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You're Fired! By: Reuben F. Johnson
The Weekly Standard | Monday, June 09, 2008

Kiev - IN THE 1990 FILM adaptation of John le Carré's The Russia House, Katya (Michelle Pfeiffer) gives the English book publisher played by Sean Connery her take on how little the perestroika (economic restructuring) and glasnost (openness of expression) policies of the Gorbachev era have actually done for the country.Unable to find a place to buy a decent pair of new shoes, she says, "Everything is corrupt and incompetent. Perhaps different people are now stealing."

"Keep your voice down," says Connery nervously.

"Complaining is our new human right," she explains. "Glasnost gives everyone the right to complain and accuse."

The first part of that equation is still true. The Russian system is still wildly corrupt and incompetent. When he took power then-president and now Prime Minister Vladimir Putin ran on a platform that there would be a drastic change and his Russia would be one of a "dictatorship of the law." Much was made of the "rampant graft and malfeasance" of the Boris Yeltsin years and we were all assured that the days of the "wild east" and "cowboy capitalism" were over.

Except that in comparison with how the Putin regime has played out, Yeltsin and even some of the more egregiously avaricious members of his government could be classified as Red Cross relief workers. Everything that has any real value has been concentrated in the hands of the state and the few members of Putin's inner circle. These are operatives who can trace their roots back either to their days with him in the KGB, or to the St. Petersburg mafia that formed around Putin when he was an official in the government of Russia's second city.

The most recent example has been the creation of Russian Technologies, a state corporation that not only controls Rosoboronexport, the state arms export monopoly, and a number of defense and aerospace enterprises, but also is seeking to take control of over 500 Russian enterprises. Critics have charged that Rostekhnologia, as it is called, is an extension of Putin's power, as it is run by Sergei Chemezov, a KGB colleague of Putin's from the days when they served together in Communist East Germany.

"There is no question that Chemezov is the right hand of Putin," said one Moscow-based analyst. "He is one of the handful of people who have the phone number that Putin answers personally--even in the middle of the night."

Critics of Rostekhnologia call it "an industrial version of Gazprom [the Russian state-owned natural gas monopoly]" and say that placing enterprises under the Rostekhnologia umbrella makes oversight of their operations much more laborious and gives Chemezov and his deputies control of the revenue streams from all of these firms. Like the state gas giant, the new company has almost no constraints placed on it by the government, nor would it necessarily be inclined to respond to market forces.

Unfortunately, the second part of the quote by Michelle Pfeiffer's Katya, the right to complain and accuse, is no longer true in Russia. The Chief of the General Staff, Gen. Yuri Baluyevsky, found out this week just how extinct that privilege now is, when he was fired and replaced by an ally of Russian Defense Minister Anatoliy Serdyukov, Gen. Nikolai Makarov.

Baluyevsky had repeatedly clashed with Serdyukov, who does not enjoy the highest level of confidence from the Russian senior officer corps. Unlike previous defense ministers, Serdyukov has no experience in the military or intelligence services and is actually a former furniture-store manager from--you guessed it--St. Petersburg.)

Simply put, Baluyevsky's criticisms were unacceptable because his opposition was getting in the way of Chemezov and Serdyukov's big plans. In late April Chemezov pushed for Rostekhnologia to become the chief weapons buyer for the Russian military. Previously the military purchased weaponry direct from Russia's defense enterprises. By becoming the middleman in transactions for six of the nation's largest weapons programs, Rostekhnologia gains access to deals worth almost $43 billion in Russian state funds.

Rostekhnologia also has a supervisory council, which is not surprisingly headed by Serdyukov himself. With Chemezov, he is in the process of "carrying out a personal consolidation of power over the military by Putin and company," according to a Moscow defense journalist.

The announcement of Baluyevsky's dismissal was accompanied by strong criticisms broadcast on Russian state-controlled channels one and two (ORT and RTR). "It shows that now even if you are high-ranking--even the highest ranking military official--you cannot express any dissatisfaction with the ruling order," said the journalist.

"Make no mistake about this," said another Russian defense correspondent. "This was a Putin-Chemezov decision, even though the order for Baluyevskiy's firing officially comes from Russia's 'decorative' president Dmitri Medvedev."

In an improvement over the Stalin era, it must be said, Baluyevskiy is not being executed or reported as having "committed suicide." Instead Medvedev has given him the largely unimportant job of Deputy Chairman of the National Security Council and has awarded him an Order of Service to the Fatherland medal. Which is fitting: a new decoration for a man now in a decorative post--serving a decorative president.

Reuben Johnson is a regular contributor to THE WEEKLY STANDARD Online.

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