BORIS JORDAN: I remember it very well. We'd already opened the auction, and I was sitting in the auction center. I was watching the television, and I watched Gaidar get removed. NARRATOR: Communist opposition had forced Yeltsin to sacrifice Gaidar. His replacement, Viktor Chernomyrdin, was a product of the old Soviet central planning system. JEFFREY SACHS: There was no doubt that after Gaidar was thrown out of the prime ministership at the end of 1992 that the level of corruption rose tremendously. NARRATOR: State companies were sold off, and the trade in vouchers led to a fledgling stock exchange. A market economy was taking hold, but it was getting off to a shaky start. In Moscow, speculation was rampant in what some called the "Wild East." JEFFREY SACHS: A lot of societies have corruption, but Russia had an elite that had grown up in such an amoral environment
under the Soviet system that they really did believe that property is theft. "Okay, now we're in a private-property system; we'll steal it." And Russia had a lot to steal. You had the oil, the gas, the nickel, the chromium, the diamonds, the gold -- this extraordinary combination of huge natural resource reserves, and they were in state hands. back to top Chapter 19: Property Becomes Theft [6:18] NARRATOR: The biggest companies, the major industries were still controlled by their all-powerful managers, former Soviet "apparatchiks" known as the Red Directors. They were utterly opposed to the young reformers and privatization. The only way to privatize the commanding heights of the Russian economy was to wrest control away from the Red Directors. GRIGORY YAVLINSKY: In Eastern Europe, the real democratic revolution happened. it was a real replacement of the political elite. In Russia, the same people changed their jackets and changed the portraits in the rooms, and instead of saying "communism" and "Lenin" and "Five-Year Plan" started to say "market," "democracy," "freedom." ANATOLY CHUBAIS: I do remember one of the first meetings with the directors, which was very tough, very tough. They hate the language we speak; they hate the face we have. They hate everything which was connected with us. These guys were the real owners of the country. I was fighting for the real commanding heights in terms of who runs the economy. Who runs the economy, market or the Soviet directors? NARRATOR: The vast factory complex at Norilsk was to become a major battleground between the Red Directors and a new kind of Russian. Vladimir Potanin was a buccanneering businessman who quit his job in the foreign ministry and within a few years built a small trading company into one of Russia's leading banks. VLADIMIR POTANIN, President, Interros Holding Company: I decided to become a businessman at the moment when I understood that it is possible. I grew in a country where it was not possible, and there existed even a special article in a penal court of the Soviet Union which banished entrepreneuring activity.