This article is based on reports from Russia's Institute of Globalization Studies (IPROG) and the Moscow anti-corporate organisation Counter Corporate Centre (KOFR).
The G8 summit in Petersburg this month has set the seal on Russia’s re-emergence as a world force, already underlined by its growing clout as an energy superpower. The oil monopoly Gazprom, for example, is now the third largest company in the world by market capitalization. Russian firms are therefore seeking mergers, acquisitions and investment opportunities in the West.
The growth of Russia's economy since 1998 was accompanied by the growth of the oligarchs. These emerged in the mid 1990s when the government created new private conglomerates that replaced the old Soviet ministries. These were controlled by corrupt government officials and by their partners in business. Much of their success is due to the fact that they not only privatized the state property for symbolic prices, but also continued to use public resources long after privatization. The formation of these groups was accompanied by massive theft and corruption, but sometimes other crimes (including murder) were involved. Russia's corporations continue their destructive course, often with American and European partners.
Rosneft Perhaps the clearest example of the ethical issues posed by the Russian economy is Rosneft’s exploitation of oil wealth in Chechnya, where Russia’s second invasion has left the republic devastated and lawless. In January 2006 Amnesty International noted the grave human rights situation in Chechnya: 'Disappearances and abductions, torture, arbitrary detention and incommunicado detention of individuals in both unacknowledged and official places of detention continue to take place in Chechnya and neighbouring republics in Russia’s North Caucasus. Impunity remains the norm, as few perpetrators of human rights violations are identified and brought to justice.' But brutality by Russia’s occupying forces and their clients in the government go hand-in-hand with abuse of Chechnya’s main natural resource: oil. Rosneft controls Grozneftegaz, the company formed in 2000 by the Russian government to extract Chechen oil. Investors in Rosneft’s recent floatation on the London Stock Exchange are profiting directly from Russia’s occupation of Chechnya.
Alfa Group/Altimo Alfa is a huge Russian business group. Interests include Alfa Bank, the major private bank in Russia; the management company Alfa Capital; Alfa Insurance; Altimo (formerly Alfa-Telecom); supermarket chain Perekrestok and alcohol producer Smirnoff. The boss of Alfa, Mikhail Fridman, is Russia’s second richest man and one of the oligarchs who enjoys the Kremlin’s favour. Mr Fridman has stated his ambition to create a new global telecoms operator - a 'Eurasian Vodafone' Alfa's most famous deal was the sale in 2002 of half of its TNK oil assets to create a joint venture with BP. Previously, Alfa had fallen out with BP after using legal but dubious means to dispossess BP of its Russian oil assets. Alfa Group seems to be one of the most efficient business groups in terms of lobbying the Russian authorities. Former high-ranking officers of Alfa are the deputy director of administration Vladislav Syrkov, assistant to the president, the secretary of State Council Alexander Abramov, the head of department on internal policy of presidential administration Andrey Popov and the member of Federation Council Gleb Fetisov. The head of Alfa Bank, Peter Aven, is said to have frequent meetings with president Putin.
