About
Adam A. Blanco lived and worked in Russia for 18 years, arriving in 1991 with the first Peace Corps volunteers to assist Russian entrepreneurs. After serving his two-year tour ending in 1994, Mr. Blanco consulted the Russian ZeFs Machine Tool Plant, located in Nizhny Novgorod, on enterprise restructuring and played a critical role in the establishment of Coca-Cola Inchape bottling and distribution Center, also in Nizhny Novgorod. In the late ‘90s and early ‘00s he implemented several United States Agency for International Development (USAID) economic development programs in Eurasia, establishing FINCA Microfinance Bank—Tajikistan and the Russian Microfinance Center in Russia. He also advised the Central Bank of Russia on payment systems and bank prudential supervision practices, led Visa International business development in Central Asia, and held a senior position with the Rolf Group, Russia's largest privately held automobile wholesale and retail distributor.
Adam Blanco: This was, in as a segue way into our whole discussion. I never planned on being here. We’ve been here for the past 11 years; it was originally a vacation home. When I was declared persona non grata, given ten days to leave the country, we came here. After paying the obligatory bribes to get the kids into the Moscow kindergarten, my family was here at the vacation home. I had to call my wife and say, "Honey, don't come back."
Daniel Satinsky: Wow.
Adam Blanco: So, summer, July 2009, I said, "I've been told to leave the country." My wife is Russian,and we speak Russian at home, so... But you know what? Damn. It took me three years to decompress. Someone once described my reluctance to leave Russia as a drowning man being thrown a life vest and refusing it. The ship's going down. Okay. Take it, take it. Be a better man.
Daniel Satinsky: Well, let me start. Usually, I start with asking people how they got involved with Russia. But maybe with you, it's better to start at the other end. How is it that you got thrown out?
Adam Blanco: That's a good question, Dan. I'm really not sure. I think it is a combination of issues. Another friend of mine described it as...death by a thousand cuts. AID, relationships with option leaders, Boris Nemtsov, Sergei Petrov, etc. You and I have a lot of friends in common. I don't know how close you are to them. Like Robert Langer, for example.
Daniel Satinsky: Right. I've known him for many, many years. Yeah.
Adam Blanco: He's a very good friend of mine. And actually, he was one of the first people that I knew that went to Russia. And much to my surprise, I called his office because we're negotiating a real estate deal on Fisher Island
and his Secretary told me he has moved to Russia to open the office. This was in 1991. So that gives you a little, you know, a little taste of how I got into this? The influences in my life, I would say in order of influence, first and foremost were my grandparents. Second, some friends of mine who did Foreign Service, one of them was an intelligence officer. Much older than I. My background has always been international. My grandparents were Basque refugees from the Civil War. They emigrated to Cuba. And in Cuba, they met a lovely, young, intelligent man by the name of Fidel Castro, who they supported and knew well. In fact, Fidel was at their funeral in the 90s.
Daniel Satinsky: Wow.
Adam Blanco: In 1994, my grandfather died. His body was shipped from New York to Cuba, and Fidel was at the funeral. They had a very close relationship.
Daniel Satinsky: Very interesting.
Adam Blanco: But why? Look, I did a lot of USAID work. I think that has a lot to do with it. I also knew Boris Nemtsov. I can't say that I knew him well, but I knew him. I worked with him in various capacities when I was a Peace Corps volunteer. I think that's the other thing. I was a Peace Corps volunteer.
Daniel Satinsky: Peace Corps volunteer. Okay, I... So, there were a couple of other Peace Corps volunteers?
Adam Blanco: Yes. So, the reason I would have been kicked out, I believe, it's more about the changing landscape in Russia. How Putin has restructured the government. I think in 2000, when he became president, I believe he honestly tried to build a relationship with the West. But the humiliation of the 90s played a key role in turning him to where he is now. During that time, the government started looking at records of foreigners that had been there for many, many years in the 90s, particularly USAID, Peace Corps, anything government related. And started moving into where they are today, which is really in war mode. I can't say that they're wrong. I can't say that they're right. I can understand why Putin feels threatened. He doesn't have a proven methodology for transferring power. The only precedent for transferring power is when he took over. It was basically: leave the Yeltsin family alone, don't pursue the family, and you can take over and start controlling the oligarchs. That was the deal.
Daniel Satinsky: Yeah, we all know that.
Adam Blanco: And now he's in a position in which the country is still dependent on hydrocarbons and minerals—60% of the economy. And the rest of the economy is exporting grains and weapons.
Daniel Satinsky: Yeah. And wheat.
Adam Blanco: Yes. That's right. And, sadly for Russia, human capital. You have scientists leaving left and right. I'm dealing right now with groups of scientists with patents for clean energy. And they want to move to the US or to the Scandinavian countries. One of them has already set up a company here in the US. I'm consulting them on their businesses set up in the US and Europe.
Daniel Satinsky: That was, by the way, my previous book, "Hammer and Silicon," which was about Soviet expats in the US high-tech sector.
Adam Blanco: You had mentioned that to me. So, I think I was simply a cog in the system. I had direct and indirect relations with the Embassy, with Boris Nemtsov, with opposition leaders such as Sergei Petrov, founder of the Rolf Group and support of Nemtsov, Vladimir Ashurkov, who's in London now, and Alexei Navalny's right-hand man. He's a very good friend of mine. Frankly, I did not know that Vladimir was so involved with Navalny back in the early 2000s. Vladimir was working for Mikhail Fridman, Alpha Group. And, you know, he was doing very well. And that's why he lost his job, because he was getting involved with opposition politics. Fridman told him, "You’ve got to go."
Daniel Satinsky: Yeah, he was...
Adam Blanco: Getting involved in politics. And I think that's why. I did meet with people in the Eembassy, who sometimes came to national events. There was an article written about me as a spy. This was in 1998. What was funny about it, Dan, was that they had me mixed up my background with other friends. I allegedly had a Harvard MBA. But it wasn't me that had the Harvard MBA. It was Alan Bigman that had the Harvard MBA. I think the piece on me was more about one of the security service guys looking for a promotion. You know, so you deal with these lower-rank bureaucrats, right? "We need to find spies. You're out. Mission upgrade. Let's find somebody."
Daniel Satinsky: Right. So, were you in Moscow at that time when you were thrown out?
Adam Blanco: Yes, I was already in Moscow.
Daniel Satinsky: Oh, okay. And what was your position? What were you actually doing in Moscow?
Adam Blanco: My last position in Moscow was as a director at the Rolf Holding Group, which was owned by Sergey Petrov. Sergey Petrov is what we would call a mini-oligarch however a self-made man, entrepreneur. He did not steal Russian assets. Sergey is now in exile in Austria. And Sergey was also a supporter and financier of opposition figures. For many years, I did not know about that relationship. So, it's very possible that they assumed I was part of the opposition movement. Now I send a dozen roses every year to the FSB on the anniversary of my expulsion. Russia has become... It has become a Stalinist state. Now they're even arresting family members of opposition. Like Stalin did.
Daniel Satinsky: Yeah, I don't know, I've not been there, but my assumption always is that it's, as you describe it, junior-level people. They're getting a signal and knowing this is the route to promotion.
Adam Blanco: Exactly. Directly, yeah. I think that's probably it. And he was able to make, you know, a dossier... Compelling enough to, you know, say... And it's part of the trend. "Let's get the foreigners out of here. We've been humiliated enough. We don't want them around. Why do we have Peace Corps here?"
Daniel Satinsky: Yeah.
Adam Blanco: "We're not a third-world country." So, I think that's probably...
Daniel Satinsky: Was Peace Corps your first placement there in Russia?
