The Oligarchs by David Hoffman Page A

Soviet industry and not ideology. Nevertheless, it was common that a top industrial manager would be drawn into city affairs. In 1975 Luzhkov was chosen to serve on a local district council, and two years later he became a member of the rubber-stamp Moscow city council, known as the Mossovet. Its size varied, but the Mossovet at this time had about a thousand members. The entire city was run by the party, and the Mossovet was an enormous, unwieldy legislature, a facade of authority that decided very little. Luzhkov accepted a part-time post as head of the city commission on consumer services. It was an important choice because it was here that the seeds of change would be planted in Gorbachev’s early years of perestroika. 7
    In 1986 Luzhkov resigned from his industry post and moved full-time into the city administrative system. Yeltsin had arrived from Sverdlovsk and broke the news to Luzhkov personally; he had been made one of the deputy chairmen of the ispolkom , the city executive committee. His new duties included supervising the budding cooperatives in Moscow.
    As already noted, the old party stalwarts of the time were suspicious ; they saw the entrepreneurs in the cooperative movement as profiteers, speculators, and subversive enemies of socialism. When Luzhkov set up a commission to license the cooperatives in Moscow, the whole experiment stood on wobbly legs. “This was a mission, a very dangerous one,” Luzhkov told me. No one knew if it could survive the dead hand of the old system, which had stifled so much individual initiative over the decades.
    One unlikely champion of the cooperatives was a man who spoke in the dry, measured tones of a bureaucrat, Alexander Panin, a Leningrad management specialist who became Luzhkov’s right-hand man in dealing with the cooperatives. Panin was among legions of experts who, in between endless cups of tea and idle hours in their institutes, were supposedly working to perfect socialist management techniques. Panin, who had been discreetly reading Western management texts, concluded that the most important thing was to unlock the brilliance and imagination of individuals. He took a courageous decision and wrote a letter to the Communist Party Central Committee in Moscow. His ideas flew in the face of decades of party doctrine. He was summoned to the Central Committee offices at Staraya Ploschad,
or Old Square, and the party people listened, for a while. Panin told me that, by necessity, he had to dress up his notion of individual initiative with a lot of rhetoric, insisting that allowing individual initiative did not contradict socialist dogma. The party apparatchiks told Panin they could not help him, but they urged him to keep spreading his notions and approach the Communist Youth League, the Komsomol, which had a little more leeway for free thinking about such things. Amazed by their reaction, Panin kept up his campaign. He suggested a modest experiment in individual initiative—allowing people to start their own cooperatives, which would be very small private businesses, such as baking pies. Finally, the authorities agreed to let him try, and Panin became executive director of Luzhkov’s Moscow committee on cooperatives—to oversee baking of the first pies of capitalism. 8
    Luzhkov and Panin began in a room as large as a dance hall on the sixth floor of the Mossovet building in central Moscow. Simple folding tables were brought in to one side of the room. The staff worked by day; then Luzhkov, in shirtsleeves, came in the evenings, usually after 7:00 P.M., often holding meetings with the new entrepreneurs until well beyond midnight. The new businessmen thronged the halls with their proposals, their paperwork, their questions, and their substantial problems, not the least of which were how to get supplies from the state-run economy and how to get a room or garage for their new venture. “Bearded, shaggy, and looking God-knows-how,” Luzhkov