#11 | July 5 - 16, 1997  

There is a great moment in the Tolstoy story The Kreutzer Sonata when the narrator, Pozdnyshev, compares marriage to a circus attraction. Recalling a visit to a circus in France in his youth, Pozdnyshev remembers stopping in front of a tent with a sign outside which reads "Bearded Lady" He pays his money, goes in, and finds a woman with a fake beard crudely pasted on. Upon coming out, he realizes that he's too ashamed to tell the people waiting in line that he's wasted his money, so he smiles and pretends it was a great show. And that, the Tolstoy hero says, is what marriage is like-a sham that no one wants to admit to being taken in by.

Here's a similar story. Six years ago in Russia, Western politicians and commentators jumped on the "reform" bandwagon, making idols out of Yegor Gaidar and Anatoly Chubais and anyone else who claimed to want to take on the old order and shake up Russia's planned economy. As time went on, those same reformers turned out to be cunning oligarchs whose idea of economic reform was also a crude paste-on-the replacement of GosPlan not with a law-based economy and rational competition, but with rigged auctions and monster monopolies. And those same Western politicians and commentators, rather than admit they were conned, kept smiling and sending the "reform" flag up the pole, nervously hoping taxpayers would keep saluting.

"Reform" in Russia has a new poster boy, and his name is Boris Nemtsov. Just over 100 days ago, he was named first Vice-Premier of the government. Nemtsov looks like our kind of guy. He's tall and has curly hair. He played basketball and was a physics whiz. Vladimir Zhirinovsky threw juice at him. Chicks dig him. He is said to have presided, as Governor of the Nizhni Novgorod oblast, over Russia's greatest economic miracle.

Unfortunately, he's also a fraud.

But we're stuck with him, just as we're stuck with "reform." Dismissing him would mean spilling the beans outside the Bearded Lady's tent. But in accepting him, we got exactly the opposite of a "reformer"- a slick front man for a corrupt, stagnant, cynical regime, doing all he can to preserve the status quo. By calling him a reformer, we're as much as admitting that reform is a sham.

We wanted him, we got him. Here he is, the bearded lady himself-Boris Nemtsov, live and uncut:

The Hype

Since Boris Yeltsin brought Nemtsov to the federal government in March, literally every single American newspaper with a Moscow bureau has, at one time or another, described Nemtsov as a "Young Reformer." Bios of the new Vice-Premier after his nomination were almost universally fawning and laudatory, real exercises in legendmaking. Some, like a recent LA Times bio by Robin Wright, were written in the kind of booming, heroic prose hack sportswriters like Grantland Rice used to describe football stars like Johnny Unitas and Frank Gifford in the 50's:
"When the Soviet Union collapsed in 1991, the boyish scientist with a dark curly mane and perpetually loosened tie was appointed Governor of Gorky. His mandate: convert Russia's third-largest city and the surrounding region, the hub of the Soviet military-industrial complex and closed to outsiders for 70 years, into a viable center for free market and international trade.

"By then Nemtsov was all of 32.

"He began by restoring Gorky's pre-Soviet name of Nizhny Novgorod. Then, without a whit of economic experience, Nemtsov turned the region into Russia's most daring and successful laboratory of economic reform."

And so on. Wright didn't forget to hype Nemtsov's hunky personality: "so gifted that he wrote his doctoral thesis without taking course work," "dark, curly mane," etc. In fact, many Nemtsov profiles read like Penthouse Forum letters for long stretches, interrupting themselves only occasionally to discuss politics. The local French-language magazine Les Nouvelles Francaises demonstrated the Western predilection for hunk-o journalism at its purest in its recent portrait of the Vice-Premier. The magazine publishes French-language articles right alongside their Russian translations, and the French version included a sub-headline which read:

Populiste et populaire, Nemtsov est devenu le sex-symbol du gouvernement!

The head was left out of the Russian text. Someone among the editors must have realized the home crowd wouldn't buy that line.

Nemtsov had a lot in his resume to show the West. In 1996, he was said to have organized a signature drive, collecting over a million signatures for a petition to Boris Yeltsin to end the Chechnya war, thereby winning himself the automatic approval of the Oliver Stone, stuck-in-the-sixties crowd. Nemtsov was also clearly his own man. He courted Gaidar but never joined his party, citing differences over price hikes. He invited Yabloko chief Grigory Yavlinsky to Nizhni to use the city as a lab for his economic ideas, but never joined Yabloko and never gave Yavlinksy unqualified support during the 1996 campaign. The petition made it seem that he wasn't Yeltsin's man, either.

Nemtsov, it seemed, was clean-a new face who would ride into town with a white hat and kick ass all over the place. It was also said that he had some kind of magic touch with economics, that Nizhni was the one place in Russia where capitalism was actually working, and that he would bring this to the rest of Russia. True, the Nizhni "economic miracle" was seldom if ever elaborated upon in print. But it was mentioned by writers like Wright often enough that people came to accept it as fact.

Then Nemtsov took office.

The Scam

Mr. Clean breezed into town talking left and right about how he was going to bring "capitalism with a human face" to Russia and drive "corrupt mafia capitalism" out of the country. The first order of business, he said, was to reform Russia's system of tenders, and put an end to the legion of insider-dealing that had marked privatization ever since the loans-for-shares auctions of 1995.

Nemtsov's first blow against phony auctions came on April 8, when President Yeltsin signed a decree "On high-priority measures for preventing corruption and reducing budget expenditures in the purchase of products for state needs." Nemtsov, according to Yeltsin's press releases, had taken a leading role in drafting the decree, which was hyped by Economics Minister Yakov Urinson as a means for creating one set of tender rules for everyone, "with no exceptions whatsoever."