Adam Blanco : Yes, I got there, and I think it was ‘91, ‘92. I was in a place called Kstovo. Peace Corps, they asked us whether we wanted to be with other volunteers or whether we wanted to be out alone. My goal was to really learn the language and the culture. So, I knew from my own experience with Spanish — my first language was Spanish, and I learned English when I was six. The reason I learned English was because I had no choice. I knew that if I'm in an environment with other volunteers I was not going to learn the language and culture. I saw this as a huge, huge educational opportunity. Yeah. Adventure. So, I wanted to be by myself, but not too far from the center. They said the one of the days. I am a city boy. So, I was based in Kstovo, and I did business consulting, worked with IFC to identify some investments.
Daniel Satinsky: Were there investments there? I saw near Nizhny Novgorod that there was some Coca-Cola...
Adam Blanco: Oh, yeah. I did. I identified the site for the Coca-Cola bottling distribution center in Nizhny Novgorod. After Peace Corps, I decided to start my own consulting business as a naive entrepreneur does in an environment that's very fluid. Hello?
Daniel Satinsky: I know that. Yeah.
Adam Blanco: And I hadn't really developed a lot of... like, in your questionnaire, I read your question there, and I gave it a lot of thought. One of the questions you had was successes and failures in Russia. What contributions did you give? What contributions did you gain? And, you know, I really assimilated into... I married Russian.
Daniel Satinsky: Is she from Nizhniy?
Adam Blanco: Yes. And when I say I married Russian, literally, I married Russia, I married the country.
Daniel Satinsky: And why do you think you felt so drawn to that, by the way?
Adam Blanco: As a kid, I really didn't know what I wanted to do with my life. I did know I wanted to leave the United States. I knew I wanted to travel. I knew I wanted to go to different places. My first job out of college was with Banco do Brasil and at the time my career thoughts were Latin America focused. I think my grandparents had a lot to do with my desire to leave the US and travel. They traveled a lot. And they were involved in things of which we had no idea as kids but learned about their activities later in college. And I think that was one influence. The other influence... You know, you asked why Russia? It was an adventure and an opportunity. An opportunity to be part of a historic event, the transformation of Russia into a democratic and free market economy. Youthful idealism and naivety. At that age, you know, you've got your whole life in front of you. Take the risk. You know, grab the bull by the horns and let's have some fun. And that's... I think that's what really drove my decision to join Peace Corps and go to Russia.
Daniel Satinsky: No, no, I understand that. I think you're articulating in a very succinct way what others have expressed to me and what I also witnessed myself.
Daniel Satinsky: So, you embraced being in Russia and what that opportunity would mean. And as a consultant, who did you consult? Western companies coming in?
Adam Blanco: Western companies as well as Russian companies and enterprises. And I would say then I learned more about the United States in that whole experience than I did about Russia.
Daniel Satinsky: Okay. Can you explain that?
Adam Blanco: I don't think Americans really fully understand the power and influential of the US. When you go into the regions of Russia or Tajikistan—I lived in Tajikistan for two years — and you see...out in villages like Kulyab [Kulob] or some other place outside of Dushanbe, kids…teenagers with a New York Yankees T-shirt on and listening to American music. You have to step back and think, "Wow, that US is projecting a strong cultural presence on the other side of the globe.” You know, the reach that this country has and the influence it has. People really don't understand that. And, along those lines, as I'm consulting Russian companies... One company, ZeFs Machine tool plant in Niznhy Novgorod, where I located the Coca-Cola plant, was located on a machine tool factory that was part of the Soviet military-industrial complex. ZeFs occupied 49-hectares and the factory was a solid part of the industrial complex. They had machine tools, lathes, all kinds of stuff. And they manufactured also for the Russian space and defense Ministry. ZeFs was bankrupt.
Daniel Satinsky: Bankrupt?
Adam Blanco: They had not paid their employees in over a year. Later, with the General Director’s help, we established Coca-cola on the property. The factory was taken over by the local mafia, with whom I had a good relationship. They wouldn't bother me. They wouldn't touch me. I was protected because they saw me as a source of money, not personally, but through business and the establishment of foreign companies coming into the region. This took place after I had finished Peace Corps. I was deciding what to do. I didn't want to go back to the States. I stayed because I saw great economic opportunity in Russia. I had talked to EBRD. There were other jobs opportunities. Looking back, Dan, if I could do it again, I would, without question, I would do it again. No doubt. Although I think would have change some decisions, maybe. If I knew then what I know today, I think I would now be filthy rich or six feet under. But I think with today's wisdom, I'm a modest man. And I think I could have mitigated that six-foot-under risk better.
Daniel Satinsky: Well, that's great. That's wisdom.
Adam Blanco: It is wisdom.
Daniel Satinsky: Right. And how would you have imagined that you would have been a wealthy man as a result of different decisions?
Adam Blanco: Well, for example... It all has a give and take. For example, I could have gone and worked for EBRD. Right after Peace Corps. That would have been a nice secure job. You know, work, keep your head down. Work, keep your head down. Go up the ladder and retire. I can't say that that would have been the right move for me. You know, I had already come out of the corporate world. Before Peace Corps, I was a banker with Dresdner Bank.
Daniel Satinsky: Okay, so this is the skill you brought with you to Russia. You had that skill already?
Adam Blanco: Yeah, I did,. and international skills. International skills from my experience with my grandparents and working with Germans and Latin Americans at Dresdner Bank. The Germans did not like traveling to Latin America. They hated going to Latin America. And I was used to the culture. They would always complain about... And this is way back in the 80s they would complain. "I get there, and we don't do anything. We have dinner, we go hunting, and nothing gets done until five minutes before I get on the plane." So, what's wrong with that? That's normal. That's how they operate. If you want their business.
Daniel Satinsky: What you're describing is why you were okay with Russia. Because my experience, and I'm sure yours, is people want to know who you are, who the person is that they're dealing with. And the way they find out is through these other things and not through business negotiations.
Adam Blanco: Yes, and that environment is very similar to the environment that I grew up in with my grandparents. Because the friends they had were friends from the war in Spain.
Daniel Satinsky: Trust.
Adam Blanco: So, trust is earned. Maybe I'm wrong, but I don't think you really see that in American culture today.
Daniel Satinsky: I don't think so either. Not the same.
Adam Blanco: It's not the same. It's very European. So, for me, I felt comfortable in that environment.
Daniel Satinsky: Yeah. And do you think there were businesses that you would have gotten involved in initially, looking back, that you should have or you regret not having?
Adam Blanco: I ended up doing... Well, the most important and the best thing I got out of Russia was a family. My wife and two kids. You know, I couldn't be happier with that. I did a lot of economic development stuff for USAID. I did consulting work. I did a partnership with Pricewaterhouse doing the restructuring of the ZeFs plant in Nizhny Novgorod. A director from Pricewaterhouse London came in to work with me on that restructuring. It's the same plant where I located Coca-Cola in Kstovo. We're in a meeting with Maxim, the mafia representative, and he's taking over the plant. He's got long hair. At the time the mafia guys were into Tarantino’s Pulp Fiction characters. You know which one I'm talking about?
Daniel Satinsky: I do.
Adam Blanco: He had that look, and he's high as a kite in the meeting room. He says through his translator, who was also high, "Have you ever seen a man dipped in boiling oil?" The translator looks at him and says, "You really want to ask him that?" And he laughs and says, "Yes." So, he says it. Ian Anderson, the PWC director was with me from London, not from Jethro Tull.
Daniel Satinsky: Not the flutist, right?
Adam Blanco: After the meeting, Ian says to me, "Oh, he threatened us. Do you think we should call Moscow? Do you think we should call Pricewaterhouse security? He's threatened us.” I look at Ian and told him "Ian, don't worry about it."
He didn't threaten us. He was just playing with us. And I said, "You know what? Even if you call Moscow, they can’t help us here. "
When that whole thing was going on, Alexander Alexandrovich, who was Maxim's bodyguard, was in the back of the room, standing by the door. I turned around and looked at Alexander as we were walking out, and he was just smiling, and he winked. I smiled back at him and winked back.
