Death of a Dissident - Alex Goldfarb [21]
Berezovsky was referring to September 16, 1992, a.k.a. Black Wednesday, when Soros played against the British government on currency markets around the world, forced the British to devalue the pound, and made a billion dollars in a day. This earned him the sobriquet “the man who broke the Bank of England.”
Soros’s Black Wednesday fame made him a role model for the new breed of Russian capitalists, but George himself was of two minds about the goings-on in Russia. His principal interlocutor there was Anatoly Chubais, and he reacted to Chubais’s privatization explosion with a mixture of amazement and disapproval. On the one hand, he could not help but admire Chubais’s grandiose feats: in a little over three years, the youthful first deputy prime minister had essentially reversed the revolution of the Bolsheviks, who seventy years previously had shed rivers of blood expropriating private property. Chubais transferred much of that state property back into private hands, almost without bloodshed—that is, not counting the storming of the Supreme Soviet in 1993, or the several hundred victims of “business disputes” across the country.
Yet to Soros, Chubais wasn’t doing things quite the way he would. The arrogant, abrasive first deputy prime minister was not just an archenemy of the Communists. He was a radical free-marketeer who assumed the rule of law would somehow automatically follow in the wake of economic freedom. If the economy was opened up, social relations would work themselves out. Soros, on the other hand, was horrified at the ugly consequences of the no-holds-barred brand of capitalism. Their dispute broke into the open in January 1995, at the World Economic Forum in the Swiss ski resort of Davos, where Chubais announced to the world that privatization in Russia had bred a new class of property owners, people who would make up the backbone of the new free Russia.
Chubais came to Davos in place of Yeltsin, who was stuck in Moscow as a wartime president; the New Year’s Eve debacle in Grozny was too fresh. As the delegates gathered to listen to Chubais give his speech, the ferocious fighting in Chechnya continued.
Nonetheless, Chubais’s speech was triumphant. He had just completed the first stage of massive privatization, whereby vouchers given to each and every Russian citizen could be traded for equity in state-owned enterprises. Many vouchers, to be sure, were bought up by speculators and “red directors,” former Soviet factory heads, but even so, Chubais succeeded in making several million people stockholders.
Most observers had predicted runaway inflation and chaos, but the pessimists were discredited: inflation was held in check. The statistics of privatization spoke for themselves. Yeltsin remained in power, despite the intrigues of the Communists. “Our reform is irreversible!” Chubais proclaimed.
In response, Soros, a widely admired guru in Davos, called the new Russian capitalists “robber barons.”
“I was hoping to see an orderly transition to an open society, a market-oriented democratic system based on the rule of law,” he complained. “That attempt has basically failed. But you do have the emergence of a new system: robber capitalism.”
To be sure, he added, “it is raw and ugly, but a very vital, self-organizing system. It can succeed because there are now economic interests that know how to defend themselves.” But the problem is that “the system is creating a tremendous sense of social injustice and a decline in civilized values, the sense of frustration and disorientation that could lead to a political backlash and a xenophobic, nationalistic mood.”
Over the years, Soros and Chubais held several conversations, mostly during George’s frequent visits to Moscow related to his various philanthropic initiatives. I often joined them, but it was a dialogue of the deaf with the dumb. Chubais, the free-market worshipper, kept repeating that private property would eventually resolve all social and political problems; that democracy and freedom, social