Accessibility links

Chubais Defends Reforms, Warns Of Reversals Under Communists

  • Stephanie Baker

Prague, Feb. 6 (RFE/RL) - Russia's former architect of privatization, Anatoly Chubais, is on the offensive to defend economic reforms in Russia. He is warning of a possible government spending spree, and says a communist victory in June presidential elections may cripple privatization in Russia.

Speaking two days ago at the World Economic Forum in the Swiss resort of Davos, Chubais said that a government spending spree to buy popular support ahead of Russian presidential elections could have a disastrous effect on the country's economy. He repeated the warning in an article published in the yesterday's "Financial Times."

Chubais, described by many as the Russian government's last radical reformer, was forced to step down last month from his post as First Deputy Prime Minister after parliamentary elections saw huge gains for the Communist Party.

He said that the government now stands at a "crossroads," and must choose whether to adhere to the reform program or indulge in budgetary extravagance.

Chubais, who was responsible for putting three quarters of the Russian economy in private hands, said real growth and lasting financial stability can only be achieved if the government sticks to this year's budget. He cautioned that a boost in spending will deal a "fatal blow" to the reform process.

Chubais said that the government's decision to end a miners' strike with a $2 billion package would be basically covered by the budget. But he strongly criticized a recent presidential decree calling for 3,400 million dollars to be spent on rebuilding war-torn Chechnya, saying there was simply no money in the budget to pay for such a reconstruction program. He warned that such spending would lead to the growth in inflation and a "banking catastrophe."

He also said that the Communist Party was pushing for major expenditures on social welfare programs for reasons of "populist politics." Its effects, he said, would be turmoil in the financial markets, and a breakdown of the ongoing talks with the International Monetary Fund (IMF) on a $9 billion loan.

Chubais said that the Communist Party could use such an economic crisis to stage a comeback, and warned that this could lead to bloodshed. He went on to admonish western economic and political leaders gathered in Davos for uncritically accepting Communist Party leader Gennady Zyuganov's assurances that his party would not turn back reforms.

"There are two Zyuganovs, one for foreign and one for domestic consumption," Chubais told a news conference in Davos. Citing party documents, he said Zyuganov plans to reverse privatization and nationalize key sectors, such as banking, energy and defense. According to Chubais, many Russian businessmen already contemplate whether to fight the communists or leave the country.

Communist Party Spokesman Mikhail Molodtsov dismissed Chubais' remarks as irrelevant. He said Chubais' policies had also been publicly criticized by Yeltsin.

For his part, Zyuganov told business and political leaders in Davos that he does not intend to "expropriate businesses," adding that this would only lead to "shooting from Murmansk to Vladivostok." The Communist Party leader used his debut on the international stage at the World Economic Forum to reassure foreign investors that the Communists would form a more stable, predictable government than Yeltsin has.

Zyuganov tried to play down fears that his party would halt or roll back privatization. He said that the problems with the current privatization program centered on the rushed pace of the program and the legality of some of the sell-offs.

Zyuganov said privatized companies could stay in private hands "if they work well and are being run properly." But he said he favors a "mixed economy," with "a stable balance of public, private, and collective ownership."

The Communist Party leader also decries crime and corruption in Russia, saying the "mafia" has left the government powerless.

He is not alone. Some western businessmen operating in Russia have begun complaining about crime and unpredictable policy changes, such as taxation. They say that neither Yeltsin nor Moscow mayor, Yuri Luzhkov, have treated foreign investors well.

A Zyuganov victory in the June presidential election has made some observers, like Chubais, nervous. But others are a little more optimistic. Some analysts believe that Zyuganov's party can transform itself into a social democratic party along the lines of Poland's former Communist Party.

But Chubais is not so sanguine. He said business leaders who believe Zyuganov will be partly responsible for the mess that follows.