Daniel Satinsky: You know, the game. It was a game.
Adam Blanco: Yeah. He was basically saying to me, "Adam, don't worry. You're one of us."
Daniel Satinsky: Yeah. Nash chelovek*, right?
Adam Blanco: Yeah.
Daniel Satinsky: What year was that, by the way?
Adam Blanco: That Coca-Cola deal I did in '96, '97. It was just before the elections, the presidential elections.
Daniel Satinsky: Yeah, so that would be '96 then?
Adam Blanco: Yeah, it was '96. I remember meeting with Nemtsov, and he said to me, "We have to have that plant operational before the elections."
Daniel Satinsky: By the election.
Adam Blanco: Yes. And we were pushing it close, but we got it done. And I also worked on the expansion of it. So, you know, hindsight's 20/20. Would EBRD have been better for me? Maybe. But, you know, do I have regrets? Not really. I'm a happy man with a good family.
Daniel Satinsky: You seem that way, so that's good. And regrets don't get you anything, really.
Adam Blanco: Exactly, exactly. Could I have done things a little bit differently? Yeah, maybe. But I made a lot of very good Russian friends. I'm still in touch with the former director of that plant, who's now 80. I speak with him every few months. He calls me for my birthday. I call him for his birthday. And he's a Soviet guy. I remember one celebration we were having with him and some of his directors. And, you know, they're making toasts, and one of them got up and made a toast “to Rodina, to Stalin.”
Daniel Satinsky: That was probably deep into the evening, right?
Adam Blanco: Yeah, they all got up, and we toasted, including me.
Daniel Satinsky: But it sounds like the fact that you took that time to learn the language was a really important factor in being able to do what you did.
Adam Blanco: Absolutely, Dan. Absolutely. Learning the language is not a mechanical process. All languages are tied to the culture. It doesn't matter if your grammar is perfect; what matters is that you're able to communicate in a way that relates to the culture. You have to absorb the culture to really learn the language. I realized that and internalized it when I was in Tajikistan. I was drunk with the idea that I could learn any language. I had forgotten that the languages I do know were learned out of need. I was assimilated. In Tajikistan, I studied Farsi for about a year and a half. My teacher was a dissident Iranian air force officer. I studied three times a week with him for about an hour. After my lessons, I would speak Farsi with the office staff and they would humor me for about five minutes in Tajik conversation, but we had to get back to work, so we switched to Russian. Russian is the language of business in Dushanbe. In the regions like Kulyab, they speak Persian and Tajik, but in the office, it's Russian. Learning the language and the culture, living the culture, allowed me to do what I did. That is an acquired skill that a lot of people who were successful in Russia have been able to do. I can name a number of them. Robert Langer's language skills and his insight into the culture are very good. He can articulate that in a way that, if you have experience in Russia, you can follow and understand exactly what he's talking about.
Daniel Satinsky: Right. So, walk me through what you were doing from '98 to 2009. Let me back up. With USAID, there were so many programs and directions. Was there any coherence in what they were doing? Did they have a clear plan, or were they just throwing everything at the wall to see what would work?
Adam Blanco: I think we threw everything at the wall to see what worked. I don't think we had a well-thought-out plan to really help Russia. We were focused on our own self-interest.
Daniel Satinsky: Yeah, I believe that.
Adam Blanco: I think it is one of the biggest failures of U.S. foreign policy.
Daniel Satinsky: Failure because it wasn't focused or because it hit zero? Why failure?
Adam Blanco: I think you can't transform a society into what you want it to be — wanting it to conform to the US. It doesn't work. It's a different culture. It's a different history. We were able to do that with Germany and with Japan because it was a complete rebuild. They were completely defeated, Russia was not. That's a very different situation. We didn't have full control. Those were the honeymoon days. I remember having army officers in my apartment telling me how they love America, and they want to go to America. They loved America.
Those aid programs... I think the intent was good, but the problem was not understanding Russian culture. Let me give you a short example. Right now, I'm doing some consulting work for an American group that is in the repair, maintenance, and overhaul of aircraft, and one of their partners is a Ukrainian turbine manufacturer. It used to be part of the Soviet industrial complex. They call me in a panic. The Americans call me in panic. "We don't understand them. They're just not listening to us. We don't understand. Can you help?" "Okay, $500 an hour. I'll help you."
And the cultural differences are huge. I've always known that. And I think that was part of the failure, that we really didn't have Russian experts. And when I say Russian experts, I don't mean State Department Russian experts who speak the language perfectly. I mean Russian experts who understand the culture and history from field experience. This program could have been done differently. We spent hundreds of billions. The most successful program was, of course, the nuclear disarmament. Bringing stuff from Ukraine and Kazakhstan. That was successful.
But in terms of economic development and democracy programs... You know, financing parties there... I'm not sure that was the right approach. Reform must come from within, not from outside. Insurgencies are successful because they have a cause of passion. It's like a virus. And I think in that... Fast forward to today with Navalny, with Alexei. The regime is on a war footing. They're afraid of him. He has mobilized a young generation. A younger generation that will eventually take control. The younger generation is starting to take control — not just the 18 to 25, but a lot of the 25 to 50. There is a generational change, a power shift going on and the current regime is out of touch with the younger generation.
Daniel Satinsky: You were talking about the lack of understanding of culture?
Adam Blanco: Yes, lack of understanding of culture. So, the type of work I did was... For example, in 2004, I did work for Visa International for about a year, which took me through Central Asia, Belarus, and negotiations with central banks. I also worked for a group called FSVC, which was USAID financed. I really enjoyed both jobs.
Daniel Satinsky: What was that? Say it again.
Adam Blanco: FSVC — Financial Services Volunteer Corps. That was USAID funded. And they focused on central bank and commercial bank processes, development, branch development. That was good work. That's the kind of work I should be doing.
Daniel Satinsky: So, you brought skills and processes to banks who wanted those skills?
Adam Blanco: Yes, exactly. That's exactly right. There was a marriage of what was on offer and what was needed. Lending practices, loan portfolio management, non-performing loans. How do you deal with those? How do you deal with the central bank, the payment system? And how do you deal with bankrupt banks? We helped put together that program. I danced with Tatiana Paramonova, the central bank chairman.
Daniel Satinsky: Of course you did.
Daniel Satinsky: Wow.
Adam Blanco: So, summer, July 2009, I said, "I've been told to leave the country." My wife is Russian,and we speak Russian at home, so... But you know what? Damn. It took me three years to decompress. Someone once described my reluctance to leave Russia as a drowning man being thrown a life vest and refusing it. The ship's going down. Okay. Take it, take it. Be a better man.
Daniel Satinsky: Well, let me start. Usually, I start with asking people how they got involved with Russia. But maybe with you, it's better to start at the other end. How is it that you got thrown out?
Adam Blanco: That's a good question, Dan. I'm really not sure. I think it is a combination of issues. Another friend of mine described it as...death by a thousand cuts. AID, relationships with option leaders, Boris Nemtsov, Sergei Petrov, etc. You and I have a lot of friends in common. I don't know how close you are to them. Like Robert Langer, for example.
Daniel Satinsky: Right. I've known him for many, many years. Yeah.
Adam Blanco: He's a very good friend of mine. And actually, he was one of the first people that I knew that went to Russia. And much to my surprise, I called his office because we're negotiating a real estate deal on Fisher Island
and his Secretary told me he has moved to Russia to open the office. This was in 1991. So that gives you a little, you know, a little taste of how I got into this? The influences in my life, I would say in order of influence, first and foremost were my grandparents. Second, some friends of mine who did Foreign Service, one of them was an intelligence officer. Much older than I. My background has always been international. My grandparents were Basque refugees from the Civil War. They emigrated to Cuba. And in Cuba, they met a lovely, young, intelligent man by the name of Fidel Castro, who they supported and knew well. In fact, Fidel was at their funeral in the 90s.
