Publication: Prism Volume: 4 Issue: 20

By Elena Dikun

Boris Nemtsov moved in the highest circles of the government and political elite, and was always thought of as Yeltsin’s favorite. He was known as “a bright young man with a bright future”, and was tipped as a future president of Russia. But this, alas, is all in the past. Today, former governor of Nizhny Novgorod and former first vice-premier Boris Nemtsov holds a lowly post–that of deputy chairman of the Council for Local Government. He is now voluntarily helping Boris Yeltsin build bridges with the mayors of Russia’s towns. For a man who was aiming for the top job, such an appointment is tantamount to exile.

PRISM: “Boris Yefimovich, couldn’t you have been offered a more important job? Ambassador to some nice country, for example? Anything would be better than some mythical council.”

BN: “An ambassador is a civil servant. I don’t want to be a civil servant. The Council for Local Government is far from a mythical organ–it is an essential body. In Moscow no one has time for the problems of life in the towns–education, hospitals, balanced local budgets. In many provinces even the governor himself doesn’t get around to it. Given that I have significant experience of work in the regions–my five-and-a-half years as governor were not wasted–plus a year-and-a-half in government, the development of local government is precisely what I could do.”

PRISM: “But do you not bear the slightest grudge against a president who has destroyed your brilliant political career? He plucked you from your post as governor, promised to leave you alone until the year 2000, and now, to put it bluntly, he has dumped you.”

BN: “How can I bear a grudge? I knew right from the start that it would all end like this. Back in March 1997, when I had just been appointed to the government, I said that it was suicidal to take this job. Politically, it would have been much better for me to have stayed put as governor.”

PRISM: “So you sacrificed yourself out of love for the president?”

BN: “It’s not a question of love. You need to know the background to my move to Moscow. Tatyana Dyachenko came to Nizhny Novgorod and spent all night persuading me. She said that the president had always helped me, which was true enough, and that the time had come for me to help him. No decent man could refuse after hearing such words.”

“There then followed a long conversation with the president. I told him that the country was governed by bandit capitalism, that authorized banks were looting the state’s coffers, that privatization was being carried out illegally and that there was no middle class, only the superrich and the poor–who were in the majority. Basically a new market needed to be set up, which would entail rejecting all corrupt decisions, exposing the activities of the monopolies, forcing the oligarchs to pay taxes and so on. All this would run into bitter opposition from the strongmen of this world. “So, Boris Nikolaevich, we need your political will and your constant support to do the job,” the president pledged: “You will have it, 100 percent. I totally agree with your assessment, and will help.”

PRISM: “You met Yeltsin recently. He didn’t by any chance say ‘Sorry, Boris old man, that it all went wrong?'”

BN: “He didn’t say anything of the sort. He said something else: “We’ve been together since 1990, and we should go forward together. I think we should help each other.”

PRISM: “Is that what you think too?”

BN: “I answered that I am prepared to help, but only on a voluntary basis. I’m not going to be a state official any more. I’m fed up with it all–all these intrigues, account settling, official subordination, which have nothing to do with the job.”

PRISM: “Despite the fact that the president did not keep his word, do you still support the route he is taking?”

BN: “No, I am an entirely free man, and I made it clear to the Boris Nikolaevich that I reserve the right to criticize the authorities, the Duma, the government. He looked at me and asked ‘And the president?’ I replied, ‘And the president.’ I must say that he took that calmly.”

PRISM: “Do you think that you are still one of Yeltsin’s favorites?”

BN: “I don’t think so. But he knows that I am not capable of treachery and treason. The president, like any ruler, is a basically a lonely person, so he feels the need to talk to normal people.”

PRISM: “At what point did you realize that the head of state had cooled towards you?”

BN: “It’s difficult to put a date on it. The thing is that by definition my job meant constant conflict. Forcing Gazprom to pay its taxes, canceling the trust contract with Vyakhirev which was daylight robbery for the state or ensuring a level playing field for privatization and open competition–all this is impossible without coming into conflict with people who are used to doing everything under the counter and for free. Naturally the reverberations from these clashes reached the president and at some point he got tired of defending us–me in particular.”

