As Yeltsin revives, so does his nation

Chrétien will see changes on his visit this week

MALCOLM GRAY,M.G. October 20 1997

As Yeltsin revives, so does his nation

Chrétien will see changes on his visit this week

MALCOLM GRAY,M.G. October 20 1997

As Yeltsin revives, so does his nation



Chrétien will see changes on his visit this week


There are fewer potholes. The buildings have been repainted. And everywhere there are gleaming billboards—and many more cars. Those are likely to be some of Jean Chrétien’s snapshot impressions as his motorcade speeds from the airport into Moscow this weekend. Since the Prime Minister last visited Russia in 1995, there have been a few changes. For one thing, the capital looks glossier than it has for years, thanks to a civic facelift overseen by Yuri Luzhkov, its energetic and ambitious mayor. Less happily, Russia’s richest and most powerful city now suffers horrendous traffic jams; the number of vehicles has tripled to 2.2 million during the past six years. But more order is entering the chaotic business scene. “Some things are definitely better,” says Canadian lawyer François Cadieux, who has lived in Moscow for most of the post-communist era. “People say that the court system is weak, but I’ve noticed that the courts are starting to settle business disputes. I’ve had 17 cases against the government in the past three years and won every one.”

That will be welcome news for Chrétien. Along with discussing such issues as land mines and a controversial new religion law

with Russian President Boris Yeltsin, he hopes to boost business back home. Chrétien is not the only one. In recent weeks, Moscow has flirted with limo gridlock as the leaders of Egypt, Italy, France and Britain, as well as U.S. Vice-President AÍ Gore, all dropped in. Japan’s prime minister is up next after Chrétien. And Microsoft founder Bill Gates is merely the richest of the many businessmen arriving to sniff out investment opportunities. Canadian gold-mining entrepreneur Peter Munk is one of them. He was roaming the forests of southern Siberia this summer checking out goldfields near Lake Baikal—as was an old boar-hunting pal of Yeltsin’s, former prime minister Brian Mulroney, who sits on Munk’s board.

Those who meet the president find a man who has regained his strength and renewed his control of the country after undergoing heart surgery last fall. Yeltsin’s robust revival coincides with encouraging signs that Russia’s battered economy is about to start growing after six years of contraction and depression. Under tight money policies that have made the hyperinflation of the early 1990s a receding memory, consumer prices rose by only 14 per cent last year. And Yeltsin has made it clear he still backs his band of fortyish reform-

Battling over Russian souls

The onion-shaped domes of the Cathe dral of Christ the Savior, with 50 kg of gold donated by a Russian bank, tower over the Kremlin in central Moscow. The $540-million structure, built in only 15 months, is a near-copy of the czarist church that Soviet dictator Josef Stalin demolished in 1931. Its triumphant reappearance is a symbol of the Russian Orthodox Church’s drive to regain its place at the centre of society. But that drive has also embroiled the church in international controversy. Late last month, Russian President Boris Yeltsin signed a bill that imposed restrictions on so-called nontraditional religions— a definition that lumps together Roman Catholics, Mormons and other Protestant sects, and cults like the Hare Krishnas. Many of

those affected complain that the law gives the Orthodox Church a virtual monopoly on religion. Says William Mendenhall, 49, a Catholic priest from Vancouver who is teaching at a St. Petersburg seminary: “It places restrictions on freedom of worship, hampers dialogue between religions and effectively denies that Roman Catholics have been in Russia for over 400 years.”

Support for the law came from a curious alliance between Orthodox Church Patriarch Alexei II and the Communist-dominated parliament. Alexei, spiritual head of a church claiming 60 million members, lobbied vigorously for protection against the numerous sects and cults, foreign and homegrown alike, that have flourished in Russia since the collapse of communism. In a burst of neopatriotism, he argued that foreign religions were as great a threat to Russia as NATO’s eastward expansion. That fitted easily with the nationalist rhetoric of the Communists. Party leader Gennadi Zyuganov attacked Yeltsin for “siding with foreigners who have bought up Russians’ lands and now come to take their souls.” Hemmed in, Yeltsin lost even more manoeuvring space after the U.S. Congress raised Russian hackles by threatening to reduce aid if the bill became law.

ers who are bent on eliminating unaffordable state subsidies left over from the communist era. The good news for Canada is that bilateral trade jumped by 45 per cent last year. The not-so-good news is that there wasn’t much in the first place. The United States, Britain and Germany are Russia’s heavyweight trading partners, while Canada, with $800 million in total commerce, is stuck in 35th place—well

behind even the tiny island of Cyprus, a favorite haven for newly rich Russians.

