25 March 2013

Boris Berezovsky, 1946-2013

The oligarch Boris Berezovsky was found dead in his home outside of London over the weekend, either a suicide or a heart attack. He was depressed over losing a lawsuit to his old business associate, Roman Abramovich; had failed to secure what he thought was his rightful property after the death of another, much closer associate, Badri Patarkatsishvili; was losing a decade-long battle to his former protege, Vladimir Putin; and was also, on top of all that, apparently running out of money. With him he took many of the secrets, and insights, and schemes, that nearly destroyed Russia in the decade after the Soviet Union fell apart.

Berezovsky wasn’t just an oligarch: he was the first oligarch. He is sometimes referred to slightingly as a “former used car salesman”—this is a kind of joke. In fact Berezovsky was an accomplished mathematician, a corresponding member of the Soviet Academy of Sciences, with a specialization in game theory. In the late 1980s, as free enterprise began to be introduced in the USSR, piecemeal and with every possible loophole for corruption, the other future oligarchs began to go into “business”: Mikhail Prokhorov, future owner of Norilsk Nickel and then the New Jersey Nets, sold acid-washed jeans at the local market; Vladimir Gusinsky, future owner of Most-Bank and the country’s first independent television channel, NTV, became an event planner; Mikhail Khodorkovsky, future owner of the country’s largest oil company, now in prison for a decade, opened a cafe. 

Berezovsky, a generation older than these others, had an in at the Avtovaz factory in Togliatti, in central Russia; he had helped them set up their computer systems, and for years had been picking up hard-to-get auto parts there and reselling them in Moscow (so he was a bit of used car salesman—but they were new parts). As the USSR fell apart, Berezovsky saw that the country was moving from a barter economy to a cash economy. In Yuli Dubov’s quasi-fictional account of what happened next, Berezovsky manufactured thousands of straw brooms and traded these for thousands of Ladas—the Soviet car was not a good car, but it was still a car, and once the economy became a cash economy, people would pay good money for them. I haven’t found any confirmation of the brooms-for-cars story in the real world; the story David Hoffman tells in The Oligarchs is that Berezovsky took advantage of hyper-inflation to buy the cars in 1991 and pay for them in devalued 1993 rubles. In this way he was able to gain a significant share of the Russian car market in a few short years, and was able pretty quickly to turn those cars into cash. 

The incredible success of Berezovsky—he would have become a multi-millionaire when he started moving hundreds of thousands of cars, and a billionaire, at least on paper, when he won the Sibneft oil conglomerate in the rigged loans-for-shares auctions of 1995—represented the colossal failure of his generation of Russian liberals. He may not have been the best of this generation, morally speaking, but he may well have been one of the brightest (for a Jew of that generation to have made it as far as he did in Soviet academia was a tremendous accomplishment), and in certain important ways he believed what they believed: that capitalism was virtuous; that because capitalism was virtuous, those who succeeded at capitalism were the elect, and those who failed at it were the damned; that, politically speaking, all that was required for the liberation of the Russian people, after three hundred years of oppression, was to open the windows and let the free market in. What all this led to, in fact, was the enrichment of a very few and the immiseration of the populace, the reduction of life expectancy for Russian males by nearly a decade, and, as of last year, nearly a million suicides. And now it seems possible that Berezovsky is one more.


What was criminal capitalism in Russia actually like? On the most fundamental level it was a series of protection rackets. If you sold vegetables on the street corner, eventually you’d be approached by some guys in leather jackets who would demand protection money. If you didn’t pay, they upset your vegetable stand; next time, they beat you up. If you paid them, they protected you. They didn’t do this particularly well, but they would try; if some other group of guys in leather jackets came along and tried to shake you down, they’d tell them to lay off, and if they didn’t lay off, they’d fight them. There was a lot of fist-fighting in those days, and most of the guys in the protection rackets were boxers or karate or wrestling champions, including, occasionally, a former Olympian. There were knives, but, at this level anyway, there weren’t many guns. It wasn’t a great system but in the absence of any other kind of system—of an actually functioning law enforcement system—it mostly kept the violence confined to the battles between the gangs themselves, rather than the vegetable sellers. In the absence of a legal system, it was also a way of enforcing contracts, because eventually these shake-down gangs formed larger shake-down syndicates, or were crushed by them. The larger syndicates, without giving up their positions in vegetable stands, moved on to bigger game: shaking down, or “partnering with,” small businesses, and less small businesses, and small banks. In my understanding of this process—which is an imperfect understanding—there was a lot of mobility for the gangs themselves but maybe not within the gangs. If you were a foot soldier, you probably remained a foot soldier, and you suffered a foot soldier’s fate. If you were shaking down a vegetable stand in 1990, you are probably not in the State Duma in 2013. Chances are, you are probably dead.

