CHAPTER 5

Backlash against Markets

Ethnically Targeted Seizures and Nationalizations

IN ZIMBABWE, FOR three years now, furious mobs wielding sticks, axes, crossbows, iron bars, sharpened bicycle spokes, and AK-47 automatic rifles have invaded and ripped apart white-owned commercial farms. Usually by the hundreds, sometimes a thousand at a time, the invaders—with noms de guerre like “Hitler” and “Comrade Jesus”—ransack and destroy, hurling stones and gasoline bombs, singing revolutionary songs, drinking crates of looted beer, fighting over bread and tinned beef, beating, raping, abducting. “They were really like wild dogs,” sobbed a terrified victim. After grabbing food, money, and clothing, they “grabbed four chickens, cut their throats and barbecued them as they watched the house they had set on fire burn down.” Hospitals are flooded with victims of violence: resisters, black or white, faces smashed to a pulp, deep welts zigzagging down their backs, some shot at point-blank range.¹

These assaults have not been spontaneous. Rather, they have been sponsored and encouraged by the Zanu-PF government of President Robert Mugabe, which has designated over three thousand farms, covering millions of acres and overwhelmingly white-owned, for confiscation. “We are taking our land,” Mugabe has said. “We cannot be expected to buy back our land that was never bought from us, never bought from our ancestors!” To thousands of cheering supporters in December 2000, he declared, “Our party must continue to strike fear in the heart of the white man—our real enemy. The white man is not indigenous to Africa. Africa is for Africans. Zimbabwe is for Zimbabweans.” When middle-aged Zimbabweans marched for peace, they were bludgeoned by police.²

Many have described the violence directed at Zimbabwe’s white farmers and their black farmhands as “anarchy.” But if this is anarchy, it is an anarchy born of democracy. Moreover, this “anarchy” follows a highly predictable, worldwide pattern. Democratization in Zimbabwe arrived with independence in 1980, in the face of a 1 percent former-colonizer minority owning 70 percent of the nation’s best land.

Mugabe was a hero of Zimbabwe’s revolutionary movement. In 1976 he declared, “in Zimbabwe, none of the white exploiters will be allowed to keep an acre of their land.” That promise helped him sweep to overwhelming victory in the closely monitored 1980 elections, and repeating that promise has helped him win every election since.³ On taking power in 1980, Mugabe was as popular as Nelson Mandela was in newly postapartheid South Africa.

It is easy to demonize Mugabe. But in an ugly sense Mugabe has behaved as a highly rational vote-seeking politician, and the recent violence and seizures are direct products of the democratic process. In 1980, heavily pressured by Britain, Mugabe agreed to a ten-year moratorium on major land reform: Zimbabwe’s whites would be allowed to keep their vast estates in exchange for their tacit political support. After the deal expired in 1990, Mugabe stepped up his rhetoric about nationalizing white-owned land, particularly whenever elections rolled around. Nevertheless, largely out of fear of losing foreign investment and World Bank and IMF loans, Mugabe redistributed almost no white farmland in the nineties.

Meanwhile, Mugabe’s popularity waned. Complying with IMF free market austerity measures led to sharp price hikes, unemployment, and widespread disenchantment among Zimbabwe’s poorest. These hardships were exacerbated by drought and massive crop failure. Crime rates increased. At the same time, Mugabe was plagued by one corruption scandal after another. In the late 1990s, Zimbabwe’s white farmers and corporations, anxious over Mugabe’s intensifying calls for confiscation of their land and sensing weakness in his constituency, swung their support fully behind the free-market-oriented opposition Movement for Democratic Change (MDC). Along with the British government, Zimbabwe’s whites poured funding into the MDC.⁴ Furious, Mugabe—called a “master manipulator” of the populace even by his detractors—responded as he always had: by playing the race card.

Starting in 1998, in anticipation of the 2000 parliamentary elections, Mugabe called for the immediate seizure of hundreds of commercial farms owned by the “sons of Britain” and “enemies of Zimbabwe.” These calls were delivered at mass rallies and broadcast on national television. As the 2002 presidential elections approached, Mugabe intensified the hatemongering and expropriations. Subordinates were sent into white-owned tobacco fields to mobilize support: “Vote for Zanu PF and you will all be given land, farms, houses. Vote for Zanu PF and there will be peace, jobs, prosperity. Vote for MDC and there will be war. We will get our guns.” Their slogans were: “Down with the whites. Down with colonialism. Down with the MDC. Down with Britain.” The seizures began in earnest in 2000 and have accelerated since.⁵

The results have been catastrophic. Zimbabwe’s currency, stock market, tourism sector, and foreign investment have all collapsed. Vast fields of tobacco, maize, sunflower, and sugar lay in charred ruins. Tens of millions of dollars in export earnings have literally gone up in flames. Aid agencies estimate that more than half a million people in Zimbabwe face starvation.

