Global Finance, Local Control: Corruption and Wealth in Contemporary Russia

By Igor O. Logvinenko

Exploring Russia's reentry into global capital markets at the dawn of the twenty-first century, Global Finance, Local Control shows how economic integration became deeply entangled with a bare-knuckled struggle for control over the vestiges of the Soviet empire. Igor Logvinenko reveals how the post-communist Russian economy became a full-fledged participant in the international financial sector without significantly improving the local rule of law.

By the end of Vladimir Putin's second presidential term, Russia was more integrated into the global financial system than at any point in the past. However, the country's longstanding deficiencies—including widespread corruption, administration of justice, and an increasingly overbearing state—continued unabated. Scrutinizing stock-market restrictions on foreign ownership during the first fifteen years of Russia's economic transition, Logvinenko concludes that financial internationalization allowed local elites to raise capital from foreign investors while maintaining control over local assets. They legitimized their wealth using Western institutions, but they did so on their terms.

Global Finance, Local Control delivers a somber lesson about the integration of emerging markets: without strong domestic rule-of-law protections, financial internationalization entrenches oligarchic capitalism and strengthens authoritarian regimes.

• Language: English
• Publisher: Cornell University Press
• Release date: Oct 15, 2021
• ISBN: 9781501759611

Book preview

GLOBAL FINANCE, LOCAL CONTROL

Corruption and Wealth in Contemporary Russia

Igor O. Logvinenko

CORNELL UNIVERSITY PRESS ITHACA AND LONDON

To my babulya Zoya and to my docha Zoya

Contents

Preface

Acknowledgments

Abbreviations and Acronyms

Note on Transliteration

Introduction

1. Local Control and Global Access

2. Episode 1

3. Episode 2

4. Episode 3

5. Coda

Conclusion

Appendix

Notes

Bibliography

Index

Preface

It is an odd admission, but I remember exactly where I was the first time I thought about rules and regulations governing international financial flows. It was on the evening of July 1, 2006. I was sitting in my parents’ living room in Bishkek, Kyrgyzstan, half-paying attention to the 9 p.m. broadcast of Russia’s most popular evening news program Vremya on the state-controlled Channel One. As usual, the news extolled the virtues of Russia’s leadership and the revival of the country’s economy, but I noticed a strange headline on the chyron: Ruble equal to the euro and the dollar. All restrictions on the movement of capital are removed. The first part seemed like the usual hyperbole, but the second sentence seemed perplexing. By 2006 Russia had become an autocracy. All of the independent TV channels had been brought under the Kremlin’s control, elections of governors had been abolished, opposition parties had been neutered, several famous oligarchs had been imprisoned or expelled, and the most valuable assets in the oil and gas sector had been put under state control. Vladimir Putin was only interested in more power and control, so why would his government opt for less control over capital movements? Why would an authoritarian regime embrace financial internationalization? How long could this possibly last?

During the next fifteen years, these questions would preoccupy me as an academic researcher and writer. After a while, I began to see a link between financial integration and the problem of contestability of property rights—a persistent issue that was just as acute under Boris Yeltsin as it is under Vladimir Putin. Corruption, lawlessness, and kleptocracy—not authoritarianism—emerged as the relevant analytical categories for my analysis. Indeed, Putin and his clique are not the first among the Russian elites to strategically use financial openness to solidify their hold on recently reshuffled assets. A variant of this form of financial integration—removal of restrictions on minority foreign ownership that follows the establishment of control over assets by powerful local elites—was used in the 1990s. In terms of the viability of financially integrated authoritarianism, it turns out that Russia would remain financially open long enough for me to finish a book that has a whole chapter about the durability of this model for the country. As I write these words, despite years of sluggish economic performance, painful sanctions, and the onset of the COVID-19 pandemic, Russia’s financial borders are as open as ever.

This book demonstrates that two phenomena—deepening financial internationalization and weak rule of law—are closely linked in Russia. At each crucial juncture between 1991 and 2005, the country’s reentry into global capital markets was deeply entangled with unruly fights for control over the vestiges of the Soviet industrial empire that reliably took place outside the bounds of the rule of law. Once in control, the winning business interests supported policies that would allow foreign investors to obtain and hold minority positions in their firms in order to increase the legitimacy of their property rights. After the Global Financial Crisis of 2008–9, financial internationalization only intensified while a more entrenched form of autocracy took root in Russia. Old and new economic elites continued to rely on open financial borders to bolster the legitimacy of their property rights while benefiting from weak local rule of law. This story of Russia’s integration into the global financial system delivers a somber lesson for those who advocate for financial internationalization of emerging market economies. Absent credible domestic property rights protections, deep economic integration only further strengthens oligarchic capitalism and kleptocratic regimes.

