(«Ukraine — Russia: War or Peace», part 4)
Some of my readers asked me few questions, such as,
Why do I pay almost all attention to Russia and write very little so far about Ukraine? Why do I pay special attention to the political decisions that were taken by the Russian Prime Minister Yevgeniy Primakov, when Vladimir Putin appeared in Moscow and got his first job in the Kremlin, though these decisions were not directly connected to Ukraine? What was the impact of the political turn made in late 1990-s by Primakov and Putin on the Russian – Ukrainian relations?
Responding to these questions, I would like to note that until the end of the 1990s, the processes that took place in all post-Soviet states were very similar. By writing about the processes that were going in Russia, I describe the problems that were facing all the republics of the former USSR, including Ukraine.
However, in the late 1990s, when Yevgeniy Primakov became Prime Minister, the paths of Russia and Ukraine began to diverge. The changes in Russia, initiated by Primakov and later by Putin, were of a fundamental, profound nature, and the trajectories along which the two countries began to move, pushed them in different directions and predetermined the conflicts between them.
In this article, I continue to analyse the role of the Soviet military industrial complex (MIC) in the collapse of the Soviet Union, on how new defense technologies made the Soviet economy outdated and unable to compete with the West, and why the key figures in the Soviet MIC, who had very little or no interest in privatization of Soviet state properties and wealth, or opposed it, had to abandon attempts to preserve the old Soviet system and allowed the economy of the superpower to collapse.
Russia and Ukraine have chosen different ways of reconstruction and recovery after the post-Soviet collapse, and the current conflict between them is based on the differences between these ways.
I will also look back at the 2008 crisis, when it turned out that Russian “matryoshka system» created by Vladimir Putin and his group, unexpectedly for the Kremlin showed its weaknesses and contradictions that constrained further development of Russia. However, this will be discussed only in the next part of the series, and now let us start with the topic on how the glimpses of future brought down the Soviet superpower.
The scenarios of future wars that could not be avoided
The monster of the Soviet military-industrial complex has not only restrained and suppressed peaceful industries, including production of consumer goods, turning them into dual-use industries, but also engulfed, owned and inefficiently used the huge property.
Along with factories, plants and warehouses, the MIC owned many buildings in all Soviet cities and towns, including in the best areas. It engrossed enormous transport facilities, laboratories, institutes, landfills of testing and shooting ranges, hundreds of kilometres of seashore and ocean bays, islands of territories bigger than most of the European countries, airfields and just land covered with lakes, forests that concealed huge natural resources… There were tens of secret cities and towns not existing on the official maps of the USSR, their existence and names were classified, and access to them was prohibited.
MIC controlled over 80% of the Soviet economy and workforce.
The monster was designed and created for the third world nuclear war, but in peacetime it had to be abandoned.
There were two options: either to go through politically dangerous restructuring of the entire economic system, changing the lives of hundreds of millions of people, or to break the whole system, to make it collapse, to be torn apart, but trying to preserve the best, the most important and valuable parts and pieces deep inside, hidden from all, to be used as foundation for resurrection in order to create a new model of the country and society from the ruins.
Within this new model, a revamped MIC could be built. It has to be compact, relatively small, cost-effective, not overwhelming peaceful industries. It is to be focused on the future warfare and on those areas of science and military industry that could predetermine the level of defense that could provide decisive advantages in weapons and methods of conducting future wars. It has to correspond to military doctrine of the future and to be able to provide victory in military conflicts or to prevent them, beating off the desire of anyone to attack the new USSR.
This was vital, because already in the 1970s, the Soviet scientists and the key figures in the department of the Central Committee of the Communist party and the government, who supervised and controlled the Soviet MIC, well understood that the Soviet military doctrine based on the experience in the WWII was hopelessly out of date.
The offensives on the fronts and the occupation of the territories, as part of the military doctrine and the basis of the strategy of warfare, were in the past, perhaps irretrievably. Very few people in the world understood that, but in the Soviet MIC, in the General Staff and the Central Committee of the Communist Party of the Soviet Union there were people who understood it well.
It so happened that I met some of them in my life and worked with them. Among them were Yevgeny Primakov, Fyodor Burlatsky, Georgiy Arbatov, Lev Tolkunov, who was one of the key people in the «oasis» of Yuri Andropov and later the Chairman of the “Novosti” Press Agency…
Pictured: The group of consultants to Yuri Andropov, when he worked as Head of the Department in the Central Committee. Andropov nick-named this group «Oasis». Lev Tolkunov (sitting in center), Fyodor Burlatsky (standing second from right), the Moscow Kremlin, 1960s
Nuclear strikes, both powerful and small, the possibility of emergence in near future of high precision weapons and missiles capable of developing tremendous speed, nuclear-powered rockets, nuclear-powered space stations that will allow creation of powerful military and transport platforms in space capable of moving at great speeds at any distance for years, — all that made it possible in the event of war in few minutes to destroy enemy headquarters, ground control and command centers, as well as space communications and control satellites simultaneously.
In the first minutes of war, these weapons of the future will allow to deprive enemy troops of ability to control troops, to plan and conduct operations by armies and fleets. Tank armies, missile launchers and satellite groups in space — all this could be turned into piles of useless metals, semiconductors, plastics, and the personnel could be turned into unorganized crowds of armed men.
These crowds of confused, disorganized, ungovernable armed men, as well as crowds of confused and ungovernable unarmed citizens will turn into those masses that could sweep away any political system and any government… The occupation will be not necessary…
Remnants of the state apparatus, which will remain after the point strikes of missiles, will instantly disappear, dissolve or become easy prey of evil masses, if these masses master the ideas laid in advance, the ideas that able to master the masses in a situation of chaos.
The communist parties, workers, trade unions and other political groups of the opposition, pre-created, embedded and nurtured in the public and political spheres will have to play important role. Then everything has to go in accordance with Marx: the idea, which has mastered the masses, becomes a material force that can change any society and state, that can change the world.
Groups of political opposition, on command or independently, will take power or raise a revolt, or create chaos that will put an end to the state system of the enemy.
So, why do you need tens of millions of soldiers in this scenario? Why do you need to occupy territories, or to take administrative control in the enemy territory? All this can be done quietly later, when the situation calms down and matures, acting in the role of savior and benefactor.
Or, what happens if along with the communication and control centers, the most important electricity generation and distribution centers, or fuel reserves and production are destroyed throughout a country? Where can a billion of Chinese go if the trains stop, planes don’t fly, trucks do not run? What part of Siberia can the Chinese army occupy in the event of those destructions? It can only stay in China…
Or, as Andrei Sakharov, before he became a peacekeeper and Nobel prize winner, once suggested to create a torpedo capable of delivering a huge power nuclear charge to the enemy coast and explode to create a tsunami that will destroy everything for hundreds of kilometers on the enemy coast? In one minute to wash off Japan… Or leave in the UK only mountain tribes of Scots … Where will the Americans go if in first 10 minutes of war, hundreds of kilometers from the coast inland all disappear, washed away by millions of tons of ocean wave?
(This “torpedo” with the blast yield — up to 100 Mt, based on Sakharov’s idea, called “Poseidon”, or since Soviet times — “Status-6”, NATO reporting name Kanyon, has been created and will go on industrial scale production in Russia in 2021 — VM)
The US NukeMap model of Poseidon explosion near New York City.
However, tsunamis may not be required. The victory in war can be achieved not only quickly, but also inexpensively and relatively humanely compared to the WW1 and WW2.
In a future war the main goals could be achieved without great material and human losses, without any occupations, purges and suppressions. The destruction of state systems will be done mainly by the internal forces and at their own expense and cost…
The Soviet MIC on its way into the future
These were the weapons of the future, but then, in 1960-1970-s, these weapons were already in the process of being created. They were inevitable to emerge, although the outdated Soviet MIC hindered their development. The Soviet MIC was controlled by the old Generals and Marshals, who were covered with awards and medals, respected and loved by people.
MIC was huge, clumsy and aimed at the past, loaded with industries that had existed for decades. It refused to discard the old and to concentrate on the future. It was a monster whose time had passed.
The US military-industrial complex was the same kind of monster. However, the US monster was owned by banks, private companies and capitalists, by millions of shareholders, to whom it brought huge profits. It was not profitable to kill such a monster. The owners didn’t want to kill it and destroy the vast wealth of millions of the most powerful people.
However, the Soviet military-industrial complex belonged entirely to the state, and its destruction could not only solve the problem of modernizing the entire economy, but also make it possible for Soviet bureaucrats to create personal fortunes by privatizing parts of the Soviet economy.
Only the one who kills his aged dragon first, who destroys his monster first, could really win in the Cold War… For the sake of this it was worth risking the USSR, the CPSU and the outdated version of communism. With the new MIC, cheap and effective, it will be possible to find time and modernize communism ideology or even to generate a new theory.
As one of the assistants and close friends of the member of the Politburo of the CPSU Central Committee and the chief ideologist of the Gorbachev’s perestroika Alexander Yakovlev, once told me at that time: «Then your time may come. Then you may try to create a new ideology … If you live to see this time…”
Breaking is easier than building, but brains are also needed
It was from these positions that part of Soviet communist elite, who were not privatizers, «grabbers» and swindlers, but were statesmen, abandoned attempts to preserve and protect the outdated Soviet system and agreed to “perestroika” — restructuring.
However, the restructuring of the political and economic systems in the USSR through reformation without destruction did not work. To restructure the systems, the Soviet Union needed people equal to Lenin, Krasin, Stalin, Kaganovich, Beria, Kosygin, Voznesensky….
In 1980-s, there were no such people in the leadership of the party and the state, or there were very few, and they were not at the top of the government. In the Moscow Kremlin, there were Gorbachev, Yakovlev, Ryzhkov, Ligachev, Yeltsin, and similar level… By the 1980s, the political elite of the USSR had grown old or degraded intellectually and morally so much that such tasks were impossible for them to take up.
Moreover, the temptations of enrichment at the expense of the state captured the elite, and strikes with super-speed missiles and point weapons to destroy the centers of political control were not needed. Without war and invasion, the communist bureaucrats broke the socialist system and brought down the USSR allowing the West to believe that it won.
I heard about the readiness of the Soviet leadership to destroy the socialist system in the autumn of 1986, and I heard it from the man from whom I did not expect…
Valentin Falin’s warning
In the USSR, Valentin Falin was considered one of the smartest Soviet diplomats, one of the best specialists in history and culture of Europe, in particular Great Britain (in the 1960s he headed the European and British Departments of the Soviet Foreign Ministry) and Germany (in 1971-1978 he was Ambassador to Germany), as well as one of the best analysts of the Central Committee of the CPSU. He wrote analytical materials based on information received from the Ministry of Foreign Affairs and the KGB for Stalin, Beria, Gromyko, Khrushchev. He was the best specialist in German porcelain and the owner of the best collection of the German porcelain in the USSR.
When Yuri Andropov came to power in 1982, Valentin Falin fell out of favor. Andropov headed the KGB for fifteen years and had his own trusted analysts, a group he himself called «oasis.»
Under Andropov, Falin worked as a political columnist for Izvestia newspaper and wrote an interesting study called «Conflicts of Interest in the Anti-Hitler Coalition.»
When Mikhail Gorbachev, who was a nominee of Andropov, became the leader of the Communist Party and the Soviet state, Falin not only regained his position, but rapidly climbed the state and party career ladder. In 1986, he was appointed Chairman of the Board of Novosti Press Agency (APN), the main instrument of the USSR’s foreign policy propaganda, and it was Falin who created the analytical service in APN, which I headed in 1990.
Pictured: Valentin Falin (right) and Henry Kissinger (left)
In 1988, Falin became head of the International Department of the Central Committee of the Communist Party of the Soviet Union, and in 1990 he became secretary of the Central Committee of the Communist Party of the Soviet Union, in charge of foreign policy.
After the collapse of the Soviet Union, Falin lived in Germany. Several years before his death, he moved back to Russia. He died in 2018…
In 1986, when Falin was appointed Chairman of the Board of the APN, I was offered to become his assistant. At that time, I worked in the Information Department of the USSR Embassy in India, in Delhi, and was responsible for the information and counter-propaganda in the Indian media. In November 1986 my three-year stay in Delhi was coming to an end, and I agreed to the offer.
My consent was to be conveyed to Falin by Alexander Evfarestov, who also worked in Delhi as the First Secretary of the Information Department and was responsible for analytical work. Before appointment to Delhi, Alexander worked as an assistant to Lev Tolkunov, the key man in the Andropov «oasis», who headed APN from 1976 to 1983. In the late 1986, Tolkunov was Chairman of the Council of the Union, the upper Chamber of the Supreme Soviet of the USSR. Evfarestov was to go on vacation and meet Falin in Moscow.
When Evfarestov returned to Delhi, he called me to his apartment on Barakhamba Road to celebrate his return.
«I’m sorry, but I said that you had refused,» Sasha said, pouring me Scotch whiskey.
I was surprised.
— I thought I had agreed …
— Well, I decided that you and Falin would not work well. He needs an analyst who would spend all the time collecting information for him, writing notes. You love live work. It wouldn’t suit you …
— Damn, if I can run that does not mean I want to run and hold firing positions all my life. I always wanted to do quiet work, to write not being particularly responsible for anything… Nevertheless, everything is fine, — I said, not particularly upset. — We will continue to fight for the bright future of the Soviet-Indian friendship and cooperation. Archives and analytical reports can wait …
Laughing, we drank to Yevfarestov’s return from vacation …
Pictured: Alexander Evfarestov (left) and me in Delhi, 1984
I saw Valentin Falin when I returned to Moscow in November 1986. He was known to be close to all three most powerful men in the USSR — Mikhail Gorbachev, Alexander Yakovlev and Yegor Ligachev. Falin was Chairman of APN and was about to become head of the International Department of the Central Committee of the Communist Party of the Soviet Union.
Falin was speaking at a close meeting at APN, and that’s when I heard from him what struck me more than anything I had heard before in my life.
Falin was talking about the country changing rapidly and fundamentally, that we had to be ready to face and work in a new reality.
«The party must be ready to work in the underground, when it is not in power,» Falin said.
It was the end of 1986. The Soviet Union was still mighty and respected in the world. No one had any idea that the USSR could be destroyed or may collapse, that the Communist party could lose power. It was clear that the regime required changes, renewal, improvement, strengthening, development, and that was how we all treated Gorbachev’s policy. Perestroika was still widely supported, though Gorbachev already was criticized for his mistakes and weaknesses.
- What is he talking about? – I thought in surprise. – What does he mean by ‘in the underground’ and by ‘when the party is not in power’?
I didn’t know anyone at that time who would accept or presume that the Communist party could give up and lose power… Suddenly, at the meeting of the main propaganda body of the CPSU, its Chief, who was about to become the head of the party department that controlled foreign policy of the USSR, told us to be ready to work underground…! That we must be prepared for the party to lose power! … That they, the top party bosses, are ready and are going to lose power!
I couldn’t grasp what it was, what was behind it… One thing was clear to me, — that the Kremlin and the Old Square (the Headquarters of the Central Committee) were preparing to go «underground» and they began to prepare for this “underground” much earlier than anyone else in the country…
Photo: Valentin Falin (left), Genrikh Borovik and Alexander Yakovlev, member of Politburo and chief ideologist of perestroika (right) at the Congress of the Communist party
It meant that the top party and state bureaucrats understood that, in Lenin’s words, they “couldn’t govern the old way», that they couldn’t run and control perestroika that they had initiated…
Or did it mean that there was a split at the top? Falin knew about it and thought that this split would lead to conflict for power and to collapse of the country and the party?! How did he dare to speak about this openly?!
Or, they have some plan “B”…?
After the meeting, I couldn’t get Falin’s words out of my head…
Many people were dissatisfied with the situation in the country and the way Gorbachev carried out his «restructuring», but one thing was to be dissatisfied, to criticize the way it was done, to see mistakes, to demand changes, and another thing to surrender power, to relinquish power, to accept, sign up and pronounce your inability…
It was then that I realized that it would be impossible to save the USSR, because Falin’s words spoke about the most terrible news possible, that there was complete lack of self-respect, pride and belief in themselves, their strength and creativity… His words told me that the process of collapse and loss of power has already begun.
However, the active stage of this collapse came later, when the privatization of the Soviet state and public properties began…
Easy to privatize, but difficult to maintain
Now I need to come back to the story of how the American corporation «York International» tried to build its own production of milk coolers in Russia…
After our trip to Sverdlovsk (by that time it regained its old name Yekaterinburg), and then to Perm and Yaroslavl, it became clear that most of the industries inherited from the USSR were so different from the same plants built in the West, that to create on their basis a new production was too expensive and pointless. It was necessary to create production from scratch.
This was the decision made by York International in 1993. However, the privatization process that swept through Russia broke the plans of the American corporations too …
Russia was embraced by the process of privatization of collective and state farms, as well as state land that was not used for the agricultural production.
It was not a good to best process. It was not a process that could increase production and raise standards of living and wealth of farmers, as it was promised by the reformers. Everything turned out the other way around. Hundreds of thousands of collective and state farms found themselves without state plans and orders, which were canceled, and without a market mechanism for the sale of products, which had not been created.
Collective and state farms found themselves without money, without access to the market, without orders. State farms and collective farms collapsed. Farmers tried to survive. If they were lucky, they sold their land several times lower than the real value, or lost land if they fell into trap of swindlers.
Tens of millions of tractors, combines, trucks, which were owned by collective and state farms in the USSR, were abandoned and sold for export as scrap metal. The dairy farms were abandoned and the cattle were slaughtered. Milk production collapsed …
It could not be otherwise. With the transition to an open market, cooperative dairy farms could survive and operate only as collective property and while maintaining the state orders. It was impossible to sell dairy farms to new owners in Russia. There were no effective owners. The buyers had no start-up capital, no money for investment and development.
In 1992, Yegor Gaidar, the Acting Prime Minister of Russia, provided loans to the newly created AKKOR farming association. The loans were allocated in rubles. The amount at the exchange rate at that time was equal to 6 billion US dollars. However, nothing good came of it. Part of the money went to officials of the Ministry of Agriculture and the AKKOR management and was used to create and finance companies they set up, while the other part of the money went to collective farms. However, while this money was distributed and transferred, while those who were able to get hold of that money, were figuring out what to do with it, the ruble collapsed in a way no one could ever even imagine.
The ruble supply in Russia increased 500 times, prices rose 8000 times, and Russia’s GDP fell by 40%. The amount in rubles, which corresponded to a billion dollars, suddenly turned into a million, and a million into a thousand, and a thousand into one dollar…
Unlike the USSR, where the demand for milk coolers was huge, in Russia of 1990s, that demand disappeared. No one could afford to buy a milk cooler… There was no money, there were only few milk farms left…
Secondly, a strange story happened with the only Reco milk cooler supplied to Russia. This milk protector was installed as sample at the dairy farm of the Kommunarka state farm near Moscow. Before the collapse of the USSR, this state farm belonged to the Administrative Department of the USSR Council of Ministers and it supplied milk products to those who worked in the Government and the Central Committee of the CPSU. After the collapse of the USSR, the Kommunarka state farm was transferred to the Administrative Department of the President of the Russian Federation, and unlike most farms in Russia, the Kommunarka dairy farm continued to operate. However, unexpectedly, the Reco milk cooler, which had the highest efficiency provided by a unique compressor with the body made not of metal, as all other compressors in the world, but of ceramics specially created for it, that milk cooler has disappeared, and no one could explain to me where and why…
So, the USSR disappeared, the demand for milk coolers in Russia disappeared, the only chiller with a unique compressor also disappeared… The American and European farmers did not need those super technologies. Everything disappeared into the fog, like a hedgehog in the magnificent Soviet cartoon «Hedgehog in the Fog» (1975), one of the world’s most beloved animated classics about the journey of a hedgehog as he sets off to look at the stars with his friend, a bear cub…
Photo: Hedgehog in the Fog (1975)
However, the Americans were stubborn. They did not want to give up their faith in Russia and its future prospects. In 1993, they still believed in Russia of Yeltsin, Chubais, Gaidar…
The ways of the Lord are inscrutable
I also did not want to give up and hoped that the collapse of the economy in Russia could still be stopped through the creation of new modern production facilities. New technologies have emerged in the United States, including those developed by York International. These were not only small and light Reсo ceramic compressors for milk coolers, but also absorption chillers for refrigeration plants.
Building the production of the super-modern chillers in the United States was fraught with big problems for York. The corporation had already built factories, which at that time, were still modern production facilities and worked not only for the domestic US market, but also for foreign markets. It was impossible to close the operating production facilities enjoying high demand. York decided to build new factories abroad.
In 1993, York made a decision to set up the first production of absorption chillers in Russia on the basis of the Moscow plant «Compressor», and I was instructed to negotiate the purchase of the Moscow plant.
The plant was founded in 1869. It produced boilers. The factory workers actively participated in the armed uprising in 1905 and in the October revolution in 1917. After the revolution, the plant was nationalized and named «Kotloapparat». In 1931, it was modernized and given a new name «Compressor».
Before the War of 1941, the plant underwent another modernization, and it began to produce refrigeration machines and compressor equipment. When Nazi Germany attacked the USSR in 1941, in accordance with the redeployment plan it was relocated to Chelyabinsk, which is located on the border between the Ural Mountains and Siberia, where it began to produce BM-13 rocket artillery launchers, known as Katusha, as well as shells and other munitions.
Photo: the famous Katyusha rocket artillery launcher
After the war, the Compressor plant returned to Moscow to produce compressor and refrigeration equipment for all sectors of Soviet industry and agriculture. In the 1980s, the value of the products manufactured by the plant in world prices exceeded one hundred million dollars a year.
Pictured: Compressor Refrigeration Machines, 1980-s
In 1990 the plant was privatized and corporatized. Directors, managers and workers received shares in the new company, which now owned the plant.
Then, the usual story for Russia of those times happened.
The State Planning Committee was shut down, state orders were cancelled, the Compressor plant stopped working. The workers lost their wages, and in order to feed their families, they sold their shares for pennies. The workers did not know where and how to sell the shares, so they sold the shares to their former Soviet directors, who continued to sit in their offices, selling everything that could be sold: materials from the plant’s warehouses, unnecessary small equipment, cars and trucks…
These former Soviet directors, now called «managers», sit in an empty building of the factory management of a dead plant, angry with life, fate, the Gorbachevs, Gaidars, Chubais and waited for someone to come who could change everything…
At that moment I called the general director of the Compressor plant and introduced myself. —Ah, you are a Chubais’ friend! — The director greeted me with anger.
I was puzzled.
-Firstly, I’m not a Chubais’s friend,” — I said. — Secondly, I do not know you and have never seen you. Thirdly, I have not privatized your plant. As I know, there are other owners, not me. Fourthly, I have not privatized anything at all. I do not have habit or greed to privatize other people’s property, including state or public property, …
-Well, okay, don’t be angry,”- he said amiably. — We are sitting here angry, like dogs, and we hate everyone above … And you are running on the tops …
— I don’t run anywhere …
— Well, do not be offended, I said it without intention … We heard about you and York. You are now everywhere. Where we used to supply our chillers, now you sell the American «Yorks», and we are sitting here…
He started to get angry again, and I really wanted to hang up the phone, but decided to make one more effort.
-Why do you call us? – he asked.
— I’d like to meet you. The management of York Corporation is considering the purchase of your plant. If you’re willing to talk about it, I am ready to meet you.
-Well, please come,» — he said in surprise. — When can you come?
-I can do it tomorrow. At 11 o’clock.
-Please, come. We will wait for you…
Pictured: The entrance gates to the Compressor factory, 1990s
«Compressor» plant, which occupied a huge territory, was now located in the part of the city that became the central part of Moscow.
Next morning, I drove up to the gates to the factory, and my car was allowed to enter the territory of the plant without checks or questions. A man at the gates just pointed with his hand in the direction of the administrative building.
At the entrance to the building there were three men waiting for me. They were the former Soviet plant directors, now managers of the privatized plant. The CEO, a short man, who still looked like a mid-level Soviet-era director, shook my hand and presented his deputies.
We went into the building and climbed the stairs to the second floor. Outside and inside, it was a typical Soviet factory management building, but it was empty and quiet, like a cemetery. While we were walking to the CEO’s office, we saw no one and heard no sound, except for the sounds of our footsteps and voices, which echoed through the corridors and stairs.
In the office, we sat down at a long meeting table, and I briefly informed them about the York’s offer. The general director immediately moved on to the main question.
— How much are Americans willing to pay?
— We don’t have much information about the situation and condition of the plant. We need to look at your reports first, — I said. — I don’t make any offers and take no decisions. If the condition of the plant is acceptable, York representatives will come from the United States or Great Britain and Austria and will hold talks with you…
— Well, after all… I would like to have at least an idea of possible price…
— I don’t know, and no one has discussed it with me… However, I am sure that no one will make you such an offer. In addition, you can discuss your employment, so that you will remain working in the management of the plant. You can save the plant. It will be provided with orders. In that, “York Russia” will help you. We now have the largest market share in Russia, Kazakhstan, Ukraine, Azerbaijan, Turkmenistan. The plant will work for the whole of Europe and Asia, and that is a huge market that is growing rapidly. You won’t achieve it yourself. Most important, York has created a new absorption chiller, which it plans to produce not in the United States, but in one of the European or Asian countries. The decision was made to start this production in Russia. You can get this production. If you refuse, you will rot here in few months, or you will be eaten …
— Yes, we know,- the CEO said with annoyance. -Your Chubais will eat us…
— Not mine…
— I know, I know… I’ve already been told about you…
They looked at me with hope and alertness.
— What was the plant supposed to produce in case of war? — I asked, smiling to defuse the situation. — Rockets?
They looked at each other in surprise.
-It was a secret plan,” — said one of them, who had been silent the whole time.
— That is, you privatized the plant with all the secrets? — I asked, continuing to smile.
They looked at each other in surprise again …
It turned out funny. They privatized the plant with secrets, and now they are happy to sell it with all the secrets of an American corporation, and I sit here and negotiate the purchase of their factories, representing an American corporation … The ways of the Lord are inscrutable!
When they said goodbye to me, they looked at me as a Man from the Past, as they looked many years back at a secretary of the Moscow City Committee of the Communist party or a Soviet minister, or as a Man from bright and inviting Future…
— Well, Valery Pavlovic, please find out at least how much these Americans are ready to pay. It is very interesting… But, we understand that we have no other choice, — said the general manager of the “Compressor” shareholding company, looking at me as his greatest friend.
The next day, I sent the manager of technical department to “Compressor” to have a look at the plant, its equipment and to collect technical documentation and financial report to be sent to the US. In the evening, he came back and reported that from a technical point of view the plant was in perfect order.
— Please tell York that it is necessary to buy the plant. We have to save it…
A week or two later, I received telephone call from Vienna, and the CEO of “York Austria” Norbert Weber told me that York was ready to pay three million dollars.
-You start with this price, — said Weber.
I asked the head of the manager, who had been at the plant, to call the director of “Compressor” and arrange a meeting. Ten minutes later he came into my office.
-Valery Pavlovic, some crazy stuff is going on, — he said. — They have sold “Compressor”…
-To whom? — I asked in surprise.
-I have no idea. They shouted on the phone something about Chubais’ friends… I couldn’t understand anything, but I’ll find out…
Next day everything became clear.
After my arrival to “Compressor” and meeting with the owners of the plant, a group of crooks approached the owners with an offer to buy shares of “Compressor” plant. They offered to pay immediately 40 billion rubles, not in cash, but in promissory notes. In addition to 40 billion rubles in promissory notes, the owners were offered privileged shares, which the buyers promised to issue. The swindlers were ready to keep ordinary shares. The crooks explained to the owners who knew nothing about the shares that privileged shares would allow them to receive dividends first.
The former Soviet directors of the plant accepted the offer. They signed an agreement on the sale of the plant and received pieces of paper on which someone wrote that they cost 40 billion rubles. After that, the new owners fired the former directors and kicked them out into the street.
Naturally, no one was going to pay dividends. The new owners did not need dividends.
A few days later, I also received another offer. I was told that the new «owners» are ready to sell the plant to York Corporation. I refused to meet them.
— Tell the new owners that York Corporation shareholders will be very unhappy that I or someone else drags York into such a shitty situation. None would like to get into someone else’s shit …
The equipment of the compressor plant was sold as scrap, the administrative buildings were rented out for offices, and the workshops were rented out as warehouses for merchants and traders… for cash with no accounting, of course.
So, it remains to this day… “Compressor” plant disappeared as hedgehog in the fog…
Six months after York’s failure to buy the compressor plant, a scandal erupted in the Moscow Kremlin…
«York Russia» was the first company to sign a contract for reconstruction in the Moscow Kremlin since the collapse of the Soviet Union. That was the contract for the reconstruction of the air conditioning system in the Grand Kremlin Palace. The contract was signed with the Main Department of Guards (now the Federal Service of Guards).
In accordance with the contract, the advance payment was transferred and received on York’s account in the Russian bank, but before “York Russia” delivered the equipment, I received information that the Kremlin had made one or several more bank transfers to York account that I had not expected, and no money has come to the account. Several million dollars disappeared on the way from the Kremlin to our bank account.
It appeared that three commanders of the Russian top security service decided to steal millions of dollars allocated for reconstruction of the Moscow Kremlin using the contract with York as a cover. I didn’t agree with that, and the conflict between the Guards and York Corporation, though it ended in York’s favor, forced the US management to abandon plans to set up production in Russia, until the authorities become at least a little bit more intelligent, honourable and straightforward.
New plants began to open in China …
That’s how that story ended… (One can read about the conflict in the Kremlin here https://valerymorozov.com/news/942 )
(to be continued)