World on Fire World on Fire World on Fire

by Amy Chua

  There are worse suggestions about Khodorkovsky. In 1998 the mayor of Nefteyugansk was murdered, not long after he publicly insisted that a Yukos subsidiary pay its local taxes. A year later Yevgeni Rubin, head of a company that had sued Yukos, had his car blown up. Meanwhile, as the car bomb scandal spread across Russia, Khodorkovsky accompanied then prime minister Yevgeni Primakov on a trip to meet President Clinton (never making it to the United States as Primakov turned his plane around over the Atlantic when bombing started in Serbia).27

  Probably the most notorious of Russia’s oligarchs is Boris Berezovsky, whom one Russian general has described as “the apotheosis of sleaziness.” “Slight and balding, with lovingly manicured hands and a fondness for larding his conversation with Latin phrases,” Berezovsky, who is older than most of the other oligarchs, holds a Ph.D. in applied mathematics and spent twenty-five years at the Russian Academy of Sciences.28

  With the introduction of markets, Berezovsky abandoned science for car sales. Starting in 1989, Berezovsky parlayed his Logovaz car dealership into an immensely lucrative and sophisticated international financial structure, complete with reputable Swiss partners, shell companies in Panama and Dublin, and tax havens in Cyprus and the Cayman Islands.29

  At the same time, without technically violating the law, Berezovsky preyed mercilessly on a naïve Russian public, which almost overnight had become an easy target for pyramid schemes. In the convulsive first stages of Russian capitalism, when wealth was suddenly permissible and a few of their compatriots became very visible millionaires, ordinary Russians were in a panic not to miss out on the rags-to-riches moment. Riches seemed to be there for the taking, if one only had the courage to make investments. In this atmosphere, Ponzi schemes of all sorts reached dizzying heights.

  In 1993 the Russian public poured $50 million into Berezovsky’s Avva Fund, which, according to a massive advertising campaign, would be used to develop a fabulous new Russian “people’s car” through a joint venture with General Motors (GM). Unfortunately for Avva’s investors, GM, alarmed by Russia’s rampant gangsterism and corruption, backed out, rendering Avva securities almost instantly worthless. For Berezovsky, however, the Avva scheme meant $50 million interest-free, to do with as he pleased.30

  Berezovsky quickly became Russia’s iconic nouveau-riche capitalist. Ostentatiously roaring around Moscow in a dark blue bulletproof Mercedes, flanked by bodyguards in Mitsubishi jeeps on either side, Berezovsky sent his two eldest daughters to Cambridge University and married a glamorous young second wife. In 1993, Berezovsky went for the real kill. Brazenly setting out to penetrate Yeltsin’s inner circle, he befriended the ghostwriter of the president’s memoirs, who in turn recommended to Yeltsin that Berezovsky publish the book. Berezovsky did—and (with the help of some Finnish companies) “did the Kremlin proud. The book was rolling off the presses within a few weeks and the color was brighter and the pages were thicker than the washed-out onionskin text that Russian publishers produced.” Moreover, Berezovsky published the book not as a business transaction, but as a “free” favor to the president. In return, Yeltsin gave Berezovsky a membership to the President’s Club, whose only members were close friends and family of Yeltsin. Berezovsky, an accomplished networker, used his membership to full advantage and within a matter of months had key connections throughout the Kremlin.31

  In 1994, using Gusinsky’s NTV network (which often criticized Yeltsin) as a foil, Berezovsky convinced the Kremlin to privatize ORT, the state-owned television network, and to give Berezovsky control of it. Shortly afterward, he acquired control of the state oil company Sibneft and Russia’s national airline Aeroflot. (Swiss authorities later alleged that Berezovsky skimmed $200 million from Aeroflot’s earnings for himself and the Yeltsin family. Berezovsky denies these allegations.) In 1997, Forbes named Berezovsky Russia’s wealthiest tycoon.32