Since 2016 many ordinary Americans learned the names of Russian politicians and oligarchs, the compromised nature of their wealth, and their ability to influence political outcomes inside the United States and other Western nations. Russia has become an object of acute internecine political conflict in the United States. Yet, a fuller understanding of the history of Russia’s peculiar reintegration into the global financial system (itself a consequence of never-ending contests for property control and earlier US-led efforts to open the Russian economy for Western investors) is still missing from the heated discourse. Above all else, I hope the readers of this book will understand that policies that promote the integration of corrupt economies into the globalized financial markets can also lead to the spread of kleptocratic practices into the very core of the global economy.

Acknowledgments

Although my name is the only one listed on the cover, the book would not have come into existence were it not for dozens of other unofficial contributors and supporters. Both during and after my two years at Villanova University, Jeffrey Hahn and Maria Toyoda offered invaluable guidance and mentorship as I learned to navigate my way in American academia. At Cornell University, I was incredibly fortunate to have Valerie Bunce as my mentor. Whatever success I have had as an academic researcher, I owe to her guidance. Jonathan Kirshner and Tom Pepinsky offered enormously helpful advice and support throughout the entire dissertation process. In general, Cornell’s Department of Government cultivated a culture that permitted exploration of big questions that crossed rigid disciplinary boundaries, which allowed me to learn from scholars like Peter Katzenstein, Kaushik Basu, Richard Swedberg, Eswar Prasad, and many others. I am thankful to have had a chance to study with them.

I look back on my time at Cornell with special fondness because of the friendships that I made with my colleagues. Then and in the years that followed, Julie Ajinkya, Phil Ayoub, Jaimie Bleck, Ben Brake, Michael Dichio, Berk Esen, Janice Gallagher, Simon Gilhooley, Desmond Jagmohan, Don Leonard, Pinar Kemerli, Deondra Rose, Tariq Thachil, Pablo Yanguas, and Chris Zepeda-Millán—all have played an important role in helping me advance my research. Although I doubt any of them will take an iota of credit, I know that every one of them helped by offering advice, reading early drafts of my manuscript, or simply walking up and down that hill together.

I am particularly indebted to the people I interviewed for this project in Russia. Those exchanges included the most thought-provoking conversations about Russian business and politics I have ever had. Over the years, I presented versions of this work at various venues that are too numerous to list, but in particular, I am indebted to the organizers and participants of the Globalizing Eurasia workshop sponsored by the Social Science Research Council and the Davis Center for Russian and Eurasian Studies at Harvard University; workshops organized by Henry Hale and Marlene Laruelle at George Washington University; the Dissertation Workshop in Global Political Economy organized by the Balsillie School of International Affairs; and various workshops and events held at the Harriman Institute at Columbia University during the year of my postdoctoral fellowship. It was a great privilege to work with Katharina Pistor, whose ideas about the legal foundations of financial globalization have profoundly impacted the way I think about these issues. Timothy Frye welcomed me to Harriman and took a genuine interest in my project, which meant a great deal to me then and still does now.

My colleagues in the Political Science Department at Wellesley College played an instrumental role in supporting my decision to abandon most of my doctoral thesis and write a new, more focused manuscript from scratch. In particular, Stacie Goddard was a fantastic mentor who continues to be a role model of scholarly, pedagogical, and human integrity. I am also profoundly grateful for the friends I made at Wellesley who supported my project, including Maneesh Arora, Jenn Chudy, Susan Ellison, Alla Epsteyn, Robert Goree, Tom Hodge, Kathy Moon, Liza Oliver, Ryan Quintana, Joe Swingle, Nina Tumarkin, and Adam Weiner. Two students, Emma Schwartz and Samantha Lai, provided stellar research assistance for several chapters of the book. I am forever indebted to Juliet Johnson, Mitchell Orenstein, David Woodruff, and Alex Cooley for taking part in my book workshop in 2017. Spending that autumn day talking about my work with this group still ranks as the most rewarding intellectual experience of my career. I also have to thank Anna Vassilieva of the Graduate Initiative for Russian Studies at Monterey Institute for International Studies for allowing me to spend a sabbatical in beautiful Monterey, California, where I completed this manuscript. It was a pleasure to work with Cornell University Press editors Roger Haydon, Emily Andrew, and the Cornell Studies in Money series editor Eric Helleiner, who patiently helped me steer the manuscript toward completion through a period of time that included the birth of my daughter, a global pandemic, and a cross-country move. Special thanks is owed to Thomas Mowle, who always went far beyond his call of duty. My new colleagues at Occidental College have been nothing but welcoming and supportive, despite the emergency circumstances of the pandemic. Anthony Chase and Derek Shearer, in particular, made every effort to welcome my family to Los Angeles amid a Covid-induced lockdown.

