#33 | March 19 - 26, 1998  

By Matt Taibbi

Attempt after attempt has been made by journalists and academics alike to deconstruct the New Russia, to grab it by the throat and shake the essence of its politics out on paper for the whole world to read and digest, and do you know what? In seven years, not one person has gotten it right yet. It isn't a fledgling constitutional democracy with elements of monarchy; it isn't a despotic city-state; it's isn't Chicago in the 30s, Paris in the 20s, or America in the age of the robber-barons. All you people who think that way, you're all aiming too high.

Modern Russia was actually born 56 years ago, at Warner Brothers studios in Hollywood, California, on a slow pan across a fake sandstone set filled with extras in desert gowns. Like Russia, this was another work in progress, with an unfinished script. In fact, it was very much like Russia: there was really no script at all. All there were were a pair of Jews named behind the scenes, chomping cigars and jointly ruminating over the business plan-again a lot like today's Russia. Suddenly a police whistle blew on the set, and a gang of actors dressed in Vichy police costumes ran around hauling the extras into a van. Backstage, character actor Claude Rains was rehearsing the line: "Round up the usual suspects!"

Howard Koch and Julius Epstein were grateful their whole lives that audiences decades later still loved the script they wrote for Casablanca. What they didn't know was that 50 years after the play "Everyone Goes to Rick's" was written, a gang of goofball American consultants would rebuild the Russian empire in the image of their version of a North African Vichy protectorate. The only difference was, like all artistic imitators, the goofball consultants screwed it up, making a B-movie out of a classic. Captain Renault was funny when he rounded up the usual suspects. Yuri Skuratov isn't-unless you're not Russian. In which case he is really, really funny.

Casablanca marked a pretty early stage in the evolution of the new Russian state. The real meat and potatoes of the state formula wasn't put together until later, when first the Godfather movies and finally Goodfellas came out. If you know those films, you know Russia. Because the truth is, the thing that no Russia observer has yet been able to accept, is that Russia is a mafia state. Not because the actual criminal mafia is prevalent, but because the state itself is a mafia-built along lines exactly analagous to the Giancana and Lucchese Sicilian clans our most familiar mafia movies were based upon.

What follows is an introduction to a new regular eXile feature called the Mafia Scoreboard. This is our ongoing guide to Russian politics, based on our "Death Porn" format, deconstructed in a way that anyone can understand it. Like "Death Porn", it's got a legend with illustrated icons, so you can get the gist of what's going on at a glance. Better yet, it'll allow you to have a thorough understanding of modern Russia without having to read Jeffrey Sachs or Anders Aslund, take a Russian studies course, or even open up a history book. All you need to have done is seen a few movies and know a few cultural references, and you can get a perfect grip on the guys who run this country.

Below is a list of the "Mafia Scorecard" icons, along with explanations of their sources, and examples from recent Russian history to get you into the swing of things.

"A police department for wiseguys."

Remember Paul Sorvino whispering into Tutti Cicero's ear in his backyard during a barbecue in "Goodfellas?" Ray Liotta's narration set the scene: "That was what the FBI never understood. The mob was just a police department for wiseguys." If you want to know what Boris Yeltsin is, he's the Russian version of the Sorvino character Paul Cicero, who was based on a local Lucchese family crime boss from Brooklyn. Yeltsin isn't surrounded by good guys and bad guys any more than Paulie was-they're all bad guys. His role is to mediate disputes and divide up tribute among the thief-wiseguys who make up his circle of advisors, taking a piece of everyone's action all along the way. When Liotta took the Air France heist in "Goodfellas," he did it right-giving Paulie his $60,000 cut. When big-time wiseguy Boris Berezovsky robbed not one plane but an entire airline, seizing Aeroflot and setting up a mechanism for routing revenues straight into his own holding companies in Switzerland, he "did it right", too, naming Yeltsin's son-in-law head of the airline. But when Berezovsky got too big, making a run for Rem Viakharev's job at Gazprom, Yeltsin-almost certainly at the behest of rival wiseguys Anatoly Chubais and Boris Nemtsov-dismissed him from the security council, and balance in the thief-world was restored.

Just as the FBI never understood what the mob was all about, the Western press still doesn't have a clue about Yeltsin. He isn't a democrat or even a President in any normal sense. He's a crime boss. And what the Western press, like the FBI, never understood about crime bosses is that they don't actively administrate crime that often. They don't build networks of pimps and drug dealers themselves. They just wait for them to appear, and demand cuts of their operations. There's less labor involved that way, and it also instills a healthy capitalist sense of competition among crooks. If pimp A isn't earning and pimp B moves in and says he can pay a bigger cut, the boss gets rid of pimp A. Pimp B then owes the boss a favor, usually a job for one of his family members. The point is that the boss's power base doesn't exactly come from his own people. It's a network of diverse thugs who usually rise up out of their own inititative-like Jimmy Conway, the Irish truck hijacker (played by Robert De Niro) in "Goodfellas". So in order to stay in power, he has to make sure that no one gang gets too big. Otherwise he becomes superfluous.

