Oil and banking fuel the rise of Russian risk-taker


On the morning of March 23rd Sergei Kiriyenko kissed his little daughter good day and told her he would be home early for her birthday. It did not quite work out as he had planned, but in Russia it's hard to predict these things.

By midday President Yeltsin had announced that the entire government led by Prime Minister Viktor Chernomyrdin had been fired. Shortly after the surprise announcement the President told Russian TV and radio he would take on the post of Prime Minister himself.

It would seem that soon after that statement the fate of Sergei Kiriyenko's daughter's birthday party was sealed. Advisers told Mr Yeltsin the constitution of Russia did not allow him to be President and Prime Minister at the same time.

Mr Yeltsin may have written his own constitution after he had ordered the tanks in to blast the parliament out of existence in October 1993, but he was now overstepping the law he himself had set. The legal advisers told him he needed to find someone other than himself to replace Mr Chernomyrdin. For reasons yet to be explained, Mr Yeltsin chose Mr Kiriyenko, and a girl's party was ruined.

Sergei Vladilenovich Kiriyenko was born 35 years ago in the town of Sukhumi in Georgia of mixed-ethnic parents. His father Vladilen Israitel was a Georgian of Jewish origin. The very name Vladilen signified communist adherence for it was a shortened version of Vladimir Ilyich Lenin, designed either to glorify the father of the Russian Revolution or to ingratiate the family with the Soviet power structure.

Young Sergei quickly took advantage of the developing situation in Russia. After his family had moved to Gorky in the Russian heartland he began to get involved in post-communist politics. He had already dropped his surname Israitel because of its obvious Jewish connections and had taken on his mother's Ukrainian surname of Kiriyenko.

When the communist system collapsed and the Soviet Union was dismantled the young Sergei Kiriyenko went into business. Gorky became Nizhny Novgorod, as it had been before the 1917 revolution, and Mr Kiriyenko became a millionaire through the system known as arbitrage. It was a simple procedure which needed quick thinking, very little money and a certain amount of cheek and courage to make one exceptionally wealthy in a short space of time.

The trick was to find a commodity which cost little in the former Soviet Union but cost a great deal more in the West. Siberian oil was a case in point. It cost next to nothing in Russia but if sold in the West the profit margin was immense. Mr Kiriyenko made his fortune quickly, particularly in oil, and put himself in a strong position in the new Russian economy.

He then went into banking in Nizhny Novgorod, a sure sign he was a risk-taker. Banking is regarded as the most risky business in the post-Soviet system.

The risk had nothing to do with money but a lot to do with one's health. In a society in which the average male life expectancy at birth is 56 years the life expectancy of a banker in Russia is considerably lower. Competition between banks included the acceptance of the gun as a legitimate business tool.

It is hardly surprising, therefore, that Mrs Kiriyenko was somewhat worried that Sergei was not home on time on the evening of March 23rd for their daughter's birthday party. As time passed, however, it became obvious that Sergei had not suffered the bullet-in-the-temple fate of most up-and-coming Russian bankers. He had merely been proposed as prime minister by the President in one of his brainstorms.

Mr Sergei Vladilenovich Kiriyenko had been less than a year in the snakepit of Kremlin politics when President Yeltsin picked him from the obscurity of a minor position in the energy ministry to replace the even more wealthy and immensely more experienced Viktor Chernomyrdin.

Why Mr Yeltsin chose to make the convulsive decision to sack his entire cabinet and put such a completely inexperienced politician in as his choice to take over the political leadership of Russia is as difficult to explain as many of Mr Yeltsin's previous decisions.

Mr Kiriyenko's record is such that he is likely to keep an eye to making money rather than making war in a country which still has the ability to destroy Planet Earth several time over. For that at least we should be grateful.