Death of a Dissident - Alex Goldfarb [50]
We flew to Budapest on the morning of Saturday, June 7, in Boris’s Gulfstream jet, which was like a second home to him. I often wondered how he managed to handle his government responsibilities on top of his business deals without showing any signs of fatigue. In the days preceding the Budapest trip he had flown to the Hague, where he took part in a roundtable on Russia-Chechnya relations; to Kiev, to negotiate the division of the Soviet Black Sea fleet with Ukrainian President Leonid Kuchma; to Baku, to discuss the pipeline that would bring Caspian oil to the Russian Black Sea export terminals; and to Dagestan, to pick up the freed Russian journalists.
In the private sector, his investment fund had just signed a deal with General Motors to build Opel cars in northwestern Russia; a team of his managers at Aeroflot was preparing the Russian national airline for privatization; and he had just fought off an attempt by Vladimir Potanin, his fellow oligarch from the Davos Pact, to outbid him in the final auction for 51 percent of Sibneft, the oil company, which Boris held in trust since the days of the loans-for-shares scheme.
Potanin’s bid came as a total surprise to Boris. Although it was disqualified on a technicality, it pointed to trouble brewing in the coalition that brought Yeltsin to power one year before. Back in 1995, when Chubais carved up government assets in the loans-for-shares policy and distributed them among a small group of bankers, the agreement among all of them was that those deals could not be revised. In fact, the loans-for-shares policy was Potanin’s brainchild, and he was its biggest beneficiary: his Unexim Bank had grabbed Norilsk Nickel, the largest producer of nonferrous metals in Russia, and Sidanko, the oil company, which was even larger than Boris’s Sibneft.
“Potanin and Chubais are building a power base for Chubais’s presidential campaign in 2000,” said Boris as we flew to see Soros.
Potanin was the oligarch closest to Chubais. After the 1996 elections, he became first deputy prime minister for economics. His Unexim Bank received the most lucrative state contracts, including the accounts of the Federal Customs Service. In March 1997 Yeltsin reshuffled his administration, launching what has been dubbed the government of “young reformers.” Chubais took Potanin’s place as the economic supremo in the cabinet. To beef him up, a new face, not associated with the privatization scandals, was brought in: the thirty-six-year-old Boris Nemtsov. Chubais’s previous job as Kremlin chief of staff went to Valentin Yumashev, the journalist friend of Yeltsin’s daughter.
After the reshuffle, Potanin returned to his bank but his alliance with Chubais only grew stronger. Unexim people were placed in key economic positions, from the Federal Securities Commission to the Ministry of Finance to the Federal Bankruptcy Commission, among others. Now, as the battle for Gazprom took shape, Potanin and Chubais were pitted against Chernomyrdin and Berezovsky. If Boris could recruit George Soros to his side, it might end the contest in a single blow.
Gazprom was such a prize that George could not resist it. He and Boris shook hands on a partnership. Then George flew to start his planned vacation in the Adriatic. From his yacht he dictated a “Dear Boris” letter: he pledged to invest $1 billion immediately, which at the time would buy him about 3 percent of the company. He also reserved an option to buy $2 billion worth of Gazprom stock within two years, provided that Boris became the gas giant’s chairman. The letter also urged the Gazprom board to drop its restrictions on the sale of stock to non-Russian residents. This, Soros wrote, would boost Western confidence in the emerging Russian market as a whole, not to mention create a windfall for current domestic stockholders when stock prices soared.
I got on the telephone to organize a helicopter to airlift George from the Adriatic to the nearest