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jonas bernstein


He is a senior analyst for the Jamestown Foundation and writes from Moscow on Russian domestic affairs. He was a writer with Voice of America and has worked as a business columnist with The Moscow Times, and as Moscow representative and program officer for Freedom House.
Take me back to 1991. What was in the air? What was the atmosphere like? What did the then still-Soviet people want?

My experience in that period, in early '92, and I was here, again, for a longer period, was that it was based mostly in Moscow, but you did have a sense that there was a great openness and warmth toward the West and toward the United States. That was obviously a reaction to what had been going on in the seven previous decades. This was seen as the antithesis of the Soviet system. People had spent a lot of time listening to Voice of America and Radio Liberty and these sorts of things, and there was, at least among a sector of the population--perhaps [you] might call it the intelligentsia--a hope that Western values, democracy, a market system, could take root here. And the general atmosphere was a very pro-Western sort of attitude on the part of the people, at least here, in Moscow, and particularly among young people. . . .

You've written that the hopeful beginnings of the civil society that began [to emerge] in 1990, by the end of '91, beginning of 1992, didn't last very long, largely because of the economic policies that were almost immediately adopted.

Yeah. My sense of this is that the economic policies that were adopted here, and that were encouraged by, for instance, the U.S. government and other Western governments--the international financial institutions--these policies, in and of themselves, were not bad. To create a market system, and to be a part of the creation of a democratic, open society-- privatization, even--none of these things were bad in and of themselves. It was simply the way that it was actually executed here. In fact, it became apparent, at least to me, fairly early on--and, you know, this is by simply following the Russian principle, that many Russians were reporting, that what was supposed to be going on, which was an empowerment of the average person, bringing him into a market system, making him a stakeholder, et cetera--was not going on at all, but [that] there was really kind of a large-scale heist going on of the former Soviet economy. And a lot of people were talking about that, fairly early on in the process here, but there was sort of cognitive dissonance about it in the West--that was my feeling--for a long time.

Before we get to privatization, I also wanted you to address the effect that rampant inflation had.

Yeah. That was a very disturbing thing. There are lots of technical reasons for a lot [that] went on. It's not worth going into all them, but there was the lifting of price controls at the beginning of 1992, which sparked a massive inflation. The government at the time, which was led by Yegor Gaidar, didn't hide the fact that [there would be inflation] but said prices would go up six times or ten times, and they ended up going up 15, a 100 times, eventually.

That of course led to a massive impoverishment of the average person who had saved during the Soviet period. Now, you can argue, of course, that savings were based on an entirely sort of nonexistent, nonreal economy under the Soviet system, but the fact is that this was their stakes, or a life of work. And you had these people being impoverished, while, simultaneously, you had a group of new Russian businessmen who rode the inflationary curve and became very rich as a result of this. I remember, in 1993, one guy who was, actually, like many of the new businessmen, a former scientist, very smart, savvy, English-speaking, telling me--and he was not, I don't think, necessarily, a morally bad guy, like some of the other oligarchs--but he basically said, "Look, inflation is actually serving a useful purpose; it's taking the money away from people who don't know what to do with it and putting it in the hands of people who do know what to do with it." And of course he was, at this time, as far as I could gather, brokering all these very shady oil deals, and deals for exporting other natural resources and currency manipulations and he was doing very well at it.

But I remember, at the time, having a bit of a pause about this. I didn't think that this kind of process would end up in a stable or democratic society. There was sort of a low-level feeling of anxiety in the early days, which became more pronounced as time went on.

Discuss voucher privatization and the U.S. role in that.

Voucher privatization was basically sort of a compromise that the government and the then-parliament came up with, and it was ostensibly a way to get the average person involved in the process and give them a stake in it. So each received a privatization voucher. This is similar to what they did in Czechoslovakia, in the Czech Republic, worth 10,000 rubles, face value, which was their stake in the privatized, or privatizing Soviet economy, and it's now become almost a legend. Anatoly Chubais, then the privatization czar, who was running the privatization process, promised that these will be worth two Volga cars. Well, in fact once inflation got through with them, they were worth a couple of packs of Marlboros, essentially.

Russia's become something very much resembling a Third World quasi-authoritarian corrupt regime, sort of a regime that resembles Latin American regimes of old. I remember seeing people selling [the vouchers] for 4,000 rubles, everywhere, in the pedestrian crossings, in the subway stations. There was really very little sense that this was their stake in the economy. But some people managed to do very well, and there is a sense, of course, that insiders were able to scoop up a lot of the vouchers and then to take them to the voucher privatization auctions, where they won real stakes and real enterprises.