So many friends outside of academia have supported me when the going got tough, including the whole Walker family (Frank, Ruth Ann, Rusty, and Dennis), Daniel McKenna-Foster, Po Saidi, Andrew Levine, Vicki and Jordan Gantz, and all the members of the Redlands crew. It would be impossible to fully express my appreciation for my parents, Elena and Oleg, and my sister Alena for their love and support. I cannot quite explain how but being so far away from you all forced us to learn to be closer in our frequent conversations and text exchanges. I hope to live up to your astonishingly high opinion of me one day. In a very practical sense, the book would not have been written were it not for the unending support of my wife Sayda Zelaya. Thank you for patiently tolerating my escapes to the office on the weekends to revise this or that chapter just one more time, especially after the birth of our daughter. I know that nobody will be happier to read this line than you: this book is done!

Finally, I must mention my remarkable late grandmother Zoya Logvinenko. Born to illiterate parents, she made her way through university medical training to become a doctor who served her village community outside of Bishkek (then Frunze) for many decades. As a child, she lived through World War II and the postwar famine, and in her old age she had to experience the full personal and financial impact of the post-Soviet calamity. Despite all this, she was the best, most inspiring grandmother one could ever wish for. Her work ethic, humility, ability to tolerate discomfort, and selflessness astonish me to this day. I know that a little part of her lives on in my daughter. This book is dedicated to the two Zoyas who altered the course of my life: Zoya Georgievna Logvinenko and Zoya Lucia Logvinenko.

Abbreviations and Acronyms

Note on Transliteration

The book generally follows the American Library Association and Library of Congress (ALA-LC) romanization system. Following convention, I did not use diacritics and, where applicable, used the common version of names transliterated from Cyrillic, such as Yeltsin, as opposed to El’tsin.

INTRODUCTION

Russia as a Globalized Kleptocracy

Vladimir Putin is an autocrat who once bluntly pronounced the values of Western liberalism to be obsolete. Whatever his position on cultural liberalism, his policy views on economic liberalism and global capitalism are rather complicated. Putin has long been willing to work within the global economic structure fundamentally grounded in a Western liberalism based on free and open economic exchange. Most observers of Russian politics know that, just in the first few years as president, Putin centralized political control in the Kremlin, neutered the opposition, and reestablished state ownership over much of Russia’s energy extraction industry. Fewer people know that by the middle of his second term, he had fully integrated the Russian economy into the open globalized financial markets. It would not be an exaggeration to say that Putin, the anti-Western firebrand, did more to globalize Russia than his two mostly pro-Western predecessors Mikhail Gorbachev and Boris Yeltsin. For visual evidence, one needs only to look at the gleaming Moscow International Business Center (also known as Moscow City). Today the Russian capital city looks like a major international commercial metropolis. Yet, even as the shiny new skyscrapers cast long shadows over the centuries-old walls of the Kremlin, opaque power politics and informal relationships inside those ancient walls dictate who gets to control the country’s most valuable economic assets, shaping the conduct of Russia’s business tycoons both at home and abroad.

Russia’s reincorporation into the global financial system after the Soviet collapse has been an impressive and surprising success. This is especially evident when progress in financial internationalization is judged against the country’s poor record of domestic economic and political reforms. As the country opened financially, its government and big business were either unwilling or unable to stamp out rampant corruption and improve the toothlessness of Russia’s rule-of-law institutions (see figure 0.1). Financial internationalization proceeded in spurts since 1991, following episodes of property redistribution, and culminating in the most significant financial openness reforms during Putin’s second term in office. In 2006, after consolidating his hold on power and major economic assets, Putin’s government removed almost all restrictions on the cross-border movement of capital. In subsequent years, the Kremlin’s steady commitment to the policy of open financial borders withstood the Global Financial Crisis of 2008–9, the sanctions that followed Russia’s annexation of Crimea, and its meddling in the 2016 American elections. In 2020, even as most foreign nationals were banned from entering Russia due to the COVID-19 pandemic, investors from all over the world were still able to access the Russian stock market, including the ability to purchase shares in the state-controlled energy giants Gazprom and Rosneft, without ever stepping foot on Russian soil.

