Post editor analyzes Russian economy

The Media Forum discussion in Bloomberg on Wednesday, Oct. 23, featured David E. Hoffman, Foreign Editor for the Washington Post, who spoke about the new Russian economy in relation to his newly published book, The Oligarchs.

"The starting point for my book is when the late Soviet Union goes ... kaput," he began.

Hoffman's presentation, entitled "Russia: Revolution to Evolution," presented a historical analysis of Russia's "Shadow Economy," beginning with the collapse of the Soviet Union. It profiled six of the richest and most successful profiteers to form the oligarchy of new reformers.

"If you were young, ambitious, ruthless -- then billions of dollars could be yours. We are talking about wild jungle capitalism. Economic interests driven by greed," Hoffman said.

He noted that an infamous wheeler-dealer, Boris Berezovsky, elder statesman for the new reformers, took advantage of free-prices and hyperinflation in 1992 to sell millions of fake shares through an automobile commission. Otherwise known as the AVVA scandal, Berezovsky collected over $50 million from uncontested pyramid schemes targeting the Russian public.

Hoffman recounts capitalism where violence, theft, and coercion were considered common business practice in countries recovering from socialist rule.

"Yes, if you like my book on the six Russian oligarchs then you will love my book on the 100 Chinese oligarchs," he said.

Hoffman answered a number of questions from the audience: "It's like throwing a match on gasoline. I'd like to target what makes these other countries hate us so much, but try explaining Ofrustration' to a 20 year old in Cairo with explosives strapped to his chest."

Regarding Bush's involvement with Saddam Hussein, he said, "I do think the threats are real, but this method of toppling a leader doesn't speak to my values. I think creating a hundred baby Bin-Ladens is a bad idea."

Hours before the lecture, news broke that 700 people were being held hostage in Moscow by 25 armed terrorists. Hoffman explained that this was just another sign of domestic instability, saying, "We are talking about a country that has a smaller economy than Portugal and the largest land mass in the world. There are still unknown towns outside of Moscow housing biological weapons and nuclear ballistics. If there is a moment of indecision, we need to see Russia as a sieve leaking material to our potential enemies."

The Washington Post sent Hoffman to Oxford for a year of extensive language training. This foundation in Russian allowed him to interview the six "rogues" on exhibition in his book, as well as carry out a four-year investigation into their history.

"The hardest one was Yuri Luzhkov. I remember I chased him for four years before he agreed to sit down with me. We sat about 50 chairs down an executive board-room table, with Luzhkov at the head, shook hands like we were old friends, then he handed me 34 pages of commentary, single spaced, and asked if I had any questions. We didn't get to talking until after tea-time," he said.

Nevertheless, Hoffman remains optimistic about the forming effects of capitalism in Russia: "I believe the Russian people are highly adaptive. They have come a long way. Even though you can't eat freedom, you have to understand that 15 years ago there were locks on Xerox machines. We are beyond the age of charity, the Russians have to join the rush and make a seat for themselves at the table of globalization," Hoffman said. "Take Khodorkovsky: a ruthless, secretive, driven young entrepreneur, who started out as a bad boy. Then, prices rebound in the last two years and he becomes the richest man in Russia. This gets him up and running. Today he is playing by normal rules, and the markets seem to like that.