THE MISTAKES OF OLIGARCHS
They are against everyone: those above them, below them, and on the same level. They underestimate the importance of their having the positive image of a special social stratum of oligarchs, however pompous this might sound. They are fighting the wrong people. Having bled one another white, they can fall easy prey to any yapping whelp. Or hawk.
In the past few months the oligarchs have displayed such hectic activity that it looks like solar flares. This has been stifling the medium of our national habitat will all its buying and selling of our television channels, tough party congresses, and onslaught of Russians from performers to a barrage of commercials on the air. The oligarchs often show dissatisfaction in public: they claim to have been deprived of, say, the power-supply switch, ministerial portfolios, parliamentary seats, or just plain money.
The oligarchs have wormed their way into the system of state power. Is this a good thing or not?
In a situation of chaos, the oligarchs can, of course, eat through the state, especially when national and personal interests naturally come into conflict. Having a double or triple citizenship, they even lobby the interests of other countries. It naturally hurts when people with gold-lined offshore coffers dare dictate the rules of life in your own country. But will it be better if these rules are dictated by people with holes in their pockets or with bottles sticking out of their string-bags?
The state has power; the rich have money. Power without money is helpless. Money without power will only be splurged like in a casino. But money in alliance with power is a mighty lever. And who will be able to pull it? It has fallen to the first-wave oligarchs to try.
What do the oligarchs have to do to avoid being crushed by the millstone of history? They must develop the ability to think globally so that they will eventually be able to assume the roles George Soros and Gianni Agnelli now play.
The problem is not that the oligarchs are too close to and exert a baleful influence on those in power. The problem is that there are too few oligarchs — 20 instead of 200. And any deficit leads to abuse. When there was a shortage of meat, corruption inundated the butcher shops. If there is a shortage of money in a bank, the demand for money and bribes is bound to increase. If power comes to a crisis, this means there is deficit of oligarchs, and for this reason we need urgently to spawn new ones.
Everything will calm down when the number of oligarchs becomes large enough. This is why Russia’s Putin does not keep Russia’s oligarchs at bay but is creating conditions for new ones to be born. And the original oligarchs irritate you not because they break the rules (the very idea is hilarious) but because they hamper the young sprouts. They need to fall out like baby teeth in children.
WHERE WILL IT ALL END?
Should the oligarchs confine themselves to self-assertion by minor victories and local clashes, history will wash them out of its annals. So Mr. Surkis and Ms. Tymoshenko will make peace, because corporate energy interests are above everything else, and will soon be upholding a joint stand against the corporate interests of another, most likely agrarian or military, sector. This would be on an entirely new level, a bitter clash between the whales and the elephants. However, dear readers, you need not take the current spectacle to much to heart. These two political heavyweights’ dialogue on the “Epicenter” television program was the first attempt to launch a PR operation aimed at making the public accustomed to the oligarchs’ scandalous, pretentious, mind-boggling, suspicious, and soap-opera- like way of life.
The viewers of all TV channels are going to watch a long series of clashes: Z. vs. P., S. vs. T., B. vs. P., D. vs. B., M. vs. Y., V. vs. D., or R. vs. G.
As in any chess game, many figures will have to be sacrificed. The office of the Economy Minister in exchange for five laws, ten oblasts for one oligarch, two industries for an IMF loan, three newspapers for five factories, one TV channel for 100 votes, one gray eminence for a bucketful of negative publicity, three factions for one party, one party for influence, or for any office.
We are simultaneously afraid of and secretly putting our hopes in the oligarchs. What if they suddenly manage to put a certain sector in order? What if they suddenly start abusing their power? Oligarchy has its own rules of competition. If one of them works his way up by chance, he will be free to steal (monopoly can’t be beat!). But if the number of oligarchs exceeds a hundred, they will be no longer able to plunder as they please from their peers or the populace because they will be forced to develop corporate responsibility. Many countries have passed this stage of maturing. This is why, for the sake of their own stability and prosperity, the people are interested in the existence of oligarchs. Owing to some countries having oligarchs of their own, these countries have secured $5 billion contracts to manufacture 180 cargo planes, the Brazilians have placed a $3 billion order for 5 million tons of sugar, and the Chinese a $10 million one for 50 million tons of steel.
You will ask: what does this have to do with the oligarchs? The point is that they communicate with one another in a special language we are still to learn. In principle, we need not learn it, for we are quite a self-sufficient nation.
Incidentally, oligarchs have an internal competition of their own. No sooner had some Russian oligarchs of the Potanin type popped up on the world stage, than they all got the cold shoulder. For this is an elite club. The international syndicate of oligarchs keeps its ranks clean and always puts upstarts through the mill, turning all the influential media ( The Financial Times, The New York Times, CNN) on the freshmen.