Of course, this whole process was pushed very heavily by the U.S. Government. USAID ran--actually financed advertising campaigns on television-- saying, "Your voucher, your choice," that actually was manipulated during the 1993 elections to become sort of a plug for the party led by Yegor Gaidar and Anatoly Chubais. That was the sign that there was already a lot of this sort of "dirty pool" going on. That was one of the early scandals involving USAID-financed projects. But, again, there was an overall sort of reluctance to look at these sorts of things, head-on, and a lot of it was simply explained away, I think.

You mean an overall reluctance on the part of the U.S.?

Yeah. The sense was that it was always, "This is a transition period, things go wrong there--there's a hiccup on the road, a bump on the road, the transitional road." And this sort of became the mantra to explain away what I increasingly was seeing as a systemic, endemic problem--sort of a worm at the heart of this transition process.

And what was that worm?

Well, the worm was that the corruption was so ubiquitous that it simply undermined any attempts to really create a genuine market system with popular participation in it, that benefited the average person that helped develop small business. And that is simply because most of the process [of creating a market system] was run out of the Russian executive branch, controlled by the Kremlin or the various ministries, with absolutely no oversight whatsoever. And the oversight function--the only oversight function that was really going on--was from the media, to a degree, and that was ignored. And it was also ignored by the Western governments and financial institutions which were supporting this process, which, at minimum, I think, somewhere along the line, at many points along the line, should have been publicly saying, "Wait a minute, this is not what we had in mind." But there was really a deafening silence during voucher privatization and during even worse periods, later on in privatization, where there were some much more egregious examples of corruption.

What did we think we were doing in the role of selling a program to the Russian public?

It's hard for me to say. I think that some of the people involved in that project were probably just simply naive and they thought because Jeffrey Sachs or some other eminent economist had pushed this program, and it had apparently worked in the Czech Republic (although there's some debate about that, too) that, therefore, it was the right thing to do. And I think, at a higher level, probably everything [else] was subsumed to support the Yeltsin administration as being the only alternative to support in Russia. I think that was sort of the essence of the Clinton administration foreign policy vis-a-vis Russia at the time and, therefore, if you had that view, then you were simply going to ignore all the negative data and accentuate only the positive. I think that's what happened throughout.

I want you to address the fact that, among things that were not talked about during voucher privatization, is that this didn't, in fact, include all of Russia's richest resources and biggest companies.

That's right. A number of the most valuable assets of the Soviet era economy--the so-called natural monopolies: the oil companies, metals companies, metals works--were not included in voucher privatization. They would later be basically handed out in a process called Loans For Shares, a few years later. But, ex post facto, looking back on it, it seemed that the voucher process was something more for show, and something to be able to say that you let the average guy in on the process. But the real goodies were saved for later on.

I'm going to have to say, early on in the process--and this didn't even include voucher privatization--one of the true, real benefits, and one of the only real benefits that people got, I think, from the fall of the Soviet Union and the transition to the new period, was they were allowed to privatize their apartments. And that's good. It's not that much of an accomplishment, you know, 10 years later. You would hope that the process would have gone further than that. That was one tangible achievement. But the voucher process was very questionable, and then, of course, when they really divided up the goodies later on, it was scandalous.

The Loans For Shares process, which began in late 1995--the actual sell-offs and auctions occurred in late 1995--was meant to be a process whereby the state allowed certain banks, or whatever, to take over large chunks of these oil companies and metal companies, sort of as in [a] trust, while they loaned money for the government. That was where the name Loans For Shares came from. And, later on, the government was either supposed to pay back the loan, or the shares in the companies would revert to these banks. They didn't even have competitive auctions initially slated, and even some of the people involved said, "This is outrageous." So then they promised it was going to be open auctions--open to foreigners as well--but that it would be a generally competitive process.

But, one by one, various enterprises were struck off the list for privatization. Then others were closed to foreign investors. And then came the actual auctions and sell-offs. These occurred in the last few months of 1995, and were clearly, to anybody watching--even to the most cautious observer who was not ready to jump to conclusions--clearly fixed. And it became fairly clear, right after the first few, that the winner was known in advance, that there had been collusion between the authorities and the winners about who was going to win. It was a few of the insider banks, the biggest Russian banks who had close connections with the Kremlin. And it even came out later that much of the money which they bid--this was at least what the audit chamber, which is one of Russia's sole sort of oversight institutions, [claimed]--that much of the money that was bid by these banks had been deposited by the Finance Ministry before the auctions.

