A Dutchmans Life Shows Russias Path Not Taken

Mint

2 days ago

Derk Sauer, a communist turned journalist, turned capitalist entrepreneur, died this week at 72 after a sailing accident. If you aren't Dutch or haven't been heavily involved with Russia over the last three decades, then you probably haven't heard of him. But he was a hugely important figure for independent Russian media and a man who shaped hundreds of lives if not more, including my own.
His is a story that very sadly encapsulates the road that wasn't traveled in post-Soviet Moscow, either by the West in the 1990s, when it mattered most, or by President Vladimir Putin since.
When the Soviet Union collapsed, shock therapy — a big bang approach to privatization and ending price controls and other constraints on the market — was prescribed. The idea was for the free market to build a new economy from the rubble of the old. Technology and knowledge transfer from the West would be key.
McDonald's Corp. arrived early. Energy majors including ExxonMobil Corp. and BP Plc moved in, hoping to develop neglected and new oil and gas fields. Car manufacturers from General Motors Co. to Mercedes-Benz Group AG were lured by the prospect of selling modern vehicles to those used to having to repair a new Lada before they could drive it.
But Moscow also became a kind of Klondike for small-time Western would-be entrepreneurs. Many were carpetbaggers in search of a quick buck. They had the ethics of the Russian oligarchs and criminals with whom they worked to set up anything from casinos to gyms. They came and went with the money. Even blue-chip names like the Harvard Institute for International Development became mired in corruption scandals and left in disgrace.
In the end, too little of worth was built. What worked for Poland didn't for Russia, and the result, famously, was a massive transfer of wealth into the hands of a few Russian oligarchs. The economy shrank by almost 15% in 1992 alone. Life expectancy for men fell from to 59 years in 1993 from 64 just three years earlier.
Yet this familiar horror show doesn't tell the whole story. Some value was built in the 1990s. When it came to fostering a professional, independent Russian media — a key component in any functioning market democracy — Sauer made a massive contribution. He showed what was possible and what it took to succeed.
Sauer arrived before the Soviet collapse to launch a glossy English-language monthly for the Dutch publishing company VNU. As more became possible after 1991, he saw a market for a full-service daily Moscow newspaper, modeled on the Paris-based International Herald Tribune. When VNU didn't buy in, he found investors and started The Moscow Times. He didn't do the usual with such expatriate newspapers, hiring a few low-paid reporters to add some local color to a daily collection of wire stories. Instead, he invested in hiring a sizable team — including myself and older, more experienced hands, including from the IHT and The Washington Post. He used these to train and edit a larger group of young reporters from Russia and abroad.
By the time I left after several years as editor in 1997, we had some 60 journalists and editors publishing 32 to 40 pages a day. But this expat-led publishing business soon became a sideshow. Sauer's holding company, Independent Media, expanded to publish Russian editions of a whole range of magazines, from Cosmopolitan and Vogue to Playboy. When an early effort at a Russian-language business newspaper fizzled, he pulled in the Financial Times and Wall Street Journal to create Vedomosti, which quickly became the country's most respected and genuinely independent daily.
Nobody, of course, was immune from the wildness of a market that had been liberalized without regulations or institutions in place to create a level playing field. It was a jungle that served mainly the ruthless and the connected. As the money rolled in, Sauer also had to acquire a form of protection, selling a 10% stake in his company to an oligarch. But when either the Kremlin or Russian investors pressured him to shut down coverage that would embarrass them — including access for cash and transfer pricing scandals, respectively — he checked the reporting and let us print.
Most important was that he and his family stayed, committing to what they were building. When the first opportunity came to cash out, some co-investors in Independent Media took the money and left. Sauer didn't. He remained even as the market became more difficult and the tolerance of a free press that allowed his stable of newspapers and magazines to thrive began to disappear.
After eventually selling the company in 2005, Sauer went on to work with RBC, a Russian news outlet that sought the independence and quality he had come to represent. When The Moscow Times withered in 2017, he bought it back to keep it alive, albeit online and in a much-slimmed form. Increasingly under political pressure, he left RBC and then, in 2022, the country. He helped The Moscow Times and other exiled independent Russian outlets, such as the TV channel Dozhd , to relocate to the Baltic States and Netherlands, as they too had to flee. They continue to write and broadcast for Russians on issues such as the war in Ukraine in ways no domestically based media can.
What might have been if more Western businesspeople had come to Russia not to join the pillaging that in many cases passed for investment, but to actually build something? Or had lived by the rules of a regulated free-market democracy, the way Sauer did for journalism? If Western governments had tried harder and risked more? Or if international financial institutions had offered something better suited to Russia than shock therapy?
And what if Putin and his vertical power system hadn't made fact-based journalism impossible? If the Kremlin had focused on developing a strong, diversified domestic economy, instead of carving up the nation's resources among friends and looking for expansion and glory at the expense of Russia's neighbors?
Those are unanswerable questions, and by now, academic. Perhaps there will be another chance, another Moscow opening, forced by a future, younger generation of Russians at a time when the West has grown wiser and less arrogant.
All that's clear to me today, though, is that Russia would be a richer, freer, less aggressive and less paranoid nation had it remained open to people like Derk Sauer, rather than force him out with the ecosystem he did so much to foster.
This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Marc Champion is a Bloomberg Opinion columnist covering Europe, Russia and the Middle East. He was previously Istanbul bureau chief for the Wall Street Journal.