It is generally assumed in the Western media that the opposition MDC, which repudiated the violent land seizures, would have won the 2002 elections had they been free and fair. This might well be true: Mugabe set up far more polling stations in rural areas, where his support was strongest, than elsewhere, and there are plenty of reports of intimidation. On the other hand, African governments have uniformly praised the 2002 elections, which in fact were no more irregular than other elections in Africa that the West has deemed “free and fair.”⁶

More important, the MDC was in fact, and was known to be, sponsored and funded by whites. “The problem with MDC,” as one observer bluntly puts it, is that “[d]espite being led by trade unionist Morgan Tsvangirai, despite taking 57 seats in the election (most, but not all, of its candidates were black), despite appealing hugely to an urban black electorate, this is still a party designed for and by whites.” At the MDC party headquarters in Harare last June, according to news reports, “the only black face visible was the security guard outside the front entrance. Within, it was a sea of pale political strategists, organizers, media spinners and volunteers.”⁷

Even if MDC had won in 2002, pressures for the massive redistribution of white holdings would not have gone away. The land problem—specifically, the problem of a 1 percent market-dominant white minority controlling the country’s best land in the form of three-thousand-acre commercial farms while most members of the black majority live in land-hungry poverty—would remain, ready for another firebrand politician to exploit, if not next year, then two or five or ten years down the road. Nor should it be forgotten that the harsh, free market, belt-tightening policies urged on Zimbabwe in the early 1990s by the United States, World Bank, and IMF created hardship among the nation’s poorest, contributing to the mass popular frustrations that in turn made Mugabe’s confiscatory campaigns all the more appealing. Zimbabwe’s dilemma is that foreign investors and global capital flee whenever the country proposes to upset the white minority’s landholdings—which is why, from 1980 to the late 1990s almost no land redistribution occurred. But placating the interests of the market-dominant minority and the international business community throws fat on Zimbabwe’s democratic fire. Today’s bloody confiscations and the resulting economic collapse are the direct product of the collision between free markets and democratic politics.

Meanwhile, in neighboring South Africa—which prides itself on its differences from Zimbabwe—five thousand people marched in July 2001 on Kempton Park near Pretoria. At the helm were leaders of the Pan Africanist Congress (PAC), a black opposition party that has campaigned with the slogan “One settler—one bullet!” since its inaugural meeting in 1989. (“Settlers” refers to whites.) The marchers, most of whom were homeless, demanded revolution and the right to occupy land. After years of black majority rule, they protested, they still had nothing to show for it. The PAC leaders egged them on, promising Mugabe-style invasions throughout the country. “This is just a small microcosm of what is potentially a time-bomb,” declared the PAC secretary general. Furious, the Mbeki government evicted the squatters, condemning the PAC leaders as “dangerous demagogues” and “hypocrites and opportunists who will jump at the slightest opportunity to exploit the plight of our people.”⁸ But since the Kempton Park incident, President Mbeki has accelerated land redistribution efforts.

At the same time, the country’s multibillion-dollar mining industry is facing what London’s The Times recently called “[t]he biggest shake-up in South African ownership rights since the discovery of diamonds and gold in the [nineteenth] century.” If signed into law, the new Minerals Development Bill, acrimoniously fought by the white-dominated mining industry, “will abolish private ownership of mineral rights, transfer title to the State, and grant it the sole power to award licenses for prospecting and mining.” The Mbeki government denies charges that it is conducting “back-door nationalization.” A number of influential whites agree that the scope of the bill is greatly exaggerated. Nevertheless, mining giants like De Beers and Anglo-American are deeply troubled about a clause in the bill that gives the minister for minerals and energy enormous discretionary power to “confiscate any property or any right for black empowerment purposes” without the right of appeal. The current minister, Phumzile Mlambo-Ngcuka, has publicly declared that “the twenty-first century is not going to allow a white-dominated mining industry to continue.”⁹

THE LAND SEIZURES in Zimbabwe are part of a much larger global pattern. Throughout the non-Western world, wherever a small “outsider” market-dominant minority enjoys spectacular wealth in the midst of mass destitution, democratization has invariably produced tremendous popular pressures to “take back the nation’s wealth” for its “true owners.” This is true today from Indonesia to Russia to Venezuela, as I will address momentarily. But the same phenomenon—ethnically targeted confiscation—has been common ever since democratization came to the developing world in the early part of the twentieth century.

