Truly there are very few people who need as little introduction to an audience like this as Grigory Yavlinsky, whose accomplishments over the past 15 years have really been synonymous with economic and political reform in the Soviet Union and in Russia. He is an author of both 500 Days and The Grand Bargain, and he served in the Russian Duma from 1993 until the most recent elections, having headed the Yabloko bloc from its creation in 1995 until the end of the last Duma term. It's really an honour to invite Mr. Yavlinsky to the podium. Thank you so much.

(Applause.)

GRIGORY YAVLINSKY: Thank you very much. I am really extremely grateful for this opportunity to speak to such a special audience on issues relating to the further development of my country. From time to time, approximately once every two years, I make a speech about Russia at the Carnegie Endowment, and I have a privilege to share my views with the most experienced people in the United States, and maybe in the Western world, who are interested in issues concerning Russia.

I was a little surprised several days ago when I was making several lectures for Harvard people because at the outset I was warned that there was no big interest about Russia at the moment. I was told: nobody cares, so don't be disappointed if the audiences will not be so big, and so on and so forth. Now I am lecturing to audiences of 250 and 310 people. So it's not true that people don't understand the importance of the developments in Russia and don't understand the special period we are experiencing at the moment in Russia.

Certainly I have a lot of will and a lot of topics to share with you, but I think that the best way to communicate today would be to start with a short introduction about a very big country and then I will like you to ask as many questions as possible, as I'm very interested in your questions. Your questions will help me understand the most important topics for you about developments in Russia. So please don't hesitate; please ask me whatever questions you think would be interesting.

Let me start off with some special preliminary remarks. When my friends and I look at Russia as a country which must become part of Europe in 20, 25 years -- our perception of Russia is that this is a country which in these20-25 years has to cover a very long distance which took other countries hundreds of years, and become in this period of time, in 20-25 years, a country which is a fully-fledged member of all major European institutions - in that sense a European country. Because in the sense of culture and history, Russia certainly is and always has been a European country. I am referring to the political institutions of Europe, the economic institutions, security institutions, military institutions, all the issues.

I want to provide my analysis from this viewpoint. Why is it so important? Because if Russia was simply considered as a threat, let's say for the Western world and for the United States, and is now considered no longer a threat and that's it, this would be a different perception based on different criteria and different logic. Now I'm trying to explain the logic from where my starting point.

I would start with the most important features of the Russian current system, which were primarily created over the past eight years, ever since 1996. Certainly in general it started in 1991, but the most important changes, which now constitute the underlying framework of the political and economic system in Russia today clearly started to happen in the mid-1990s, especially politically, since the election of Yeltsin - the last election of Yeltsin.

Six major aspects in Russia must be considered today. First of all today Russia has no independent judicial system - independent justice. Secondly, since December Russia has no elements of independent parliament. Thirdly, Russia has no public or parliamentary control on the secret services and law enforcement structures. Fourthly, Russia has no politically important or influential independent media. Fifthly, the elections in Russia are strongly influenced and under very substantial pressure from the authorities. And lastly, but most importantly, Russia has an economic system which is de facto a 100 percent merger between business and the authorities. That means that every single important bureaucrat in Russian government or the Russian administration is at the same time deeply involved in businesses or represents their interests, and is paid from the businesses an amount that is incomparable to his or her salary. So this is the most important features required to understand what is going on in Russia.

I also want to make a very important historical analogy. Exactly such as system was created in in the mid-1930s in Russia. This is not a qualitatively new kind of political system. This system was created in the mid-1930s. The major feature of this system is that the most important components of the state and society are managed from one room. Whether it is the press or security services, legal issues or all kinds of information, all kinds of justice - all components of justice. That is why stated during the the parliamentary elections that we have got in Russia today a kind of capitalism with Stalin's face. That's why we made this statement; now I'm trying to explain what that means.

At that time the economy was really a planned economy, a centralized economy, which was managed from one room, and this room certainly wasn't the Kremlin, as is clear. Now this is certainly not a planned economy; this is a kind of a business, a semi-private economy, but it is also managed, and we had a very visible and very explicit example how itis managed: through repressive measures, by the way, as well, from the top ranks of the Russian authorities.

So let me put it this way: before in Russia we had a kind of a system which you well know entitled: "Gosplan" (Ed. the State Planning Committee in the USSR). Now I would call it "Gosclan" ("state caln"). So it is almost the same, albeit with some slight differences.

