Russia's bandits: failure by pillage


"Sale of the Century: Russia's Wild Ride from Communism to Capitalism," by Chrystia Freeland. Crown Publishers. 389 pages. $27.50.

Soviet propaganda portrayed capitalism as ruthlessly exploitative, rapacious and unscrupulous -- so when Russia turned to capitalism a decade ago, its new business barons figured they had a pretty good idea of how to behave. As Chrystia Freeland points out in her admirable and very readable history of Russian reform, they took their Marxist lessons a bit too literally. They stole from the state, they stole from their employees and they stole from their (Western) investors.

In the process, they ensured Russia's place on the margins of world commerce. If the world today has little faith in Russian credit or ability to do business, anyone reading Freeland's book would have to judge that the world is not far wrong.

How did it all go so badly? In 1991, there was a modest expectation that the introduction of free enterprise would unleash a burst of optimism, energy and -- in short order -- real growth. Instead it gave free rein to a class of bandits who became known as the oligarchs.

Freeland places much of the blame for this on the arrogance and shortsightedness of those within the government who directed the reforms and of those on the outside who profited from them. To the first group she gives credit for good intentions. To the second she allows a certain admiration for sheer nerve. But together they drove the country almost completely into the ground.

Freeland was in Moscow from 1995 to 1998 as bureau chief for the Financial Times (and was a downstairs neighbor of ours for part of that time), and focuses on the great give-away of state enterprises that coincided with Boris Yeltsin's 1996 re-election campaign. This was the crucial moment that cemented the oligarchs' control of the economy in return for their support of Yeltsin.

There's a wealth of detail in her account of the maneuvering, back-stabbing and avarice that led to the ultimate deal. It's unfortunate that in some respects it's already ancient history; Freeland pays much less attention to the subsequent economic crash of 1998, which fundamentally altered Moscow's outlook and led, in the end, to the rise of a new and very different president.

Russian movers and shakers are always smarter than everyone else. They love to profess contempt for naive Western concepts, even as they push their own country deeper into the muck. Anatoly Chubais, the man in charge of privatization, was unconstrained by any checks or balances -- or, for that matter, any political calculations at all. The oligarchs, as a group, were similarly unconstrained -- by the courts, by contract law, by any expectations that they might be acting in good faith.

Freeland convincingly shows that, as far as they were concerned, any means were justified if the ends were achieved. They had little patience for the quaint Western notion that the means are sometimes inextricably bound up with the ends. Russians, for all their history, often seem to act as though there's no tomorrow. It's a hard way to run a country.

Will Englund has been a Moscow correspondent for The Sun for seven of the past nine years, from 1991 to 1995 and from 1997 to the present. He has also reported from the Balkans, in 1999, and from India on a project that won a Pulitzer Prize for investigative reporting in 1998.

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