Ablyazov’s “contempt” case – hush-up, hover-up or cover-up?/II

Who steals a bread from the market place usually does so because he is hungry. Who steels from  million after million up to billion after billion from the community usually does so because he is greedy. Moreover, the financial criminal knows how to abuse the law to his own advantage – something the hungry bread-thief is in no position to ponder on. The funny effect of this is that the less a perpetrator steals and the less he is in a position to circumvent the consequences, the harder the law will crack down on him, while the more he has the knack to do so, the more lenient the law becomes towards him. The ongoing case of Kazakhstan’s banker-swindler Mukhtar Ablyazov represents one of the most elegant-looking displays of this principle. While all his pretences of political character should be categorically dismissed in this context, the damage done not just to the principle victim BTA Bank but to the Kazakh financial conglomerate as a whole remains painfully in place. The entire phenomenon, though, should be placed in a much broader, historic context for those who seek to formulate a way to prevent such abuses in the future on an international, if possible global level.

BY CHARLES VAN DER LEEUW. KZW SENIOR CONTRIBUTOR

Ablyazov’s “contempt” case - hush-up, hover-up or cover-up?/IIIs there a correlation between the struggle against monetarism and the increasing phenomenon of large-scale fraud and other “financial” crimes? Monetarist die-hards are likely to scream at the suggestion and traditional criminologists to frown at them. There can hardly be any surprise in that: after all, the man who invested the wheel can only be expected to reinvent it rather than replacing it by a feasible alternative. It means that repeated calls for academics and their think-tanks in the world to come up with a post-crisis model for the economy to be revamped sound rather void – since a post-crisis economy will never be the economy the world got used to and will look more like a post-capitalist economy. Therefore, those who are supposed to design it can never be the same people who developed the previous now obsolete model, and a new breed of unscathed theorists is what is being required under the present-day conditions. This does not mean that the model in use so far does not need to be thoroughly studied – most of all to avoid the effects that thwarted it from pooping up once more.

One of the most supportive elements in what upheld the global economic framework so far has been the supremacy of the US currency, stretching far beyond its geographical borders and indeed straight into the cyberspace as an unbeaten benchmark denomination instrument. Its position put the greenback virtually and practically above the law – including the American law. As the ongoing case of Mukhtar Ablyazov amply demonstrates, national prosecutors and courts of law in any country in the world have proven to be unable, even in those cases in which they were persistent, to seize tangible amounts of cash in US dollars since there appears to be no manner in which any national authority can effectively stem either the inflow nor the outflow of greenbacks across the geographical boundaries of its jurisdiction. In cases of outflow, the money, whoever controls it, passes automatically into either another jurisdiction or (more and more often these days) into a location where there is no jurisdiction such as the cyberspace. The latter’s increasing role means that if irregularities are being established it is hard if possible at all to determine the location in which, and thereby the jurisdiction under which the offence has taken place. To put it simply: the dollar appears to be virtually and practically above the law.

On the ground, this in turn is also widening the gap between types of crime committed under any jurisdiction, namely the so-called white-collar crimes for which the likes of Mukhtar Ablyazov and Boris Berezovsky (just to name two of them) are being held responsible, and the desperado-type crime occurring on the lower steps of the socioeconomic ladder – or the “crimes of the rich” versus the “crimes of the poor”. Monetary conditions have led to enormous advantages enjoyed by the latter over the former, and are going increasingly unpunished because from the very first moment on someone planning to divert from millions up to billions knows the hide-and-seek game with authorities better than any other. Plainly put: someone who steals fortunes through the world’s banking system (and to large extents though not solely thanks to the supremacy of the greenback) does so because he is greedy and ruthless while someone who steals a bread from the market place does so because he is hungry and desperate. And while the white-collar criminal knows how to abuse the law, the ragged-and-tagged petty thief is in no position even to think of it. Consequently, he will never be in a position not to attend his trial or to do so by a video connection from some tropical paradise to which he has been enabled to escape in the process.