What happened over the past four years - and why I said that started in 1996, as in 1996 it kind of was such a system, the components of the system were created to translate the 2 percent support Yeltsin had in February to the 56 percent he got in July. So it was made especially merely to concentrate everything, take back all the tools and resources, information resources and all kind of resources, to create this operation - successfully finalize this operation.

Then people decided that this was a very comfortable system. They all said that it was a great system, as it once again provided an opportunity to manipulate society. It was manipulated by the Communist Party and the Politburo and now it is possible to manipulate society in a modern way with your own interests. But over the past four years, after 2000, there was big progress in this system, and it is necessary to say that Putin's government achieved substantial progress over the past four years. The substance was that he neglected or liquidated all kinds of autonomous elements in society which had appeared in Russia after 1991.

First of all he attacked the regions. Some components of autonomous regional leaders appeared in the regions after 1991. They were members of the Council of Federation. So it was kind of a balance in that sense. So the first attack was on autonomous elements in the regions. The second attack was on autonomous elements in the press. This was the NTV story. The third attack was on autonomous elements in business. That happened half a year ago. And the fourth one, it was an attack on political parties and the creation of a one-party parliament.

So these four steps created a completely new atmosphere in Russia, as it pushed back the most important components of a civil society which appeared over the past 10 years.

This brings us to the new situation where - and I mean this very seriously - the preconditions for political opposition in terms of Western politics, or in terms of the United States or Europe, have totally disappeared in Russia. What do I mean? To create a political opposition you need at least three very important things. First you need independent courts or independent justice which will simply implement laws or provide for implementation of law. The second component is an independent press, which can publicse the ideas of the opposition and criticism. And the third, the ability to create independent financing, which is absolutely crucial to creating political - any kind of political - opposition.

None of these three preconditions exist today in Russia after the past four years. All those three preconditions disappeared. This is one of the important explanations why, for example, my Party and I declared that we would not take part in the current presidential elections. You can't take part in presidential elections if you have no independent arbitrage, if you have no independent financing and if you have no independent media in the elections.

As you know, I took part in the presidential elections in 1996 and 2000. At that time too these were not fair elections. However, let me try provide a comparison: can you imagine soccer - I'm afraid to say football in America, so I refer to soccer. To play soccer you need at least gates. You need a ground and you need a ball. If you have these three elements you can try to play a game. That was the case in 1996 and 2000. Certainly I had a gate which was 100 meters, and Yeltsin had a gate of 5 meters. Of course I had on my ground three players and Yeltsin had 55 players. The same was true with Putin in 2000. But at least it was a game. There was a ground, there was a ball, there were gates. Now there are no gates, no ground, no ball, only a score on the table. (Laughter.) So you are heartily invited to come to the stadium and look at the score.

That's why they are so worried about turnout. That's why they understand that people won't come and vote. That's why he fired the government, as he wants to make any kind of political story at the moment. There is no other reason for this step. First of all, he wants to draw attention to different issues, as there is simply no substance to the elections. There is no fight. And the responce was very special. My party, 10 days after the elections, declared that these were not elections and that we wouldn't take part. But maybe the most interesting reaction came from the best friend of the Kremlin, Mr. Zhirinovsky. He presented his bodyguard as a competitor to Mr. Putin. And then Mr. Kharitonov found a profound collective farmer from the deep Siberian region and said, that's my representative. Okay? Then Mr. Berezovsky came up with something strange, and that is the picture of our elections. That is the picture of the elections. Why did this happen? This happened owing to the creation of such a system, which I'm trying to display to you.

What is the agenda? This is the most important thing. Now I'm going to describe to you the agenda, so that you can simply understand what is going on. Before I discuss the most important thing - what is on the agenda and what needs to be done - I will first of all make some preliminary remarks. I want to say that Russia's problems are very deep and systematic. This is not simply a step back; this is a very serious situation.
We have very profound and systematic problems. Our problems go well beyond the imitation of elections and nice liberal speeches. It must be a priority to once again re-establish democracy in Russia instead of this Potyomkin village (Ed. historical allusion to the faked facades of fine villages ordered by Potyomkin to present to Catherine the Great during her trip round Russia) and implement real private property, which was the goal from the very outset that was not realized. Democracy and private property rights are once again the main priority.

For my party, and for people aspiring to liberal democracy, for that part of society advocating a liberal democracy, the task is not just to find the way - and this is what I want to stress very strongly - not just to find a way to liberalize or liberalize the current regime - the most important thing is to be able to impose long-lasting solutions. We must prevent, once and forever, the position of the liberal advisors, as the role today of liberal advisor is the same as being a deputy of the tsar for resolution. This may be a rather interesting, but is a politically senseless exercise. Don't you agree?

