Putin economic advisor Andrei Illarionov resigned yesterday, citing reasons that will surely confirm the fears of Russia watchers in the West. Illarionov said all the right things to reaffirm his liberal economic credentials, saying that Russia isn’t the liberal economic darling that the West hopes for, but instead, in his words, is “corporatist.” No surprise there. Corporatism harkens to the state controlled economics of the early 20th century, especially that of Mussolini’s Italy, where the state placed a variety of political controls on industry, regulating competition, investment, and in some cases, production.
Nothing shows this more than the current dispute between Gazprom (which is controlled by the Russian state) and the Ukraine. The former is engaging in nothing less than a muscling of the latter to accept higher gas prices under threat that the pipes will be shut off. This type of leverage has increased the already political riff between Russia and Ukraine. But some will argue that the political independence Yushchenko’s government seeks from its eastern “big bother” means that it must also accept an end to economic dependence and pay natural gas prices closer to “market value.” Ukraine has continued to enjoy the Russian gas subsidies at a rate of $50 per 1,000 cubic meters, but a few weeks ago Gazprom upped the price to $160 to begin at the new year. When Ukraine resoundly rejected this as blackmail, Gazprom raised the price again to $230 in retaliation. If one thinks that this is simply Russia adjusting to the laws of supply and demand and is not punishment for Yushchenko’s independence, keep in mind that Belarus, which is soundly in Moscow’s political pocket, will continue to get gas for $46 per 1,000 cubic meters.
The Russia-Ukraine gas dispute is just one example of the corporatism that Illarionov is speaking about. He already publicly blasted his boss for the Yukos sell off to Rosneft , which he referred to as “swindle of the year.” Public criticism is a big no-no in Russian politics and Putin punished Illarionov with removing him from Russia’s G8 envoy. But Illarionov’s statements concerning his resignation follow a typical narrative of how Putin’s has conducted his second term. He stated to Gazeta.ru that Putin has moved away from “liberal or even mainstream policies” adding, “It’s one thing to work in the partially free country that Russia was six years ago and another thing to do so when the country has ceased to be politically free.” Translation: I don’t really care about political freedom, only that I’m listened to. But when asked whether his criticisms will cause him to go into politics, Illarionov answered, “I haven’t done any politics, I’m not doing any politics, and I’m not going to do any politics.” Illarionov may be a fool, but he isn’t stupid. He knows that going into politics could mean ending up like other former Putin men who made public criticisms—suddenly faced with criminal “investigations.”
But all of this goes beyond Illarionov and to the nature of capital itself. The issue is more about what type of capitalist state Russia really is and how it differs from capitalist states elsewhere. Is it merely capitalist in form, but not in content? Or is it simply a capitalism that is more overtly corrupt and more openly based on gaft without the empty platitudes to free market ideology? I think capitalism in Russia is no different in that there are really two capitalisms at work. One for the rich and one for everyone else. The latter is where the average citizen is subjected to the “free market” in all its ruthless forms: free market in prices, labor, housing, etc., with a few caveats. Capitalism for the rich is the selective application of free market principles under the guise of “free market” rhetoric. The rich subject everyone else but themselves to it. And when the market doesn’t suit their purposes or profits, they resort to corruption and hypocrisy. After all, just take a look at the James Griffen corruption case where several American oil companies, with possible collusion with the CIA, funneled $80 million in bribes to Kazakh President Nursultan Nazarbaev and other Kazakh officials for exclusive rights to Kazakh oil. Given this, can someone explain to me the difference between what Russia is doing to the Ukraine and this? I guess that in many ways Illarionov’s charges of “corporatism” can be applied elsewhere as well, leaving Russia more in line with the rule, rather than the exception.
Guest: Ed Pulford on Mirrorlands: Russia, China, and Journeys in Between published by Hurst.