The Oligarchs (58 page)

Berezovsky and Gusinsky were wealthy men, but the “Davos Pact” was not only about wealth. The two tycoons now controlled two of the three major television channels in Russia. They could sway public opinion, and that, for Yeltsin, was the most valuable currency of all.

 

Back in Moscow, Berezovsky hurled himself into the new project. With Gusinsky, Khodorkovsky, and Vinogradov already on board, he recruited Alexander Smolensky, Vladimir Potanin, and Mikhail Friedman, the Alfa Group chief, accompanied by Pyotr Aven, his politically astute partner. This “group of seven” (Berezovsky, Gusinsky, Khodorkovsky, Potanin, Vinogradov, Smolensky, and Friedman-Aven) made up the core of the financial-political oligarchy. Most had been at the club on Sparrow Hills, most had participated in loans for shares. Now they set about trying to save Yeltsin.

The oligarchs agreed that Chubais, the steely, resolute architect of mass privatization and loans for shares, was the logical choice to manage Yeltsin's reelection campaign. The determination Chubais had shown over the last four years was just what the group of seven magnates were looking for. Less than six months after they had benefited so handsomely at the loans for shares auctions, and still awaiting the
“second key” to their industrial treasures, they simply hired Chubais, who had been out of government since Yeltsin fired him in January. The tycoons paid him a handsome salary for his services.

Chubais created a private fund, the Center for Protection of Private Property, and told the tycoons he needed $5 million to do the job. “You give $5 million to me, not for me but for me to create a structure to which I will attract the best people,” Chubais said he told the tycoons. “Within five days, the credit was extended and received.” Chubais described the money as a no-interest loan. He set up the fund and then invested the money in the superprofitable bonds, known as GKOs, which were paying ever higher annual yields at the time because of uncertainty over Yeltsin's future. The GKO yields in May-June 1996 topped 100 percent. Chubais said he paid staff salaries out of the GKO profits. His own salary was $50,000 a month. Chubais said he paid taxes on a $300,000 income that year.
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The money that went to Chubais hinted at the much larger role the oligarchs would later play in financing Yeltsin's campaign. It was also a sign of how Chubais was drawing closer to the businessmen. He had become
their
agent. “We didn't have any doubts about his decency,” Berezovsky recalled. “Plus his brains, strength, and organizational abilities.” Chubais was also impressed by the tycoons and their willingness to unite behind Yeltsin. “The fact that big capital turned to Yeltsin,” Chubais told me, “had a very serious impact on all the business elite, directors of enterprises, governors, and ministers. This had a very serious impact on all of the political elite of the country, a psychological impact.”
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But before Chubais and the oligarchs could help Yeltsin defeat Zyuganov, they had to save Yeltsin from himself. The old man was brooding about his troubles and misfortunes. Winter was always the cruelest season for Yeltsin, bringing new illness and isolation. He had suffered a heart attack in October and had been all but invisible during the autumn 1995 parliamentary campaign. For the first time in his life, he felt politically isolated, and his poll ratings were almost zero. “At that time my whole life seemed under assault,” Yeltsin wrote of the dark winter days, “battered about by all sorts of storms and strife. I stayed on my feet but was almost knocked over by the gusts and blows.... It seemed as if all were lost.”
¹³
Yeltsin's deteriorating health remained largely hidden from view. Yeltsin acknowledged in his memoir that the Kremlin doctors wrote a letter expressing concern about
“the catastrophic state” of his heart, although the letter was shown to him much later. They warned that frequent travel and stress were “a real threat to the health and life of the president.”

His political life was also draining away. On January 11, a team of top Yeltsin advisers, led by the Kremlin political strategist Georgy Satarov, sat down together to plan for the campaign. The election would be held in six months, and the outlook was as grim as it had ever been. Yeltsin stood at 3–4 percent in the polls, while Zyuganov was leading the pack with 20 percent. “At the meeting there was total pessimism, a total absence of hope,” one participant, Igor Mintusov, recalled later.
¹⁴
“Of ten people who spoke, nine said it was senseless, a lost cause.” Nonetheless, the Satarov group pushed ahead, looking for a strategy that could save Yeltsin.

