Death of a Dissident (20 page)

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 airport in the Balkans, where he would get on a chartered jet that would bring him to Sochi, in the Black Sea, where Prime Minister Chernomyrdin was vacationing. They planned to meet on Saturday, June 14.

Boris’s call woke me up in my Moscow apartment in the early morning hours on Thursday, June 12.

“A car will pick you up in fifteen minutes. I have to do an errand en route to Sochi. We are going to Grozny.”

A huge military aircraft stood on the tarmac of an airfield outside of Moscow, its motors warming up. It was the airborne headquarters of the Russian National Security Council.

“They would throw a fit if they knew that I brought an American here,” said Boris, sitting in the commander’s salon with Rybkin. “No one knows who you are except Ivan Petrovich [Rybkin] and Sergei, my bodyguard. So please keep a low profile. And once we start discussing state secrets, you will have to sit with Sergei.”

After takeoff, a guard took me to the back of the plane. It was quite something to see. In the communications section a dozen army officers with earphones monitored screens, apparently maintaining contact with the rest of Russia’s defense command. Next came a section with two dozen fearsome Spetsnaz paratroopers in full combat gear, with their Kalashnikovs resting in a stack in the corner. Finally I found myself in a tiny compartment with Sergei, whom I had seen at The Club.

“When we land, you stick to me, and ask me if you need anything,” he said. “Once these Chechens know who you are, you will be a prime target for kidnapping.” We landed. From the window I watched as our paratroopers took up positions in a circle around our aircraft. A van, followed by a Jeep full of armed Chechens, approached. Rybkin, Boris, two other NSC officials, Sergei, and I got into the van, six civilians in a sea of Chechen military. They drove us away, leaving our Spetsnaz escort behind.

“There is no point in taking them with us,” explained Sergei. “They are no match for the Chechens, and we do not want them to
come in direct contact with their fighters. The Chechen tradition of hospitality, whatever it is worth, is our best protection.”

We drove for about fifteen minutes through a countryside ravaged by war, passing bombed-out houses, charred skeletons of trees, and a burned Russian tank.

We arrived at a miraculously untouched building. A caravan of Jeeps and SUVs brought the Chechen delegation: President Maskhadov, dressed in military fatigues, Akhmed Zakayev in a civilian suit—I saw him then for the first time—and Udugov in a traditional Chechen fur hat. Sergei and I remained in the hallway in the company of half a dozen ferocious-looking guerrillas, all dressed in black, armed with automatic weapons of all kinds. We sat in complete silence, staring at each other.

An hour later the negotiations were over. “We are taking Maskhadov to Sochi to see Chernomyrdin,” Boris explained, as we drove back to the plane.

As I later learned, these meetings were among the early twists in the new Great Game for control of the flow of North Caspian oil.

An existing pipeline from the Azeri capital of Baku to the Russian Black Sea port of Novorossiysk ran through Chechen territory for ninety miles. The Chechens were insisting that they should be a full sovereign partner to an agreement to reopen the pipe, along with Russia and Azerbaijan. Hardliners in Moscow refused to give the Chechens equal status, complaining that it would be another humiliation for Russia: wasn’t control of the pipeline one of the reasons for fighting the war in the first place? But for Boris and Rybkin appearances made no difference; their primary concern was to open the pipeline in order to weaken an American-backed proposal for a new pipeline, from Baku to the Turkish Mediterranean port of Ceyhan, which would bypass Russia.

On June 13, I was virtually the only live audience member for a joint statement of Maskhadov and Chernomyrdin delivered to the ever-present ORT camera at a Russian government dacha in Sochi, which had once been Stalin’s summer retreat. Outside were terraced
gardens with magnificent cypresses and exotic flower beds. We were less than two hundred miles from Chechnya, but it was another world. Maskhadov and Chernomyrdin announced that they had removed all obstacles to reopening the pipeline, signed a banking agreement, and laid the groundwork for a customs agreement between Russia and Chechnya. The Moscow hawks were unhappy but, at least for now, outmaneuvered.