PRISM: “What surprised you most when you came to work in Moscow from Nizhny Novgorod?”

BN: “Some incredible things go on here. For example, bugging the telephones of the highest ranking officials in the White House. That flabbergasted me. As did Chernomyrdin’s reaction to the story when a tape of my telephone conversation with the businessman Sergei Lisovsky was published in the newspapers. Viktor Stepanovich said to me ‘Didn’t you know where you had come to work?'”

PRISM: “When you arrived at the Council for Local Government you began preparing a program of anticrisis measures, but you do not have a mandate to do this. How are you planning to implement this program?”

BN: “Many governors are seriously worried about their own fate and the fate of their regions. There is no point waiting until an anticrisis program is drawn up in Moscow; they won’t get to the regional level for a long time yet. Meanwhile everybody is interested in local legislation to encourage investment and guarantee ownership rights, including land ownership, the introduction of reliable tax systems for small businesses and many other things. So I think my program will be needed.”

PRISM: “Has anybody requested your blueprints yet?”

BN: “Yes, the governors of St. Petersburg, Vladimir Yakovlev, and Novosibirsk, Vitaly Mukha.”

PRISM: “Are you going to share your know-how free of charge?”

BN: “Well, I hope that eventually people will pay money for it. That’s why I set up my foundation, the National Center for Regional Policy. A man needs something to live on.”

PRISM: “Are there any potential opportunities for you to enter business?”

BN: “FIAT-GAZ has invited me to join the board of directors. I may accept the invitation, but I haven’t decided yet. I was also invited to join Svyazinvest, but I turned that down because it is state work again. I also have no desire to work under the communist Vice Premier Yuri Maslyukov. So the opportunity to enter business is there, but only private business.”

PRISM: “Boris Yefimovich, you said recently that you only found out about the Kirienko government’s historic decisions of 17 August after the event. Could you explain how it happened that you were not initiated into the plans. Didn’t they trust you?”

BN: “That’s probably a question for Sergei Kirienko rather than for me. All I can say is that I had my own opinions on these matters. I explained them to the prime minister and the finance minister back in May or June. I proposed carrying out a devaluation of 25-30 percent, thus reducing spending on servicing GKOs. Bearing in mind that the gold and currency reserves at the time were worth around 20 billion dollars, it would have been perfectly possible to maintain the ruble at a reasonable level.

“This was a purely economic argument, but I also produced political arguments. Firstly, if such a devaluation had happened at the end of spring, Yeltsin would not have sacked Kirienko because he had only been endorsed as prime minister a month previously. Secondly, summer was on its way, the political quiet season. In those three months we could have taken decisions to stabilize the ruble and prepared ourselves for a rough autumn. Unfortunately my proposals were not accepted. Everybody in the government was saying that we should fight for a strong ruble to the end, or we would be accused of being faint-hearted at best, or unprofessional at worst.”

PRISM: “Yevgeny Primakov maintains that, like you, the president didn’t know of the government’s decisions of 17 August. Do you believe this?”

BN: “Kirienko, Chubais, Dubinin and Zadornov were with the president on the Sunday evening, 16 August. I have worked with Kirienko for many years and know him better than most. I don’t believe he would not have told the president about the decisions that had been prepared. There’s something else I don’t understand–why they called in the oligarchs. As I found out later, the government delegation returned from seeing Yeltsin at about eight in the evening. After midnight, Berezovsky, Potanin, Khodorkovsky, Fridman, Aven and others arrived at the White House. I was told that they had been summoned to discuss the consequences of these decisions for the banking system. They said that the banking system would withstand the planned actions and approved the proposed scheme.”

PRISM: “But a week later the bankers cried foul.”

BN: “That was after our dismissal.”

PRISM: “In spite of everything, you are full of praise for Kirienko’s government, saying how qualified and intelligent it was.”

