Question: It would appear that you have asked the first
question yourself. Didn't you say that you had discussed the new
law with Putin, and that he did not accept the existence of criminal
proceeds in Russia?
Khakamada: On the contrary. Why is there any intrigue
about the passage of this law? After all, several similar laws
have been adopted: on combating corruption and the proceeds from
crime. The present law has been submitted by the Cabinet, and
was prepared at the demands of the European Union and the United
States. If we fail to adopt such a law, there will be a general
feeling that Russia is reluctant to tackle any problems related
to the proceeds from crime and that Russia has a completely opaque
economy - and our credit rating will be reduced.
It all sounds so progressive and democratic. But when you look
at the content of this law, it transpires that the definition
of "proceeds of crime" applies to all revenues earned
in connection with failure to pay taxes or customs duties, for
example. Given our ineffective taxation system, which has only
just begun to change, and our hideous tax policies, I consider
such measures absolutely unacceptable. If we confuse "grey"
revenues in Russia with the proceeds of crime, we will destroy
business entirely: all business, whether transparent or non-transparent.
We would be destroying business as such.
That is the idea I tried to convey to the president. We argued
for about fifteen minutes. He said: but we're making progress
on legalising revenues, and the 13% flat-rate income tax is working.
I replied: the fact that we're making progress is exactly the
reason why we shouldn't impede it. Give it another two or three
years, time for business to finally learn to trust the government
and start emerging into the light. Proceeds of crime do exist:
drug trafficking, trade in children, prostitution, arms trafficking.
Go right ahead and fight that, use all the force of criminal law.
The appropriate laws do exist, but they simply aren't working,
because state bureaucrats and key people in law enforcement are
bribed. That is not a problem with the laws themselves. It is
a problem related to the implementation of these laws, and the
structure of state authorities: what impact it has on decision-making.
Incidentally, the president agreed that we only need the law
to persuade the West to tick off this box (they are also bureaucrats)
and then it would be easier for Russia to gain access to Western
markets and the World Trade Organisation. However, we will only
support the law if all the amendments made by Shokhin are approved.
And the essence of the amendments is that no commercial proceeds
or proceeds made from failure to pay taxes and customs duties
should not be considered criminal proceeds.
Question: Is it possible that we will have to demand a
special law for every situation, and every time it will differ
from internationally accepted laws, and every time this logic
(we are special, we are not properly developed) will be used to
justify some completely unusual construction?
Khakamada: I would put it this way: at present, any kind
of generalisation would be detrimental to Russia. It is impossible
to get anything done in Russia if you are trying to do it in accordance
with some general standards. There should just be some principles:
it is necessary to lower taxes, remove barriers, reduce the number
of state officials, increase their wages – this is a whole concept.
It has nothing to do with the USA, as the USA has had democracy
for 200 years, and Russia has had it for only ten years.
Question: If I am not mistaken, the basis of the "grey"
business area concerns games with taxes and duties. In this case,
all Russian business is "grey". Are we in danger of
eventually having a "grey" middle-class, which will
never manage to become "white"?
Khakamada: A vast legislative base helps with the fight
against illegal business. At present it is not a legal issue,
but rather an issue concerning the rules of the game which have
been formed by the authorities over the past ten years. They were
formed not for business, but for the authorities themselves to
enable them to make "grey" money by themselves, violating
laws. That is why we keep saying that about $20 billion is taken
out of the country each year. Both Russia and the West keep talking
about this issue.
There is no need to state this to the public, as it knows everything.
The people live in accordance with the rules that they can live
by. Corruption, bribes, tax evasion are the only way for small
businesses and the private sector to survive. The corruption connections
in Russia are so vast and intricate that presently corruption
is not a negative phenomenon in Russia, but simply a way of life,
To change the environment, it is necessary to change the rules:
that is why new rules, a kind of public agreement, need to be
created before starting the fight against the "grey"
business. Today we are going through the very first stage of forming
It is only possible to create a perfect democracy if the state
provides ideal market legislation and administrative reform; judicial
reforms need to be accelerated to ensure that this legislation
is enforced: people should not only have and exercise their rights:
they should also be able to protect their rights. Then, in ten
or maybe fifteen years time, we will have a system that will be
called a developed democracy.
Question: Do you think ten to fifteen years is a realistic
term? Are you considering such issues as social inertia, the inertia
that has accumulated in Russia over the past four centuries?
