The Oligarchs (4 page)

In the Western experience, tycoons often feasted off both the government and private capital. The Rothschilds were bankers to princes; J. P. Morgan was a bridge between British lenders and American railroads. But Russia's first tycoons drew their early sustenance almost entirely from one source: the state. They keenly saw, and exploited, its many weaknesses. They seized on the colossal imbalances in prices, property, and trade that were the legacy of the Soviet system—and made fortunes from it. With several notable exceptions, they built very little that was new on the ground in these early years. Rather, their first lessons were how to make easy money, which came to them so effortlessly that they seemed to grab it out of thin air.

In these early years of protocapitalism, the six men portrayed in this volume came to know each other well in business alliances, in friendship, and in hatred. Their troubled relations became a never ending public spectacle. At a private club on a hill overlooking Moscow's cityscape in September 1994, some of them signed a secret pact promising not to attack each other, a pledge they soon abandoned. They formed alliances and then destroyed them. They built empires and tried to wreck those of their competitors. They all agreed about the failure of the old system, but they held quite different visions of the new.

To understand how far the oligarchs came, it is necessary to begin where they began, with the Soviet years of stagnation, the shortage economy and shadow markets. All six men were shaped by this era of decaying socialism, a time when each of them began to think—and act—toward a new order. The first chapter of this book is set in the years of stagnation, a view from the street and from inside the dying system. The following six chapters probe more deeply the road each man followed in Gorbachev's era of restructuring, or
perestroika,
and into the first years of the new Russia. The remaining nine chapters, in Part II of the book, examine the tumultuous 1990s through the oligarchs' exploits and failures. It is the story of how a rapacious, unruly capitalism was born on the ashes of Soviet communism.

I
N THE SUMMER HEAT, the glass facade of Kursky Station loomed above the sweaty crowds. The train station hall was a monumental box of glass, concrete, and space; it was stark, modern, even utopian, and the design spoke of progress. Such progress! Reflected in the glass facade, the travelers and transients below were a bazaar of traders, strivers, hustlers, and survivors, trying to make the best of life in “developed socialism” in the Soviet Union. Pies? Beer? Ice cream? Live chicks? It was there, spread out before the glass wall and just beyond, in the open platform between the station and the rows of waiting trains. From here, the long-distance rail lines stretched toward far-off cities of the south, toward Baku, Tbilisi, and the Crimea. The commuter trains ran out of the capital toward small villages and country cottages, the dachas. On a summer day, the crowds surged out of Moscow on the commuter trains, the
elektrichkas
, to the villages of summer retreat, to the cool birches.

Most Moscow train stations were seedy terminals of despair. People slept on the floors, newspapers spread out under them; the waiting halls were zones of misery, reeking of drunks and stale smoke. But Kursky Station had been rebuilt in the 1970s, transformed into an
architectural statement towering above the misery. It was a monument to a system that loved angular, concrete congratulations to itself. They were spread across the landscape of the Soviet Union, celebrations of ideology, great exclamation points—
to the achievements of the party and the people!

But for most people who passed by them, these socialist monuments were no longer even noticeable, no more remarkable than a lamppost or a tree. The architectural style remained—massive and imposing—but the meaning was gone. The truth was that the people surging in and out of Kursky Station had stopped paying attention to the stale propaganda and the hollow modernism presented by the Soviet system. A chasm separated them from the state. They no longer believed in a bright Communist future. They knew that even as the system declared its greatness, it was stagnating, rotting from within. People spent half their lives in a struggle to overcome the most basic shortages, to lay their hands on a cut of meat or a pair of boots. They survived thanks to a vast, unofficial second economy—a shadow economy—that somehow provided a cushion against the harsh realities of life.

