July 11, 1997   

This Date's Issues:   1032  • 1033  1034

Johnson's Russia List
#1033
11 July 1997
djohnson@cdi.org

[Note from David Johnson:
1. Dale Herspring (Kansas State University): Pipes and the 
Russian Military.
2. Stephen Shenfield (Brown): Russian "(neo-)imperialism": 
a few definitional problems.
3. From IEWS Russian Regional Report: ST. PETERSBURG WARY OF 
MOSCOW and NIZHNII NOVGOROD: PRESIDENT, PRIME MINISTER BACK 
SKLYAROV; COMMUNISTS CLAIM FRAUD and MOSCOW RESIDENCE PERMITS 
AGAIN DECLARED ILLEGAL.
4. InterPress Service: Andrei Ivanov and Judith Perera,
RUSSIA: No Ratification Of Chemical Weapons Ban Before Autumn.
5. New York Times: Michael Gordon, 2 Financiers to Establish
Big Investment Bank in Russia.
6. Pravda-5: Americans Scare the Caucasus with Russian Hegemony.
7. Segodnya: Andrei Kolesnikov, THE SECRET WEAPON THAT DIDN'T 
WORK. ("a summer defeat of the reformers").
8. Selskaya Zhizn: Yeltsin Election Promises Remain Unfulfilled. 
9. Jamestown Foundation Monitor: FRAUD CHARGES FLY ANEW IN THE 
RUSSIAN PRESS and RUSSIA DENIES NUCLEAR EXERCISE STORY WHILE 
SHOWCASING NEW MISSILE.
10. Reuter: Russian prime minister declares modest income.
11. International Herald Tribune: William Pfaff, U.S. Ambitions 
Outstrip Its Domestic Appetite.]

********

#1
Date: Thu, 10 Jul 1997 16:20:07 -0500 (CDT)
From: Dale R Herspring <falka@ksu.edu>
Subject: Pipes and the Russian Military

Dale Herspring, Kansas State University

Anyone who thinks the Russian military has a master plan for reintegrating
the various republics back under Russian control simply 
does not understand the state the Russian military is in at present. 
Even Dick Pipes should know that it is about as close to physical 
collapse as a military organization can be. The statistics are 
overwhelming. But, let us leave that aside. The fact is that the 
Russian military is so fractionized that I doubt that it is possible to 
even speak of a Russian military at present. In a certain way, it makes 
more sense to speak of Russian militaries. But let us leave that aside too 
and focus on Moscow and the High Command. Here I wonder at anyone's 
ability to think there is some kind of a master plan. Not only is the 
MOD beginning to look like a revolving door as leaders come and go, it is 
not clear who is in charge of what. The brass is now waiting for 
a civilian dominated national security bureaucracy to come up with a game 
plan for reforming it. Indeed, the most one can say is that the current 
situation is one of total confusion and chaos as far as the military is 
concerned. I have no doubt that some Russian officer in the General 
Staff or elsewhere has a plan for reuniting the old USSR. Having had 
extensive experience with both the Russian and American militaries, I 
would be surprised if someone does not have a plan for any eventuality. 
Having said that -- we are still a long way from the idea that the 
"military" has a plan to put humpty dumpty back together again. 

Indeed, I suspect the ones who are most heartened by Dick's suggestion is 
what is left of the Russian High Command. I can hear Sergeyev telling 
Kvashnin -- "See Anatoliy, the situation is not as bad as we thought; 
after all if the Americans think we can make those kind of plans maybe we 
are in better shape than our reports suggest." 

*********

#2
Date: Thu, 10 Jul 1997 15:43:20 -0400
From: Stephen_Shenfield@brown.edu (Stephen Shenfield)
Subject: Russian "(neo-)imperialism": a few definitional problems

I feel moved to add a few points to the debate about whether there is
currently such a thing as Russian (neo-)imperialism.

People are often arguing at cross-purposes because they mean different
things by imperialism.

1. Some people (especially in Russia) still use as their primary reference
point the "classical" overseas colonial imperialism of the West European
powers. In that case, contiguous land empires cannot be "imperialist" by
definition. Those who stress the motive of economic exploitation (following
Hobbes and Lenin perhaps) find cogent the objection that Russia did/does not
derive economic benefit from its peripheral territories, that on the
contrary they are a burden. For those who stress political and military
criteria, i.e. imperialism for the sake of geostrategic advantage, or for
the sake of power and glory, the economics is of course irrelevant.

2. Turning from ends to means, how coercive does the exercise of power have
to be to qualify as imperialism? Does only direct military conquest or
intimidation qualify? Plus the use of calculated economic pressure? How
about the power that automatically flows from economic strength and
presence, asymmetrical dependencies, cultural diffusion? This is closely
connected with the question whether any striving towards "integration" of a
big country with its smaller neighbors is ipso facto to be interpreted in
terms of imperialism. Only if no distinction is made between empire and
sphere of influence.