Conclusion The business culture recently developed by Russian corporations did not come from nowhere. It reflects the conditions of neo-liberal reforms during which it emerged. This business culture can be characterized by a combination of aggressive competition and intensive use of political connections to achieve a dominant position in the market. In this struggle for market domination, acquisition of assets is preferred to the expansion of production, developing new products or using innovative technologies. Moreover, everything that is presented as innovation, in reality is no more than an attempt to imitate Western practices (like the very expensive rebranding of the Russian-sounding VimpelCom to become 'BeeLine', a trick immediately imitated by a rival mobile phone company. Both campaigns were extremely costly, involved massive propaganda efforts and enjoyed very little success with the public. If we look at these campaigns more carefully, we discover that the basic mentality behind both of them was reflecting, not so much Western rebranding concepts, but rather the traditions of state propaganda, Soviet style. For campaigners in Russia, the practical consequences of the rise of the Russian oligarchs are quite visible and can be addressed immediately. One way that groups like the Moscow anti-corporate organisation Counter Corporate Centre (KOFR) have decided on is to single out a few concrete cases, attract public attention and turn these corporations into a model, showing how civil society in democratic countries can deal with these problems. This will involve public debate and civic action both in the West and in Russia. For the new anti-corporate movement in Russia that struggle will also be a test and a lesson of international solidarity. More information
Institute of Globalization Studies, Moscow (IPROG) www.iprog.ru/en/
Rosneft Perhaps the clearest example of the ethical issues posed by the Russian economy is Rosneft’s exploitation of oil wealth in Chechnya, where Russia’s second invasion has left the republic devastated and lawless. In January 2006 Amnesty International noted the grave human rights situation in Chechnya: 'Disappearances and abductions, torture, arbitrary detention and incommunicado detention of individuals in both unacknowledged and official places of detention continue to take place in Chechnya and neighbouring republics in Russia’s North Caucasus. Impunity remains the norm, as few perpetrators of human rights violations are identified and brought to justice.' But brutality by Russia’s occupying forces and their clients in the government go hand-in-hand with abuse of Chechnya’s main natural resource: oil. Rosneft controls Grozneftegaz, the company formed in 2000 by the Russian government to extract Chechen oil. Investors in Rosneft’s recent floatation on the London Stock Exchange are profiting directly from Russia’s occupation of Chechnya.
Alfa Group/Altimo Alfa is a huge Russian business group. Interests include Alfa Bank, the major private bank in Russia; the management company Alfa Capital; Alfa Insurance; Altimo (formerly Alfa-Telecom); supermarket chain Perekrestok and alcohol producer Smirnoff. The boss of Alfa, Mikhail Fridman, is Russia’s second richest man and one of the oligarchs who enjoys the Kremlin’s favour. Mr Fridman has stated his ambition to create a new global telecoms operator - a 'Eurasian Vodafone' Alfa's most famous deal was the sale in 2002 of half of its TNK oil assets to create a joint venture with BP. Previously, Alfa had fallen out with BP after using legal but dubious means to dispossess BP of its Russian oil assets. Alfa Group seems to be one of the most efficient business groups in terms of lobbying the Russian authorities. Former high-ranking officers of Alfa are the deputy director of administration Vladislav Syrkov, assistant to the president, the secretary of State Council Alexander Abramov, the head of department on internal policy of presidential administration Andrey Popov and the member of Federation Council Gleb Fetisov. The head of Alfa Bank, Peter Aven, is said to have frequent meetings with president Putin.
Conclusion The business culture recently developed by Russian corporations did not come from nowhere. It reflects the conditions of neo-liberal reforms during which it emerged. This business culture can be characterized by a combination of aggressive competition and intensive use of political connections to achieve a dominant position in the market. In this struggle for market domination, acquisition of assets is preferred to the expansion of production, developing new products or using innovative technologies. Moreover, everything that is presented as innovation, in reality is no more than an attempt to imitate Western practices (like the very expensive rebranding of the Russian-sounding VimpelCom to become 'BeeLine', a trick immediately imitated by a rival mobile phone company. Both campaigns were extremely costly, involved massive propaganda efforts and enjoyed very little success with the public. If we look at these campaigns more carefully, we discover that the basic mentality behind both of them was reflecting, not so much Western rebranding concepts, but rather the traditions of state propaganda, Soviet style. For campaigners in Russia, the practical consequences of the rise of the Russian oligarchs are quite visible and can be addressed immediately. One way that groups like the Moscow anti-corporate organisation Counter Corporate Centre (KOFR) have decided on is to single out a few concrete cases, attract public attention and turn these corporations into a model, showing how civil society in democratic countries can deal with these problems. This will involve public debate and civic action both in the West and in Russia. For the new anti-corporate movement in Russia that struggle will also be a test and a lesson of international solidarity. More information
Institute of Globalization Studies, Moscow (IPROG) www.iprog.ru/en/