Union of Red Directors unites the oligarchs

Issue Number: 
Vera Kuznetsova

Arkady Volsky, chairman of the Russian Union of Industrialists and Entrepreneurs (RSPP), has announced reforms for his rather conservative organization, popularly referred to as the "Union of Red Directors."

The union's managing board, which brings together 150 businessmen, met Nov. 10 and decided to replace some of the old members with new ones – mostly former and current oligarchs. The new guard includes Anatoly Chubais, Vladimir Potanin, Mikhail Fridman, Oleg Deripaska, Mikhail Khodorkovsky, Kakha Bendukidze and Vladimir Mordashev.

As well as diluting the RSPP's conservative management, the reformers have also entered the holy of holies – the union's bureau, where they are now in the majority, having gained more than half of the 27 seats. It's quite probable that they will soon gain even more of an advantage over the Red directors.

The RSPP will become something more like an oligarch trade union – an organization that will try to keep a balance of interests on the market during the transition period. The members won't just work with each other, but will also work with the authorities. The new members of the RSPP say that this is the ideology of their move to reform.

But though proclaimed by Volsky, the reform idea is not his – it comes from the new guard. Some of them were already members of the union, in particular Oleg Deripaska, Vladimir Potanin and Kakha Bendukidze. The oligarchs had never shown much interest in the amorphous union, getting together only when Volsky organized some presentation or other for whoever the new prime minister was and making threatening speeches about government policy and the pace of reform.

The oligarchs' slogans were for greater liberalism and less bureaucracy, and for tax reform. The problem was that it wasn't the oligarchs who played first fiddle in the organization, but the above mentioned Red directors and members of the old Soviet nomenklatura. With the patriarch of the nomenklatura, Volsky, at its head, they turned the RSPP into a pure lobbyist organization.

But they didn't lobby so much their business interests as their personal interests. As a result, the RSPP ended up on the margins of public life. People remembered Volsky's union only when some Russian politician or other had to publicly announce somewhere that Russia had its entrepreneurs and that they even had their own organization.

The RSPP most likely would have died a natural death if the oligarchs hadn't decided to use it to unite themselves. Of course, they could have created an entirely new organization, but perhaps because the oligarchs are busy people, they decided it would be easier to reform the old union. Also, there was no sense in creating a bunch of parallel structures.

But reforming Volsky's union has turned out to be just as complicated as putting together a new organization. The reformers' ideas on the role and functions of the RSPP differed greatly from those of the Red directors. Volsky, who is ready to change his image in order to keep his job, hasn't fully understood, it seems, the point of the reforms.

The reformers proposed giving the union the name "Solidarity" and plan to use it if necessary to defend their business interests, especially from the encroachments of the state. But just before Nov. 10, Volsky made a statement that smacked distinctly of primitive lobbying. He said that having Chubais and Khodorkovsky in the RSPP would "enable us to have a mutual influence on each other." Together with the energy, oil and transport bosses "we can conclude a cartel agreement on tariffs," Volsky said.

It's not clear who Volsky had in mind – the prime minister, or Railways Minister Nikolai Aksyonenko, the main supporter of a cartel agreement, but the reformers' ideology definitely didn't sink in, or he didn't want to let it sink in. This suggests either the end of Volsky's career as head of the union, or the end of the oligarchic reform before it has even got off the ground.

But not all representatives of the new guard are thirsting for radical reform of the RSPP. Some of them, such as Deripaska and Potanin are happy with the way things are today. (Both have virtually "privatized" Volsky in that they've co-opted him as an asset). But they are happy for different reasons. Potanin doesn't need change because he won't be able to get his own man into the chairman's post, and new people would be neutral and therefore unacceptable.

Deripaska has an even broader agenda. He represents in the RSPP not just his own interests, but also those of Roman Abramovich and the "Family" (which some have forgotten, though it still exists), and even, strange as it may sound, the Kremlin. In any case, the presidential administration, which had only just resolved, it seemed, the oligarch problem in Russia by making the businessmen get into line behind Putin, is not very happy to see the oligarchs again raising their heads.

The deputy head of the administration Vladislav Surkov, responsible for relations with public organizations, spoke favorably about not meddling in the oligarchic process, but nonetheless hinted that any independent games played by the oligarchs aren't to the Kremlin's liking.

But if there's no stopping the movement, the Kremlin can, at least, either try to head it or make it collapse from within. That's why Deripaska is putting a brake on the radical oligarchic reform within the RSPP. Deripaska now represents the reins of power.