Understanding the History of Nationalization in the Developing World without Cold War Blinders

Throughout the twentieth century, bursts of nationalization repeatedly punctuated and damaged the economic growth of Asia, Africa, and Latin America. Most American economists and policymakers, steeped in decades of Cold War dynamics, tend to assume that all these nationalizations were motivated by socialist or Communist thinking. In fact, however, nationalization in the Third World has always been far less an expression of Communism than of popular frustration and vengeance directed at a market-dominant minority.

With a few exceptions (China, Cuba, Vietnam), nationalization programs in Third World countries—unlike those in the former Soviet bloc—never sought to eliminate private property or eradicate all economic classes. On the contrary, in the vast majority of countries in Asia, Africa, and Latin America, nationalization programs have targeted explicitly and almost exclusively the assets and industries of hated market-dominant minorities.

Pre-1989 examples of nationalizations targeting a market-dominant minority are so numerous that I’ll give only a few illustrations here. In newly independent Indonesia, President Sukarno’s sweeping nationalizations in the 1950s and 1960s targeted both the market-dominant Dutch and, very explicitly, the market-dominant Chinese. Indeed, through nationalization and other anti-Chinese measures, Sukarno “indigenized” key sectors of the economy—finance, mining, batik, rice, import-export, industry—all formerly dominated by Europeans and Chinese. Although Sukarno’s “Guided Democracy” was in many ways undemocratic, his anti-Chinese nationalizations were overwhelmingly and feverishly supported by the pribumi majority. Indeed, most indigenous Indonesians thought Sukarno was “too soft” on the Chinese.¹⁰

In Sri Lanka, which has maintained a troubled parliamentary democracy for nearly half a century, the disproportionate economic power of the Tamil minority had produced bitter resentment among the (largely Buddhist) Sinhalese majority by the 1950s. Solomon Bandaranaike—Oxford-educated and a consummate politician—capitalized on this ethnic resentment. Converting from Roman Catholicism to Buddhism, he swept to electoral victory in 1956 by scapegoating Tamils and championing the cause of “Sinhala Only.” After Bandaranaike’s assassination in 1959, his wife Sirimavo became prime minister, again through democratic elections. Once in office, Mrs. Bandaranaike began radically nationalizing land and industry. These nationalizations had nothing to do with socialism; they did not affect Sinhalese business interests. Rather their express purpose was to elevate the “true” Sri Lankans over Tamils, Christians, and other ethnic minorities.¹¹

In postindependence Burma, U Nu, the country’s first democratically elected prime minister, openly sought to “Burmanize” the economy through nationalization. “The wealth of Burma has been enjoyed firstly by big British capitalists, next the Indian capitalists, and next the Chinese capitalists,” U Nu declared in a famous tract from 1949. “Burmans are at the bottom, in poverty, and have to be content with the leftover and the chewed-over bones and scraps from the table of foreign capitalists.” In the sixties and seventies, Gen. Ne Win’s expropriations of over fifteen thousand commercial enterprises again expressly targeted Westerners and the despised market-dominant Indian and Chinese minorities.¹²

In Pakistan, Zulfikar Ali Bhutto won the support of the impoverished masses (as well as members of his own, landowning zamindaar class) through rousing public speeches that accused “Twenty-Two Families”—almost all Mohajir immigrants from India—of stealing the nation’s wealth. It was intolerable, he campaigned, that Pakistan’s indigenous majority (comprising four major ethnic groups: the Punjabi, Sindhi, Baluchi, and Pashtuns) should remain at the mercy of a tiny minority of “outsider” Mohajir industrialists and bureaucrats.

After sweeping to power, Bhutto’s “socialist” Pakistan People’s Party showed itself to be not socialist at all, but deeply ethnonationalist. Bhutto left almost completely intact the massive estates of the wealthy Sindhi zamindaar families, including his own. As late as the 1970s the Bhutto family’s own estate was measured in terms of miles rather than acres, extending across several successive train stops. Nor did Bhutto ever try to nationalize all private business. Instead, Bhutto aggressively targeted firms owned by the market-dominant ethnic Mohajirs. Thus, in January 1972, along with a few Punjabi businesses, Bhutto nationalized thirty-one heavy industrial firms, representing almost all of the hated Twenty-Two Families’ industrial wealth. Bhutto’s 1974 nationalizations of banking and insurance attacked any remaining Mohajir holdings. Through ethnically targeted nationalizations, Bhutto successfully undercut the Mohajir minority’s stark dominance of Pakistan’s industrial and commercial sectors.¹³

The nationalization movements that swept across Latin America in the first half of the twentieth century present a somewhat more complicated picture. Nationalizing politicians in Latin America undoubtedly mobilized mass support for their movements with class-based appeals and Marxist rhetoric. Nevertheless, the conventional wisdom that sees these nationalization movements as solely or even principally Marxist overlooks the core of ethnic nationalism that often gave them force.