To achieve this goal, we need to take several very important steps. One of the biggest problems for all democratic forces in this period since 1990, since 1991, is that they have always positioned themselves as liberal advisors who ask the tsar to make a minor revolution - not too much and in a very limited manner.

So the first task that needs to be done is to dismantle the oligarchic system created over the past 10 years. That means that we need to adopt a package of laws which would be to some extent resemble a public court case between the old parts of society over the criminal privatization carried out in Russia in the mid-1990s. We created the concept of this accord, and I have tried ever since July 2003 to debate this approach with President Putin and other leading politicians in Russia: instead of putting people in prison, selectively using the law and repressive measures against representatives of the business. The President and his team took a completely different direction. They are now moving in the direction I explained, instead of trying to find public accord.

What are the key elements? I am convinced that the first element is to amnesty the old offences linked to the privatization process, except for murders and other violent crimes. At the same time a package of laws must be adopted - as this is all one package. Another part of this package of laws relates to regulations which would separate business from politics and would ensure the implementation in Russia of absolutely new rules in relations between business and parliament, business and the government, business and administration, including the overt and transparent financing of political parties, including implementation in Russia for the first time in its history public television of the government and oligarchic systems in Russia at the same time.

third part of this package would involve a really serious number of decisions on antimonopoly and antitrust legislation, which would be enforced and realized in practice. It would also imposition restrictions on participation in politics for people who were deeply engaged in criminal privatization in the mid-1990s.

So this is a big thing. This would enable Russia to break away frmo the vicious circle we have at the moment, which is very much based on developments in the mid-1990s.

The next step must involve implementation and adoption of legislation on public control over the security services and law enforcement structures. Today we have a real disaster, as no one can explain the goals of the security structures? No one can explain the methods they are going to take. No one can explain who is issuing their orders. So this is a very serious issue. You will never make the Russian economy effective or Russian business really competitive and this will never work until this very painful problem for Russia is resolved. The third step involves a real division of power and protection of civil liberties in Russia.

Let me cite one more issue: without proper acts about the war in the Northern Caucasus, especially in Chechnya, Russia will never give people in the country a chance to live in an atmosphere and create a modern society, modern economy, whatever. This is one of the most painful issues in current Russian politics. Our proposal here is to understand first of all whether Russia wants to be in caucases and if that is the case, then Russia must start from a totally different viewpoint. In my view it is essential to allocate about 8.5 percent of GDP every year to job creation and the development of modern communications and a modern society, a social
security system for the society, and similar things. This is the principle. All other measures, such as security, military measures, war with terrorism, this is the next part.

This is also necessary, but this is a different story. If you are going to do this first, then it is clear what you want to do in the military area. If you don't want to do this first, then the second part will be never-ending. It will never end. It is a qualitatively different story than in Afghanistan or somewhere else - for Russia, for example.

As I have already said, all these elements and steps are also directed to implement the idea of guaranteeing private property rights in Russia, which is now very far from being done. The economy itself certainly needs lots of improvements, but every economy - I think every economy in the world - needs all that. Now is not the period for 500 days for the economy. This time has elapsed. Now it is necessary to improve the tax system, tax administration; it is necessary to improve banking legislation, as Russia still lacks a reliable banking system. Now you have to do many things in the economy - all of them are absolutely necessary but not decisive. The changes may come only from these important political steps, which are far more important that the economic steps.

So the main problems of Russian economy at the moment centre around Russian politics, as in our opinion people who are frightened, manipulated, have no information - real information - about what's going on, who don't feel free can't create a modern economy of the 21st century. It's impossible. It was possible with such people to come from agrarian country to industrial, and we have the experience of Stalinist Russia and we have the experience of some other countries, but with one or two exceptions, which only justifies the rule, it is possible to say that through the same means - totalitarian, authoritarian; the means of a police state - you will never create a modern economy and you will never give Russia a chance to be a European country, and you will not be able to protect the longest border - (audio break).

That's what I wanted to tell you. Now I'm ready for your questions. Thank you.

OLCOTT: Do you want to take the questions standing or sitting?

YAVLINSKY: Yes, I'm going to answer the questions standing.

OLCOTT: Okay, that's fine. Okay identify yourself when you're recognized.

Q: Jonathan Terra, Stanford University and the Center for Economic Research and Graduate Education in Prague. People in a lot of countries want to redefine the relationship between business and politics, including the U.S. What are your concrete ideas for that type of reform?

