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[casi] U.S. brings in Russian "shock therapist"

Subject: U.S. brings in Russian "shock therapist"

This is the last bit of proof we need that the U.S. plan for Iraq is
total privatization and corporate take-over -- "in the shortest period
possible." In other words, no end of the occupation until the economic
transformation is complete. From today's Moscow Times.

Tuesday, Sep. 9, 2003. Page 1

Gaidar Invited to Shock, Awe Iraq

By Catherine Belton and Oksana Yablokova
Staff Writers

The architect of Russia's at times disastrous transition to a market
economy, Yegor Gaidar, has been invited by the U.S.-led coalition
authority in Iraq to help craft a recovery plan for that country's
war-torn economy.

The announcement, made by Union of Right Forces co-leader Boris Nemtsov
at his party's congress Monday, nearly stole the show from the party as
it announced its list of contenders for December's parliamentary
elections. At a mid-congress briefing, reporters were more interested in
Gaidar's plans for Iraq than in his party's plans for Russia.

"Many of the problems they are experiencing in Iraq are problems created
by the collapse of a totalitarian regime that had a high level of state
participation in the economy," Gaidar, a co-founder of the party, told
the conference. "These problems have parallels with the histories and
practices of post-socialist countries. They want to work out how to
minimize the risks and privatize the economic system in the shortest
period possible."

As President Boris Yeltsin's first -- and youngest -- prime minister,
Gaidar spearheaded the country's move away from a planned economy. He
was also the overall architect of the largest and swiftest privatization
in world history.

Seeing himself as a "kamikaze" who didn't have much time to bring about
revolutionary change before opposition forces moved in, his program of
"shock therapy" was aimed at combating potentially disastrous shortages
of goods. It ended up sparking a wave of hyperinflation that saw prices
increase by a factor of 26 within a year, wiping out the life savings of
an entire generation overnight.

His scheme to privatize as rapidly as possible saw the crown jewels of
the economy handed over to a handful of well-connected insiders for next
to nothing.

This time, however, it's unlikely that Gaidar will have quite as much
influence. An official at the U.S. Embassy in Moscow said Gaidar had
been invited to take part in an international conference in Baghdad
later this month "with a view to explaining how European experience with
economic reform might help Iraq manage its transition."

The official said experts from nine Central and Eastern European
countries had been invited to speak and about 50 Iraqi leaders,
including members of government committees and some ministry advisers,
would be in attendance.

He could not say, however, what role the conference will play in
deciding Iraqi economic policy, or what the future role of participants
might be. The U.S. authority in Baghdad could not be reached for

In a telephone interview later Monday, Gaidar said he had only received
the invitation Friday and had yet to discuss any plans with
representatives of the U.S. administration.

"Time would tell" if he would have to pack up his work in Russia and
move full time to a brief advising Washington on reconstructing Iraq, he

The decision to pick some of the world's most experienced brains on
transition economies comes as U.S. President George W. Bush seeks to
extend responsibility for postwar Iraq to non-coalition countries. (See
story, page 13).

Ironically, it also comes shortly after Iraq's new oil minister, Ibrahim
Bahr Al-Uloum, told the Financial Times that his country is preparing to
privatize its oil sector.

"It would be fantastic if [Gaidar] were handed the opportunity to deal
with the same giveaway twice in one lifetime," said James Fenkner, head
of research at Troika Dialog. "It's the same sector too," he said,
drawing a parallel with Russia's oil-dominated economy.

A longtime critic of Russia's reforms, Marshall Goldman of Harvard's
Davis Center for Russian and Eurasian Studies, said by telephone that
Washington could have made a worse choice -- it could have asked advice
from fellow Union of Right Forces member Anatoly Chubais.

"If they had invited Chubais, that really would have set off a
firestorm. That would have really been too much," he said. Chubais was
appointed by Gaidar in the mid-1990s to run Russia's privatization

Goldman, however, said that Gaidar could prove to be an important voice
for Washington.

"Gaidar had the best of intentions. Maybe this is not such a bad idea.
Having seen what happened to Russia, he will be aware of the pitfalls,"
he said. "He can help Iraq avoid making the same mistakes."

"Bush has clearly said we need help. This is no longer going to be an
American show. Bringing in someone like Gaidar will give the Russians a
sense they have stake in Iraq too," Goldman said. "Maybe [Russia] will
send in troops."

Moscow's diplomatic battle with Washington -- first over whether the war
was necessary at all and then over whether the United Nations should
play a more prominent role in governing Iraq -- has threatened to damage
burgeoning ties with the Bush administration.

Before the war, Russia had taken a leading role in Iraqi industry.
Gaidar, however, said his role would not involve defending Russian
companies' contracts in Iraq. "This should be what the Russian
government does," he said.

One problem could be that Iraq, like Russia before, does not have much
time to carry out reforms if further political unrest is to be avoided.

But Gaidar said reforming Iraq would probably prove less complicated
than reforming Russia. "There were very many problems in Russia, more
than in Iraq," he said. "We tried to do everything to avoid a civil war
and economic catastrophe. In the end, we succeeded."

He said battling inflation in Iraq is a key issue, but that doing so
would not be as difficult as it was in Russia, where the matter was
complicated by the implosion of the Soviet Union into 15 former
republics, with each printing its own currency. He said the main problem
would be stabilizing the economy after the collapse of the previous

Gaidar said he did not want to comment further on Iraq until he had time
to study the situation. He said he does not even know if he will be
getting paid for his work. "We have not discussed such technical things

Stop the War Profiteers!

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