"No exceptions whatsoever" actually, according to the fine print, meant "almost no exceptions." The decree mandated that tenders were to be open in every instance-except for when a closed tender was judged to be "the best method" for carrying out the sale! Furthermore, there was no mechanism in the decree for determining who would decide when auctions should be closed, and when they should be open. The result was a legal absurdity: a law which is irrefutable, except when you want to refute it.

The decree went on to provide another set of exceptions to the open-tender rule, and finished with a bang: tenders need not be held at all-meaning contracts can be directly granted to contractors without competition-if there's an "urgent need" for a product! The Nemtsov decree therefore provided the legal basis for significantly expanding the scope of the insider dealing it was supposed to be eliminating. Instead of making all tenders open, it paved the way for eliminating open tenders entirely.

Worse still, Itogi magazine later reported that the decree was authored not by Nemtsov, but by fellow Vice-Premier Anatoly Chubais. The fact that Yeltsin's press release cited Nemtsov as the primary author meant that, if the Itogi story was true, Nemtsov had probably been brought on board specifically to help sell Chubais-conceived dog-and-pony shows like the tender decree to the public.

Did Nemtsov object? No, he marched triumphantly on to his next great reform-the anti-corruption law.

Presidential decree no. 484 would have hit the newsstands like a ton of bricks, if it had ever hit the newsstands. The celebrated Nemtsov-era anti-corruption decree was unique among Presidential decrees in that it was never published in Rossisskaya Gazeta, the state newspaper where all decrees must by law be published. Maybe the loopholes wouldn't fit on the page. With this decree, Nemtsov managed the impossible; he outdid the tender decree for legal flaccidity.

The decree was meant to force government officials to declare their incomes and property holdings to local tax officials, so as to keep an eye on any untoward source of revenues, but in fact only provided a way out for every bribe-taker in government.

Nemtsov described the decree as having "epochal importance." But the decree only made for an epoch in which wives and children of officials became property owners. The decree not only didn't force wives to declare their incomes and property, it gave officials until August 1 to make their declarations-plenty of time to transfer any suspicious property to better hands. Furthermore, the decree only covered the executive branch of government, leaving the Duma and the Federation Council untouched. Lastly, there are no enforcement procedures outlined in the decree, and no language governing who was in charge of reviewing financial statements. In other words, it was a corruption drive against the top officials in the country, with only top officials maintaining the authority to see it through.

This was Boris Yeltsin's sixth anti-corruption drive. It was no different than any of the previous five, except it had a new villain in a white hat at the helm. Only the Western press took it seriously. The Russian press yawned its way through the whole affair. "The new measures are unnecessary," Literaturnaya Gazeta wrote, "because everything worth stealing has already been stolen."

Nemtsov also took on authorized banks and changed nothing. In fact, his one great achievement, in his first 100 days, has been the repayment of all outstanding pension money to all pensioners. But much of the blame for the government's failure to pay pensions previously lay squarely at the feet of the people Nemtsov's phony decrees were protecting-the authorized banks who invested state funds instead of paying out for social programs, the companies who benefited from those bank investments through non-competitive tenders, the government officials who got kickbacks from the cut-rate auctions which robbed the Russian government of privatization revenue. Nemtsov paid pensioners once, but his policies in these areas will guarantee that pensioners will have to wait for the next white knight to enter government before they see so much attention again.

A Miracle?

Nemtsov has been sold time and time again as the creator of a booming economy in Nizhni Novgorod. In fact, what Nemtsov really deserves credit for is presiding over the appearance of a booming economy. It ranks exactly in the middle of Russia's 89 regions in terms of income per capita, and only slightly above average for industrial output, which is, incidentally, less than half its 1990 figure. It takes a politician with great skill to sell that economic scenario to investors as a thriving laboratory of economic reform. Nemtsov has that skill, particularly with foreigners. Reuters reported recently that while Nizhni ranks only 33rd out of all the regions for domestic investment, it ranks fifth among regions for direct foreign investment.

How well did reform work in Nizhni Novgorod? So well that Communist candidate Gennady Khodirev is a serious threat to replace Nemtsov in a vote that will take place somewhere around July 13. Khodirev took 37.9% of the vote in last weekend's first round vote, trailing Nemtsov-supported candidate Ivan Sklyarov by just a few points. If the communists win the run-off-a distinct possibility-it will be obvious that Nizhni residents aren't as enthusiastic about Nemtsov as all those foreign investors who put him on the map.

The Death of Reform

Everybody in Russia, including the foreign community, wants a piece of the pie. In the fight for money and property, everybody needs to make alliances. If the West wants to do business here, it needs friends in high places to make it possible. Nobody's arguing with that. And of the people floating around in public life, Boris Nemtsov, even if he is a front man for a bunch of thieves and cynics, is probably less inclined to cut the West out entirely than anyone else.

It would be fine to leave it at that. But the West, unlike other parts of the world, always has to make clashes of competing interests into contests between right and wrong. Instead of simply being a guy on our side, we have to make him into an agent of righteousness-a "reformer." But Nemtsov is no reformer. He's a loyal devotee of the status quo.

For the few of us who are making money here, Nemtsov is a godsend-a man who'll stem anti-Western sentiment as long as he remains in power, making it possible for us to stay here a little bit longer before the roof caves in. But he's not a godsend because he's going to change anything, as he's proved with his work since entering Yeltsin's government. He's a godsend because he's going to keep things the same.

Reform is dead. Let's face it. And let's start calling things by their names. The writer Calvin Trillin, when asked once by a Washington politician to help think up a campaign slogan, could only manage, "Never Been Indicted." Boris Nemtsov? How about this: "Never Been Suspected."