Businessmen on the barricades
Mark Urnov, Academic Supervisor of the HSE Faculty of Politics, comments on the relations between the business community and politics in early 1990s in Russia.
This month’s Levada Center survey found that most Russians believe the 1991 failed coup was a conflict between elite clans, while only 10 percent believe it was a democratic revolution.
Mark Urnov, professor and dean of political science of the Moscow Higher School of Economics, said the reason for this disappointing perception lies in the fact that those events were driven by the elite, not by the masses. And the business community was in between the political elite and ordinary people, who were confused. “Business was very weak at that time. If they did something – it was only individually, not on an organized level,” he said.
“Business practically did not exist by that time, so it couldn’t play a huge role. It was an initial period, and the people who came were random ones,” said fraudster and pyramid scheme entrepreneur Sergei Mavrodi, who found his MMM cooperative back in 1989.
At the time of the coup, the contradictions between the new business class and Soviet officials were growing.
For example, cooperators (one of the few allowed forms of private venture under perestroika) weren’t allowed to sell their products in state shops. Forced out of official retail system, they had to sell their stuff on the streets, and were immediately accused of black market speculation.
“Businesses in fact played only an insignificant role, except that we were used as scapegoats and enemies by the people for all the failures of perestroika,” said Artyom Tarasov, the first Soviet-era millionaire, who set up his first venture to sell computers and software in 1987.
The whole country was standing in line for consumer products, Tarasov said. “‘There are no cigarettes in the kiosks – cooperatives bought them all! There is no soap in stores – cooperators bought all the soap! – That’s what the typical accusations were those days,” Tarasov recalled.
In the Russian Supreme Soviet, Tarasov was the only deputy who represented the cooperative community. “By August 1991, there were already 350,000 cooperatives all over the country,” he said.
The average monthly salary was 200 rubles at the time, and people like Tarasov were often a target for popular discontent. After Tarasov publicly spoke on the Vzglyad TV show that he had earned 3 million rubles, he immediately became a public enemy. His cooperative faced a police raid and Tarasov had to leave the country.
But Tarasov and other businesspeople laid the foundations for the private economy under Boris Yeltsin and his radical market reforms. Despite people’s confusion, there was a clear group within Soviet society that supported Yeltsin, as they already had something to lose. So they stood alongside Yeltsin in August 1991.
The so-called “business heroes” of the coup supplied food and water to the barricades, financed opposition newspapers and organized street demonstrations. The most prominent anti-putsch action, organized by Konstantin Borovoi’s commodities exchange, was a march with a tricolor Russian flag.
The flag so huge that hundreds of people carried it over their heads across the streets of downtown Moscow. That day, August 22, was later declared a national holiday, Russian Flag Day.
Urnov said that most Russian businessmen of the late 1980s and early 1990s were politicized and nonconformist. “For them, private business was a form of protest against the totalitarian system and they were more interested in politics rather than in business,” he said.
But many of those early businessmen failed to make the big time as business tycoons. Some turned to politics.
Borovoi and Irina Khakamada, who was also an active participant of the Augsust 1991 resistance, later lost their venture – the Russian Commodities Exchange. Both of them shifted to politics, fighting for more liberal rules for businesses.
In 1993, Khakamada joined the Party of Economic Freedom and became a Duma deputy. But she later quit politics as well after her SPS party lost influence. Later, a disillusioned Khakamada said that the first Russian businessmen were just amateurs, and that more professional and tougher people came after them.
Other businesspeople from the early 1990s fell victim to the “mafiya.” Among them was Ivan Kivekidi, the most prominent banker of that time, who founded the first professional bankers’ association. In 1995 he spoke out against organized crime and accused police of going soft of mafiya bosses. He was later poisoned with a substance put on his office phone.
Tarasov says he survived assassination and kidnapping attempts, but there were hundreds who didn’t.
The next wave of business leaders did somewhat better than the White House defenders.
Crucially, they were able to cut deals with the state under Yeltsin.
Such personalities as Vladimir Gusinsky, Alexander Smolensky, Boris Berezovsky and Mikhail Khodorkovsky – to name just a few prominent oligarchs – appeared on the scene.
Urnov said that the oligarchy appeared among those people, who unlike the first nonconformists built their wealth through deals with state assets.
In the chaos of the early 1990s, well-placed insiders could buy virtually anything for next to nothing. And they did.
But as soon as they were called “oligarchs”, their fate was determined, says Mavrodi, the convicted fraudster. “Others came, but they were the same as us – also easy come, easy go,” Mavrodi said.