Khakamada: I only say that it is necessary to create
a system which would make it worth one’s while to pay taxes, judge
people fairly and protect people and private property, and where
it would be unprofitable not to take such steps.
Question: Yes. However, over the past ten years not a
single law has been passed without a "fork" as you say,.
And there are no signs that such a law will be passed in the next
Khakamada: It will. At present we are working on this.
I think that we will gradually have the right laws. If the president
listens to one team only for ten or fifteen years, and if he trusts
that team, and if he does not back down, then everything will
work out. If we start compromising again, we will start another
Question: Which team are you talking about? It is considered
a media cliche that the president has two teams: a team of St.
Petersburg liberals, who are probably the best economic minds
in the country; and a second team comprising the military and
security services. So which team do you mean?
Khakamada: I believe that the democrats are to blame for
the destruction of the military elite. And the military elite
must have a role to play in society: it must not take any political
decisions and must not have an opportunity to form independently
political and civil systems. However, it must fulfil its functions:
to defend the country from external enemies. However, the Russian
military elite has been destroyed morally, economically and professionally.
A part of the military has started up businesses, somewhere in
the market; others were hired by security agencies. As a result,
we have neither a normal market, nor the consciousness of a military
organisation in the country.
Naturally, the time has come for their revenge. And now the
military organisation is ready to fulfil functions it is not supposed
to fulfil. And this is the most disturbing development. That is
why the authorities would be very wise to restore the elite status
of the military organisation; it should provide a distinct definition
of what is permitted and prohibited: the military must not even
attempt to take any decisions on key issues of civil life: here
Gref's team should dominate. I believe that some kind of battle
is going on at present and if this results in an enormous increase
in the role of the military, everyone will suffer.
Question: How did President Putin react to your criticism
of the law on preventing legalisation of criminal proceeds?
Khakamada: The President said – this is not a direct quote,
though - "Irina, I understand your concept, and I agree with
you that the pressure of the West is tremendous on this issue,
that is why we will try to create an image law, which will provide
some signals. In reality, we will only apply this law after establishing
corresponding good conditions for business”
Question: I have the impression that the President very
often responds like this. The interlocutors are always different,
but the answers are always similar. Each interlocutor comes back
absolutely fascinated and believes that he or she has just managed
to privatise the President. In your opinion, what is the President
like in reality?
Khakamada: I have never met the President tete-a-tete,
only as a deputy Duma speaker and together with other deputy speakers.
I can only say that if you were the President you would act in
the same way. He has an elevated ability to communicate. He is
incredibly passionate. Even if he does not agree with you, he
will listen to you for a long time. If you want to talk to him
as an equal, you must be able to pose you question very professionally,
and not only criticize but also make very concrete suggestions.
If an opponent does not suggest anything, the President loses
all interest in this individual - it is a very technological approach.
I cannot generalize, but I believe that the President has several
features. First, he knows perfectly well the sphere in which a
particular well-known individual is a professional. For example,
if I start speaking about oil and gas , he will not listen to
me. He would prefer to listen to Grigory Yavlinsky on the issue
of the death penalty than me.. However, whenever I start speaking
about business and the development of market relations, I am entitled
to engage in a dialogue with the President. His second feature
is that if you give him specific grounds explaining what is wrong
and right about a particular issue, if you can prove your point
and he agrees, he will take a decision immediately. Putin is an
However in terms of political ideas many things remain unclear.
His views remain unclear about what he is going to build, what
is his model of Russia, what is his ideal. He announced that Russia
must join the Council of Europe. However, I cannot understand
him at mental and psychological levels. At the same time, from
the point of view of liberalisation of the economy he is very
Question: So what is Putin liberal about?
Khakamada: About the market. Until at least 50% of owners
and employees have a market mindset in Russia, there will be nothing
normal and no improvement in the country. Only a new society will
be able to create a civil structure independently of the authorities.
Only this new society will be able to rear new politicians, and
real parties that will be really supported by the electorate.
That is why it is absolutely unreal for Russia to become a democratic
country with a half-dead market. When the new elite has no ground
to grow on, it starts to reproduce itself: consequently, even
young people will act exactly like the elderly. I do not believe
in the generation model: that as soon as a new generation comes,
everything will be fine. No, we are growing the same bureaucrats,
bribe-takers, and retrogrades.