That's why Yeltsin has held on so long. He's done a very skillful job of keeping the Capos balanced. He even fired his best friend, Alexander Korzhakov, to reassure the plurality of neo-capitalist banker-thieves who by 1996 formed his chief power base. That's what it takes to be a good policeman for wiseguys.

"I'll make him an offer he can't refuse."

In the Godfather, Robert Duvall, playing consigliere Tom Hagan, asks Don Corrleone how he'll convince L.A. film producer Jack Woltz to take crooner Johnny Fontaine for a part he's been rejected for. "I'll make him an offer he can't refuse," Corrleone says. Hagan goes to LA, has Woltz's thoroughbred decapitated, then slips the bloody horse head between his sheets while he's asleep. That scene was based on the story behind the casting of From Here to Eternity, where Frank Sinatra got the Oscar-winning lead role-presumably with the help of mobster Johnny Roselli-after initially being rejected for the part.

The offer that can't be refused is the chief unit of currency in Russian politics. Like Mario Puzo's L.A. producer, Russian politicians usually get the offer after they cross the wrong people and make an ill-advised power play. The classic example happened last summer, when Central Bank chief Sergei Dubinin make the bad mistake of trying to wash government laundry out in the open, calling a press conference to accuse Andrei (Nine Lives) Vavilov of MFK (and former Deputy Finance Minister) of embezzling over $300 million in funds intended to pay for the production of MIG airplanes. Dubinin normally wouldn't have cared, but the money disappeared at a tense time in the Kremlin crime family-the Svyazinvest bid was coming up, and all the Capos wanted every kopek they could get their hands on to make the bid. In any case, shortly after Dubinin was pushed into making his much-ballyhooed press conference, the Central Bank President's apartment was riddled with bullets for the second time in two years. General Prosecutor Skuratov had scarcely had time to round up the usual suspects before Andrusha Nine Lives made a balls-on-his-sleeve triumphant return to Moscow, holding a press conference in the Radisson to deny any wrongdoing and hint that he had a thing or two to tell about banks close to Dubinin and Chernomyrdin. Shortly afterward, Dubinin held a press conference to announce that he had been wrong and that the money actually had never been missing. He'd been made an offer he couldn't refuse, and he didn't. Weeks later, Vavilov ally Vladimir Potanin won the Svyazinvest auction.

Russia observers should look for the "offer he can't refuse" every time a politician in this country does an about-face overnight. In 1993, Kalmyk President Kirsan Ilyumzhinov could be observed crawling along the glass shards on the floor of the besieged White House, having come out in support of the Rutskoi/Khasbulatov putsch. When Rutskoi and Khasbulatov bit the dust, Ilyumzhinov and a lot of the other regional leaders who picked the wrong horse suddenly looked expendable. Ilyumzhinov, though, hung on and a few years later enthusiastically delivered 66% of the Kalmyk vote to Yeltsin in the 1996 election. Coincidentally, planned investigations into the uses of Federal budget money in Kalmykia were stalled and finally dropped. Kalmykia, incidentally, is home to some of Russia's choicest thoroughbred farms- none of the horses got decapitated, and Yeltsin got the lead role he was after.

"You bring it in the front door, you move it right out the back."

Russian economics at its core. This isn't robber-baron capitalism; this is Paul Cicero capitalism. People seem to forget that the American robber-barons actually built things-railroads, coal mines, steel mills, telegraph lines. Russian barons, on the other hand, get rich the same way Paul Cicero did in Goodfellas-by moving in on legit properties that already exist. In that movie, when a restaurant owner realizes he can't deal with Joe Pesci breaking bottles over his head anymore, he turns to Paulie for protection. Paulie shrugs. "What do I know about the restaurant business? I just know how to order a meal." Finally Paulie relents, takes a piece of the restaurant, and Joe Pesci isn't a problem anymore. But the restaurant goes through a metamorphosis. Liotta narrates: "You load goods in the front door, you move it right out the back and sell it at a discount. You take a case of whiskey that costs $200, and you sell it out back for $100...It doesn't matter, it's all profit!"

That's how Russian business works. At companies like ORT, or Aeroflot, or especially AvtoVAZ, you move taxpayer money in the front door and sell it right out the back at a discount. Or, to put it another way, you take budget money to buy your airplane fuel and your spare parts, sell the tickets at whatever price you can get, then pocket whatever the gross is, never worrying about repaying the principal.

AvtoVAZ is the classic Russian black hole. Taxpayer money goes in to make the cars, and the finished product moves right off the line out the back door to a series of mafia groups, who sell the cars at whatever price they want. Norilsk Nickel for years was exporting billions of dollars of metals every year, but not paying its workers or repaying profits to the state. Aeroflot? Money went in to keep the planes in the air, but as Moskovsky Komsomolets reported last year (in an article that cost reporter Leonid Krutakov his day job at Noviye Izvestia), proceeds from all ticket sales made overseas go to Aeroflot subsidiaries in Switzerland which essentially act as private bank accounts for Boris Berezovsky.