Daniel Satinsky: Wow.
Adam Blanco: In 1994, my grandfather died. His body was shipped from New York to Cuba, and Fidel was at the funeral. They had a very close relationship.
Daniel Satinsky: Very interesting.
Adam Blanco: But why? Look, I did a lot of USAID work. I think that has a lot to do with it. I also knew Boris Nemtsov. I can't say that I knew him well, but I knew him. I worked with him in various capacities when I was a Peace Corps volunteer. I think that's the other thing. I was a Peace Corps volunteer.
Daniel Satinsky: Peace Corps volunteer. Okay, I... So, there were a couple of other Peace Corps volunteers?
Adam Blanco: Yes. So, the reason I would have been kicked out, I believe, it's more about the changing landscape in Russia. How Putin has restructured the government. I think in 2000, when he became president, I believe he honestly tried to build a relationship with the West. But the humiliation of the 90s played a key role in turning him to where he is now. During that time, the government started looking at records of foreigners that had been there for many, many years in the 90s, particularly USAID, Peace Corps, anything government related. And started moving into where they are today, which is really in war mode. I can't say that they're wrong. I can't say that they're right. I can understand why Putin feels threatened. He doesn't have a proven methodology for transferring power. The only precedent for transferring power is when he took over. It was basically: leave the Yeltsin family alone, don't pursue the family, and you can take over and start controlling the oligarchs. That was the deal.
Daniel Satinsky: Yeah, we all know that.
Adam Blanco: And now he's in a position in which the country is still dependent on hydrocarbons and minerals—60% of the economy. And the rest of the economy is exporting grains and weapons.
Daniel Satinsky: Yeah. And wheat.
Adam Blanco: Yes. That's right. And, sadly for Russia, human capital. You have scientists leaving left and right. I'm dealing right now with groups of scientists with patents for clean energy. And they want to move to the US or to the Scandinavian countries. One of them has already set up a company here in the US. I'm consulting them on their businesses set up in the US and Europe.
Daniel Satinsky: That was, by the way, my previous book, "Hammer and Silicon," which was about Soviet expats in the US high-tech sector.
Adam Blanco: You had mentioned that to me. So, I think I was simply a cog in the system. I had direct and indirect relations with the Embassy, with Boris Nemtsov, with opposition leaders such as Sergei Petrov, founder of the Rolf Group and support of Nemtsov, Vladimir Ashurkov, who's in London now, and Alexei Navalny's right-hand man. He's a very good friend of mine. Frankly, I did not know that Vladimir was so involved with Navalny back in the early 2000s. Vladimir was working for Mikhail Fridman, Alpha Group. And, you know, he was doing very well. And that's why he lost his job, because he was getting involved with opposition politics. Fridman told him, "You’ve got to go."
Daniel Satinsky: Yeah, he was...
Adam Blanco: Getting involved in politics. And I think that's why. I did meet with people in the Eembassy, who sometimes came to national events. There was an article written about me as a spy. This was in 1998. What was funny about it, Dan, was that they had me mixed up my background with other friends. I allegedly had a Harvard MBA. But it wasn't me that had the Harvard MBA. It was Alan Bigman that had the Harvard MBA. I think the piece on me was more about one of the security service guys looking for a promotion. You know, so you deal with these lower-rank bureaucrats, right? "We need to find spies. You're out. Mission upgrade. Let's find somebody."
Daniel Satinsky: Right. So, were you in Moscow at that time when you were thrown out?
Adam Blanco: Yes, I was already in Moscow.
Daniel Satinsky: Oh, okay. And what was your position? What were you actually doing in Moscow?
Adam Blanco: My last position in Moscow was as a director at the Rolf Holding Group, which was owned by Sergey Petrov. Sergey Petrov is what we would call a mini-oligarch however a self-made man, entrepreneur. He did not steal Russian assets. Sergey is now in exile in Austria. And Sergey was also a supporter and financier of opposition figures. For many years, I did not know about that relationship. So, it's very possible that they assumed I was part of the opposition movement. Now I send a dozen roses every year to the FSB on the anniversary of my expulsion. Russia has become... It has become a Stalinist state. Now they're even arresting family members of opposition. Like Stalin did.
Daniel Satinsky: Yeah, I don't know, I've not been there, but my assumption always is that it's, as you describe it, junior-level people. They're getting a signal and knowing this is the route to promotion.
Adam Blanco: Exactly. Directly, yeah. I think that's probably it. And he was able to make, you know, a dossier... Compelling enough to, you know, say... And it's part of the trend. "Let's get the foreigners out of here. We've been humiliated enough. We don't want them around. Why do we have Peace Corps here?"
Daniel Satinsky: Yeah.
Adam Blanco: "We're not a third-world country." So, I think that's probably...
Daniel Satinsky: Was Peace Corps your first placement there in Russia?
Adam Blanco : Yes, I got there, and I think it was ‘91, ‘92. I was in a place called Kstovo. Peace Corps, they asked us whether we wanted to be with other volunteers or whether we wanted to be out alone. My goal was to really learn the language and the culture. So, I knew from my own experience with Spanish — my first language was Spanish, and I learned English when I was six. The reason I learned English was because I had no choice. I knew that if I'm in an environment with other volunteers I was not going to learn the language and culture. I saw this as a huge, huge educational opportunity. Yeah. Adventure. So, I wanted to be by myself, but not too far from the center. They said the one of the days. I am a city boy. So, I was based in Kstovo, and I did business consulting, worked with IFC to identify some investments.
Daniel Satinsky: Were there investments there? I saw near Nizhny Novgorod that there was some Coca-Cola...
Adam Blanco: Oh, yeah. I did. I identified the site for the Coca-Cola bottling distribution center in Nizhny Novgorod. After Peace Corps, I decided to start my own consulting business as a naive entrepreneur does in an environment that's very fluid. Hello?
Daniel Satinsky: I know that. Yeah.
Adam Blanco: And I hadn't really developed a lot of... like, in your questionnaire, I read your question there, and I gave it a lot of thought. One of the questions you had was successes and failures in Russia. What contributions did you give? What contributions did you gain? And, you know, I really assimilated into... I married Russian.
Daniel Satinsky: Is she from Nizhniy?
Adam Blanco: Yes. And when I say I married Russian, literally, I married Russia, I married the country.
Daniel Satinsky: And why do you think you felt so drawn to that, by the way?
Adam Blanco: As a kid, I really didn't know what I wanted to do with my life. I did know I wanted to leave the United States. I knew I wanted to travel. I knew I wanted to go to different places. My first job out of college was with Banco do Brasil and at the time my career thoughts were Latin America focused. I think my grandparents had a lot to do with my desire to leave the US and travel. They traveled a lot. And they were involved in things of which we had no idea as kids but learned about their activities later in college. And I think that was one influence. The other influence... You know, you asked why Russia? It was an adventure and an opportunity. An opportunity to be part of a historic event, the transformation of Russia into a democratic and free market economy. Youthful idealism and naivety. At that age, you know, you've got your whole life in front of you. Take the risk. You know, grab the bull by the horns and let's have some fun. And that's... I think that's what really drove my decision to join Peace Corps and go to Russia.
Daniel Satinsky: No, no, I understand that. I think you're articulating in a very succinct way what others have expressed to me and what I also witnessed myself.
Daniel Satinsky: So, you embraced being in Russia and what that opportunity would mean. And as a consultant, who did you consult? Western companies coming in?
Adam Blanco: Western companies as well as Russian companies and enterprises. And I would say then I learned more about the United States in that whole experience than I did about Russia.
Daniel Satinsky: Okay. Can you explain that?