Nationalization in Latin America was in a surprising number of cases fueled by the desire to reclaim the wealth of the nation for its true, ethnically defined owners. In country after country, revolutionary leaders sought to reverse the historical obsession with white superiority, either by glorifying Amerindian blood or by celebrating “mixed-bloodedness.” Indeed, in the early twentieth century the resentment engendered by Latin American racism, always interwoven with the struggle between rich and poor, was a powerful engine of revolutionary change throughout the region.

In Bolivia in 1951, for example, Victor Paz Estenssoro, head of the revolutionary party Movimiento Nacionalista Revolucionario (MNR), won the presidential elections by mobilizing the largely mestizo middle class with slogans like, “The land to the Indians, the mines to the State.” Properly terrified, the distinctly “non-Indian” mining elite supported a military takeover. After the MNR recaptured power in a bloody coup in 1952, one of Estenssoro’s first acts was to extend universal suffrage and free education to the Indian majority, consciously seeking to reverse the ethnically based disdain that had imbued Bolivian society at every level since the colonial period. The government then nationalized all major mines and expropriated six thousand vast estates from the “illustrious-blooded” hacendados, redistributing them in family-size plots among the landless Amerindian majority.¹⁴

But revolutionary as they were, Bolivia’s nationalizations were not really Communist: They did not seek to abolish private property in any thoroughgoing fashion. Rather, they were majority-supported confiscations directed at a market-dominant minority. The nationalization movements in Mexico, Peru, and elsewhere similarly targeted, along with “foreign imperialists,” the wealthy “white” elite with their links to foreign capital and vast latifundia landholdings.¹⁵

There are many more examples, from all parts of the developing world. Not all nationalizing leaders were democratically elected (although many were). But virtually all were supported with wild enthusiasm by the indigenous majority when they expropriated the riches of the market-dominant minority.

AFTER 1989, MANY proclaimed that nationalization was a thing of the past. The Soviet Union had fallen, Communism had been discredited, and developing countries would never again be moved to nationalize. Unfortunately, all this is true only if nationalization in the developing world genuinely rested on Communist ideology. But as I have tried to show, this is not the case. To a far greater extent than has been recognized, nationalization movements in the developing world have been fueled by popular resentment among abjectly poor majorities against market-dominant minorities. Thus it should be no surprise that nationalization and confiscation persist today, even after the collapse of the former Soviet Union. Indeed, almost everywhere market-dominant minorities exist, post-1989 democratization has generated a volatile combination of anti-market sentiment and ethnic scapegoating. As a result, in a striking number of countries, even as markets triumphantly swept the world in the 1990s, a backlash of nationalization and confiscation began.

These nationalizations and confiscations have been anti-market, but only in a limited sense. They target not the institution of private property itself, but rather the wealth of a hated ethnic minority. They are based not on an ideal of a Communist utopia, but rather on a deluded vision in which the indigenous masses somehow step into the capitalist shoes of the minority so that they, “the true owners of the nation,” can be the market’s prosperous beneficiaries. In Zimbabwe, the ongoing mass seizures of white-owned farmland are hardly motivated by socialist thinking. On the contrary, these confiscations are quintessential expressions of ethnic nationalism directed at a deeply resented “outsider” market-dominant minority. The recent anti-Chinese confiscations in newly democratic Indonesia provide another vivid illustration.

Post-Suharto Indonesia: Markets Plus Democracy Equals Ethnic Confiscation

As discussed earlier, market-oriented policies in Indonesia during the 1980s and 1990s led to the astounding economic dominance of the country’s 3 percent Chinese minority along with widespread, seething hostility among the pribumi majority against both General Suharto and the country’s “greedy Chinese locusts.”

