SPEAKING
FREELY The birth of Russia's new energy
class By Justin Dargin
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
contributing.
Milovan Djilas,
prominent Yugoslavian author and subsequent critic
of Josef Tito, developed the theory of the "new
class" - a phenomenon that took the vacated
position of the ruling bourgeois/aristocracy. The
new class, according to Djilas, did not seek
property control but political control: not one of
them had
significant holdings, but, as
a class, they owned everything.
Djilas
proposed that the new group incrementally came to
the self-realization that it constituted a
distinct class. However, once realized, it
undertook rapid scale industrialization to
buttress its power and exclude opponents, internal
and external. The members of the new class, as
long as they submitted to the group's goals, had
superior access to the material rewards that the
system has to offer.
President Vladimir
Putin's Russia provides an opportunity to study
the new class of socio-economic-political
interests that are coalescing, based on the shared
interest in and ownership of the state's energy
resources. This triumvirate is composed of the
security services (Siloviki), the politicians and
the business elite.
In most oil and gas
producing nations, taxation over the extractive
industries is the primary tool for expropriation
of previously generated wealth, present as
infrastructure investments and capital goods. The
class structure of a society is governed and
defined by the relationships between specific
groups of individuals and the interaction between
the two methods of wealth acquisition, political
or economic.
However, the more prevalent
the political venues are in a society, then the
more likely that the beneficiaries of expanding
state intervention may be designated as a separate
class. This new class comprises all individuals,
and their political and biological kinsmen, whose
positions in society stem from state expansion as
the political means of wealth acquisition in
society.
It is important to clarify that
the class itself, or the individuals that comprise
it, may not have a full understanding of the
formation of a concretized group. A member may not
realize aligned goals, or interests with others in
that class. However, after a period of time, as it
becomes evident that there are shared special
interests, a common class consciousness evolves.
Moreover, the ascension of a class identity will
harden more in those that are net beneficiaries of
the system (in Russia's case the oil and gas
industry), rather than the more diffuse net losers
from the political intervention in the market.
Russia's triumvirate of Siloviki, energy
oligarchs and bureaucrats will obtain a decisive
advantage in honing a consciousness of their
common interests and promoting a broad consensus
of the measures necessary to defend those
interests.
The Siloviki comprised 58.3% of
the Security Council in 2003, 33.3% in 1993 and an
insignificant 4.8% in the Politburo of 1988.
Instead of Djilas's massive industrialization,
this group seeks expanded control over the mineral
resources, which then allows the state to fund its
expansion. In compliance with Djilas's new class,
as long as members do not upset the prevailing
social order, the new class has channels for
material enrichment that are woefully closed to
the average citizen.
The financial
collapse of 1998 in the Russian banking and
financial sector solidified the power of this
class around the extractive industries. The
collapse of Moscow’s banking sector decimated the
power base of the Moscow-centered oligarchs in
banking and finance but gave a corresponding boost
to the regional oligarchs, who dominated local
production around the oil and gas industry. The
ruble's devaluation prompted the industrial
sector’s enhanced role in politics, which
oligarchs in the more Russo-centric regions
occupied, to the detriment of the cosmopolitan
elite in the financial sector.
However,
the parasitical nature of affairs becomes
increasingly manifest because the beneficiaries of
the political means in an essentially capitalist
system depend upon the uniqueness of the economic
system to survive. Although the two classes
coexist in a symbiotic relationship, the predatory
political classes feed off the wealth-accruing
groups, without which they would not survive. On
the other hand, the groups that use economic tools
can survive and in fact generally thrive in the
absence of political interference.
In the
Russian backdrop, the energy oligarchs and the
Siloviki guiding the state ship are in a sense
co-dependent. The state needs the revenue inflows
generated by the oil and gas industry to survive;
and the energy oligarchs and their state-dominated
energy companies receive enhanced business
opportunities. With these contradictions, it is
Kafkaesque to surmise that Russia sails a sound
ship of state. The New Russian State is gripped by
an inherent instability, which resonates with
contradictions the longer it prevails.
Although the 1990s were dominated by a
relatively small group of tycoons, the dawn of the
21st century saw power spread across a larger,
more geographically dispersed group, which
actually showed greater dependence on the state
institutions than had the Moscow-centered banking
and finance oligarchs. Because Putin appointed
important government figures to head state energy
corporations, the post-2001 era saw the new
class(es) develop apace.
During the
preliminary stages of the current restructuring, a
we/they dichotomy formed the basis of a new
weltanschauung (worldview). A definite set
of class interests develop at this period, which
then becomes second nature during the subsequent
socialization process. As the restructuring
formalizes, the new class(es) assume a more
cohesive form and a more synthetic shape, with
resource nationalism as the glue that holds
together their unity.
In contrast to the
emergence of the new class under communism,
Putin's new adherents seek to control the levers
of the extractive industries and to exert Russia's
power outward. The new class so to speak etches
itself into the state machinery and
state-dominated firms, just as Baron von
Munchhausen's wolf eats itself into the horse and
then finds itself harnessed and has to draw the
sledge. Perhaps due to the necessarily dependent
nature of the energy sector with regard to the
oil-consuming nations, state centralism in Russia
has a distinctly expansionary essence.
However, in its incipient phase, Putin
stands iconically above the fray, as he plays one
group against the other to maintain his personal
power over the governmental apparatus. Putin's
legacy will be that of a disciplinarian; he molded
a heterogeneous group of people, with diverse
interests and forged them, sometimes against their
will, into a more cohesive unit.
Justin Dargin is the author
of Rebuilding the Iraqi Oil Industry: Legal
and Constitutional Strategies for Sustainable
Post-Saddam Development featured in the
forthcoming Rebuilding Sustainable Communities in
Iraq (2008).
(Copyright Justin Dargin
2007.)
Speaking Freely is an Asia
Times Online feature that allows guest writers to
have their say. Please click hereif you are interested in
contributing.
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