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. Last Updated: 07/27/2016

Requiem for a Reformer

It may be too early to write Anatoly Chubais' political obituary. But even if he remains a first deputy prime minister, he has lost control over privatization, bankruptcy and, most importantly, finance. This alone would suggest an inevitable decline. On Wednesday, however, Chubais was dealt perhaps the cruelest blow of all: He lost The New York Times.


America's newspaper of record called for Chubais' dismissal over the $450,000 honorarium he and his colleagues received from a Uneximbank-linked publishing house, for a book on privatization. Chubais, the Times said, had "disgraced" himself and "tarnished" reform.


Why would supporters in the West abandon him over a relatively petty deal? Because Chubais was supposed to be above that: After all, he, like other members of former acting prime minister Yegor Gaidar's original team, came to power on an historic mission -- to build Russian capitalism.


"Chubais has often served a larger interest with his manipulations," is how the Times put it. In other words, the ends justified the means.


But now that he's been caught trying to line his pockets, Chubais' halo has disappeared. Venality is unbecoming in revolutionaries. His venality, in my view, pales before his "achievements."


Gaidar's team led Russia down the path of oligarchical capitalism. They kept price controls on oil while freeing them on consumer goods; this, coupled with inflation, impoverished citizens while enriching exporters, who received their export licenses and quotas from Gaidar's "liberal" government. This same government furthered the concentration of wealth by funneling federal budget funds into "private" banks.


Chubais engineered voucher privatization. Its consequences are still debated, but doesn't the widespread contempt for the program by the people (remember them?) say something about how successful it was? (And just how did one person wind up with 17 million vouchers?) Chubais was in charge of privatization while an estimated 20 million Russians lost their vouchers or savings in pyramid schemes. On his watch, the Gazprom natural gas monopoly and state television's main channel were privatized in a completely opaque manner.


He then presided over the loans-for-shares auctions. Uneximbank chief and Chubais ally Vladimir Potanin recently confirmed to Business Week that these auctions were insider deals. "It is a part of our history," Potanin told the magazine. Chubais has never admitted the process was rigged. Throughout the war in Chechnya, Chubais was silent.


At a recent forum on the media, Nezavisimaya Gazeta editor Vitaly Tretyakov described an autumn 1996 meeting between top newspaper editors and Chubais, then head of Yeltsin's administration. One editor complained to Chubais that the presidential administration was interfering in editorial policy via Gazprom, which controlled the publication. According to Tretyakov, Chubais responded (no doubt, with the "larger interest" in mind): "You will do what the owners tell you. And if you don't, bones will crack."


Some in the West, which became one of Chubais' chief sources of power, may have believed the liberal image he so carefully cultivated for them. Others were more realistic, but backed him anyway. George Washington University professor Janine Wedel, for instance, has quoted a USAID official as saying his agency helped Chubais' team circumvent parliament by promulgating presidential decrees to ram through reform. True, the parliament was Communist-dominated and anti-reform. Maybe it wouldn't have been had the reforms benefitted average people.


In my view, some in the West instinctively liked Gaidar, Chubais and Co. precisely because they were a small cadre of intellectuals imposing a grand plan from the top down. Put differently, they believed that giving Russia's "reformers" massive state power was the same thing as reform.


Now they are shocked to discover that some of those reformers have lined their pockets. Big surprise: Within one year of the October Revolution, the top Bolshevik leaders had "requisitioned" tsarist palaces -- all, of course, in the name of "a larger interest."


Chubais and his team are being squeezed out by some of the clans they helped empower, while other early democratic leaders like former St. Petersburg Anatoly Sobchak and former Moscow deputy mayor Sergei Stankevich have fled abroad in the face of corruption charges. This is no cause for rejoicing. But it is the logic of revolution, which devours its own.