Post-Soviet States: People, Power, and Assets Oral History Archive

Post-Soviet States: People, Power, and Assets Oral History Archive Interviewee: Ambassador James F. Collins Interviewer: Rebecca Adeline Johnston Date: August 3, 2018 Location: Washington, DC Abstract James Franklin Collins served as U.S. Ambassador to the Russian Federation from 1997 to 2001. His long career in the U.S. Foreign service included two prior posts in Moscow, from 1973-1975 and 1990-1993. His expertise in Russia predates his diplomatic career, having earned a master’s degree in history and Russian studies from Indiana University and with research and teaching experience in Russian as well as European and American history, government, and economics. His diplomatic career also included positions in Izmir, Turkey from 1969-1971 and Amman, Jordan from 1982-1984. Stateside, served on the European and Near East bureaus and the executive offices at the Department of State, and on the National Security Council Staff at the White House. Ambassador Collins has done an extensive interview spanning his life and career with the Association for Diplomatic Studies and Training Foreign Affairs Oral History Project.1 The present interview focused on topics of specific interest to the Post-Soviet States project, including the privatization of the Russian economy in the 1990s and the Russian energy industry. This transcript is lightly edited for clarity. Unedited remarks are available in the embedded audio recording and can be located with the aid of timestamps bracketed in the transcript text. Interviewer questions and remarks are presented in bold. Interview Transcript To start, could you talk about your view of the trajectory of Russian private sector reform throughout the 1990s, from your vantage point in the U.S. Embassy in Moscow? In the world of the economy, let’s put it that way, I would break the ‘90s into three parts. The first part is the part in which you have, in a sense, the focus on privatization and, if you will, the acquisition of asset by everybody. And if your normal citizen in some village somewhere, it's probably getting your house and your plot. If it’s someone like the oil barons, it’s trying to get your hands on oil fields. But the theme was, what could you acquire and how could you, basically, make yourself into an economically-defined person, either as a truck driver because you privatized your own truck or a banker because you privatized or made a bank. The way things were perceived as important, I would say up to sort of the mid-‘90s, was acquisition. That was what it was all about, and it was messy, it was disorganized, and chaotic. Most Americans who watched it thought it was totally unfair, because not everybody got an equal share of the national wealth, which is, I thought, rather naive, but this was kind of the way it was written about. So, you had a very chaotic, often bloody, lawless often, “Wild East” time in which people were acquiring aspects and elements of the national wealth. Now, the government had a privatization program. But how that worked and how it was implemented and so forth was sometimes sort of according to certain kinds of rules. Sometimes with fairness; other times it was somebody shooting somebody else and just grabbing his property. The second phase, I thought, was the phase that was started in ’94 or ’95 roughly, when something else happened. Enough acquisition and acquiring had taken place that people started to think maybe the way forward was now to make what you had into something bigger or something more important or use it to acquire something else through the system that we might recognize as normal. And a couple things happened then. Nobody, until that time, ever went to court. Nobody used the law. Suddenly, starting in the mid- ‘90s, people start to go to court or to look to law or legal rules as a basis to protect what they had acquired. And that makes a big difference. It’s a huge step. I don’t mean that it was a complete transition, but it was the beginning of something different. A pioneer in this was [Mikhail Borisovich] Khodorkovsky, who took Yukos [Oil Company] and, having acquired a lot, decided at a certain point in the mid-‘90s that the next step was to grow it rather than just acquire more. So, you begin that process. And the third phase, I think, is just the one that begins with the financial collapse in ’98. Because until then you kind of had a situation in which nobody thought anybody would use a Russian good if you could get a foreign one. They were importing things like yogurt from Skokie, Illinois. It was kind of insane. When the financial collapse occurred, it brought a much-needed shock to the system, but put the economy almost on a different basis. Because all of a sudden, what people could afford was made in Russia. That was a huge stimulus to things like Russian agriculture or Russian food processing, Russian furniture builders, you name it, who suddenly were now competitive with foreign products. And they were the only thing that people could afford. It gave a huge stimulus to the base of production and so forth in [0:05:00] the Russian case. From there, through, I would say, the end of the [Boris Nikolayevich] Yeltsin era and into 2000. In that phase you have the emergence of new businesses. It’s the growth of new business based on Russian consumption of Russian product, as well as the fact that the imports were less attractive, because they just couldn’t afford them. It was major periods. And I think it was an immense psychological, educational, institutional, and just practical set of changes at a rapid, rapid pace during this whole decade that people had to adjust to new realities day in and day out. The Russians are very resilient. They managed their way through this in ways that look very Ambassador James F. Collins, interview by Rebecca Adeline Johnston, August 8, 2018, transcript, Post-Soviet States Oral 2 History Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-collins strange to the outside. People thought it was corrupt, people thought it was chaos, et cetera, et cetera. But in fact, it was Russians coping with a reality that was changing on them almost daily—something we have no sense for, frankly, in the United States. When you mentioned that Americans seemed, by and large, naive about the unfairness, or what they perceived as the unfairness of the privatization of Russia, what did you see that made you perceive it as naive that they thought it was unfair? Well, it was just a reality that what was going on in the former Soviet space—but we’re talking about Russia here—was unprecedented. Literally, you were privatizing the entire national wealth, essentially. There was kind of a spirit emanating from the Americans—and the Europeans too, it wasn’t just the Americans—that this all ought to be done fairly and with respect for citizens’ rights, and so on and so forth. It was kind of an underlying assumption in a lot of the editorial writing, and the way people wrote about what was happening, and so on and so forth, that everybody in Russia, every citizen, should get an equal share of what the country had. Then, you know, you’d have a market. But, come on. They were asking for the kind of thing where they were arguing that money shouldn’t be—I had one guy come to me one time who was “a democracy expert,” who was saying that there was a perception that money was playing too great a role in politics. That the elections weren’t fair because some candidates and parties had more money than others. Well, come on. I’m from Chicago. There was a spirit about this that this was somehow a huge experiment that was going on and that every idea that any anybody ever had here was supposed to be put in practice. But there was a sense that it should have been orderly—by laws, by regulations, in a structured way so that a New York lawyer would have made perfect sense of it. And it simply had nothing to do with that. Because there were decrees, there were regulations, there were rules. Some of them were guidelines that operated in how, let’s say, oil fields were privatized, or land was allocated, or whatever. But it was by no means the simple idea that all of this should happen in a way that a law firm in the United States would be comfortable going to adjudicate in a court in Moscow as a fair and proper way to have things done. It just didn’t happen that way. What was that like to deal with on a day-to-day basis? [0:10:00] The perception that you’re fighting against, and then the pushback, and the advice from all sides? First of all, again, in this early period, in the period up to the mid-‘90s roughly, the United States was seen as the model. The expectation was that the United States had the answers for whatever the question was, particularly on the economy. I would say on the Russian side there was a kind of perception that, “Okay, we got rid of that old system, now make us into something like you.” And it should happen in a year or so.

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