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[casi] Gaider joins Al-Uloum in Iraq

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

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

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 comment.

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 said.

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

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 program.

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

"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

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 regime.

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 yet."

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