Arrest Warrant for Magnate Signals New Phase in Russian Politics
Summary:
Boris Berezovsky has been relieved of duties as Executive
Director of the CIS and a warrant for his arrest has been issued
on charges of corruption. His fall, unthinkable a few years ago,
signals the beginning of the revenge on the beneficiaries and
even advocates of reform in Russia.
Analysis:
Boris Berezovsky, one of the wealthiest men in Russia, close
friend of Boris Yeltsin, and one of the linchpins of the
development of capitalism in Russia, has been fired as executive
secretary of the Commonwealth of Independent States (CIS). He
was replaced by Yuri Yarov, Yeltsin's representative to the Duma.
What makes this a most interesting matter is that Russian
prosecutors issued an arrest warrant for Berezovsky on charges of
money laundering. The arrest was ordered by Russian Prosecutor
General Yuri Skuratov who is involved in a bitter feud with Boris
Yeltsin and who submitted his resignation on the same day.
Skuratov has been investigating corruption in the Kremlin and has
been under intense attack by Yeltsin. Skuratov did say that he
would continue to remain in office if the Duma backed him in his
struggle with Yeltsin. Berezovsky, who was in Paris when the
warrant was issued, said that he would return to face the charges
although he didn't specify when he would return.
While this struggle is interesting in its own right as a soap
opera, it has tremendous potential significance. Berezovsky,
more than any other individual, symbolizes what has been called
the Russian "kleptocracy." Berezovsky emerged after the fall of
Communism and used his relationship with Yeltsin and other
political contacts to create an empire that includes oil,
airlines, and media companies. Berezovsky became the leader of
the Russian oligarchs that dominated the Russian economy during
the 1990s and who are held responsible by many Russians for what
is seen as the looting of the Russian economy. It is not only
his fall from power, but the issuance of an arrest warrant for
him that we find potentially significant. Indeed, reports
circulated that another oligarch, Alexander Smolensky, former
head of the SBSAgro bank that collapsed in August, was about to
be arrested under corruption charges.
The arrest of a businessman on corruption charges is not, in
itself, interesting. Such things happen everywhere and at all
times. But Russia is a very special place where what is
commonplace elsewhere sometimes takes on greater significance.
We wrote the following in our 1999 Annual Forecast: "The Russian
love affair with the West came to an abrupt halt. As so many
times before in Russian history, the pendulum is moving from
adoration of the West to suspicion and contempt. As before, the
Westernizers who dominated Russia for the past decade are being
replaced by Slavophiles, who will seek to root out Western
influence while they liquidate the Westernizers."
The pendulum is clearly swinging away from the Westernizers and
toward the Slavophiles. This swing can be seen in areas from the
emulation of Western economics to Russia's relations with Serbia.
The pendular swing is an old story in Russian history. Intense
infatuation with everything Western is replaced by extreme
xenophobia and paranoia about all things Western. The
replacement of the Westernizers by the Slavophiles is not merely
an intellectual exercise. It has frequently been a brutal and
bloody process in which yesterday's unassailable and powerful
Westernizer is turned into an exile, a criminal or a corpse. We
were quite serious and were not being metaphorical when we wrote,
"...they liquidate the Westernizers."
Boris Berozovsky is now a wanted man who, if he returns to
Russia, will in all likelihood wind up in prison for a very long
time. He is not alone. The purge will extend not only to the
handful of wealthy oligarchs that ruled Russia but also to the
lesser figures, politicians and intellectuals who engineered the
Russian love affair with the West. The economic, political and
intellectual elite of the 1990s is being replaced. In Russia,
this process is rarely pleasant to see and we don't believe that
it will be very pleasant this time either.
Berezovsky's fall is part of a struggle between Boris Yeltsin and
his enemies. Berezovsky attacked Moscow Mayor Yuri Luzhkov who
is going to be a candidate in the 2000 presidential elections and
who applauded the arrest warrant. Berezovsky's real enemy is
Prime Minister Yevgeny Primakov who first opened the attacks on
him. This is, to wax poetic, a struggle for the soul of Russia.
On one side, Yeltsin, who presided over the breakup of the Soviet
Union and championed Western style reforms and close ties with
the West, is on the defensive everywhere, with most of his
policies in tatters. On the other side, Primakov, the old KGB
apparatchik, and Luzhkov, the opportunistic weather vane of
Russian politics, are signaling the end of an era and a return to
a more Russian, Slavic and illiberal Russia. As Berezovsky said,
"Even Communists today are less dangerous than Primakov. He
poses a greater danger. He wants to again build the empire."
It was inevitable that at some point this would lead to arrests.
There will be many more arrests for economic crimes. Many of
those arrested, particularly at the beginning, will indeed be
guilty of extraordinary corruption. Later, as the purges gain
steam, people will be arrested for doing things that were not
particularly corrupt at the time, but are now viewed as crimes
against the people. The real issue is not whether this will
happen. It is happening. Last time, merely knowing a Westerner
could result in that person landing in the Gulag. There is no
reason to think it will go that far this time. On the other hand
there is no reason not to think that. In Russia, extremes are
the norm.
Berezovsky has a choice between exile and prison. His fate will
not be decided by the courts but in a power struggle between
Yeltsin and his enemies. In our judgment, Yeltsin has already,
in principle, lost that struggle. Thus, one of the richest and
most powerful men in Russia is now an exile (we doubt that he
will return, given the wealth he has in foreign bank accounts),
the victim of a sea change in Russian political life. The
pattern is now in place. The issue is only how far it will go.
Our bet is that it will go very far and that both the mighty and
the mere functionaries in the Russian reform movement are facing
some very tough personal times.
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