Adam Blanco: I don't think Americans really fully understand the power and influential of the US. When you go into the regions of Russia or Tajikistan—I lived in Tajikistan for two years — and you see...out in villages like Kulyab [Kulob] or some other place outside of Dushanbe, kids…teenagers with a New York Yankees T-shirt on and listening to American music. You have to step back and think, "Wow, that US is projecting a strong cultural presence on the other side of the globe.” You know, the reach that this country has and the influence it has. People really don't understand that. And, along those lines, as I'm consulting Russian companies... One company, ZeFs Machine tool plant in Niznhy Novgorod, where I located the Coca-Cola plant, was located on a machine tool factory that was part of the Soviet military-industrial complex. ZeFs occupied 49-hectares and the factory was a solid part of the industrial complex. They had machine tools, lathes, all kinds of stuff. And they manufactured also for the Russian space and defense Ministry. ZeFs was bankrupt.
Daniel Satinsky: Bankrupt?
Adam Blanco: They had not paid their employees in over a year. Later, with the General Director’s help, we established Coca-cola on the property. The factory was taken over by the local mafia, with whom I had a good relationship. They wouldn't bother me. They wouldn't touch me. I was protected because they saw me as a source of money, not personally, but through business and the establishment of foreign companies coming into the region. This took place after I had finished Peace Corps. I was deciding what to do. I didn't want to go back to the States. I stayed because I saw great economic opportunity in Russia. I had talked to EBRD. There were other jobs opportunities. Looking back, Dan, if I could do it again, I would, without question, I would do it again. No doubt. Although I think would have change some decisions, maybe. If I knew then what I know today, I think I would now be filthy rich or six feet under. But I think with today's wisdom, I'm a modest man. And I think I could have mitigated that six-foot-under risk better.
Daniel Satinsky: Well, that's great. That's wisdom.
Adam Blanco: It is wisdom.
Daniel Satinsky: Right. And how would you have imagined that you would have been a wealthy man as a result of different decisions?
Adam Blanco: Well, for example... It all has a give and take. For example, I could have gone and worked for EBRD. Right after Peace Corps. That would have been a nice secure job. You know, work, keep your head down. Work, keep your head down. Go up the ladder and retire. I can't say that that would have been the right move for me. You know, I had already come out of the corporate world. Before Peace Corps, I was a banker with Dresdner Bank.
Daniel Satinsky: Okay, so this is the skill you brought with you to Russia. You had that skill already?
Adam Blanco: Yeah, I did,. and international skills. International skills from my experience with my grandparents and working with Germans and Latin Americans at Dresdner Bank. The Germans did not like traveling to Latin America. They hated going to Latin America. And I was used to the culture. They would always complain about... And this is way back in the 80s they would complain. "I get there, and we don't do anything. We have dinner, we go hunting, and nothing gets done until five minutes before I get on the plane." So, what's wrong with that? That's normal. That's how they operate. If you want their business.
Daniel Satinsky: What you're describing is why you were okay with Russia. Because my experience, and I'm sure yours, is people want to know who you are, who the person is that they're dealing with. And the way they find out is through these other things and not through business negotiations.
Adam Blanco: Yes, and that environment is very similar to the environment that I grew up in with my grandparents. Because the friends they had were friends from the war in Spain.
Daniel Satinsky: Trust.
Adam Blanco: So, trust is earned. Maybe I'm wrong, but I don't think you really see that in American culture today.
Daniel Satinsky: I don't think so either. Not the same.
Adam Blanco: It's not the same. It's very European. So, for me, I felt comfortable in that environment.
Daniel Satinsky: Yeah. And do you think there were businesses that you would have gotten involved in initially, looking back, that you should have or you regret not having?
Adam Blanco: I ended up doing... Well, the most important and the best thing I got out of Russia was a family. My wife and two kids. You know, I couldn't be happier with that. I did a lot of economic development stuff for USAID. I did consulting work. I did a partnership with Pricewaterhouse doing the restructuring of the ZeFs plant in Nizhny Novgorod. A director from Pricewaterhouse London came in to work with me on that restructuring. It's the same plant where I located Coca-Cola in Kstovo. We're in a meeting with Maxim, the mafia representative, and he's taking over the plant. He's got long hair. At the time the mafia guys were into Tarantino’s Pulp Fiction characters. You know which one I'm talking about?
Daniel Satinsky: I do.
Adam Blanco: He had that look, and he's high as a kite in the meeting room. He says through his translator, who was also high, "Have you ever seen a man dipped in boiling oil?" The translator looks at him and says, "You really want to ask him that?" And he laughs and says, "Yes." So, he says it. Ian Anderson, the PWC director was with me from London, not from Jethro Tull.
Daniel Satinsky: Not the flutist, right?
Adam Blanco: After the meeting, Ian says to me, "Oh, he threatened us. Do you think we should call Moscow? Do you think we should call Pricewaterhouse security? He's threatened us.” I look at Ian and told him "Ian, don't worry about it."
He didn't threaten us. He was just playing with us. And I said, "You know what? Even if you call Moscow, they can’t help us here. "
When that whole thing was going on, Alexander Alexandrovich, who was Maxim's bodyguard, was in the back of the room, standing by the door. I turned around and looked at Alexander as we were walking out, and he was just smiling, and he winked. I smiled back at him and winked back.
Daniel Satinsky: You know, the game. It was a game.
Adam Blanco: Yeah. He was basically saying to me, "Adam, don't worry. You're one of us."
Daniel Satinsky: Yeah. Nash chelovek*, right?
Adam Blanco: Yeah.
Daniel Satinsky: What year was that, by the way?
Adam Blanco: That Coca-Cola deal I did in '96, '97. It was just before the elections, the presidential elections.
Daniel Satinsky: Yeah, so that would be '96 then?
Adam Blanco: Yeah, it was '96. I remember meeting with Nemtsov, and he said to me, "We have to have that plant operational before the elections."
Daniel Satinsky: By the election.
Adam Blanco: Yes. And we were pushing it close, but we got it done. And I also worked on the expansion of it. So, you know, hindsight's 20/20. Would EBRD have been better for me? Maybe. But, you know, do I have regrets? Not really. I'm a happy man with a good family.
Daniel Satinsky: You seem that way, so that's good. And regrets don't get you anything, really.
Adam Blanco: Exactly, exactly. Could I have done things a little bit differently? Yeah, maybe. But I made a lot of very good Russian friends. I'm still in touch with the former director of that plant, who's now 80. I speak with him every few months. He calls me for my birthday. I call him for his birthday. And he's a Soviet guy. I remember one celebration we were having with him and some of his directors. And, you know, they're making toasts, and one of them got up and made a toast “to Rodina, to Stalin.”
Daniel Satinsky: That was probably deep into the evening, right?
Adam Blanco: Yeah, they all got up, and we toasted, including me.
Daniel Satinsky: But it sounds like the fact that you took that time to learn the language was a really important factor in being able to do what you did.
Adam Blanco: Absolutely, Dan. Absolutely. Learning the language is not a mechanical process. All languages are tied to the culture. It doesn't matter if your grammar is perfect; what matters is that you're able to communicate in a way that relates to the culture. You have to absorb the culture to really learn the language. I realized that and internalized it when I was in Tajikistan. I was drunk with the idea that I could learn any language. I had forgotten that the languages I do know were learned out of need. I was assimilated. In Tajikistan, I studied Farsi for about a year and a half. My teacher was a dissident Iranian air force officer. I studied three times a week with him for about an hour. After my lessons, I would speak Farsi with the office staff and they would humor me for about five minutes in Tajik conversation, but we had to get back to work, so we switched to Russian. Russian is the language of business in Dushanbe. In the regions like Kulyab, they speak Persian and Tajik, but in the office, it's Russian. Learning the language and the culture, living the culture, allowed me to do what I did. That is an acquired skill that a lot of people who were successful in Russia have been able to do. I can name a number of them. Robert Langer's language skills and his insight into the culture are very good. He can articulate that in a way that, if you have experience in Russia, you can follow and understand exactly what he's talking about.