This was the visible manifestation of criminal capitalism in the 1990s. I never saw a vegetable seller get beat up, but I definitely saw tough guys in leather jackets talking to frightened women selling vegetables. And it was instructive to see this. But of course the real action of capitalism remained invisible.

My father, a computer programmer who emigrated to the US in 1981, went into business in the 1990s with two of his old computer programmer friends who had remained in Russia. They did “import-export”—they brought things into Russia that were much cheaper to get abroad (the classic example of this was personal computers, which were nonexistent in Russia in 1991, though relatively plentiful in the West), and exported things that were cheaper to get in Russia than abroad, like timber. After a few good years, my father and his partners closed up shop when the Russian economy collapsed in 1998.

But my father had a great time; I suppose it was especially fun since he spent most of it in Newton, Massachusetts. He liked telling the story of how his partners got shaken down by a criminal gang. By this point they were an established business; they owned a beautiful old mansion right next to the Belarusskaya train station. But one day two men marched into the mansion and demanded protection payments. My father’s partner, a former computer programmer, explained that they already made payments to someone (which was true). The two gentlemen didn’t seem to care. They said they’d be back in two days for their money.

My father’s partner called the security firm that was supposed to be guarding him, otherwise known as his krysha, or “roof.” The krysha was run by a former police colonel. Other such groups were run by former KGB colonels. Others still were run by former (or current) gangsters. In any case they were now all in the same game. This former police colonel listened to the story and said he would make some inquiries. “If it’s the Georgians,” he said, “we can deal with it. And if it’s the Izmailovo group, we can talk to them. But if it’s the Chechens, we can’t help you.” This was not a great answer to receive from your security group, but that’s how things worked. The Chechens were considered more brutal than other gangs, and they were also, it seems, better-armed; this may have been due to the fact that Chechnya was in the process of arming itself for a war against the Russians that was to break out in 1994. A certain amount of weaponry found its way north. In the event, the police colonel made some phone calls, posted himself and some others at the office for a week, and the men never returned. Nonetheless this kind of thing scared the hell out of my father’s partner, who despite making very good money for that time refused to move out of his old Soviet apartment or replace his old Soviet car. He now lives, happier and more relaxed, in Brookline, Massachusetts, and my father has gone back to being a computer programmer.

This is the world Berezovsky, who was a year younger than my father, came from. Professor Berezovsky never shook down a vegetable stand. Like my father and his partners, he had worked at a Soviet research institute—what were known as NIIs, like the knights who say “Ni.” This is where, in the absence of private companies, the Soviets put their many, many college graduates. The NIIs were often housed in giant buildings on the outskirts of big cities. Knowledge workers went there and tried to keep busy. Sometimes they worked on commissions from big industrial enterprises; sometimes they just passed the time. No one ever got fired. When the USSR fell apart, some of these people emigrated; some tried to hang on at the NIIs; some went into private enterprise; and some of the latter became Berezovskys.

The best book I’ve read about the Russian 1990s is a roman a clef about Berezovsky by his close associate, Yuli Dubov. The book is called Bolshaia Paika and it describes a close-knit group of mathematician friends who, led by the brilliant and charismatic Platon, go into business together, take over the Lada factory, then move into even bigger and crazier schemes. Eventually they find themselves embroiled in a war with Moscow’s criminal gangs, and they win the war. The men are, for the most part, sweet-natured, honest, and highly intelligent. By the end of the book, through no one’s particular fault, the friends, with the exception of Platon, are all dead.

Despite this, the moral universe of the novel is curiously good-natured. What is never visible in the frame of Dubov’s book is the human toll that the various machinations of the brilliant Berezovsky took on the country he was manipulating: the poverty; the humiliation; the deaths. There are individual deaths in the book, but they do not represent the massive social death that took place in Russia in the 1990s. As Kirill Medvedev wrote a few years ago: “For the past fifteen years, reality has been broken and stamped on; so many legal, moral, and human commandments have been violated; so many people were involved in so many hideous deeds (using their intellect, their power, their knowledge, or alternately their stupidity, their uselessness, their cynicism) that NOTHING GOOD CAN COME OF IT. And the longer the day of reckoning is delayed, the more devastating it will be when it arrives.”