The funny thing in such situations throughout human history is that the law tends to react by increasing lenience towards the well-dressed criminal while towards his ragged counterpart it tends to crack down all the harder for it. The fact that these days this trend is clearly visible on both sides of the former Iron Curtain subsequently leads to the plain observation that any system throughout the history of human civilisation has eventually fallen victim to abuses – however sincere those who were in control of them tried to remain. This has happened to monarchist despotism up to the antiquity, the early republics north of the Mediterranean, feudal orders in the middle ages, constitutional monarchies in colonial times and eventually to communist states – and there is no reason whatsoever to assume that it is not happening within the global monetarist power constellation that dominates the world today, if it were only for the fact that everyone can see it happening before his very eyes on a day-to-day basis. This means that monetarism cannot escape its fate any more than any other -ism put into practice from the dawning of mankind up to this very day.

Signs of the pending round of Oswald Spengler’s scenario in his Untergang des Abendlandes were already visible before the global crunch hit the surface – even though the outcome might well differ fundamentally from Spengler’s rather simplistic model. One of the most striking tendencies that popped up over the turn of the millennium and seven years later looked pretty strongly that it was here to stay for a generation or more is the appeal by citizens in so-called emerging economies to constrain private enterprise rather than laying out the red carpet for it and impose tough control over resources. From Caracas to Moscow, the call for state intervention in order to prevent ransacking by both foreign and domestic short-term thinking usurpers has got stronger and it has been answered as it always will. Is it for the better or for the worse? Skeptics tend to think that it is a road that leads to nowhere. After all, the story of one man, and one man only, who could save the world (or in science fiction, the universe) from evil and destruction is a most cherished formula among adventure novelists. It is not for nothing that if the idea is being transferred to politics, their protagonists tend to be third-rate movie actors accompanied by their companions who are addicted to horoscopes. Apart from the United States, hardly anymore fertile soil for this way of governing ever existed in the world than Russia ever since the days of Boris Goudonov. The ideal of a hero-ruler in Russia survived invasions, uprisings, gentry coup attempts, civil wars, revolutions and the recent collapse of the USSR. Popular contempt for the “individualist” merchant, entrepreneur or countryside kulak, persistently accompanied the process.

It looks like the perfect example of so-called metalogic after Nikolay Alexandrovich Vasiliyev’s ideas. Vasiliyev was a poet and philosopher who lived in Kazan, on the bank of the Lower Volga, on the eve of the Russian Revolution. Also dubbed “imaginary logic”, meta-logic, taken in analogy from Lobachevsky’s “imageinary geometry” assumes the existence of laws of cause and consequence the human mind cannot grasp. His “triangle of logic” has been little elaborated upon since his death in 1940, and only drew some attention more than half a century later. But what today is dubbed “the crunch” may or may not, and indeed very well may, have started with a distortion of the human spirit. Some say that half of the human heart is warm and the other half cold. Throughout each human life, the two sides are engaged in a bitter struggle between the heart’s altruistic and its envious side. But the result remains impossible to foresee, and no notion of mechanism of incentives triggering the fight has been observed so far. This antagonism and its unknown third dimension could well stretch from the bottom of the human soul up to the economic upheaval the world has been suffering from since that fateful summer of 2007. Earthly mortals’ need for a crust of bread was always the secret of the rise of leaders within communities. Perish in the light – or survive in darkness.

Control over that choice generates power over fellow human beings. This is the basis of what theorists have put on display as supply versus demand. The so-called supply-side theory supplies can be either provided or withheld. In this way, the supplier turns into a predator. Food, warmth and shelter have been mortgaged in a continuous squeeze for countless generations. Basic needs were turned into rewards for being abused. In some cases, this led to revolutions which, however, only changed one predator for another in the end. Meanwhile, community-oriented scientists including psychologists and (in particular) economists, have time and again provided for the illusion that greed and abuse could be calculated. They put eve more complicated algebraic formulas forward in order to impregnate the human mind with that illusion – in pretty much the same way psychologists try to convince the community that madness can be calculated and thereby cured. Can greed be explained by x minus alpha diminished by the square root of epsilon? Such explanations are no more plausible than the vision of a star-gazer. In all: economics have been suffering from symbolism taken for analyses for centuries. It looks very much indeed as though Vasiliyev was right.

