#34 | March 26 - 31, 1998  

By Matt Taibbi

Boris Yeltsin's wacky decision to settle all family business and fire his entire government was not the only big story to break on Monday. Actually, there were two big stories, one Russian and one Western. The Russian one was the cabinet firing business. The Western one was...well, you haven't heard about that one yet, because it hasn't been reported yet. And in case it still isn't out there by the time this issue hits the newsstands, here it is: Anatoly Chubais was fired, and the Russian stock market actually rose.

Despite a massive propaganda campaign in the Western press which repeatedly pushed, over the course of almost two years, the idea that Chubais's presence in government was absolutely crucial to reform, the troubled Vice-Premier went down Monday without a whimper. After news of his permanent dismissal was released, it only took Western investors about two hours-scarcely a dent in the cigarette packs of most journalists-to deem him totally irrelevant to Russia's economic future.

After an early tailspin Monday, the market recovered quickly to close just 1% down. By Tuesday, the market was actually up 1.5%.

"It just goes to show how cynical investors are," said American broker Buck Wiley. "Basically, a lot of people feel that it doesn't matter if he's gone. Some more guys will come in his place."

Wiley isn't the only guy in town saying this, but he might as well be. You can scan the news reports until the second coming, but you won't find a single journalist anywhere who addressed the question we put to Wiley: if Chubais was so crucial to reform all this time, why are the markets going up? Where's the disaster? Where's the panic?

Panic reigned in the Western investment community when Anatoly Chubais was fired Monday.

Investors, of course, know the answer to that question, and Wiley hit it on the head. The answer is that the system of government in Russia is so ingrained that the people in it are virtually interchangeable. Meet the new boss, same as the old boss. Chubais was one hack in a pile of hacks who got to play the role of the liberal darling, but by Friday of this week he'll be older news than Captain and Tenille, replaced by a new golden boy.

The events of this past Monday are incontrovertible proof the entire machine of the Western press corps can finally be sacrificed in favor of a computer readout of the stock market returns. Markets, at least, don't lie-they're self-explanatory. The Western press corps, on the other hand, has revealed itself to be completely incapable of telling the plain truth, committed to the last to an almost Orwellian policy of turning straightforward clashes of material interests into profound contests of principle. It's committed itself to propping up irreplaceable new hero after irreplaceable new hero of the glorious war against anti-reform Oceania- apparently convinced that no one will notice that the faces haven't changed, or that the moral reasons for fighting the war were long ago dispensed with.

The Western press's coverage of the Monday firings was remarkable not for what was eventually published, but for what was left out. To see the group-think for what it was, you had to read between the lines.

"Perhaps Chubais will manage to recover his position, as he did after his dismissal last year. But economic reform is likely to be the biggest victim of this latest round of kompromat."
-Moscow Times editorial, November 18, 1997, in the wake of the "writer's union" scandal

"But the departure of the stolid and inarticulate Chernomyrdin, and also of the compromised First Deputy Prime Minister Anatoly Chubais, does open up the chance for Yeltsin to appoint a real dynamic reformer to the crucial post of prime minister."
-Moscow Times Editorial, March 24, 1998, after Chubais's sacking

Well...no kidding. Despite the odd implication that one needs to be articulate to be a reformer, the Moscow Times had it mostly right in that small passage of its latter Black Monday editorial. Except that they had it wrong. True, you can't be "compromised" and a "real dynamic reformer" at the same time. But the reasons aren't the ones the Times is implying. The Times would have you believe that the reduced political clout that comes with being "compromised" is the only reason Chubais can't also be a "real dynamic reformer. In fact, Chubais was "compromised" for a reason-he was corrupt. He took bribes, rigged elections, lied, and subverted the democratic process whenever he saw fit. He was compromised for the very reason that he was not, at heart, a "real dynamic reformer."

Which is a whole lot different from saying he can't be a real, dynamic reformer because he was compromised. In fact, he can't be a real dynamic reformer because- he isn't one.

As is clearly seen from the above passages, the Moscow Times was never interested in these distinctions. Even after he was caught in improprieties too numerous to count and a rendered a virtual political corpse, the paper was still willing to depict Chubais, as long as he was still in government, as vitally important to reform. But magically, when he was fired, that was suddenly also a boost to reform.

This is spin control, pure and simple, and the Times wasn't alone in being guilty of it. You can look back for almost two years, and except for one remarkable op-ed piece by Peter Reddaway in the Washington Post, you won't find anything like an assertion that firing Chubais would be a good thing for reform. Yet the instant he gets fired, every hack in town starts seeing a very big bright side (see insert) to his departure.

"I think that investors see Chubais's removal as a positive thing, because it means important legislation like the tax code will go through now," said Rory McFarquhar of the Russian-European Center for Economic Policy. "Before, he was a political obstacle, because reform detractors were so insistent on his removal that they would not consider reform legislation."

Fine-but in that case, reform proponents should have been calling for Chubais's dismissal all along. Right?

"Well," said McFarquhar, "the thing is, Chubais set as part of the conditions for his departure...everyone else in government who was an obstacle to reform had to go too. His main function was to keep those people from interfering with reform. So he made sure that when he left, they left, too."

What? What position was Chubais in to set conditions for his departure? Isn't Yeltsin still president, and wasn't Chubais still subordinate to him?

"Well, he didn't set the conditions,' McFarquhar explained, "he advised Yeltsin."

And Yeltsin listened to him?

"Well, actually," concluded McFarquahar nonsensically, "I think that if the markets went down, then that means they were deeply mistaken about the situation."