  But that was during the Yeltsin era. Under President Vladimir Putin, it was Berezovsky’s (also Jewish) protégé and former partner Roman Abramovich who, as the Washington Post put it in 2001, became “the man to see in Russia.” An orphan before the age of four, Abramovich has in the last several years orchestrated a takeover of the world’s richest aluminum industry and bought out Berezovsky’s share of the ORT television network. Moreover, on Christmas Eve 2000 the thirty-four-year-old Abramovich was, surreally, elected the new governor of Chukotka, a miserable, poverty-entrenched, below-freezing region in the remotest corner of Russia’s Far East, just across the Bering Strait from Alaska. Abramovich’s campaign strategy? Spending tens of millions from his own pocket airlifting food, boots, and parkas for the locals and flying thousands of them to sunny beach vacations. When asked about his motives, Abramovich says that he has grown tired of simply making money. “I do it for pleasure,” he explains.33

  Why were so many of the oligarchs Jewish? How did it happen that, even as Russia sank from Soviet superpower to post-perestroika immiseration, members of a minuscule “outsider” ethnic minority came to wield almost unimaginable economic and political power?

  Certainly the answer is not that Boris Yeltsin had a special fondness for Jewish interests. Yeltsin agreed to loans-for-shares because he desperately needed capital, both to salvage a collapsing economy and to finance his reelection. And the soon-to-be oligarchs had capital. By the early nineties they had already accumulated far more wealth than anyone else in the country.

  For one reason or another, for better or worse, in Russia’s nearly anarchic transition to a market economy, Jews rose to the top. Long before most Russians—including the country’s leaders—had any real understanding of how markets work, the six Jewish oligarchs mastered the game. These men started with next to nothing; most were actually disadvantaged by their Jewish ancestry. They were not particularly sophisticated. They may have been ruthless, but they were plainly smart, unsurpassed entrepreneurs who built their empires from scratch.

  The Seventh Oligarch

  The contrasting story of Vladimir Potanin, the non-Jewish oligarch, provides a stark counterpoint. Unlike the others, Potanin essentially inherited his wealth from the former Soviet Union. The well-connected son of a senior Soviet foreign trade official, Potanin was privileged all his life. During the Communist era he traveled widely with his father, to places like New Zealand and Turkey. He never had to barter theater tickets or hawk blue jeans. Instead, he attended Moscow’s Institute of International Relations, the prestigious training ground for Soviet diplomats, then began his climb up the bureaucratic power structure. In 1992, Potanin started a bank. It was not especially successful. Yet when Russia’s state-owned International Bank of Economic Cooperation collapsed, and the panicking Kremlin needed someone to take over its accounts, it was perfectly natural that they chose the golden boy Potanin. “He went straight from a promising Soviet career to a $300-million bank,” writes Freeland. “Even in a country where most fortunes were built on the back of government connections, Potanin earned an enduring reputation as the nomenklatura’s favorite capitalist, the tycoon who had been appointed by the old elites, rather than making his own way.”34

  In 1994 it was Potanin who conceived of loans-for-shares and, after getting the other oligarchs on board, it was Potanin who sold the scheme to the Kremlin. He was, after all, one of them: an archetypical Russian with a pug nose, pink skin, and sandy hair, and just the kind of “home-bred tycoon” Yeltsin’s pro-market reformers had hoped the market revolution would create. With the cash-hungry state behind them, Potanin and the other oligarchs wrested control of Russia’s crown-jewel natural resource companies away from their (also highly corrupt) “red” directors. The oligarchs divvied up the loot: Potanin grabbed Norilsk Nickel, Russia’s metals colossus, Khodorkovsky took Yukos, Berezovsky and Abramovich got Sibneft, and so on.35

  All the oligarchs were cold-blooded. They cheated foreigners and compatriots alike, displaying utter disregard for Russia’s welfare—and in some cases, human life. In these respects, however, the oligarchs essentially personifie
d Russia’s agonizing, lawless transition to a market economy. The capitalism that emerged in Russia beginning in the 1990s was not the Pareto-optimal paradise of efficient, voluntary market exchange that Western economists envisioned. Instead, in the words of John Lloyd, Russian capitalism was “a deformed and ugly beast.”36 Nevertheless, the fact remains that Russian capitalism was made and is still dominated by a tiny handful of immensely successful entrepreneurs, most of them Jewish.

