Have you ever delved into the Russian approach to capitalism? Ever wondered how Russia’s transnational elites conduct their business?
As opposed to ordinary nine-to-fivers, these archetype elites must deal with governments (their own and foreign), a tangle of legalities, banks, high finance and a hundred other stakeholders we might name. Take the famous Magomedov brothers – Ziyavudin and Magomed – as an example. Yahoo Finance examines them here.
Smart and nice-looking, their power, wealth and outward success is nothing short of amazing. They have found niches in telecommunications, high technology, oil and gas, port logistics and engineering. On a cursory level, they seem to have tremendous reach around the world, as well as the connections one needs to make extravagant deals.
Russian Deputy Prime Minister Arkady Dvorkovich is known to run interference for the brothers – yet his own power and favor within the Kremlin has waned. It should be noted that Ziyavudin Magomedov and Dvorkovich studied together at Moscow State University. According to Yahoo Finance, “This precarious connection is widely rumored by many to be the sole catalyst for Ziyavudin’s rise to oligarchy.”
For some reason, mixed martial arts is a passion for the brothers, who hail from the rugged region of Dagestan. One might be reminded of the great Jean-Claude Van Damme films like “The Quest,” “Hard Target” and “Desert Heat.” Since those and even earlier films were released, mixed martial arts has emerged as a major international sport for both men and women. These are really tough guys and gals who train hard and fight in brutal combat reminiscent of the gladiators of ancient Rome. “Fight Nights Global” is certainly a hot ticket item backed by the Magomedovs. Perhaps the brothers see MMA as a metaphor for the rough-and-tumble world of international business and mega-construction projects.
According to one MMA report, “Following a period where [Ziyavudin Magomedov] had fallen out of favor with the Kremlin, resulting in the contraction of his personal fortune down to $800 million.” While the definitive reasons are unclear, heavy investment in Fight Nights Global was instrumental to Magomedovs regaining some favor at the Kremlin. The Russian Bear enjoys this spirited competition.
The Summa Group, which provides the broad strategic architecture from which the brothers operate, has been involved with Elon Musk’s maverick “Hyperloop One” tube transport system. The Hyperloop is supposed to create a postmodern conduit to ship freight between Russia and China. There are major questions about the science, safety and feasibility of this project. (Meanwhile, the South African Musk has made headlines claiming the world is living in a computer simulation. The New Yorker explains Musk’s views in this article.)
The Magomedovs have also been linked to “the Rotterdam Project.” It would have essentially made them the guardians of oil flowing from Russia to Western Europe. But questions emerged about its potential for being used to launder less-than-pristine monies. There were also concerns about a monopoly being formed. Even though a $1 billion was spent, the project was canceled.
Dagestan, the cradle of the Magomedovs, is unknown to most Americans. It’s nestled next to Georgia, where the late Soviet dictator Joseph Stalin was born.
Dagestan features less than 4 percent ethnic Russians, and it stands as the most diverse republic in the Russian Federation. Dagestan is a word of Persian and Turkish origin. It literally means “mountain land.” The nation features coal, oil and natural gas. To the east is the Caspian Sea, and to the south lay Azerbaijan. It might be remembered that American foreign-policy elites sought to push radical Islam up against Russia’s southern flank as a part of the “Brzezinski Doctrine.” These days, Sufi Islam strives for supremacy in Dagestan against those promoting Shariah law.
In Dagestan, the Magomedovs, are being investigated by the Russian government for overcharging on their construction practices. This is in addition to malfeasance in regard to state funds over a ski resort, Matlas, they had planned to build. Seeking to control maritime trade between Russia and Europe, they planned the Makhachkala Sea Commercial Port in Dagestan, which has yet to come to fruition. Also at issue is the development of the huge industrial park AgroDagItaly, which has been pending since 2012. Yet the new business has not blossomed as hoped. This seems to be a recurring theme for the Summa Group.
Some of the Magomedov brothers’ projects have gone wrong in places that are well-known to NATO planners. Take Kaliningrad, for example. It’s an enclave close to Denmark that belongs to Mother Russia. It was annexed from Germany in 1945. When Moscow wants to scare Denmark and NATO, it moves nuclear weapons into Kaliningrad. Radio Free Europe explains it all here. The region is fast becoming the most heavily militarized zone in Europe. Take a look at this article concerning the Magomedovs’ dealings in Kaliningrad.
According to one account, “GlobalElectroservice, a member of the ‘Summa’ group … [which] in 2013, won a tender for the preparation of the territory for the construction of the Kaliningrad stadium on the Oktyabrsky Island. The stadium in Kaliningrad is being built specifically for the World Cup 2018. The planned deadline is November of 2017. Police suspect the Magomedovs’ structures in organizing a criminal scheme that allowed the state to extort more than 500 million rubles from overstating the cost of construction work.”
If the above were actually true, would any of us really be surprised? Russia (like China) has an underdeveloped legal system. This is a well-established fact. Russia, like China, features a non-Romanized alphabet, a history of gulags, one-party rule, an insular culture and the all-too-common shady business dealings.
That said, Russia’s elites are enjoying the finer things in life and don’t want to lose what they have accumulated. Their billionaires and oligarchs have to play ball with the transnational elite. How else can they get things done? But what happens when they don’t play nice? Honesty, after all, is still the best policy. And things can easily fall apart without moral boundaries.
For example, once again, referring to the article above:
“GlobalElectroservice in recent years has generally earned itself a reputation as a troubled company. According to the system of professional analysis of markets and companies [or] ‘SPARK,’ dissatisfied customers filed against Magomedov about 40 lawsuits for a total of 180 million rubles. Most plaintiffs unanimously accuse GlobalElectroservice of not fulfilling its obligations.
“Nevertheless, companies from the holding company Summa regularly receive large contracts, the work on the implementation of which is financed from the state budget of the Russian Federation. The most logical explanation of why state agencies and companies are associated with a problematic structure is Ziyavudin Magomedov’s close relationship with [the aforementioned] Deputy Prime Minister Arkady Dvorkovich, who [as noted] allegedly promotes the flourishing of the brothers’ business empire.”
As for the Magomedovs, one can only marvel at the sheer size of their vision in terms of impacting the business world. Money is only pieces of paper, but you can’t do much without it. Even Jesus Christ was betrayed for a mere 30 pieces of silver. You can sheer a sheep a hundred times but only skin it once. These are all salient lessons the brothers have learned all too well.