Obit Desk

The Wheeler-Dealer

Boris Berezovsky and Russia’s roaring 1990s.

Among the Russian tycoons who emerged after the fall of the Soviet Union, there were many reclusive figures who sheltered behind the tinted glass of their armored limousines, their armies of public relations men and bodyguards. They kept the outside world at bay, including the people of Russia who came to despise them. Boris Berezovsky had his share of protection, too, but he could not resist the limelight and the lure of being a kingmaker.

He would hold court at press conferences and breakfasts, give interviews in his club, and appear endlessly on television. He was a short man, with arching eyebrows and a soft, hurried voice. He was always rushing toward something big. When he was in mathematics in Soviet times, it was a quest for the Nobel Prize. When he was in politics, it was controlling President Boris Yeltsin.

At the time of his death outside of London on March 23 at 67, he had slipped into near-obscurity, known primarily for his periodic outbursts against Russian President Vladimir Putin and for a legal battle with another oligarch, Roman Abramovich. Perhaps the final irony of Berezovsky's life is that his last great act as kingmaker -- bringing Putin to power -- backfired on him, and he was never able to recover. After a series of disagreements with Putin, Berezovsky moved from Moscow to London in late 2000 and never went back.

But the most important part of Berezovsky's story is not the last. Rather, it is how he rose to power.

He wasn't the most visionary oligarch. Others began to squeeze fortunes from the dying Soviet state much earlier. But once he got going, Berezovsky showed a particular knack for exploiting the nexus between wealth and power.

The collapse of the Soviet Union gave rise to enormous imbalances. Prices, property, and trade were set free. The transition between failed, centrally-planned socialism and the rapacious new market capitalism left a huge opportunity for arbitrage and rent-seeking. The hyperinflation of the early 1990s destabilized the economy and wiped out the savings of the population. But for the most daring businessmen -- men like Berezovsky -- the wave of inflation was an incredible opportunity. The lure was especially strong for those who already had connections.

Berezovsky grasped how connections were vital in the lawless days of the early 1990s, an era when the state was feeble and power was something to be wrangled and co-opted.

An early example was his move on the Soviet-era car factory, Avtovaz.  He knew that the boxy little Zhiguli cars made on the banks of the Volga were a dream of many people in the late Soviet era. "I understood one important thing," he told me once in an interview. "At that time, an enormous number of people wanted to buy cars. It didn't matter if they lacked an apartment. It didn't matter if they lacked clothes. But if only there would be a car!"

When he said this, Berezovsky was sitting in the 19th-century mansion he had transformed into the Logovaz club, wearing a pressed white business shirt and an elegant maroon silk tie, sipping from a glass of red wine. He savored the memory, as if it had rushed back to him again through all the years, of how desperately people wanted a car of their own, a dream that he too had shared. He once swapped a car with a friend every other week.

"Possessed," he told me, pausing again. "I remember myself. My first car appeared when I was 40 years old. Half a car. One week mine, the other week his."

The Avtovaz car factory was a leviathan, three times the size of the average U.S. automobile plant, with four assembly lines, capacity to produce 740,000 cars a year, and a country of people who were eager to own a car. In the Soviet Union there was one car for every 22.8 people, compared with one for every 1.7 in the United States.

To become the largest distributor in the country, Berezovsky ingratiated himself with the management.

The factory was a state enterprise that had been built by the state and received state subsidies. The Zhigulis came out of the gate with artificially low, subsidized state prices. Then they were sold at a huge markup. Traders would take a batch of cars -- 100 or 200 -- on "consignment," meaning that they could take the cars now for a small sum and pay the rest back later, or not at all. Bureaucrats who worked in the factory took bribes to grease the way for the deals, which were measured in a special code: the height in centimeters of a stack of dollars. Criminal groups stood on the assembly line and claimed the cars as they rolled off; anyone who interfered would suffer. Violence was endemic.

Berezovsky didn't bother with small consignments or the small-time criminals. He went right to the executive suite.

Instead of 100 cars, he persuaded the factory to give his dealership a huge fleet of cars on consignment -- tens of thousands. Berezovsky later recalled the terms were 10 percent down and the remainder to be paid two and a half years later. The hidden trick in the deal was that Berezovsky was going to repay Avtovaz in rubles -- and hyperinflation was just around the corner. The hyperinflation meant that he would pay back for the cars in rubles that were worth far less than when he bought the cars.

For example, in January 1993, the wholesale price of a basic Zhiguli, the model VAZ 2104, was 1 .9  million rubles, or about $3,321. At Logovaz, Berezovsky's dealership, the retail price for this car at the time was $4,590 , or a markup of $1,269 per car. Over the next two and a half years of inflation, the ruble went from 527 to the dollar, when Berezovsky made the deal, to 4,726  to the dollar.  The deal meant that Berezovsky was getting the cars for a song. He knew what he was doing. If he took a consignment of 35,000 cars and made, conservatively, $3,000  on each, that was a $105 million deal.

"Of course, we would return the money as late as we could, because the value of the money was falling," Berezovsky told me  "We understood that a powerful process of inflation was going on. The devaluation of the ruble. The economists at Avtovaz didn't understand this."

Berezovsky went on to apply similar cunning to other deals, and ultimately rose to become the most prominent of the oligarchs who wielded power behind the scenes in Yeltsin's Kremlin. They saved Yeltsin's re-election campaign in 1996 and reaped handsome rewards: privatization of still more state assets, including some of the crown jewels of the oil industry, at fire-sale prices. The marriage of wealth and power was complete.

