RUSSIA'S REGENT

By Paul Quinn-Judge

As Boris Yeltsin recovers from a near fatal bout with heart disease, who's the real power behind Russia's President? Most Kremlin watchers would point to a consummate political strategist named Anatoli Chubais (Choo-by-iss), the organizer of Yeltsin's come-from-behind election win last summer and the favorite of the country's influential new entrepreneurs.

His official title, chief of the presidential administration, suggests a high-level aide, but that understates his clout. Chubais, 41, has pushed out one rival, the populist general Alexander Lebed, and--for the time being at least--has outmaneuvered another, the uncharismatic but formidable Prime Minister, Victor Chernomyrdin. During the months of Yeltsin's illness, Chubais controlled access to the President so tightly that his enemies dubbed him "the Regent."

His detractors are everywhere. To rival politicians Chubais is an opportunist most dedicated to his own advancement. And among disgruntled ordinary citizens, he is reviled as the mastermind of a flawed privatization program that gave away vast wealth to a new capitalist elite at the expense of the general population.

Now Chubais' reputation is taking a new beating amid allegations that he and other senior campaign officials last summer tried to undermine a legal investigation into possible election-law violations. The accusations stem from the recent publication in a Moscow newspaper of what purports to be the transcript of a June 22 conversation between Chubais and other top campaign aides. In it, they discuss ways to slow and then possibly block criminal inquiries into the case of two Yeltsin election workers, detained as they left a government building, allegedly carrying more than half a million dollars in cash. The opposition-dominated Duma, or lower house of parliament, maintains that Yeltsin vastly exceeded the campaign-spending limits and that the dollars were part of an illegal slush fund. The Duma has called on Yeltsin to suspend Chubais until the case is resolved. Yeltsin has not responded.

Chubais has dismissed the recording as a fabrication of his enemies. It was indeed reportedly leaked to the media by an ally of his chief nemesis, General Alexander Korzhakov, Yeltsin's former security chief. But Western diplomats who have studied the transcript say it rings true.

Whether the tape is authentic or not, the controversy surrounding Chubais goes deeper than his campaign tactics. In many ways he embodies Russia's ambivalence about its own political future: Can Western-style democracy work in this enormous, fractious country, or will it resort to its own hybrid of economic liberalism and tight political controls? Chubais may look like a Westernizing technocrat, but he has proved to be a formidable Kremlin infighter. His own political statements portray a mixture of authoritarian and democrat. "For a society to reach democracy," he said recently, "a dictatorship must be established within the government."

Unlike other first-generation "democratic" leaders, Chubais has not built himself a sumptuous new residence. Yet he moves easily in the murky world of Russian Big Business, where the line between the Mob and legitimate companies is fuzzy at best. His associates are suspect as well. Sergei Lisovsky--one of the two campaign workers detained last June--cannot, diplomats say, get a visa to the U.S. because of suspicion about his links to organized crime. Afghan war veterans have accused Yuri Yarov, a Chubais deputy, of financial misdealings affecting a dispute between veterans' groups. That conflict is thought to have been behind a cemetery bombing last month that killed 14 people. Yarov has rejected the allegations.

Even if Chubais were less controversial, he would stand out on a Russian political stage still dominated by slow-moving, slow-talking politicians in late middle age. Chubais, in contrast, is brisk, articulate and cocky. Admirers and enemies alike agree that he is also abrasive and remote--someone who prefers to read his laptop computer during breaks in policy meetings, rather than work the corridors. And he's hard to fathom. "Chubais was never a democrat," says Yuri Yarmagayev, a onetime close friend. "He always stood for market reform but never saw the link between market and democracy."

Until Soviet communism began to crumble, Chubais seemed destined for a career of academic obscurity. At best he might have achieved his boyhood dream of becoming a factory manager. Born in a military family in a small town in Belarus, Chubais graduated in 1977 from the Leningrad Engineering and Economics Institute, the least distinguished of the city's economics schools, and stayed on to teach. In 1984 he formed an informal economics study group, a mildly dangerous move in those totalitarian days.

Most group members have since become government ministers, bankers or both. Their big chance came with the Gorbachev era. In 1990 pro-reform "democrats" won control of the Leningrad city government. In 1992, after the fall of the Soviet regime when he was still under 40, Chubais was named a Deputy Prime Minister of Russia and put in charge of the sweeping program to privatize industry and commerce.

In a little less than two years, he presided over the sale of 122,000 state-owned enterprises. Every Russian citizen received a privatization voucher, to be invested, sold or exchanged. The aim, says Grigori Glazkov, a Chubais associate who is now an official of the European Bank for Reconstruction and Development, was to "replace the Soviet management machine with a system compatible with a market economy." Given the vastness of the task, he said, Chubais "has done brilliantly."

Most Russians would disagree. Their vouchers turned out to be largely worthless, and the popular view is that privatization was a rip-off. Privatizatsiya, Russians say in a typically biting play on words, was really prikhvatizatsiya--grab all you can. "They proclaimed freedom, property and law as their basic values," says a critic, Larisa Piyasheva. But in fact, she says, the "ruling elite" turned the state sector "into their private property virtually for free."

Public disgust over privatization nearly destroyed Chubais. After disastrous reverses in the December 1995 parliamentary elections, Yeltsin fired his deeply unpopular Minister, but Chubais got back into the thick of things much faster than expected. Presidential elections were scheduled for the summer of 1996, and Yeltsin's popularity was at rock bottom. Korzhakov and other intimates urged him to postpone the elections and declare a state of emergency. Yeltsin was tempted, but in mid-March consulted several political figures, including Chubais. His passionate arguments against that course swayed Yeltsin and led the President to put Chubais in charge of the campaign. At the time his acceptance seemed like political suicide, since Yeltsin appeared headed for defeat.

But Chubais pulled together a new team of savvy technocrats, businessmen and pollsters. More important, he established a strong working relationship with Tatyana Dyachenko, Yeltsin's forceful daughter, and tapped what an associate says were "unlimited" supplies of private-sector financing. Yeltsin's victory was a brilliant turnaround, even though the methods behind it--particularly the amount of money spent on the campaign--were questionable.

After being named presidential chief of staff within days after the final round of voting, Chubais brought together an eclectic group of people, such as Maxim Boyko, a Harvard-trained economist, and Yevgeni Savostyanov, an activist and disciple of Andrei Sakharov, who in the Yeltsin era became a KGB general. In trying to create his "dictatorship within the government," Chubais has wielded power with brutal enthusiasm. The recently created All-Russian Extraordinary Commission to collect back taxes, for example, has his fingerprints all over it. The idea is to scare money out of the companies that owe the government--and do not have enough political muscle to resist.

Too much power could be Chubais' undoing: Yeltsin does not like aides who can build an independent base. Some political observers argue that Chubais' unpopularity makes him more attractive to Yeltsin. Others suspect that in spite of the public's distaste, the chief of staff has concealed designs on the presidency. Yeltsin's re-election may have led Chubais to believe that with the right campaign team and lots of money, anyone could win. What Chubais needs, however, is something few Yeltsin associates so far have had: time. A few more years near the center of power, and the people might forget all about vouchers and privatization. "He'd be stupid if he wasn't thinking about the presidency," says a close associate. "And believe me, he is not stupid."

--With reporting by Yuri Zarakhovich/Moscow

With reporting by Yuri Zarakhovich/Moscow