OLIGARCHY DEFICIT

Now we are witnessing only the birth of oligarchy, while candidate oligarchs flex their muscles from time to time. What can prove the existence of these muscles is the acute social interest in Ukraine and a massive onslaught on oligarchs by the state authorities in Russia. Settling accounts among oligarchs themselves requires assessing their own value, amassed capital, or political weight. Then what do they defend? Life? Clan structure? I think not.

Paradoxical as it might sounds, they are defending a strategy of social development, sometimes perhaps unconsciously. This is remotely similar to a sign of the future maturity — incomplete maturity, as we would say about an adult — as the high-school certificate awarded a pupil after ten years of schooling. In this way oligarchy is now taking a sort of pop quiz after years of independence.

WHAT IS BETTER?

Two strategies have clinched in a struggle of life and death. One is building the economy on a state-run foundation, the other is laying a private one. Jumping the gun, I must say both are makeshift affairs.

The strategy of stringent state control will ensure a better and fairer taxation, as well as a chance to occasionally pay coal miners their back wages (it is impossible by definition to pay off all arrears). This means wages and pensions will be paid on time, and nuclear fuel and fuel oil will be bought at any rates. The authorities will be able to make ends meet, although with difficulty, eking out an existence and scaring the people with the eternal preparing for winter and with our customary power outages. Things will be placed in order and everything will look like a field kitchen during an army exercise, when almost every soldier is served gruel and will not die of hunger. The gruel will be dished out for all to see, so justice will be transparent. The state’s mission will be fulfilled.

And then? Treasury resources will be distributed, as always, further down. And, as these resources go from one bureaucratic level to another, they will be, as always, stolen. And where the overseers will be standing the electricity will go out simply because of our inefficient, old-fashioned, and Soviet-style management. In other words, the electricity will either vanish into thin air or slip through our fingers.

Electrical energy will remain on a its miserable and pitiful level. But there will be fewer complaints because our people are patient and will believe that coal will be delivered soon and light will be switched on in three days. Thank God for that.

But what if the strategy of the growing private business takes the upper hand, and not only oblenerho (regional power-supply authorities) but also the generating facilities have been privatized? Private business will entangle this sector like an octopus, keeping it on a starvation diet, barely covering the essential costs, and accumulating everything left in order to save for a rainy day. The oblenerhos will not be ruined, of course (otherwise, the owner will simply change, for business tends to stick to simple laws), nor will they prosper.

Meanwhile, private business will be able to amass, little by little, enough funds to, say, modernize the sector, as the Germans are going to do following the shutdown of their nineteen nuclear power plants.

But will ours want to do so? For big business can hit upon the heretic capitalist idea of transfusing capital at their own discretion, pumping it somewhere else, for example, into the timber industry of Transcarpathia, toll roads, or southern Crimean resorts.

Big money is not only the object of envy but also the ability to think big.

The only thing you need is only global-scale thinking. Such people were called oligarchs in Ancient Greece. Translated literally from Greek, oligarchy means power of the few or, in the times of reform, power of the best. In the era of Pericles, they managed to turn a fragmented, backward and war-ravaged country into a prosperous paradise.

I have a quite thick book, The Chronicles of Humanity, before me. Democracy and oligarchy keep replacing each other from page to page. And if you take a closer look, you will see oligarchy emerging in the hard times of wars, reform, and restructuring. But when everything calms down, oligarchy would give way to democracy. This is the way history leapfrogs onward. Do we have adequate grounds to cancel this history or think that we are at the end of all history?

HOW SHALL WE FIX UKRAINE?

Only big business can shoulder large-scale restructuring projects, and this country does not have it. Even if we are given 100 billion, there is nobody to pick it up and turn it into something rational.

That big business is now going through its birth trauma before our eyes is indisputable. Does it hurt to see this? Then turn away. But should it come into being one way or another or not? If there is no big business, no big property owners in the country, then who will be the crucial figure to move mountains?

The state? It simply messes things up. In any case, the state is not earmarking budget money for the construction of factories, roads, and resorts.

The common people? After millions of our compatriots have had more than their share of happiness as shuttle traders, when 98% of them wound up ruined and disappointed, and cheerfully left that dog-eat-dog atmosphere (as the wounded leave the battlefield), these desperate people are unlikely to be the motors of the cement, fishing, or steel-making industries of our far from healthy economy.

Small traders? The owners of hairdresser’s, restaurants, shops, and filling stations? Perhaps only at a soiree of humor and satire.

Only big business is able to move mountains.

I am gaining an impression that Ukraine is the first guinea-pig country in the history of mankind, subjected to an economic experiment called Creation of the Good Life. As if all the other 230 countries were still living in greenhouses. It always takes capital to renovate a house. It cost Germany DM400 billion to bring it round after reunification. It took Poland $80 billion to awaken after its lethargic sleep, and then thanks only to the Pope’s divine support. China has recovered in the past twenty years, having footed a $200 billion treatment bill. These are the kind of figures that make it possible to move mountains in large countries.

