#13 - RW 274
RFE/RL NewsLine
September 17, 2003
CONTROVERSIAL RUSSIAN REFORMER HEADS TO BAGHDAD
By Daniel Kimmage

The Cold War ended not with a bang, or even a whimper, but a murky, messy series of events that sounds somehow tidy in a history-book retelling -- the decisive defeat of an entire political and economic system.

As change remade whole societies, the two sides that had officially glowered at each other across barbed wire for decades were already settling on the shorthand they would use to reduce history's murk and mess to simple, vivid images. For the West, those images would be the fall of the Berlin Wall and the disappearance of the "Soviet threat" -- the East's stifled masses rushing toward freedom, missiles vanished from Red Square, Gorbymania. For the East, the image would be "shock therapy" and privatization, at once more material and more abstract -- the sudden squall of market forces and the great redistribution of property in societies where no one had really owned anything.

In Russia, shock therapy and privatization call to mind two names: Yegor Gaidar and Anatolii Chubais. Gaidar's tenure in government was brief: deputy prime minister in charge of finance and the economy from November 1991 to June 1992, and then acting prime minister until December 1992. Working in conditions of chaos and crisis, Gaidar implemented a policy of "shock therapy" that aimed to wrench Russia into capitalism, most famously through the 2 January 1992 elimination of Soviet price controls. Although the policy eased goods shortages, it unleashed skyrocketing inflation that soon rendered Russians' savings worthless. Specialists continue to mull the minutiae of Gaidar's decision, but the vast majority of Russians returned their judgment long ago -- Gaidar impoverished them.

Though he was involved in parliamentary politics and pro-market party building, Gaidar faded from the front ranks of the public political elite in the 1990s. Today, as director of the Institute for the Economy in Transition, Gaidar has settled into the role of expert elder statesman on transitions to capitalism (at the ripe old age of 48).

And Gaidar's expertise on transition is once again in demand. Russia's chattering classes were abuzz last week with the news that the U.S. Coalition Provisional Authority has invited Gaidar to participate in a three-day conference in Iraq on 19-21 September. An official at the U.S. Embassy in Moscow told "The Moscow Times" on 9 September that experts from nine Central and Eastern European countries will speak to 50 Iraqi leaders "with a view to explaining how European experience with economic reform might help Iraq manage its transition." According to "Izvestiya," other invitees include former Bulgarian President Petar Stoyanov and former Estonian Prime Minister Mart Laar.

For his part, Gaidar told a 8 September press conference, "Many of the problems they are encountering in Iraq stem from the collapse of a totalitarian regime with heavy state involvement in the economy," "Vedomosti" reported the next day. "[The Americans] want to figure out how to minimize the risks and privatize the economy as quickly as possible." Beyond that, he would only say that he needs to study the situation.

Gaidar left an ambiguous legacy, and many of the reactions to his upcoming Baghdad engagement were flush with faint praise. Sergei Aleksashenko, former Central Bank deputy chairman and current deputy director of the Interros holding company, told "Vedomosti" on 9 September: "Gaidar is one of the few people who knows how to reform an economy in a crisis situation. It's better to learn from other people's mistakes, and no one knows better than Gaidar the mistakes that can be made here." Marshall Goldman, associate director of Harvard University's Davis Center for Russian and Eurasian Studies, echoed the sentiment, telling "The Moscow Times": "Maybe this is not such a bad idea. Having seen what happened to Russia, he will be aware of the pitfalls. He can help Iraq avoid making the same mistakes."

Others were considerably less enthusiastic. A 9 September article in the London-based, Saudi-owned Arab daily "Al-Hayat" pilloried Gaidar, describing him as "one of the heroes of the 'reform' process that led to the collapse of the Russian economy and paved the way for the theft of the country's wealth." Evoking the Russian "national-patriotic press," "Al-Hayat" called Gaidar "one of Russia's most disreputable politicians, accused by nationalist parties of 'systematically destroying' the Russian economy. They charge that his policies were directly responsible for what they describe as the 'genocide of the Russian people.'" As if all this were not bad enough, the daily added that "Gaidar has, in past years, remained a faithful ally of the West, and especially the United States; he is also considered close to extremely influential Jewish circles in Russia."

The Russian business daily "Vedomosti" voiced a different variety of gloom in an editorial the same day. The editors concluded: "Gaidar...has suggested that privatization would be beneficial. If we recall that, aside from the oil business, there is nothing to privatize in Iraq, certain questions immediately present themselves: The United States would manage the transfer of oil fields to foreign companies on its own, and former Ba'ath Party members can't be allowed to have them. That leaves those who made money during the anarchy of recent months. These 'new Iraqis' are unlikely to be more popular with their fellow countrymen than the oligarchs are with Russians."

In point of fact, Gaidar is unlikely to have any decisive influence over the future course of the Iraqi economy. But the furor over his possible involvement in Iraq's transition -- which drew coverage and comment from virtually every Russian newspaper of note -- shows how many passions still stem from the period when Gaidar made the fateful decision to free prices and release the genie of market forces from its Soviet bottle.

The focus in Iraq today is mainly on political passions, the same passions that blazed so brightly in the early days of change in Russia and Eastern Europe. But the reaction to Gaidar's invitation illustrates one lesson from earlier transitions that could prove instructive in Iraq -- long after the political fires burn out, the economic embers smolder.

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