Andrew Osborn








Russian Reformer Voices Optimism About Medvedev --- Energy Executive Expects Influence Of Kremlin to Ease

The Wall Street Journal, 25th June 2008 11:49

By Andrew Osborn

MOSCOW -- The architect of Russia's post-Soviet privatization program said he believes new President Dmitry Medvedev will deliver on promises to loosen the Kremlin's grip on economic and political life. But Anatoly Chubais, one of Russia's leading economic reformers, also defended the growing clout of state gas giant OAO Gazprom, denouncing as "madness" Europe's efforts to check the company's expansion.

Mr. Chubais said in an interview that President Medvedev's pledges to improve the rule of law, strengthen democracy and implement market reforms are more than just rhetoric.

"We're going in a liberal direction," Mr. Chubais said.

Mr. Chubais's optimism follows years of occasionally biting criticism of former President Vladimir Putin, who chose Mr. Medvedev as his successor. In December, Mr. Chubais slammed Mr. Putin's United Russia party as "Soviet," calling parliamentary elections that handed it a landslide victory "disgusting." In January, he denounced the Kremlin's confrontational foreign policy as harmful to the economy.

His optimism about Mr. Medvedev reflects hope among some liberals that years of growing authoritarianism are about to give way to a softer, looser style of government. Some other liberals fear that Mr. Medvedev's pledges are just rhetoric.

Mr. Chubais, 53 years old, was speaking as he prepared to step down as CEO of state-controlled electricity giant RAO Unified Energy Systems. In what he said was the only major economic-liberalization move of its scale under Mr. Putin, UES has been broken up into nearly two dozen companies that are to compete in a market for electric power.

Mr. Chubais's overhaul has attracted billions of dollars in foreign investment to build power plants. In a meeting last week, Mr. Putin, now prime minister, endorsed the effort as "a pilot program for reform," according to Mr. Chubais. Once UES ceases to exist next week, Mr. Chubais said he plans to retire.

Mr. Chubais said that while there has been little concrete evidence that Mr. Medvedev will loosen the Kremlin's grip over politics and the economy, he was encouraged by the president's recent speeches.

"We don't need a revolution . . . full freedom or democracy starting on Monday. That's not workable for Russia," Mr. Chubais said. "But this is the historical vector we need. Mr. Medvedev's personality and political resources suggest we are going in this direction."

At the same time, Mr. Chubais defended some of the Kremlin's most-controversial economic policies of recent years. He said Gazprom was right when it briefly cut supplies to Ukraine in a pricing dispute in 2005. He rejected Western criticism that the move amounted to using energy as a political weapon.

"Putin was 100% right," Mr. Chubais said, noting that Russia had been subsidizing prices for its neighbors for years. "If it was any other country than Russia it would have been perceived as normal."

Mr. Chubais also criticized European Union attempts to curb Gazprom's expansion in Europe. The result, he said, would be higher prices as Europe's gas supply was reduced. "It means forcing your own population to pay for your political fears," he said. "It's madness."

But in January, Mr. Chubais objected to the Kremlin's treatment of the U.K.'s cultural arm, the British Council, which was ordered to stop operating outside Moscow to comply with Russian law. Britain and others said it was retaliation for the U.K.'s robust response to the 2006 murder in London of former Russian security agent Alexander Litvinenko. Britain is one of Russia's largest foreign investors.

Mr. Chubais is seen as one of Russia's leading liberal reformers, a reputation he won in the 1990s when he masterminded the sale of state assets that were bought at bargain-basement prices by businessmen who became known as oligarchs. He is highly respected by some in governing circles, but many ordinary people, particularly older Russians, blame him for the anarchic carve-up of post-Soviet assets that enriched a few but left many mired in poverty.