Death of a Dissident (9 page)

Chubais came to Davos in place of Yeltsin, who was stuck in Moscow as a wartime president; the New Year’s Eve debacle in
Grozny was too fresh. As the delegates gathered to listen to Chubais give his speech, the ferocious fighting in Chechnya continued.

Nonetheless, Chubais’s speech was triumphant. He had just completed the first stage of massive privatization, whereby vouchers given to each and every Russian citizen could be traded for equity in state-owned enterprises. Many vouchers, to be sure, were bought up by speculators and “red directors,” former Soviet factory heads, but even so, Chubais succeeded in making several million people stockholders.

Most observers had predicted runaway inflation and chaos, but the pessimists were discredited: inflation was held in check. The statistics of privatization spoke for themselves. Yeltsin remained in power, despite the intrigues of the Communists. “Our reform is irreversible!” Chubais proclaimed.

In response, Soros, a widely admired guru in Davos, called the new Russian capitalists “robber barons.”

“I was hoping to see an orderly transition to an open society, a market-oriented democratic system based on the rule of law,” he complained. “That attempt has basically failed. But you do have the emergence of a new system: robber capitalism.”

To be sure, he added, “it is raw and ugly, but a very vital, self-organizing system. It can succeed because there are now economic interests that know how to defend themselves.” But the problem is that “the system is creating a tremendous sense of social injustice and a decline in civilized values, the sense of frustration and disorientation that could lead to a political backlash and a xenophobic, nationalistic mood.”

Over the years, Soros and Chubais held several conversations, mostly during George’s frequent visits to Moscow related to his various philanthropic initiatives. I often joined them, but it was a dialogue of the deaf with the dumb. Chubais, the free-market worshipper, kept repeating that private property would eventually resolve all social and political problems; that democracy and freedom, social morals, the rule of law, and a liberal system of government would flow from capitalism just as surely as efficient prices flowed from Adam Smith’s invisible hand.

Soros, on the other hand, somewhere between a Keynesian and a covert socialist, believed that in moments of crisis, state interference was unavoidable. He advised Chubais to reintroduce customs tariffs to protect the most vulnerable sectors of Russia’s economy and to support Soros’s own campaign in Washington to create a social safety net for Russia, paid for by Western economic aid, a “social Marshall plan” that would prime the pump of demand by putting billions of dollars into the hands of ordinary Russians. Chubais wanted Soros to lead the way by investing in Russia himself, but Soros was too busy setting up multimillion-dollar charities and did not want to mix business and philanthropy. Besides, with the Communists gaining strength, he considered Russia too risky for investors.

Now, at Berezovsky’s tea table, it was Boris’s turn to try to lure George into a business partnership. Boris ardently believed that sooner or later, his 200 million ORT television viewers would turn into an enormous advertising market and his investment in the network would be richly rewarded. Meanwhile, however, he faced a deficit of $170 million, and he couldn’t afford it. He explained that he wanted to ask Soros for a loan of $100 million or so, with collateral in ORT shares plus an option to buy more. It was a package potentially worth a billion, he claimed. Moreover, by supporting the new progressive TV, Soros could really help democracy in Russia. After all, he noted, Soros had given $100 million to help Russian scientists without getting anything in exchange.

“By the way, why does he call us robber barons? Does he think that we’re all gangsters here, like Al Capone?” Boris inquired.

“Not exactly,” I said. I told him the story of the American tycoons and financiers of the Gilded Age. I told him about their mansions in Newport, where children are now taken on tours, just as Soviet children, as both of us well remembered, were taken to Lenin’s Tomb. “Those people are remembered not for how they made their money—they were no angels—but for building American industry and for their philanthropy. That was how Carnegie Hall, the Rockefeller Foundation, and Vanderbilt University came about. This is
why Soros gives money to Russian scientists. He wants to be remembered not as ‘the man who broke the Bank of England’ but as a sponsor of democracy in the ex-USSR.”

For an instant, Boris seemed reflective. But his comeback was as quick as ever. “How interesting. Well, we will do that, too, as soon as we can. Have you heard about my Triumph Fund? It gives prizes in the arts. What if I were to contribute to your Science Foundation, put in a million and a half or so, would Soros agree?”

