As the late sixties, early seventies may have been considered edgy times given the previously described hunting escapades in Thailand and life in various war zones, the ensuing years were perhaps equally exciting though directed to finding oil in countries that had previously been off- limits for political reasons. The simple motto was “be the first to the table for the best selection.” The initial adventure was Russia in the early nineties. Following Boris Yeltsin’s rise in power upon dissolution of the Former Soviet Union, he embarked on a course to privatize the state industries by issuing vouchers to Russian citizens and permitting western joint ventures. Therein began our Russian adventure for the next ten years. Boris Yeltsin and Bill Clinton are shown below sharing a joke. Let’s hope it was not about the futility of making investments in Russia.
Whereas the buildings and infrastructure of Moscow looked impressive from afar, the reality underneath that veneer of snow revealed a society, culture and system on the brink of collapse.
In 1991, Russia was a country of people trying to find their way, with the resourceful ones beginning their own enterprises selling goods next to a park such as garlic, as all the supply chains had been destroyed.
While it was not up to Starbucks quality, beverages were being offered outside the soccer stadium. Accordingly, the people spent considerable time out on the streets looking for goods and products as the former state stores that offered no variety were, at those times, either closed or had nothing on their shelves.
The most resourceful Russians purchased the state enterprise ownership vouchers issued to Russian citizens for a couple of sausages or through loan schemes. Over the years, many of these entrepreneurs became the unbelievably wealthy ones we hear about today. However, it did not work so well for Mikhail Khordorkovsky, who acquired a number of state Siberian oil companies which became Yukos providing him a $15 billion net worth. Wealth does not always create wisdom and Khordorkovsky went into politics which resulted in him serving 10 years in prison, sacrificing his ownership in Yukos and becoming a Russian exile abroad with a net worth of some $500 million. At $50 million per year in a Russian prison, that is still hard money. Putin had simple rules with oligarchs - Do not steal too much money and do not enter politics unless invited to do so. He and Putin are shown below in happier times.
The most basic free market environment in Russia was the Ismailovo Market in Moscow where one could find many treasures ranging from caviar to former Lenin flags and communist-era memorabilia. As there were no fixed prices or price tags, everything was negotiable. Joey enjoyed a winter visit there but it was miserably cold.
The early business days were spent in Moscow putting together a legal framework that would conform with the unfolding regulations to begin a joint venture with a state-owned oil enterprise, Perm Neftegaz. We were quite fortunate to have a long-standing group with us that facilitated what would have been an endless process of forming Permtex which became a successful enterprise. Our translator and legal assistant had close friends and relations in the artist community that were loads of fun though they often resulted in massive headaches the next morning.
You would not be surprised to learn that we have considerable modern Russian art that resides in our condominium in Ulaan Baatar, Mongolia. At this juncture, one might conclude that there is nothing about this coverage of Moscow that has anything to do with being edgy. However, you never knew when the odd car bomb might explode while you were in traffic or an assassination a block or two away as old scores were being settled in a lawless environment.
Further, in the early nineties, the U.S. intelligence agencies were starved for information on Russia in general, and energy in particular, which may have seemed like a good thing to do to some former Boy Scouts. Nonetheless, there was a cataclysmic event in the intelligence community on February 18, 2001, when FBI Agent, Robert Hanssen, was arrested and charged with committing espionage on behalf of the intelligence services of the Former Soviet Union and its successors. The FBI performs the security clearance for all people who serve in any capacity with the CIA - be they agents, contractors or collaborators. On March 05, 2001, Time Magazine ran a cover story highlighting Hanssen’s arrest and his disclosures to the KGB of the identities of unpaid patriots who served as collaborators for the CIA gathering intelligence in Russia. The local Russian collaborators had been killed in the two-week period between Hanssen’s arrest and the Time article. However, the Americans had not received any notice from the CIA and would have remained “out in the cold” except for the Time Magazine disclosure. Moreover, it is one thing to read about it in the press and yet another to have the disclosure confirmed by the KGB at a later date which will be obliquely mentioned in the future about another edgy place in North Africa.
Therein lies the groundwork for an additional John Le Carre novel. You should know that Le Carre did reside with my friend, Fred Kroll, in Phnom Penh, Cambodia toward the end of the war as he was writing The Honorable Schoolboy. Fred was our man in Laos for years though he and the CIA station chief were declared “persona non-grata” by the U.S. Ambassador to Laos for stealing his piano after an embassy party. There are always places most people would not want to be during a war but Phnom Penh was just perfect for Fred-no fear and fluent in French. The next episode of oil in edgy places will pick up in Perm, Russia which was home to military weapon manufacturing facilities and prison camps in the Urals.