Even Mexico, also now reforming its energy sector, has found $50 billion in foreign investments.

You will ask if money is really of paramount importance.

No. Coming out of a crisis requires one more thing: the availability of people who think globally and know how to make their economy a champ.

Of course, the society of any country flies into a rage when it sees that power could be seized by unpredictable oligarchs (they will never have grace on you). They have no goldfish in the aquarium. They are sharks themselves. For they are appropriately called the sharks of business.

In childhood, I was always puzzled but too embarrassed to ask: if sharks are so harmful, why not wipe them out? Why does everybody curse them but does nothing at all? No shark, no problem, or not? But even the greatly feared poisonous snake has its justification: its venom is sometimes useful. As to sharks, they have won no good words even in fairy tales. They are tolerated. They may even be performing some function of their own. And if nature needs predators, as my biology teacher taught me, to eat up the weak and ailing in order to revitalize the whole herd or flock, then maybe there is something similar in business? Do ineffective and money losing small and medium businesses not exist? There are thousands with their snouts at the budgetary trough, robbing the impoverished population of its last crumbs.

Do you wonder who will stand to gain if the oligarchs begin to rule this country? The first to gain will be second-wave oligarchs who will sweep away the original ones. And who will gain if the oligarchs are to be swept away by the wave of bureaucratic envy and jealousy? Again, the second-wave oligarchs will.

WHO WILL LOSE?

I have reached this point and then thought: what about the people? But where, of all countries, can the people gain? In affluent America? But they also have their strikes and shoot-outs. And they envy the rich just like here. Just look what they’ve done to Bill Gates. They are tearing down, for no apparent reason, the mighty computer empire he built with his own brains. No one loves the rich any more than sharks anywhere in the world.

People are the same everywhere: they expect somebody else to carry out reforms for them. The more so that people do not like reform. But who likes a house renovation?

Do you know why the oligarchy of Ancient Greece has gone down in history? Because it emerged at the right time, put everything in order, streamlined the structure of society, and accumulated the strength to conquer the world and make science and art bloom. Judging by the fragments that have reached us, culture truly ruled supreme there. After fulfilling its historical task, the oligarchy melted down and vanished into thin air.

We have already mentioned Artiom Tarasov and German Sterligov with his little dog Alice. Where are they now? They fertilized the nascent bourgeoisie and were then sacrificed. Now, after stomping the burial ground down, history is placing the bar a cut higher in search of new sacrificial lambs.

DO NOT CONFUSE AN OLIGARCH WITH THE RICH

A rich man only has some property of his own which he increases and seeks profit from by expanding production, cutting costs, etc.

An oligarch never contents himself with profit and capital alone. His life and interests are aimed at wielding power and trying to improve his natural habitat. This habitat may be a country, a region, a city, an industry, or the world. Power is a stronger and more stable instinct than money. Oligarchy is the fusion of financial capital and power. This is a phase currently typical of the whole world.

Huge corporations are being merged into multinational monsters. It would be naive to think that the owner of Motorola just makes a merger deal with that of Sony, with the respective governments being unaware. They know. Everybody does. What is at stake is the security and survivability of the country and its economy. Oligarchs are not interested in their country being weak. Nor are they interested in substandard goods and poor workers, for this can result in lost markets and strikes.

As Bill Gates said after the court ruled to break up Microsoft, which caused his shares to plummet, his wealth to dwindle, and himself to quit as Microsoft president, “You don’t have to be a director to rule the world.”

WHAT AWAITS THE UKRAINIAN OLIGARCHY?

An upsurge of natural activity. A great country cannot do without captains of industry, bad or good, more photogenic or less, more moral or less. In a complicated period of transition, business people are of greater value than romanticists.

WILL THE OLIGARCHY LIVE FOREVER?

Of course not. The first wave will bear the main brunt of public rejection and governmental suspicion. But the fruits will be reaped by the second wave. As to the third wave, it will not interest or provoke much allergy in the population at all.

Much has already been written and said that money is only the middle, not the end, of the road. If the young Klychko brothers have certain motives to beat Mike Tyson and Asiya Akhat to outdo Vanessa Mae, why not try to support the motives of people who wish to speak on a par with Anatoly Chubais or Rupert Murdoch?

I wonder why do you, dear readers, think we, Ukrainians, always lose in trying to play grownup games with big Western businessmen? Can you guess why we have lost such a big business as aircraft-building (our excellent An-70), sugar, metallurgy, and armaments? It is because we have nobody to sit at the negotiating table. We are simply in different weight categories. Have we produced our own Murdoch, Agnelli, and Soros? Or Chubais, Berezovsky, and Luzhkov?

Nobody even knows for sure what they own. Nonetheless, they have clout in society and influence political decision-making, the economy, and cadre policies. They also have charisma, i.e., a special inimitable image of their own. And they do business. They don’t want to deal with weaklings and only respect the power of business. Thus it is only on the terms and conditions existing in the world business league that it is possible to establish foreign ties and try to win something in negotiations.

