CORRUPTION Syndromes of Corruption

Oligarchs and Clans 127
first Presidential Decree granted criminal immunity to Yeltsin and his
relatives, a move seen by many as a quid pro quo for their backing. Many
oligarchs had careers in the Soviet-era nomenklatura, and built empires by
pushing aside other ‘‘red bureaucrats’’ who dominated the early ‘‘unofficial’’
privatizations; their followings extend into the political, business, and
criminal worlds (Satter, 2003: ch. 4).
The clans are made up of personal loyalists, opportunists, would-be
tycoons, criminals, and corrupt officials. For those seeking to move up in
life, economic and political opportunities outside of a clan are comparatively
few and risky (Ryklin, 2003). In exchange for aiding an oligarch’s
schemes they receive opportunities, money, protection, and a measure of
status. Andrusenko (2003) and Coalson (2003) argue that the regime
itself has such a stake in the oligarchs, in the profits they can deliver and in
the muscle they can use to get things done, that reform efforts from the
center lack basic credibility (see also Shelley, 2001: 252).
Just how powerful business oligarchs are is a complicated question,
made more so by the Putin government’s legal and political offensive
against Mikhail Khodorkovsky and his Yukos Oil empire in the late
summer of 2003. Selective anti-oligarch initiatives continued into 2004.
Those events may mark the opening of a real attack against oligarchbased
corruption; conversely, Khodorkovsky’s arrest may be punishment
for his financing of liberal opposition parties (Mortishead, 2003; Shleifer
and Treisman, 2004), or may be an attempt by state officials to cut
themselves in on the economic action (Coalson, 2003; Goldman,
2003b; Handelman, 2003; Kagarlitsky, 2003; Kostikov, 2003;
Tavernise, 2003b; Weir, 2003).
Oligarchs and Clans in action
How did the oligarchs acquire wealth and power, and how do they use it?
More than any other the ‘‘loans for shares’’ episode of the mid-1990s
enabled oligarchs to oust many ‘‘red bureaucrats’’ who had taken over
industries during the early stage of privatization. In late 1994 the state was
desperate for cash and for ways to jump-start private economic development.
At the same time a few well-connected bankers and businessmen
were looking to take over major firms and natural resources. Vladimir
Potanin proposed loans to the state in exchange for the privilege of
managing major shares of state enterprises. In theory the deal would
end once the state repaid the loans or sold off its interests in the corporations.
Not surprisingly, however, the loans were never repaid (it is unclear
whether the state ever received significant new revenues, as the bankers