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. Last Updated: 07/27/2016

Old Guard Turns New Rich

The other day, I saw my first Western stretch limousine. Here in the village, I mean -- not there in the big city, where I am told they are common enough. It passed down the main road one afternoon as silently and smoothly as a killer whale, with two Mercedes-Benz sedans as its pilot-fish outriders, and then it vanished down the hill.

Not much of an epiphany, I suppose. But it set me thinking, again, about where Russian millionaires come from. I mean, there was a time, not long ago, when the entire economy ran on virtually no cash at all. Yes, there were underground manufacturers, and directors of state factories who diverted goods and material na lyevo. There were wise guys who ran prostitutes or underground gambling joints, there were under-the-counter salesmen and add-on profiteers in virtually every shop and market -- and there was a whole slew, of course, of bribe-takers and protection boys who had to be taken care of by them all. Basically, though, it was still penny-ante stuff. The only people here who had serious money were foreigners.

Not even the guys who owned and ran the store called The Soviet Union dealt in actual cash.

Instead, they took their screw in the form of luxury goods at knock-down prices and all the privileges they could dream up for themselves: foreign trips, cars, fancy dachas and apartments, top-of-the-line medical care, holidays in Sochi, what have you. These were not, however, the same as real money, and they could be taken away overnight if the board of directors decided to walk you off the plank into oblivion or early retirement.

So what happened? First, the owners and managers who ran the show decided that, what with all the changes coming down the road under Gorbachev, the store might well be taken over by a new group -- or, even worse, handed over to the people themselves. So a couple of laws were made, essentially removing the whole kit-and-caboodle from central control and passing it instead, first to local administrations, and then to the supervisors and bureaucrats who were already in their place at the privilege-trough.

Almost overnight, Party bosses and state directors of factories and farms became the real controllers of their own destinies -- and the destinies of their workers as well. They were now free to set their own salaries, to take over the apartments, dachas and cars they had been allocated, and to use the property, equipment and workforce in their care to make money any way they wanted.

They were also free to divvy up the shares in all the factories and refineries that were suddenly made available. These could always be bought with the state money under their control -- happy accident! -- of which there was suddenly a superfluity.

Once this process was well under way, public privatization came along, to camouflage it.

The general population was given vouchers worth -- in the end -- roughly $3 billion, in order to buy shares in plants and refineries worth $246 billion. In other words, they were given a stab at 1.2 percent of the wealth. Most of the vouchers were sold off, to buy the things that families, whose savings had already been stolen by reforms, could no longer afford. But as a public relations exercise, the whole thing worked wonderfully. Boris Yeltsin can now announce that 70 percent of Russian industry has finally been privatized (hark this, ye aid agencies and watchful World Bankers), though he neglects to say that it has actually been privatized not by the people, but by the old nomenklatura and the mafia who used to bribe them.

So there we have it. The Western stretch limousine I saw in my village was housing, behind its blind windows, some Ivan or Andrei or Vitaly, on his way to one of the palaces financed by this cashing-in of the nomenklatura privilege system.

Either that, or he just happens to have good contacts in government with the right apparatchiki -- he went to the right institute, say, with Svyatoslav, Boris or Georgy. In which case, he has simply been appointed a millionaire: Either his bank has been handed a large wedge of state funds to take care of, or his company has been given, out of the blue, an export license for timber or minerals or oil.

It no longer makes much of a difference. A Lada may get you from Moscow to my village, but a stretch limousine is a fact of life. It goes a long way further.