Witness to the Fall of the Soviet Union, part 2: Capitalism – Russian-Style, 1992 – 1994

We learned that doing business in Russia requires a kryusha – a roof for protection, of which there were two kinds: the unofficial Russian mafia one, or the official government one that usually included the KGB. Our Russian partners handled relations with the kryusha, in this case the municipal government of St. Petersburg whose Deputy Mayor, Vladimir Vladimirovich Putin, oversaw international business relations. He was a serious, somewhat reserved, calculating yet pragmatic Russian patriot. He hosted and participated in many international conferences seeking to improve Russia’s relations with the West.

     Starting in 1992, we got into other entertainment projects. We were producers of a Hollywood film “Russian Holiday” in which Victoria starred with Barry Bostwick and E.G. Marshall.  We were asked by St. Petersburg municipality to help organize and promote its annual White Nights Festival occurring at the summer solstice. We organized rock groups and performers for the festival to include Blood, Sweat and Tears; Salt n Pepper; Jose Feliciano; Ricky Martin; and Falco. To promote the 1993 festival, we brought Deputy Mayor Putin and his wife to New York. We held a reception at the Russian Tea Room attended by Henry Kissinger and other notables and introduced Putin to leadership of the Council on Foreign Relations. Regretfully, I have to say that we hosted Vladimir Putin on his first visit to the United States.

     On the business side, Russkoye Video, our partner in St. Petersburg, always had  cash-flow problems. On each visit we would see new faces in the hallways, former KGB types or local investors looking for a quick buck from their illicit earnings. Strange things then happened. One of the investors was killed in a late-night car crash in the city center; two weeks after his funeral, his partner suddenly died of an asthma attack. The KGB guy then organized a Russian Orthodox priest to sprinkle holy water throughout the headquarters building and purge it of evil spirits. You can’t make this stuff up. But the lesson here is that mafias — unofficial and official – were moving into the private sector and business disputes were not being resolved by lawsuits.

     To punctuate the message, ten years later, the founder of Russkoye Video ran afoul of his kryusha protectors and was imprisoned in the notorious Lefortovo prison where he languished and died. The founder of Video International later became Minister of Communications under President Putin and established the Russia Today international television network. In November 2015, he died from blunt force trauma in the Dupont Circle Hotel in Washington DC under mysterious circumstances, officially ruled an accidental death. Rumor has it that he was in DC to testify before a grand jury.

     In October 1993, I witnessed the last gasp of the Communists as they nearly toppled Yeltsin’s Government of the Russian Federation. President Yeltsin was in the midst of a constitutional crisis with hard-liners in the Russia Parliament. On a warm, quiet Sunday afternoon of October 3, Russian Federation Vice President Rutskoy led a mob of Communist sympathizers to attack the White House housing the Russian Parliament and the Ostankino complex housing the national tv and radio channels. Fighting was fierce at Ostankino, and the mob came close to occupying it. If they had, the outcome for Yeltsin might have been a disaster. The mob did seize the White House.

     That night I walked with Nikita through the streets of Moscow and passed by the Ministry of Defense headquarters where all the lights were on. Later I learned that President Yeltsin was there striking a late-night deal with top Army generals allowing them to profit handsomely from the pending military withdrawal from Eastern Europe. Equipment and supplies were to be sold off as the troops pulled back to Russia, and the proceeds were not expected to reach the coffers in Moscow.  

     That deal brought military units into Moscow early October 4 to surround the White House.

I went down there and perched myself along with thousands of Muscovites on top of an adjacent building to witness the battle.

   

Tanks were firing into the White House. Automatic gunfire was indiscriminately flying about.

Crowds of onlookers along the banks of the Moscow River were cheering as if they were at a boxing match. Finally, around 3 p.m. a white flag emerged from the White House, and the occupiers came out with hands up only to be severely beaten by awaiting soldiers. The rebellion was over.  

Time to Pull the Plug – 1994

     Major changes forced us to pull out in 1994. Russian mafias had moved into the advertising business, and we had no desire to compete against them. Then, Western media companies began to set up in Russia and no longer needed the middleman to deal with Russian broadcast entities. Russia Television did its own deal with the US distributor to broadcast “Santa Barbara”. The handwriting was on the wall, and we pulled out.

     After five years working in Russia, what did I learn? First, Russians for the most part are amoral – they have little concern for what is right and wrong. They may have heard of what’s right, but it does not influence their actions very much. That leads to the second point: Russian society is not based on right vs. wrong but on strong vs weak. Only the strong survive and anything goes to acquire and maintain strength. Third, the near absence of legal or moral boundaries leads to corruption throughout the government, business, and the military. And finally, why were we and NATO so afraid of Russia’s conventional military power? Yes, they have nuclear weapons, but otherwise to me, the country was “70 years of deferred maintenance”. Little worked well in the civilian economy outside of the Moscow subway system, and I can’t believe that the Russian military was much different. After seeing the Russia Army’s performance in the first year of its war in Ukraine, I still hold that opinion.