So they were in fact bidding for these stakes in these companies with government money. And of course the fiction that it was actually Loans For Shares was a joke because the ownership of these factories and companies eventually reverted to these banks, and it empowered a very small group of what are known here, now, as oligarchs, who are these bankers....

When this process is complete, what is the effect?

The effect, first of all, was to simply consolidate the financial, economic power of a very small group of insiders, who are these Kremlin-connected bankers and financiers. By the way, I will add, there had been an earlier "gravy train." A lot of these banks were called authorized banks because they had been authorized by the Russian government to hold budget money because, in the early days, the Russian government didn't have a federal Treasury. So they simply named a few of these banks to become sort of the de facto Treasury. And during the inflationary period, they used this money, and they would take it and play financial speculative games with it--earn a lot of money. Some argue that they even stole quite a bit of it too. And that gave them the first sort of level of empowerment. Then you had the Loans For Shares process which gave them actual stakeholdings in the industrial infrastructure of the country. And then the next step, basically, was for them to really become politically empowered, and that happened in 1996, where they banded together and bought Yeltsin's reelection.

Was there a connection between Loans For Shares--giving a bunch a money to these oligarchs--and the '96 election?

There seems to be a connection both in terms of chronology and time, and just in terms of a logical connection. You had these oligarchs getting these huge pieces of major industrial enterprises, and then, within about six to eight months, you had the presidential race.

During that period, during the run-up to the presidential race in June '96, Yeltsin was campaigning against his main opponent. Gennady Zyuganov, the head of the Communist Party, and there was a sense--and there's some, I think, tangible evidence of this--that the spending was beyond belief. There were massive promises to the workers. Suddenly, wages and pensions, which hadn't been paid for months and months, get paid off, and there's massive advertising on TV and on radio, and there's non-paid advertising, there's just hagiographic news coverage. But all this costs money. The sense is that I do you a favor, you do me a favor. That's the way things get done in Russia.

So there was a sense that the oligarchs got their stakes, and then they gave back by financing the Yeltsin campaign. Some of the estimates are that the money spent by the Yeltsin campaign was a $100 to $300 million, when the official spending limits were $3 million. It was clear, during the campaign, that the executive branch and the Kremlin had just had a preponderance of advantages over anybody, and, in that sense, it wasn't really a fair, democratic election.

. . . [Yeltsin] may have won anyway. Zyuganov was not a very attractive candidate. The Communist Party, the Russian Federation, has a certain stable support, but it's down there around 30 percent. He might have won anyway. But that sort of begs the question. The fact is that still the conditions were completely unequal. Yeltsin had a preponderance of advantages based on his being the chief executive and having the support of the tycoons. Of course, there was a sense that [the tycoons] wanted to ensure that the status quo would remain, that the Communists wouldn't come to power because they might start revisiting privatization and questioning whether it was done legally, and therefore undoing some of those privatizations. They didn't want that to happen. The oligarchs didn't want that to happen. So that was clearly the basis of their support [for Yeltsin] . . . .

Now we've skipped over, or left out, any discussion about the U.S. and U.S. policy during this time.

Yeah. The one thing that has always struck me, particularly, as a person who covered the Loans For Shares scheme as a journalist, number one, and number two, as a person who believed basically that privatization is a good thing--depending upon how it's done--was, during the months that these auctions were going on, the deafening silence from the U.S. government, from the international lending institutions like the World Bank and the International Monetary Fund, from other Western governments, basically from Western officialdom.

It was clear to anybody watching this process--it was being openly said in the Russian press, and to a degree in the Western press too--I was saying it, pretty much--that it was a rigged, fixed process. And you would have thought that, at some point, someone would have said, "Hey, guys, look--this is not what we had in mind. This is not a step towards creating an open, democratic, and genuinely competitive market economy. This is a real heist." But there wasn't. Nothing was said, on the record, that I recall. I think some U.S. government officials have subsequently claimed that they raised questions about it but I recall none, publicly.

And this heist is involving at least some of the people that we continue to call the reformers.