  Retaliation, Reform, and Mass Resentment

  For at least two of the oligarchs, life has gone downhill since former KGB official Vladimir Putin came to power. A week before being elected president on March 26, 2000, Putin warned Russia’s billionaires that their days of running the country were over: “[T]hose people who fuse . . . power and capital—there will be no oligarchs of this kind as a class.”37 So far, Putin’s main targets have been Vladimir Gusinsky and Boris Berezovsky, both media moguls who dared to cover the president unfavorably. Indeed, many Russia watchers are concerned that free speech in Russia is under serious threat. According to The Economist, for example, “Gusinsky, owner of NTV, the only independent national television station, was jailed on June 13th on a spurious-sounding allegation of fraud. Before that, the press minister had called him a ‘bacterium,’ anti-Semitic remarks were broadcast about him on state-controlled television and masked police had raided his headquarters.”38 Gusinsky, widely detested in Russia, is now in exile.

  Also in exile is Gusinsky’s former rival Boris Berezovsky, who is lashing back at Putin from his new home in London. According to one source, Berezovsky is planning to release a documentary “proving” that Russian security forces were behind a series of bombings that in 1999 killed over three hundred people in Moscow and other major Russian cities. Berezovsky claims that the bombings were conducted to incite hatred against Chechens in a calculated effort to rally public support for Putin.39

  The consensus in Moscow, however, is that the popular Putin has nothing to worry about. “People hate Berezovsky here,” explains one Moscow journalist. “The rating of [Russia’s security police] is way higher than Berezovsky’s own rating, not to mention the president.” Stanislav Kucher, another Moscow journalist, is even less sympathetic. In his view Berezovsky is simply rankled “that he no longer can influence the development of this country.” “He was absolutely sure that had he not been Jewish he would make president. And of course, he would say that with bitter regret.”40

  Meanwhile, the oligarchs remaining in Russia have, at least in appearance, shaped up under the Putin presidency. In a recent interview with Matthew Brzezinski, Vladimir Potanin waxes eloquent: “We are coming to the end of the first phase of Russia’s capitalist transition: the accumulation of capital.” Now, in the “second stage,” we must make our holdings “profitable, restructure them into viable concerns, change the system.” “What was okay two years ago is no longer acceptable.”41 Similarly, Mikhail Friedman “applauds” the government’s recent economic and rule-of-law reforms, “but wishes they could be pushed through more quickly.” And Mikhail Khodorkovsky in a recent interview with the Los Angeles Times: “We used to think that all that mattered was to have good production figures. We considered other matters less important: the environment, investor relations, public affairs, corporate governance as a whole. And suddenly it hit us over the head, hard, and we realized we were wrong.”42

  The Jewish oligarchs in particular are keenly aware that they are increasingly at President Putin’s mercy. According to the Union of Councils for Soviet Jews, Putin “is gaining popularity by what is seen as a crackdown on widely hated, mostly Jewish, tycoons.”43 The most recent shakeup occurred in January 2002, when Roman Abramovich, an oligarch formerly favored by Putin, was replaced by Viktor Geraschenko as Russia’s “top business leader.” According to journalist Andrei Grigoriev, Putin’s move “did not make Abramovich any poorer but his weight did go down.” As recently reported by the National Conference on Soviet Jewry, political anti-Semitism appears to be on the rise in Russia, with prominent politicians, particularly those associated with the Communist Party, employing anti-Semitic rhetoric in parliamentary sessions, on television, in newspapers, and at mass rallies in order to further their own political ambitions.44

  As is sadly so often the case with market-dominant minorities, struggling ordinary Russian Jews, with no political connections or billion-dollar fortunes, bear the brunt of Russian anti-Semitism. According to the chairman of the Glasnost Public Foundation in Moscow, a majority of Russians today believe that “they have been impoverished at the expense of rich Jews.”45 (Along with the oligarchs, many of the Yeltsin government’s key market reformers—including former prime minister Sergei Kiriyenko, shock therapy advocate Yegor Gaidar, and the now-despised “privatization tsar” Anatoly Chubais—are also well known to be part Jewish.)46 Russian websites today are filled with references to the “zioncrats” and “bloodsucking Yids” who “hijacked the privatization process,” “control the economy,” and are “stealing the wealth of the Russian people.”

