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Vodka Cartels Hold Sway in North Caucasus

COMMENT. Why Moscow is content to allow private vodka empires to flourish unchecked
By Yuri Akbashev

The exploits of the North Caucasus vodka magnates have already become a part of local folklore. In some regions, their power and influence have come to rival that of the government authorities; in others, they are the authorities.


And the Kremlin watches in satisfaction as the mutinous republics fracture into tiny fiefdoms ruled by wealthy oligarchs.


North Ossetia was the first republic to see a vodka boom in the early 1990s. Some settlements, most famously the village of Elkhotovo, gave themselves over entirely to vodka production with illegal stills in almost every home.


Soon powerful mafia clans had taken control of the business, carving the republic up into profitable spheres of influence. They paid hefty bribes to police and bureaucrats whilst forging links with criminal groups in neighbouring Ingushetia.


Kazbek Dzantiev, the Ossetian minister for internal affairs, commented, "During the Ossetian-Ingush conflict, many policemen and gangsters found themselves fighting on the same side of the barricades. Hence their current alliance."


He went on to say that the clans - particularly the notorious Gesovskaya cartel - presented the single greatest threat to law and order in the republic and had few qualms about coming into direct conflict with the authorities.


"When I had just begun working in the republic," said Dzantiev, "the son-in-law of a government official complained that he had been victimised by the Gesovskaya gang. We later took 12 members of the cartel into custody. Some of them were armed.


"Well, the next thing I knew, the Ministry of Internal Affairs was surrounded by cars driven by tough-looking young men with walkie-talkies. When I saw that, my flesh crawled. I couldn't believe my eyes." The threat was undisguised: if the suspects were not released, the Gesovskaya gangsters would take appropriate action.


The minister added, "The illegal vodka business is an abscess on society. It involves thousands of people and the most successful vodka magnates have become dollar millionaires. They made their money by eliminating the opposition. It's impossible to calculate how many lives have been lost in the process."


In neighbouring Kabardino-Balkaria, the struggle for control of the vodka business flared into an all-out gang war. Mafia godfathers such as Khagazhey, Shu and Shaitan were shot dead in broad daylight while Alkos, a veteran of the war in Abkhazia, miraculously escaped unharmed when an assassin fired a Mukha rocket-propelled grenade through the window of his apartment.


Some vodka barons went into politics in a bid to consolidate their authority. Tembulat Erkenov - who owns several distilleries and petrol stations - was elected parliamentary deputy for the Urvansky region in the last round of elections.


Occasionally, the government in Nalchik attempts to crack the whip - or at least curb the excesses of the new oligarchs. When Aslan Arkhestov's father died last year, the director of the Maisky vodka distillery publicly slaughtered 18 oxen as a mark of respect.


On the following day, President Valery Kokov appeared on television and, without mentioning any names, asked the republic's nouveau riche to avoid such vulgar displays of wealth - "even if they did hold their parents in such high esteem".


Parliamentary deputy Zaurbi Tlekhas had his spirits licence removed after the authorities brought criminal proceedings against his distillery.


Certainly, the current situation allows the Kremlin to keep Kabardino-Balkaria firmly under its sway. Eighty per cent of the Nalchik budget comes from vodka production which Moscow controls according to the number of excise labels it issues to local producers. The Russian authorities can decide at any time to reduce or limit the number of labels, with disastrous consequences for the local economy (vodka with no excise stamp is sold for half the price of a licensed bottle and cannot legally be exported).


Furthermore, the vodka industry is dominated by clans with links to the police and local bureaucracy. Lucrative contracts are awarded exclusively to members of the cartels which are understandably jealous of their monopoly. As a result, society is divided by an atmosphere of distrust and an overriding sense of injustice. And a fragmented society is one that is unlikely to mount a serious challenge to the Russian overlords.


Yuri Akbashev is a regular IWPR contributor