3. Does "imperialism" have to be a conscious strategy (even if not all that
coherently planned and implemented) of the "center"? In the FSU there are
scattered communities of imperially minded people who do not fit in well in
the new states and hark back to Soviet or even Tsarist times -- e.g. the
"Russian-speakers" of north-eastern Estonia, northern Kazakstan, the
Dniester area etc., and also the "Cossacks" in the Caucasus and the border
regions of southern Russia. Regarding the Yeltsin regime as traitors, these
people are nonetheless often willing to act on behalf of a once-and-future
empire that does not at present exist. Holding the fort until a new
derzhava-minded elite takes power once more at the center. Sort of
imperialism on spec.

4. There is also the attitude among Russian "imperialists" -- e.g. see the
infamous anonymous article in Nezavisimaya gazeta 3/26/97, "CIS: beginning
or end of history?", it later became known that the authors were Migranyan
and Zatulin -- that even if Russia is currently too weak to control the
countries of the "near abroad" itself, it is at least strong enough to
prevent outside powers from moving in and controlling them. In
Russian/Soviet strategic thinking, such negative control was always even
more important than positive control (and served to justify the latter).
According to Migranyan and Zatulin, Russia faces the imminent danger of the
consolidation of a hostile alliance between outside powers (Turkey and the
West) and most of the post-Soviet republics -- the emerging
Kiev-Tbilisi-Baku-Tashkent axis, to which Almaty may later adhere (and we
should now probably add -- Grozny!). To prevent this terrible fate, Russia
should do all it can to promote the disintegration and destabilization of
Ukraine, Georgia, Azerbaijan, the Central Asian states -- even though the
process may well get out of control. Better an arc of instability than a
hostile encirclement. 

Does this sort of strategy qualify as imperialism? Whether it does or not,
it is surely the most dangerous variant of all. . 

********

#3
Excerpt
From: Natan_Shklyar@IEWS.ORG
Date: Thu, 10 Jul 1997 11:35:46 -0400
Subject: IEWS Russian Regional Report--10 July 1997

ST. PETERSBURG WARY OF MOSCOW...
On 26-27 June a unique gathering took place in the building of the
presidential representative in St. Petersburg. Scholars and journalists met
with figures from the city's political and economic elites to discuss the
oldest political question: who governs? Several representatives of the
local elite were remarkably frank in detailing the path to power which
individuals had traversed from the old party/Komsomol institutions to the
new commercial structures.
Several broad areas of consensus emerged from the discussions. First,
the idea of a fundamental division between conservative and progressive
elites is misleading, and not useful in understanding the distribution of
power. Moreover, it was probably never relevant at any point in the
transition process. Alliances and rivalries between individuals and groups
in the local elite cut across the arbitrary ideological division of
"communists" and "democrats."
Second, local politicians and businessmen seem to agree on the
importance of stability, and the avoidance of extreme and potentially
de-stabilizing actions. Local elites have learned how to survive in the
current situation and are searching for gradual rather than radical
solutions to enduring problems (which are admittedly severe). There was a
feeling that the changes of the past decade were more than sufficient, and
the time has come for consolidation. There was disdain for those wishing to
disrupt the status quo at both ends of the political spectrum - the
communists and the market radicals. Several speakers underlined the need to
find a unifying theme or goal - a new "Russian idea" - in order to fill the
ideological vacuum and provide a sense of purpose and direction to society
at large.
A third point of consensus was wariness in dealings with Moscow. There
was strong concern that the federal government is colluding with its
favored Moscow-based commercial banks to pursue financial policies which
will see the extension of those banks' control over the economic resources
of St. Petersburg. This theme emerged several years ago, and shows little
sign of diminishing despite the achievement of macroeconomic stabilization,
the ongoing consolidation of the banking system, and efforts to make
privatization more transparent. - Peter Rutland in St. Petersburg