Is the distinction between privileged and deprived a given thing? Many will answer the question affirmatively, but admit that the gap has its boundaries and that crossing them turns it into a black hole absorbing all. In a rather provocative-starting statement even for his days, Jean-Jacques Rousseau wrote in the second chapter of his main work Du contrat social: “Aristotle […] said that men are far from being equal by nature, but that some are born for slavery and some for mastership. Aristotle was right except for the fact that he took the effect for its cause. Nothing is more certain than that  men born in slavery are born for slavery. Slaves lose all in their chains, including the desire to cast them off. They are as fond of their servitude as Ulysses’ companions of the brutal way they were treated in. […] Force generated the first slaves; their cowardness has made their existence continue.” But, as the French philosopher concludes many pages further down, this is not necessarily a cyclic process unable to correct itself. For people have forces in them that are bound to prevail one day if the community they live in fails to satisfy them by and large any longer. Towards the end of the first book, Rousseau writes: “I suppose that men who have come to the point that obstacles work against their conservation within the natural state will do away with that state through the force each individual is able to deploy to maintain himself in that state.” In other words: manipulators of social conglomerates have limits to their room for manoeuvre and the closer they come to those limits the more likely a backlash is to occur.

As a result, in the real world things have kept almost wrong time and again. In the aftermath of near-collapse, no thought was ever given to fundamental changes. Instead, communities fell back either into their previous dolce far niente or into their previous misery. And even now, as thing turn terribly sore, people cannot resist of dreaming the sweet times will come back. But what if this is the time it goes definitely wrong? If it is, the dream will become sheer illusion – but this time not a tangible illusion as it has been on previous occasions, but a hopeless one. And no one seems to have thought about what is up next in such a case. The older generation in the former Soviet republics of Central Asia keep complaining that in Soviet times everything was so much better. They have been the laughing stock of younger generations for almost two decades. But what if it was? The arguments of the Soviet generation are that salaries and allowances were something one could survive on (without much to buy with them – true), that jobs were available on all levels (without much job performance to speak of – true) and that community life was secure (with corruption being rampant all the time – true).

The Soviet system collapsed from Berlin to Vladivostok, even though many of its remains survive in countries such as Belarus and Uzbekistan where state control over the key economic activities is still predominant. In Russia and Kazakhstan, state institutions are claiming back interests privatised earlier on. They appear to enjoy a silent nod from the general public, which points at a widespread mimetic desire for a state-controlled safe haven described earlier. And the way countries such as China, India and Venezuela are running their economies could well be a sign on the wall concerning in which direction the rest of the world has been going of late. Downtown Almaty, the number of jobseekers was expected to grow dramatically as of late 2008, after plummeting commodity sales prices had added insult to injury. At the same time, the number of job opportunities was poised to shrink no less dramatically through the upcoming year and beyond.

Since usually this leads to people who have a job to cling on to it, it means that newcomers on the labour market were due to suffer most. The reason that job-haves tended to defend themselves against job-have-nots was obvious: more and more people were drowning in debt. Starting from late 2007, crowds were spotted queuing up at the door of the main building of the Kuat Holding, Kazakhstan’s biggest construction and property enterprise and at entrances of its peers. People wanted the money back for the real estate they bought in advance. If the money were there, they would not have been queuing up. This could only mean that people’s feathers had been plucked and consumed. It means that in this world, the rich can only remain rich as long as the poor are not too poor for it. Since explanations, especially illusionary ones, are mo remedy for a situation that got out of hand, the future remains unpredictable except for the fact that things cannot go on the way they have done so far. How, nobody knows. But there must be found a way to re-feather the people to whom the property they though they had bought rightfully belongs. And those people are not the world’s rich elites.

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