BN: “It’s not just me–everybody who takes an interest in economic and political matters in this country and abroad thinks so too. In five months Kirienko’s government managed to do an awful lot. It actually succeeded in changing the tax system in the country, in creating an adequate package of anticrisis measures, and in stopping the further growth of financial pyramid schemes, although it hurt. In other words, the government did a reasonable job, but it did not have much time. Naturally, it is impossible to solve in one or two or even five months the many problems which have built up over a number years. So Kirienko’s government can’t really be accused of anything.”

PRISM: “Do you think the president was wrong to remove Kirienko?”

BN: “Of course. I would have acted very differently in his place. I would have summoned Kirienko and Dubinin and said: “I’m giving you three months to sort everything out. If you can do it in that time, well done, if not, you’re out.” That would have been a presidential approach. At least somebody would have borne moral and political responsibility for the decision. But as it was, there was musical chairs in the government, time was lost, there was panic, the ruble was plummeting and nothing concrete was being done.”

PRISM: “Why did you ask the president to release you from the job of vice-premier? Was that your way of saying that you did not want to work in Chernomyrdin’s government?”

BN: “All the financial pyramids, GKO pyramids, the huge budget crisis and the oil crisis–everything that is now seen as the cause of the financial crisis–are, in my opinion, a consequence. The reason for the crisis is that in the six or seven years that a market economy was being created, an oligarchic form of capitalism was established in our country. It is characterized by the fact that the bulk of gross domestic product is produced in a few financial-industrial groups, which, incidentally, work very inefficiently and are run by avaricious managers. Their main concern is to siphon money away from production and stockpile it abroad. The same can be said about a fairly large number of banks.

“Chernomyrdin bears full responsibility for this outrageous state of affairs in the country, because he was at the wheel the whole time. When Kirienko’s government reached the line beyond which we were prepared to declare bankruptcy–of the oligarchic banks too–then the oligarchic elite made an effort to ensure that our team was dismissed. The main task they set Chernomyrdin when they brought him back to the White House was to save the oligarchs, whereas I think that we should be saving the country’s financial, economic and budget system. That’s why I resigned.”

PRISM: “So the Duma acted responsibly in rejecting Chernomyrdin?”

BN: “The level of trust in Chernomyrdin, which I have picked up in my meetings with people, is very low. The rabid opposition in the Duma generally reflects the attitude of society towards Chernomyrdin. In conditions of serious conflict, firstly with parliament, but possibly also with the governors, it would have been very difficult for Chernomyrdin to do anything substantial.”

PRISM: “Why do you think Primakov, whom the Duma supported almost unanimously, and his team are making such slow progress?”

BN: “For the very reason that he got a mandate of trust from the Duma. Yevgeny Maksimovich is undoubtedly indebted to the communist majority, and to a lesser extent to Yabloko, and like an honest man is now fulfilling his obligations. He has to form a communist government. It is no coincidence that Primakov immediately appointed Yuri Maslyukov.”

PRISM: “But it was Kirienko who first asked Maslyukov to join the government!”

BN: “Yes, but not as first vice-premier. However, Primakov is a man of the world, flexible, intelligent. I don’t think he will tie his own hands by restricting himself to this composition of the government. The prime minister will probably act like a vice president, not taking responsibility for the cabinet. Incidentally, this is what Chernomyrdin did. He saw seven governments come and go, if you count the first vice-premiers who bore the bulk of the responsibility.

“I think that Primakov’s strategy is to distance himself from social and economic decisions, to retain full freedom in replacing his deputies and ministers who founder and thus to stay in the job until the presidential elections.”

PRISM: “A few days ago you said that you were planning to get involved in politics, and to unite the forces of the center right. But the center right is basically “Russia is Our Home” and Yabloko, but all the jobs are taken, nobody wants Nemtsov there.”

BN: “As well as the parties you have named there are a huge number of other organizations. For example, the parties of Svyatoslav Fyodorov, Irina Khakamada, Russia’s Choice, Narodniye Doma.”

PRISM: “Are you sure that they will want to serve under you?”