GRIOGRY YAVLINSKY: Sorry, I didn't get you. A little bit slower.

Q: People in many different polities and societies want to redefine the relationship between business and politics. What are your specific reform proposals?

YAVLINSKY: I can only be specific about Russia, as it is very difficult to talk about all other countries, but let me explain the general rule as far as I understand it. Let me put it this way: business, for example, and the economy are completely different things - different things. There is a big difference between business and the economy. Business is an activity conducted to make money and not go to prison. Big business wants to make big money and not to be in prison for a long time. (Laughter.) Small business wants to make small money and not to be in prison for a
small period of time. The economy is a different thing. Economy is welfare, it is up to politics to create the welfare of the state, of society even more than the state - of society. If the economy is organized in the right way and the government is smart, it provides a lot of opportunites for
business to be very rich and not to be in prison, and at the same time to serve society, to move society up.

If the government is bad, then it is not giving business the right and opportunity to make a lot of money and is not giving a lot of chances for society to move up. But a very bad government is a government which simply is a business government itself, which is simply making money and not pushing society forward. So the kind of a policy which must be implemented in this area is a very national thing - for every country must be special. But the general idea is that the vital interests of business differ from the vital interests of society. If society can internalize business then business will be a driving force.

Let me make one final observation here: maybe you remember a book written by Karl Popper. He was speaking about open society and its enemies. He said that fascism and communism are the bigger enemies to open society. From Russian experience I can tell you that capitalism, or business capitalism, which is not limited by civil rights, civil society, trade unions, culture, by education, by all the civil institutions, is one of the other enemies of open society. That may not be a precise answer to your question, but that's what I think.

Q: (Off mike.)

YAVLINSKY: Oh, giving money to parties, it's a very simple thing. Very specifically I can say I would be happy if parties - for example, very specifically - I would answer very specifically: if a party like mine would get $1 a year from every voter, I would be happy. And that's it.
I'm ready to be transparent. I'm ready to show how I use this money, and it's absolutely enough for me. And I think it's enough for any party. It's the German system of financing parties. If I would get $1 a year from every voter, that would be okay. Then I could take some more money from businesses for elections. Or take for the election year $2 from every voter, which was coming from the budget, which is transparent and you can take control. This is a specific example.

OLCOTT: A question over here.

Q: Andrei Sitov from TASS from Russia. To follow up at, why should every voter give you a dollar a year?

YAVLINSKY: Sorry?

Q: Why should I give your Party a dollar a year, as a Russian voter? I mean, liberal democracy sounds very nice, but in a country like the United States, it's based on the grassroots. And the democracy here, as you know, is in a great degree based on populism, or a variation of populism: an attempt to cater to the interests of the populace. Can you describe to us the attitudes of the Russian population towards your party in view of your results in the elections over the years, and why do you think that the population needs to give your Party a dollar a year in the future?

YAVLINSKY: Okay, thank you very much.

First of all I want to say that you are not obliged - you personally can give your dollar to Mr. Zhirinovsky and that will be much easier, and that will be the right answer. Or if you would not be so brave, you can give your dollar to Mr. Putin. He will also be very happy.

Let me explain. I have 2,700,000 voters. That's what I have at the moment, according to official data. And I think that 2,700,000 people are ready to give $1 a year to have their representatives in the parliament and in Russian politics. That's the very simple answer.

Q: What about the attitudes over the years? How has it progressed? And why is the Putin support so strong?

YAVLINSKY: Putin's what?

Q: Why is the Putin support so strong?

YAVLINSKY: Why Putin is supported so strong? Because Brezhnev was supported very strongly, because every Russian leader who is in such a lonely position on the screen would be supported. If you don't see any other politicians on the screen, and no one else has a chance to speak, then the people have to vote and support the person they see. It is as simple as that.

Secondly, Putin is so popular because he is the only hope. There is no other hope in the country as he is the only one giving everything. He is giving pensions, he is giving jobs, he's promising the strong military, he's promising everything. There are no other politicians; there are no other political structures in the country. So what people can do? People have only once chance: to support this person. And that's why they are saying in the polls very often that they are not supporting his policies but they are supporting him because the policies are a little bit of a different story. Now, another part of your question: what happened with my Party during the years, I can talk not only about my Party - I can say even more. Let me put it like this. In 1993, the total vote for the Democrats in Russia was 41 percent, including my party, which got at that time about 8 percent - 41 percent. In 1995 the vote was 18 percent - one-eight. In 1999 the vote was less that 14. Now the vote is less than 10, for all Democrats - I mean, single mandate, all kind of the parties, all that.