In 1998 and 1999, Berezovsky’s position—at this point he was not only a rich man, but a frequent visitor to the Kremlin and adviser to Boris Yeltsin—became tenuous. Some portion of the country’s political elite, led by an old Party stalwart named Yeveny Primakov, had grown weary of the oligarchs and their antics. So had the country. Primakov, as prime minister, began to move to root them out of politics.

Berezovsky saw this happening and came up with a plan. The mood of the country was nationalistic, even militaristic. The oligarchs (or liberals, as Berezovsky thought of them) needed their own nationalist candidate, and he found one in a short, unassuming former KGB officer named Vladimir Putin. He convinced Yeltsin to replace Primakov with Putin. A month later, two large apartment buildings were blown up in Moscow. The explosions were blamed on Chechen terrorists; the second Chechen war began; and Vladimir Putin was assured election to the presidency even if he hadn’t been assigned to the office in a bizarre New Year’s Eve address by a Yeltsin.

To his credit, Putin disappointed Berezovsky’s expectation almost as soon as he assumed the presidency. He tried to bring the oligarchs to heel. Whatever else he was wrong about—which was everything—in this at least he was right. These were men who had been handed immense industrial fortunes by a desperate government. They became billionaires overnight. But they had not built these companies. The companies had been built by Soviet workers over the course of decades—some of these workers believed that they were building Communism, some of them were prisoners of the Gulag. All of them worked for pennies. For the oligarchs to pretend like they had earned their fortunes was tremendously insulting to the millions of people who had built them in actual fact. The best and fairest thing to do would have been to nationalize the giant oil companies right then and there. But Putin is a bully and he tried to bully the oligarchs. He began police inspections of Gusinsky and Berezovsky, and soon they had both fled the country; Gusinsky quietly and forever, Berezovsky loudly and with a promise to return. The other oligarchs agreed to behave themselves. The exception was Khodorkovsky, who neither left nor agreed to behave himself. He ended up in prison.


The old question in Soviet studies used to be: Was Stalinism a continuation of Leninism, or a betrayal of it? If you were on the right, you answered that it was a continuation; if you were on the left, a betrayal. The new question is whether Putinism is a continuation of Yeltsinism (such as it was), or a betrayal of it. If you are on the right (and in the US this includes most liberals and neoliberals), you believe that it’s a betrayal; if you are on the left, you believe that it’s a continuation. 

Certainly in his style, and in his self-conception, Putin is an anti-Yeltsin. And in many ways, both good and bad, he has undone the legacy of Yeltsin. But there is no denying the continuity, and it’s fitting that Boris Berezovsky should be one of the most vivid links between them. In recent years Berezovsky would often talk about how Putin was his biggest mistake—“I thought I knew people,” he would say, “but look at the mistake I made.” The implication being that if it weren’t for that one mistake, things would have turned out all right. But they had already not turned out all right, long before Putin. Berezovsky has been named as a suspect, implausibly in my opinion, in the murder of Anna Politkovskaya; he has also been named in connection with the murder of Paul Khlebnikov. That the former mathematician ordered hits on his implacable enemies, most of them criminals, even his novelistic biographer Dubov would not deny. That he was close to various Chechen rebels, who lived in a world where life and death were bought cheaply, is also a fact. After leaving Russia he became the most active proponent of the theory that the September 1999 apartment bombings were the work of Putin’s FSB—whether because he was involved in the planning, or because, for once, he wasn’t. We may never know whether he crossed the line and authorized the killing of innocent people. I don’t think it really matters. His undisputed role in the nastiness and brutality of Russian capitalism, and the ruin of many lives, should be more than enough.

I know that it’s a turn-on for Westerners, left and right, to pretend that big bad Putin ordered Berezovsky killed. The likelier scenario is more tragic and more internal: the self-reckoning of a man who had been given a magnificent mind, and limitless energy, and who devoted these, primarily, to destruction, speculation, and manipulation. With humor, panache, extraordinary inventiveness—but still.

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