Daniel Satinsky: Right. So, walk me through what you were doing from '98 to 2009. Let me back up. With USAID, there were so many programs and directions. Was there any coherence in what they were doing? Did they have a clear plan, or were they just throwing everything at the wall to see what would work?
Adam Blanco: I think we threw everything at the wall to see what worked. I don't think we had a well-thought-out plan to really help Russia. We were focused on our own self-interest.
Daniel Satinsky: Yeah, I believe that.
Adam Blanco: I think it is one of the biggest failures of U.S. foreign policy.
Daniel Satinsky: Failure because it wasn't focused or because it hit zero? Why failure?
Adam Blanco: I think you can't transform a society into what you want it to be — wanting it to conform to the US. It doesn't work. It's a different culture. It's a different history. We were able to do that with Germany and with Japan because it was a complete rebuild. They were completely defeated, Russia was not. That's a very different situation. We didn't have full control. Those were the honeymoon days. I remember having army officers in my apartment telling me how they love America, and they want to go to America. They loved America.
Those aid programs... I think the intent was good, but the problem was not understanding Russian culture. Let me give you a short example. Right now, I'm doing some consulting work for an American group that is in the repair, maintenance, and overhaul of aircraft, and one of their partners is a Ukrainian turbine manufacturer. It used to be part of the Soviet industrial complex. They call me in a panic. The Americans call me in panic. "We don't understand them. They're just not listening to us. We don't understand. Can you help?" "Okay, $500 an hour. I'll help you."
And the cultural differences are huge. I've always known that. And I think that was part of the failure, that we really didn't have Russian experts. And when I say Russian experts, I don't mean State Department Russian experts who speak the language perfectly. I mean Russian experts who understand the culture and history from field experience. This program could have been done differently. We spent hundreds of billions. The most successful program was, of course, the nuclear disarmament. Bringing stuff from Ukraine and Kazakhstan. That was successful.
But in terms of economic development and democracy programs... You know, financing parties there... I'm not sure that was the right approach. Reform must come from within, not from outside. Insurgencies are successful because they have a cause of passion. It's like a virus. And I think in that... Fast forward to today with Navalny, with Alexei. The regime is on a war footing. They're afraid of him. He has mobilized a young generation. A younger generation that will eventually take control. The younger generation is starting to take control — not just the 18 to 25, but a lot of the 25 to 50. There is a generational change, a power shift going on and the current regime is out of touch with the younger generation.
Daniel Satinsky: You were talking about the lack of understanding of culture?
Adam Blanco: Yes, lack of understanding of culture. So, the type of work I did was... For example, in 2004, I did work for Visa International for about a year, which took me through Central Asia, Belarus, and negotiations with central banks. I also worked for a group called FSVC, which was USAID financed. I really enjoyed both jobs.
Daniel Satinsky: What was that? Say it again.
Adam Blanco: FSVC — Financial Services Volunteer Corps. That was USAID funded. And they focused on central bank and commercial bank processes, development, branch development. That was good work. That's the kind of work I should be doing.
Daniel Satinsky: So, you brought skills and processes to banks who wanted those skills?
Adam Blanco: Yes, exactly. That's exactly right. There was a marriage of what was on offer and what was needed. Lending practices, loan portfolio management, non-performing loans. How do you deal with those? How do you deal with the central bank, the payment system? And how do you deal with bankrupt banks? We helped put together that program. I danced with Tatiana Paramonova, the central bank chairman.
Daniel Satinsky: Of course you did.
Adam Blanco: It was hilarious. I'm sitting at a table with two Russian guys who worked in the embassy, Alexei and another guy whose name I forget. Paramonova was at the other table. I said to them, "I'm going to go ask her to dance." They looked at me, "Really?"
I said, "Yeah." I went over there, asked her to dance, and we danced. I had a great conversation with her, but I had worked with her before. She knew me. She knew me from when we had brought Paul Volcker over for consultations. Paul Volcker was on the board of FSVC. He's a big guy — well, he passed away now, God bless him. And he came over. I remember during a meeting with Paramonova and a few of the other senior board members, one of them said, "We know you as the father of inflation." Paul didn't really like that.
Daniel Satinsky: I bet he didn't.
Adam Blanco: If you've ever heard him speak, he's got a loud, booming voice. He's like a foghorn coming down the hallway. He's a big guy. And when he said that I just thought, "Oh boy." Going the right way. And that's one of the things I appreciated about Russian culture — it can sometimes be very direct. There's no mincing words here.
Daniel Satinsky: Yeah. Well, I have to say that... I don't want to digress into my own personal story, but just a little bit.
Adam Blanco: No, please do.
Daniel Satinsky: We were part of a small consulting group on commercialization technology called Russia Innovation Partners. We were at a forum in Novosibirsk, an economic forum, and a room full of people talking about innovation policy. Someone in the back of the room stands up and asks, "How do you make money? How much money do you make?" I never imagined, that... That's not the kind of question you'd get in an American audience. But then we realized that was going to come up every single time. Whenever it did, we'd say, "We're glad you asked that question. We were waiting to see who would ask it," because it always came up. That's the way they were thinking — very direct.
Adam Blanco: And they didn't know. They really didn’t know what we did. What United States was about, how we lived. One of the first questions I got in Peace Corps when the mayor of Kstovo picked me up at the train station was, "What do you want to do?" I thought, didn't Peace Corps work all this out? Another question from the deputy mayor, who gave me his apartment because mine wasn't ready, asked me one day, "How much does your suit cost?" Along the lines of, "How much money do you make?"
Daniel Satinsky: Exactly. Well, one other story I can't resist...
Adam Blanco: No, please.
Daniel Satinsky: In the winter of 1990-1991, we went to Tashkent and did a seminar on how local government works in a market economy. There were about 350 people from across Central Asia, with simultaneous translation. I had people from the Boston Redevelopment Authority and planning agencies. They described sales tax, and someone said, "That's the most ridiculous thing I've ever heard — that a merchant is going to collect a tax and then give it to the government. Who would do that?" One of our guys got up and said, "Three letters: IRS." It was a great moment. At that moment, they really wanted to know, and over the time that you were there, they actually learned a tremendous amount. So, my sense is a lot of expats and foreigners became irrelevant after a while.
Adam Blanco: That's right.
Daniel Satinsky: Yeah, because the skill level and the knowledge level just...
Adam Blanco: They absorbed it.
Daniel Satinsky: Absorbed it, yeah.
Adam Blanco: They absorbed it, and they put it into practice. Yes, they made mistakes, but we all make mistakes. Especially when you come out of the ashes of what they went through — that humiliation, that abject poverty which you saw in Moscow. One come out of that... That was a challenge.
Daniel Satinsky: It was.
Adam Blanco: I don't think Americans really understand. That goes back to my first comment. I learned more about the United States than I did about Russia — well, a little bit of an exaggeration — I learned more about both the United States and Russia. Full stop. I learned a tremendous amount about Russia. Looking at my own country from afar really gives one a different perspective. How influential is the United States around the world? When the Ppresident of the United States says something, how does that resonate in a foreign land — not only with the government, but with the people? Let's face it, Putin is human. So is the whole power structure. They listen to that, and they are looking at those words from their shoes, their environment, and their power structure. The idea that a president could say something without the agreement of the entire power structure — how can that be? This country's blessed beyond what they really understand.
Daniel Satinsky: I would agree with that.
Adam Blanco: Back to '98 to...
Daniel Satinsky: Right, '98 to 2009.
Adam Blanco: And I still participate in a lot of these Atlantic Council conferences and stuff like that.
Daniel Satinsky: Yeah, so do I.