After Suharto’s fall, Indonesians were euphoric. After the words “free and fair elections” hit the U.S. headlines, Americans were euphoric. Democratic elections, it was thought, would finally bring to Indonesia the kind of peace and legitimacy perfect for sustaining free markets. Indeed, Thomas Friedman has suggested that this is “one of the real lessons of globalization’s first decade”—that democratic processes give the public a sense of ownership in market reforms, thus making the majority more patient and tolerant of the inevitable “pain of globalization reforms.”¹⁶

That’s not what happened in Indonesia. The fall of Suharto’s autocracy was accompanied by an eruption of ferocious anti-Chinese violence in which delirious, mass-supported Muslim mobs burned, looted, and killed anything Chinese, ultimately leaving two thousand people dead. (Many of the dead were non-Chinese Indonesians trapped in blazing shopping malls.) Overnight democratization in the midst of all this naturally gave rise to ethnic scapegoating and demagoguery by opportunistic, vote-seeking politicians. The Islamic right, recalls Clifford Geertz, attacked the frontrunner candidate Megawati Sukarnoputri “as not really a Muslim but some sort of Javanist Hindu, beholden to Christians and Chinese. …” Megawati, meanwhile, assured frenzied crowds that she was speaking daily with her dead father, Indonesia’s nationalist hero and founding president, Sukarno.¹⁷

Tarred by having been Suharto’s vice president, presidential candidate and interim president Bucharuddin Jusuf Habibie played brilliantly on both anti-market and anti-Chinese sentiment. To screaming crowds, Habibie and his right-hand man Adi Sasono preached their vision of a New Deal for Indonesia: a true “people’s economy” to be achieved by breaking up Chinese conglomerates and redistributing them to “the long suffering masses” in the form of indigenous cooperatives. “It’s a matter of economic justice,” Sasono declared. “One race cannot control 90 percent of the economy!” yelled adulating supporters.¹⁸

While president, Habibie expropriated the Chinese-controlled rice industry by canceling rice distribution contracts with hundreds of ethnic Chinese businessmen and awarding them instead to members of the Indonesian majority—most of whom hadn’t the foggiest idea what to do. The results were disastrous, part of a food crisis in which tens of millions of Indonesians were at one time reportedly eating only one meal a day. The new state-run rice cooperatives were immediately saturated with corruption, inefficiency, and scandal (one official was accused of trying to export illegally nineteen hundred tons of rice to Malaysia while his own constituents were starving). Predictably, indigenous officials and businessmen began to secretly subcontract work out to Chinese traders again. Still, the anti-Chinese and anti-market campaign rhetoric continued—and didn’t stop until most of the wealthiest Chinese Indonesians had left the country, along with $40 to $100 billion of Chinese-controlled capital. It was only when the World Bank and IMF realized that this capital was gone that they started to be concerned about ethnic conflict in Southeast Asia and to urge the Indonesian government to come to an “accommodation” with the country’s Chinese business community.¹⁹

Today—as a result of what one Jakarta-based consultant calls “Asia’s largest nationalization since the Communist takeover of China in 1949”—the Indonesian government sits on roughly $58 billion in industrial assets consisting of equity stakes in over two hundred companies ranging from automobile production to cement. Most of these nationalized assets were formerly owned by Chinese tycoons. For several years now these nationalized companies—once immensely productive Chinese “money making machines” as one government official described them—have simply stagnated while the country descends further into frustrated poverty. (As of last year, a frightening 40 million pribumi Indonesians were unemployed or underemployed.)²⁰

Although there may have been economic justifications for the state takeovers of Indonesia’s failing, corruption-soaked banks, it is telling that most of the vast nationalized holdings have not been reprivatized despite the availability of buyers, the ongoing massive economic waste, and the government’s repeated assurances that the assets will be sold. Apart from bureaucratic incompetence and infighting, the explanation is that the potential buyers are typically ethnic Chinese or foreign investors, and the government has been paralyzed by fear that sales to such groups will trigger another violent nationalist backlash. As a result, Indonesia is “now like a communist country,” one observer recently lamented, “where the government owns, controls or manages almost 80 percent of productive assets.” Four years after Suharto’s fall, intense ethnic resentment and xenophobia continue to drive Indonesian economic policy. Among the pribumi majority there is a pervasive dread that ethnic Chinese and other “foreigners” will “swoop in like vultures” to carry off the nation’s resources. These “vultures” include the hated ethnic Chinese Salim Group, which is rumored to be making a rebid for its former companies from Singapore.²¹

Anti-Semitism and Nationalization in Democratic Russia

In Russia, economic and political liberalization has unleashed widespread—and in parts of the country like Cossack-dominated Krasnodar, virulent—anti-Semitism. As chapter 3 discussed, many of the Yeltsin government’s most reviled market reformers—including “shock therapy” champion Yegor Gaidar and “privatization tsar” Anatoly Chubais—are well known to be part Jewish. Moreover, the principal beneficiaries of Russia’s chaotic transition to capitalism were also disproportionately Jewish.

