Freedom Socialist • Vol. 29, No. 1 • February-March 2008

Russian billionaires thrive amid mass privation
Profits from oil and natural gas put the country back on the world stage

by Monica Hill

A worker tends machinery at the massive Yuzhno Russkoye natural gas facility, a joint German-Russian project that could fill all gas exports to Germany for 15 years. Credit: Ilya Pytayev / RIA Novosti

Since the dissolution of the Soviet Union in the early 1990s and the re-institution of capitalism, experts tell us that the Russian economy has stabilized, democracy has expanded, Putin is popular, life is swell.

But, actually, the peoples of Russia have never recovered from the poverty, illness, drug addiction and desperation that overwhelmed them when the Soviet Union collapsed. Workers who had grown up with the world's most advanced education and most encompassing social services were left to sink or swim for themselves. Only the looters, human and drug traffickers, gangsters and eventual investors flourished.

They cannot be pleased now that the working class is beginning to rumble.

Restoration not all it's cracked up to be. Business analysts point to Russia's economic growth in the last few years. They don't mention that three or four people freeze to death every day in Moscow during the winter months. HIV/AIDS, almost nonexistent in the days of the Soviet Union, has become an epidemic due to the explosive increase of intravenous drugs. Russia's death rate is the highest in Europe largely because of the relentless spread of AIDS and tuberculosis, both diseases of poverty and neglect. The federal budget has run surpluses since 2001, but the extra funds are not used to alleviate low wages, homelessness and an unsafe healthcare system.

Russia's population is sharply declining because of these crises. A good many people migrate. And appalling numbers of young women and children are kidnapped and forced into the sex and slave trade. Trafficking around these most vulnerable has become hugely profitable - from Moscow to Tel Aviv to New York City. No doubt it also contributes to Russia's "economic growth."

Oil, the major player. In the midst of privation and degradation, Moscow boasts the most billionaires of any metropolis with the possible exception of New York City. Where does this wealth come from? Oil, mostly, and gas. Petroleum's beneficiaries live in big-city enclaves where apartment prices never fall below a million dollars. Such construction projects, built by gigantic companies such as state-run Gazprom, the biggest gas company in the world, are known as "cities of millionaires."

Russia has the planet's largest natural gas reserves and the eighth largest oil resources. It exports these precious commodities for lots and lots of profit. This is the capital that launched Russia back onto the world stage. "Similar to the long battle over sea lanes in prior centuries," writes Steve LeVine, author of Oil and Glory, the major world powers "are doing all they can to take control over the pipelines that carry former Soviet oil and natural gas to the rest of the world."

Electoral relief? Ordinary people are ready for change. But it's not going to come via the ballot box.

President Vladimir Putin cannot run for a third term. So he selected his protégé Dmitri Medvedev, current chairman of Gazprom, to be the presidential candidate in March 2008. Medvedev shortly thereafter announced that Putin would be his prime minister.

In early December, their political party, United Russia, netted a landslide victory for Russia's national parliament. Their largest opponent, the Communist Party, is leftist in name only and has no strong revolutionary challenger. In the short term, then, no one expects Russia to undergo a change of direction through the electoral arena.

Workingclass organizing. Marxist Boris Kagarlitsky writes, "There is no capitalist solution to Russia's problems. ... In the longer-term perspective there are still grounds for optimism. The restoration carried out by Yeltsin in Russia not only failed to end revolutions for good, but created the preconditions for a new revolutionary cycle."

Those preconditions include independent trade unions that are beginning to abandon the official labor organizations whose primary function is to prop up the United Russia party. From mines and refineries, to auto, Coca-Cola and Heineken factories, unaffiliated unions are mounting work actions, picket lines and strikes for better wages and working conditions. A three-week strike at the Ford factory last December was a highly publicized and serious sign of the times. Labor is on the move in Russia, and in this epoch of globalization, workers in one nation can look for help from those in other countries.

Those billionaires shouldn't get too comfortable.