Question: Once you wrote that Gaidar had paid for the
transition to market mechanisms; however, here are prerequisites
for the emergence of a middle class in Russia. In 1998 the middle
class and Kiriyenko's government partially paid for everything,
including the death of the middle class. So who will now pay for
the possible restoration of the middle class, if, according to
your logic, it is impossible to have a future without it?
Khakamada: The Union of Right-Wing Forces will pay for
this in full. We will pay as we have paid before. Why? The reason
is very simple: to survive politically, you need to establish
a position and distinguish yourself: either you are in opposition,
and follow the traditions of the Yabloko movement, or you are
the party of power, bureaucracy, which means you are a member
of the Unity; or you are part of the left-wing opposition. Theoretically,
we should become an opposition, but we will not become such a
force, as we are trying to reach agreement with the authorities
and assist them with the adoption of priority economic, legislative,
judicial and administrative reforms. And we will pay for that
with our popularity rating, as our position is not clear and distinct.
And the middle class is not large enough to support us, and this
will become very obvious during the next elections.
Question: So you are going to annihilate yourself as a
Khakamada: No, we will never annihilate ourselves, because
a new middle class is growing in the country. In fact, we are
a bourgeois party; Yabloko is a party of the protection of rights;
Unity and Fatherland are bureaucratic parties, the communists
are a left-wing party.
Question: With the current model it is highly likely that
Putin's liberalisation will be carried out, but a civil society
will never develop.
Khakamada: It will grow, it is already growing. Here is
a classic example of the growth of civil society: all magazines
and journals devoted to the market are writing about the emergence
of a new class, a class of hired employees, whose profession is
unique: I am referring to anti-crisis managers. They extricate
an enterprise from the abyss and then promote it on the markets,
and all that only at the expense of correct management decisions.
It is a unique profession: it is not very well paid and had never
existed in Russia before. Special presidential programmes were
established to send people abroad and teach them to do this. These
people decided for themselves: yes, it is easier to move away
from Russia, we speak ten languages each, we know management,
we work for foreign companies, we study in Harvard, abroad, we
are cosmopolitan, but we want to live in Russia. We like it first
because we speak Russian, and second, because this market offers
vast prospects. We cannot keep passively watching developments
in this country, that is why we made this decision and we will
try to influence the decisions of the authorities.
This is called the growth of civil society: these are absolutely
new people. They have developed potential development scenarios
of the country, where they indicated all the threats facing our
country today, as well as the chances for positive development.
These are mostly very young: they are 25 to 35 years old. They
all are self-sufficient, they all have good professions. They
do not work like others: steal - sell - disappear. They make serious
human investments and they need a long-term development strategy
for Russia. If they perceived that Putin's reforms had no future,
they would have left Russia long ago.
Question: You say that you cannot understand the political
thinking of the president. However, many people suspect he has
some paternalistic - state concepts of authority in mind.
Could you imagine economic liberalisation combined with tremendous
Khakamada: A Chinese model, but a milder variant.
Question: Actually, it is a very Russian model: to have
grandeur, to have power, to outdistance the Americans, and to
have some liberal clubs as well.
Khakamada: Such a scenario is also possible. Moreover,
Russia will really be tempted to following this path, as our democracy
is so imperfect.
Question: And what about civil society?
Khakamada: I have already said that we need to grow this
society first. Then it will sweep away this authoritarian model.
Question: You spoke about two major reforms: judicial
and administrative reforms. The judicial reform is clear enough,
but what about the administrative one: what stage has it reached?
Khakamada: It is in a dire state: that is why we have
so many problems. The administrative reform implies reform of
the authorities. Since Gorbachev's era the authorities have been
reforming society for 15 years. They always forget about themselves.
As a result, it has been growing all that time, and now the bureaucracy
cannot even feed itself, and it has already started to hurt itself
as well. Consequently today it is seriously necessary to understand
the burden of the state in the economy is and the exact functions
of the state.
The state’s role in the economy should be reduced and also be
made more efficient in some areas, such as defence: wages of budget-sector
employees; child benefit; free state health system; penitentiary
system; courts (judges must receive enough money from the state
so that they cannot be corrupted); military reform. It is not
right for the Nuclear Ministry to have its own businesses and
enterprises; and it is not right that the Energy Ministry is unable
to resolve any issues. Why do we need a minister who cannot resolve
any issue, why do we need more than a thousand people who work
in his ministry, who always receive wages in time; who drive cars,
and have state summer houses (and we pay for all with taxes)?