To repeat, it would be preposterous to suggest that Russian anti-Semitism is caused by either markets or democracy. Anti-Semitism has poisoned Russia since long before 1989. Over a century ago, for example, Fyodor Dostoyevsky, in his self-published magazine A Writer’s Diary, blamed the “Yids” for their exploitation of the noble Russian peasant:

And so the [tsar] liberator came and liberated the native People [the serfs]; and who do you think were the first to fall upon them as on a victim? Who was foremost in taking advantage of their weaknesses? Who, in their eternal pursuit of gold, set about swindling them? Who at once took the place, wherever they could manage it, of the former landowners—with the difference that though the landowners may have thoroughly exploited people, they still tried not to ruin their peasants, out of self-interest, perhaps, so as not to wear out the labor force, whereas the Jew doesn’t care about wearing out Russian labor; he takes what he can and he’s gone.²²

The point, however, is that the combined effect of post-perestroika marketization and democratization has been to galvanize anti-Semitism in Russia (as well as in Ukraine, Belarus, and the Baltic republics) in highly predictable fashion. Markets have generated starkly visible Jewish wealth—Forbes in 2002 listed Jewish oligarchs Mikhail Khodorkovsky, Roman Abramovich, and Mikhail Friedman as Russia’s three richest billionaires, with Vladimir Potanin in fourth place—while democracy has made anti-Semitism a political force with a strength not seen in Russia since Stalin.

Since perestroika, the new democratic rights of free speech and free association have given rise to eighty nationalist political parties and organizations, including three that have openly adopted neo-Nazi symbols and rhetoric. At the same time, politicians all over the country, including powerful elected officials, publicly engage in anti-Semitic baiting.

In October 1998, for example, Gen. Albert Makashov, a Communist Party representative in the Russian Parliament, accused Jews of ruining the country’s economy. “Who is to blame?” railed Makashov in recorded testimony before the Duma. “The executive branch, the bankers, the mass media are to blame. Usury, deceit, corruption, and thievery are flourishing in the country. That is why I call the reformers Yids.” A “Yid,” he elaborated in an editorial in the newspaper Zavtra, is “a bloodsucker feeding on the misfortunes of other people. They drink the blood of the indigenous peoples of the state; they are destroying industry and agriculture.” Makashov subsequently led two fiery rallies in which he shouted, “I will round up all the Jews and send them to the next world!” A few months later, Viktor Ilyukhkin, Communist chairman of the Russian Parliament’s security committee, blamed Jews in Yeltsin’s government for effecting “a genocide against the Russian people.”

When asked by Yeltsin to censure Makashov and Ilyukhkin, Gennadi Zyuganov, head of Russia’s still powerful Communist Party, endorsed them instead. In a letter to the Ministry of Justice and the national security chief, Zyuganov declared that Zionism is among the “most aggressive imperialist circles striving for world domination.” “Communists … rightly ask how it can be that key positions in a number of economic sectors were seized by representatives of one ethnic group. They see how control over most of the electronic media—which are waging a destructive campaign against our fatherland and its morality, language, culture and beliefs—is concentrated in the hands of those same individuals.” Zyuganov has also said, “Too many people with strange sounding family names mingle in the internal affairs of Russia.”

Anti-Semitism is moderate in Moscow compared to other parts of Russia. “At least in Moscow there’s some regulation,” explained the distressed leader of the local Jewish Association in the Siberian city of Novosibirsk, where a synagogue was recently vandalized and the name of the neofascist group, Russian National Unity, painted on the walls. Aleksandr Barkashov, the leader of the group, subsequently told a rally in Yekaterinburg (Sverdlovsk) that he was changing the name of his organization to “Movement Against the Jews.” Anti-Semitism is probably most intense in Krasnodar, a city along Russia’s southern border that is home to numerous Cossacks. Since his coalition’s landslide election in 1996, Communist-Nationalist governor Nikolai Kondratenko has openly spewed anti-Semitic hatred. “What is the result of Zionism?” boomed Kondratenko’s deputy governor in 1998. “The result is the collapse of Russia. Native Russians never would have allowed all these reforms to happen.” And the governor himself recently proclaimed to cheering crowds: “Why haven’t we revolted against that scum, a bunch of people for whom Russia, Russians, patriotism, the land of Russia is something alien? Their policy is the losing one, and those who will continue torturing Russia will burn more than just their tongues.”²³

During Russia’s 1998 election campaign, calls for renationalization of the oligarchs’ holdings—widely viewed as “stolen” from the Russian people—were everywhere.²⁴ Like Yeltsin before him, Vladimir Putin most likely would not have won the presidential election without the oligarchs’ massive funding and media support. Not surprisingly, Putin did not campaign on a renationalization or anti-Semitic platform. Once in power, however, Putin made sweeping promises to “bring the house in order” and “move the oligarchs away from power,” gaining popularity with every new attack on the oligarchs.

