Thursday, December 20, 2007

The Russian Shadow Realm

Live, from the Shadow Realm: The birth of Russia's new energy class by Justin Dargin, Dec 6, 2007.

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.

Does this sound familiar?

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.

A little hard to follow? It sounds like new-age doublespeak for a special oligarchy being born.

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.

This is a fairly important concept.

Put another way, people are not joining a conspiracy, but rather, an informal "conspiracy" develops due to common concerns, common interests and common problems.

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.

They naturally get on the same sheet of music, because each determines that it is that sheet of music which best suits his needs.

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.

This could kind of be described as a "neo-communist" description; one significant aspect to the system described here is that it is political bigwigs sucking the blood of the energy and mineral industries, rather than capitalist bloodsuckers exploiting the working class in general.

Regardless, the point is a group of politicians promote the oil and gas sector as a means to securing their own political power.

The government security apparatus is an active part of this, forming a three-legged stool on which power over Russia is maintained: the politicians, the security forces, and the oil and gas sector. This replaces the three-legged stool of the Soviet era, which was the Communist Party, the KGB and the Red Army.

The more things change, the more they stay the same.

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.

Part of the reason this is significant is because it offers us a mirror to look at ourselves in.

Government officials, lobbyists, and the industries that lobby and are regulated by the government form a similar class in the United States, as individuals change jobs within that group. Appointed government officials are often selected from the industries they regulate. In return, they do things that benefit those industries. Upon completion of service, they perhaps return to those industries and resume their careers. This is the model for the interaction of the military-industrial complex and the Defense Department. The model for elected officials is a little different, as former politicians become lobbyists, marketing their Washington know-how, often to the highest bidder. High-ranking military officers, upon retirement, are often able to secure cushy jobs either as lobbyists, or as executives in the defense industry.

This is what Sibel Edmonds has pointed out -- how government officials, whether elected or appointed, civilian or military, do things while serving in the government in order to earn the rewards they will receive from the private sector later.

In the clumsy attempt to recruit Edmonds into espionage, it was basically said that all she needed to do was let the American Turkish Council know where she worked -- translating Turkish-language material for the FBI -- and she would be accepted as a member, and once that was done, she would be guaranteed a cushy future.

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.

This is just one way in which these Shadow Realm entities achieve animation....

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.

If, instead of interacting and perhaps dominating the oil and gas sector, the new leaders were in bed with the nation's military industrial complex, what might we expect?

Might we expect German convicts to be dressed up in Polish uniforms, taken to the border between Germany and Poland, and shot there, amid claims of a Polish attack on Germany? Might we expect this incident to then be used to justify a Wehrmacht onslaught on Poland?

Or, might we expect something more sinister even than that?

Might we expect the government security services, having become aware of a horrific terrorist plot, to obstruct investigations that might derail the plot in order to make sure the terrorist attack actually happens, so that the incident can serve as a justification for expansion of state power within the country, and military attacks to secure business opportunities outside the country?

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.

It is a good thing we live in the United States, where nothing like that could ever occur.

No comments: