The video recording of yesterday’s presentation of “Memoirs of a Russianist, Volume II: Russia in the Roaring 1990s” has now been released on http://www.youtube.com. I offer below the link to the video and the full text of the speech.
Speech: Presentation of “Memoirs of a Russianist, volume II: Russia in the Roaring 1990s”
First, I wish to thank the Russian House, Brussels for kindly inviting me to present the book today and for organizing this Zoom show.
Though it would be wonderful to be able to appear in person in the Russian House auditorium as was the case before Covid, there is an undeniable advantage to the Zoom technology in that the audience today extends across several countries – Belgium, Germany, Russia, Ukraine, the United States.
Moreover, it is thanks to Covid that I have books to present today. The self-isolation imposed on us by the pandemic led me to carry out a project that I had long postponed. The project of writing and publishing my Memoirs goes back more than ten years. Indeed, as you can read on the back cover of Volume II, it was already in my thoughts in 1998 when I was writing the diaries that are the basis of the Memoirs.
Five years ago I set out on the floor of my home office the 15 linear meters of files that went into Volume II, but they just sat there gathering dust. With no other distractions now and with the fear of imminent doom spurring me to act, over several months I spent my days transcribing the paper documents onto MS Word computer files. And from that I distilled the material now published in the books.
I speak of “books” because there are two – volume II which I will talk about today, covers the period when I worked as an expatriate manager in St Petersburg and Moscow, 1994 – 2002. Then there is volume I, which was also published in this past “year of the plague,” in November 2020 to be precise, and which covers the period from my childhood through my college years and work experience as consultant and as corporate manager looking after business in Russia and Eastern Europe from offices in Brussels, in London, in Frankfurt, all the way up to 1994.
I speak about Volume II today because it is the volume with greatest interest to the broad public. The 1990s were volatile, with dramatic changes in the economy, in domestic and foreign policy almost weekly. The times set the stage for the East-West confrontation of the 21st century and so have immediate relevance to today’s reader. However, Volume I has its own merits to recommend it to your attention: it helps you to understand where the author of Volume II came from, what intellectual baggage and life experience I brought with me to my assignments as expatriate manager in Russia in the 1990s. And within the narrative and diaries of Volume I there are chapters which the general reader can enjoy.
There are two high points of Volume I worth mentioning here. The first was the period when I headed my own consulting company and took the senior executives of a half dozen major U.S. corporations in the food processing and agricultural sectors to negotiations for major turnkey projects in the USSR. That is 1976-1980. The highest point within that period was my participation as a guest at the dinner in honor of Leonid Brezhnev in the Kremlin in December 1978. At that point, as a company president, I was among America’s 150 captains of industry singing “Happy Birthday, Dear Leonid Ilyich” to the General Secretary of the Communist Party. The second period of greatest interest in Volume I is the four years from 1989 to 1993 when I was employed by the logistics company United Parcel Service to create and then to operate a parcel delivery system in what had been the East Bloc, and within the USSR to create and co-manage a Joint Venture delivery company with Russia’s biggest ground transportation company, the trucking firm Sovtransavto. My adventures traveling across the Soviet Union as far as Vladivostok in the East, down to Central Asia where Uzbekistan became our main hub, and through the Baltic States and Ukraine are set down in diary entries which read like a time lapse recording of the final couple of years of the Soviet Union when it was in progressive dissolution and the local populations of the borderlands were trying to find new identities.
Volume II will soon be launched in a properly edited Russian translation by the St Petersburg publishing house Liki Rossii. It will have a new name: not “Memoirs” but “Diaries of a Russianist.” That name change will better reflect the true nature of these volumes.
Many people publish memoirs, often written decades after the events described and based on sketchy recollections. In my case, 75% of both volumes consist of diaries, a further 10% is news clippings and 15% is overarching narrative placed at the start of each book to orient the reader about the blocks of time that will follow.
As a professionally trained historian, with a doctorate based on research in state archives the contents of which tend to be dry and impersonal, I knew the value of diaries very well from when I was lucky to find such documents in the collections of university libraries. That value goes well beyond the details that our memories tend to lose later. Rather, the greatest value is to convey the thinking of the author and of his/her interlocutors at the time of the events, without any changes that are always introduced in memoirs written much later as personalities evolve over time and as social values change.