It couldn't go on forever. Yeltsin, frail and exhausted, eventually relinquished his office. Berezovsky was not the most astute politician, and he badly misjudged the man he helped select as Yeltsin's successor, Vladimir Putin, who did not want to be a puppet and had nothing but disdain for the oligarchs. He set out to break their grip on power.

Berezovsky was among the first to go.

Warrick Page/Getty Images

Obit Desk

A Real American Hero

Remembering George McGovern.

George McGovern's father was a miner turned Methodist minister, and the future senator grew up poor. No matter, perhaps: There are children of ministers who grew up poor in once-populist strongholds during the Great Depression and then devote their lives to forgetting where they came from or priding themselves on having pulled themselves up by their bootstraps and left the losers trailing in the dust.

There were no doubt other 19-year-olds beside George McGovern, who, on hearing the news from Pearl Harbor, rushed off to enlist in the Army Air Forces.  There may even have been one or two others who decided, in the course of 35 bombing missions over wartime Europe, that the appropriate sequel to the fear and trembling of wartime was to finish his college degree (on the same G. I. Bill that many today consider a contemptible element of the nanny state) and then become a professor of history. Along the way, influenced by the Social Gospel, he went to divinity school. About his war service, he rarely spoke -- even during the presidential campaign when he was savaged for insufficient respect for the divinity of an American war cause. When he returned to school -- Northwestern -- to write a dissertation on the Colorado coal strikes, his adviser was Arthur Link, the biographer of Woodrow Wilson. Had McGovern won election in 1972, he would have been the first president since Wilson with a Ph.D.

He was a liberal, not a radical, and he trusted in liberal leadership. In August 1964, against his better judgment, at the behest of the usually astute Sen. J. William Fulbright, he voted for President Lyndon Johnson's Tonkin Gulf resolution, and quickly regretted it. What made him an old-fashioned sort of liberal was his moral directness. When, in the Senate of 1970, he rose in favor of the McGovern-Hatfield bill, which would have cut off American military operations in Vietnam and withdrawn all the troops, he said this:

"Every senator in this chamber is partly responsible for sending 50,000 young Americans to an early grave. This chamber reeks of blood. Every senator here is partly responsible for that human wreckage at Walter Reed and Bethesda Naval and all across our land -- young men without legs, or arms, or genitals, or faces or hopes.

"There are not very many of these blasted and broken boys who think this war is a glorious adventure. Do not talk to them about bugging out, or national honor or courage. It does not take any courage at all for a congressman, or a senator, or a president to wrap himself in the flag and say we are staying in Vietnam, because it is not our blood that is being shed. But we are responsible for those young men and their lives and their hopes. And if we do not end this damnable war those young men will some day curse us for our pitiful willingness to let the executive carry the burden that the Constitution places on us."

These were not the words of a communist but a moralist.

The bill went down, 55-39.  Many more thousands of Americans and hundreds of thousands of Vietnamese, Cambodians, and Laotians went down before President Richard Nixon had the grace to resign, and even then, the bill of impeachment failed to cite Nixon's secret (from Americans, that is) bombing campaigns in Cambodia (Rep. John Conyers of the Judiciary Committee moved an additional article of impeachment, charging truthfully that Nixon submitted to Congress "false and misleading statements concerning the existence, scope and nature of American bombing operations in Cambodia.") Many thousands of tons more napalm and Agent Orange (among other incendiary and poisonous weapons) rained down on Southeast Asia because, as McGovern would put it in his ringing acceptance speech at the Democratic Convention of 1972, "during four administrations of both parties, a terrible war has been chartered behind closed doors."

That notorious speech became, to the neoconservatives, emblematic of American gutlessness. The neocons, then and since, did not pay so much attention to this line: "In 1968 many Americans thought they were voting to bring our sons home from Vietnam in peace, and since then 20,000 of our sons have come home in coffins." Or this, in a reference to Nixon's campaign of lies in 1968: "I have no secret plan for peace. I have a public plan. And as one whose heart has ached for the past 10 years over the agony of Vietnam, I will halt a senseless bombing of Indochina on Inaugural Day." Or this: "There will be no more Asian children running ablaze from bombed-out schools. There will be no more talk of bombing the dikes or the cities of the north."

Or this:

"America must never become a second-rate nation. As one who has tasted the bitter fruits of our weakness before Pearl Harbor in 1941, I give you my pledge that if I become the president of the United States, America will keep its defenses alert and fully sufficient to meet any danger."

No, what freaked them out was three words: "Come home, America." The refrain was embedded like this:

"From secrecy and deception in high places; come home, America.

"From military spending so wasteful that it weakens our nation; come home, America.

"From the entrenchment of special privileges in tax favoritism; from the waste of idle lands to the joy of useful labor; from the prejudice based on race and sex; from the loneliness of the aging poor and the despair of the neglected sick -- come home, America.

"Come home to the affirmation that we have a dream."

"Isolationist," they called him, shuddering at the South Dakotan who devoted much of his life to shipping American food around the world. To people exhausted by years of wretched, indefensible war--like me, for the first time granted a presidential candidate I could zealously vote for -- these words were so, so long overdue. In many ways, they still are.

For his nobility, McGovern has been cursed for decades. When Newt Gingrich was riding high after his victorious off-year elections of 1994, the worst thing he could say about Bill Clinton (who had indeed, with Taylor Branch, run McGovern's Texas campaign) was that he was "an enemy of normal Americans" and a "counterculture McGovernik." The real George McGovern, crushed by Richard Nixon in 1972, must be remembered as the man who stood up to recover America's honor. R.I.P.

Cliff Owen-Pool/Getty Images