After the fall of the Wall

  • The Oligarchs: Wealth and Power in the New Russia,
    by David E. Hoffman, Public Affairs Books, 567pp.

Up to a point, the life story of Alexander Smolensky reads like a morally uplifting, even spiritually enriching rags-to-riches parable. With an absent father and a mother whose Austrian background qualifed her, in Stalin’s Soviet Union, as an ‘enemy of the people,’ Smolensky grew up in poverty. Refused entry to higher education because of his mother’s background, he worked, in the early 1980s, in the shadowy, black-market economy, printing bibles at night. For this crime, the KGB arrested him, and sentenced him to two years in a prison construction brigade. In the late 1980s, however, in the first flush of Mikhail Gorbachev’s economic and political reforms, Smolensky founded one of the first ‘co-operative’ businesses in Moscow. He sold building materials, then in constant shortage, and flourished.

In fact, he flourished to such an extent that in 1988 he founded a bank. At first, he was not quite sure what a bank was supposed to do. ‘For several months I had a big desk and all my friends made jokes,’ he told David Hoffman, a reporter for the Washington Post. One of his early assets was a ‘manuscript’ he claimed to have written about banking, which he valued at 200 million roubles. ‘Presto!’ writes Hoffman. ‘Instant capital.’ But the bank succeeded. In 1992, it turned a 2.4 billion-rouble profit on 6.1 billion roubles’ worth of revenue.

Unfortunately, it isn’t easy to explain how Smolensky’s bank got from zero to 6.1 billion in four years – and Hoffman even admits that he can’t do it. Smolensky, he points out, seems to have led a charmed life:

He fought back against the government, kicked out the Central Bank auditors, and refused to answer questions about his bank, and yet he survived. What was the source of his impunity? The answer is unclear.

In the end, the moral of the story is unclear too. Was Smolensky a hugely creative, entrepreneurially gifted, clever and canny Russian proto-capitalist, or was he a crook? He may have been both, of course – which is more or less the conclusion Hoffman comes to about all of the ‘oligarchs’ described in this book. For those not familiar with the term, the oligarchs are a concrete group of billionaire Russian businessmen, who joined together for a brief period in the 1990s in order to control Russia’s nascent private media, to support Boris Yeltsin, and to make Vladimir Putin president. Some are still going strong: Mikhail Khodorkovsky, with a personal fortune of $2.4 billion, is the richest man in Russia, and Yuri Luzhkov is the mayor of Moscow. Others, like Smolensky, have now dropped out of sight, and still others – Boris Berezovsky and Vladimir Gusinsky – have effectively been exiled from Russia.

For a time, however, these men ran Russia. How they came to do so is the subject of this book, which both tells their very different individual stories and describes the theatrical atmosphere surrounding their rise to power. This was the era, among other things, of MMM, a pyramid company which swindled up to 10 million Russians out of their life savings; of mass privatisation via a ‘voucher’ system which nobody understood; of new protection rackets; of the reconstruction of Moscow’s Christ the Saviour cathedral, at a cost of $700 million; of criminal gangs composed of homeless children. During most of the past decade, nobody in Russia ever knew which elements of the new ‘capitalism’ were legal and which were not – if, that is, ‘capitalism’ is the right name for a system with no contract law, no company law, no rule of law whatsoever.

Hoffman has managed to write about all of the men and the era without prejudice or ire, a task which I myself often find difficult: the sight of a massive swindle passing itself off as ‘democratic reforms’ has always made me irritable. To his credit, however, he manages to evoke not only the corruption but also the genuine enthusiasm which some of these men exuded, an enthusiasm which partly explains their amazingly swift success. Gusinsky, he writes, had ‘an incredibly optimistic vision of Russia. He believed in the birth of a new middle class.’ Berezovsky, on the other hand, told him that ‘I have never Ògone to work” – I do only that which I love.’

The story isn’t, of course, complete. Invariably, those who succeeded in the half-reformed system were not only enthusiastic but also somehow well-connected, either to the government, to the remnants of the KGB, or to the criminal world, usually in ways that they preferred not to make public. For that reason this book occasionally feels like a history book awaiting its true sources. Hoffman himself apologises to his readers for those moments in his story

when the inexplicable happens – when a bank suddenly inherits a windfall, when a factory is given away for nothing, when a tiny company explodes from zero to $1 billion.

What occurred at these junctures was, he says, ‘a mystery of the new Russia’.

