How Putin Outwitted the Russian Oligarchs

The Rise and Fall of the Russian Oligarchs

Directed by Alexander Gentelev (2006)

Film Review

The Rise and Fall of the Russian Oligarchs focuses on the scandalous period after the collapse of the Soviet Union, in which 100 opportunist oligarchs destroyed the economy of a relatively wealthy country (with the help of the CIA, USAID, the IMF and the World Bank) by seizing $20 billion of assets for roughly a billion dollars. The admitted goal of these Russian oligarchs (and their CIA supporters) was to privatize as many industries as possible behind the scenes before the Communist majority in the Russian parliament could consolidate power and stop them. The documentary’s overarching theme concerns Putin’s rise to power in 1999, which is credited for saving the Russian economy via his shrewd confrontation and defeat of these oligarchs.

This Russian-made documentary focuses on three specific oligarchs: Mikhail Chernoy, who now lives in exile in Israel; Theodore Gusinski, who now lives in exile in Spain, and Boris Beresovksy, who now lives in exile in London. It’s divided into two parts.

Part 1

Part 1 describes how these men used privatization schemes introduce by the last Soviet president Mikhail Gorbachev (under Perestroika – 1985-1991) to acquire a variety of Russian assets for pennies on the dollar. With the collapse of the Soviet Union in 1991, many state-owned factories were threatened with closure, the Russian government initially privatized them through an ill-conceived voucher scheme. Ownership in the factories was broken up into millions of shares in the form of vouchers distributed to all Russian citizens. Because they had no other source of income, many were forced to sell their vouchers cheaply for food. Others were tricked into “investing” them in phoney investment schemes as their owners sold on their hoard of vouchers and pocketed the proceeds.

Chernoy wound up with hundreds of thousands of these vouchers, which he used to buy up Russia’s aluminum industry.

Using western financing, Gusinski would form Russia’s first commercial TV network in 1993. In 1994 Berezovsky (again with the help of western financing) would buy Russian state TV for a few million dollars. Joining with other oligarchs, they skillfully used their media monopoly to promote their privatization agenda.

Part 1 also covers the 1991 attempted coup against Gorbachev (a desperate attempt by the Communists to reverse rapid privatization); Yeltsin’s successful (CIA-backed) coup in 1993, in which he used the military to attack the Russian parliament, effectively dissolving parliament and the constitutional court; and the vast human misery caused by the “shock therapy” Wall Street imposed Russia as they looted their economy. This, in turn, would lead to escalating mass protests demanding a return of the Communists to power.

Part 2

Part 2 focuses on the oligarch (and CIA) financed and controlled election of Boris Yeltsin in 1996 – as well as the direct role the oligarchs assumed in government following Yeltsin’s victory against his more popular Communist opponent.

The Russian economy reached breaking point in 1998. By then, the Russian government had lost so main state-owned industries (75%) that it could no longer pay its debts and Russian banks froze depositors assets.

This, along with Yeltsin’s failing health, would lead to a political crisis, resulting in Vladimir Putin’s appointment as acting president initially supported by the oligarchs – in 1999. Following Putin’s election in 2000, he quickly turned on oligarch supporters, who expected to control his government as they had Yeltsin’s.

Then, as now, he excelled at media manipulation, capitalizing on popular fear of Chechen terrorism to heighten his popularity. He also shrewdly confronted individual oligarchs for tax evasion and other financial crimes during televised cabinet meetings.

This was followed up by security raids and harassment, arrest – and in some cases imprisonment – to encourage numerous oligarchs to relinquish their ill-gotten shares to state control.

In this way, Putin essentially ended Wall Street’s wholesale exploitation of the Russian economy and the Russian people – and Wall Street and the US military-intelligence complex have never forgiven him for it.

The documentary’s main weakness is its failure to explore the major role Wall Street and US intelligence played in the destruction of the Russian economy between 1991-2000. Good background on this at the following links:

The Harvard Boys do Russia

US Meddling in 1996 Russian Elections in Support of Boris Yeltsin

USA Russia

The Plunder of Russia in the 1990s

The Ideology of Revolution

Trapped: What Happened to Our Dream of Freedom

Adam Curtis

BBC (2007)

Film Review

Part 3 We Will Force You to be Free

Part 3 is about the philosophy of revolution, as articulated by the Algerian psychiatrist Frantz Fanon (author of Wretched of the Earth and Black Faces, White Masks). Fanon, who studied in Paris, was strongly influenced by French philosopher Jean Paul Sartre. Sartre, who viewed economic equality as essential to personal freedom, believed true freedom was only possible through the overthrow of bourgeois society via violent revolution. Fanon was convinced that the western elites got into people’s heads and turned them into zombies devoid of the ability to think critically or act altruistically for the collective welfare of the community. He also believed that the mere act of organized violence freed people from their competitive individualistic conditioning.