A graph shows two lines: one for the rule of law and the other for the levels of financial openness from 1992 until 2016. While the rule of law stays consistently low through this period, financial openness increases over time, reaching nearly complete openness by the middle of the first decade of the 2000s.

FIGURE 0.1. Rule of law and financial openness in Russia, 1992–2016. Financial openness (right axis, ranging 0 to 100, based on the CAPITAL index by Quinn and Inclan). Rule of law (left scale, ranging –2.5 to +2.5) is based on the Voice and Accountability data project produced by the World Bank.

Sources: Dennis P. Quinn and Carla Inclan, The Origins of Financial Openness: A Study of Current and Capital Account Liberalization, American Journal of Political Science 41, no. 3 (1997): 771–813 (including subsequent updates shared by Dennis Quinn, email communication). D. Kaufmann, A. Kraay, and M. Mastuzzi, The Worldwide Governance Indicators: A Summary of Methodology, Data and Analytical Issues (World Bank Policy Research Working Paper No. 5430, 2010), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1682130.

In the early 1990s, the combination of policies of open financial borders, strong rule of law (including secure property rights), private enterprise, fiscal austerity, and deregulation were the core of the Washington Consensus—the do-it-yourself guidebook to policymaking after the end of history. The Washington Consensus is thought to have failed, but in reality, Russia and other emerging market economies have adopted many policies from the pages of this policy menu à la carte. They have rejected democratic institutions and the rule of law while embracing fiscal austerity, low taxes for the wealthy, and capital decontrol. In particular, the combination of deep financial integration with widespread local informality, corruption, weak property rights protections, and unchecked government power —turned out to be a formula for producing and entrenching kleptocracy and authoritarianism. This book traces how this model took root in Russia overt the past three decades.

Argument

In surveying the entirety of Russia’s thirty-year volatile journey from autarkic state socialism to globalized state capitalism, I show that the continuous contestability of property rights fundamentally shaped Russia’s integration into global financial markets. I utilize a simple framework that links the internal politics of struggles over asset control with outward-facing policies of financial openness across the entire post-Soviet period. After the fall of communism, the internationalization of Russia’s financial markets has consistently served the interests of the wealthy business tycoons who managed to combine local control over their wealth with global accessibility (LCGA) of shares in their companies for foreign investors.

I apply this framework to describe the key episodes of post-Soviet economic history, revealing two peculiar features of Russia’s approach to financial integration. First, the economic transition was characterized by a series of large-scale battles for control over legacy Soviet assets. After each episode of property redivision, the business elites who came out victorious in the struggle, relying on their clout and personal connections, retained a majority control of shares in assets. The division of property always took place according to the rule of clout, not the rule of law. Second, once in control, these businessmen supported policies that would allow foreign investors to obtain and hold minority positions in their firms in order to increase the legitimacy of the local owners’ otherwise tenuous property rights in these assets. After all, given the lawless nature of postcommunist economic transition, local claims to ownership could never be fully secure.

Each of the three episodes of property redivision highlights the role of successive cliques of oligarchic interests as they took over the most valuable pieces of the former Soviet economy. The first group—the carry-over insider directors of Soviet state enterprises—gave way to the second, the private oligarchs of the mid-late 1990s, who ultimately relinquished influence to the third coterie, the Putin-appointed state oligarchs (or stoligarchs) who took over giant state-owned enterprises beginning in 2000. All of these leading groups of business elites were preoccupied with wealth defense, and almost all of those who managed to hold onto their riches through the years did so by relying on greater integration into the global financial system. Deepened financial integration gave them access to liquidity and legitimacy, making it more difficult for current and future political enemies to dispute their property rights. Over time, the LCGA logic of wealth defense became the fundamental and deeply entrenched feature of the Russian economy.

