fter the collapse of the Soviet Union, a team of young economic reformers led by Yegor Gaidar worked to create a new economic future for Russia Against an overwhelming threat of looming hunger and civil war, they created a market economy which is still in place today In the face of crisis, a process of ‘shock therapy‘– involving the end of price regulation, the introduction of privatization and a reduction in public spending – appeared necessary Their plans have been the subject of controversy ever since – the path to the new economy was not smooth and Russia continued to struggle with economic crises throughout the 1990s Yet Gaidar’s plans have been widely praised for saving the country from complete collapse A For the fi rst time in this book, the participants in the process reveal their experiences during those frantic days, their insights into Yegor Gaidar and of the formation of post-Soviet Russia In doing so, Gaidar’s Revolution provides a unique perspective on contemporary Russia, making it an indispensable resource for understanding its economic and political complexities Petr Aven is a Russian banker and economist who served as Minister of Foreign Economic Relations for the Russian Federation (1991–2) He holds a PhD in Economics from Moscow State University and is now Chairman of the Board of Directors of Alfa Bank, Russia’s largest commercial bank He is a trustee of the Centre for Economic Policy Research and a member of the Board of Directors of the New Economic School in Moscow Alfred Kokh is a writer and economist who was a Deputy Prime Minister of the Russian Federation in the 1990s and a chief architect of Russia’s privatization He holds a PhD in Economics from the St Petersburg Mathematics and Economics Institute of the Russian Academy of Sciences and is the author of A Crate of Vodka: An Insider View on the 20 Years That Shaped Modern Russia and The Selling of the Soviet Empire: Politics and Economics of Russia’s Privatization “Aven and Kokh provide a fascinating history of the second Russian revolution of 1989–92, as told by participants to participants, and focusing on the central role of Yegor Gaidar Even the most imaginative novelist could not match the drama and clash of personalities as vividly as these interviews.” William Nordhaus, Sterling Professor of Economics, Yale University “In 1990–3 Russia was transformed from a centrally planned to a market economy (with Russian characteristics) – a period of economic and political turbulence for all involved This fascinating book records, through interviews two decades later, the recollections, reflections, and re-evaluations of key leaders in that dramatic transformation A remarkable collection.” Richard N Cooper, Professor of Economics, Harvard University “This fascinating book records the recollections and ideas of the key participants in Russia’s attempts at market reforms, with a special focus on the central role of the brilliant and cunning Yegor Gaidar For anyone who lived through these reforms without the benefit of hindsight, or who has studied what went right and what did not, the key players and events jump off the page with action and insight No one ever knows all of history This oral history allows us to know far more than we have to date.” David Lipton, First Deputy Managing Director, International Monetary Fund (IMF) New edition published in 2015 by I.B.Tauris & Co Ltd London • New York www.ibtauris.com First Published in the United States in 2013 by The Gaidar Foundation Copyright © 2013 Petr Aven & Alfred Kokh Translation Copyright © 2013 Petr Aven & Alfred Kokh All rights reserved Except for brief quotations in a review, this book, or any part thereof, may not be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher ISBN: 978 78453 122 eISBN: 978 85773 958 A full CIP record for this book is available from the British Library A full CIP record is available from the Library of Congress Library of Congress Catalog Card Number: available Typeset in Adobe Garamond Pro by A & D Worthington, Newmarket, Suffolk CONTENTS List of Illustrations Foreword by Leszek Balcerowicz From the Authors A Book Written Under Duress GENNADY BURBULIS: “Yeltsin Served Us!” Yeltsin: Together and Nearby The Appearance of Gaidar Démarches and Resignations The Disintegration of the USSR About Gaidar ANATOLY CHUBAIS: “We Destroyed the People’s Idea of Justice with Voucher Privatization” Muscovites