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Russia's 1990S Criminalisation Vol. 9 No. 16 Russia’s 1990s criminalisation was ‘Made in London’ By Rachel Douglas This article was originally published under the title “Lon- don’s ‘Our Men’ in Moscow Keep Poisoning Russian Pol- icy” (EIR magazine, 26 March 2010). It has been short- ened and slightly updated. Anatoli Chubais, CEO of Russia’s state-owned corpora- tion Rosnano, spelled out the essence of the events of 1991 when the Soviet Union was breaking up, in an interview pub- lished 3 March 2010 in the Russian edition of Forbes maga- zine. He was asked about the urgent consultations that took Lord Harris of High Cross (l.), a leader of the Thatcherite deregulation/ place in a Moscow suburb in late September 1991, to which privatisation revolution from his post as head of the Institute of Economic Chubais was summoned by the late Yegor Gaidar. It quickly Affairs (est. 1955 with backing from Harley Drayton, personal financier for the British Crown), groomed Yegor Gaidar (c.), the first PM of post-Soviet became clear that Gaidar was to be the prime minister of the Russia. The Russian institute of Gaidar and his protégé Vladimir Mau (r.) new government of independent Russia—the Soviet Union nearly folded in November 1991, because so many of its staff entered being in the process of disintegration, after an abortive coup the government. Harris called them “our men”, and they treated Russia attempt the previous month—and the discussion was about as “a perfect new laboratory” for testing their Thatcherite doctrines. Mau the economic policy to be implemented. still heads the Russian government’s Academy of the National Economy. “Was an evaluation made”, Forbes asked Chubais, “of [of 21-22 August] has rendered the empire ripe for a dose of what the impact of the reforms would be? I mean, forecasts Thatcherism…. The Thatcherites believe that the events of of the extent to which production and real incomes would the last few days have created the perfect new laboratory to collapse, and how high prices would rise.” test their ideas.” Interviewed about the monthly luncheons Chubais replied: “We didn’t have to make any special es- he would be hosting for “free-marketeers and Soviet econo- timates, because this was one of the fundamental scientific mists”, Lord Harris told the Times, “We criticised [then Sovi- topics we had been working on for the previous ten years. So, et President Mikhail] Gorbachov in the past for not reform- we knew very well what the impact was going to be: the real ing fast enough. Now the pace will be accelerated and our cost of the reforms. We had even written about it, including in think-tanks can play a key role.” a famous article co-authored by myself and [Sergei] Vasilyev. Harris’s project, and the parallel patronage of megaspec- ... It provided a sober and tough description of the inevitable ulator George Soros, shaped the group of “young reformers” adverse effects of the transformations that had to be made.” who ran economic policy under Russian President Boris Yelt- Setting aside Chubais’s sophistry regarding the inevitability sin in 1991-98. Harris called them “our men”. As the Soviet of the “shock therapy” deregulation and privatisation policy, bloc splintered, the Mont Pelerin Society-groomed economists and its hideous consequences, what’s true in that statement seized the opening. Their first policy submission was the no- is that the Gaidar government had its plans set in advance, torious 500 Days Plan for a leap to the “free market”, drafted thanks to a nearly ten-year process of preparation. Foremost in 1990 by young economists, including Boris Fyodorov and among the foreign sponsors of that process was the late Lord Leonid Grigoryev from the Gaidar-Chubais group. A year later, Harris of High Cross, head of the Institute of Economic Af- in September-November 1991, the Russian institute of Gaid- fairs (IEA) in London. The IEA is an arm of the infamous Mont ar and his protégé Vladimir Mau nearly folded, because most Pelerin Society, the British economic warfare unit founded of its staff entered the government. As acting prime minister in 1947 by London School of Economics Prof. Friedrich von in the first Yeltsin cabinet, Gaidar promptly implemented the Hayek. Mont Pelerin’s mission: to use the free-trade “liberal- “shock” decontrol of prices, beginning the catastrophic loot- ism” of 18th- and 19th-century Britain as a bludgeon against ing of Russian industry and living standards. nation-states, which had been strengthened during the mo- The horror story of 1990s Russia has been told many times, bilisation for World War II. Three decades after Mont Peler- including in Sergei Glazyev’s Genocide: Russia and the New in’s launch, the IEA became the think-tank that cranked out World Order (English edition, 1999) and