In keeping with this approach and not to compromise the status of these volumes as “primary sources,” I have kept the lessons I draw from the diaries largely to myself. You will find very few generalizations in these volumes. It is largely up to you to extract what you wish from the diaries depending on your interests.
However, today I will violate that principle and share with you in this presentation some of my conclusions from the diaries. These are in several dimensions worthy of note: domestic politics in Russia at the time, the challenges of doing business in Russia back then, foreign relations and culture.
Since the host of this book presentation is the Russian House was until recently known as the Science and CULTURAL Centre, I think it is appropriate to begin with and to devote most of my remarks to what my book tells us about Russian cultural life in the 1990s. That is all the more justified when you browse the diaries themselves and find, as I did, that a great deal of my time and attention was spent on Russian culture.
I will go into that in a moment. But first the overriding conclusion that I draw from the diaries in this particular dimension: that the performing arts in what we call High Culture were, are and likely will always be a defining characteristic of Russia and “Russianness.” Even in the very difficult times of the 1990s when the Russian economy had shrunk by 50% (compare that to the US loss of 30% of GDP in The Great Depression) Russia had one of the world’s richest offerings of high culture that we foreign residents, often living without our families, had the time and interest to explore.
However, I was not just a consumer of Russian culture. My work and my interests gave me the opportunity to participate in the creation of cultural events.
As the general manager in Russia of multinational corporations at a time when sales were in the hands of our local business partners, not run directly by our employees, and when most strategic direction was given by corporate headquarters in London or New York not by people in the field like myself, I had primary responsibility for public and government relations, for brand image, not for daily sales. This was all the more true during my two years 1998 to 2000 working for United Distillers/Diageo, the world’s largest liquor company then, and today, since the number one issue facing the company in Russia was the challenge to its ownership of the Smirnoff vodka brand by a local offshoot of the Smirnoff family, Boris, who had set up his own vodka brand and was capturing market share. His legal challenge was not only intended to drive our Smirnoff off the Russian market, which he successfully did, but also to collect billions of dollars in damages for the sale of Smirnoff around the world on the basis of wrongly claimed ownership. Since you have seen a lot of vodka brands on supermarket shelves, allow me to explain that in the period under review Smirnoff was the world’s best- selling vodka and the second best-selling hard liquor brand after Bacardi rum.
Besides the law courts, the defense of Smirnoff was carried out in the domain of public and government relations, which I answered for. Sponsorship in the arts was and is an important tool of public relations in the luxury goods sector. I was given a relatively free hand in choosing where and on what to spend the funds entrusted to me for these purposes.
For those of you unfamiliar with the workings of international business and who may believe that sponsorship is a crassly commercial activity motivated directly by profit targets, let me inform you that the relationship between sponsor and beneficiary is much more subtle and mutually advantageous. I will explain in detail in a moment.
First, I want to stress that the sponsorship activities which I oversaw were generally on a limited budget. Not all of them to be sure. Indeed, when I was general manager for United Distillers/Diageo my single biggest project was not cheap. I headed the board of the Russian Booker Literary Prize, because my company paid the bills of the competition, which came to about $200,000 per year. Of this $15,000 went to the first laureate of the Prize. The rest went into supporting and building out the infrastructure of the competition: the Long List and Short List announcements at press conferences, which entailed generous hospitality for journalists, and the Awards Dinners which were organized on a lavish scale. We engaged the main ballroom of the Metropole Hotel in downtown Moscow, opposite the Bolshoi Theater; we entertained our guests with a chamber orchestra conducted by a deputy to Valery Gergiev and with appearances by known stars including at the time Bolshoi Theater tenor Nikolai Baskov, who is today a leading television personality in Russia and crooner at every televised New Years celebration.