The current crisis in the electricity, sugar, and tourism businesses was caused by the absence of people able to manage these structures, not because they are so hard to privatize.

This country lacks top managers capable of managing large- scale business facilities. There are millions who can row a boat across the lake. But we do not have those who can steer an ocean liner through storms and hurricanes. At best, they are only arising.

A big state should have big- time managers doing big business. A traditional way to furnish such people in a developing country is to invite foreign top managers for the key posts. This helps domestic personnel to acquire the necessary skills, as a rule, in 10-15 years and then, in the course of time, to supplant the Western invitees. This quickly puts things in order, and a hitherto developing country becomes a leading one. But this is not the way our proud mentality works.

CAN WE FOLLOW THE EXAMPLE OF AT LEAST SOME FLAGSHIPS OF THE WORLD OLIGARCHIC FLEET?

Certainly, there are some people to look to.

Gianni Agnelli is a global-scale Italian oligarch whose might is comparable to that of the Pope and the prime minister. He is the uncrowned king of Italian business and media. Everybody deifies him. He is the public idol. He owns FIAT, Juventus, Cinzano, Formula-1, and Ferrari. What vividly testifies to the respect he enjoys throughout the world is the fact that the next Olympics will be held in Turin, Agnelli’s home town and imperial stronghold.

George Soros, the world-scale Hungarian-American financial tycoon, triggers the movement of huge amounts of money from one continent to another, which can only be compared to the tectonic movement of the continents themselves. He influences the cardinal decisions of the governments he consults. He invests colossal funds in such universally humanitarian programs as building an open society as well as science and education projects of practical value for millions of people.

Now there are seven million millionaires and 514 billionaires in the world. The tendency is for the number to double each decade and to rise ten times in developing countries like Ukraine.

THE COMMON PEOPLE ARE INDIGNANT THAT OLIGARCHS CONDEMN THEM TO HARD LABOR

In this case, one should hurl the first stone at the oligarch Ford and stop driving his cars because it was he who invented the conveyor belt, forcing his workers to work hard. But he also paid them handsome wages and let them buy the cars they made at dumping prices. While making his workers sweat, he also organized the first kindergartens for their children. There was a long line of aspiring job-hunters standing by Ford’s gate.

Historically, this was undeniable progress. And can we imagine that Ford did not make an impact on government decisions? In the West, even trade union bosses are considered part of the oligarchy, although they are supposed to defend the ordinary workers’ interests. But it is not trade unions that create jobs. This is the function of employers. The current situation in this area is like this:

We already have thousands of enterprises where ordinary workers get, or, to be more exact, earn, over 1000-3000 hryvnias a month. They manufacture prefabricated glass windows and juice, deliver cargo, build houses, grow onions, lay telecommunication lines, put up dish antennas, and create computer programs and Internet sites.

If we divide the economy into new and old, the new one is showing more encouraging results. Obviously, irritated public opinion prefers everything to be done as if by itself, without those ostensibly sinister oligarchs. But, like it or not, it is they who produce new technologies and create new (highly- paid) jobs.

Most of the population looks with disfavor on the oligarchs grabbing enterprises, especially the cherries. A good comparison indeed, because many of us would buy tasty fruit and see what happened to it if they were not eaten in a week. They rot away and the flies swoop on them. The same applies to enterprises. And it does not matter that they were set up at government or even the people’s expense. The point is they are now rotting away, and neither the state nor the people have the means to revitalize them. If the oligarchs had awakened earlier and seized sugar-beet plantations, tourist centers, and mechanical engineering plants, ten million Ukrainians might have now highly-paid jobs and the country would have a UAH 400, not UAH 40, billion budget.

In any case, our neighbors, the Russians, who have also been harassing and ostracizing their oligarchs (although words and deeds differ), can say with satisfaction that their oligarchs have seized television and set up NTV much to the pleasure of the country in general and this company’s employees who no longer complain about low pay. The oligarchs have seized oil and gas production: as a result, the latter has blossomed instead of withering and extended its tentacles far abroad, thus increasing their country’s wealth. Incidentally, high wages are being paid there not only to Russian nationals but also to our compatriots who still dream patriotically about the time when “this thing” will occur in Ukraine, even by way of seizure. There, the oligarchs have also seized and stabilized the banking system which is now functioning quite effectively.

It is not an unfounded accusation that the oligarchs have been implicated in smuggling capital abroad. This can only be regretted. However, in China and Chile, which also lost their original chance to keep capital from fleeing, this capital is now returning. I wish we had not been so slow, I wish our people could have lived through this transition period easier, without all this suffering. But better late than never. Hence the presidential decree on capital legalization is both timely and indispensable.

The whole situation can be regarded as paying for freedom, the freedom we at first failed to make use of, as if we had been small children presented with a nice toy.

(To be continued)