Irina Makarova knew both the reality and the lie. A bright young schoolteacher, with shoulder-length black hair worn in stylish curls, her face framed in aviator glasses, Irina made her way through the bustling crowd outside Kursky Station. She led her four-year-old daughter with one hand and gripped a bulging red rucksack with the other. It was a hot day in the summer of 1985, and she did not bother to notice the modernistic facade of Kursky Station. She did not pay attention to the declarations of the Party Congress or the latest five-year plan or the absurd television news broadcasts about peasants happily preparing for the harvest. It was all so distant from real life. At home, in the kitchen, they had been talking often about the new general secretary, about this younger man, Mikhail Gorbachev. But at this moment she did not stop to ponder politics or worry about the future; she worried about the water.

Irina clutched her young daughter's hand as they approached the small bustling square outside the train station. She stiffly resisted the pull toward a hulking, blue-gray vending machine, as big as a refrigerator, with the disgusting jar that everyone drank from. Long ago, the machine had boasted a real drinking glass and a separate, tiny nook in which you could rinse it, put your kopeks in the machine, and watch
the sulphurous water pour down. But then the glass had been stolen. Someone replaced it with a jar, an old mayonnaise jar, with a grimy string tied about its neck. They all drank from the jar. She desperately hoped she could pass it without being tugged by her young daughter—who always wanted a drink—toward that jar with the dirty string.

Inside, the train station was cool and dark. She found the line for tickets to Kupavna, a small village of summer cottages beyond the oppressive metropolis of Moscow. Kupavna was their refuge, but it was never easy to flee the city. It meant struggling, shoving, pushing, and always hustling in small ways, grabbing what you could when you could. The line for the tickets on the
elektrichka
to Kupavna was the first hurdle. Children cried in the line, passengers pressed forward. People pressed so close that she could smell the soap—that brown, caked soap they used for everything—for the laundry, for the dishes.

The ticket windows were imposingly tall. Yet no one could look in or out. Each was closed off by a faded, dirty drawn blind that fell down to a tiny rabbit hole–sized sliding door at the bottom. The authorities did not want the angry crowds peering in, so they closed out the exhausted faces of the passengers with the impenetrable blind. Through the rabbit hole, Irina saw the hands, but not the face, of the clerk on the other side. Two tickets for Kupavna, fifteen kopeks each.

Then back to the doors. For all the vastness of the station hall, with its high ceiling and wall of glass and huge main floor, when it came to people, everything was constricted, as if a hand were reaching down and choking them at the throat. Four doors stood at the entrance to the tracks yet three of them were closed and locked, so people surged, pushed and shoved to get through the one door. Irina pushed out into the bright sunshine, toward the long, slinking green trains. Then, just as they turned toward the trains, she saw it.

Toilet paper!

A crowd was pressing shoulder to shoulder. Instinct and years of survival took over. Irina had long understood that to survive in this life, you grabbed what you could when you saw it. She saw they were selling toilet paper from an open box and didn't hesitate; she bought twenty rolls because it was there.

She had no free hand to carry the toilet paper. On one shoulder she carried the heavy red rucksack, packed with books and things for the dacha. With her other hand, she clung to her daughter. She dug into her bag and found a piece of string. She laced the rolls of toilet paper
together and, without a moment's thought, she was wearing a toilet paper necklace. No one thought it unusual; it was life—she bought what came her way. When she wanted to go out and buy a chicken, she didn't. She bought toilet paper, and next time when she wanted toilet paper, she'd probably get a chicken.

They boarded the
elektrichka
. The wooden bench seats were three across, the wagons jammed full. A bicycle was parked in the aisle, dogs barked, fruit trees were bound in cloth bags, heavy suitcases piled on seats, children dodged and squirmed. It was stifling. The thick windows of the train were closed like vaults that trapped inside the smells of herring wrapped in paper, cheese, and cigarette smoke. The train lurched forward.

Despite the packed and stuffy cars, the heavy bag that cut a crease into her fingers, and the toilet paper rolls around her neck, something wonderful lifted her spirits when the train pulled out. The burden of Moscow slipped backward through the windows. It was true for all of them, the
dachniki
. They were escaping, running from the suffocating lives they led in the city to their own private reserves of fresh air.

