Boris Berezovsky: An oligarch who lost his status

March 25, 2013

Among the initial wave of Russian oligarchs, Boris Berezovsky was the first among equals, and among the last.

By the mid- to late 1990s, he had become the most powerful figure, after the ailing President Boris Yeltsin, in the Kremlin. A mathematician and engineer of ability, Berezovsky leveraged an early success as a car salesman at a time of rampant inflation into huge wealth and control of media, auto, aviation and oil assets.

He strongly backed Vladimir Putin for president after Yeltsin’s resignation; indeed, he was his main promoter. In Putin, the apparently modest and amiable former KGB officer, Berezovsky saw somebody with self-discipline. He also saw somebody with the need for financial and intellectual support from somebody who had much of both – somebody like Berezovksy.

It was a huge misreading of Putin, a man well-trained to appear bland. In 2000 the new president summoned the oligarchs to the medieval fortress of the czars and told them they could keep their wealth if they left the politics to him. Three oligarchs ignored the order: Mikhail Khodorkovsky, now in a Siberian prison colony; Vladimir Gusinsky, in exile; and Berezovsky, who died this past weekend at his Berkshire estate.

These men, whose Jewishness had kept them out of the Soviet establishment for much of the Communist period, were brilliant, bold and ruthless. They were forces of nature who created the first draft of capitalism in the ruins of a completely socialized economy. They built it the only way possible, through expropriation, state capitalist corruption and a wholesale disregard for the rules ‑ permitted to do so by the Yeltsin governments in the ’90s, which, though often chaotic, held to the belief that even corrupt private ownership was better than the party-state version from which Russia had just emerged.

Putin’s reassertion of the rule of the Kremlin made the remaining oligarchs, Berezovsky included, subject to Putin’s regime. Great wealth had to now bow low and remember that its business was only business, not politics and Kremlin power games. In the past 13 years the state has taken back much of the oil industry and has tightened its grip on the broadcast media. Russia has seen FoPs (Friends of Putin) take control of the strategically important corporations and institutions; it has allowed the creation of a state-business relationship that depends largely on a series of relationships that lead to the presidential administration, and whose lubrication is a system of bribes, kickbacks and privileges reckoned in the hundreds of millions.

In her just-published book, Can Russia Modernise?, the political scientist Alena Ledeneva writes that, according to the leading politician Vladimir Zhirinovsky, corruption has an explicit price in Russia. It’ll cost $5 million to $7 million for the post of governor, $5 million to $7 million for a seat in the federation council and $2 million to $3 million for the head of a department in government or of a federal service. These entrance fees are paid by the office holder (who is fairly certain he can quickly recoup his investment) to whichever high official has the post. She quotes a businessman’s description of a “new normality code” for a high official:

One should take kickbacks openly so that others know about it. Moreover, one should give advance warning to one’s superiors and ask for feedback (approval). One should also share the spoil with subordinates. One should never think of the spoils as one’s own. Easy come, easy go.

This is the new order, and Berezovsky helped bring it about. It is one that grew out of the “robber-baron capitalism” period (as George Soros described it) in which Berezovsky, with Khodorkovsky, Gusinsky and others, reigned all-but-supreme. Berezovsky was the most frank: He saw a fusion between the raw capitalism he was furthering and the rawer democracy  Yeltsin guaranteed. His political interventions, of which few were secret, were “acceptable” because it was “necessary to interfere directly in the political process to defend democracy.”

Berezovsky overreached himself, and badly miscalculated. In their last meeting in 2000, Putin told him bluntly that he would relieve him of his TV channel (he did the same to Gusinsky). Berezovsky left the country.

Once in exile in the UK, Berezovsky could not reconcile himself to powerlessness. He poured money into anti-Putin projects, of which the most dramatic was the allegation that the president had organized bombs in apartment blocks in Moscow so the administration could blame Chechen terrorists. That then helped justify a fresh war in Chechnya that hugely boosted Putin’s popularity. Berezovsky’s  onetime bodyguard and friend, the former KGB officer Alexander Litvinenko, was poisoned in November 2006; the oligarch accused Putin of ordering the murder. Last year he lost a case he had brought against his onetime protégé, the much richer Roman Abramovich, claiming $5.5 billion for alleged underpayment of the shares he had in the oil company Sibneft. Berezovsky lost, and was saddled with huge costs – and a reportedly all-enveloping depression.

He was the last of an extraordinary band – not, to be sure, of brothers but of fractious, warring comrades-in-arms. They supported Yeltsin with money and media against the return of a political system that had excluded them from their just deserts. For Berezovsky, the irony was that the man who did succeed the anti-Communist Yeltsin had a reverence for the Soviet Union, and the will to use the state, in certain instances, as repressively as the Soviet leaders had done.

Berezovsky never, it seemed, grasped that he and his fellow oligarchs were deeply unpopular in a country that, through the ’90s, suffered huge material poverty. In his own estimation, he was the first among those who were building a future wealth on a foundation of freedom. But the first sometimes shall be last: Boris Berezovsky died in distress, frustration and despair. He was not likely to have been comforted by any reflection that he will have a vivid, if ambiguous, place in the history of the creation of the new Russia. For him, the rapid accumulation of raw power in a time of troubles was a drug from which he could not wean. In the end, as drugs tend to do, it killed him.

PHOTO: Russian oligarch Boris Berezovsky speaks to members of the media after losing his court battle against Roman Abramovich, at a division of the High Court in London August 31, 2012. REUTERS/Olivia Harris 

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Wow. A vivid and interesting bit of analysis, well written.

Posted by ARJTurgot2 | Report as abusive