That is the most important issue. Why did this happen? It happened owing to the failure of the reforms. The failure of the reforms conducted under Yeltsin and his government, which was named at that time the most democratic force in the world; not only in Russia, but in the world. Yeltsin was the most prominent Democrat in the world and all the leaders of all Western states were supporting him in this quality and giving him most - the best nominations in the democracy. Yes? But on behalf of so-called democratic forces, where I include Mr. Yeltsin and his government, the government of Chernomyrdin and Mr. Chubais, people saw something absolutely different. They suffered very much from the reforms and they can't accept this reform and they think that these are reforms that are not acceptable for them.

I simply want to say that it was not democratic reform. That's another story. And that governments were not democratic governments and that was the problem of many think-tanks and institutions and governments in the world. They were not able to understand at that time that this is a post-Soviet - just simply a post-Soviet nomenklatura, but not Democrats and not the liberals at all. I failed to convince the majority of voters that democracy can be clean, can be limitedly populistic as you said - limitedly populistic, and the market is something which would bring people prosperity. How that happens in Poland, in the Czech Republic, in Hungary, and in Europe, nothing to say about other Western developed democracies. I failed to explain to the majority of Russian voters - not to 2 million people, not to 5 percent of people, but I was - it was necessary for me to explain to 35 percent of people that it is possible to have a different democracy. And I didn't fulfil this task. It's my personal failure. I didn't do it. And I have no partners for that because all the world was saying that the genuine democracy is what Mr. Yeltsin, Mr. Chubais is doing. That is the real democracy. And Russia paid for that.

Now the final stage of my answer: Russia paid a terrible price. The price is two wars in 10 years. One is still going on I mean the war in Chechnya. Hyperinflation in 1992. Default in 1998. Almost the start of a civil war in 1993 in Moscow. Those elements brought Russia to the current situation. Those elements brought Russia to the position that Russians just now don't want to vote for democrats, and they are right in that sense, but certainly if you would come to a person on the street and you would say, tell us, do you want to re-elect the President every four years? Almost every Russian citizen would say certainly yes. Do you want to be able to say what you want and not to be in prison? He would say yes. Do you want to read in the press about the corruption? He would say yes. Do you want to have your account in Sberbank, don't make him threaten - don't speak about private property, but the account in Sberbank which nobody would touch - you would say, certainly it's mine. It's private. I want it. But that means that you are a democrat. No, he would say. I am whoever, but I am not a democrat. Because democrats in the past 10 years made everything opposite to that. They were never really even liberal democrats, they were not democrats at all. That is the philosophy of the current situation in Russia. That is true. But the problem is - I'm sorry for such a long answer, but the problem is that the policy of Mr. Putin, which I can call "derzhavnaya politika" (Ed. superpower policy), would never bring Russia to the future.That simply won't work. It's not a case whether he's a good man or bad man; simply the policy. I don't know if this English word - by the way nobody knows. I was asking everybody how to say in English "derzhavnik;" nobody knows. Status is something different, but the substance of this is that he thinks that the state is much more important than an individual and that the individual serves the state. This policy in the 21st century in Russia would never take Russia to the future. It would stop Russia. That is the difference between my views and his views for the moment. I think that only policies based on freedom, human rights, and liberal economy and market economy and competition would bring Russia to the future. Derzhavnaya ideology would never bring that.

Q: Angela Stent from the National Intelligence Council. You laid out a very clear roadmap for the direction in which you think Russian should develop, so I have a two-part question for you The first part is, how in a practical way do you think the democratic forces should organize themselves in the next Putin administration to pursue this agenda? And the second part of the question is, can the outside world have any impact on this agenda? Can it do anything to help?

YAVLINSKY: Okay. First of all about democratic forces. So the main problem or task is to find those forces, okay? The problem is that it's not so easy. At the moment in Russia we have only one organized and structured democratic institution - one - and the task of this one party, which is the Russian Democratic Party Yabloko, which has 80,000 members by the way, is to organize around as many democratic forces as we can find in Russia. And this is the task and this is what we are going to do, but that would not be easy after such a history of the last 12 years it would be very uneasy to do that.

