Central Asia/Russia


	June 22, 2002	atimes.com

Central Asia/Russia

DANCES WITH BEARS
The World Bank's Russian soap opera
By John Helmer

MOSCOW - The World Bank in Russia is a long-running soap opera full of starlets who demand astronomical fees for playing scenes charged with intimate advice and suspenseful mistakes that keep the plot alive, episode after episode.

When we last tuned in, a year ago in May, the Bank had just engaged Anders Aslund, the paid Romeo of Russian privatization, to analyze the effectiveness of World Bank programs in Russia. Julian Schweitzer, then the freshly appointed chief representative of the Bank in Moscow, conceded that Aslund was being paid anew to assess things in which he'd had a past, and possibly a current personal stake. "We don't necessarily take his advice," Schweitzer said, as he nodded in the direction of the US doctrine on conflict of interest.

What Schweitzer didn't reveal then, but fans of the World Bank drama are beginning to understand now, is that the World Bankers have divided into gangs with diametrically opposed passions toward Russia. By comparison, the Montagues and the Capulets in Shakespeare's version of Verona were genteel.

Of little or no significance himself, Aslund was hired by the gang that is convinced they have done nothing wrong in Russia, and aim to do more of the same for as long as the Russian government, or someone else, can be persuaded to pay for it. In the corridors of the World Bank's Washington headquarters, it is said the leader of this gang in Moscow at the moment isn't Schweitzer, but Timo Hokkanen, head of the World Bank affiliate International Finance Corp. Call this gang the Blues.

Fierce in condemnation of everything they stand for is the gang that is led by Joseph Stiglitz. Chief economist of the Bank and a Nobel Prize winner, Stiglitz was forced out of his post when his criticism of the wrongs inflicted on Russia and elsewhere by Bank policy became too hot to handle. Stiglitz is now at Columbia University in New York, where he has been assembling a new gang capable of sustaining the challenge to the Bank's programs. Stiglitz allies inside the Bank and its research institute have been hunted down and "exterminated". Call them the Reds.

In gang fighting it's always difficult to find neutral ground, but that's what Schweitzer has been trying to do. He is a member of the gang best called the Whites. Al Watkins, head of the Bank's new regional program in Krasnoyarsk, is probably a White by background, and a Pink by conviction. So, it seemed for a time, was the Bank president, James Wolfensohn - at least Pink was the color Wolfensohn went when he had his famous bathhouse session with Alexander Lebed.

Lebed, the late governor of Krasnoyarsk, had sought out Wolfensohn to ask for World Bank assistance in building small and medium-sized businesses. With political enemies gunning for him in the Kremlin, and in the headquarters of Norilsk Nickel and Russian Aluminium (Rusal) - the dominant corporations in Krasnoyarsk - Lebed was hoping to recruit countervailing business support, and define an economic future for Krasnoyarsk, independent of Vladimir Potanin and Oleg Deripaska, owners of Norilsk Nickel and Rusal.

With Lebed, Wolfensohn had what some World Bankers call the "bonding in the Banya". This has been turned into a program by Watkins, with funding from the stronghold the departed Stiglitz once controlled. Internal funding for the Krasnoyarsk program has been vital, because the Russian government in Moscow has been refusing to borrow World Bank funds to pay for such things.

Why, you should ask, would the political and corporate enemies of Lebed agree to letting the Russian federal treasury accept the obligation to finance a potentially serious economic alternative to their power in the region? Why would the gang who run the World Bank imagine that they should bite the hands that have fed them so royally for more than a decade?

The plot lines and gang motives were beginning to become clearer when Lebed made his ill-fated helicopter trip in April and was killed. In the election campaign to replace him, Norilsk Nickel has announced that its candidate will be its former chief executive, Alexander Khloponin, who is already governor of the Taimyr autonomous region on the border of Krasnoyarsk. Rusal has declared its interest, appointing its public relations chief Yevgeny Ivanov to be the vice governor ad interim and deputy to the acting governor Nikolai Ashlapov, also a former Rusal employee. They appear to be backing the head of the regional legislature, Alexander Uss, for Lebed's seat. In opposition, there may be a Kremlin candidate - maybe Sergei Shoigu, the emergency situations minister. In addition, there are the Communists, Pyotr Romanov and Sergei Glazyev; and the wild-card candidate Anatoly Bykov, the aluminum boss whom Deripaska evicted, and whom the federal government has been trying to keep in prison but who was released this week. He has been given a suspended sentence in connection with the murder of a former business associate.

When gangs as tough and numerous as these fight for turf, the passions of the World Bank's Blues, Reds and Whites are bound to pale. Wolfensohn and Schweitzer desperately want to lend several hundred million dollars to Russia this year. What is a self-respecting Bank to do in a place if all the countryfolk do is pay back their loans? If Moscow says no to fresh credits, there is a danger the Blues and Whites will find themselves unemployed, and the Reds will have their revenge.

A Wolfensohn-sized credit will require the approval of Prime Minister Mikhail Kasyanov and Finance Minister Alexei Kudrin. That duo enjoy playing at Romeo and Juliet for romantic foreign audiences, but hardly now when the wealth and votes of Krasnoyarsk are at stake. In the clinches, what will they whisper to Wolfensohn? Stay tuned for the next episode ...

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