Reacting to the December setback in the parliamentary voting, Yeltsin had fired three people who were closely associated with the early democracy and reform movements: Chubais, Foreign Minister Andrei Kozyrev, and his chief of staff, Sergei Filatov. Chubais was replaced with Vladimir Kadannikov, Berezovsky's one-time partner from Avtovaz and AVVA. Kozyrev was replaced by Yevgeny Primakov, then head of foreign intelligence and a representative of the old Soviet
nomenklatura,
who was no friend of the West. The new look of Yeltsin's team was nationalist and regressive, and the oligarchs worried that Alexander Korzhakov's clan was gaining ground in the Kremlin.

Despite his standing at the bottom of polls, Yeltsin decided to run for reelection. He said his motive was to stop the Communists from returning to power. Yeltsin appointed Deputy Prime Minister Oleg Soskovets to head the campaign. Soskovets was put in charge of collecting the 1 million signatures necessary to put Yeltsin's name on the ballot. What should have been a relatively easy organizational problem turned into a disaster. Soskovets, a product of the Soviet era, was woefully unprepared for running a real campaign. He ordered the Russian railroad ministry workers to be coerced into signing pledges for Yeltsin. Yeltsin said he heard that railroad workers were being forced to sign up when they got paid. “They were sent to two windows, one to get their pay packet, and the other to support President Yeltsin. I asked that the story be checked out, and it turned out to be true.” Arkady Yevstafiev, the Chubais lieutenant, told me that he and Yeltsin's daughter Tatyana Dyachenko (who would play a large role in the campaign in the coming months) went to the Ministry of Railways
and took samples of the signatures gathered there. Yevstafiev then had the samples checked. In four days he got a response. “Fifty percent of them were fake,” he said.
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Yeltsin said of Soskovets, “My campaign manager had ‘forgotten' that we were already living in another country and not the old Soviet Union, where politicians could buy voters so crudely.”
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When Yeltsin finally made his announcement speech on February 15 in Yekaterinburg, where he had once been Communist Party boss, a number of his closest advisers stood in the wings and cried. Some of them feared they were witnessing Yeltsin's last hurrah. Most major polls put Yeltsin in fourth or fifth place in the presidential race. It was a frigid, damp day and Yeltsin's normally booming baritone was reduced to an unhealthy rasp. “We were standing behind the curtains, and several of the president's aides—their eyes welled up with tears,” recalled Mintusov. “Here was this elderly president with his hoarse voice who was showing this tremendous determination. It was an emotional moment.”

“At key points in his life, Yeltsin wakes up,” Berezovsky told me of Yeltsin's revival in the spring of 1996. Yeltsin shrugged off ill health, depression, and drink. He literally climbed out of his hibernation, a great political animal if there ever was one. “He was born with a sense of power,” Gusinsky marveled. “You have two hands, two feet, and a head, and so do I, but Yeltsin was also born with a sense of power.” Yeltsin roused himself for the sake of keeping this power, but he needed help.

“We realized that the first problem was to get information to Yeltsin,” Berezovsky said. “We had to break down the walls that had been built around him. We agreed to stop fighting among ourselves, and to try and connect with the president's team and tell them.”
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Berezovsky went to Viktor Ilyushin, an old Sverdlovsk hand in the Kremlin, a low-profile, silver-haired, quiet Yeltsin man who had warned Yevgeny Kiselyov about the Yeltsin family's unhappiness with NTV. Ilyushin arranged a meeting with Yeltsin, Chubais, and the oligarchs.

In the intensifying romance between wealth and power, between the tycoons and their patron, the meeting was a turning point. Yeltsin knew most of those at the table, but, isolated in his hospital bed and protected by Korzhakov, he had not seen them in a long while. He recalled that he at first regarded them “rather cautiously,” feeling that
“they had nowhere to go, that they had to support me, and I thought that the conversation would probably be about the funding of my campaign.”
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But the oligarchs had a different plan. Before the meeting, they agreed that someone would try to deliver the raw truth to Yeltsin that he was no longer popular, a painful realization that, according to Ilyushin, the president had not absorbed. “We agreed that we were going to tell the truth to Yeltsin, that his popularity was 3 percent,” Gusinsky said, “because his KGB men . . . were telling him stories that it was not less than 98 percent.”