Now, what about the outside world? So, the short answer on the first question, we would have - we would protect the Party and we would try to make all kind of alliances - all kind of alliances - to strengthen this element of the political life in Russia and to be prepared for the next elections. This is the task. Now, what about the outside world? I would try to give the short answer. For the outside world I see the main task is to put your house in order, okay? (Audio break, tape change) - because when Russian people see the problems - I would be very soft - of the Western policy, and they see the conflict between Europe and the United States, when they see the conflict inside NATO, when they see a policy of double standards very often, when they see hypocrisy, when they see all these elements, which one can find just in Western policy at
the moment, that's created big problems for Russia - for Russian democratic development.
I can explain this with what appears to me to be an important example. The example is Kosovo. It was the beginning of very painful period of time when NATO decided to isolate Yeltsin from NATO's plan on how to put the Kosovo in order, and it was a very big mistake. When Yeltsin understood, he immediately implement a very strong counterplot and started to support Milosevich, and it was autumn 1998 when it was absolutely necessary not to make a television show in Rambouillet, but to come to Moscow and speak to Yeltsin and tell him about this decision and avoid bombing and all this story. Instead, Russian television and the Russian media was dominated for half a year with anti-Western propaganda which was very strong and very serious and it was very difficult to find any kind of justification for such things. And in May 1999, when the ground operation was almost inevitable, finally Western leaders came to Yeltsin and Yeltsin - and Russia played its role and the ground operation was not needed and Milosevich stepped back and all that.

So this is the example, but since that time to be an openly pro-Western party, as Yabloko is for example, became a big problem. It was very difficult to justify such approach and such things. I'm not just nspeaking about the substance of theevent; it is another story. I am speaking about how it was implemented. How the West can make some problems and certainly now, for example, now one more problem: what would happen in Iraq if the United States leaves Iraq? That will be a big, big problem for Russia. That's anotherstory whether it was necessary to go to Iraq or not - it's a different story. It's already finished. This page is turned. Now, to leave Iraq in the situation it is now means to replace Saddam Hussein and put in his place a group of Bin Laden's, which I would not - don't think it would be very smart.

So a lot of elements of politics are important for us. If you really want to show what a liberal democracy based on values, principles, on all the things that appeared in world politics after the Second World War means, that will be the best support and best help for Russian democracy as the Russian changes in 1991 were not due to economic difficulties, but happened because people wanted the quality of life and type of living that they saw in Western Europe and in North America. And when they have disappointments from time to time here, that's the most serious problem for Russia.

Q: Svetlana Savranskaya, the National Security Archive. You described the sad tendency with support for democratic forces in Russia and you also described the situation with no independent media and no independent judiciary, and I'm wondering what is your strategy? How would you make the idea of liberal democracy attractive again in Russia? How - what channels do you use? How do you make it attractive specifically to young people - to the new generation in the system where it's very hard to use any independent outlets? What are your views on that?

YAVLINSKY: To say about channels, I wouldn't say something new. I mean here newspapers, seminars, education, communication. But to speak at a more serious level, I would say it's not me, life would bring the country to that direction. I am only an element which can help and my Party is a structure which can help. It's just now a structure in a very complicated position, but if we were able to protect it, then a time would come when that would work, but it's not for human beings to do such things. It's for life. Life would bring that direction because nevertheless there are all these limitations which I explained to you. If Russia wants to survive in the 21st century, if Russia doesn't want to collapse in the 21st century, then that's the only way.

Q: Bill Maynes, Eurasia Foundation. I wanted to push you a bit further on your statement that a top priority is - (inaudible) - the system of oligarchs that developed in the mid-'90s. Antitrust - that could range form trying to prevent price collusion all the way to breaking them up. Where do you stand on that scale? Would you break up the companies that have been formed? What does antitrust mean?

YAVLINSKY: Antitrust laws means that it would implement such rules for the economic development that the new hungry groups, which are very much the element of this troubles which we have, would not be in a position to fight for these very big companies again. Do you understand what I mean? These groups created very big pieces of property. Now, the class which you see in Russian internal politics from this point of view is a class based on the fact that other groups which were not so successful at that time want to take over these big companies, but my idea is to stop that. To say that no one except those who just own that, but in the conditions of competition then the situation would change. Once again can have such big pieces to control, let's say, 12 percent or 15 percent of Russian oilfields or something like that.

Antitrust legislation as you had in the beginning of the previous century. This is absolutely crucial for us because it's the basis of corruption. I was not speaking about the corruption today at all, but corruption is still one of the most difficult problems for Russia. Certainly corruption was created with big help from the Western world, so it was a joint venture because as far as I know Russian corrupted officials are not keeping their accounts in Saddam Hussein's banks or in the banks of North Korea. The accounts of our corrupted officials are - I'm not going to say in which countries and in which cities. So if you had not been so prepared for that 10 years ago, we would not be so successful in developing corruption. But once again, just answering the same, try to set an example. That would be very helpful. But in case of antitrust laws, it's very important to go in the same direction the United States did at that time.