With less than three years to go in his second and probably final term as president, Yeltsin, 66, is intent on cementing his role as the man who swept away communism and made Russia safe for capitalism. He has a designated successor of sorts in First Vice-President Boris Nemtsov, the 37-year-old former governor of the central Russian region of Nizhny Novgorod— formerly off-limits to foreigners because it is thick with Soviet defence plants. But after the collapse of communism the region, some 500 km east of Moscow, became known as Russia’s laboratory of reform due to Nemtsov’s eagerness to embrace freemarket measures.

Bushy-haired and open in style, Nemtsov has become the most popular politician in the country, as well as a political pin-up for Russian women. He describes himself as a kamikaze for agreeing to take on the job of axing the massive state housing and utility subsidies, which cost more than the defence budget. Yeltsin has given heavy hints that Nemtsov is his choice for heir apparent—provided that he manages to dump 1 the subsidies without triggering massive I discontent. Millions of Russians will find I life even harder after their housing and I heating bills rise dramatically. But Nemtsov came in with his eyes open, knowing that Yeltsin sheds no tears for protégés who fail.

Chrétien will get a chance to study N emtsov at close quarters during his five-day Russian visit, which also includes a trip to St. Petersburg. Nemtsov was scheduled to attend an Oct. 20 lunch hosted by Prime Minister Viktor Chernomyrdin, the heavybrowed aparatchik who is nominally in charge of the government. Also pencilled in is the other first vice-president, Anatoli Chubais, who is easily the least popular politician in Russia. Chubais gained that distinction by presiding over a rushed, chaotic and corrupt privatization that saw state enterprises sold off at bargain prices to a small group of well-connected insiders. Together, the two men form a goodcop, bad-cop team that is the real centre of power and the driving force for reform in Yeltsin’s government.

Since Yeltsin signed it, non-Orthodox sects have been waiting anxiously to see how the measure will affect them. Under the letter of the law, faiths that have not been registered with the state since 1982—a time when the Communist party discouraged religious pluralism—now face a probationary period of 15 years before they gain such rights as holding church services, publishing religious material or inviting missionaries to Russia. Effectively, they will be at the mercy of the officials interpreting the law. Few take comfort from Yeltsin’s late inclusion of Christianity in a preamble that recognizes Judaism, Islam and Buddhism as well as Russian Orthodoxy as traditional faiths. “Mentioning Christianity in the preamble is not going

to force any bureaucrat to do anything,” says Lawrence Uzell, a spokesman for the Keston Institute, a British organization that monitors religious freedom in Eastern Europe.

Authorities have verbally assured Roman Catholics, Mormons and other Protestants that the new restrictions are not aimed at them. Viktor Zorkaltsev, the Communist deputy who originally sponsored the bill, said that its primary aim was to protect Russians from falling under the influence of such cults as Aum Shinri Kyo (Supreme Truth), the secretive Japanese sect that released poison gas in the Tokyo subway system in 1995. In the meantime, the so-called foreign sects are hoping the country’s Constitutional Court will quash the law and allow them to continue proselytizing unimpeded. The Mormons take pride in having made more than 7,000 converts during the past seven years—although the figure pales beside the number of Orthodox believers. During a break from his seminary classes, Father Mendenhall had some advice for Russia’s biggest church. “After 70 years of communism, there are many people in Russia who are receptive to a religious message,” he said. “They should be concentrating on reaching them instead of fighting other churches.”

M.G. in Moscow

Chrétien will also have a brief meeting with Moscow mayor Luzhkov, another Yeltsin ally who would like to be president. At 61, Luzhkov is a teetotaller with energy to spare. Seizing on the 850th anniversary of Moscow’s founding as the somewhat unlikely occasion for a major civic bash, he has spent long hours micro-managing countless projects, from the rebuilding of the massive Christ the Savior Cathedral in the city centre to the refurbishing of neigh-

borhood parks and recreation centres. The balding, pearshaped mayor has also fought bitterly with Chubais to exempt Moscow’s 10 million residents from reformist programs. He argues that it is too early to remove housing and utility subsidies, saying that many of the city’s poor could not survive without state handouts.

