Moscow Times

March 2, 2000

DEFENSE DOSSIER: New Thousand-Year Reich?

By Pavel Felgenhauer

Last week, I attended a foreign-sponsored conference in Moscow, hoping to get

a first-hand brief on acting President Vladimir Putin's future reform

priorities. German Gref, chief of the Center for Strategic Projects, was to

tell potential investors what Russia's future will be.

The Center for Strategic Projects was founded last fall by Putin himself,

while Gref is considered by many in Moscow to be Putin's right-hand economic

guru. Today Gref is in great demand, and last week he addressed at least two

conferences (U.S.- and German-sponsored).

I do not know whether the conference organizers paid Gref an honorarium, or,

if so, whether Gref actually accepted such an offer. But I do know that, if

money was paid, it was squandered. Gref's presentation was nice, but

irrationally unspecific. Gref announced that Russian government bureaucrats

are corrupt and that the state needs honest chinovniki to regulate economic

development. But Gref did not tell us how to convert the numerous old Soviet

apparatchiki and new Russian thugs that today dominate Russian's government

into honest civil servants. The only idea put forward was the institution of

a pay increase for the myriad bureaucrats.

Of course, Gref did not explain where the government will find the extra

money to substantially raise the official pay of Russian chinovniki, whose

numbers have swollen since the demise of the Soviet Union. Nor did Gref

explain how a simple wage hike can make good Christians out of seasoned

Russian kleptocrats. For years the Russian Central Bank has been paying its

chinovniki on par with commercial bank executives, ostensibly to prevent

corruption. But is the Central Bank in fact corruption-free? The highly paid

Central Bank chinovniki have stationed billions of public funds with obscure,

offshore companies and done other disreputable things.

Is Gref serious when he insists that a "strong government" under Putin will

create "equal rules for all"? Or is this a liberal smoke screen?

Gref's public pronouncements are pathetic in their lack of detail.

Nevertheless, time and again Gref disclaims all possible responsibility for

future Putin policies. Gref said that "we have a patron [Putin] and we

[members of the Center for Strategic Projects] are just trying to figure out

what this patron actually wants." Gref also stated that "Putin's economic

program is being drafted by Putin's campaign staff, not by the Center for

Strategic Projects." If Putin is a true "reformer," as many Western officials

seem to indicate, what is Gref so afraid of?

Putin's election manifesto, published last week, is also vague on specific

details of future policies, but it did lay out some of what Putin stands for:

Russia is a "rich country of poor people" and Russia's two main problems, its

sources of weakness, are "lack of will" and "lack of firmness." This main

tune of Putin's manifesto sounds distinctly familiar: In the early 1930s in

Europe there was a "reformer" named Adolf Hitler, who believed that Germany

was a potentially rich country, but that Germans were maliciously robbed of

their wealth, and that the main source of German weakness was "lack of will."

Today Putin's "will" and "firmness" are displayed in Chechnya, where hundreds

of thousands of Russian citizens have been killed, tortured, robbed or

forcibly displaced. Putin also has stated that Chechnya "is the first step"

in establishing "a dictatorship of the law that is fair to all."

Gref stated last week that he is preparing for Putin a 10-year development

plan. He immediately began to mumble a disclaimer: "Well, of course, the

present Russian Constitution allows only two four-year presidential terms for

one man, so the same plan may be for eight years, not 10, if nothing changes,

you know." Gref knows it will change, of course. Two days later, Putin

spelled out the reform plan: The Constitution would be changed to expand

Russia's presidential term from four to seven years. After the March 26

presidential elections, one would expect, the Russian Constitution will be

rewritten through a referendum, and Putin could become in effect a president

for life with greatly enhanced centralized powers. Then all other citizens

will truly be "equal" in their insignificance, compared with Putin.

However, foreign investors need not worry too much. At least some of them

will comprise a privileged class in Putin's Russia, just as General Motors

and Ford did well in Nazi Germany. The only problem may be that regimes that

kill and torture thousands to impose "order" are never truly stable. Such

"thousand-year Reichs" tend to collapse rather early, even if their tax codes

are sound and their employment laws efficient.