Smolensky recalled that Chubais arrived carrying a briefcase. Despite the elegant Kremlin lunch, Chubais plopped his briefcase on the table and took out some papers. Chubais, fearless in the face of power, abruptly fired off the bad news. “Boris Nikolayevich, the situation is not simple. Your rating is 5 percent!”

Chubais showed some of the papers to Yeltsin. The president glanced at them and tossed them aside. “This is all rubbish,” Yeltsin said.

“Yeltsin grew tense and red,” Gusinsky recalled. Speaking very slowly, Yeltsin said, “Anatoly Borisovich, we have to figure out who prepared those ratings. I think this is not true.” Yeltsin emphasized the last words,
not true
.

Chubais then turned scarlet. There was a long pause. Gusinsky spoke up. “Boris Nikolayevich, everything that your people say to you, your circle, is all lies.”

“He turns to me, he gazes,” Gusinsky recalled. Gusinsky felt that Yeltsin strongly disliked him, that he was only allowed to set foot in the Kremlin because Yeltsin now needed him and the bankers to hold on to power—such a cynical man, Yeltsin.

“And how do you know what my men are telling me?” Yeltsin inquired of Gusinsky, again speaking slowly.

“Boris Nikolayevich,” Gusinsky replied, “because you act foolishly. That's why. I see it—you act foolishly because they give you this sort of information.”

Another long pause, as Gusinsky remembered it. Both Smolensky, who was seated next to Yeltsin, and Gusinsky, who was across from him, remembered that Yeltsin was figuratively looking around for a heavy plate to throw at Gusinsky.

“Somehow we moved on,” Gusinsky added. “Keep in mind,” he told Yeltsin sympathetically, “if the Communists come back to
power, you will be held personally responsible. All of us are here for this reason: to prevent them from coming back.”

Yeltsin's recollection was that the businessmen also expressed their own fear of Zyuganov. “The Communists will hang us from the lampposts,” he quotes them saying as a group. “If we don't turn this situation around drastically, in a month it will be too late.”

Throughout the meal, Yeltsin largely remained silent. The bankers suggested Yeltsin put Chubais in charge of his campaign. Yeltsin, who had only recently fired Chubais, later said this suggestion “amazed me most,” although he acknowledged his own growing dissatisfaction with Soskovets. The bankers left and shook hands with Yeltsin, not really knowing if they had gotten through to him or not.

Before the meeting, Berezovsky had quietly approached Yeltsin's wife, Naina. He had asked her to help arrange a ten-minute tête-à-tête with the president after the lunch. Berezovsky reminded Yeltsin of his request as the other tycoons were leaving, and Yeltsin gave him an approving look. When they were alone, Berezovsky recalled, he told Yeltsin that trouble was brewing. He told Yeltsin that Korzhakov wanted to call off the elections because Yeltsin's standing was so low. “Boris Nikolayevich, you cannot use force to solve the problem,” Berezovsky said. “If we follow this route we may get into a civil war.”

Yeltsin looked down at Berezovsky. “Is this all you have to say?”

“Yes,” said Berezovsky.

“I left with a heavy feeling,” Berezovsky recalled. “Everybody felt that he failed to understand, that he did not understand.”

“The very next day,” Berezovsky recalled, “he gave the order to reorganize the headquarters.” In a method familiar to all, Yeltsin maintained his power by balancing competing groups. He was the arbiter, the great circus master, who kept his lions and tigers jumping through hoops with a long whip. Yeltsin did not immediately close down the Soskovets campaign operation but created a rival, a campaign council chaired by himself and attached to it an all-important new analytical center headed by Chubais. The analytical center became a second campaign headquarters; the money came from the oligarchs.

The key figure at the analytical center was Yeltsin's youngest daughter, Tatyana Dyachenko, who stepped into politics for the first time as her father's eyes and ears in the campaign organization. She was a short woman, shy, with her father's eyes and loose bangs over
her forehead. Dyachenko had studied to be a systems programmer and worked at a defense-related bureau on space trajectories. She was not a public figure, and little was known about her at the time. She had no experience in politics, but she could speak to her father in a way no one else dared. The oligarchs saw her as a detour around Korzhakov to get information to Yeltsin.