Otherwise, however, I was able to achieve considerable impact with spending far less money. This was all the more possible in St Petersburg, where I chose to hold many of our sponsorship events, partly because many could be executed there at a cost 10 times less than in Moscow. In 1996-97, on behalf of my employer Seagram & Sons, the Canadian liquor company, I arranged to sponsor four concerts of the St Petersburg Philharmonic Society to mark the 75 years of their founding. These were events with high visibility in St Petersburg to which I was able to purchase tickets for our VIP guests, including government officials of importance to our business, such as the head of the city’s customs office, the directors of our main importers and distributors with their wives. At one concert the star performer was the singer Barbara Hendricks, then in great demand across the world. At another the conductor was Sir Georg Solti. Our contribution to each concert was just $2,000. By an agreement with the managers of the magnificent Grand Hotel Europe across the street from the Philharmonic, we hosted post-concert receptions for the lead performers which were highly appreciated. In this we were recreating the tradition of such receptions that was widely practiced before the Revolution.
Another key cultural event for which I arranged sponsorship was also done jointly with the management of the St Petersburg Philharmonic: this was the first ever Russian performance of Dimitri Shostakovich’s opera “Lady Macbeth of Mtsensk” (known only till then in its censored version “Ekaterina Izmailova”). This was to celebrate the anniversary of Shostakovich’s birth. The performances, two in Moscow and two in St Petersburg, under the direction of Mstislav Rostropovich, had national importance. That cost us a total of $20,000. In Moscow the proceeds of ticket sales were contributed to the reconstruction of the Christ the Savior cathedral, a project that enjoyed the patronage of Mayor Luzhkov, so that the donation made business sense in terms of our visibility before the authorities.
I do not mean to suggest that all events sponsored by major international companies in St Petersburg were cheap. On the same day as we had Sir Georg Solti at the Philharmonic, Mercedes Benz sponsored the performance in the Mariinsky Theater of the Berlin Philharmonic under the baton of Claudio Abbado. That must have cost Mercedes several hundred thousand dollars – to bring the entire orchestra to St Petersburg, and to host their VIP guests in loges at $600 per loge. Add to that the cost of the direct broadcast of the concert to Germany by German television.
Nonetheless, my point is that brand building activities in public and government relations do not have to be very expensive in cash, though they are very demanding of management time. The best payback is what I heard from Yasha Gordin, the editor in chief of St Petersburg’s literary journal Zvezda, after one of our sponsored concerts: “I see that your company Seagrams not only comes here to take but also to give back to Russian society.” That is what every sponsor wants to hear.
It takes two to tango, and I wish to point out that especially in St Petersburg we had very good partners in the general director Anton Getman of the Philharmonic Society and in the Mariinsky Theater, where we established excellent relations with the Intendant, Schwarzkopf.
Over the course of the six years I was working in Moscow from major corporate offices, my cultural activities began primarily in music, then moved to literature and finally to drama theater.
Aside from financial affordability, a major reason for concentrating on music in St Petersburg rather than Moscow was that at this time the Mariinsky theater of opera and ballet under the musical directorship of Valery Gergiev was unquestionably the leading house of music in the whole country. After the forced departure of choreographer Grigorovich, the Bolshoy was in disarray, ruled by committee.
In the 1990s, the Mariinsky Theater was my second home. Our closest friends in St Petersburg were the Kalagins. Sergei was one of a handful of conductors performing in the orchestra pit several times a week and also taking the orchestra on some foreign tours. For many of the performances which Gergiev himself conducted the preparatory work with the orchestra was carried out by Sergei or other assistants.
Thanks to Sergei, Larisa and I sat in the Director’s Loge several times a week. After a show we would leave with Sergei and often with his wife Irina and his daughter Nastya, then a student of the Conservatory and protégé of Larisa Gergieva in her group of young singers, to take champagne at the most prestigious meeting place in the city at that time, the Grand Hotel Europe. Anastastya Kalagina is today a soloist – soprano – in the Mariinsky. We also were introduced to Kalagin’s circle of friends among the opera singers – I name here Victor Chernomortsev and Sergei Naida, who were known in Europe and in the Metropolitan Opera in New York. All of these get-togethers were recorded in my diary and are largely reproduced in this book.
The Mariinsky meant still more to us. For a couple of years we rented an apartment from the first and second viola players in the orchestra, the Safarovs, and they invited us to their dacha, which Seva built in an artistic community outside Petersburg. We went to the debut performance in the Conservatory of their violinist daughter, who today is second violin in the Mariinsky.