OLIGARCH CONFABS
In the oll days, our small businesspeople used to strike oral deals in the evening, with a shot of vodka in hand. Then our medium-size businesspeople began to conclude their oral deals in a sauna, with a glass of beer in hand. And big-time businesspeople finalize their oral deals on multibillion-dollar contracts and mergers onboard Mediterranean yachts over evening cocktails in the rays of the setting sun. We do not even know where these bays are.
And when our officials accept invitations to attend international tenders, they only see the ceremonial beginning. It does not matter that our aircraft are better, cheaper, and have already been built. They will choose other, more expensive, ones expected to be test-flown as long as five years later. Nor does it matter that our sugar tastes better and is more useful. The Brazilian or Cuban cane sugar is sure to win.
The whole point is in management, in the titans of management. If we do not feel like inviting them from the West, then how can we possibly rear them at home?
On a rainy Paris evening last spring, John Welch, General Electric president, entered a low building without a nameplate just opposite the Arch of Triumph to make a secret call on a high-frequency tap-proof telephone to his old friend, aerospace titan Jean Luc Lagardere. The point was to set up an air company of a size unheard of in the history of Europe, which would monopolize the world airbus market. A month later, during a secret lunch on the seventh floor of the French Ministry of Finance, Welch, who annually sells aircraft engines worth $10 billion (an annual state budget for Ukraine), picked up from the table a small mock-up of the A3XX airplane and asked, “Jean Luc, can this be built?”
“Yes, John, and we’ll do it! Why should we occupy other people’s lousy niches? We will capture the whole world. There will be 1700 flying palaces with 500 passengers each, investment of $20 billion, and they will fly as early as in 2005.”
So I sit and think: does Ukraine have a way to break into negotiations of this caliber? Do we have anybody strong enough?
After Boris Berezovsky had been invited to the Mediterranean yacht, on which Rupert Murdoch was celebrating his marriage to a young Singapore television hostess, and had a five minute talk on deck with his host (that was the time limit!), Moscow’s ORT Television suddenly got its second wind, as did the newspaper Kommersant. Where can we find such a yacht? Which of our boys will get the honor of an invitation to the wedding party of a worldwide media baron?
Of course, I am fully aware of the extent to which my standpoint in defense of the nation’s sharks of business might seem unpopular. But is it good that we only have calves? We keep losing international tenders, markets, money, spoiling our reputation, and do not win points where we could otherwise do so. Only business muscles can show strength. I might be told in reply that muscles can also be built artificially. Of course, any undertaking can be distorted. Any good endeavor will be, as usual, surrounded by hangers-on, thieves, and deviants. But humankind has only one high road to walk down. And precisely this road can give us a chance to make a breakthrough.
SHOULD THE OLIGARCHS BE STRIPPED OF THE MEDIA?
Yes, if you cannot calculate five moves ahead. For grown-ups should not behave like little children and feel hurt because the media have been seized by oligarchs. Our newspapers and television are on such a level that it is a shame to compare them to the West. Thus, if we are to be effective managers, we must first put the media on their feet by using the oligarchs’ money and only then give them the bum’s rush if need be. Life can and will put everyone in his proper place.
What we just have to do is pass knowingly through some not terribly pleasant stages which cannot be skipped. Simply imagine this scenario. The media are still eking out an existence, with newspapers printed on substandard paper. The television stations are beaming such weak signals that you turn your face from the screen. Radio waves are difficult to tune in. Journalists earn starvation wages, the equipment is antediluvian and inadequate. Complete vexation.
But there is a piece of good advice usually given to the electorate: I recommend you take the gifts and goodies, but vote your heart. The media should do likewise: take everything being given and do their best to stand on solid ground. Let them write and broadcast whatever their owners please. In any case, nobody hears anybody in the times of tempestuous democracy. One has to take advantage of these times of trouble.
And although this is a forced compromise, it would be naive to expect the oligarchs to treat the media as charity in order to sugar the pill for journalists and television producers. But, if reinforced by oligarchs, the media will only become more professional.
Nobody is saying this situation should be preserved forever. But is there any other choice? Any movement forward encounters friction. There are no perpetual engines in a world full of perpetual brakes. The state is cash- strapped. The West is waffling. Incidentally, if the oligarchs are offered a tax amnesty, where will they be advised to reinvest their offshore profits? In money-losing, ailing, and unattractive construction projects? No, they should be lured with a carrot and cake. All the tsars in good fairy tales do so, thus going down in history as those who gathered riches scattered all over the world.
WHERE IS ALL THIS LEADING?
We need to rear oligarchs.
Both the high officials and the oligarchs who joined forces with them still do not know what broad vision is. Mostly have only a point of view. What point of view? It is an ever-narrowing field of vision that eventually becomes a viewpoint. Just imagine how many funds, loans, and all the other kinds of financial aid we have been given worth hundreds of millions or billions of dollars. Where has it all gone?
