cash, where those oligarchs that took it from the state (when they played the devaluation game (chech this ) : take the money, buy dollars, devalue the currency and you are the only one left with any real money to do anything, then swoop in and buy out all the assets, and pocket pure profit.

This is particularly interesting, because something similar exists in Saudi Arabia, yet another oil rich country. For example, Saudi Telecom, the biggest telecom operator in the Middle East, and formerly the 13th largest telecom companies in the world, was one very profitable company (at least when I was in the region, and before global recession and the decline of oil prices), simply because the whole telecom infrastructure, the base stations, the transmission dishes, the relay stations, the switch boards, routers etc, was all paid for by the government. It wasn't subsidized, it was PAID for, by the government. And then what happens? They privatize Saudi Telecom into STC, and throw it on the stock market, as a purely profitable company. Of course it is, they don't have any running costs or debt service. Operations costs? pfffffffff that's nothing.

Yeah well think of the Oligarchs of the private owners of such government institutions. Now that's what I call big money.

The only twist in all this, and I don't know if this really is the way things work in Russia, but I know one thing: Don't piss off one certain ex-KGB agent, with a black belt in Judo.

Now, Boris Beresovsky knows this very well, so does Khodorvsky, and Abramovich sure does. I guess now, they are laughing- well, at least Abramovich is. Beresovsky, although equally a London billionaire, would probably do anything for some real Russian vodka, but I guess he isn't dropping into Moscow anytime soon. Khodrovsky, in a 4x3 , probably is enjoying the vodka, but probably not much more.

......there is really only one oligarch, and his name is Vladimir Puttin.

I recommend Hoffman's book "The Oligarchs: Wealth and Power in the New Russia", yet I'd like to read "Putin's Russia" but my shelves are stacked with enough unread books already.

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