Adam Blanco: Russia's part of my DNA. So, I did Visa International for about a year. Then the '98 crisis hit, or what was it, 9/11 occurred. And so, my job was eliminated. Then I went to Tajikistan under a USAID program with FINCA International. That was about setting up microfinance businesses across Tajikistan, which I think is a good program. Although I think the rates are... there are a lot of changes that need to be made. You can't be charging 50% and claim that you're doing good. And higher. There has to be a way of reducing these costs. And there is. And you still make money.
I did that until... and I wanted to go back to Moscow. Then I was offered a position to do the microfinance center in Moscow, also USAID funded. So, there were two parts to that: create an NGO, which is the Russian Microfinance Center, which still exists today.
Daniel Satinsky: It does?
Adam Blanco: Still exists today. And the guy that I mentored and who ran the Russian Microfinance Center, today is a board member of the Russian Central Bank.
Daniel Satinsky: Wow. That's a success.
Adam Blanco: Yes, it is. His name is Mikhail Mamuta...
Anyway, I did that, and then I really wanted to move out of NGO work. So, then I went to graduate school in Barcelona to try to transition into private sector work. And I did. So, after IESE, that was 2006-2007. A good friend of mine was CEO of the Rolf Group. So, he brought me into the Rolf Group, and I finally... I was finally making that big packeted money that you want. A USD million and a half you know. I just needed three more years of that. But there just wasn't enough time.
Daniel Satinsky: And so, you were only there two years?
Adam Blanco: Yeah, two years.
Daniel Satinsky: And then... how did, by the way, the 2008 crisis impact what you were doing?
Adam Blanco: It hit us hard. And the way I got into Rolf was... and this is another story entirely about economic development and the purpose of economic development, USAID, British Know-How Fund, all of that. You know, you're building platforms to create an environment conducive to businesses growing and developing. So, in that microfinance, one of the keys was to create a for-profit microfinance business that lends to credit cooperatives out in the regions.
So, I started that. It was called Centurion Capital. I did that. It ran for about a year and a half. Then they asked me, "Can we privatize it? Can you get private money into it?" Because USAID was leaving the project. I approached Rolf Group and said, "Why don't you invest in this?" Needed $5 million to grow it. I had another $10 million in debt financing that was contingent upon the $5 million equity coming. One thing led to another, and suddenly USAID got cold feet. "Wait a minute, wait a minute. Do we want a Russian group to take over Centurion Capital? How will that change the mission?" There was a disconnect there. And that disconnect was partly about trust and partly about not really understanding what your mission is. Which goes back to the failures. What is your real mission here? As that was progressing, they said, "No, we don't endorse this," and Rolf backed off. Then I said, "Okay, fine, I'm done with this." I put together the plan myself, a duplicate of Centurion, and I sold it to Rolf. You can imagine the controversy that created.
Daniel Satinsky: Yeah, you made yourself a lot of friends in USAID.
Adam Blanco: Oh, yeah.
Daniel Satinsky: You can imagine.
Adam Blanco: And I thought to myself, "Well, what was the whole purpose of setting this up in the first place? You want to transition it? You're leaving. What do you expect?" I worked for the microfinance center, and Rolf and I had raised a significant amount of money from Citigroup. A friend of mine ran Citigroup asked me when I returned to Moscow after Tajikistan, I asked what I was doing. I told him about the USAID funded Microfinance Center and my mission to privatize it with local money. He said to me, "How much money do you need?" I said, "How much do you have?" Just like that.
So, yeah, I made friends with USAID at the beginning. They wanted that money coming in and that process making it self-sustainable. What they wanted. So, two entities: the Russian Microfinance Center, which is an NGO, which I transformed into a self-sustaining organization, which it is today. Our partner in that was the Russian Bankers Association. That's kind of like having the Italian mafia as your partner. I can tell you some stories about them.
So, where was I? Going to Rolf, showing the business model to Rolf. In that business model, what was interesting for Rolf was that it represented a platform to not only help... it was very interested in the microfinance business from a financial investment standpoint as well as for the good. And so, I sold it to them for $5 million, and I just got the $5 million. Let me be clear. They invested $5 million in the business model.
And another thing that didn't help me with USAID was two of my people from Centurion Capital that I had recruited and trained came over to privatize it.
Daniel Satinsky: So, was there actually a demand from the region for that kind of loan?
Adam Blanco: Oh, yeah. Absolutely. These loans were not at a rate of 60%. These were reasonable. These were wholesale loans to the credit cooperatives. We did our due diligence on the credit cooperatives' loan processes. That was our risk.
As long as we felt comfortable with their due diligence process, we would go out there and audit the loan portfolio, make sure the money was going where it was supposed to. Of course, there was leakage. You have to accept that in that environment. We saw that at Rolf in dealing with the dealerships and wholesalers. We knew some of those dealers and some of our salespeople were pocketing money. We knew it. We had evidence, but what are you going to do?
When I was doing Visa International in Central Asia, we had banks down there that were doing unauthorized acceptance of Visa and unauthorized issuance of Visa. I would go to London, and we would talk about it. I would say, "Yes, they are unauthorized, but what do you want to do about it?" We have people going down there. There are tourists going down there. If they can't use Visa cards, then what? So, in a way, there is an aligned interest, but it needs to be later formalized and brought under control. I remember one of the directives I had in my plan for 2003. My boss in London said, "How much card issuance do we want out of Turkmenistan?" We only had 15 card holders.
Daniel Satinsky: Fifteen. Right. But I bet there was a big number associated with those fifteen.
Adam Blanco: Oh, yeah. I know exactly who they were. The government, the president, you know. And my boss tells me, "We need to increase this number to 50." I looked at him and said, "How? We know who all the cardholders are — Mr. President and his family."
I said, "Yeah." I went over there, asked her to dance, and we danced. I had a great conversation with her, but I had worked with her before. She knew me. She knew me from when we had brought Paul Volcker over for consultations. Paul Volcker was on the board of FSVC. He's a big guy — well, he passed away now, God bless him. And he came over. I remember during a meeting with Paramonova and a few of the other senior board members, one of them said, "We know you as the father of inflation." Paul didn't really like that.
Daniel Satinsky: I bet he didn't.
Adam Blanco: If you've ever heard him speak, he's got a loud, booming voice. He's like a foghorn coming down the hallway. He's a big guy. And when he said that I just thought, "Oh boy." Going the right way. And that's one of the things I appreciated about Russian culture — it can sometimes be very direct. There's no mincing words here.
Daniel Satinsky: Yeah. Well, I have to say that... I don't want to digress into my own personal story, but just a little bit.
Adam Blanco: No, please do.
Daniel Satinsky: We were part of a small consulting group on commercialization technology called Russia Innovation Partners. We were at a forum in Novosibirsk, an economic forum, and a room full of people talking about innovation policy. Someone in the back of the room stands up and asks, "How do you make money? How much money do you make?" I never imagined, that... That's not the kind of question you'd get in an American audience. But then we realized that was going to come up every single time. Whenever it did, we'd say, "We're glad you asked that question. We were waiting to see who would ask it," because it always came up. That's the way they were thinking — very direct.
Adam Blanco: And they didn't know. They really didn’t know what we did. What United States was about, how we lived. One of the first questions I got in Peace Corps when the mayor of Kstovo picked me up at the train station was, "What do you want to do?" I thought, didn't Peace Corps work all this out? Another question from the deputy mayor, who gave me his apartment because mine wasn't ready, asked me one day, "How much does your suit cost?" Along the lines of, "How much money do you make?"
Daniel Satinsky: Exactly. Well, one other story I can't resist...
Adam Blanco: No, please.
