TIME EUROPE
MARCH 27, 2000 VOL. 155 NO. 12
The Brain Trust
The new economic élite have a plan
By ANDREW MEIER Moscow
Last month, in words meant to entice investors, Vladimir Putin declared his intention to tame Russia's oligarchs. "We have to prevent anyone from leeching onto those in power," he said. "No clan and no oligarch should be allowed to get close to regional or federal power." Whether he meant his vow or not, Putin nicely summed up the unseemly spectacle that played out under Boris Yeltsin, during Russia's so-called transitional period when the nation's riches were sold for a song to the wealthiest and best-connected men in the land.
Should Putin dare to battle the oligarchs, he will need back-up from Russia's weary financial élite. For guidance he has created his own brains trust: the Center for Strategic Developments headed by German Gref, a 36-year-old lawyer from St. Petersburg. Gref, who shares with Putin an affinity for the German language and German rigor, has long worked near the top of Russia's privatization agency. In December, Putin tasked him with a tall order: "To achieve sustainable rates of growth," as Gref explained last week, "so that in 20 years Russia can return to the ranks of the top few dozen most-developed countries in the world." With Russia's gdp hovering near the level of Turkey's, Gref has his work cut out.
Enter the 2015 Club, a group of executives fluent in international finance and representing a wide swath of Russian industry. Unlike the lavish men's clubs that flourished under Yeltsin, the 2015 Club is not a drinking association. Nor is it another of Russia's metastasizing corporate lobbies. Rather, it is a strategic alliance with one agenda: to make Russia a trustworthy global player. Putin's salvo to the oligarchs sounded familiar to the club. Like his call for "a social contract," another favorite of late, it came, almost verbatim, from their 208-page manifesto, "Scenarios for Russia." "We told these ideas to Gref who told them to Putin who said them on TV," says the club's chair, Sergei Vorobyov, director of the headhunting firm Ward Howell in Russia. "Does Putin understand what we're saying? Who knows? But at least he's speaking our language."
The talk, in soundbites at least, is impressive. Born out of the ashes of the August 1998 crash, when Russia defaulted on $40 billion in debt and devalued the ruble, the club has met regularly to chart Russia's future. The club--whose members make everything from MiGs to PCs to Snickers--has met regularly to chart Russia's future. "We were united by a disgust of what happened," says Vorobyov. "Our government had not just cheated Western investors, they'd cheated us." Adds club member Sergei Nedoroslev, head of the Kaskol Group of aerospace and shipbuilding companies, "We were surprised to find so many managers who wanted the same thing--to do business here without having to evacuate your family."
After a year of seminars, the group sketched three scenarios. The best--"The New Social Contract"--foresees a long-term boom; the middle--"The Tale of a Lost Time"--predicts continuing stagnation; and the worst--"Mega-Serbia"--essays a giant step backward into nationalist isolation due to "economic and psychological" depression. The exercise began with a prosaic aim: to help club members plan their future. Nedoroslev explains, "In the worst scenario, we and our kids flee. In the status-quo case, we send our kids abroad. And in the best, the whole family stays." But by now--and by accident, they claim--the club is helping to draft the economic blueprint for the Putin era. Says Nedoroslev, "We don't have a copyright on our ideas. If Gref likes them and passes them on to Putin, all the better."
As Putin's inevitable coronation nears, courtiers from all corners seek his favor. The 2015 Club may be well positioned, but they will have to compete with another, slightly better endowed, crew: the oligarchs. In 1996, led by Boris Berezovsky, Vladimir Gusinsky and Vladimir Potanin, they allied to ensure Yeltsin's re-election out of fear that the communists might return to power behind the candidacy of Gennadi Zyuganov. This time Berezovsky, the flamboyant tycoon and political operator, has eagerly come to Putin's aid, while the others have fallen suspiciously silent. But they are all, says Pyotr Aven, a top Russian banker, "waiting in quiet fear" of the moves Putin might make. Whose licenses will be stripped? Whose loans recalled? Whose arrest ordered? "The war in Russia is no longer between communists and democrats," says Ruben Vardanyan, a club member who runs Troika Dialog, a Moscow investment bank. "It's the fight in the economy, between people who have opposite ideas of what a market is."
There may not be much competition on March 26, but the battle for Russia's remaining riches--13% of the world's proven oil reserves and 36% of its natural gas reserves--will be fierce. Gref and his minions--who work out of a marbled mansion inherited from a fallen oligarch--promise radical reform. Having survived the Yeltsin era, they yearn for a new way of doing business. They speak of the need to outgrow the "paternal state model" that has plagued Russia since czarism.
Putin, says Vardanyan, echoing many club members, has one job: "To put the rules of the game in place and force everyone to play by them." To do that, Putin will need more than a brains trust. He'll need enough political and economic muscle to make bold changes. But, for now, the 2015 Club must wait, along with everyone else, to find out if Putin really wants to do more than parrot their words.
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