From the moment I met Berezovsky, I couldn’t rid myself of the thought that he did not fit in the ecosystem of the Russian power establishment. He was the Great Gatsby of Rublyovka, his mercurial temperament and grand visions incompatible with the lethargic but murderous ethos that permeates the Kremlin walls.

The inauguration of Logo VAZ Fellowships for Young Scientists at the Soros Foundation took place in the summer of 1995 in Moscow at the Great Hall of the Ministry of Science. As television cameras whirred, George and Boris shook hands. George gave a speech about passing on the philanthropic baton to a new Russian capitalist class. “Capitalism in Russia is only beginning; after all, you have to make money first in order to give it out. I’m very happy that things are going so well for you and that you have the same understanding I do of the importance of science and education.” Boris beamed.

As we drove away from the ceremony, however, George’s tone was different. I mentioned the Great Gatsby parallel. “Indeed,” George said. “I sympathize with him, but I’m afraid that he will end up badly. He is climbing up and doesn’t know where to stop. And the higher you climb, the farther you fall.”

By the end of the summer, Soros’s forecast for Russia had considerably worsened. Yeltsin, he said, was caught between a rock and a hard place, coping with a social crisis amid pressure from the International Monetary Fund and the World Bank, which supplied the bulk of his budget, to keep spending at bay. In Chechnya, he seemed
to have lost control over the army, and the war’s violence was spiraling upward.

Spring 1995: Chechen ambushes accelerate, and separatists mine roads throughout the war zone. On June 14, eighty rebels led by warlord Shamil Basayev seize a hospital in the Russian city of Budyonnovsk, seventy miles from the Chechen border, taking more than fifteen hundred hostages. A tense standoff, interrupted by botched Russian attempts to retake the hospital, finally leads to a deal: most of the hostages are released in exchange for Yeltsin’s agreement to a cease-fire to the war, allowing negotiations. The militants return to Chechnya as heroes. Russian Prime Minister Viktor Chernomyrdin, who conducts televised negotiations with Basayev, emerges as a leading dove in the Kremlin
.

“Russia is falling into a black hole which will drag the entire region with it,” Soros gloomily predicted late that summer. He asked me to gradually wind down the science program so that we wouldn’t be “burning cash for nothing.”

He was still reluctant to consider a loan for ORT. “Boris needs a strategic partner, and I don’t understand anything about television,” he said. “I can introduce him to someone.”

But that potential partner, an investor in one of the big American networks, did not want to give Boris a loan either. Instead, he simply offered to buy a chunk of ORT. Boris said that wasn’t possible, as the Communists in the Duma would kick up an incredible fuss once they found out that Channel One was being sold to Americans. Well, if that’s how it was, the strategic partner said, then even a loan would bring a huge political risk. The deal didn’t go through.

The only good news was that the success of the revamped Channel One exceeded all expectations. A new team headed by the liberal journalist Konstantin Ernst, a young intellectual with shoulder-length hair, revamped programming, changed the format and style of
the news, and produced entertainment broadcasts targeted at young viewers. The network strove to create a vision of dynamic, prosperous, Westernized Russia, a place where you wanted to live, if only the Communists didn’t drag it back into the Soviet past. The ratings rose steadily, gradually overtaking NTV, but the main problem remained unresolved: the network continued to run huge losses. Boris constantly searched for money to keep it going. He thought he just needed to buy a year’s time, until the presidential election.

He was certain that after Yeltsin’s victory, foreign investors would line up to see him. Once, as we sat on the terrace of The Club drinking an incredibly good bottle of Chateau Latour, his favorite wine, I asked him what he would do if Yeltsin didn’t win. He looked at me as if I were an idiot. “What do you mean, not win? That can’t happen! Did you ever get into a fight when you were a kid?”

“No,” I admitted.

“Well, you cannot get into a fight thinking that you may be beaten. And not just beaten, but hung from a lamppost! Well, we can’t even think of losing. These aren’t your municipal elections in Cincinnati. This is a revolution, old boy!”