Absolutely. I mean, at the time of the Loans For Shares process, Anatoly Chubais, who had been the privatization czar during the early voucher privatization process, was now Deputy Prime Minister in charge of the economy. I watched his reaction to this very closely, and he justified it throughout. And not only did he justify it throughout, but it was simply clear from reports in the Russian press, that he had been one of the people who had pushed the idea of the process. Now, granted, he had said prior to the auctions that we're going to make sure that they're open and they're fair. But when they were patently not so, not only did he not say anything about it, but he accused some of the banks--some of the banks who lost out in the process were complaining that it was a farce--of being shills for hidden Western investors. . . . He subsequently actually admitted, "Look, my choice at that time was either to go toward instituting bandit capitalism, or robber baron capitalism, or communism, and I picked the former." It's not an exact quote but it was something along those lines. So he made his choice. He was the man with whom the American government was doing business in terms of Russian economic reform, and nobody in Washington said boo about this.

How did US policy get so tied up with what others have called just one clan? How is it that we got hooked up with this one small group and they were the reformers, and no one and nothing else was?

It's a complicated question. I think that it works on various levels. On one level this clan--you can call it the Chubais clan--but the people who were led by him, and who surrounded him, I think cultivated this. In other words, a number of them were and are intelligent people--English-speaking, Western. They cultivated a Western outlook at any rate. That's what they liked to present to the West, and I think they saw their empowerment in cultivating Western officialdom, including in Washington. So they appealed to these people by speaking their language. That's on one level. On a second level, I think that it's just a case of being unable to retreat from a bad policy. In other words, once you're in, once you've staked on these people, it becomes very hard to admit that you might have made a mistake, and then, politically, and institutionally, your entire policy becomes dependent upon this particular group of people . . . .

So I think it's that combination. I think the first one is very important. I think that the Chubais clan, other members of the Yeltsin government, who were identified as "younger reformers," worked very hard to cultivate Western government officials, Western media. And I think the media element was very important because the mainstream Western media didn't so much have the policy stake, but they did develop sort of an intellectual stake in these guys. And I watched for a few years, and I was kind of appalled, by the way a lot of the mainstream Western media simply would not hear a bad word about these guys. It became sort of an article of faith.

When you say that [the Yeltsin government] knew--they cultivated the U.S. government--I assume that they knew how to "play us" as well?

Yeah, I think that's what it was. They knew how to say the right things. They talked the talk. Frankly, if you look at, for instance, many of Anatoly Chubais's declarative statements, over the years, I wouldn't object to many of them. He said many times that he's for the development of small business and he even, later on, talked about rule of law, and those sorts of things. It's just that in Russia the gap between rhetoric and practice is gigantic. It's true everywhere, but it's particularly gigantic here. They knew the right things to say to the right people in the West, and it really built up an incredible amount of support and loyalty to them. Even, I think, far beyond the time when there should have been eyebrows raised about these guys.

And [the Yeltsin government] knew how to raise the right bogeymen too.

That's right. I'd be the last person in the world to say that I hoped someone like Zyuganov came to power. But I, very early on, got the distinct feeling that the Russian Communist Party was such a party of losers, that they really never had a chance of coming to power, but that they served a very, very convenient role for the Kremlin of being the bogeyman. In other words, every time the Western politicians and officials might start to ask questions about what's going on in Moscow with privatization and hints of corruption and all this kind of stuff, they would raise Zyuganov and say, "You want this guy in the Kremlin? You want this guy's finger on the button?" That became a very, very useful way of maintaining American support, and they played us like a violin in that respect.

How much did this have to do with the reluctance to admit that the policy might be having problems, if not failing?

Russia was the centerpiece for the Clinton administration's foreign policy. You had the Gore-Chernomyrdin Commission, which was set up between Vice President Al Gore and then-Prime Minister Viktor Chernomyrdin, which was to basically organize the trade links and business links and political links between the two countries....

Did we, in the end, call, continue to call Yeltsin, and cheerlead for Yeltsin as a democrat and a reformer far after [we had reason to think he wasn't]?

Absolutely. The first questions probably should have been raised in the October 1993 parliamentary uprising which Yeltsin crushed with force. That was a murky affair in the sense that the people who led the rebellion were unattractive, to put it mildly. But, at the same time, the ruthlessness with which it was put down should have been a signal to Washington, to other Western governments, that there was more than an authoritarian streak in Boris Yeltsin and in his administration. But we had already staked on Yeltsin, and several months after that rebellion was crushed, we basically signed off on the new December 1993 constitution which enshrined near-authoritarian powers in the Russian presidency. In that sense, we were saying, at that point, [that] our policy towards Russia is Boris Yeltsin. He is the embodiment of our policy in Russia. We were picking individuals.

What was our policy? Was it honestly to promote, to try to help this country become a democracy?

