Anatoly Chubais is the biggest factotum in Russia, and an oligarch of sorts, in part because he controls United Energy Systems (UES), the electricity utility on which the profit margins of several other oligarchs depends; and also because he was the government official who rigged the privatization schemes that created the oligarchs’ private wealth.
Because he is not the direct owner of UES, and governs it by an appointment of the majority shareholder, the federal government, he could in theory be dismissed with a stroke of President Vladimir Putin’s pen. His power is thus usually measured by the fact that he has surived so long. On the other hand, that power is usually qualified by the often reported public opinion that he is one of the most hated men in Russia.
Chubais’s survival in the Kremlin’s good-books is attributed by his friends to his resourcefulness as a manager. But when President Vladimir Putin began to focus this past summer on what should be done with Russia’s natural resource reserves, policymaking for the future of the country’s electricity – the generating plants, the transmission lines, the mechanism for regulating the market price of power – has begun unravelling many of Chubais’s schemes. His attempt to transfer unfinished power plants to oligarchs like aluminium producer, Oleg Deripaska, in return for little cash, and unsecured promises of capital expenditure, was aborted. Chubais’s bigger attempt to attract the oligarchs into buying up UES shares to use later in swaps for privatized regional generating companies has also been stymied, although not before the UES share price jumped more than 250% in the past year.
In a normal stock market, the share value of an electricity utility like UES is usually based on the depreciated replacement value of the generating assets it operates. But in the rigged Russian market, Chubais triggered a speculative run on the shares by proposing to allow buyers of UES now to swap them into controlling stakes of regional energy companies later, when UES is dismantled, and the regional sources of electricity will be offered for sale. Power-hungry aluminium and steel makers jumped at the opportunity to lock in control of their subsidized electricity costs for years to come. So did arbitrageurs looking for an opportunity to buy electricity assets on the cheap for profitable resale.
Then Putin began to intervene, in part to hold down electricity prices before the December parliamentary election; and in part to prevent another privatization ripoff. As the UES board struggled to secure Kremlin approval, the unbundling of UES into regional energos was postponed. The scheme for privatizing the energos was also reviewed, and under pressure, the state-controlled board of UES conceded that an open cash auction for energo shares might be preferable to Chubais’s share swap scheme. One of the steelmakers complained that it was unfair to change the rules in the middle of the game. That the game had been rigged from the start was the retort from Chubais’s critics.
At that point, Chubais announced he would be a candidate for election to the State Duma on December 7.
Normally in Russian politics, a man like Chubais would hesitate before running for a parliamentary seat, unless he were convinced that he would shortly need it for the immunity it provides to criminal prosecution. While the other oligarchs have tried to cash out, and place their cash beyond reach of the second Putin administration, Chubais hasn’t the same leverage. If he has hidden a fortune under a mountain of gold somewhere abroad, it’s peanuts to compare with the fortunes of those Chubais created for others.
The timing of Chubais’s political move suggested that he expected that he would be dismantled before UES, possibly after Putin’s reelection next March.
To announce, therefore, that he is not only running, but leading the small party called the Union of Right Forces is one thing; to follow almost immediately with the declaration that if elected, he won’t take his seat, is to forego the immunity, but call into doubt his real motive. Chubais’s candidacy is the first ever offered to Russian voters to pass judgement on his methods of privatization. It is also a vote on whether voters want electricity prices to be fixed by the oligarchs, or by the state. The outcome of both seems so obvious, it has to be wondered why Chubais would invite his fellow Russians to heap on top of the opprobrium his record has already earned, the nemesis that such a display of vanity should provoke. More than once Chubais has admitted getting away with the deceiving the International Monetary Fund; the last time, he said, was on the eve of the August 1998 financial crash. Even for voters with short-term memories, it isn’t likely Chubais will get away with persuading them to support him for his unrepentant insincerity and cynicism.
In the retiring Duma, the Union of Right Forces (SPS is the Russian acronym) holds 7% of the seats after winning 9% of the 1999 vote. Most polling organizations currently estimate that, compared to the eiection four years ago, voter sentiment has been cut in half, and that the party is struggling to make the 5% threshold for proportional representation of its party list. Chubais is ranked third on the SPS list, behind Irina Khakamada and Boris Nemtsov. If the latter duo were worried that their party organization was headed for oblivion, Chubais may have persuaded them that his candidacy was a necessary, if desperate measure.
Through its spokesman, Elena Dikun, the SPS isn’t so sure. Dikun says she doesn’t know what Chubais will be doing to campaign for the party in the next four weeks. To questions of what benefit the party thinks Chubais brings to its campaign, Dikun added that the only official comment the party will make about Chubais is that he holds the number-three slot on the ticket.
If SPS won’t say that Chubais will add votes to the ticket, Chubais isn’t so reticent. On a personal website, www.chubais.ru, he has posted the results of a poll among voters which asked whether voters would be more or less likely to vote for, or against, SPS if Chubais is on the ticket. According to the sample of 1,132, 54% responded that they would vote for SPS, whatever names led the party list. Almost 20% replied that they wouldn’t vote for SPS under any circumstances. That left 299 voters in the sample. According to Chubais, 4% said that they had been thinking of voting for SPS, but now that Chubais was running, they would not. Twenty-two percent said that Chubais’s candidacy had convinced them to vote for SPS. At best, then, the net benefit of Chubais’s candidacy to SPS may be a positive 18%.
For the Chubais boosters, this is evidence enough that negative sentiment for him in the Russian electorate is irrelevant. His campaign is needed, they say, to garner bonus votes that may tip SPS over the 5% electoral barrier. But none of the nationally recognized election pollsters believe this to be true. According to VTsIOM, SPS was polling 5.3% in August, before Chubais took his position on the party list; afterwards, it dropped to 3.6% in September. Analysts at the polling agency claim Chubais has changed almost nothing, and that SPS’s vote range remains bounded between 4% and 5%. ROMIR, another of the national pollsters, concurs. He puts the SPS vote between 5% and 6%, but is emphatic; “SPS has a very stable group of electors, and Chubais will not scare them off. But I’m not sure he will be able to add new voters.” The Public Opinion Foundation (FOM) has run voter intention surveys with Chubais’s name on the SPS list, and without.
The results show a vote range of 3% to 4%, without the addition of Chubais’s name making a difference. The Centre for Political Technologies confirms a similar finding. The SPS vote is currently running below 5%, and Chubais hasn’t lifted that, at least not yet.
There is one clue in the national polls to explain why some voters might vote for SPS because of Chubais. Most profiles of SPS voters indicate that they are predominantly female, young, and residents of Moscow or St.Petersburg. Many of them are so young, in fact, they don’t know what Chubais was doing in the mid-1990s. His record is irrelevant to these voters. They associate him with the wealth that is conspicuous where they live, and essential for their lifestyle. Call them courtesans with candles – they don’t care about high-priced electricity.
If SPS breasts the tape on election day with voters like these, then Chubais will have won a sideshow. The question of whether there is any place for him in Putin’s policy for the future of Russia’s natural resources will be decided elsewhere.