So I believe that reform involves a reduction of state functions
in the economy and a concept on its role in society.
The minister should be directly subordinate to the prime minister
and the government: I cannot understand why there is a whole apparatus
above each minister. Plus, there is the issue of relations between
the federal centre and the regions. We either provide every region
with as much freedom as it can swallow: as a result they have
been transformed into feudal principalities, with no freedom of
information, no market freedom, and the institution of a personal
power hierarchy. Subsequently we try to establish a single power
hierarchy and everyone starts shouting about a unitary state.
Question: Does the Union of Right-Wing Forces have a complete
concept for administrative reform?
Khakamada: I have not talked with Anatoly Chubais about
this yet. He believes that this is so difficult that it is better
to first resolve economic and market issues. The internal resistance
of bureaucracy is so vast that a president who tries to break
this machine risks losing the next presidential elections. So
I personally believe that if President Putin plans to be President
for two terms only, without violating the constitution and changing
it much, in his first term he will try to consolidate society
as much as possible, bureaucracy, and promote such priorities
as the economy and judicial reform. And the administrative reform
should be postponed: otherwise, state officials will immediately
be transformed into opponents, even enemies of everything. However,
if the President wins the next presidential elections, in the
second term he will be freed from the aforementioned priorities,
and he will carry out a radical administrative reform.
Question: Do you think Putin is prepared for this?
Khakamada: I cannot judge, he is not a close friend or
a colleague of mine. However, I do believe that the President
is thinking over the issue of managing this huge "Russia"
corporation and achieving maximum efficiency in its management.
Question: Then, how should we assess his latest actions
for concluding a new agreement between the authorities and large
businesses? For instance, Gazprom is a new union of the Kremlin
and gas money. Does that prove that Putin is a potential administrative
Khakamada: The story with tycoons is a different story.
Western governments also have to agree on certain things. And
if there is a monopoly, nothing can be done until you de-monopolize
it, otherwise you will have to reach agreements.
Question: Putin would not de-monopolize it.
Khakamada: You always return to the "authorities-tycoons"
issue, while I am speaking about another issue: administrative
reform is a reform of the officialdom, which takes decisions,
of the actual government structure.
Question: How would you assess the present parliament?
Do you think that the President may dismiss it?
Khakamada: I think the present parliament is very stable
and is convenient for decision-making; actually if all the centrist
and right-wing parties agree, it is possible to pass any decision:
the Land Code proved that. Right now President Putin does not
want to destabilize society, on the contrary, he wants stability.
By the way, it is also important for Russia's image in the west.
Why do you think that China receives so much investment, even
though their system is so inimical? They have a very stable system
and provide state guarantees. These are the most important things
At the same time, it seems that President Putin is not completely
satisfied with the government as a tool. He would like it to be
faster, more flexible and more consistent.
Question: We have not talked about the Union of Right-Wing
Forces yet. Have you really parted ways with human rights advocates?
Khakamada: No, we have joined the Democratic Council,
we have passed a common resolution, and I have been pushing it
through the parliament. We still carry out our human rights advocacy
functions. We have lots of problems with other Duma factions,
because they did not vote consistently, and scuttled this statement.
We are also developing our relations with Yabloko and are even
trying to assess whether we have any chance of contesting the
elections as a united bloc. Today we are trying to work more seriously
and to be more consolidated.
Question: Nonetheless, there was your recent conflict
with Kovalev. Have you broken up completely? How do you feel about
Khakamada: First of all, I believe that Sergei Kovalev
was very honest, by the way, just like Sergei Yushenkov. It is
not correct to remain in an organisation, if you are dissatisfied
with its programme, and merely abstain all the time, thereby stirr!
ing up a conflict. It is more honest either not to join it at
all, or to quit, and here both Yushenkov and Kovalev acted as
politically mature, honest and conscientious people.
Question: But, in some ways, you have lost the moral resource
of Sergei Kovalev...
Khakamada: You are returning to the start of our conversation.
We have to pay. And some day Sergei Kovalev will thank us, when
he sees the kind of new people growing up in Russia.
Question: I am afraid that you will not hear his "thanks"
Khakamada: I am not waiting for it, I just hope. Anyway,
I believe that the extremely orthodox ideology is the main problem
of the human rights movement in Russia. In my opinion, the right
choice for any politician is to try to assess the situation as
objectively as possible, based not only on the orthodox values
they accept, but also on their final goal.