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#10 - JRL 7211
Moscow Times
June 5, 2003
Illarionov: Chubais a Threat to Growth
By Lyuba Pronina
Staff Writer

He gathered journalists to talk about the Group of Eight summit in France, but Andrei Illarionov rarely misses a chance to go after Anatoly Chubais in public.

President Vladimir Putin's outspoken economic guru lambasted Chubais and his "comrades" at Unified Energy Systems on Wednesday for pushing through a breakup plan for the electricity monopoly that he said will make a few rich people richer and a lot of poor people poorer.

He said the Chubais-backed plan, which includes auctioning off the company's prime assets only to current shareholders, will make Putin's goal of doubling the size of the economy by 2010 impossible.

Illarionov has repeatedly called on the government, which owns 52 percent of UES, to sack Chubais, who could barely control his glee last month when the UES board finally approved a long-debated blueprint for parceling out the monopoly's assets over the remaining five years of its existence.

"It is clear ... that opponents of the revamp, including civil servants, have been dealt a crushing defeat both morally and professionally," Chubais gloated at the time, referring to Illarionov.

"The entire country will pay for the operations that the management of [UES] suggests in its strategy. Frankly speaking, it has no relation to market reform but to an oligarchs' reform directed at forging their monopoly status," Illarionov said.

He said the government would have to spend some $2 billion under the UES plan to buy up the shares it needs to have 75 percent ownership of the Federal Grid Co., as the law requires.

And another $2 billion burden will be placed on the shoulders of public sector workers next year if electricity prices are allowed to increase by 16 percent, as the Economic Development and Trade Ministry recommended, he added.

"What we have is a group of comrades that has found itself in the management of a company and is trying to misappropriate something it does not own. ... These are two different things, the energy reform and actions taken toward the redistribution of financial resources from one pocket to other pockets."

Illarionov said that the only reason Putin signed off on the reform plan was because the government and both houses of parliament had already approved it.

"The president is not just a man, but an institution, part of a political structure," he said.

UES spokesman Andrei Yegorov brushed off Illarionov's comments.

"The actions of management are controlled by shareholders -- the largest of which is the state -- and are absolutely transparent," he said.

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