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Fred Hiatt

Russian Motives

By Fred Hiatt
Monday, December 13, 2004; Page A21

Many experts have speculated about why President Vladimir Putin and his narrow circle seem so determined to lead Russia in a self-defeating direction. Explanations range from misplaced imperial nostalgia to personal insecurity and a need for absolute control to an overzealous response to Russians' understandable desire for stability. Increasingly, though, it seems another, perhaps more rational, motive should not be excluded: simple thievery.

As to the misrule, there can no longer be much doubt. Russia continues to benefit from high oil prices, the salvation of incompetent rulers all over the world, but on the most fundamental score card -- demography -- Russia faces catastrophe. Its population is dwindling; in just the first eight months of this year, its population declined by a half-million. The population is forecast to fall from 150 million when the Soviet Union collapsed to 120 million by 2030. Male death rates in particular have exploded, and life expectancy is lower than it was 40 years ago. AIDS and tuberculosis could make matters far worse; yet Putin pays no attention to these incipient epidemics and not much to the blossoming epidemic of alcoholism.

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The stifling of political and civic freedom under Putin is well chronicled. Television is again state-controlled, power is concentrated in the Kremlin, the renamed KGB harasses academics and citizen-advocates.

The regime is beginning to isolate itself internationally, too. At a forum of European and North American nations last week, Russia put itself in the remarkably Cold War position of vetoing a measure supporting Ukrainian democracy that the Ukrainians themselves put forward. Russia's only ally was Europe's only total dictatorship, Belarus.

None of this is remotely in ordinary Russians' interest, nor did it seem inevitable 10 or even five years ago. Then, many Russian leaders understood that they had nothing to fear and much to gain from living in a rule-based society, with democratic neighbors and growing ties to Europe. Reformers in Putin's government believed he wanted to move toward a nation governed by law, not fear or personal whim.

What happened? No doubt deep-seated habits of nationalist thinking, superpower envy and secret-police paranoia have played their role. But so, perhaps, at least among some Kremlin insiders, has the lure of riches -- the temptation of property redistribution.

At least it's hard not to entertain such thoughts as the destruction of Yukos Oil Co. unfolds. This was Russia's most profitable and efficient energy company until its chief was put in prison more than 13 months ago. Since then it has been socked with one tax bill after another -- the most recent last week -- until its bills to the government for 2001 and 2002 now exceed its revenue for those years, according to its American chief executive, Steven M. Theede.

Yet the government shows no interest in negotiating a payment schedule, Theede says. Instead, it has scheduled an auction of Yukos's core assets for Sunday, with a government-controlled company quite likely the only bidder, at a price as low as one-third of the assets' real worth. "Illegal expropriation," in Theede's words.

Some investors hope the gangster tactics will cease once Yukos is gone. But just last week tax authorities sent a $158 million tax bill to a cell phone company that has been feuding with the telecommunications minister, who allegedly (he denies it) has a financial interest in a competitor. (The tax authorities, at least showing a sense of humor, sent a $3 million bill to the competing company.)

The government in neighboring Ukraine had been running affairs the same way, selling off valuable assets to privileged insiders, and democrats there see a connection between Putin's support of Ukraine's government-backed candidate in recent elections and the similarity in economic systems. "What they have created in Russia is state capitalism," says Oleh Rybachuk, chief of staff to reform candidate Viktor Yushchenko in Ukraine, and an end to corruption in Ukraine would be "a vital danger" to that system.

The stifling of free press and political opposition in Russia may have been undertaken for other reasons, but it certainly facilitates Yukos-style official thievery. Who now dares object?

And here's the most depressing part: Once a regime becomes hooked on expropriation, no matter how gussied up with legal niceties, it can never voluntarily give up power. Rulers know that someone will be waiting to re-redistribute what they have claimed, and perhaps to usher them into the prison cells where their enemies have languished. Even if thievery was not the original goal, the criminal logic consumes all else.


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