Now a word about my involvement with Russian literature in the 1990s, or to be more exact, during the years 1998 to 2002 when I was the chairman of what was then Russia’s most prestigious private literary award, the Russian Booker Prize. For the first two years of my chairmanship, my position was directly attributable to my employment with the Prize’s general sponsor. However, after my departure from United Distillers/Diageo in 2000 I was kept on as chairman at the request of the U.K. Booker Prize in recognition of the substantial work I had been doing to expand the activities of the Prize in Russia and bring it into line with the formula for success that had made the UK Booker the world’s leading literary competition, attracting the attention of the British middle and upper classes, and yielding book sales of the laureates on the order of hundreds of thousands of copies.
When I came to the Booker, the Russian off-shoot needed excitement, to capture popular imagination. It also needed to do some work with the publishing industry and with booksellers to revive the supports to literature which had collapsed with the Russian economy from the late 1980s into the 1990s. In this regard, with the assistance of the British Embassy we arranged events bringing together these critical contributors to literary production and consumption. The lady general manager of the St Petersburg Dom Knigi, Samokhalova, was a strong supporter of these initiatives.
When I joined the Russian Booker, not a single novel nominated for the Prize was actually published as a self-standing book: they all had been appeared only in literary journals. We paid for a retrospective publication of the past laureates as hardbound volumes.
Adding well known authors to the Advisory Committee that oversaw the awards process was one task to raise the visibility of the Prize. In this regard, I can name one outstanding writer who joined at our invitation – the satirist Vladimir Voinovich. Still more important was the addition of popular personalities from the arts to the jury. The fact that the Booker jury changes every year was a key part of their success formula – to ensure that the personal taste of a permanent jury is not the determinant of winners year after year. With changing juries recognition is given to the highest quality in various literary trends. Thus, together with the Advisory Committee I brought onto the jury, Dmitry Bertman, enfant terrible and director of the fashionable boutique opera house beloved by Moscow intelligentsia, the Helikon Opera. Also the film maker Valeri Todorovsky. And actor Sergei Yursky ….
These appointments are all set out in the diaries.
Of course, everything comes to an end. When Diageo wound down its funding of the Booker in 2002 and a local sponsor stepped in, The Open Russia Foundation of Mikhail Khodorkovsky, it was time to turn over the chairmanship to a Russian and for me to move on. However, the moment of transition was by itself unexpectedly interesting and I recorded in my diary, published in Volume II, a verbatim account of my meeting with the new “owners” of the Russian Booker. That meeting sets out a clear rebuttal to anyone who says that Khodorkovsky stood for civil society in Russia. Quite the contrary, he and his foundation had no respect for our free jury and behaved like authoritarians. Thus, in 2003 the winner of the Russian Booker Prize was dictated by none other than Mikhail Khodorkovsky himself, who overrode the jury and issued the winner’s name from the prison cell where he was then.
In Moscow, there was still another cultural establishment with whom I brought my employers into a sponsorship relationship. I have in mind Yuri Lyubimov and his Taganka Theater in the period 1998-2002. Our “sponsorship contribution” consisted of wine and hard alcohol for their frequent receptions in the theater. These allowed them to be generous hosts to visitors of great importance, for example, the lady President of Finland. Or when they hosted the 80th birthday celebrations on stage for Alexander Solzhenitsyn. I was there and took down my notes on these extraordinary days.
At such events it is expected that luxury beverages will be served with the buffet table food. However, under rules of the Russian state Treasury, institutions receiving government funding were not allowed to spend money on liquor. We helped them out of this embarrassment repeatedly and regularly. In return, we were invited into the inner sanctums of the Taganka.
I think of the gatherings in Yuri’s offices where we could meet some very interesting personalities, as for example, our meeting with the oligarch Boris Berezovsky, who was invited in to see Yuri since the latest show then in rehearsals was made possible by money from the award Triumph that Berezovsky sponsored. It was a revelation to see that Berezovsky, who was flattered by Katalin Lyubimova as “The Brain” in the room, could not remember her name when he was proposing a toast and addressed her as “Yuri’s companion for life.” These and similar notable events were captured in my diaries and are published in Volume II.