In particular, Putin recently turned on Jewish media moguls Vladimir Gusinsky and Boris Berezovsky. In a murky corporate coup in 2001, the Kremlin-controlled natural gas monopoly Gazprom took over Gusinsky’s independent NTV station, which had made the mistake of poking fun at the First Lady. Then, in January 2002, Putin pulled the plug on Berezovsky’s TV-6 station—cutting off a show in midsentence—leaving the Kremlin with a monopoly on television for the first time since the collapse of the Soviet Union. Berezovsky’s unfavorable television coverage of the Kursk submarine disaster the previous year had infuriated the Kremlin.²⁵

Officially, Putin’s shutdown of Berezovsky’s TV-6 station was supported by a court ruling that the station was bankrupt. Nevertheless, even Putin’s supporters concede that his confiscation techniques in both cases—involving intimidation, dozens of armed secret service raids, and mysterious backroom deals—were highly suspect. In the West, Putin’s actions provoked a firestorm of criticism that he was “destroying free speech,” “silencing critics,” and returning to “Soviet-style terror.” In Russia, however, negative reaction has been much more muted while many have openly supported Putin’s moves against the oligarchs. Although Putin himself has never engaged in anti-Semitic rhetoric, he is no doubt aware that significant sectors of the population believe that they “have been impoverished at the hands of rich Jews” and that, as a result, his confiscations of Gusinsky’s and Berezovsky’s media holdings would generate little popular opposition.²⁶

It is important to stress that President Putin himself has not adopted anti-Semitic rhetoric and that he has also targeted non-Jewish businessmen in Russia. The fact remains that the three wealthiest people in Russia today are Jewish oligarchs Khodorkovsky, Abramovich, and Friedman. With Gusinsky and Berezovsky now in exile, hatemongering demagogues waiting in the wings, and draft nationalization bills constantly being debated in the Duma, these oligarchs are increasingly at Putin’s mercy. Meanwhile, the new political party headed by Yeltsin’s former defense minister, Gen. Igor Rodionov, if approved, will have as its explicit policy agenda reclaiming from Russia’s “Zionists” the wealth they “looted” from “the Russian people.”²⁷

Anti-market Backlash in Venezuela

In Venezuela, a small minority of cosmopolitan “whites”—including descendants of the original Spanish colonizers as well as more recent European immigrants—historically dominated both the country’s economy and its politics. As elsewhere in Latin America, this minority is very closely knit. As one Venezuelan jokingly put it, “In Venezuela there are more boards of directors than there are directors.”

But in 1998, the Venezuelan people—respecting their democratic institutions and to the horror of the United States—elected as president the wildly anti-market former army paratrooper Hugo Chavez. Like President Alejandro Toledo in Peru, Chavez swept to his landslide victory on a wave of ethnically tinged populism. Demanding “a social revolution,” Chavez aroused into impassioned political consciousness Venezuela’s destitute majority, who make up 80 percent of the population, and who, like “the Indian from Barinas”—as Chavez refers to himself—have “thick mouths” and visibly darker skin than most of the nation’s elite. “He is one of us,” wept cheering, growth-stunted washer-women, maids, and peasants. “We’ve never had another president like that before.”²⁸

According to Moisés Naím, former Venezuelan Minister of Trade and Industry and now editor of Foreign Policy, “What differentiates Hugo Chavez from his political rivals” is “his enthusiastic willingness to tap into collective anger and social resentments that other politicians failed to see, refused to stoke, or more likely, had a vested interest in not exacerbating.” Whereas Peru’s Toledo reached out to his country’s elite, Chavez deliberately fomented class conflict, lacing it with ethnic resentment. Chavez, writes Naím, “broke with the tradition of multiclass political parties and the illusion of social harmony that prevailed in Venezuela for four decades.”

