Marc Rich and the Rape of Russia

The death of metals and oil wheeler-dealer Marc Rich in Switzerland, who was pardoned by Bill Clinton on January 20, 2001, has led to some rather bland notices in the newspapers, such as this one in the Wall Street Journal. The New York Times' version is a little more forthcoming, but fails to mention his sizable role in the Rape of Russia in the 1990s.

Rod Dreher wrote in the New York Post on Feb. 15, 2001:

Overlooked so far is Rich's role in the looting of the disintegrating Soviet Union by Communist Party officials and their associates in the early 1990s. 

You can read about it in "Godfather of the Kremlin," an exhaustively researched book about Russian oligarch Boris Berezovsky, which was published last fall. The author is Paul Klebnikov, an expert on Russia and a Forbes magazine senior editor. 

The book details the myriad ways Berezovsky and his minions stole untold sums from the Russian people through international financial schemes. 

According to Klebnikov, Rich came into the picture around 1990, when the Soviet Union began to open up to outsiders. 

"Governmental authority began to crumble. All these local Communist Party bosses got to strike deals on their own," the author tells me. 

Based in Switzerland, with its secretive banking laws, Rich was in a prime position to help Russia's plunderers carry out their dirty work. Klebnikov reported that Rich dealt in oil, aluminum, zinc and other raw commodities. 

"He'd strike a deal with the local party boss, or the director of a state-owned company," explains the author. "He'd say, 'OK, you will sell me the [commodity] at 5 to 10 percent of the world market price. 

"'And in return, I will deposit some of the profit I make by reselling it 10 times higher on the world market, and put the kickback in a Swiss bank account.'" 

For at least two years, as the Soviet Union was in its death throes, Rich was that nation's largest trader of aluminum and oil on a spot basis. 

"He made a complete mint off of Russia," says Klebnikov. 

A former foreign-trade minister told the author that Rich instructed the robber-baron elite how to skirt the law by doing secret deals through shell companies and the like. 

"Marc Rich ended up being a mentor to all these young kids who came out of the Communist Party establishment, and who made billions off these schemes themselves," Klebnikov charges. ...

Rich's profitable relationship with the Russians ended in 1993, when the monster he helped create turned on him. The Russian swindlers became so good at Rich's game that they muscled him out of the action. 

"Applying the lessons they learned from Marc Rich, they bankrupted Russia," Klebnikov alleges. "As a result, you have a ruined economy, bankrupt government, and an impoverished population."

One reason nobody remembers this is because, despite the convenient alliteration, the Rape of Russia isn't a thing, not in the way that, say, the Rape of Nanking is a thing. The plundering of the ex-Soviet Union in the 1990s, which was egged on by the Clinton Administration, Wall Street, Harvard, and other highly respectable American institutions was misreported at the time as a triumph of the free market. And now it's mostly being forgotten. A 15-year-ago PBS Frontline documentary explained: 

The auctions, simply put, were imperfect. ... A series of privatization "auctions"--whose results were determined beforehandówere held by the GKI. (There are books out on this phase, but in essence, they held the firesale of the century. ) The engines of Soviet industry --oil companies, metals plants, utilities-- were sold for a song. Russia is among the world's richest countries in terms of natural resources--(The Natural Resources Minister, Viktor Orlov, can run down the list of gold, nickel, silver, timber, oil and of course natural gas--one-third of the world's reserves--for you.). And in short order, the riches were exported by the shipload east and west.

Ever wonder how Estonia, a country that produces no aluminum, became one of the world's top aluminum exporters?

Aluminum plants are typically gigantic investments built near hydroelectric dams. The Soviet Union churned out gigantic amounts of aluminum for its huge air force. Aluminum is pretty much of a commodity in quality, so the general cruddiness of everything Soviet mattered less in aluminum than in just about anything else: the Russians had hydroelectric power galore in Siberia and they had huge, valuable aluminum plants.

This was the market's main cancer: theft. The greed that motivated it (and still does) was impressive. But the theft will go down in history. Economists now talk about state corruption, and of course graft was a contributing cause of the market's death, but pure and simple robbery played the leading role. The rape of Russia's riches in its first decade of "independence" will doubtless be remembered in a century's time as unprecedented.

Is it remembered even in a decade or two's time? Not if the articles on Rich's death are any indication.

Here's an interesting paragraph from a 1991 BusinessWeek article on Rich:

Rich's lawyers continue to press for his return to the U. S., offering to pay multimillion-dollar fines he still owes. Rich's one condition is that he avoid prison. He may have allies in the State Dept. U. S. marshals have tried several times to trap Rich, most recently in September, when they alerted officials in Finland that he was due to arrive by private plane. But in that instance, as in previous ones, Rich got away. A. Craig Copetas, author of a 1985 book on Rich, says the marshals suspect that someone in State, which must be notified of such operations, is leaking their plans to Rich because they value his high-level contacts around the world. 

From Wikipedia's article on Marc Rich:

Clinton also cited clemency pleas he had received from Israeli government officials, including then-Prime Minister Ehud Barak. Rich had made substantial donations to Israeli charitable foundations over the years, and many senior Israeli officials, such as Shimon Peres and Ehud Olmert, argued on his behalf behind the scenes.[24] (Speculation about another rationale for Rich's pardon involved his alleged involvement with the Israeli intelligence community.[25][26] Rich reluctantly acknowledged in interviews with his biographer, Daniel Ammann, that he had assisted the Mossad, Israel’s intelligence service,[12][4] a claim that Ammann said was confirmed by a former Israeli intelligence officer.[11] According to Ammann, Rich had helped finance the Mossad's operations and had supplied Israel with strategic amounts of Iranian oil through a secret oil pipeline.[4] The aide to Rich who personally traveled to the U.S. from Israel and persuaded Denise Rich to ask President Clinton to review Rich's pardon request was a former chief of the Mossad, Avner Azulay.[20][27])

Sounds rather like Robert Maxwell, another James Bond supervillain-type. Unlike Maxwell, I fortunately didn't have to do business with Rich. Like Maxwell, Rich is being buried in Israel.