Information Digest Spring 2013 Price £1.00 Initially Putin was confronted with Contents challenges on all sides: by the expansion of NATO into Hungary, Poland and the Czech Vladimir Putin and His Policies 1 Republic; by NATO strikes against Serbia; SCRSS News 3 by a growing Islamist secessionist threat in Member Obituaries 6 Chechnya and Dagestan; by the withholding Soviet Memorial Trust Fund News 8 of taxes by major companies and regional The New Russian FBI 9 governments. Putin’s position as president Stalin’s Personal Library 11 was undermined by business interest A Soviet Design for Life 13 groups who influenced deputies to defeat Whither Lenfilm? 14 his tax proposals. Reports 16 Reviews 17 Listings 19 Feature Vladimir Putin and His Policies By David Lane Vladimir Putin, with the support of President Yeltsin and the Russian economic oligarchs, arrived on the Russian political scene as appointed prime minister in August 1999 and jumped immediately onto the international stage when appointed acting president on 31 December 1999. For the first two years or so, as far as the West was President Vladimir Putin (courtesy of RIA Novosti) concerned, his work was acceptable. Putin maintained and even developed the market The oligarchs, particularly Khodorkovsky, economy. At home the power of the believed that the private sector could utilise oligarchs, such as Berezovsky who had Russia’s massive energy resources, from backed him, went unchallenged and Yeltsin which they profited, better than the state. was given immunity from prosecution. By Putin and his government believed the advent of his third term of presidency in otherwise. Consequently, Putin adopted a 2012 Putin had reversed many of the major more confrontational policy against oligarchs faults of the Yeltsin era. who opposed him – “if it’s business you 1 have chosen, stick to business” was his privately owned national companies to fulfil advice to the oligarchs. His statist policies state objectives. This clearly gives problems had implications for foreign investment in to companies and their shareholders when the energy industry and he sought to the state intervenes to direct their resources change the terms of investment with the to politically inspired (though legitimate) large foreign investors who had benefited goals. disproportionately by contracts made under the Yeltsin regime. In international relations Putin’s handling of the closure of a factory in Putin, while trying to placate the West, saw Pikalyovo illustrates this point. The the USA as a hegemonic threat not only to enterprise laid off thousands of workers and Russia but also to world peace in general. could not pay bills to the local utilities companies, which turned off the supply, Putin became a target of anger from the leaving the population with no hot water and leaders of the West. The British media have heating. Putin ordered the owners to pay depicted him as a “trilbyed gunman” (The immediately arrears of salaries amounting to Economist), and a master puppeteer 41 million roubles. He is reported to have controlling the strings not only in Russia but told the management: “You made thousands also of the supply of energy to the West. of people hostages to your ambition, The Observer newspaper posed the incompetence and greed. It’s absolutely question: “Is he the westward leaning ally of unacceptable!”2 The Russian state can President Bush and Tony Blair, or someone enforce what is euphemistically called in the whose real affection is for the bad old days West the ‘social responsibility of business’. of the Soviet Union?”1 Putin reversed Putin, however, is no socialist. At the Yeltsin’s pro-Western policy and sought to beginning of his presidency he legalised the give Russia the respect it deserved abroad, purchase of land. During the period of as well as to instil a feeling of confidence economic crisis, he could have extended the domestically. Internally he curbed the worst nationalisation of enterprises and further consequences of privatisation by transfers reduced the power of the oligarchs. But he of income derived from Russia’s material preferred to keep within a private property wealth to the population. Putin’s popularity market system and he successfully applied rose at home, though he was criticised for membership of the World Trade abroad. He renationalised many of the Organisation in December 2011 – exposing energy companies: in 2003 state-owned Russia to the external constraints of the companies accounted for only 12 per cent of world economic system. oil production, a figure that rose to nearly 40 per cent by 2007, while in the gas sector But Putin reversed the relationship under state companies controlled 85 per cent of capitalism between business and the state. production. Under Western and Russian capitalism, there are two frameworks of power: in the What type of political and economic system West business has captured the state; in has Putin introduced? He has pushed the Russia, under a commanding