Rather than modernizing the economy, each spurt of financial internationalization further solidified the oligarchic status quo. In each episode detailed in the book, domestic business interests used financial openness instrumentally. They consistently opposed foreign investment until they locked up control over the valuable property. Once they obtained exclusive ownership, these individuals began to favor openness policies that made it easier for nonresident investors to obtain minority ownership stakes in their companies. In this manner, financial globalization enabled companies representing the commanding heights of the once-mighty Soviet colossus to be incorporated into the pool of global capital without improvements in the Russian rule-of-law protections that continued to be exceptionally weak. Their continued weakness was not accidental, but central to the process. Russian elites and policymakers of different political stripes pursued financial integration precisely because local rule-of-law protections were so poor. By the time ownership was resettled for the third time under Putin, local control had become inextricably linked with the availability of these assets on international capital markets.

Weak rule of law and intensifying financial internationalization, on which the logic of LCGA rests, are thus different sides of the same coin: the local corruption, personalism, and lawlessness that characterize weak rule of law are supplemented by the formal rules and faceless automaticity of global financial markets. The global financial system at its core is a functioning legal construct. This is why in Russia, surges of financial internationalization followed episodes of local property reconfiguration as the new owners actively searched for ways to formalize their ownership claims. The ever-present fear of contestability of these claims is also why, despite destabilizing side effects like crises and Western sanctions, the benefits of financial internationalization have been too tempting to pass up even during the most trying times for the Russian elites.

A Saga in Three Parts and a Coda

The empirical core of the book is the analysis of three key episodes of property redistribution. In each episode, local economic actors’ preference for financial openness shifted depending on the extent to which they controlled assets. The first episode covers the period of voucher privatization (1992–94), examining how the dominant group of insider managers changed their preferences concerning foreign ownership restrictions during this period. During the second episode, the private oligarchs’ preferences about foreign ownership shifted before and after the loans-for-shares privatization scheme of 1995–96. The third major episode is the 2003–6 property reconfiguration in favor of state oligarchs, who initially resisted, but later radically accelerated the internationalization of Russia’s capital markets.

Each episode is presented in the context of contemporaneous local and international politics. The second chapter begins in the late 1980s with an overview of Mikhail Gorbachev’s reform policies that so crucially shaped how the first event I examine—the contest over formerly Soviet state property—would unfold in the early 1990s. Out of political considerations, Boris Yeltsin responded to what he saw as Gorbachev’s indecisiveness with a radical change, rapidly shifting state-owned assets into private ownership. Shortly thereafter, Yeltsin was forced to make his own compromises in the privatization agenda, ultimately bowing to immense political pressure from the Soviet-era managers of state enterprises. Most crucially, the voucher privatization reform program progressed without established legal frameworks for corporate governance, disclosure requirements, or minority shareholder protections. As a result, it ushered in an era during which insider managers of previously state-owned enterprises carved out a significant measure of de facto power over those enterprises without ever acquiring controlling ownership stakes. Although these managers had consistently lobbied to exclude foreign participants during this first phase of privatization, after privatization, they sought to benefit from establishing connections with foreign financial interests. In 1993 and 1994, a series of laws enabling greater financial openness were passed; these changes contributed to Russia’s first stock market boom-bust cycle in 1994, which was almost entirely driven by foreign portfolio investment.

Politics were once again central to the fight over property control during the second phase of privatization, which took place between 1995 and the 1998 financial crisis. In the second episode, the leading business interests (primarily from the banking sector, but also several prominent insider managers from large oil companies) acquired majority stakes in some of the biggest state-owned enterprises. Predictably, foreign investors were barred from competing for these assets while the upstart oligarchs used their political, media, and financial resources to influence Yeltsin to transfer ownership rights to them in exchange for supporting his reelection. Much as the insider managers had done, these oligarchs changed their position on acquiring control: they quickly made shares in their assets accessible to foreign investors, both on the domestic stock market and through the American (US) and global depository receipts on foreign exchanges. This resulted in a second boom-bust cycle in Russian equities (1996–98); the Russian equities exchange became the best-performing stock market in the world before it crashed in August 1998.

