Decline of The West
by George Szamuely

April 22, 2001

Demonizing Putin

It is always hilarious to watch the champions of unbridled capitalism turn into mawkish defenders of the rights of the workingman when they turn their attention to Russia. Earlier this month, Gazprom, the 38 per cent state-owned gas monopoly, took over a television channel, NTV and installed its own management. Some time ago Gazprom had acquired 46 per cent of NTV after Media-Most, the owner of NTV, had defaulted on $1 billion it had borrowed from Gazprom. Recently, Gazprom in tried and true capitalist fashion outmaneuvered Media-Most – owned by tycoon Vladimir Gusinsky, currently in Spain fighting extradition to Russia – which owned 49 per cent of NTV, by winning the support of the only other shareholder, Capital Research and Management, a US-based fund.

The NTV journalists promptly declared the move "illegal," part of a sinister Kremlin plan to shut down the only TV network that had been critical of Russian policy in Chechnya. "Barricaded journalists resist a hostile takeover by forces allied with Vladimir Putin’s Kremlin," shrieks the New Republic, a magazine notorious for firing editors insufficiently slavish in their devotion to Al Gore. "The fate of NTV, the only Russian national television network free of Kremlin control, hangs in the balance," intones the Financial Times pompously. "With it hang hopes for genuine media freedom in Russia. For if NTV fails to retain its independence, other press organizations will also suffer. And Russia’s weak democracy will be all the weaker." According to Time, "People close to the Kremlin have all but admitted…that their move on NTV is politically motivated. They’ve justified this on the basis that they see NTV as a rival political party rather than simply a news outlet."

The US Government has been making daily statements expressing anguish at the plight of NTV. According to State Department spokesman Richard Boucher, freedom of expression is in grave jeopardy in Russia because of "political pressure and intimidation tactics." NTV, he claims, "played an important role in the development of political and media pluralism in Russia…It is important that the NTV editorial staff continue to exercise full control over news and information programming." Based on no evidence whatsoever, the US Government is accusing the Kremlin of suppressing free speech. "We’ve seen actions that have led many reasonable observers to conclude that the campaign against Media-Most is politically motivated, given the media company’s often outspoken criticism of the Russian government’s policies," Boucher declares. "The United States expresses its deep disappointment with setbacks suffered recently by independent media in Russia." Boucher is also worried about what rampant capitalism is doing to Russia: "We’ve been concerned about the lack of open and transparent process in terms of the shares and the controlling ownership issues, as well as the overall issue of freedom of speech and freedom of the media in Russia…So we’re watching this very carefully."

What has really happened at NTV? A company that has been losing money for years has been taken over by a giant corporation. The corporation’s first act was to fire a management it deemed incompetent. It is the sort of thing that happens in the United States every day. Only when it happens in Russia is free speech suddenly in jeopardy. Had this been a US corporation taking over an "anti-establishment" media outlet in the United States business journalists would have been knocking out drooling stories about the brilliant Gazprom tycoon who masterminded a sensational coup. There would be rhapsodies about the total worth of the new company. There would, of course, be little mention of workers being laid off. Or of news coverage news coverage giving way to the usual mélange of celebrity-puffing, soap reruns and sport. The only issue of any significance would be how much richer the shareholders have become. But let shareholders assert themselves in Russia and it’s as if Stalin is back in the Kremlin.

How Gazprom came to acquire NTV is an intricate story. Gazprom had been trying to collect debts from Vladimir Gusinsky’s Media-Most holding company. In 1996 Gusinsky was one of a number of powerful tycoons surrounding Boris Yeltsin who were terrified that their man was about to go down to defeat. Gusinsky and Boris Berezovsky teamed up to ensure Yeltsin’s victory by using their media outlets to deny his opponents any coverage at all except for the most unfair and hostile.

Gusinsky was quickly rewarded for his labors. Gazprom was encouraged to invest $1 billion in Media-Most. The investments came in several tranches: Gazprom purchased 30 percent of Media-Most’s NTV subsidiary – Russia’s third largest national television network – for $130 million. It then bought 14 percent of Media-Most for $260 million. It also guaranteed two loans, for $211 million and $262 million. Gradually Gazprom came to own 46 percent of NTV.

With Media-Most unable to repay the two loans, Gazprom Media set out to take over Media-Most’s shares to cover its losses. This is standard capitalist practice of course. It is how companies take over other companies. According to Alfred Kokh, General Director of Gazprom, it was only when Media-Most was unable to meet its obligations that "Gazprom Media took action to protect its investment in the firm, now valued at only $200 to $300 million." A Russian court ruled recently that Gusinsky could not vote the 19 percent stake in Media-Most that Gazprom was trying to seize. Gusinsky had used the shares as collateral for the loans.

The US coverage of these murky financial transactions has been the usual combination of tendentiousness and hysteria. Whenever the US media focus on another country, it is essential that it be contrasted unfavorably not with the reality of the United States but the fantasy. Much of the media commentary focuses on the state stake in Gazprom. Government participation in any media enterprise precludes it from being free. Evidently government participation in the presentation of news is unheard of in the West. Most countries in the world have at least one television network, usually more, that is state-owned. Even in the super-capitalist United States, there is such a phenomenon as PBS. Yet the New York Times and the Washington Post who are much exercised about the fate of NTV are usually calling for increasing the level of US Government funding of PBS.