Daniel Satinsky: In the winter of 1990-1991, we went to Tashkent and did a seminar on how local government works in a market economy. There were about 350 people from across Central Asia, with simultaneous translation. I had people from the Boston Redevelopment Authority and planning agencies. They described sales tax, and someone said, "That's the most ridiculous thing I've ever heard — that a merchant is going to collect a tax and then give it to the government. Who would do that?" One of our guys got up and said, "Three letters: IRS." It was a great moment. At that moment, they really wanted to know, and over the time that you were there, they actually learned a tremendous amount. So, my sense is a lot of expats and foreigners became irrelevant after a while.
Adam Blanco: That's right.
Daniel Satinsky: Yeah, because the skill level and the knowledge level just...
Adam Blanco: They absorbed it.
Daniel Satinsky: Absorbed it, yeah.
Adam Blanco: They absorbed it, and they put it into practice. Yes, they made mistakes, but we all make mistakes. Especially when you come out of the ashes of what they went through — that humiliation, that abject poverty which you saw in Moscow. One come out of that... That was a challenge.
Daniel Satinsky: It was.
Adam Blanco: I don't think Americans really understand. That goes back to my first comment. I learned more about the United States than I did about Russia — well, a little bit of an exaggeration — I learned more about both the United States and Russia. Full stop. I learned a tremendous amount about Russia. Looking at my own country from afar really gives one a different perspective. How influential is the United States around the world? When the Ppresident of the United States says something, how does that resonate in a foreign land — not only with the government, but with the people? Let's face it, Putin is human. So is the whole power structure. They listen to that, and they are looking at those words from their shoes, their environment, and their power structure. The idea that a president could say something without the agreement of the entire power structure — how can that be? This country's blessed beyond what they really understand.
Daniel Satinsky: I would agree with that.
Adam Blanco: Back to '98 to...
Daniel Satinsky: Right, '98 to 2009.
Adam Blanco: And I still participate in a lot of these Atlantic Council conferences and stuff like that.
Daniel Satinsky: Yeah, so do I.
Adam Blanco: Russia's part of my DNA. So, I did Visa International for about a year. Then the '98 crisis hit, or what was it, 9/11 occurred. And so, my job was eliminated. Then I went to Tajikistan under a USAID program with FINCA International. That was about setting up microfinance businesses across Tajikistan, which I think is a good program. Although I think the rates are... there are a lot of changes that need to be made. You can't be charging 50% and claim that you're doing good. And higher. There has to be a way of reducing these costs. And there is. And you still make money.
I did that until... and I wanted to go back to Moscow. Then I was offered a position to do the microfinance center in Moscow, also USAID funded. So, there were two parts to that: create an NGO, which is the Russian Microfinance Center, which still exists today.
Daniel Satinsky: It does?
Adam Blanco: Still exists today. And the guy that I mentored and who ran the Russian Microfinance Center, today is a board member of the Russian Central Bank.
Daniel Satinsky: Wow. That's a success.
Adam Blanco: Yes, it is. His name is Mikhail Mamuta...
Anyway, I did that, and then I really wanted to move out of NGO work. So, then I went to graduate school in Barcelona to try to transition into private sector work. And I did. So, after IESE, that was 2006-2007. A good friend of mine was CEO of the Rolf Group. So, he brought me into the Rolf Group, and I finally... I was finally making that big packeted money that you want. A USD million and a half you know. I just needed three more years of that. But there just wasn't enough time.
Daniel Satinsky: And so, you were only there two years?
Adam Blanco: Yeah, two years.
Daniel Satinsky: And then... how did, by the way, the 2008 crisis impact what you were doing?
Adam Blanco: It hit us hard. And the way I got into Rolf was... and this is another story entirely about economic development and the purpose of economic development, USAID, British Know-How Fund, all of that. You know, you're building platforms to create an environment conducive to businesses growing and developing. So, in that microfinance, one of the keys was to create a for-profit microfinance business that lends to credit cooperatives out in the regions.
So, I started that. It was called Centurion Capital. I did that. It ran for about a year and a half. Then they asked me, "Can we privatize it? Can you get private money into it?" Because USAID was leaving the project. I approached Rolf Group and said, "Why don't you invest in this?" Needed $5 million to grow it. I had another $10 million in debt financing that was contingent upon the $5 million equity coming. One thing led to another, and suddenly USAID got cold feet. "Wait a minute, wait a minute. Do we want a Russian group to take over Centurion Capital? How will that change the mission?" There was a disconnect there. And that disconnect was partly about trust and partly about not really understanding what your mission is. Which goes back to the failures. What is your real mission here? As that was progressing, they said, "No, we don't endorse this," and Rolf backed off. Then I said, "Okay, fine, I'm done with this." I put together the plan myself, a duplicate of Centurion, and I sold it to Rolf. You can imagine the controversy that created.
Daniel Satinsky: Yeah, you made yourself a lot of friends in USAID.
Adam Blanco: Oh, yeah.
Daniel Satinsky: You can imagine.
Adam Blanco: And I thought to myself, "Well, what was the whole purpose of setting this up in the first place? You want to transition it? You're leaving. What do you expect?" I worked for the microfinance center, and Rolf and I had raised a significant amount of money from Citigroup. A friend of mine ran Citigroup asked me when I returned to Moscow after Tajikistan, I asked what I was doing. I told him about the USAID funded Microfinance Center and my mission to privatize it with local money. He said to me, "How much money do you need?" I said, "How much do you have?" Just like that.
So, yeah, I made friends with USAID at the beginning. They wanted that money coming in and that process making it self-sustainable. What they wanted. So, two entities: the Russian Microfinance Center, which is an NGO, which I transformed into a self-sustaining organization, which it is today. Our partner in that was the Russian Bankers Association. That's kind of like having the Italian mafia as your partner. I can tell you some stories about them.
So, where was I? Going to Rolf, showing the business model to Rolf. In that business model, what was interesting for Rolf was that it represented a platform to not only help... it was very interested in the microfinance business from a financial investment standpoint as well as for the good. And so, I sold it to them for $5 million, and I just got the $5 million. Let me be clear. They invested $5 million in the business model.
And another thing that didn't help me with USAID was two of my people from Centurion Capital that I had recruited and trained came over to privatize it.
Daniel Satinsky: So, was there actually a demand from the region for that kind of loan?
Adam Blanco: Oh, yeah. Absolutely. These loans were not at a rate of 60%. These were reasonable. These were wholesale loans to the credit cooperatives. We did our due diligence on the credit cooperatives' loan processes. That was our risk.
As long as we felt comfortable with their due diligence process, we would go out there and audit the loan portfolio, make sure the money was going where it was supposed to. Of course, there was leakage. You have to accept that in that environment. We saw that at Rolf in dealing with the dealerships and wholesalers. We knew some of those dealers and some of our salespeople were pocketing money. We knew it. We had evidence, but what are you going to do?
When I was doing Visa International in Central Asia, we had banks down there that were doing unauthorized acceptance of Visa and unauthorized issuance of Visa. I would go to London, and we would talk about it. I would say, "Yes, they are unauthorized, but what do you want to do about it?" We have people going down there. There are tourists going down there. If they can't use Visa cards, then what? So, in a way, there is an aligned interest, but it needs to be later formalized and brought under control. I remember one of the directives I had in my plan for 2003. My boss in London said, "How much card issuance do we want out of Turkmenistan?" We only had 15 card holders.
Daniel Satinsky: Fifteen. Right. But I bet there was a big number associated with those fifteen.
Adam Blanco: Oh, yeah. I know exactly who they were. The government, the president, you know. And my boss tells me, "We need to increase this number to 50." I looked at him and said, "How? We know who all the cardholders are — Mr. President and his family."
Our man
Contact US
+1 (202) 9946340
russiaprogram@gwu.edu
russiaprogram@gwu.edu
INSTITUTE FOR EUROPEAN, RUSSIAN, AND EURASIAN STUDIES
1957 E St., NW, Suite 412,
Washington, DC 20052
