- The Washington Times - Wednesday, May 24, 2000

Anatoly Chubais, who plotted much of Russia's checkered economic reform program the past decade, said yesterday that new President Vladimir Putin has gotten off to a promising start by introducing liberal reforms.

But Mr. Chubais, a leading business "oligarch" who heads the country's biggest electricity company, said in a Washington visit that the new president will have to put his immense popularity on the line to overcome resistance in Moscow and in the regions.

"When you listen to Putin's economic team discussing reform, the question is only whether the steps in question are radical enough," said Mr. Chubais. "There's no discussion any more of whether to do it or not."

He recalled that as minister of finance under former President Boris Yeltsin he was accused by the Communist-dominated legislature of selling out to the "bourgeoisie" when he recommended cutting the country's top tax rate from 45 percent to 40 percent.

Mr. Chubais said the debate now among such Putin advisers as Finance Minister Alexei Kudrin and Economic Development Minister German Gref is whether the country is ready for a flat, across-the-board 13 percent income tax rate.

With his economic program under review, Mr. Putin has moved quickly to assert his authority, introducing a plan to rein in the country's 89 regional governors and taking at least symbolic steps to curb the oligarchs as well.

Russian tax police Monday raided a Russian car maker with ties to tycoon Boris Berezovsky, perhaps the most powerful and politically connected of the oligarchs who grew rich on Mr. Chubais' privatization program of the 1990s.

Many in Moscow hailed the move as the first step to clip Mr. Berezovsky's power, but the Russian rumor mill also buzzed with suggestions that the oligarch had orchestrated the raid himself to mask his continuing clout inside the Kremlin.

The raid follows a similar one last week on offices of Media-MOST, an independent media conglomerate controlled by rival oligarch Vladimir Gusinsky that has been critical of the Putin government.

Mr. Chubais yesterday condemned the raid on the Media-MOST offices and cautioned that any effort to scale back the oligarchs will take time.

Mr. Chubais predicted that the Russian State Duma (lower house of parliament) would eventually approve Mr. Putin's plan to rewrite the domestic balance of power by dividing the country into seven new administrative regions overseen by presidentially appointed "superenvoys."

While designed to make Russia's government more consistent and reduce the power of the country's largely autonomous regional governors, the implementation of the plan may run into trouble closer to home, Mr. Chubais predicted yesterday.

"Obviously, the governors won't be happy with a new layer of supervision," he said. "But also this affects the rights of the ministries in Moscow. The main fights over implementation might not be in the regions but in the capital."

Mr. Chubais, who served for a time as Mr. Yeltsin's first deputy prime minister and now has a seat in the Duma, remains an intensely polarizing figure in his homeland.

Many blame the country's disastrous early experiences with privatization and unregulated economic liberalization on Mr. Chubais. His re-emergence in a lucrative post at one of the country's biggest firms has also inspired grumbling.

But Mr. Chubais told a small Washington luncheon yesterday that his market-oriented Union of Right Forces party sees an opportunity as the largely unknown Mr. Putin lays out his agenda.

Meeting over the weekend, Union of Right Forces activists attempted to unite liberal democratic elements in Russia with a goal of electing 50 mayors, 15 local governors and 20 percent of the Duma.

Conspicuously not included in the gathering was liberal standard-bearer Grigory Yavlinsky of the Yabloko Party. Mr. Yavlinsky polled a disappointing 5 percent of the vote in Mr. Putin's March 26 electoral triumph, and Mr. Chubais said the outcome sent a message.

Yabloko "is always against, against any budget, against any government suggestion, and that's why they're losing popularity," he said.

Mr. Chubais said he strongly backed an alliance of all Russia's pro-market parties in coming elections.

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