. . . I think there was a sense--it was sort of a combination of arrogance and naivete--that we could just plug in our model of a market democracy. Sort of like a tape player, you just plug it and turn it on, and it works, and everything is fine. And we also thought that there was just no way that the Russians themselves wouldn't like it. Of course it didn't turn out the way it should have turned out, if we were genuinely concerned about developing a real democratic state. . . . The result was, probably on some levels, the American government became cynical. But, I think a lot of it was just really based on this combination of arrogance and naivete that it would be that easy to do, and it didn't turn out that way.

So we're cheering and, basically, by the end of '96 the oligarchs have cemented their power over much of the government.

That's right. I think by '96, it was fairly well cemented. The oligarchs are always fighting with each other. They continued to fight with each other through '97, and they're still doing it right now. But that's the kind of system [that it is]. It's a system of competing oligarchical groups. But that kind of plurality is not the same thing as a democratic pluralistic system. I think that once the '96 election was finished, it was pretty much clear the direction Russia was headed. There were no more questions anymore.

What about the Clinton administration defense that they had no choice? Boris Yeltsin was the democratically elected leader of this country, and of course they had to deal with Boris Yeltsin. That's what governments do.

That can sort of become the fallback position for defending any policy. I don't rule out the possibility that the way things turned out might have been inevitable, but I don't really know that, and whatever leverage we had, I think there was more than ample room to try to use it. For instance, there is still talk that the 1993 referendum, in December 1993, which was held simultaneously with parliamentary elections, and which approved the constitution, which Russia now operates under, was rigged. That constitution basically gives Yeltsin nearly dictatorial powers, or, certainly, authoritarian powers, and there were a lot of good democrats back then who were questioning whether this is the right thing to do. They said, "Even if you like Yeltsin, what if somebody else gets in?"

So we could have said something back then. We could have said, even in a diplomatic way, that we would approve something less where there was more respect for the separation of powers. So, no, I think that's a copout. I think that there was room for skillfully trying to push the Russian government, as long as the Russian government was a recipient of aid, the basis of which was that it was moving toward a democratic form of government. There was room to try to push them more in that direction. And it was never ever tried as far as I could see.

What has Russia become in these ten years?

It's a peculiar thing. I think there's several ways of looking at it. On one level, it's become something very much resembling a Third World quasi-authoritarian corrupt regime, sort of a regime that resembles Latin American regimes of old. Number two, it's a highly criminalized system. In other words, the power of organized crime--which sort of merges into the regional bosses, and governments, and local governments--this mish-mash of the security services and organized crime is a salient feature of the new system.

On the other hand, I think that people underestimate the degree to which there's great continuity between this system and the old system. One thing that's often overlooked is that the Yeltsin Kremlin basically nationalized billions of dollars worth of property owned by the Soviet Communist Party. It held on to it. It made the Kremlin administration one of the biggest property holders in the country--billions of dollars worth of property--and uses this property to provide the 12,500 top officials of the Russian state with basics like apartments and transportation and rest homes, and vacation resorts. This is exactly the way the Soviet Communist Party nomenklatura operated. Just that aspect of it always astounded me. Why doesn't anybody bring this up? Shouldn't this [have] been a subject of demarche by Washington or Western governments? But it was overlooked.

What about ordinary people?

I think that for a lot of ordinary people, the situation either hasn't changed or it's gotten worse. I think there are pockets where it's probably gotten better. At least before the 1998 crash, [they] shuttle-traded because the borders were open, people could travel abroad, buy cheap textiles in Turkey or in the United Arab Emirates, order goods there, bring 'em back, sell it. So there was a lot of moonlighting going on. There was a huge underground economy and so a lot of people had more than they would appear to have on the surface. Of course a lot of people were decimated by what happened, by inflation, first of all, in the early '90s, and then the crash in August 1998 reduced people's standards of living by 30 percent or more in one fell swoop.

However you do the math, at the end, I think it's a really sort of pathetic and sad result, that even if it's slightly improved over the Soviet Union, that it only came this far in ten years. And I would add that in certain ways it's already moving backward. In other words, I would say that the area of press freedom is worse than it was during the late Gorbachev period now, and the trend line appears to be moving in an even worse direction. So it's a mixed picture, at best.

How much of the failures can be blamed on misguided U.S. policy?

Again, I don't know. It's a hard thing, in the end, to say whether it would have been different, depending upon the role the U.S. government had played, and the kind of advice that it gave. I think I've gotten, sadly, in a sense, sort of a renewed appreciation for the huge role that sort of historical legacy and historical baggage plays in development.