The Anatomy of Rus- the core policies of “Thatcherism”, named for British Prime sian Capitalism, by Prof. Stanislav Menshikov (2007). The loot- Minister Margaret Thatcher. That radical privatisation/dereg- ing of the country reached a high point in 1996-98, when a ulation/free-trade agenda savaged the UK itself, and much of Ponzi scheme of Russian short-term government bonds, called the rest of the world, beginning at the end of the 1970s. GKOs, became a magnet for hot-money flows from all over In 1983-91, the IEA and its Centre for Research into Com- the world, in the wake of the savaging of Asian currencies by munist Economies (CRCE) conducted a series of seminars, at Soros’s and other hedge funds. During frenzied mid-1998 at- various venues around the world, for young economists from tempts to keep the GKO bubble from blowing out, Chubais Eastern Europe and Russia. On 23 August 1991 the “Diary” handled the Russian government’s dealings with the Interna- column in the London Times showcased their special relation- tional Monetary Fund and World Bank, securing pledges of ship with these Russians: “The free market gurus and think- US$22 billion in help. From the outside, then-US Assistant tanks that helped redraw the economic map of Britain during Secretary of the Treasury Larry Summers was a key player. the 1980s”, wrote the Times, “are planning an ideological in- They failed, Russia defaulted, the stock market crashed by vasion of the Soviet Union, in the belief that the failed coup 75 per cent on the year and the ruble by two-thirds, and some Australian Alert Service ALMANAC Vol. 9 No. 16 PAGE I Russia’s 1990s criminalisation was ‘Made in London’ When London’s ‘Our Men’ took over The late Ralph Harris (Lord Harris of High Cross, 1924-2006), director of the Institute of Economic Af- fairs (IEA) in London, made these comments in a 1996 interview with an American journalist. Q: You had some input into the reforms in Russia. Harris: We got to know [Yegor] Gaidar and some of his friends. We’ve had them over here, we introduced them to [Prime Minister Margaret] Thatcher, and this kind of thing. Anatoli Chubais (r.) briefs (or pretends to brief) President Vladimir Putin on [In early 1996] it is a mixed situation. There are some a hydropower plant, July 2003. Does Chubais know anything about power very, very good bits, but it is all in the balance, with the plants? His expertise is in destroying economies on orders from London. [1996 Presidential] election coming along, and wheth- Photo: Russian Presidential Press and Information Office er Yeltsin will stay; and some of our men, like Gaidar, of the Russian nouveaux riches lost their fortunes. Bad deriv- have been sacked. The chaps that we really wanted in atives bets related to the Russian bonds brought down the charge, in the early days, have had to be dropped be- Connecticut-based Long-Term Capital Management (LTCM) cause of sort of communist-leftist pressure. hedge fund, nearly leading to a worldwide meltdown right Q: You did have Gaidar over to London to talk? then. One would suppose that Chubais’s services were no Harris: Yes…. longer required, as veteran intelligence figure and econo- I have met chaps who are as lively-minded, and mist Yevgeni Primakov took Russia’s reins of government in open-minded and as liberal-minded, as the people who September 1998. make up the IEA in London and elsewhere. I have met But, Chubais managed to hang on to another job he had chaps there who know about [Friedrich von] Hayek. acquired in April 1998, as the GKO crisis ripened. Fired in I didn’t have to tell them. They have read Hayek and March 1998 as first deputy prime minister, he became CEO [Milton] Friedman and others, and are very, very bright. of the national electric power utility, United Energy Systems. During the next decade, while arranging the break-up of UES At the time of this interview in 1996, Vladimir Mau and privatisation of its components, Chubais re-styled himself was deputy director of Yegor Gaidar’s Institute for the as a “liberal imperialist”, borrowing that catch-phrase from Economy in Transition. Britain’s Tony Blair. Q: Who were the economic thinkers you looked to? And the legacy of the London-steered experiment in Rus- Mau: For Gaidar the most important things were sia runs deeper than its visible extravagance of the 1990s. In Adam Smith and [John Maynard] Keynes. … In terms of a 2001 interview, published for the first time by journalist Al- the philosophy of economy, it is, of course, Adam Smith. exander Gentelev only in January of this year [2010], Chubais … There are those who believe that if something hap- explained: Until the 1996 re-election of Yeltsin, “privatisation pens, it happens not because of, but in spite of attempts in Russia was really not an economic process.
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