Congress of the disgruntled
On November 14, 2003, the 13th Congress of the Russian Union of Industrialists and Entrepreneurs (RSPP), popularly known as the “oligarch trade union,” opened
in the Hall of Columns in Moscow. Far from every billionaire was there. YUKOS head Mikhail Khodorkovsky was absent – three weeks before he had been arrested. But the hall was full of journalists, as all the main outlets sent their correspondents, and many more than one. The reason was that the day before, rumors spread from the bowels of the RSPP that President Vladimir Putin might come and that congress attendees were ready to express their opposition to the arrest of Khodorkovsky.
Prior to the congress, members of the RSPP board wrote to Putin urging him to intervene in the YUKOS case: “Only the clear and unambiguous position of President Putin can reverse the situation. The absence of such a position will make irreversible the deterioration of the economic climate and the transformation of Russia into a country unfavorable for business development.” Another rumor was that Putin agreed to come to the congress only if Khodorkovsky was not mentioned. “Will he come or not? Will they say something or not?” the journalists wondered.
In his opening remarks, Arkady Volsky, the longtime head of the RSPP, now deceased, did not say a word about Khodorkovsky or YUKOS. After the introduction, Volsky invited Vladimir Putin to the stage. He spoke about the social responsibility of business and the governance reforms that were then being carried out by then-Minister of Economic Development German Gref.
In his response, Volsky delicately mentioned the use of siloviki
to carve up business and the “excessive cruelty of state institutions during criminal investigations of economic crimes” – and that was it. Still, Putin again took the floor and responded: business uses the siloviki
to advance its own interests, and as for cruelty, “we should get used to a culture of lawfulness.”
At this point, the audience palpably tensed up: until then, in confidential conversations with journalists many billionaires said that Khodorkovsky’s case was an exception, that “Khodor was asking for it;” however, Putin’s words sounded like an unambiguous warning: we will crush anyone who dares to go against our will. Yesterday’s rulers of Russia – often called the “oligarchy,” the people who had won their assets in a brutal and sometimes bloody struggle – obviously did not want to bow before the bureaucrats. Sitting in the back rows, along with journalists from other outlets, I felt in my bones that things were about to explode. And then Putin abruptly changed the subject.Oligarchs and the land question
Note that shortly before Khodorkovsky’s arrest, a law was passed to allow industrial enterprises to buy out the land where they operated – before that, all privatized factories had been on land leased from local authorities. The cost of the buyout was high, with coefficients multiplying the appraised value. The owners grumbled. The oligarchs were especially indignant, as large enterprises typically sat on massive land plots that were built according to Soviet military standards: should a workshop be destroyed by bombs, debris was not supposed to block transport routes or damage the walls of neighboring plant buildings, hence the distances between buildings were hundreds of meters. It was now either unrealistic or very expensive to reduce that space.
And here was Putin, who had just said that business should work hand in hand with the state and not try to fight it, all of a sudden saying that he considers it unfair to make enterprises buy out the land and that it should be given away free. For a few, long seconds, the hall froze, taken by surprise. And then it burst into applause and cries of joy. Respectable gentlemen hopped up from their seats and jumped like children. In front of the astonished journalists, they squealed and hugged.
In the first minutes, I did not understand why the businessmen were so euphoric. Free land is, of course, a fabulous gift. However, firstly, the issue was not one for the president – the oligarchs could resolve it at the level of the government and parliament, since they had a powerful lobby in both places. Secondly, though the buyout prices were high, big business could definitely afford them. Finally, is it worth rejoicing at free land if as part of the deal you can be thrown in a prison cell?