In other words, Russia has had an authoritarian system of governance for centuries. It had the experience with Soviet style communism for seven decades prior to this. It makes it very difficult for the kinds of things one would hope to see happen. But, again, I think that is sort of an irrelevant question. If we were going to pursue a policy where we were going to be that intimately involved in the internal politics and economics of the country, we should have insisted that what we hoped to happen happened. And if it didn't happen, we should have publicly spoken out against it.

Now we're in the year 2000. A couple of months ago Yeltsin resigned and anointed a successor. Why does Putin seem to appeal to so many people at this point in time?

I think Putin's appeal is less a function of his personal qualities than the situation which he inherited. It's partially a function of his personal qualities, the main quality being that he is a career KGB officer, a member of the state security apparatus. That's a plus in the current environment, and the reason is because of the events of the fall of 1999. When the second conflict in Chechnya started, [it] really changed the direction [of popular opinion]. It was sort of a watershed in the direction of Russian public consciousness, if you like. A lot of things which had been brewing around became crystallized then. A desire for a firm hand, rallying around an external enemy. And this was skillfully played up by the people who put Putin in power. Therefore, he's become sort of the rallying point for this new, more nationalistic, and I would say more authoritarian, direction of society.

But that seems to be, at least at this point, being welcomed by a majority, or close to a majority.

I think it's welcomed by a majority. Unfortunately, again, much of it is because what the average Russian person saw in terms of "democracy." What they were told was Western style or American style democracy and the market system, didn't do anything for them. Therefore, there's an obvious rejection of that on the part of a lot of Russians. Secondly, the events of last fall, which led up to the second Chechen war, I think galvanized a lot of the public--those were the apartment building bombings--and that served as a sort of watershed to crystallize this more nationalistic, somewhat more anti-Western and more authoritarian direction.

Who are the people who put Putin in power?

One has the sense, and one gets the sense of this from Russian reporting and the media, that he was the choice of at least parts of the political and business elite, the oligarchs, members of the Kremlin inner circle, the inner circle of his predecessor, Boris Yeltsin, which became known last year as The Family. That these guys finally sort of landed on him as the guy who could be the person to guarantee what one of them . . . refers to as "the continuity of power." . . . They were looking for a figure who could guarantee [continuity of power]. I don't think all of them necessarily agreed on [Putin] as the figure. There was a lot of fighting over that, but he became the default choice.

Once again, they are looking to preserve the status quo.

I think that's absolutely the case. There's a lot of arguments that Putin [will not preserve the status quo] because of a lot of things he's declared in the run-up to the election on March 26th--that he may change the rules of the game, he's going to make it one set of rules for everybody, the oligarchs are not going to have any special favors anymore--but I've heard this tune a million times, and it doesn't strike me as particularly realistic. Individual oligarchs may get thrown by the wayside for sort of a popular gesture, for reasons of internal political maneuvering, but my sense is that the system will not fundamentally change, and that Putin represents an attempt to preserve the status quo . . . .

I have no information about this whatsoever, per se, but it strikes me as almost an obviously logical necessity, that when they were looking for someone to serve as Boris Yeltsin's successor, they had to find someone who somehow had a weakness, or was somehow dependent upon them. So my question is what do they have on him? Because I simply cannot believe that the very, very, very smart power brokers who have been climbing to power over the last 10 years, would have [put] Russia's very powerful chief executive position in the hands of someone that they didn't have something on. Because for them, power's too important to hand it over to just anybody....

During the last two-plus months, essentially since New Year's Eve, I've gotten the clear sense from almost every Russian that I've talked to, that something has come to an end, not just Yeltsin's era, not just Yeltsin himself, but something larger.

Yeah, I think I [agree], to some degree. In other words, that same feeling that I detected in the early '90s, which was this sort of openness to the West--Russia has, through its history, had these swings from Westernizers to Slavophiles, and from pro-Western to anti-Western sentiment, and in a number of cases the door, at some point, was shut on the West. I'm not sure it's shut completely, but it's certainly moving much more in that direction than it has at any time in the last 10 years. I have the distinct feeling that the last vestiges of sort of looking to the West as a model, or looking to the United States as a model, are pretty much over except in a small, maybe 10 percent segment of the population, among the intelligentsia. But otherwise, I think that those days are pretty much over.

And what you've written as the moral authority that the U.S. built up over the cold war has been squandered.

I think it's been pretty much squandered, unfortunately, and I think it's, again, because of the feeling that we invested all our trust, faith, and money in a corrupt system, and that was obviously bound not to win us the gratitude of a majority of the Russian people, unfortunately.

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