The World Bank in Russia is a long-running soap opera full of starlets demanding astronomical fees for playing scenes charged with intimate advice and suspenseful mistakes that keep the plot alive, episode after episode.
When we last tuned in, a year ago in May, the Bank had just engaged Anders Aslund, the paid Romeo of Russian privatization, to analyze the effectiveness of the World Bank’s program in Russia. Julian Schweitzer, then freshly appointed chief representative of the bank in Moscow, conceded that Aslund was being paid anew to assess things in which he’d had a past, and possibly a current, personal stake. “We don’t necessarily take his advice,” Schweitzer said, as he nodded in the direction of the American doctrine on conflict of interest.
What Schweitzer didn’t reveal then – and what fans of the World Bank drama are beginning to understand now – is that the World Bankers have divided into gangs with diametrically opposed passions toward Russia. By comparison, the Montagues and the Capulets in Shakespeare’s version of Verona were genteel.
Of little to no significance himself, Aslund was hired by the gang that is convinced it has done nothing wrong in Russia, and aims to do more of the same for as long as the Russian government, or someone else, can be persuaded to pay for it.
The gang’s fierce opposition is led by Joseph Stiglitz. Former chief economist of the Bank and a Nobel Prize winner, Stiglitz was forced out of his post when his criticism of the wrongs inflicted on Russia and elsewhere by the Bank’s policy became too hot to handle. Stiglitz is now at Columbia University in New York, where he has been assembling a new gang capable of sustaining the challenge to the Bank’s programs. Stiglitz allies inside the Bank and its research institute have been hunted down and exterminated. Call them the Reds.
In gang fighting, it’s always difficult to find neutral ground, but that’s what Schweitzer has been trying to do. He is a member of the gang best called the Whites. Al Watkins, head of the Bank’s new regional program in Krasnoyarsk, is probably a White by background and a Pink by conviction. So, it seemed for a time, was the Bank president, James Wolfensohn – at least pink was the color Wolfensohn went with when he had his famous bathhouse session with Alexander Lebed.
The late Krasnoyarsk governor had sought out Wolfensohn to ask for World Bank assistance in building small and medium-sized business in the region. With political enemies gunning for him in the Kremlin and in the headquarters of Norilsk Nickel and Russian Aluminum (Rusal) – the dominant corporations in Krasnoyarsk – Lebed was hoping to recruit countervailing business support and define an economic future for Krasnoyarsk independent of Vladimir Potanin and Oleg Deripaska, owners of Norilsk Nickel and Rusal.
With Lebed, Wolfensohn had what some World Bankers call “bonding in the banya.” This has been turned into a program by Watkins, with funding from the stronghold once controlled by the departed Stiglitz. Internal funding for the Krasnoyarsk program has been vital because the Russian government in Moscow has been refusing to borrow World Bank funds to pay for such things. Why, you should ask, would Lebed’s political and corporate enemies agree to let the Russian Federal Treasury accept the obligation to finance a potentially serious economic alternative to their power in the region? Why would the gang members who run the World Bank imagine they should bite the hands that have fed them so royally for more than a decade?
The plot lines and gang motives were beginning to become clearer when Lebed made his ill-fated helicopter trip in April and was killed. In the election campaign to replace him, Norilsk Nickel has announced its candidate will be the former chief executive officer, Alexander Khloponin, who is already governor of the Taimyr Autonomous Region on the border of Krasnoyarsk. Rusal has declared its interest, appointing its PR chief Yevgeny Ivanov to be the vice governor ad interim and deputy to Acting Governor Nikolai Ashlapov, also a former Rusal employee. They appear to be backing the head of the regional legislature, Alexander Uss, for Lebed’s seat. In opposition, there may be a Kremlin candidate – possibly Sergei Shoigu, the emergency situations minister. In addition, there are the Communists Pyotr Romanov and Sergei Glazev and the wildcard candidate Anatoly Bykov, the aluminum boss Deripaska evicted and the federal government has been trying to keep in prison.
When gangs as tough and numerous as these fight for turf, the passions of the World Bank’s Blues, Reds and Whites are bound to pale. Wolfensohn and Schweitzer desperately want to lend several hundred million dollars to Russia this year. What is a self-respecting bank to do in such a place, if all the country folk do is pay back their loans? If Moscow says no to fresh credits, there is a danger the Blues and Whites will find themselves unemployed, and the Reds will have their revenge.
A Wolfensohn-sized credit will require the approval of Prime Minister Mikhail Kasyanov and Finance Minister Aiexei Kudrin. That duo enjoys playing at Romeo and Juliet for romantic foreign audiences, but hardly now when the wealth and votes of Krasnoyarsk are at stake. In the clinches, what will they whisper to Wolfensohn? Stay tuned for the next episode.