and St Petersburgians The Inevitability of Change With Yeltsin or Without A Complicated Choice Reforms and the Collapse of the USSR October 1993 We Never Fought in Thirty Years ALEXANDER SHOKHIN: “We Took as Much Power as We Could” How Many Programs Were There? Recollections About the Candidates The Kamikaze Government The Election of the Premier Between Gaidar and Chernomyrdin Farewell to Gaidar Wine, Yeltsin, and the Stillborn Coalition Good Premier ANDREI NECHAYEV: “It’s Indecent to Blame the Former Regime for Everything” The Status of the Country Hunger and Cold Concerning Money Separatism Working with Gaidar When Things Settled Down On Mistakes Back to Gaidar Present Day VLADIMIR LOPUKHIN: “That Was the Bone-Breaking Machine” Why Gaidar? Price Liberalization Lukoil, Yukos, Surgutneftegaz Work and Dismissal A Change of Elites An Extremely Decent Man Crazy Tempo STANISLAV ANISIMOV: “It Was a Nightmare” Foreign Practices of the USSR Academician Velikhov and Copper Export How the System Broke Down “There Would Have Been Hunger” Attempts to Keep the Union Young Reformers “Putin Practically Committed Crimes” Could the Union Have Been Saved? VLADIMIR MASHCHITS: “We Were Like the Bourgeois Specialists of the Civil War Period” Revolution Is an Impulse Why Gaidar? Public Politics The Collapse of the Union The Gaidar Team as Military Specialists ANDREI KOZYREV: A Bona Fide “Kamikaze” At the Soviet Foreign Ministry The Russian Foreign Ministry Change of Course The Attitude of the West Humanitarian Aid Internal Contradictions Hot Spots CIS and NATO Resignation SERGEI SHAKHRAI: “Those Events Made Yeltsin More Isolated, Angry, and Vindictive” Parliament Work The Yeltsin Team The Putsch of 1991 The Collapse of the USSR The Belovezh Accords About the Government Gaidar and Yeltsin 10 PAVEL GRACHEV: “I, the Defense Minister, Did Not Allow the Army to Break Up” Service Before 1991 and the GKChP Putsch Ministerial Rank Relations with NATO Dismissal and Afterward On Gaidar’s Government The Chechen Campaign The Army and the Putsch of 1993 11 JAMES BAKER: “You Still Have Not Built a Free Market Economy” 12 YEGOR GAIDAR: “I Made a Bad Public Politician” First Conversation: On the Resignation Second Conversation: On Morality and Effectiveness in Politics Third Conversation: On War Fourth Conversation: On Privatization 13 What We Learned 14 Conclusion 15 Afterword by Carl Bildt Appendix: Biographical Listing Notes Plates 34 Stanislav Anisimov, Minister of Trade and Material Resources of the RSFSR, 1991 35 Minister of Economy and Finance of the Russian Federation Yegor Gaidar, and Minister of Fuel and Energy of the Russian Federation Vladimir Lopukhin at a meeting of the government of the RSFSR, December 5, 1991 36 Russian President Boris Yeltsin, Russian Foreign Minister Andrei Kozyrev and Moldovan President Mircea Snegur at a conference in Istanbul 37 Chairman of the Supreme Soviet of Azerbaijan Heydar Aliyev at a meeting with Russian Foreign Minister Andrei Kozyrev 38 Alfred Kokh (left) and Anatoly Chubais 39 Boris Nemtsov, Alexander Kazakov, Alfred Kokh, Yevgeny Yasin, Anatoly Chubais, Yakov Urinson, and Oleg Sysuyev at the funeral of Viktor Chernomyrdin, 2010 40 Yegor Gaidar and Alfred Kokh (left) 41 Michael Manevitch, vice-governor of St Petersburg Behind him, Alexander Kazakov, then deputy prime minister, Alfred Kokh, and Anatoly Chubais 42 Boris Nemtsov and Alfred Kokh 43 US Secretary of State James Baker speaks at the Supreme Soviet of the USSR 44 Minister of Economy and Finance Yegor Gaidar and Deputy Prime Minister and Finance Minister of Poland Leszek Balcerowicz at a press conference, December 1, 1991 45 Barricades in front of the Supreme Soviet of the RSFSR 46 Journal Ogonek, no 36, dated August 31, 1991 47 October 4, 1993 The storming of the White House, Moscow ... Chairman of the Board of Directors of Alfa Bank, Russia s largest commercial bank He is a trustee of the Centre for Economic Policy Research and a member of the Board of Directors of the New Economic. .. Minister of the Russian Federation in the 1990s and a chief architect of Russia s privatization He holds a PhD in Economics from the St Petersburg Mathematics and Economics Institute of the Russian... Russian Academy of Sciences and is the author of A Crate of Vodka: An Insider View on the 20 Years That Shaped Modern Russia and The Selling of the Soviet Empire: Politics and Economics of Russia s