Russia’s most profound shift to financial internationalization occurred in the middle of the first decade of the 2000s. This period saw a global commodities boom, favorable currency devaluation after the crisis of 1998, and prudent fiscal management by a competent technocratic government. Putin was, therefore, less politically vulnerable to pressure from business or subnational political elites. He and his cronies, a close-knit group of new insiders with personal connections to the president, pulled off a stunning reconfiguration of asset control since the Soviet collapse. In 2003, Putin initiated a campaign to renationalize the most valuable energy-exporting enterprises. Through purchases and outright expropriation, the Putin-backed group of Russian power brokers gained control over the most lucrative gas and oil companies. Once again, while the struggle for control of these assets was taking place, foreign access was deliberately circumscribed. However, in 2006, when the assets were safely in the control of this group, the Russian government rapidly and nearly completely eliminated controls on cross-border capital. This increase in the accessibility of Russian equities created the largest stock market rally in Russia’s history, leading to skyrocketing valuations of the state’s newly majority-owned companies, and Russia’s greater integration into the global financial system legitimized the new configuration of ownership. Since July 2006, Russia has boasted the most open equity markets to foreigners among the Brazil, Russia, India, and China grouping of emerging market economies.

In each of the cases examined in the book, the winning interest group shut out foreign investment while they sought to gain control. Once control was consolidated, they integrated domestic and international financial markets by facilitating foreign investors’ access to local assets, offering safeguards such as the ability to withdraw investments instantly and to litigate disputes in Western jurisdictions to increase Western investor confidence. This produced a mature stock market infrastructure that eased short-term cross-border asset exchange but without the reform of broader rule-of-law institutions that would encourage long-term investment. The continued power of the rule of clout meant that Russian economic elites approached financial internationalization with remarkable consistency: by and large, they maintained local majority control by taking advantage of weak economic institutions while at the same time enjoying the benefits of globally integrated financial markets.

The final large-scale episode of the redivision of assets was completed by about 2005, but the story does not end there. Subsequently, but especially since 2009, the deep financial integration that elites have imposed has repeatedly damaged the welfare of ordinary Russians and endangered the country’s national security. Even before the COVID-19 pandemic began, Russia experienced several major crises, including the 2008 global financial crisis, the 2012–13 banking crisis in Cyprus, and the 2014 imposition of increasingly painful Western financial sanctions. Despite these crises and external challenges, the Kremlin kept up its unyielding commitment to financial openness. After twenty years of transformation and experimentation, Vladimir Putin’s regime had successfully married political authoritarianism, economic statism, and full financial openness. In the last empirical chapter—a coda to the three dramatic episodes—I explore the implications of this commitment. I show that from the point of view of elites of all stripes, the benefits of openness have far outweighed the cost inflicted on the country’s economy and national security. Having become entirely dependent on the model of asset defense based in the combination of local control and global access, the tycoons of different stripes have repeatedly refused to give up on financial internationalization. Financial internationalization is now hardwired into the Russian economy.

Through these three key episodes and subsequent events, the book explores how a country like Russia can combine financial openness with weak domestic rule of law and pervasive corruption, but it shows that doing this leaves unanswered an important question: What happens when markets succeed and democracy fails? While the book cannot settle this question, I outline in the conclusion several pertinent lessons from Russia’s experience with financial globalization. One such lesson is the cogency of the West’s growing concerns about the rise of globalized autocracies. Using its unique place at the center of the global financial system, the West, and the United States in particular, can exert tremendous pressure on these economies—power that it could use much more prudently. Russia’s track record highlights the enabling role played by international financial intermediaries in facilitating the financial internationalization of kleptocratic economies. In the 2010s, Russian corporate excesses, while still widespread, were somewhat reduced by the participation of foreign investors, and most local controlling owners were willing to pay that price to legitimize and legalize their assets. But at the same time, the long-standing practice of systematically offshoring assets and relying on foreign-registered shell companies to manipulate and shift assets within the companies they control continues unabated. Leading financial institutions in the United States and the United Kingdom still facilitate and profit from these activities. The future of globalized kleptocracies will depend on whether policymakers and regulators in the West continue to allow commercial banks, rating agencies, hedge funds, and pension funds to indiscriminately integrate assets located in rule-of-clout countries into the global financial system governed by Western legal norms.

Sources and Methods

The book is a study of a single country, but focusing on the shorter episodes within the larger case allowed me to partially control for some confounding socioeconomic and cultural variables. While all three episodes examined here followed the same pattern—domestic elites favoring restrictions on financial internationalization while property control was contested, then lobbying to ease those rules once they had established full control—these episodes of property reconfiguration were also different in many respects. For example, these cases cover two foundational economic shifts: in the 1990s, control over large enterprises was transferred from the state to private hands and, in 2000–2010, were transferred back to state ownership. Different groups benefited most from the asset reshuffles (insider and private oligarchs during the Yeltsin era, state oligarchs under Putin); the ruling regimes in each episode