Luzhkov’s populist sentiments and massive public works have made him wildly popular in the capital as an old-fashioned boss who can get things done. He has also forged ties with other local power barons across Russia to overcome the traditional provincial dislike of Moscow, which absorbs some 80 per cent of foreign investment. But while the anniversary facelift was widely seen as the beginning of Luzhkov’s campaign for the presidency, he has carefully avoided declaring his ambitions. He is well aware that Yeltsin reflexively tries to cut

down allies and courtiers who too openly lust after his job.

As usual, the president is keeping his options open. A month ago, Yeltsin spontaneously announced that he would hand over power in the year 2000, abiding by the constitutional limit of two four-year terms. Then, clearly concerned he would be seen as a lame-duck leader, he reversed course and said it was too early to speak of a third presidential term. “My colleagues and friends have forbidden me to talk about this,” he told reporters while visiting Nizhny Novgorod—as an attentive Nemtsov hung on his words. Yeltsin loyalists have added to the uncertainty by floating several dubious legal propositions. One is that the two-term limit took effect in 1993, when Yeltsin was halfway through a mandate he won under the laws of the Soviet Union. ‘Yeltsin is serving his first term un-

der the new constitution,” argues Alexander Shokhin, leader of the president’s supporters in parliament. “Until the Constitutional Court rules otherwise, his participation in the next election cannot be ruled out.” Even more far-fetched is a scheme to upgrade the loose union between Russia and neighboring Belarus and have Yeltsin run for the leadership of the revamped country. Last week, Yeltsin changed course again, telling reporters on a visit to France that he had no intention of running for a third term.

The bottom line is that Yeltsin has made yet another comeback as the dominant political figure in the country. But that may not be the only element that has returned. In a scheduled informal visit to Yeltsin’s dacha, or cottage, on the outskirts of Moscow, Chrétien will be able to gauge for himself a favorite topic of speculation on

the city’s overactive gossip circuits: how much vodka Boris is putting away these days. The answer appears to be that his quintuple-bypass operation a year ago put only a temporary crimp in his hard-drinking style. So far, the post-op, slimmed-down Yeltsin has managed to avoid the alcoholfuelled embarrassments he was prone to in the past, especially on foreign trips. But Ludmilla Nikolayeva, a well-known folk singer who performed at a dinner Yeltsin hosted for French President Jacques Chirac last month, told Maclean’s she could not help noticing Yeltsin’s drinking habits. “Chirac was sipping a glass of wine, but Yeltsin was constantly downing shots of vodka,” she said. “Every five minutes, or so it seemed, he kept getting up and going to the bathroom.”

In his formal sessions, Chrétien will press the case of Canadian firms trying to navigate in a still-murky business environment. Northern Telecom, a subsidiary of Bell Canada, has just won a $20-million contract to install data and communications systems for a local bank and is trying to land a $75-million deal with another major company. That is a Canadian success story in a field known for corruption and favoritism. This summer, the privatization of part of a state-owned telecommunications company touched off bitter accusations of a rigged auction by the losing side. Prosecutors are investigating whether Alfred Kokh, formerly minister in charge of privatization, took a $139,000 bribe in return for supplying Uneximbank, the successful bidder, with vital inside information.

Now, at least, there is a new privatization head: Maksim Boiko, a close ally of Chubais. Roland Nash, chief economist at Renaissance Capital investment bank, describes the appointment as “part of a transition towards a cleaner, fairer privatization.” According to Canadian lawyer Cadieux, such moves are part of Russia’s slow and uneven attempts to provide better protection for investors. Regulatory bodies, he notes, are bringing in measures to aid shareholders, including those with minority stakes. “It’s a business environment that’s changing for the better,” he says, ‘filióse with the patience to wait for those changes will be well-rewarded.”

Corruption is still a persistent problem. So are the gangsters involved in many key businesses. And Russians who live far from the bright lights of Moscow are still waiting to share the benefits of a market economy. But Yeltsin’s reaffirmed support for economic reform signals his intention to complete the difficult transition from communism to capitalism. As Chrétien and other Western leaders arrive to check out his progress, they may conclude that Russia is finally on the brink of becoming what Yeltsin has long claimed it is—a normal country. □