Follow the Leader "Man doesn't cross himself until he hears peals of thunder." - Russian proverb If the assertion that the dismissal of Anatoly Chubais might actually benefit the reform effort sounds familiar, that's because it is. We've been saying it in practically every issue for almost a year now. For a lesson in how "radical and irresponsible" rhetoric can become conventionally accepted wisdom overnight, compare the stance of the notorious eXile in June, 1997, with the about-face slant of the Western press this week: eXile, June 4, 1997 "Claiming that exclusively supporting one group was more effective than supporting many, aid directors steadfastly refused to investigate the possibility of searching out alternatives to Chubais- who might actually be of more use to the country- choosing instead to put all their eggs in what would turn out to be one increasingly flawed basket."

Western Press, March 23-24, 1998: "There is, however, another view: that, by firing his government, Mr Yeltsin is clearing the way for a new era of reforms that could pave the way for a modernising new president. In this optimistic scenario, Boris Nemtsov, the reformist first deputy prime minister (who, unlike Mr. Chubais, has not been explicitly and personally sacked) or Grigory Yavlinsky, the head of the liberal opposition Yabloko party, might be chosen to head a government with cleaner hands and a commitment to reforms more credible even than Mr Chubais, who has been weakened by his dirty war against the oligarchs. "'I think essentially it is a further step towards reinforcing the renewed reform drive, Yeltsin is reinforcing this last, breakthrough attempt at reforms,' argues Dirk Damrau, head of research for MFK-Renaissance.'" Financial Times, March 24 "This was clearly not a coup d'etat against the reform faction," said Eric Kraus, the chief strategist at Regent European Securities in Moscow. "It appears to be a step forward for the reform camp." Moscow Times, March 24 "The announcement, he said, does not necessarily presage `any change in Russia's basic orientation, either in terms of domestic economic reform or cooperation with the international community.' "In a similar vein, White House national security adviser Sandy Berger noted that Yeltsin himself had indicated Russia will remain on the same path despite the purge." AP, March 23 "The attachment of Sergei Kiriyenko, the new prime minister, to the reformist camp around Boris Nemtsov bodes well for greater transparency in government than characterised the era of Victor Chernomyrdin." Financial Times Editorial, March 24 Political analysts Sergei Markov and Andrei Piantkovsky told RFE/RL that the move "benefits Yeltsin in the first place, and also gives a partial boost to the positions of the reformers." Radio Free Europe, March 23

It's a very strange thing when an economic research analyst crosses the judgement of the market to come to the defense of a state official. McFarquhar surely knows as well as Wiley that the market response had an awful lot to do with cynicism about the nature of Russia's government today, and about Chubais's ability to have any kind of real effect on he economy. But why he wouldn't say that, even post factum, is a mystery. Then again, nothing about the Chubais story has ever made much sense. Seemingly without any motive whatsoever, journalists and Russia watchers have been willing to consciously tell outright falsehoods about Chubais throughout his service. They continued after his dismissal. Among the oddest notions journalists tried to spread was the idea that his tenure as guardian of the Russian economy has been successful. As the Associated Press wrote Monday:
"The Russian economy actually has begun to show signs of growth after years of decline. But as Yeltsin acknowledged, it has been too little, too late for many people."

Actually, the economy in recent weeks has taken a turn downward. The problem Chubais was directly charged with solving-the liquidation of the government's debt to state workers-was again worsening. According to the the State Statistics Committee, the debt to workers by March 1 of this year had begun to grow rapidly, reaching 7.636 billion rubles. Whatever good statistical news there might have been to report, it would shortly have been overshadowed by this debt problem, which would soon have become a noisome political issue for Yeltsin again.

David Hoffman of the Washington Post was another writer to give Chubais credit for good works:
"Chubais's ouster had been rumored for months, and he said he asked Yeltsin to allow him to leave in early February. He was recently offered a top job at Russia's Unified Energy Systems, an electricity giant, and he hinted today he would take it.
"Chubais was a lightning rod for complaints about the economy. He oversaw Russia's privatization program, but was blamed for the poverty of millions of Russians. He also clashed with some major businessmen over his efforts to reduce their influence in government and their throttlehold over the auction of state-owned enterprises.
"In a valedictory to reporters today, Chubais took pride in the changes in Russia's economy. 'What was achieved cannot be destroyed,' he said."

Again, God knows exactly what Chubais means by "what was achieved," but whatever it was, Hoffman let him get away with it. As a result of his article, readers of the second-most influential newspaper in the United States will believe that Chubais left government voluntarily to go into business, after being hounded by irrational and unscrupulous enemies who resented his honest approach to government.

In any case, all of this anti-Chubais stuff is getting boring, and even we at the eXile know it. In fact, we wouldn't have even run this lead article if we didn't think the story wasn't really about Chubais, but about the Western press in general. What was scary and new about this story is that the press madness didn't end even after Chubais was fired. A guy they deified and declared invaluable yesterday was suddenly expendable today. And there are plenty of hints that the process is going to repeat itself; several news outlets have already referred to acting prime minister Sergei Kirienko as a "reformer." Which he isn't. Or if he is, it doesn't matter. The tag "reformer" long ago ceased to be applied with any concern for its correlation to any actual meaning.

The working press knows this, but for some reason, it still insists on creating a world with good guys and bad guys, even when they're not there. Maybe they do it for fun-who knows? Journalists' lives are pretty dull-you can almost see how turning Russia into a Lone Ranger and Tonto episode would start to sound fun after a while. For our part, we'll leave them to it and follow the markets from now on when we want to know what's going on.