Like Bolivia’s Amerindian rebel leader Mallku and Ecuador’s Villavicencio, Chavez generated mass support by attacking Venezuela’s “rotten”, largely white elites. “Oligarchs tremble,” he campaigned to great, agitated crowds. “The plan of battle” was to “take every piece of space by assault.” Chavez’s platform could not have been more anti-market. He relentlessly attacked foreign investors and Venezuela’s business elite, calling them “enemies of the people,” “squealing pigs,” and rich “degenerates.” He lashed out at “savage capitalism,” describing Cuba as “a sea of happiness.” “I will bring about the end of the latifundia system,” he repeatedly declared, “or stop calling myself Hugo Chavez.” Over and over, Chavez has said that he is not proposing “anything like Communism.” Rather, he intends “urgently” to expropriate the “idle” land of the agrarian elite and redistribute it to “the Venezuelan people.”²⁹

After taking power, Chavez changed the country’s name to the Bolivarian Republic of Venezuela, in honor of the revolutionary hero Simón Bolívar. He passed a new constitution, hailing it as the most democratic in the world. The right to food, he proclaimed, was more important than corporate profit. Displaying distinctly autocratic tendencies, Chavez disbanded the “worm-eaten” Congress and Supreme Court. He stopped privatization of the oil sector, “outlawed” large landowners, and guaranteed free education and worker benefits for “housewives.”³⁰ He “decreed” almost fifty anti-market laws. In 2001, Chavez threatened to nationalize all banks that refuse—in accordance with one of Chavez’s new laws—to grant credit to small farmers and small businesses. “Not only can we nationalize any bank,” declared Chavez, “any banker who does not abide by the law could go to jail.”³¹

Chavez swept to electoral victory not by offering any affirmative economic policy. Rather, in Naím’s words, he “catered to the emotional needs of a deeply demoralized nation,” employing an “inchoate but very effective folksy mixture of Bolivarian sound-bites, Christianity, collectivist utopianism, baseball and indigenous cosmogony, peppered with diatribes against the oligarchy, neoliberalism, foreign conspiracies and globalization.” That Chavez would even try to play the ethnic card—and proudly describe himself as “the Indian from Barinas”—is remarkable. Unlike Bolivia or Ecuador, Venezuela has only a tiny Amerindian population and, despite the glaring disproportionate whiteness of the wealthy minority, many middle- and upper-class Venezuelans will still insist that their country has “no ethnic divisions” and that to see otherwise is to impose a lens of North American racism. Ironically, given Chavez’s constant railing against globalization, it was one of globalization’s major components—democracy—that allowed Chavez to convert generations of bitterness and frustration into a powerful political engine. Stirred to political consciousness by the demagogic Chavez, Venezuela’s 80 percent dark-skinned majority, most of whom live below the poverty line, voted for a leader whose nationalization and other anti-market policies seem to Westerners utterly irrational.

Unfortunately, democratization in Venezuela ran smack against free markets. Chavez’s antibusiness policies have had a devastating effect on the economy. As soon as Chavez took office, Venezuela’s wealthy whites, fearful of confiscation, whisked away more than $8 billion out of the country, mostly to the United States. As Chavez’s incompetent state interventions accelerated, foreign investment fled. The real battle, however, occurred in the oil industry, which generates 80 percent of Venezuela’s export revenues and represents the country’s lifeblood. Although technically state-owned, Venezuela’s oil company PDVSA has for years been professionally run by members of the business elite—“oligarchs,” in Chavez’s view. In spring 2002, Chavez fired PDVSA’s president, Gen. Guaicaipuro Lameda, widely admired by foreign investors for his efficient steering of the company. In Lameda’s place, Chavez installed a radical left-wing academic with little business experience. Chavez also appointed five new left-leaning directors to PDVSA’s board. PDVSA’s blue-blooded senior management fought back. Chavez retaliated.³²

The coup that momentarily deposed Chavez in April 2002 was a classic effort led by a market-dominant minority to retaliate against a democratically elected government threatening their wealth and power. Although supported at first by trade union leaders and skilled labor, the regime that was briefly installed to replace Chavez “looked like it had come from the country club.” Interim president Pedro Carmona, a wealthy white, was head of the country’s largest business association. Union representatives were completely excluded from positions of authority. “All of them oligarchs,” scoffed a dark-skinned street vendor, referring to the country’s wealthy white minority. “Couldn’t they have appointed one person like us?” The new leadership was “pure business”; its exclusion of anyone but “country club” elites as well as its attempt to dissolve the democratically elected national congress turned even supporters of the coup against it.³³

To the dismay of the Bush administration, which hailed the coup as a “victory for democracy,” the high-handed actions of the Carmona regime combined with Chavez’s still-considerable support among Venezuela’s poor majority returned Chavez to power with stunning speed. But in many cases, as the next chapter will show, market-dominant minorities have much more success in their collisions with poor, democratic majorities.