Fanon’s ideas had major influence over numerous third world revolutionaries, including Che Guevara in the 1952 Cuban revolution, Pol Pot in the 1975 Cambodian revolution and Grand Ayatollah Ruhollah Khomeini in the 1979 Iranian revolution.

Pol Pot believed the only way to rid society of bourgeois self-interest was to kill the entire bourgeoisie – all 3 million of them.

Positive and Negative Liberty

The documentary goes on to discuss the work of British political philosopher Isaiah Berlin (1909-1997). Berlin believed only two types of freedom, which he called positive and negative liberty, were possible. He labeled Fanon’s type of freedom “positive liberty,” as it involved a new elite forcing the masses to adopt a new way of thinking through violence. In contrast, “negative liberty,” allowed individuals to do whatever they want so long as they don’t infringe on the rights of anyone else.

Curtis contends that both types of so-called liberty involve violence and coercion. As examples, he offers the “shock therapy” the US corporate elite carried out in Russia in 1992 and in Iraq in 2003. While on the surface, both instances of “shock therapy” looks like pure exploitation by US banks and corporations, both were examples of the neoconservative doctrine of spreading “democracy” via armed force.

Shock Therapy in Russia

Following the collapse of the Soviet Union, US vulture capitalists invaded Russia and pressured the new regime to abandon its centrally controlled economy virtually overnight. All subsidies for food, energy and other basic necessities were discontinued and most of Russia’s state owned industries were privatized. Millions of Russians lost their jobs and were plunged into abject poverty, as Russian oligarchs and American venture capitalists stripped the newly privatized industries of their wealth. Face with the loss of government subsidies, ordinary Russians lined up on the street and traded everything they owned for food.

In 1993, with the economy on the verge of collapse, Boris Yeltsin dissolved Parliament and launched a military coup to install himself as absolute ruler. He had to borrow money from the oligarchs to run his government, for which he handed over the remaining state-owned industries.

By 1998, the oligarchs and their American investors had bled Russia dry and the currency collapsed. Yeltsin was forced to resign and the Russian people elected Putin as president. The latter moved quickly to strip the oligarchs of their wealth and jailed them or forced them into exile. The vast majority of the Russian people adored him. They didn’t care if they lost basic freedoms (e.g. of speech, the press and assembly) because it was a better alternative than starvation.

Shock Therapy in Iraq

The Americans applied similar shock therapy during their occupation of Iraq, privatizing all the state owned industries (selling them for a pittance to US investors) and writing a new constitution that allowed foreign companies to expatriate 100% of their profits tax free.

In Iraq, the brutal US occupation would enhance the rise of a radical Islamist movement violently opposed to both western colonization and exploitation and the selfish, hedonistic and morally bankrupt lifestyle that seemed to be the driving force behind US foreign policy.

The US and Britain, in turn, responded to the threat of Islamic terrorism by severely restricting the freedom of their own citizens.

Both Fanon and Berlin Were Wrong

The two conclusions Curtis draws is that 1) both the so-called positive and negative liberty Berlin describes lead to violence and coercion and 2) Berlin was wrong in claiming that all attempts to change the world for better lead to tyranny.

My own perspective is that both Fanon and Berlin are wrong. As educated members of the upper middle class, they both made the mistake of assuming that the working class thinks the same way they do, i.e. that the working class is afflicted to the same extent as the middle class by individualism and competitive self interest.

Both failed to appreciate or understand that working class people share a distinct culture with its own values, language and world view. In fact, the issue of working class culture received little attention in academic circles prior to the 1970s.* Basic to this culture are the loyalty and group allegiance based on shared hardship.

Both are deeply ingrained values stemming from early childhood experience, which makes them difficult to reverse with mass media messaging, no matter how pervasive it is.

This is certainly my experience in working with blue collar families for 33+ years. It’s also born out by working class patterns of charitable giving.**

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* Some of the better known authors on working class culture include Lillian Breslow Rubin (Worlds of Pain), Richard Sennett (Hidden Injuries of Class), Jake Ryan and Charles Sackrey (Strangers in Paradise: Academics from the Working Class), and Alfred Lubrano (Limbo: Blue Collar Roots and White Collar Dreams).

**Studies of working class charitable giving:

• Study (Aug 2012) shows lower income people donate a much bigger share of their income: America’s generosity divide
• Studies examining why poorer people are more charitable than the wealthy: Why poorer people are more charitable
• Study examining why the rich are so stingy: Why the rich dont give

 

Free link to Part 3: The Trap 3 We_Will_Force_You_To_Be_Free_BBC/