William Safire can always be counted on to whip himself into lather about the least significant events in Russia. A janitor is fired somewhere? That means a new Yezhovchina has started. Last June he started a column in his usual self-aggrandizing ingratiating style: "I had breakfast recently with the deputy chief of Media-Most, the last major Russian TV-and-newspaper company to dare criticize or satirize the men who have ‘democratically’ seized power in the Kremlin." Safire’s breakfast companion was Igor Malashenko, who had formerly worked as a propagandist for the Central Committee of the Communist Party of the Soviet Union. But then no one has ever accused Safire of being a man of principle. "[A]fter a decade of blessed free speech in Russia, repressive days are here again," Safire sighs.

Safire follows the standard practice of the US Government of calling an election whose outcome displeases him a "coup." Thus he invariably refers to Valdimir Putin’s overwhelming election victory as a "coup." According to Safire, Putin turned against Vladimir Gusinsky because his "channel’s newscasters do not hew to the Kremlin line." Odd. Russian prosecutors want him extradited from Spain because, they claim, he overstated his Media-Most holding company’s assets to win loan guarantees from Gazprom. These charges may or may not have merit. We do not know. It is extraordinary though how people who are willing to believe every accusation of financial chicanery thrown at Slobodan Milosevic (a man known for the frugality of his lifestyle), refuse to believe that a wealthy tycoon who got rich through insider deals in Russia could possibly have engaged in wrongdoing. Gusinky hardly seems a poster-boy for free speech. Not to worry; Safire is always ready to turn to a favorite standby: "Best of all for Putin’s persecution purposes, Gusinsky is a Jew; unlike Berezovsky and some partners in Oligarchy Inc., he is not the self-hating, religion-denying kind." How does Safire know Berezovsky is a "self-hating Jew"? Probably the same way he knows for sure that the embezzlement case against Gusinky "is trumped up." Now that Berezovsky and Putin have had a falling out, doubtless he is a Jew in good standing again.

The New Republic, as usual striving hard to be more repulsive than any other publication in America, is not content to pose fraudulently as the champion of press freedom. It has to engage in its usual racist Slavophobia (last week Sinophobia got its regular go-around). The Russians, barbarians that they are, could not care less about freedom: "[A]s NTV’s enemies set about seizing Russia’s only major independent TV network, not only are the broader masses not up in arms but many Russians, if not most, are actually on the government’s side… One recent poll showed that 52 percent of Russians believe NTV would work the same or better if it belonged to the government. Another, released last month, revealed that 57 percent want to reintroduce censorship." The New Republic is hardly one to raise the issue of "censorship." Over the years has been a firm advocate of the so-called V-chip. "The NTV fight," the little magazine goes on, "is only Exhibit A of Putin’s drive to consolidate power. Having cowed parliamentarians in the Duma into submission, thrown the governors out of the Federation Council, and silenced the oligarchs who remained after Gusinsky and Berezovsky were forced out, Putin has no serious opposition left." One wonders what the New Republic considers to be "opposition." Is anyone being jailed for his views? Has any political party been suppressed? Have the police broken up any peaceful gathering? Newspapers are being closed down – on commercial grounds, much like everywhere else in the world.

US pundits are unswerving in their demands for the rooting out of corruption in Russia, the elimination of the so-called oligarchs, the crackdown on the tax cheats, the calling in of bad loans. Yet when the Russian Government takes action against a corrupt oligarch who however enjoys the approval of the US Government, then it is clearly a case of unjust persecution. The US media quickly fall into line. Oligarchs who support US foreign policy overnight become brave fighters for freedom. The US Government had no problems with the oligarchs so long as their man, Boris Yeltsin, ensured that Russia remained supine and feeble. A Russia that blindly supports US foreign policy even when it is directly contrary to its national interests, as in the case of the bombing of Yugoslavia, could happily suppress democracy and still get a clean bill of health from US-funded "human rights" watchdogs like Freedom House. During the 1996 presidential election the oligarch-owned media shamelessly promoted the candidacy of the hapless Yeltsin. Yet USAID, the NED, Human Rights Watch, any of the innumerable George Soros-funded organizations did not seem to think the issue merited much attention. In 1993 Boris Yeltsin sent in the tanks against the Russian parliament. The US Government applauded. The Western media could not care less about the murder of elected representatives. But let Russia challenge US interests, however mildly and ineffectively, as it has done in the post-Yeltsin era and suddenly the fate of Russia hangs on the fate of an obscure newspaper that no one had ever heard of up until the day-before-yesterday. Western concern about the fate of democracy in Russia is in inverse proportion to Russia’s acceptance of United States tutelage.

The Safires of this world were cheering on the so-called "privatization" pursued by Boris Yeltsin so long as it was strengthening the Yeltsin regime. The media were writing breathless stories about Russia’s go-go capitalism even as state assets were being looted. Suddenly it turns out "privatization" was not about the creation of a free market at all. It was about the enrichment of a few individuals at the expense of the hardworking masses. This is shocking news. According to the ever-apoplectic Safire, "Vladimir Putin was hand-picked by the band of oligarchs who wanted to maintain iron control of Russia’s economy."

Suddenly it’s "iron control of Russia’s economy." One never ceases to be amazed at the speed with which the pundits fall into line with current US policy.

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