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Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.
He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.
In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.
Global Real Estate Project
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Possible New Course in Russia
But first, what's happened in Moscow that was called by some the most radical event in economy since 1998; and for some others the biggest event in the country since the collapse of the Soviet Union in 1991? On the surface the movement is barely seen, nothing more than one arrest and one resignation. But these days in Russia everyone talks about this, because the arrested was Mikhail Khodorkovsky, the owner of the oil company YUKOS (one of the biggest in Russia) and the resignation was given by Alexander Voloshin, the chief of staff of president Putin. Voloshin was the strong man in Kremlin in the late reigning of Boris Yeltsin. It was he who designed the system of "managed democracy" where everything looks like a real democracy and market economy, but in reality the system is administered by the political center. Khodorkovsky was one of the main beneficiaries of this system, taking over some of the Soviet assets in the oil industry. If we look back in the early 90's, just every single Russian industrial giant was made this way. YUKOS wasn't the biggest, or the most prominent among the other companies, owned by Russian "oligarchs".
The creation of the systemWhen this system of "managed democracy" (in Russia this notion has pejorative connotation) was invented and why? In the early 90's when the Soviet Union collapsed, it was obvious that the state can't manage properly the huge industrial complex. On the political front the president Yeltsin had to bar the road for any possible communist restoration. The communist idea in Russia was still very popular and the fair play democracy could bring the former political elite into power. So Yeltsin had to create new elite. But where he could find big managers and businessmen after 74 years of communism? There were none. So he decided to solve the main economic "efficiency" problem and the main political "no-return-to-communism" problem by creating a special group, called later the "oligarchs" that had to manage efficiently the state industry and by providing the huge financial resources to Kremlin, to maintain the political system as we know it now. Against all odds, Yeltsin won the president election in 1996. The "democracy" and the "private property" in Russia were saved from the communists. But what was the price? The price was that the economy was ruled by small group of people, randomly chosen earlier by Kremlin. They had to represent the new face of Russia, to make deals with the western capitalists, to take foreign loans that were earlier denied to the state. As we mentioned, Yeltsin was just the most well-known figure in this regime; one of its main architects was Alexander Voloshin.
Attack on the "oligarchs"Russia is now entering election period. Later this year we'll have elections for State Duma (lower chamber of parliament); earlier next year Russians will elect president. To maintain the regime of "managed democracy", Kremlin has to do well in the first election and to win the second. In order to do so the "Kremlin Party" needs huge financial resources. As we saw earlier, they can come only from the "oligarchs" as election donations. Some time ago one of the "oligarchs" Boris Berezovski was ousted from the game. He was supposedly become too powerful and has allegedly tried to use his financial assets to take control over Kremlin. Now he is political refugee in London. The lesson was clear: "The economic power can't be transferred into political power". So the other "oligarchs" took this lesson. YUKOS chairman Mikhail Khodorkovsky tried to influence Kremlin by supporting financially other anti-communist political right-wing parties, such as Yabloko and the Union of Right Forces. That was the issue that brought him against Kremlin and decided the fate of his company.Khodorkovsky believed or appeared to believe that he lives in a society where the big business can influence the public administration by providing financial aid to the political parties. In general it's possible in many western countries, although recently has been limited in order to make the politicians more accountable to the public, not to the big business. What Khodorkovsky was doing wasn't illegal in Russia; it was exactly what the ruling party stood on. YUKOS chairman just believed that he could finance any party; in fact he had the authority to finance only Kremlin. The result was his arrest and the following resignation of his political supporter Voloshin. It's not odd to expect that after arresting Khodorkovsky the state could confiscate YUKOS and apply the same measure to any other company that had put money on "wrong" party. But how could this be possible in a country under rule of law and why the general population looks at this with rather positive attitudes?
The real nature of the property rights in RussiaThe answer of these both questions is hidden in the nature of the property rights in Russia, which have little in common with the rights as known in the modern western countries. When we say: "This is my property" we usually mean that we and only we can decide what to do with it; to sell it, to lease it, even to destroy it if we are so foolish. Even in the cases when the public interest is at stake and the government decides to take over our property, it usually pays for this or promise to pay later. In fact, this expropriation also stress on our property rights. No state is so foolish just to anyone's property without proper compensation, because nobody will choose to live in such state. That's how the system works and all we think that this is the most rational way of enjoying our property rights.But there are different property rights or different perceptions of these rights. One of them existed earlier in places where the modern western civilization later flourished. I mean the feudal system of rights and duties. One of the best examples of this system was Middle Age England so we have to look briefly what it's about. After conquering England in 1066, king William claimed all the land to be his personal property. He then leased some big chunks of it to his lords and they were obliged to give him in return certain services, usually military but also financial. These lords also divided their lots into smaller ones, leasing them to smaller aristocrats. They also had in return to give back some services. The system went from top to bottom, finally reaching the peasants, who were obliged in return for the land to give back part of their production. When the tenants of any order ceased to serve, the higher level of feudal authority took its land back. There were no absolute property rights (except for the king), instead they were linked to the services and these rights could be inherited only together with the services due to the higher lord. Now let's return to Russia and see what's common between the present economic and political situation and the feudal property rights we talked about. The Soviet Union knew no other form of industrial and land property except state property (small "private" lots near the farmers houses were allowed but this resembled more to the feudal system of "gifts-against-services" than to the western idea of absolute property rights). After 1991 the state gave as gifts many industries into private hands. These new "private" owners had to serve the state in return. The state itself was designed to resemble western democracies. In fact, the main task of the ruling regime was to bar the road to power of the former communists. In fact their main task was to keep the power as longer as possible (they still do). The conflict between Khodorkovsky and Kremlin is not understandable in terms of modern property rights concept. But it has very clear explanation in the light of the feudal system of gifts and services. The state in Russia still considers everything to be its property, to be given in return of some services and to be claimed back if these services aren't paid in term. Why the population has positive attitude toward this conflict? Because after "disgracing" Khodorkovsky and perhaps some other "oligarchs", Kremlin will need other persons to take their places. The individual lords can be executed; the whole system must remain intact. The more execution, the more new people will rise to economic power. At least this is the general idea behind the public support for Kremlin. But why this system must remain intact? Because there is a need the present image of Russia as "democratic" and "market-oriented" country to be kept for the outside world as long as possible. The only thinkable alternative for Kremlin should be to put under direct control the industry, to take back its property as supreme lord, in other words, to move the country toward the model of China. Will Kremlin do this? We'll see, but in any case, the next years in Russia promise to be very interesting.
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