Putin by Philip Short

Author:Philip Short [Short, Philip]
Language: eng
Format: epub
Tags: Biography & Autobiography, Presidents & Heads of State, Political, Political Science, World, Russian & Former Soviet Union
ISBN: 9781627793674
Google: AY9nEAAAQBAJ
Publisher: HenryHolt
Published: 2022-07-26T20:26:57+00:00

* * *

The toxic combination of bureaucracy and corruption, was the principal, but not the only, cause of the failure of Russia’s economy to develop to its full potential. Inadequate protection of property rights and legal abuses deterred foreign investors and persuaded Russians who were able to do so to park their gains offshore.

Even so, GDP growth averaged 6.6 per cent annually over Putin’s first two terms. Productivity increased by more than 5 per cent a year, inflation remained modest, each year saw a substantial trade surplus and by 2008, the Central Bank had the world’s third-largest foreign reserves, totalling 570 billion US dollars. Real incomes rose across the board, 10 per cent a year on average for the bottom quintile, 12 per cent for the top and many times more for the richest 0.001 per cent.42

Oil and gas accounted for roughly half of Russia’s export earnings. Putin had decided early on that he should bring them under his personal control.

The hardest nut to crack was the gas monopoly, Gazprom.

Rem Vyakhirev, the CEO and Chairman of the Management Board, was a protégé of the former Prime Minister, Viktor Chernomyrdin, who, during his time in government, had granted Gazprom extraordinary privileges.43 As a result, both men had become immensely wealthy. Charles Ryan, the young banker who had been with EBRD in St Petersburg, estimated that the sums being stripped out of Gazprom and finding their way into the pockets of board members were of the order of 2 to 3 billion US dollars a year.44

Putin was determined to push Vyakhirev out.

The problem was that Chernomyrdin had set up the board in such a way that Vyakhirev and his allies had six seats and the government, despite being the principal shareholder, only five. Even after Putin had appointed Dmitry Medvedev as Board Chairman, Vyakhirev retained effective control.45

A solution was proposed by Yeltsin’s former Finance Minister, Boris Fyodorov, who now headed an investment company in Moscow, UFG Asset Management, of which Ryan was Chief Financial Officer. UFG had built up a stake of almost 10 per cent in Gazprom, entitling it to a seat on the board. Together with another minority shareholder, Hermitage Capital Management, founded by Bill Browder, an American-born British financier who was the grandson of Earl Browder, the long-time head of the American Communist Party, UFG wanted to force Gazprom to divest itself of its non-core interests and pay shareholders dividends which would reflect the company’s true value.46 If the board change was approved, Fyodorov told Putin, the UFG representative would vote with Medvedev and the other government-appointed directors and Vyakhirev’s stranglehold on the company would be broken.

According to Ryan, Putin accepted Fyodorov’s proposal, but on one condition, the significance of which would become clear only much later: the agreement must remain secret. ‘They will attack you,’ he warned, ‘but when they do so, I want you to know that you have my complete guarantee for your personal safety, your clients’ property and your business.’

The attacks were not long in coming.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.