MOSCOW (Mineweb.com) – At the turn of the last century, when Americans were the conspicuously new oligarchs of the western world F.Scott Fitzgerald was their story-teller.
In his novel about a rich young man of upper-class New York, called The Beautiful and Damned, Fitzgerald stuck a warning of his fate as an epigram at the front of the book – ” the victor belongs to the spoils”. There’s no escape from the corruption of too much money, Fitzgerald seemed to be saying in 1922.
Once that painfully snobbish tale gets under way, it’s a question which Anthony Patch, the doomed playboy, puts to his friend, a novelist like; Fitzgerald himself, swollen with the early financial success of his first book. Then the warning is expressed as a question, as if Fitzgerald thought it might be possible to avoid the corruption of riches, if only it can be recognized in time Three years later, when Fitzgerald’s life was coming apart under the strain of spending more than he could earn, he wrote wistfully about the very rich: “They are different from you and me…soft where we are hard, and cynical where we are trustful.” Much later, when Fitzgerald was a decade beyond his best work and almost broke, his sometime pal Ernest Hemingway rewrote the answer to the question of how the rich were different. “Yes, they have more money,” Hemingway’s character said simply. Fitzgerald told Hemingway he had insulted him.
For the time being, the only person in Russia who claims to have given Yukos oil company owner Mikhail Khodorkovsky the Fitzgerald warning in advance of his arrest last October is his mother. She says she phrased it more like the ancient Greek warning that pride goes before a fall, that too much hubris brings on nemesis, destruction by the jealous gods. None of the super-rich young men, the Russian oligarchs who made their fortunes alongside Khodorkovsky, apparently thinks the same. In fact, they are so far from heeding Fitzgerald’s warning, they are now trying to reverse it in their own favour . If Khodorkovsky’s assets are up for grabs, they have begun to tell their friends in government, let the spoils be auctioned off to those rich enough to afford them; in other words, a new round of rigged asset disposals by the government, for the benefit of the surviving oligarchs.
By way of announcing his readiness, Oleg Deripaska a, the controlling shareholder of Russian Aluminium (Rusal) and the holding company Basic Element, recently arranged for the Moscow press to be told that he is thinking of going into the oil business.
Mikhail Fridman, head of the Alfa banking group and one of the beneficiaries of last year’s sale of Tyumen Oil Company to British Petroleum, has gone further. He is reported by some in the Kremlin to have proffered a bid of $10 billion for the assets of Yukos, once the state has taken around $3 billion in tax payments, and Khodorkovsky and his allied shareholders hive been assigned, and cleared their penalties. At the time Fridman tabled his bid, the Yukos share price was tumbling towards a market capitalization of $12 billion. It has since risen to around $16 billion.
Roman Abramovich, the controlling shareholder of Sibneft, has gone much further. In proposals to both the Kremlin and Yukos, Abramovich has indicated his plan for unfreezing the court orders that have locked up the Yukos acquisition of Sibneft from last year, along with other Yukos assets, and cash. Abramovich proposes to allow Yukos to clear its debts to the state by selling its Sibneft stake back to Abramovich. Just how big a shareholding that is remains for the courts to settle. But Abramovich isn’t intending to part with any of his own money. According to his plan, he will only buy back from Yukos in value what Khodorkovsky will need to pay the authorities and then only on two conditions – that Yukos will indemnify him from lawsuits seeking enforcement of last year’s Sibneft sale contract, or restitution for the damage he may have conspired to inflict; and that the Kremlin will give him advance approval for reselling the stake he buys from Khodorkovsky at double, or triple, the price to a foreign oil company.
Inside the Kremlin, each of these proposals has its low and mid-level advocates. But for President Vladimir Putin, the problem of how to settle Yukos’s debts and resolve Khodorkovsky’s fate is far too weighty to be left to his aides, or to the courts, to decide. For every division of the spoils, and for each self-promoting victor, there is now a Kremlin faction busily promoting its line to the President; drafting its interests into his speeches and one-liners; and interpreting him to suit their own ends. They are eager to recruit ministers like Alexander Zhukov and Alexei Kudrin to their cause. They, in turn, are trying to gauge which way Putin is leaning, in order to avoid damaging themselves in his eyes, and to share in the eventual spoils, if they can. This appears to be so confusing, the President and his men now find they are in as much need of time, and courtroom delaying tactics, as the defendants at the bar.
But Putin may be undecided; he isn’t confused. He understands that if he proceeds to dismantle Yukos at Khodorkovsky’s expense,and then redistributes his shares and assets to Deripaska, Fridman, or Abramovich, he will be confirming the central charge which Khodorkovsky’s supporters, the US and English governments, and the oligarch in exile, Boris Berezovsky, have repeatedly leveled at him. He will be demonstrating favouritism for one oligarch over another, and inviting the interpretation that his motives are either political – that Khodorkovsky backed political opponents and media critics – or corrupt.
At the same time, Putin realizes that his power to pursue the other oligarchs for similar crimes as Khodorkovsky committed is limited. To prevent a legion of mid-level officials reopening files for the sole purpose of being paid to close them again, Putin has too few personnel, who are both loyal and honest, never mind competent. In this respect, despite the massive election mandate he won since he started the campaign against Yukos almost a year ago, and notwithstanding his reorganization of the government Putin is hardly better served today than he was then. He is obliged, therefore, to proceed slowly, agreeing to tax claims against one company, to threats of other consequences against others, and to delays on delivering the decisions everyone, including the oligarchs, are seeking.
The timing to redistribute the wealth, Putin is told by economic advisors, is as good as it is ever likely to be, with oil and commodity prices at their peak. But how to resolve the conflicting priorities that land on his desk each day, urging him to pursue Deripaska for one reason; Fridman for another; or Abramovich for yet another? And what of Abramovich’s demand that Putin reverse last year’s veto of sales of Russian oil company assets to American, French, or British companies? Is the weight of their lobbying so heavy, that for the sheer relief, he is ready to give an assent, which contradicts every statement he has made on national resource policy? Are the spoils of the anti-oligarch campaign to belong to Putin the victor, or will the victor belong to the spoils?
If Putin were to take a leaf out of Fitzgerald’s tales of rich Americans, he would discover that asking the right question repeatedly doesn’t produce an answer that is either convincing or enduring.