The beauty of Russia over Lucchese-controlled Brooklyn is that here, your credit never runs out. You never reach that moment when you have to light a match and burn the restaurant down for the insurance money because private banks have stopped lending money to keep your fridge stocked. In Russia, you've got one Central Bank, and if you have the right friends, your credit is endless. If you're a media organ like ORT, you can stay in the red forever, so long as you toe the given line in your news coverage. You don't have to pay your workers, and your energy costs and rent are taken care of. That's Russian capitalism-no Chinese work gangs laying railroad track, no empires being built, just a bunch of wiseguys collecting free money out the back door.

"A meeting of the heads of the five families."

In the Godfather, just after James Caan gets whacked and just before Al Pacino comes home from Sicily, Don Corrleone calls a meeting of the heads of the five New York crime families to make a truce and guarantee Pacino's safe return. "If anything should happen to him-if lightning should strike his head-then I'm going to blame some of the people in this room," he says, waving his finger. Corrleone secures passage for Michael, but in return he has to provide political and legal protection for the drugrunning operations the other four families are starting up in their territories (with the crucial caveat that drugs would only be sold in "the colored neighborhoods"). The mere fact of the meeting is high drama; people whose relatives kill one another as a matter of routine don't get together that often. To even consider calling a meeting of the heads of the five families means something serious is about to go down. Russia is no different, except that here, you've got seven families instead of five. Instead of Don Bardzini you've got Boris Berezovsky; instead of Bruno Tattaglia, you've got Mikhail Khordakovsky, and so on. Even though there are seven of these guys here, the eXile, in the interests of literary consistency, is going to continue to refer to any meeting between them as a meeting of the heads of the five families. Because that's what they are, according to the script. The extra two bankers were a casting oversight.

There have only been two instances in modern Russian history in which things got so serious that meetings of the heads of the five families were necessitated. The first came at the Davos conference in 1996, when Berezovsky, Khordakovsky, Gusinsky et al met to decide the winner of the upcoming Presidential election. They settled on Yeltsin and later appeared together, not for a meeting, but for a photo opportunity, making it clear that they were actually the five families in the script, and that they had met as planned and decided to vote incumbent.

Since then even Chubaisite screwheads like the guys at Reuters have openly called these guys the "Group of Seven" oligarchs, which is a close approximation of the truth. But to get it exactly right, you've got to ditch the pseudo-academic term "oligarch." These guys are heads of crime families, each with distinct spheres of influence and distinct sets of judges and cops in their pockets. They even look the part. Check the photo archives.

The second meeting of the heads of the five families came in September, 1997, at the height of the so-called "Banker's War." At that meeting, Boris Yeltsin made a Corrleone-esque appeal for peace, croaking out in his gravelly voice that the bankers shouldn't spend so much time attacking Chubais and Nemtsov, since it was "bad for business." Not much was made of it at the time, but for the lead actor-Yeltsin-to call this meeting of would-be private businessmen in public as a means of settling the affairs of state should have been a signal to all Russia-watchers that Russia had settled once and for all on the Godfather method of government. Nonetheless, you can still pick up the papers just about every day and see Russia referred to by some Western reporter as an "emerging democracy".

"Round up the usual suspects."

Getting back to Casablanca, corrupt Vichy Police Prefect Captain Renault's crimefighting technique of rounding up "the usual suspects" has been a cherished cultural cliche in the States for nearly fifty years. The only problem is, most Americans are so ignorant when it comes to corruption that they actually think that Captain Renault was a caricature, and not a figure from life.

Here in Russia, every high-level crime is met by a rounding up of the usual suspects, who are ultimately set free. When Russian Round Table Chief Ivan Kivelidi was murdered with a sophisticated military poison, Vladimir Khutsishvili, a Kivelidi business associate, was arrested as a suspect then quickly set free. After ORT chief and TV personality Vladislav Listyev was shot, three men suspected of being the contract assassins were hauled in, then set free not long before Prosecutor Boris Uvarov came out publicly to say that he'd been ordered to bring them in as "usual suspects" (Uvarov was subsequently sent on a long vacation). Since then, practically any arrested hoodlum who admits to being unimpressed with the charges against him quickly finds himself facing additional charges as a suspect in the Listyev killing (Skuratov even went abroad in search of usual suspects for that one, pinning Listyev involvement on a Russian emigrant in Israel named Lerner who had been a lawyer for the Solntsevo gang). Moskovsky Komsomolets reporter Dmitri Kholodov got blown up by a briefcase, and even though everybody in Russia knew Defense Minister Pavel Grachev was involved, the only arrests so far have been of an army colonel who was hauled in this year, or three years after the fact. The thread connecting every single high profile killing in post-communist Russia-Listyev, Kholodov, Kivelidi, Oleg Kantor-is that no one has been convicted of any of them. There have been plenty of arrests, though-Russia is full of people just waiting around to be usual suspects.

"Round up twice the number of usual suspects."