'Russia ceased to be a democratic country. And some prominent critics of the regime have been beaten or killed.’


October 30 2006

'Russia ceased to be a democratic country. And some prominent critics of the regime have been beaten or killed.’


October 30 2006

'Russia ceased to be a democratic country. And some prominent critics of the regime have been beaten or killed.’



Last December, five years after he was appointed chief economic adviser to Russian President Vladimir Putin, Andrei Illarionov resigned. He is openly critical of a country that has taken away basic human rights, shut down the media and, as he says, “ceased to be a democratic country. ”He was recently named a senior fellow at the Cato Institute’s Center for Global Liberty and Prosperity in Washington.

Q Vladimir Putin was somebody we in the West thought we could do business with, we thought he was an ally in the war on terror, we thought he was making genuine efforts to open up the Russian economy and democratizing the Russian political system. How badly have we misjudged him?

A: One of the rules that I’ve made is not to comment on personalities, certainly on the personality of my former boss.

Q: Let me ask that question again about Russia, then. We thought Russia was going to open itself up and democratize, open its economy and become a productive member of the G8 and an ally in the war on terror. That hasn’t happened, at least not to the extent many people expected. Why do you think that is?

A: I think we have to pose a clear distinction between Russia and Russian authorities, Russia and Russian government. So, in the case of Russia as a country, Russia one day, sooner or later, will be in the ranks of those who can be considered by the

United States and by other countries of the civilized world as a partner and as an ally. For current authorities, their position is quite different, and it seems to me that some countries [have] started to note this fact. But certainly there are some factors that contributed to the situation—internal, domestic—in Russia, but there were also some, from my point of view, mistakes on the Western side, and several very important opportunities to slow the transformation and slow the movement of Russia in this direction had been missed by G7 countries, over the last several years.

Q: I know you don’t like to talk about the personality of your former boss, but he does personify the present administration. How do you distinguish between his office and the administration as a whole? Is he not responsible for its direction?

A: Mr. Putin? Certainly, yes.

Q: The administration seems to have become much more authoritarian in its second term, less open. Am I correct?

A: You’re right in saying that the second term was quite different from the first term, but I would add that the starting point was certainly not in the beginning of the second term. From my point of view, some trends could be noted earlier, but the clear turning point had happened in 2003 during the assault on Mr. [Mikhail] Khodorkovsky and the company Yukos.

Q: From your point of view, as an economic adviser in the Russian government, what

was the mistake on Yukos?

A: It’s not a mistake, it is a clear assault on the company, on the best company in the country, and it was a deliberate assault to take assets from this private company and to give [them] to a group of people, private people. It’s not nationalization in the strict definition of the term, it is grabbing assets and giving [them] to other people.

Q: From the administration’s point of view, why did they do this? Was it simple corruption, or was it in response to perceived domestic political pressures?

A: There are several theories trying to explain what has happened and why it has happened. For me, it’s not which particular theory explaining this sounds better—what is important is that it has happened.

Q:And it’s continuing to happen. What have you seen in the last two years in Russia that gives you cause for concern?

A: It’s a long list. What is the most important is Russia ceased to be a democratic country, ceased to be a politically free country.

Q: But it’s still holding elections, and the current administration seems to be quite popular with the Russian people.

A: You know, during the former Soviet Union there were also regular elections, and at that time the governing party—Communist party—was also extremely popular among the illiterate.

Q: How are they maintaining their popularity, and how are they manipulating elections?

A: It’s a long list of different tricks. It’s better to talk to political analysts, they would provide you with a lot of explanations and details how it has been done, but for us it’s no doubt that the country’s not free anymore.

Q: You say that, and you say it’s no longer democratic. What evidence do you have forthat?

A: There is no free electoral process, there is no free access to the mass media, there is no free mass media, almost no free mass media in the country, there is no independent judiciary, there is no way to express different views. Political parties that are not in favour of the administration have been denied access to the electoral process, and so on and so on. And some of the prominent critics of the regime have been beaten, harassed, or even killed.

Q: Do you feel fortunate to have emerged unscathed from Putin’s Russia? You are one of the most prominent critics of the government.

A: I did not leave the country—I do spend some time in Russia.

Q: Do you feel that there’s a danger in you living there given that you’ve been an outspoken critic of the government?