Still, given the reliable resources available – mostly interviews, of which Hoffman seems to have conducted hundreds – this is about as clear an account as you’ll get of what actually happened, in Russia, in the murky ten years between the fall of the Berlin Wall and Boris Yeltsin’s resignation. It may take another ten years – or another 100 – before we know the whole story.

Questions that can never be answered
Applebaum”>Anne Applebaum
Saturday, 3rd November 2001

If, in the next few weeks, Western commandos succeed in capturing Osama bin Laden alive, what should we do with him? Some will want to kill him immediately, the better to avoid a trial of dubious legality. Others will want a trial, to prove to the world how evil he really was. The pros and cons will be argued back and forth – and few will realise that this argument has in fact been held before. In the closing days of the second world war, as Allied forces began approaching Berlin, the ultimate fate of prominent Nazis became the subject of heated debate between the British, the Americans, and the Soviet Union. Churchill deeply believed – and said so many times – that any captured German leaders should be shot within six hours of identification. Stalin, on the other hand, smelled the propaganda advantages of a vast show trial, and urged that one take place. Initially, American opinion was divided, but the United States ultimately came down against ‘lynch-law’, in favour of an international tribunal. Thus did the preparation for the Nuremberg trials begin.

Trials require evidence, however, if they are to appear even remotely fair, and in the days before global communications the Allies actually knew very little about how Hitler’s inner circle had operated. As the Nazi leaders did begin to fall into their hands – Goering, Hess, Speer, Ribbentrop – they therefore began to interrogate them. In the end, allied interrogators were to conduct hours’ worth of interviews with men who, only a few weeks previously, had been the leaders of one of the most powerful nations on earth. These interviews produced the necessary evidence – and more. As Richard Overy writes in the introduction to this book, ‘Very seldom have historians had the opportunity to examine the oral evidence of an entire leadership corps taken down verbatim only weeks after their fall from power.’ In this book, he publishes large chunks of the interviews and analyses them, separately from the subsequent Nuremberg cross-examinations, for the first time.

It makes for mesmerising reading. Overy’s interests are broad, and his background knowledge extensive, enabling him to explore a number of issues at length: the different interrogation strategies deployed by different internees, their reflections on life at the top of the Nazi power structure, their memories of Hitler, their explanation of the Nazi defeat. Several characters emerge with particular clarity, notably Albert Speer, Hitler’s architect, who deeply repented his Nazi allegiances, and Reich Marshal Hermann Goering, who didn’t. Immediately after his capture, Goering was asked if he knew he was on the list of major Nazi war criminals. ‘No. That’s a big surprise to me,’ he said, ‘for I don’t know why.’

Perhaps not surprisingly, Overy’s analysis of who knew what about the Holocaust is particularly fascinating. ‘Nothing was denied more vehemently in the interrogation rooms at Nuremberg than the persecution of the Jews,’ he writes. Hans Frank, the wartime governor of Nazi-occupied Poland, claimed that the orders to murder Jews were ‘forced upon us, against our will’.

Alfred Rosenberg, the minister of the Occupied Eastern Territories, where most of the Holocaust took place, easily admitted to anti-Semitism but refused to take responsibility for atrocities which were ‘in the hands of the police’. Joachim Ribbentrop, the foreign minister, claimed to have learned about the Holocaust from the foreign press. Overy concludes that the interviewees would have been aware how repelled the Allies were by the concentration camps, which had by that time been discovered, and might have tried to distance themselves from them. At the same time, however, he also points out that the ‘secretive habits and compartmentalised structure of the Hitler regime’ might indeed have made it difficult for those not immediately involved with the Final Solution to know the full details.

A few other documents stand out as well. One is Speer’s analysis of Hitler, whom he describes as a ‘puzzle full of contradictions and opposites’, and who emerges as a man with an extraordinary ability to charm – he had some form of near-hypnotic influence on those around him – as well as a man with ‘artistic’ working methods: ‘He had no definite time schedule for work; weeks were given to subsidiary problems.’ Another is the bizarre written ‘dialogue’ which Robert Ley, a Nazi party leader, conducted with his dead wife. ‘Success is the only proof of the soundness of an idea,’ he wrote. Yet a few sentences later Ley concluded that despite the ‘complete collapse, the unconditional surrender, the imprisonment of all German leaders’, Hitler is still ‘the greatest German of all times’. One wonders whether Osama bin Laden will be able to maintain his beliefs as well.