Publication: Monitor Volume: 4 Issue: 187

Kommersant daily led its October 10 edition with an article headlined: “Chubais returns.” According to the newspaper, Prime Minister Yevgeny Primakov’s meeting on October 8 with Chubais–the architect of Russian privatization who currently heads United Energy Systems, the country’s electricity monopoly–set the groundwork for Chubais’ return to the cabinet. Primakov asked to meet Chubais for “consultations” after Finance Minister Mikhail Zadornov and Central Bank Chairman Viktor Gerashchenko returned empty-handed from negotiations with the International Monetary Fund, the World Bank and U.S. government officials in Washington. While the meeting between Primakov and Chubais was officially devoted to preparations for supplying power during the winter, Chubais himself confirmed that he and the prime minister discussed a plan of action for getting the IMF to release the next tranche of its multibillion dollar loan. The IMF has refused to release the installment, worth more than US$4 billion, because the Russian government has not yet produced a coherent, market-oriented anticrisis program.

Kommersant daily noted that Russia must pay US$3.2 billion on its foreign debt by the end of the year and an additional US$17 billion next year. This will not be possible without debt restructuring and Western credits, and nobody in Russia today, the newspaper wrote, has Chubais’ “rich experience” and “close personal ties” with Western creditors. Kommersant added that Chubais would be unlikely to agree to this role unless he was given a post equal in power to that of First Deputy Prime Minister Maslyukov, who is in charge of economic policy.

Chubais’ return, however, would provoke a huge scandal with the opposition-dominated State Duma. According to Kommersant daily, Primakov is thus likely to wait until the economic situation reaches a breaking point before bringing Chubais back. If Russia is unable to convince the IMF to release the money within a month, Chubais will be brought in as the only person capable of getting the money, thereby preventing a default on Russia’s foreign debt. According to the newspaper’s scenario, the Duma deputies will then have no choice but to swallow the return of their bete noire (Kommersant daily, October 10).

Chubais has fallen in and out of favor with President Boris Yeltsin numerous times over the last six years. In late 1997, Chubais lost the post of finance minister because of a scandal involving a book honorarium he and several allies received from a large financial-industrial group which had won big during privatization. A short time later, Yeltsin tapped Chubais to be his emissary to the Western lending institutions. Last summer, Chubais–reportedly with a major assist from the U.S. Treasury Department–helped convince the IMF to put together a US$22 billion bailout package for Russia. His achievement, however, lost some of its luster in August when Russia de facto defaulted on its domestic debt and devalued the ruble. Chubais subsequently lost his post as Russia’s representative to the Western financial institutions. Later, in an interview with Kommersant daily, he said that Russia had “conned” the West out of billions of dollars. Chubais claimed his comments to the newspaper were misconstrued.