Money is being given for us to break free from our Asiatic past, from our economic and technological backwardness. But instead we are proud of having spent all these targeted funds on paying age-old back wages to coal miners and hard-currency market intervention to keep the hryvnia afloat. Can we possibly hope, given this kind of thinking, to restructure our transport, agrarian, mechanical engineering, and fuel industries? Money clearly does not matter here.
On the other hand, there are two positive points even in what is going on now. The first is we are employing the theory of small deeds, i.e., the ability to move forward by short concrete bounds under the hard conditions of indebtedness and economic weakness. After recapturing one position we engage another.
And one more thing: We are now seeing the electricity problem being fruitfully solved jointly by the state and the oligarchs. The rivals, while finding each other’s sore spots, still continue to seek compromises. The results are, as we see, better than at Camp David. Moreover, this country’s leadership is not shying away from every lunge of either side, although there are more than enough reasons to be nervous, but is promoting, patiently and constructively, the final positive result. The same pattern (of productive interaction with instead of rejection of the oligarchs will reinforce the banking system and the agrarian sector.
Aristotle, a living witness of Greek oligarchy, wrote, “Inessence, the difference between democracy and oligarchy is in poverty and prosperity. Oligarchy is the opposite of democracy. Under democracy, you can speak as much as you like but nobody will listen to or hear you. This is why society moves forward very slowly, sticking in the mud of uninterrupted demagogic conversations and debates. Clearly, the speakers draw great pleasure from these debates, but progress stands still like a statue, let alone the bogus reforms.
“Oligarchy brings forth another ill. All people feel the forward movement, progress flourishes, but some future champions elbow their way ahead before the eyes of amazed audiences. This creates an outrageous inequality which the majority of the population cannot tolerate. And deservedly so. The only principle of stability is equality in the following proportion: each is content with his happiness and position.”
WHERE IS THE WAY OUT?
The way out is simple. One must move by stages: five years of oligarchy, five of demagogy. Then another five years of a minority rule. When this becomes unbearable, then back to social appeasement. You can thus move a few steps forward in twenty years down the path of improving the life of the whole people or at least of the unduly suffering electorate.
HOW SHOULD THE STATE REACT?
Its historic role is to increase its own strength and pacify the people. Hence, it must find an adequate way to react. Suppose the state has decided to carry out some reforms. But the point is that somebody has to put them into practice. Railroad cars will not roll by themselves without a locomotive. The oligarchs are precisely these locomotives. Are they pulling the cars in the right direction or toward themselves to a dead end? Are they acting solely in their own interests? They have privatized chemical and steel plants. They have not laid off the workers and are still producing metal, so they are doing at least some good, for otherwise we would not have even this.
Reforms can only be pushed forward by the new generations of oligarchs guided by the country’s leadership. Appointing new ministers, advisers, and especially governors, letting them the manage political and financial flows, and placing hopes on their energy, the country’s leadership at the same time is spawning oligarchs, as if nurturing them from embryos. Simultaneously, society is slowly staggering down the road of reforms. Sometimes the way is tortuous. We just have to put up with it.
WHY WILL THE FIRST-WAVE OLIGARCHS FAIL TO HOLD OUT?
Because the sectors they chose to supervise are not very promising technologically. Metallurgy? We are not the leaders here. Oil? We are also trailing. The situation will resemble that of a Hungarian oligarch who bet on the Ikarus automobile giant. Ikarus has gone bankrupt and is closed.
HOW ARE THINGS IN THE WEST?
Juan Villalonga has recently been dismissed as director of Telefonica, a Spanish monopoly, on suspicion of shady dealings. His illegal deal with WorldCom was disclosed. When Villalonga smelled a rat, he went to Mexico to live with Miss Mexico awhile. Staying overseas, he continued, without any qualms, to manage the state-run monster by video-phone, which sent the country’s leadership into a blind rage. Would you say that this oligarch lost his sense of proportion? You would be right. These things also happen to Western oligarchs, not only to ours.
But still, what about the fact that Telefonica managed, thanks to this young Spanish oligarch, to grow in six years from an obscure provincial telecommunications unit into a $90 billion colossus?
The answer is that the Moor has done his duty, the Moor can go. Other characters should pick up the relay baton on this track, of course, just for a short time.
Any state behaves in the same way vis- ` a-vis its oligarchs, be they in sports, art, politics, or business. It squeezes them like a lemon and then throws away what is left
But, whatever the rumors and schemes, there will always be oligarchs. Fate had them climb up this Golgotha and surrender. The oligarchs will do their duty and vanish into thin air, albeit a century later.
(Concluded from last issue)
Editor’s note. By publishing this article by Volodymyr Spivakovsky, Den/The Day is begins a debate on the place and role of oligarchs, political power, and individuals in the history of modern Ukraine. The most interesting opinions are sure to be published. @=> (Continued from page 2)
