Old Saint Basil's Cathedral in MoscowJohnson's Russia List title and scenes of Saint Petersburg
Excerpts from the JRL E-Mail Community :: Founded and Edited by David Johnson

No. 44
November 2001
An interview with Anatoly Chubais, CEO of Russian Joint Energy Systems

Author: not indicated
[from WPS Monitoring Agency, www.wps.ru/e_index.html]


Question: The electricity sector used to be a vital part of the Soviet economy. Huge sums were invested in it and a powerful energy system was built. Why are we having electricity shortages nowadays?

Anatoly Chubais: What you say is almost correct. Huge sums were invested indeed but only until the mid-1980s. That was when the financial river began to dry up. It dried up completely by the early 1990s. The same goes for new manufacturing capacities - a great deal in the 1960s and particularly the 1970s, much less in the 1980s, and nothing at all in the 1990s.

From the point of view of investments, the electricity sector is the least attractive. We cannot be compared to gas, oil, or nickel as far as returns are concerned. There are a number of objective and subjective reasons that make it so.

As for the problems, the ones we face are much more serious than in many other sectors of the economy.

The sector is unattractive, but investments are necessary.

Everything the RJES management has done these last three years comes down to trying to get potential investors to at least cast a glance in our direction.

Question: Has anything changed?

Anatoly Chubais: Yes. We implemented a significant anti-crisis program. Despite complication and difficulties, it turned out a smashing success.

On the whole, the financial branch of RJES management has been very successful.

A balance between Russian and foreign investors is what I think is needed. Both groups have their own advantages and disadvantages.

Question: What are the disadvantages of our oligarchs?

Anatoly Chubais: Firstly, they approach us as consumers all too frequently. This is a wrong approach because of a basic conflict of interests that immediately appears. Consumers need cheap electricity. The electricity sector needs money for development from its investors, which means more expensive electricity. That's the conflict of interests.

It is possible to agree on mutually acceptable conditions so that no consumers will feel their interests encroached on.

Question: Can the president be of any help?

Anatoly Chubais: I do not think it correct to demand that the government should get involved in business too deeply. Creation of the proper atmosphere is what is required from the president. He has created it. Requiring anything else from him would be wrong. Once the atmosphere is created, I should take it up from there.

That's what I have always advocated ever since 1998. Remember my little dispute with Berezovsky? He said the authorities should be appointed by businesses. I repeated (and I still think so) that the authorities had their own tasks, and businesses their own.

Question: Everyone knows how you fought for this transparency, this normal payment with real money. There were tragedies. A boy died on the operation table not so long ago because the hospital had been left without electricity for debts. Do you think this is a normal price?

Anatoly Chubais: Let me tell you right away that there have been three such incidents in three years, and we did not take them lightly.

By the way, hospitals and schools are customers of the RJES only rarely. Usually, they are serviced by the so-called go-betweens. These go-betweens are our problem. Collecting from end users, they do not pay us. Their debts to the energy sector amount to 23 billion nowadays. When debts accumulate some, we step in. Let me explain. When a go-between has not paid us for 40% of all energy it got from us, we cut down what we send it by the same 40%. But the go-between is forewarned. It is up to the go-between then, who he turns off. Frequently, go-betweens deliberately overdramatize. They disconnect the most vulnerable end users for better effect.

Question: You are known as a first class executive. What do you think of business management in Russia?

Anatoly Chubais: I consider it the key problem of business in Russia. We were forced to replace 75% of managers at RJES. Fortunately, the necessity was well understood by all involved parties in most cases.

Question: And whenever it was not understood?

Anatoly Chubais: We persuaded them with words or with OMON security. It is not as though Chubais is such a bad guy. The problem is, only a few directors representing the Soviet management school turned out to be adaptable to new realities and requirements. Almost all directors we replaced were all right from the professional and technical point of view but their financial, legal, or corporative skills were something else, I can tell you.

Question: And what do you think of business management on the nationwide scale?

Anatoly Chubais: On the nationwide scale, unfortunately, business management was only replaced by 10-15%. On the one hand, the remaining 85-90% are a burden. On the other, this is a colossal reserve, a colossal potential yet untapped. Once we got around to using it, businesses in Russia will get a powerful impetus.

Question: What about political management? Do you think of it in a similar manner?

