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Russia: Chubais Says Fundamental Change Has Occurred

Washington, 22 July 1998 (RFE/RL) -- Anatoly Chubais says there has been a "fundamental change" in both the people of Russia and their government -- a fundamental change that has made it possible for the International Monetary Fund (IMF) to approve the first and central part of a global financial rescue package.

Chubais, appointed a special presidential envoy to negotiate the package with the IMF and the World Bank, says the $22.6 billion package was possible because "the Russia of July, 1998 is not the same Russia as that of March, 1998."

Changes are happening "very fast," he says, and "one year in Russia is equal to ten years under normal circumstances."

Russia's willingness and ability to undertake a large number of major and deep reforms was a question at the forefront when the IMF's Board of Executive Directors debated the loans for hours on Monday.

In the end, the board approved new loans totaling $11.2 billion for Russia, but withheld $800 million from the first drawing and added it to the second tranche due in September because the Russian parliament had failed to pass the entire reform package the fund had demanded as a condition for the new loans.

First Deputy Managing Director of the IMF, Stanley Fischer, said that while the laws and other acts adopted in recent days laid a "solid basis" for the fundamental improvement of Russia's economy, weaknesses in implementation have been the "Achilles heel of Russia's economic policies in the past" and that Moscow must get the last bills approved by parliament before the next drawing in September.

Speaking to a gathering of economists, analysts and financial journalists in Washington on Tuesday, Chubais said the reforms will be implemented now because Russia is finally ready.

There was a time when reformers were a minority in the government, like an internal opposition, from 1992 to 1995, said Chubais. Then in 1997, reformers became the majority in the Russia government -- when Chubais and Boris Nemtsov became deputy prime ministers and jointly became responsible for reforms.

But now, said Chubais, reformers are not in the minority or majority -- reformers are the government "and that is an extremely important fundamental change."

Even more important than the change in the government, said Chubais, is the huge shift in the Duma. The press focused on the measures in the anti-crisis package the parliament did not pass, but he said the surprise to him was that the Duma agreed to most of the most difficult measures and rejected only two.

Among the 12 bills approved were those increasing taxes -- never a popular action -- and a new tax code, a fundamental document creating the framework for the entire budgetary system in Russia which has been at the center of a political fight for two years, said Chubais. The Duma could have simply refused to tackle these important measures and left the government to take the blame.

But said Chubais, "they didn't choose this tactic" and that is part of a long-term political shift occurring in Russia. Even the communists who control the Duma are acknowledging that private property will remain a central part of the new Russia.

Chubais said as importantly, the people are becoming more clever in understanding the need for the reforms and supporting their adoption. That, said Chubais, "is the fundamental reason for my modest optimism."

"You have to understand," said Chubais, "that this is only the starting point. It's been very difficult and very painful, but it is the start point for the market economy and freedom in Russia."