  The financial collapse in 1998 brought a burst of popular anti-Semitism, including the bombing of synagogues, the beatings of two rabbis, a number of neo-Nazi marches in Moscow, and the desecration of Jewish cemeteries around the country. Russian National Unity, a paramilitary and virulently anti-Semitic extremist group, is thought to have at least 6,000 active members and up to 50,000 nonactive members, spread across twenty-five Russian regions. One of the group’s leaders was recently sentenced to two years in prison for inciting ethnic hatred. At the trial a Russian Orthodox priest testified that according to the Jewish Talmud, Jews “kill children, gather blood” and “use it to make matzah.”47 Around the same time, hundreds of posters appeared in the Siberian city of Novosibirsk with the slogan, “Jews are Rubbish!” In the Kuban region of Krasnodar, mailboxes were filled with leaflets saying: “Help save your dear, flourishing Kuban from the damned Jews—Yids! Smash their apartments, set their homes on fire! They have no place on Kuban territory. . . . Anyone hiding the damned Yids will be marked for destruction the same way. The Yids will be destroyed. Victory will be ours!”48

  Obviously, Russian anti-Semitism is not caused by economic liberalization or capitalism. As discussed earlier, there was plenty of anti-Semitic sentiment and violence long before 1989, both during the tsarist era and in the former Soviet Union. Nevertheless, the fact remains that the chaotic, post-perestroika transition to markets has generated starkly concentrated and visible Jewish wealth, bringing to the surface tremendous ethnic resentment and hostility among the “indigenous” Russian majority. According to recent polls, most Russians are deeply “ambivalent” about Jews and thus susceptible to manipulation by politicians, particularly during periods of economic downturn and distress. In one independent survey of 1,509 Muscovites, 52 percent opposed Jewish social-political organizations operating in Russia, while 34 percent favored quotas limiting the number of Jews holding leading positions in Russia. “The basic problem is the economic situation,” Adolf Shayevich, Russia’s chief rabbi, said a few years ago. “People have no work and no prospects. Historically, that’s when Russians look for scapegoats.”49

  Even today, with Putin popular and the economy on the upswing, anti-Semitism shows no sign of waning. On February 28, 2002, the Moscow Times reported that a new political party was formed, calling for a better deal for ethnic Russians and explicitly blaming Jews for stealing the country’s wealth. “Look on the list of Russia’s richest people,” urged Vladimir Miloserdov, head of the party’s executive committee, “and you will see no ethnic Russians among them.” The head of the new party is Gen. Igor Rodionov, who served as defense minister under Yeltsin. His policy platform: The oligarchs “must return what they have looted in Russia and publicly repent to the Russian people for the crimes that Jewish terrorists and extremists have committed.” The new party expects to be registered with the Justice Ministry in May 2002.50

  CHAPTER 4

  The
“Ibo of Cameroon”

  Market-Dominant Minorities in Africa

  Of all the world’s regions, scarcity-stricken Africa has the greatest abundance and variety of market-dominant minorities. Some of these minorities are indigenous Africans. Others are “entrepreneurial” immigrant groups like the Indians or Lebanese. Still others are former European colonizers. All are deeply resented and, at times, the objects of homicidal fury.

  The problem is starkest in southern Africa. In country after country, a handful of whites engorged themselves on natural resources and human labor, creating enclaves of spectacular wealth and modernization, surrounded by mounting, justifiable hatred among the indigenous black majority. The typical result has been horrific violence.

  A tragic example is Angola, now largely forgotten in the West. For many the country, with its shocking death tolls and endless atrocities, is simply too depressing to think about. But Angola’s problems can be traced to a familiar colonial history.

  Under the Portuguese, Angola suffered from one of the most oppressive forms of colonial rule: Until the nineteenth century, Portugal used the area as a “slave pool” for its more lucrative colony in Brazil while plundering Angola’s precious gemstones and metals. Even just thirty years ago, 335,000 Portuguese colonialists ruthlessly ran and controlled the virtual entirety of Angola’s economy. In Another Day of Life, Ryszard Kapu´sci´nski describes their almost overnight departure in 1975, when Angola was granted independence in the midst of rising chaos and violence:

  At the airport in Lubango a group of terrified, sweaty, apathetic Portuguese sat on kit bags and suitcases beside their even more terrified wives, and their children asleep in the women’s arms. They rushed for the plane before it had even shut off its motors. . . .