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behind the walls of Moscow's Kremlin, Russia has been ruled
by czars, by Bolsheviks, and more recently by democratically
elected presidents. New York Times reporter Sabrina Tavernise
says that outside the Kremlin walls a new power has emerged:
money. Tavernise takes FRONTLINE/World on a tour of the
brave new world of Russian capitalism - from the young entrepreneurs
remaking Moscow to the billionaire tycoons, or "oligarchs,"
the Kremlin regards as rivals for power.
What's it like to be young, Russian and newly affluent? Tavernise
meets 30-year-old Vladislav Dudakov, who got his start as a
soldier in the Red Army, assigned to an elite unit guarding
Lenin's Tomb. Then, McDonald's came to town, and Vladislav switched
allegiances. He worked his way up from floor sweeper at McDonald's
to store manager, after being sent to Hamburger University in
Chicago. Ten years later he went to work for an investor who
wanted to open a chain of Starbucks-style coffee shops in Moscow
- a revolutionary enterprise in a country where the coffee had
been undrinkable. Western business ideas are reshaping everything
in Moscow. No more sour expressions on the faces of Russian
waitresses, says Dudakov, these days his waitresses must learn
to "smile, smile, smile."
Andrei Gnatiuk is another prosperous Muscovite, the owner
of a new type of business in Russia -- advertising and political
consulting. He says it is people like him who will bring a new
order out of the chaos of post-communist Russia. According to
Gnatiuk, Russian capitalism is still in its wild phase. For
those with money, everything is for sale, even the law itself.
He argues that Russia is rapidly trying to build a stable free
enterprise economy -- something that took the United States
centuries. "We have yet to arrive at a society governed by the
rule of law," concludes Gnatiuk.
In the ten years since Russia chose capitalism, Moscow has
been transformed into a party for the young and the rich. The
nouveau riche are famous for their indulgent excesses, with
high fashion, luxury automobiles and a nightlife that rivals
that of Paris or London. But beyond the bright lights of Moscow,
the average salary in the country is just $4,000 a year. Moscow
is an enclave where fortunes are being made.
Rafael Filinov, a 33-year-old real estate speculator, sees
Moscow and Russia as two entirely separate entities. "Don't
be confused," he tells Tavernise, "Moscow and Russia are two
different countries." He's keenly aware that the prices that
the Moscow rich are paying now for real estate with views of
the Kremlin would simply not be believed by any Russian "babushka"
out in the country.
For ordinary Russian citizens, billionaires and the exclusive
boutiques where they shop are a world apart. Most Russians are
poorer since the fall of the Soviet Union. They despise the
rich and powerful for having grabbed the crown jewels of the
Soviet economy - factories, oil fields, gold mines. The profound
changes have left many Russians disoriented. Their country is
no longer a great world power. Their economy has shrunk to the
size of Poland's. Doctors have to moonlight as cab drivers.
"It is as if they are immigrants in their own country," says
Worst off are the elderly, whose pensions do not even begin
to cover the cost of modern life. On the streets Tavernise finds
a 70-year-old woman, a former foreman at a Soviet shoe factory.
She is selling a scrap of fur from an old family coat to supplement
her pension. "Every country needs rich people," she says. "They
have a lot to contribute. We just wish that they would give
a tiny bit back to us."
Russia now has 17 billionaires, more than any country except
for the United States, Germany and Japan. At the very pinnacle
of those rich people is 40-year-old Mikhail Khodorkovsky, the
principal owner of Yukos, Russia's biggest oil company. Khodorkovsky
is worth an estimated $8 billion, his company $45 billion. His
recent arrest on charges of tax evasion and fraud puts him at
the center of a new power struggle between big business and
In an exclusive interview with Tavernise, Khodorkovsky admits
that a decade ago he conducted his business in a careless, if
still legal, way. At the time, he says, "Russian law allowed
us to do things that were unthinkable in the Western business
world." But now he insists he not only obeys the law but also
adheres to good business ethics. Despite his current struggle
with the government, and the fact that he has been financially
backing opposition parties, Khordorkovsky claims he does not
deal in politics. "You can do business, or you can do politics,"
he tells Tavernise. "But you cannot play both games."
The Russian government is wary of the economic power concentrated
in the hands of men like Khodorkovsky, and of their political
ambitions. President Vladimir Putin told the so-called "oligarchs"
who had surrounded former President Yeltsin that they could
keep the wealth they had grabbed as long as they stayed out
One of the country's best-known oligarchs, Boris Berezovsky,
is currently living in London, where the British government
has granted him political asylum. At the peak of his power Berezovsky
owned a television network, Russia's biggest car company and
its national airline. Now he's wanted in Moscow for fraud, and
says Kremlin agents are plotting to assassinate him.
On her way to Moscow, Tavernise met up with Berezovsky in
London, just as a new Russian movie, "Tycoon," was released,
based on Berezovsky's controversial rise from math professor
to powerful billionaire. When asked about the business practices
of the Russian oligarchs, he acknowledges that they did make
some "mistakes," but also likens the oligarchs to rich Americans
who became active in politics, such as Nelson Rockefeller. He
maintains his innocence, saying "We didn't break any laws, but
if you call giving bribes a crime, then all oligarchs were criminals."
Does Berezovsky feel guilty about his fortune? "I don't regret
being rich," he tells Tavernise. "I only regret that there are
so many poor." Moreover he says, "I believe oligarchs are true
heroes. Because of us, Russia was put on a new course."
The oligarchs may have put Russia on a new course, but as
Vladimir Seminov, a communist agriculture minister turned capitalist
farmer, sees it, that course is still perilous. The man whose
greenhouses provide lettuce and tomatoes to McDonald's in Moscow
warns that the oligarchs must learn from President Roosevelt's
New Deal in the Depression - capitalism must be reformed and
provide for the poor to avert rebellion. "Russia will not survive
another revolution," he says.
Not long after Tavernise interviewed the richest man in Russia
- Mikhail Khodorkovsky - the Russian government arrested him
in a dramatic, military-style raid on charges of business corruption.
Khodorkovsky's supporters say his arrest was politically motivated
- Putin's way of appealing to voters before Russia's parliamentary
elections in December - showing that he was willing "to spear
an oligarch." But the arrest of such a prominent businessman
also raises fundamental questions about how Russia will operate
politically and economically in the future.
Leaving Moscow, Tavernise has no doubt that Russia will continue
to pursue a capitalist course, but that the rivalry will continue
between the Kremlin and the oligarchs, and that foreign investors
- including companies like ExxonMobil - will be more cautious
about buying into Russia's unsettled oil companies.
Videographer / Editor
Tycoon Courtesy Of New Yorker Films
Produced In Association With The
New York Times
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