Fall of Communism

[John Simkin]

Vladimir Kalinin is from Belarus. A former soldier in the Red Army he is now a teacher in Smorgon.

http://educationforum.ipbhost.com/index.php?showuser=258

A lot of things were very bad during former USSR. We did not know about millions of people which had been killed by Stalin and his company because they were different, Gulags, etc. I think that communists would like to push history ahead too quickly and build communism everywhere. But they had to build concentration camps for many people within their own countries and in this sence they were very dangerous. But I have to say that a lot of things were quite positive - I mean social protection because we had a lot of things free of charge-medical care, education, etc. I read about unemployment only in the books but now we have a lot of poor and jobless people, anarchy and mafia games, wild capitalism which you in the West had passed 200 years ago. So, like in Russia they have 50 multi-millionaires who stole all property and 80 million people under living in extreme poverty.

What am I trying to say, that even cold war is not so primitive and simple as we thing, it's quite complicated issue.

[John Simkin]

It is interesting to examine the increase of inequality in Russia since the fall of communism. It is now the home of some of the richest men in the world. In fact, 23 men now own 60% of the Russian economy. Their combined wealth amounts to £44.6bn. In the UK the most famous of these is Roman Abramovich. He now lives in the UK and is officially our richest man (22nd richest in the world) and is estimated to be worth £7.5bn.

How did Abramovich get his money? Well he refuses to say. However, two journalists, Adrian Levy and Cathy Scott-Clark, have been investigating his business career. They have an interesting story to tell.

Abramovich was only 20 years old when Gorbachev decided to legalise private business in 1987. Abramovich, via his contacts in the Communist Party, was able to set up an oil trading company. He then bought cheap Russian oil for a few roubles a barrel and sold it abroad for a healthy profit. This enabled to build up his capital and put himself in a good position to exploit the situation when Russia fully embraced the concept of capitalism.

On 20th August, 1992, Boris Yeltsin announced that Russian industry was to be privatised. He explained that Russia was to become a stakeholding society (a word that Tony Blair prefers to privatisation). Each citizen was to be issued with a voucher worth 10,000 roubles (at the time the average monthly wage in Russia). These vouchers could then be exchanged for shares in the companies that employed them. By taking a stake in the company that employed them, Russians were going to be working for themselves. According to Yeltsin there would be “millions of owners rather than a handful of millionaires”. He added: “everyone will have equal opportunities in this new undertaking and the rest will depend on ourselves… The privatisation voucher is a ticket for each of us to a free economy.” Yeltsin also explained that the state would retain a third of the shares in these companies.

Yeltsin also announced the deregulation of prices. As a result the rouble fell on the foreign exchange market from 230 per dollar in 1992 to more than 3,500 by December, 1994. This wiped out most people’s savings in Russia. The impact on the health of the population was dramatic. Life expectancy for men fell from 65 in 1987 to 59 in 1993. The number of suicides rose by 53% and more than one third of the population slipped below the poverty line.

People in Russia were now desperate for money and began selling their possessions. Abramovich and his mates now made their move. In 1994 stalls started appearing in towns all over Russia. They offered to pay cash for people’s vouchers. The agents employed on the stalls told them they were now worth only a few kopeks. Desperate for money to feed their families, the people sold their vouchers. A recent survey showed that most Russians sold their vouchers during this period.

By 1996 the majority of people in Russia were worse off under capitalism than under communism. Yeltsin was in serious trouble and was expected to be beaten by the communists in the forthcoming elections. His only hope was to mount a propaganda campaign against the communists. He needed money to do this and so he struck a deal with Abramovich and his mates. In return for financial backing he would introduce a “loans for shares” scheme. Yeltsin told the Russian people that this was a temporary measure and once the economy had stabilised, the state would repay the loans and the state would reclaim its shares.

Abramovich was not the only one to take advantage of this situation. Vladimir Potanin, the deputy prime minister, purchased Norilsk Nickel for £78 million (now worth £2 billion). Another member of parliament, the 32 year old Mikhail Khodorkovsky, who helped draft the “loans for shares” legislation, was given the job of policing the system. He now owns 40 former Soviet enterprises and is estimated to be worth £8.4 billion.

During this period Abramovich obtained large chunks of Sibneft (oil), Aeroflot (national airline), RusAl (aluminium), GAZ (cars), Orsk-Khalilovsky (metal), Avtobank (insurance), Kraznoyarsk (hydroelectric), Ust Ilinsky (paper), etc.

The value of these companies have increased enormously since they were sold off for cut-down prices (sound familiar). The workers for these companies have not done so well as they are now earning less in real terms than they were in 1987.

So far Abramovich has spent £250 million on Chelsea. He also lives in England (a 450 acre estate in Sussex) although he is governor of Chukotka. Abramovich is aware that every time he returns to Russia he is in danger of being taken into custody. Mikhail Khodorkovsky, the richest man in Russia was recently arrested. Others have also escaped to the west and are busy trying to get their money out as well as it will only be a matter of time before their companies are renationalised. It could be argued that Abramovich's buying of Chelsea is an example of what the Mafia call money-laundering.

[John Simkin]

Paul Klebnikov, editor of Forbes Magazine’s Russian edition, was murdered in Moscow yesterday. Klebnikov, the author of a book on the Russian tycoon, Boris Berzovsky, was working on an investigation into how In 23 men in Russia now own 60% of the Russian economy. Their combined wealth amounts to £44.6bn. Klebnikov is the latest investigative journalist to die while trying to find out how these men made their billions. Over the last few years over a 110 journalists have been murdered while working on this story.

[Derek McMillan]

I have a friend who lives in St Petersburg. Her perception was that people were given the right to shares in the electricity company but they had no food. They exchanged the shares for food and the black marketeers ended up owing the electricity company. Basically they exchanged the Stalinist bureaucracy for gangsters!

She also pointed out that they had a million workers working for nothing. They worked because if they didn't they lost their jobs and the right to any back pay if it ever materialised...it didn't

They don't, decidedly don't, want to go back to Stalinism but the drug addiction, alcoholism and prostitution are all seen as worse now than before.

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address 125167 Moscow a\Ya 37, Russia

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