I mention here that Yuri Lyubimov first entered my consciousness in 1972 when my future bride Larisa Zalesova talked our way into the sold out Taganka performance of “Hamlet” starring the already then famous bard Vladimir Vysotsky. We were given places on the stairs. Then I had first met Lyubimov in person at the end of the 1980s when he was living in exile, based in Jerusalem, traveling the world and largely employed by opera houses, including nearby Bonn. He was here in Brussels for a couple of days staying with the dissident writer-publisher Maksimov, a friend and collaborator of Solzhenitsyn. Maksimov owned a house in the Brussels borough of Foret. I drove Lyubimov down to Namur for a day of mushroom hunting. These events are set out in Volume I of the Memoirs.
Doing business in Russia
When I arrived in Russia to live and work in 1994, there were at the time 50,000 expatriate managers and their families living there. Some in senior positions were my age. Many others were quite young, 15 or 20 years younger than me. Many of these comparative youngsters came to Russia to study the language and literature, saw the opportunities to get good jobs immediately and stayed to make their fortunes. I write about this cohort in the chapter of Volume II entitled “Who were we, the expatriates?”
I point out here that while some of the young foreigners were unprincipled opportunists others were highly talented and trained professionals who were using the vacancies in their chosen field to get invaluable experience in a major emerging market. This concerns journalists in particular. It is worth mentioning that the current Deputy Prime Minister of Canada Chrystia Freeland was in the late 1990s a reporter in Moscow for “The Financial Times.” Her well composed articles on many different facets of life in Russia were published several times a week. There were also some very smart journalists in what I would call the “underground” English language press in Moscow working for “The Exile” and other publications that exposed the hypocrisy of both expat and official Russian communities.
As regards doing business, the generalization I offer today is that it was very difficult, almost impossible to do business legally in Russia in the mid-1990s. The picture of Russia as a normal country governed by law that the Big Accounting firms were presenting to the headquarters of multinational corporations was nothing more than a Potemkin- village that contradicted the chaotic reality.
The problem was not an absence of law, although to be sure there were entire domains with respect to share trading, truth in advertising and so forth where the law did not yet reach. The bigger problem was the body of law that was inherited from the Communist past that was in flagrant contradiction with the market economy being introduced. This was the legacy of 70 years of Communism and was based on the assumption that all private business was run by criminals. Hence, there were restrictions on all business transactions. The Central Bank forced the commercial banks to act as policemen. Both income and expenses of more than a few dollars had to be justified to the bank managers. The situation was impossible.
Privatization was uppermost in the minds of Russian “reformers” and their Western backers but it did not address this critical dimension of the market economy in formation. Western mainstream media and Western politicians spoke of Russia’s problems as being the mafia, corruption. These were lesser evils. Meanwhile many Western consultants arriving on assignments for US Government and European Community agencies were abusing their fiduciary responsibilities when serving as advisers to the Russian reforms and engaging in their own corruption. I discuss this in the diary notes, backed up by news clippings.
The further problem facing business, both foreign and local business, was the never ending flow of new decrees and regulations supposedly to implement laws but in fact taking the place of laws. The many years’ war between President and Duma during the Yeltsin period meant there was no proper legislation during the whole time. The decrees were often contradictory and confusing as power shifted to and from among Yeltsin’s entourage between reformers and conservatives.
The alcoholic beverages industry in which I worked for most of the period 1994 to 2000 was one of the most criminalized in all of the Russian economy. It was also highly politicized. Taxes on liquor had accounted for about 30% of the Russian state budget in the days of the Soviet Union. They were still 23% when the Soviet Union collapsed. That is to say, liquor was as important to the Russian state then as gas and oil are today. For that reason, the taxes and regulations governing the alcohol industry were a point of contention among the politicians at the top. I was following closely the political fortunes of Anatoly Chubais back then because his policies on the alcohol industry were of decisive importance to our daily work. Hence the extensive diary notes on who was who in the Presidential Administration. These may not be of interest to every reader, but they will have importance for historians of the period.