A: In today’s Russia everything can be expected.

Q: What does Russia have to do, what should an administration do, in order to get its economy back on track? I think you’re about 69th place in the world right now in terms of GDP per capita, and there are not a lot of positive signs in the country economically.

A: I don’t think that the main problem in Russia is an economic problem. Certainly we do have some issues in economic policies that can and should be improved, but the main problem—as I said earlier—is that country is no longer politically free and there is no more democracy. That is much more important than anything else. The people are denied the basic human rights and basic political rights and basic civil rights.

Q: So the economy isn’t going to grow and isn’t going to improve until y ou address these fundamental changes?

A: No, the economy’s growing pretty fast by international standards—6.5 per cent over the last several years—but the greatest contribution to this growth is extraordinarily high energy prices, so it’s very hard to distinguish between contribution from energy prices and from economic policy. We try to distinguish between those two factors, and found energy prices have contributed to approximately 15 percentage points of GDP.

Q: How deep is the corruption in the Russian political system? Is it just around this administration or is it going to take a much greater effort in order to clean it up?

A: It’s hard to talk about corruption if the

government is using its resources to grab multi-billion-dollar assets from one company and giving [them] to other people. What is it? Is it corruption? And who should address this? It’s just not some particular person, it’s not some particular people, it’s the government itself. If the government has taken the decision to give some particular companies exclusive resources and exclusive access to natural resources, for example to oil fields or the gas fields or the pipelines, what is it?

Q: Has the rest of the world—for instance, the rest of the G8—done enough to make it clear to Russia that it’s not happy with these practices? Europe seems quite friendly toward Russia, it hasn’t been highly critical of moves like the move against Yukos, for instance.

A What we have seen in St.

Petersburg last July during the G8 summit, neither Europe nor any other corner of the world has raised a voice concerning human rights, political rights, civil freedoms in Russia, nobody has criticized the aggressive policy of Russian authorities toward their neighbours, nobody has raised the issue of blockades against Ukraine or Moldova or Georgia, nobody actually said anything about the IPO of Rosneft, just before the G8 summit, when many investors at the London Stock Exchange were buying seized assets from Yukos through this IPO. Nobody has taken any steps in this regard.

Q: Why not?

A: Ask them why. They have been informed long before, they have been warned many, many times by many, many people.

Q: All of the abuses and problems that you’ve noted have been written about in newspapers and talked about in every country at the G8, so why wouldn’t the leaders of these other countries be more vocal? It’s certainly in their interest to see Russia deal with its problems.

A: It’s better to ask them, not me.

Q: What kind of actions do you think would be most effective with this particular Russian administration?

A: Once again, I’m not advising anybody on the policy toward Russian authorities. Since I know them quite closely and since I was occupying a rather high position in that administration, I don’t think that it’s quite ethical to disclose that information.

Q: That’s a fair comment. Do you think there is any chance that a substantial opposition will emerge domestically in Russia?

A: Opposition in Russia does exist.

Q: What does it need in order to become more effective?

A: I’m not advising the opposition as well. I am not in politics, I’m not a politician.

Q: Is there any hope for more stability bet-

ween Russia and its neighbours, particidarly Georgia and the Ukraine, in the near future, orare things going to continue to deteriorate?

A: Russia announced a blockade against Georgia on Monday, Oct. 2—a full blockade, all contacts, not only with electricity, not only with gas, but with all trade flows—and it’s actually stopped transportation, and even planes do not fly between Moscow and Tbilisi anymore, and Russia has already started an ethnic cleansing campaign against Georgians in Russia. Second, if you are talking about any connection between energy prices and stability, domestic and international, I would say that higher energy prices contribute greatly to instability, both domestic as well as international.

fIt was a clear assault on the company Yukos, a deliberate assault to take assets’

Q: You won’t talk about Mr. Putin. Would we not be seeing a different character of government were Putin not in charge?

A: Each person has personal individual features, so that is why there’s no doubt that Mr. Bush, Jr., is different from Mr. Clinton and even from Mr. Bush, Sr., so certainly it would be slightly different. In the case of not very well-established countries, in new countries like Russia, certainly personal character could have a much stronger impact on the evolution of the state, no doubt. M