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Russia: Analysis from Washington -- A Test Of Privatization

Washington, 19 July 2000 (RFE/RL) -- Russian businessman Boris Berezovsky's announced plans to resign from the Duma may represent a critical test of the widely-held proposition that privatization of state assets by itself can promote democracy and prevent the return of authoritarian regimes.

Berezovsky, one of Russia's economic oligarchs, announced on Monday that he was giving up his seat in the lower house of the Russian parliament because he does not want to be part of "the destruction of Russia." Specifically, he said he was stepping down because of President Vladimir Putin's attacks on other oligarchs, his efforts to rein in regional leaders, and his campaign in Chechnya.

There has been an explosion of speculation about why Berezovsky has taken this step. He was after all widely assumed to have played an important role in Putin's rise to power. Moreover, even in announcing his resignation, he indicated that he would vote again for Putin if elections were held today. And he has said that he hopes to create a "constructive opposition" to the Russian president.

Some have suggested that, by resigning, Berezovsky may be trying to preempt any government action against him. Others have suggested that he is simply trying to regain his influence with the Russian president. And still a third group have argued that Berezovsky is trying to use his own economic clout as a launching pad for a political career of his own.

But whatever Berezovsky's motives may be -- and his past record suggests that they are likely to be mixed -- his resignation and the notice it has attracted have the effect of calling attention to some of the problems with the assumption that privatization of state property by itself represents a bulwark of democracy in Russia and other post-communist countries.

Following the collapse of the Soviet system in 1991, Russian reformers and their Western supporters simultaneously proclaimed Russia a democracy and argued that the best way to prevent it from going back to the past or drifting off into some other kind of authoritarianism was the rapid and complete privatization of all state assets.

The logic for such an approach seemed compelling. On the one hand, by 1991, Russia had already conducted a competitive race for president, one that Boris Yeltsin won. And on the other, depriving the state of its control of the economy appeared certain not only to deprive the Kremlin of one of its most important levers of power but also to create alternative bases of power independent of the state.

Indeed, many in both Russia and the West deemed the creation of such independent power bases as a necessary and sufficient foundation for the rise of a vigorous civil society.

As a result, Russian reformers at the urging of their Western partners saw privatization as something more than an end in itself: They came to view it as the magic solution to the transformation of post-Soviet politics and society as a whole, as a process that took precedence over the development of the rule of law and over the promotion of other democratic institutions.

And because privatization was deemed to play such a central role, the reformers carried it out in ways that in many cases led not to the competitive market economy they wanted but rather to privatized monopolies less interested in the competitive pursuit of profit than in continuing to seek rents through corrupt but now privatized relationship with the state.

In short, the privatization campaign contributed to the rise of oligarchs like Berezovsky, people whose wealth depends on their ties to the state and whose need for these ties has made them deeply opposed to any radical break with the existing post-communist economic and political system.

By striking out on his own politically this week, Berezovsky may represent the kind of political breakthrough that many had hoped privatization would produce. That is, the wealth he has acquired may allow him to stand up to the state both personally and by mobilizing voters to advance his own political program.

But Berezovsky's move may also prove to be nothing more than a game within the Moscow elite, one that will confirm once again that privatization alone won't produce democracy or prevent the return of a new and potentially ugly authoritarianism.