Russian Domestic Politics
As I leafed through my diary notes, I found many entries reporting on speeches behind closed doors delivered by leading Russian politicians of the day, for example the governor of Novgorod oblast, Mikhail Prusak, or the deputy minister of Finance or the head of the Tax Administration.. But the speakers were not only members of the government, federal and provincial. They also included important people from the State Duma, such as the chairman of the Committee on Taxation. These gatherings were often organized by the American Chamber of Commerce in Moscow, which despite its name, was the largest business club of all international companies operating in Russia.
Then there were also industry association gatherings that I attended such as those organized by the alcohol producers and bottlers Rosalko. They were busy preparing to lobby the government to save the industry which in 1996 was operating at only 10% of capacity for a number of reasons that the government could remedy if it took an interest. At these meetings the leading figures in the Government responsible for excise taxes and other issues of vital importance to the industry spoke. What emerges from my diary entries is in direct contradiction with what we are accustomed to think about the domestic political situation in Russia during the Yeltsin years, namely that a Reformist minded Executive was in never ending conflict with a Communist dominated legislature, compelling the use of presidential decrees to get things done.
What I saw before me was very often incompetent or wholly impractical people from the Ministries and presidential administration and very competent and patriotic legislators from the Duma who knew their economics very well. And while we in the West celebrated the Liberal Reformer Boris Nemtsov for the supposed economic miracle in his Nizhny Novgorod oblast, which never happened in fact, the quietly efficient and business friendly governor of Novgorod oblast situated between St Petersburg and Moscow, had captured several of the country’s biggest manufacturing investments, including the 200 million dollar Cadbury chocolate factory and the Stimorol chewing gum factory thanks to focused assistance to overcome bureaucratic obstacles in such matters as fire inspection and housing for workers. Prusak did not offer tax breaks and that did not harm to his attractiveness to foreign investors.
Then there is the issue of good and evil in the Russian political world, a never ending refrain in Western commentary on Russia up to the present. Those Russian politicians who provided favors to Western business were by definition Reformers and their opponents were by definition retrogrades, Neanderthals.
However, as one sharp tongued political analyst writing in the “underground” English language press in Moscow observed in his commentary on Boris Nemtsov as a phony Liberal and de facto defender of the status quo: we Westerners always painted Russian political fights as between good and evil when most often they were, like political contests everywhere, a fight over power and the perquisites of holding office and not much more. We very easily forget that in the 1990s nearly all of those occupying office within the government or elected to office by popular vote were former Communists with the same education and life experience. Liberals took to authoritarian behavior and to corruption once in power like ducks to water. The reality was that Russia was ruled by presidential decree and by implementing regulations issued for all new and old laws which had the power of laws themselves. There was a constant flow of regulations from the top down. The political direction of these edicts and regulations changed at any moment depending on the shifting balance of power in the Executive, with Liberals like Chubais in favor one day and out of favor the next.
Of course my diary and the news clippings record the developing international relations and the growing alienation of Russia from the US led International Community. Russia’s liberation from Western tutelage was signaled by the retirement of “Mr. Yes,” Foreign Minister Andrei Kozyrev and his replacement by Evgeni Primakov, a strong defender of national interests and “realism” in foreign policy. What is less noted in Western accounts of the period but what impressed me was how the Duma elections of 1995 and emergence of strong nationalist and pro- Communist voters fed the argument in the West that Russia might turn from the liberal democratic path, and so NATO enlargement would protect against any resurgent Russia.
I also direct your attention to my description of one of the turning points in Russian –Western relations, the murder of American investor Paul Tatum in November 1996. His gangland style execution just outside the hotel-business center of which he was co-owner together with Mayor Luzhkov’s Property Office, showed that Western businessmen were as likely to see any disputes with Russian partners settled in gun battles as were purely Russian bankers and businessmen. That was a shock to the entire Western business community.
These are some of the highlights of Volume II in my reading. The book is vast, nearly 800 pages. No doubt every reader will find what interests him or her most and will skip material that is outside that focus of interest. I do not expect the average reader to go through this book word for word, page for page. But I do believe there is enough variety to satisfy both specialists who will use this book in university courses as a primary source and general readers who want to learn about those fateful years in Russia from a very personal perspective of someone whose feet were on the ground and had the advantage of being an outsider recording the views of the expatriate community as well as of Russians in all levels of society.
©Gilbert Doctorow, 2021