BN: “I am not an ambitious man. I don’t have to be at the top of the list. For several years Kirienko served under me, then I served under him–nothing happened. But whatever happens, I really do think it is important to unite the center right organizations, including the small ones, to ensure 10-15 percent of the votes in the Duma. The thing is that one of the reasons for the crisis was the conflict between the government and parliament. The GKO pyramid did not grow from nothing, it arose after the Duma had passed crazy, clearly unrealistic budgets, and the government could not do anything about it.”

PRISM: “Which party leaders have you already held talks with about this?”

BN: “I would rather not name names at the moment. All these people are very ambitious, and, God forbid, they may take offense. After a month of working in this arena, I can safely say that it is no easier holding talks with the leaders of parties and movements than with Gazprom bosses.”

PRISM: “Have you discussed your future political career with the president? Is the Kremlin planning to create a “party of power” with you at its head?”

BN: “I told the president that I would be participating in the parliamentary elections. He said ‘good’ and left it at that. As for the “party of power”, today that is the Communist Party. In other words I am in opposition. As are millions of right-minded citizens in our country.”

PRISM: “If you are planning to revive your political career, you will naturally need to work out what you did wrong before. Why did your career not work out in Moscow? After all, at first your approval ratings were excellent. Perhaps you made some unforgivable mistakes for a political leader?”

BN: “It is not so much a question of mistakes as of actions. I was party to some very important anticorruption decisions. To name just three of them: for the first time officials were forced to complete declarations; open competitions were arranged for allocating budget expenditure to be spent on purchasing equipment, road building etc.; and the system of authorized banks, which led to corruption, was dismantled.

“In addition, we forced several oligarchs to pay taxes, closed a number of semi-legal programs such as the state oil export program, required large monopolies to undergo an independent audit of their activities and for the first time in many years ensured honest privatization in Russia.

“These actions affected the material interests of the bigwigs. So they fought me. With their political and media resources, they did everything they could to discredit Nemtsov. But I did make mistakes, of course. For example, I underestimated the resistance of the bureaucracy which didn’t want to drive around in Russian-produced cars. I had to travel around in a ‘Volga’, but the rest could do what they wanted. Another, more serious error was that we failed to explain to the public what we were doing.”

PRISM: “But Anatoly Chubais notes that you have “a great talent for explaining complex things simply and clearly.” In this sense you can be placed in a class of your own.”

BN: “Nevertheless the explanatory work was done badly. By myself included. People just didn’t understand what was behind the privatization of Svyazinvest, the conflict with Gazprom or the reconstruction of the pipeline through Chechnya.”

PRISM: “Did any of the oligarchs ever try to put you right?”

BN: “Sometimes they would tell me, through other people, ‘not to stick my nose in.’ But usually the conversation would go something like this: ‘Why have you suddenly decided to begin your honest privatization with Svyazinvest? The rules of the game used to be different. By all means let’s be honest, but later. Russia isn’t ready for it yet.’ The only way of surviving in this struggle was to have the support of my colleagues, to work openly and honestly, and to have the president’s help. The disappearance of one of these factors led to my position being weakened.”

PRISM: “Whom do you count as a friend amongst your colleagues in government?”

BN: “Perhaps Anatoly Chubais. Basically I think that when Chubais and I began to work together, in 1997, the country was on the mend. For the first time in ten years, pensions were being paid, GDP had begun to rise, industry had begun to revive, investment had increased. Then, of course, people started putting spanners in the works. It’s a shame–I think we could have done a lot more together. Anatoly has a unique capacity for work and organizational talent. You won’t find another Chubais in Russia. Even those who don’t like him, or simply hate him, have to reckon with him.”

PRISM: “A year ago you said that the president would announce in Nizhny Novgorod a program of “popular capitalism” drawn up by you and Chubais. Why did this not happen?”

BN: “The president himself asked me to draw up this program. We got the assignment done and handed the documents in to the president’s administration. Essentially they added up to establishing public monitoring of the actions of officials, the removal of privileges for certain companies, honest privatization and ensuring the conditions for creating a middle class as the basis of stability.

But the president’s administration was totally against this, saying that it was the wrong time for such reforms. Boris Yeltsin himself never returned to the subject.”

Elena Dikun is a political columnist for Obshchaya gazeta.