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. Last Updated: 07/27/2016

INSIDE RUSSIA: Takeovers in The Urals Are Really Hostile

Last week I had occasion to talk with a highly educated, liberal European who has a strong interest in Russia. And given that I had just returned from the Urals, where I visited the Kachkanar Mining and Ore Enrichment Plant, I recounted to him some of the factory's more picturesque episodes.

Over three years, Kachkanar has gone through five owners and 17 general directors; its management's building has been taken over by OMON and bandits, its shares seized with the help of threats, rifle butts and soldering guns.

Here is just one of the three or four armed confrontations that took place at the factory during September 1997. Its owner at that time was Pavel Fedulev, one of Yekaterinburg's most prominent industrialists. Fedulev also owned all of the illegal vodka factories in the Urals and is now in prison, accused of murdering two of his partners and numerous acts of fraud.

Fedulev, after removing the factory's previous owner with the help of gunmen provided by his good friend Vasily Rudenko, head of the regional anti-organized crime unit, had ensconced himself in Kachkanar and remained there round the clock. But when he left the factory for his own wedding in Yekaterinburg, he received a call: "Come back! They've taken the factory!" Leaving his betrothed and gathering 30 gunmen, Fedulev headed off to Kachkanar. Upon his arrival, he was confronted by Anton Bakov, his longtime enemy and one of the most noteworthy adventurists in the Urals. Bakov did not own a single share of the Kachkanar factory: he simply bought the director, who then rented all the factory's property to an enterprise under Bakov's control.

On seeing Fedulev, Bakov made the trademark gesture with his fingers, known in the underworld as koza, saying: "I'm telling you, Pasha, as deputy to deputy, get out of here."

On hearing this story, my European interlocutor sighed. "Russia somehow must be reformed," he said. "Russian businessmen need to be taught how to resolve conflicts using the law. An elite school should be created, which will produce businessmen who consider it unacceptable to overstep moral norms."

Upon hearing this, I realized that we inhabit two different worlds. My interlocutor lives in a world with a clean, highly transparent market economy, whose rules are like English boxing, where you don't hit below the belt. Russia is a world where factories are rented, shares are seized with the help of rifle butts and proprietors are expropriated with the help of the police anti-organized crime unit.

The Russian authorities are very ashamed of this real world. They act as if one more credit, one more law, one more election will make us like the West. The West, meanwhile, believes Russian politicians. Because it is much easier to demand from Russia, say, a budget surplus than to ask whether the very term "budget surplus" means anything in a country whether the above-mentioned Anton Bakov pays taxes in veksels issued by a factory that has rented out its property to another enterprise (making the veksels worth about .01 percent of their face value).

The happy certainty that Russia has a capital market led to the Aug. 17 meltdown. God knows what it will lead to after the presidential elections.

Yulia Latynina is a staff writer for Segodnya.