Q: (Inaudible) - Georgetown University. Mr. Yavlinsky, I wanted to ask you why Yabloko refused the proposal of SPS to go with the common bloc to parliamentary elections and considering then one of the purposes of parties - to take the power - do you think that going as a common bloc could change at least a little bit the outcome of your percentage?

And my second question - very short - before the parliamentary elections we saw some trends, some quite dangerous trends, in Russian foreign policy in Near Abroad by a conflict with Ukraine, by the conflict - some problems in Moldova, some problems in Georgia. Do you think this was just some pre-election trends of Russian foreign policy, or it's just a long-term trend and the post-Soviet states really have to prepare for a new wave of more active, let's say, like this Russian foreign policy? Thank you.

YAVLINSKY: Russia - Yabloko rejected the proposal of SPS because we are absolutely different parties with absolutely different views. That's it. SPS was the party which conducted all these policies, as a result of which the people don't want to vote for democracy. So what - if I would make a merger with SPS, I would lose three fourths of my electorate immediately in the same second. This is absolutely unacceptable. Among that, SPS has in its list the most hated people in Russia. It's very difficult to find a politician who will be prepared to - just to be married to that. What is the point?

Political arithmetic and arithmetic are two different things. In arithmetic, four plus four is eight. In political arithmetic, four plus four may be two. So I would recommend that SPS go its own way. It's the right party which is based on protection, big property, huge property, which is linked to the state. And we have different views. We are la iberal democratic party. We did not support Putin in 2000. We do not support Putin at the moment. The congress of SPS in fact supported Putin and didn't support Khakamada for example.Yes? We did not support the war in Chechnya and SPS said that it marks the regeneration of the Russian military in Chechnya. We were not in favour of the closure of NTV.
We were not in favour of the closure of TV6 and the other - and the other - and I already forget it - TVS. All these television stations which were private and independent - we were not in favour of their closure. They closed them.

So are you for freedom of speech? Then you must be consistent. If you are against the war, you must be consistent. If you are against oligarchy,you must be consistent. And it is not enough to say simply I am for democracy and market. Everybody is for democracy and market - everybody. By the way, President Putin's speech which he made two weeks ago is an excellent
liberal-democratic speech. And so what? That's why we didn't go together. It's different parties with different views. Now, what about our neighbours - whether they must be concerned. Yes. Always. (Laughter.) Best regards.

OLCOTT: There's a question over here. Right behind you.

Q: Peter Trofimenko, Emerging Markets Management. I was fascinated with your analogy with the mid-1930s specifically in the context of not only the government being corrupted by the business and being one together with the business, but also by the absence of control over the security services in Russia either from the parliamentary or from the political, or say public, bodies. Could you make projection? I know that you're saying that Russia has no future under Putin's government and the way it behaves, but what do you see will happen? If history is a guidance to us, the prospects are frightening. You know, mid-'30s it was just before the war and then we all know about the Gulag thing and a lot of other things that went badly wrong in Russia. What do you expect Russia and the political situation and economic environment in Russia to do in the next, say, 20 years?

YAVLINSKY: If what?

Q: No. No if. As it is now, with the lack of public control -

YAVLINSKY: Ah, you ask me what would happen.

Q: What would happen, yes.

YAVLINSKY: The answer is everything. Everything can happen. It doesn't mean that the situation would change. It's not the system which would exist as the system of the 1930s for 70 years. No. No. This system is not so strong. It would change. It wouldchange not only under the pressure of liberal democratic forces or whatever; it would change for its own internal reasons. It's not stable. It's very unstable system. For example, what is the type of relations between Putin and his party, which is just now in the Duma? It's the type of relations between Mr. Khrushchev and Soviet party apparatus. It's not a political grouping. So while they are friends, everything is okay. If they break the friendship for some reasons - if all the contradictions in such structures develop, then it would be all change. And by the way, a year from now you will see new adult entertainment in Russia looking for the successor. It'll be a new story. You can imagine what will happen inside. So I want to say that this system is not stable. It would - why I am saying that there is no future? Because the system itself in the 21st century under the information technologies with such developments of the world and so on and so forth, it is not stable. So I am not prepared to give you a forecast for 20 years. First of all because I am not a Hitchcock and secondly because I think that many things will change. And I believe - I strongly believe that in two, three, four years Russia is going to come back on this - on the track which was the choice at the end of '80s.