Soros arrived in the morning, sporting a new tan. He was awed, as I was, by Stalin’s famous Black Sea residence. He and Chernomyrdin met as old friends; Chernomyrdin jokingly recalled the anti-Communist sermon he gave Soros at their previous meeting. Now it was George’s turn to lecture. Over lunch, he extolled the virtues of open markets and corporate transparency and promised that his investment of $3 billion would change the attitude of others in the West who considered Russia an unsafe place for their money.

Boris beamed. The three of them shook hands on a deal. Then Boris and George took a walk along the beach to talk out the details, after which George took me aside.

“Are you being paid by Boris for arranging this?” he asked.

“Of course not,” I said. “I thought I was working for you.”

“Good. Are you still a Russian citizen by any chance?”

“No, I lost my citizenship when I left the USSR and I naturalized as a U.S. citizen ten years ago.”

“That is a problem,” said George. “You see, Boris and I agreed we would set up a vehicle for this, fifty-fifty, and that I should control it, but the law requires that more than half of the ownership be domestic. We need a Russian citizen whom I can trust.”

“I have a daughter by my first marriage, in Moscow, who is a Russian citizen, although she is thinking of moving to the United States.”

“That’s good enough,” said George. “Get a copy of her ID to my people as soon as we get to Moscow. We will give her a quarter percent.”

Suddenly, I felt a hint of the greed that drove the Borises and
Georges of this world. Just by being in the right place at the right time, I stood to gain millions.

Then it all unraveled. The plan to take over Gazprom did not last twenty-four hours after Soros’s arrival in Moscow. There he met with Boris Nemtsov, who explained to George that back in March, when he joined the government, it was decided that from now on everything had to be strictly by the book. He strongly advised George against the Gazprom deal, because it had been organized in the old ways of the robber barons. It would be a blow to the government’s new attempts at fair play.

George immediately changed his mind, reverting from investor to disinterested helper—or so it seemed. He agreed to lend $1 billion to the Russian budget—to keep it going until the arrival of Eurobond proceeds—and he dropped out of the Gazprom sweepstakes.

George was gloomy as we drove to The Club so he could deliver the news to Boris. He broke his silence only once: “You know, I envy you. You got yourself a ticket in the front row—with my money—and you get to enjoy the show. I cannot afford that. The moment I pop up, I become a player.”

In The Club he told Boris that the Gazprom deal was off. Boris could barely control himself. As soon as George left, he exploded: “How could he do it? We shook hands! Did he really believe those clowns? Doesn’t he know that Nemtsov’s sole role is to act as ‘Chubais with a human face’ for foreign consumption? I personally recruited him for that role back in March when we still were one team. I was honest with George—I brought him to Sochi so that he could see how the system works. Potanin just puts up smokescreens. George should know better!”

I did not know what to say. Of course I was upset, not least because my own chances of becoming a millionaire had just evaporated. Was George really so naïve? Or did he know something that we did not? George was my boss, but I was beginning to think Boris understood the Kremlin better than he did.

In fact, it turned out that George was still in the game. Boris Jordan,
the American-Russian investment banker, soon talked him into backing none other than Vladimir Potanin with a $1 billion pledge for a forthcoming auction of 25 percent of Svyazinvest, the telecom monopoly. In the contest, Soros and Potanin would be pitted against Vladimir Gusinsky, who was backed by a Spanish strategic partner, Telefonica de Espana. Privatization Minister Alfred Koch managed the auction.

On July 26 the winning bid was announced: Soros and Potanin had bought one-fourth of the company for $1.88 billion. It touched off a full-blown scandal. Gusinsky, who had bid $1.71 billion, cried foul. He claimed both that the auction was fixed and, in something of a contradiction, that Chubais had personally promised him that his bid would be uncontested under the Davos Pact rules. Berezovsky backed Gusinsky. Chubais retorted that everything had been honest, and that it was the start of a new era of squeaky-clean capitalism.

That was the end of the Davos Pact. For the three ensuing months the losers, using the full force of their media empires, attacked the winners with charges of cronyism. They painted a picture of a state in the pocket of Potanin, the fat-cat banker, who in turn relied on the patronage of the infamous Wall Street speculator, George Soros. The fight became a national issue, tearing the Yeltsin administration apart, paralyzing the government. Opinion polls indicated a steady decline in the credibility of “the young reformers.”