Anatoly Chubais: In politics, professionalism of managers is important but not absolutely vital. Some are qualities are required. I know there can be a strong minister who at poor managers at the same time and who have skilled deputy ministers to handle these matters.

Question: You are saying about 90% of managers have to be replaced? How many officials and politicians do you think should be replaced?

Anatoly Chubais: Life itself will see to the replacement of managers in business. As for politicians... I hope I will not be misunderstood, but I do not think much of our government's managerial skills. At the same time, I think the world of their effectiveness and their achievements.

I think it's amazing what has been accomplished over the last eighteen months. If, eighteen months ago, I been given the list of what was planned to accomplish (tax reforms, pensions reforms, new Labor Code, private ownership with regard to land, etc) and told all this would be accomplished by November 2001, I'd have laughed fit to split. I'd have said it was too much.

And yet, all this has been done. Even though the purely managerial level of the government is not very high if I may repeat it again.

Question: Let us get personal some if you do not mind. Would you say Deputy Prime Minister Viktor Khristenko (the man who monitors the work of the RJES) is competent?

Anatoly Chubais: Khristenko is unmatched in the depth of understanding of the link between consolidated budget and energy sector. In the Finance Ministry, he handled subsidies and budget relations between the center and the regions, and took up the fuel and energy complex only afterwards. The results are for the whole world to see.

Debts of the federal budget to the energy sector amounted to almost 20 billion two years ago. They amount to only about 6 billion today. I'll take back everything I've said here about Khristenko if the debts are not zero in early 2002.

Question: You recently went to Aksenenko's defense much to everyone's surprise. It is the widespread opinion that there is no love lost between you two. Could you explain your decision to defend the minister?

Anatoly Chubais: It is about my appraisal of the position of the powers-that-be as such more than appraisal of Aksenenko or whatever he is suspected of having done. I do not think the powers-that-be should that one of their own, a federal minister.

Beginning with a certain political level, all criminal matters automatically become political, that's what I think.

In my view, pressing charges against a federal minister is shame. I'm not saying ministers are immune or above the law or whatever. I'm saying that evidence should be a killer if a minister is under fire.

Question: Embezzlement won't do?

Anatoly Chubais: What materials I read on the charges pressed against Aksenenko made me smile, that's all. Nothing serious, really nothing. Just trifles like hiring more subordinates that he was entitled to, bonuses to assistants above the sums permitted by appropriate documents, etc.

As a rule, nothing ever comes of cases like that. I do not rule out the possibility therefore that a year from now we will probably be told that the file is closed and charged dropped. But a federal minister is a state executive and politician of the national level. A blow at the minister means a blow at the government and the powers- that-be as such.

I find it hard to rid myself of the impression that all this has little if anything to do with the criminal sphere. The impression I get is that someone is trying to even some old scores.

Question: Who do you think he may be?

Anatoly Chubais: No comments.

Question: You are suspected yourself?

Anatoly Chubais: I know. To tell you the truth, that was one of the reasons I made the statement.

Question: Do you think any other mode of "cleansing" the government is possible?

Anatoly Chubais: We should battle corruption as such and not in the executive power structures alone. In my view, the judicial branch of the government is the leader in corruption in our country. It is corrupt almost to the point of absolute inadequacy. This is a factor braking the reforms, investments, economic growth, etc.

I do not think we have any priority higher than a full-fledged war on corruption. The scope and seriousness of the problem are such that force alone will not avail us.

Question: What methods do you suggest?

Anatoly Chubais: I do not have a ready and clear-cut answer. In my view, there three to five main layers to the problem, each of them requiring serious analysis and special programs.

Salaries of officials should be raised, that much is clear. Higher salaries alone will not root our corruption, of course, but corruption cannot be successfully fought without that.

Radical liberalization and deregulation of the economy are two other integral components. Secret services, prosecutor's office, and the powers-that-be should take a radically stronger stand on the matter. It is also essential. A clear political declaration about the war on corruption, backed up by political will, is likewise essential...

Question: A personal question. Do you like power?

Anatoly Chubais: No.

Question: Absolutely?

Anatoly Chubais: Absolutely, though I understand you may tend to disbelieve me. It is only an instrument, nothing more. I'll try an analogy. My attitude toward power is like a piano player's attitude to a piano.

(Translated by A. Ignatkin)

Back to the Top    Next Issue