Q: Larisa Glad, Voice of America. It's a follow-up question. If Mr. Putin will - if you - like you compared it to the 1930s; maybe he will come up with a new economic policy, something like NEP, and in the process actually have someone who would come as the next President - prepare someone for that role. Is that possible?

YAVLINSKY: I don't know. I don't know. The only changes I see if Mr. Putin would really understand that trying to create the vertical of power and the elements of a police state and trying to operate business from the top and trying to use repressive measures in order to dismantle oligarchic system, trying to operate with the judicial system, trying to operate all media, and so on and so forth, that won't work.

Maybe he will reach such a conclusion, that means the system is going to be changed. He can take in other people, he can take another steps. That can happen. I don't believe that, but that can happen. That's the only think I can say. It's very difficult. Many times many newspapers and everywhere else have said that Russia has stability. Russian stability today is uncertainty. We are stable every second in understanding that we are uncertain. In that sense we are absolutely stable.

Can you imagine such a stable government which comes to ameeting with the President and while they are moving in the cars to the Kremlin the television is saying that they're fired? That's what's happened. All the Russian newspapers state this fact. They came to the meeting with the President for innovation policy and nobody was aware that they had all been fired. And the journalists were meeting them at the doors and asking, how do you feel? Hello. They were saying, we're okay. And what? We want to know, how are you? Why? They said, because you are fired. These ministers were coming in the room. So this is the kind of stability. And you're asking me what would happen tomorrow. Russia is a country with unpredictable past, not only with unpredictable future. (Laughter.)

Q: Jonathan Terra, Center for Economic Research and Graduate Education in Prague in the Czech Republic. In a room full of democrats, Vladimir Putin makes a very easy punching bag. What good has he done for Russia and Russians since he rose to power?

YAVLINSKY: Putin did a very good thing for Russia - very important and very good. When he took the right - conceptually right policy after the 11th of September of 2001. That was very important, and since that time my Party and I supported him in that by all means because it was a very serious crossroad. If if at that time he had made a wrong decisions, then many things which I am discussing just now would be simply senseless because, seriously saying, influence of the world - of the Western world on Russia development is very huge, very important - very important especially now when we have problems with the press and so on and so on. It's very important. So from that point of view, Putin made a very serious, serious step.

I can find some other things, but I'm speaking today on principal issues. Seriously speaking, the problem that my Party didn't cross five percent - it's not a problem. The problem was and is why my Party was fighting for five percent, not for 35 percent. That is the problem. five percent - if you want to have 6 percent in Russia, you have to fight for 35 percent, then you would be guaranteed about six percent. Okay? If you try only to balance for a long time about five -six percent, this is not influence. This is an advisor on liberal matters with a totalitarian leader, you know? You are an expert for that disease which is called liberal democracy and he can ask you something what to do with this or with that.

That is our problem, but this problem is rooted, especially because you are from the Czech Republic I want to tell you, because in your country at the end of 1980s you had a real democratic revolution and in Russia, no. In 1991 there was no democratic revolution. It was two days of revolution - literally two days - the 18th and 19th of August, and then the 21st of August it was a revenge or kind of a - (unintelligible) - or without blood certainly. When the members of the Politburo came to power and led the country. And why - and in 10 years in Russia - in 10 years of all this democratic reforms, we have had 10 Prime Ministers. All of them, with no exception, were members -representatives of the Central Committee of Communist Party of the representatives of KGS/FSB. All except one young man who was a young Communist League officer who created in two months default and disappeared. All the others were Central Committee, Communist Party, or KGB people.

Why did that happen in Russia? Because in your country revolution started in 1968, in Hungary in 1956, in Poland at the beginning of the 1970s, and in Russia it started at the end of the 1980s, absolutely unexpectedly, because Gorbachev gave freedom. It was not the fight from the grassroots of society. It was simply a historical accident. It happened in this way. That's why we are still in post-Soviet transition period, and our democratic revolution is ahead, if time gives us a chance.

OLCOTT: I think on that note I'm going to thank you very, very much for a really brilliant tour de force.

YAVLINSKY: Thank you.

(Applause.)

See also:

the original at
http://www.ceip.org/files/events/events.asp?EventID=682

Presidential elections 2004

State Duma elections 2003

Understanding Russia

Grigory Yavlinsky's lecture for the Carnegie Endowment for International Peace, February 26, 2004