As the train picked up speed and the city slipped away, the whine of the electric motors grew ever more shrill, then faded away. Hulking factories, fields of rusting cranes, and concrete skeletons of unfinished buildings passed solemnly by the window. It was a parade of decay.

Irina was a survivor and strove to do her best in a world of gross imperfection. She learned English and taught it at a special school, although she had never met anyone who spoke native English. She had always, loyally, put on that artificial face, that mask, at the meetings of the Komsomol, the party's youth organization, even though she knew the whole exercise was empty and meaningless. They implored her to be a true Komsomol member. To preach principles of the Komsomol builder! Yet she knew the system was creaking. Irina was thirty years old when Gorbachev came to power. She and her generation had come of age during the Brezhnev malaise of the 1970s and early 1980s. These were called the years of stagnation, the
gody zastoya.
But they were also called the period of senility—
marazm
.

The senility of Soviet socialism thrust its failure in their face every day. Often they dreamed of drinking a certain scarce tea with a yellow label. The leaves were finer and cut thinner, and when they brewed it, the tea was a rich reddish brown. The tea came in a yellow pack with an elephant on it. Supposedly it was from India. But there was a desperate
shortage of this yellow-packeted tea. It was impossible to find and no one knew if it really came from India. But if you spotted it, you willingly stood in long lines for it, at any time.

Then there was the canned meat. The cans were discarded army rations, and everyone knew it. But fresh meat was nowhere to be found. In the provinces, people went for years without seeing fresh meat in the stores. The state dumped the tinned-meat army rations on them. If they saw twenty cans, they bought them on the spot. They hoarded it; they hoarded everything, just in case. Canned meat on spaghetti was a meal to savor. There weren't many kinds of pasta, either; the thick, long, grayish kind took forever to cook. They dreamed of the tea with the elephant, the stewed meat in cans, and perhaps real spaghetti. Sometimes they could obtain better pasta, like the finer types from Italy. They couldn't buy it, but they could—with great effort—get it. This was the story of their life; although the Russian language had a verb “to buy,” they preferred to say “to get” or “to take.” They would say, “I took a half kilo of butter.” What you could “get” or “take” did not depend on money but on connections, on luck, on fate.

The Soviet state theoretically provided for almost everything—medical care, schooling, transportation, work. In the hulking gray headquarters on Marx Prospekt in central Moscow, Gosplan, the mammoth state central planning agency, arranged how to allocate every ton of steel, deliver every bolt, utilize every last gear in the administrative-command economy. Khrushchev had vowed that Communism would overtake capitalism by 1980. Yet in the mid-1980s, Irina's generation knew, felt, and tasted every day the hollowness of that long-ago promise. Soviet socialism provided less and less, and they struggled to survive with their own networks of friends and connections. They lived with a carnival of wants, always on the prowl.

The state stores never threw anything away. They just sold it to people. Irina had seen it many times: they wrapped up a package of outdated canned herring and stale bread, and one packet of the tea with the elephant. And, maybe, the pasta, in a fancy red cover. These packages were called
zakazy
, or orders, and every school, every factory, every kindergarten, and every institute offered them to workers, perhaps once a month. There was no choice: if you wanted to enjoy the Indian tea with the elephant, you had to take everything that went with it: the stale bread, the old herring.

Irina's generation lived their lives in long, slow cycles of shortages. The Soviet Union at the time was devoting massive resources to the arms race, but for its citizens there were toilet paper necklaces and outdated cans of herring. Every year, the shortages seemed to grow worse. At the beginning of the 1980s, there was cheese, one kind of sausage, milk, margarine, sugar, bread, and the basic necessities. Even so, back then, Irina and her family complained to each other that there was nothing in the stores. They would say it aloud, “there's nothing,” and they meant that they wanted a bit of ham, but there was no ham. They wanted a beer but there was no beer. Sadly, they didn't really know what was coming; they could not imagine that there would
really
be nothing.