president, it economy in the direction of market state can be the other way around. This does not capitalism. This is an economic system undermine capitalism – it may strengthen it legitimating private property and the market through state support, contracts and with significant state control. It is not state subsidies. socialist. The state has two major forms of control: first, considerable ownership of Against this background, the Western media property that gives the government complain about the lack of modernisation, significant revenue independent of taxes. the mafia-like nature of society and state Some economic surplus (profit) accrues infringements of individual rights. The directly to the state through state companies reason underpinning the political and such as Gazprom. Secondly, power is economic malaise, they contend, is the secured through administrative control. The presence of corruption and the focus is on government is sufficiently powerful to direct the state and, of course, its leader. The 2 message is that if you can cure corruption, greater statism and more national then progress can be made. My own view is autonomy. Statist China, rather than liberal that the causality is the other way around. America is the model and would involve a Corruption is a consequence of the rapid, revival of the more paternalist policies of the haphazard and spontaneous privatisation state socialist period. carried out in the Yeltsin period which influenced the mores of society. Corruption Footnotes is much wider than state officials using public property for private interest; 1. The Observer, 2 November 2003 privatisation involved the seizure and 2. Angus Roxburgh, The Strongman, fraudulent procurement of state property London, 2012, p 276 with no proper accountability and 3. A class of owners who seek super-profits consequently led to the formation of a from their investments, rather than utilising capitalist rentier class.3 This weakened the profits for further capital accumulation. economy through the export of capital on a massive scale. David Lane is an Academician of the Academy of Social Sciences, Emeritus Western media give relatively little attention Fellow of Emmanuel College, Cambridge, to the wealth and power of the new capitalist and was previously Professor of Sociology class. Consider Roman Abramovich. In at the University of Birmingham. He was 2012, he had a ‘net-worth’ of 13.4 billion Vice-Chairman of the SCR from 1972–79, dollars. He made his money initially through having been an Executive Committee oil export and then bought into the oil and, member from 1968–71. He is currently later, the metals industry. He was appointed studying unemployment in Ukraine, Russia by Putin as governor of Chukotka and China. His recent publications include: autonomous okrug (in Siberia). His ‘Elites and Classes in the Transformation of expenditure is lavish; he has the largest State Socialism’, 2011; ‘Rethinking the sea-going yacht in the world; the “Coloured Revolutions”’, 2010 (with Stephen accumulated losses (2003–11) for Chelsea White); ‘Elites and Identities in Post-Soviet football club, which he owns, come to some Space’, 2011; ‘The European Union and $1,000 million; just two players (Shevchenko World Politics’, 2009 (with Andrew Gamble); and Torres) cost $120 million. Consider his and ‘The Transformation of State Socialism: constituents in Chukotka who, in 2006, had System Change, Capitalism or Something an average income per person of $976 Else?’, 2007. He can be contacted at the (25,703 roubles) per annum, while 13 per following address: Emmanuel College, cent of the population were below the official Cambridge CB23AP. Russian minimum living income. The wealth of the business tycoons has increased Note: David Lane will lecture on What Next for during Putin’s presidency and they may be Russia? at the SCRSS on Friday 12 April 7pm (see page 5). considered an unrecognised support to his leadership. But it is clear that Russia has not created a vibrant form of modern capitalism and the SCRSS News state, therefore, comes to perform a developmental role. As to future developments, critics point in two directions. Annual General Meeting First, as articulated by journals such as The Economist and neo-liberal commentators, is Notice is hereby given that the SCRSS AGM a stronger commitment to the free market will take place at 12.30pm on Saturday 18 and greater involvement in the world May at the Society’s premises. The meeting economy which would attract inward is open to SCRSS members only. The investment. The second direction advocated deadline for motions and nominations of by national and leftist politicians is a move to members for election to the next Council is 3 Friday 26 April. All motions and nominations Councillor Heather Johnson, in the company must be seconded by another SCRSS of a range of representatives of respected member. The agenda for the AGM will be academic, literary and cultural organisations available from early May.