By Renfrey Clarke
MOSCOW — Anyone who follows western media reports on Russia will know the formula: the country's chances of economic recovery rest on the "young reformers", brought into top government posts early this year to battle Communist parliamentarians and conservative factory directors. In these reports, star billing is usually given to the 37-year-old former governor of Nizhny Novgorod province, Boris Nemtsov.
Mentioned often in the same sentence is the government's top economic strategist, 42-year-old first deputy prime minister Anatoly Chubais — often identified as the "father" of Russia's privatisation process.
Chubais is popular in western business and financial circles. The British financial journal Euromoney recently proclaimed him its "banker of the year". In 1995, when the International Monetary Fund decided to extend a US$6.4 billion credit to Russia, one of its reported conditions was that Chubais play a central role in implementing the government's economic program.
Nevertheless, foreign correspondents here know not to feature Chubais in the same way they promote the boyish, photogenic Nemtsov. Chubais, western journalists are aware, is one of the most detested individuals in Russia. In surveys, more than 80% of respondents express disapproval of his activities.
The reasons have to do not only with the cynical and often hostile reception which the Russian public has given privatisation, but also with a great deal else in Chubais' policies, personal ties and individual financial history.
Chubais' reputation in Russia is so bad, in fact, that questions are beginning to be asked in western capitals about whether continuing to bet on him is really wise.
A symptom of the disquiet is an article that appeared in the August 24 issue of the Washington Post. Written by Peter Reddaway, a well known professor at George Washington University, the article warned that Chubais' "questionable integrity and authoritarian ways are fostering anti-western sentiments in the Russian public".
Press commentators in Russia — avowed liberals among them — go much further. In July, an article in Moscow's most popular daily paper, Moskovsky Komsomolets, accused Chubais of using Stalinist methods.
Then, on September 13, Nezavisimaya Gazeta, traditionally one of the most intelligent and scrupulous of Russian liberal newspapers, carried an extensive article strongly attacking Chubais and accusing him of trying to introduce an authoritarian regime.
Nezavisimaya Gazeta is controlled by interests which, like many Russian business groups, have fallen out sharply with Chubais in recent times. But if the publisher's motives were self-interested, that does not make the facts in the article untrue or the analysis unwarranted.
The Nezavisimaya Gazeta article is closely reasoned, and its author clearly had an abundance of material to work with.
Privatisation
Chubais's unpopularity with ordinary Russians has its origins in his "voucher privatisation" scheme, through which most state-owned enterprises were transferred to private hands.
In theory, the vouchers entitled all citizens to an equal share in Russia's wealth. People who sold their vouchers at least received something, if only the price of a meal in a second-rate restaurant.
But most Russians chose to "invest" their vouchers, and in the bulk of cases these investments became worthless. At the same time, a small number of people became the extremely rich owners of the property which the vouchers were supposedly meant to distribute.
Late in 1995, after winding up the voucher scheme, Chubais launched a new phase of privatisation: the so-called "shares for loans" program.
State shares were transferred to selected major banks, which in return made loans to the government. Later, the banks involved were permitted to organise auctions and to sell the shares to themselves at derisory prices.
The state property handed over in this way included major stakes in huge natural resources firms.
For the Russian state apparatus under President Boris Yeltsin, Chubais represented both an asset and a weakness. His organising gifts were sorely needed. But in terms of attracting voter support to the presidential camp, he was seen as a liability. In January 1996 he was dumped.
'Lecture fees'
Back in private life, Chubais prospered. The details are murky. Obliged later to detail his earnings during this period, Chubais at first tried to explain an income of some US$280,000 as "lecture fees".
It has since been reported (and Chubais has not denied) that he made the money by playing the securities market with a $3 million interest-free "loan" from one of Russia's major banks.
Chubais' spell outside the state apparatus did not last long. As campaigning for the presidential elections began in earnest in 1996, Yeltsin's rating was disastrously low. Chubais was brought back as campaign director. Over the following months he succeeded in assembling large amounts of money and resources, and in getting Yeltsin re-elected.
He also used the favourable circumstances of the campaign to remove his chief rivals around the president — in particular the head of the presidential bodyguard, Alexander Korzhakov.
Chubais' immediate reward was to be made presidential chief of staff. Early in 1997, in a move intensely pleasing to Yeltsin's international backers, Chubais was returned to the government in the number two position, with overall responsibility for economic matters.
He proceeded to place a string of his supporters, most notably Nemtsov, in key positions.
Chubais clearly grasped the importance of having personal access to Yeltsin. But for success in Russian politics, mere closeness to the president is not enough; also necessary is support in the mass media and security services, along with strong financial backing and western support.
Power base
As the September 13 Nezavisimaya Gazeta article detailed, Chubais in the past year has built an impressive power base in all these areas.
As economic policy chief, Chubais is responsible for state policy in funding the mass media. His opponents charge that he has used his powers to help ensure that a range of media outlets express his interests.
During the spring of 1997, the Moscow daily Izvestia published an article alleging financial impropriety in high government circles. The paper's editor was soon sacked, and a number of leading writers were forced to quit. According to the Jamestown Monitor information service, Chubais was instrumental in the sackings.
Izvestia is now controlled by the financial-industrial group ONEKSIM-MFK, which is widely seen as having privileged insider connections to Chubais. During the summer, this group was among the main winners in the controversial sale of large stakes in two state-owned firms, Norilsk Nickel and the telecommunications giant Svyazinvest.
ONEKSIM-MFK has burgeoned in size and influence during the last period. Its huge concentration of economic and political power, including close relations with the president, is prompting alarm among commentators who see the country's system of rule evolving into a tight business-governmental oligarchy.
The September 13 Nezavisimaya Gazeta article speculates that ONEKSIM-MFK may even represent a new phenomenon: a "super- oligarchy", well clear of its business rivals and, through Chubais, exerting a decisive measure of political control.
Merely outlining these developments, however, cannot convey the full flavour of Chubais' thinking, or explain why he has become so controversial. It is necessary to quote the man himself.
At the height of the presidential campaign last year, two Yeltsin campaign workers were arrested leaving the government's main offices with more than US$500,000 in a cardboard box. The incident confirmed a widespread belief that Yeltsin's campaign officials — with Chubais at their head — were ignoring the financial provisions of the electoral laws.
On November 15, Moskovsky Komsomolets published transcripts of tape recordings in which Chubais allegedly discussed how to cover up the scandal. According to one of the transcripts, Chubais, at a meeting on June 22, 1996, explained how someone could leave the country:
"We have another variant for you ... Rostropovich is driving in a car to Finland, you get into his car, no official formalities, and we'll help you arrive normally. An air ticket for you has already been booked from Helsinki to Turkey, and you'll fly quietly to Turkey. Everything will be OK. Only one important thing. You'll have to live in Turkey for four or five months, so take enough money so everything's normal and there are no problems."
These excerpts suggest a total unconcern for legality and democratic methods of rule. For western governments, the perils of continuing to champion such a "democrat" and "reformer" are considerable.