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#14 - JRL 7245
June 30, 2003
An interview with Anatoly Chubais, CEO of RAO UES
Author: Konstantin Smirnov
[from WPS Monitoring Agency, www.wps.ru/e_index.html]


The first meeting of RAO UES board of directors following the annual general meeting of shareholders (conducted on May 30) was held last Saturday. Alexander Voloshin, director of the Presidential Administration, was reelected chairman of the board of directors. Energy specialists from Europe and the CIS had met on the eve of the board's meeting in the Czech Republic and Kyrgyzstan. Anatoly Chubais, CEO of RAO UES, participated in both forums. On his way from Prague to Bishkek, he was interviewed about reforming RAO UES and other natural monopolies, the relationship between business and government, and Vladimir Putin's second term in office.

Question: What do you think of Arkady Volsky's recent letter to the president? It contains a proposal to create an inter-departmental agency which would select projects under which individual customs and tax duties would be granted, and also use a portion of Central Bank's reserves to stimulate investment.

Anatoly Chubais: It reminds me of my youth. We went through these discussions in the 1990s. Volsky and some outstanding Soviet academicians made these proposals many times. Frankly, our nation has long since surpassed this level of economic analysis. Unfortunately, this letter wasn't discussed among members of the bureau of the Russian Union of Industrialists and Entrepreneurs (RUIE). My colleagues at the RUIE are furious. The nation is maturing very quickly, in its understanding of economics among other things. Around five or seven years ago, such proposals could be politically suppressed at the highest level. The consequences of implementing them would be catastrophic. In general, these are adolescent ideas in terms of economics. It makes no sense to urge anybody to stop, since it won't go ahead. It is not serious. Therefore, I'm calmly ironic about this letter, rather than indignant.

Question: Who is the true author of Volsky's letter?

Anatoly Chubais: I'm not ready to answer that yet. If I'm getting everything right, this problem will soon be discussed at the meeting of RUIE bureau.

Question: How would you rate the effectiveness of the RUIE's interaction with the authorities, including the president? Many oligarchs are saying it would have been better if they hadn't raised some issues with the authorities. It only leads to worse consequences.

Anatoly Chubais: Indeed, there are hundreds of flaws in relations between big business and the authorities. However, taking a more general view, the result is undoubtedly positive. Volsky, whom I've just criticized, has done so much to organize the right kind of relations between business and government. There are situations when the interests of business and the interests of the nation coincide, and the RUIE is included in coordination of these - for instance, joining the WTO and developing the pension reforms.

Question: What do you think of the administration's response to the RUIE's proposals? Has big business been playing alone, rather than all institutions of civil society?

Anatoly Chubais: I do agree that the RUIE has often seemed to be replacing the institutions of civil society, which is ambiguous in itself. We need some forces other than the state to rein in business and its influence on government. Nevertheless, the RUIE's social role has more positive than negative aspects.

Question: What do you think should be the start of the administrative reforms - reforming the Cabinet, as your colleague Alexander Shokhin is proposing, or reformation institutions under the Cabinet, as proposed by Mikhail Kasianov? In the opinion of the prime minister, it should first be decided which functions the state apparatus may reject; only then will the Cabinet be considered.

Anatoly Chubais: There have been many darts of criticism against the Cabinet. However, the key point can be formulated as the question foreigners like so much: "Who are you, Mr. Putin II?" The question primarily concerns how Putin's second term in office will be used for a real breakthrough. We all see that along with some serious steps, a slowdown of reforms is evident, and nothing drastic is likely to take place until March 2004. Russia is not unique in this respect. Therefore, the main problem is not to ascertain specific solutions for the administrative reforms, but something different: will Putin's second term be a burst of effort to double the GDP, or a repeat of moves along a tried and tested route?

Question: Do you know the answer?

Anatoly Chubais: I don't. I think nobody does, except Vladimir Putin. However, reforming the Cabinet is impossible without internal guidelines which the president must have. I'd go beyond the framework of your question. There are definite backbone features of Russia under Putin. The positive and negative aspects are fundamentally mixed in these features. Stability, not only political stability, is evident; there have been some macroeconomic successes. Inflation has been falling, and we are realizing now what its rates will be in 2005, 2006 and even 2007. The growing hard currency reserves, stable ruble, budget surplus, settlement of the debt problem. Earlier, there had been predictions that 2003 would be a year of crisis, a nightmare, a catastrophe. Nothing so awful has happened. Everything is cool. I'm ready to take off my hat. However, stagnation is the reverse side of stability. In general, the boundary between stability and stagnation is very shaky. Undoubtedly, Russia needed stabilization after a decade under Yeltsin. However, I've always thought that the lion's share of basic reasons behind today's successes, at least in the economy, had been laid by Boris Yeltsin. The idea of the Yeltsin era as chaos, disorder, decay, and so on is being overcome; the people are beginning to realize that that period had been a stage of construction, a certain zero cycle, when everybody is walking dirty, everything is uncertain and risky. However, the present stability is very deceptive, and very enticing for those who are actually responsible for the nation. This is a natural temptation. Look around, everything seems to be fine: the GDP is growing; everything's fine with the budget, foreign policy is full of positive aspects. Why should relations between the president and the elites and the political structure be reshaped!? This is always very painful and difficult. All of this is determining the basic direction, which I've mentioned before. What will the elections of March 2004 be like? This is a key problem for me. In this sense, the administrative reforms are only an element of the changes which might come in the future.

(Translated by Andrei Ryabochkin)

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