NIZHNII NOVGOROD: PRESIDENT, PRIME MINISTER BACK SKLYAROV; COMMUNISTS CLAIM
FRAUD. Russian President Boris Yeltsin and Prime Minister Viktor
Chernomyrdin promised Nizhnii Novgorod Mayor Ivan Sklyarov support if he
wins Nizhnii Novgorod's 13 July gubernatorial runoff, Segodnya and
Kommersant-Daily reported on 9 July, quoting Sklyarov. On 2 July, Sklyarov
had a telephone conversation with Yeltsin, who invited him to meet with
Chernomyrdin on 8 July in Moscow. Chernomyrdin promised to send Nizhnii
Novgorod 100 billion rubles (about $17.4 million), a significant part of
the federal government's debt to the region. The money is intended to cover
unpaid salaries owed to state employees and other social benefits. In
addition, Chernomyrdin ordered the Finance and Defense ministries to work
out a schedule for making good on a 534-billion-ruble ($93 million) debt to
oblast military-industrial enterprises.
Sklyarov will face Communist Gennadii Khodyrev in the second round of
the gubernatorial race. He won the first round by a mere three percentage
points (see IEWS Russian Regional Report, 3 July 1997). The opposition
considers the 38% that its candidate won in the first round an enormous
victory in the region which was governed by First Deputy Prime Minister
Boris Nemtsov until April and is regarded as one of the "bastions of
reform." Communists believe that they have a good chance of gaining the
support of the 15% who voted for the other three candidates in the first
round. In the meantime, local pollsters predict Sklyarov's victory if over
40% of the voters turn out in those districts were he finished second in
first round voting (Segodnya, 5 July). Turnout in the first round was just
over 40%, but it usually drops in the second round.
The Communists claim that their candidate would have done even better
if not for fraud at several polling stations. In one rural district where
turnout was over 60%, about 15% higher than in the oblast overall, Sklyarov
beat Khodyrev by about 20%, Sovetskaya Rossiya reported. The newspaper
alleged that it is highly likely that the result was forged. For the
run-off, the opposition will post at least three observers at each polling
station, according to Moskovskie novosti (no.27). - Anna Paretskaya in
Moscow

MOSCOW RESIDENCE PERMITS AGAIN DECLARED ILLEGAL. On 2 July the
Constitutional Court declared that the operation of the registration
(propiska) system in Moscow Oblast is unconstitutional (Rossiiskaya gazeta,
9 July). The constitution adopted in 1993 guarantees a Russian citizen's
right to freedom of movement and residence, yet Moscow and St. Petersburg
continue to operate the Soviet-era propiska system, under which citizens
require police permission to take up residence in those cities. Moscow city
and oblast charge new would-be residents 300-500 times the minimum wage (a
sum totaling $4-5000) for the right to move to the city - for example, into
an apartment which a person may have purchased. In fact, as Itogi noted in
its 24 June issue, this is the fifth time that the propiska system has been
declared illegal. Apart from the 1993 constitution, a 1993 Supreme Soviet
law banned the practice, and even back in 1990 the USSR Committee on
Constitutional Protection had ruled against propiski. The current
Constitutional Court had itself ruled against the Moscow city propiska
system in a appeal considered in March 1996. The city authorities justify
their flagrant violation of the law by claiming that the cities are in
danger of being overwhelmed with poor migrants from the Russian provinces
and other countries. - Peter Rutland

********

#4
>From InterPress Service, all rights reserved.

RUSSIA: No Ratification Of Chemical Weapons Ban Before Autumn
By Andrei Ivanov and Judith Perera

MOSCOW, Jul 6 (IPS) - The Russian parliament (duma) will not
resume discussion of ratification of the 1993 Chemical Weapons
Convention (CWC) before the autumn, according to Duma Defence
Committee member Albert Makhashov.
The CWC went into effect at the end of April. The convention,
which took years to negotiate, bans the production, stockpiling,
transfer and use of chemical weapons. It obliges members to
eliminate all chemical weapons and production facilities by 2007.
Officials estimate it could cost five billion dollars or more for
Russia to destroy its 40,000 tons of chemical weapons, many of
which are stored in old and rusting containers.
The communist-dominated Duma refused to ratify the convention
despite urging from President Boris Yeltsin mainly because of
concern about the costs of disposing of existing chemical weapons
stocks. Makhashov told a news conference on Tuesday that the
Russian parliament had only been given a month to consider the
ratification of the convention which was not long enough.
''Before resuming the debate, parliament will demand from the
government clear answers as to how Russia's joining the convention
would affect overall national defence, especially with NATO's
eastward expansion,'' he explains. He adds that parliament also
wants to know the real cost to the budget of chemical weapons
disposal, including closure of former production facilities.
Failure to ratify has put Russia in a difficult position as it
cannot formally participate in further deliberations in
implementation of the treaty. A Russian delegation was able to
attend the first meeting of CWC member states in the Hague in May
only as an observer.
During the debate on ratification, Duma members had argued that
Russia would need Western financial assistance as well as more
time to destroy its stockpile of weapons. However, the Duma
approved a bill setting out how Moscow will dispose of its
chemical weapons, but not when. The bill was signed into law by
Yeltsin on 2 May.
According to Colonel-General Stanislav Petrov, head of Russia's
nuclear, chemical and biological defence forces, Russia cannot
rely heavily on foreign help for weapons destruction, although
domestic finance for the programme was inadequate.
He says that in 1996 only one percent of the required sum was
earmarked for the programme from the budget, while foreign support
from Germany and the U.S. would not account for more than 3.5
percent. However, he insists that with ''stable financing'' Russia
could destroy its chemical weapons completely by 2007.
Petrov says Russia's arsenal of chemical weapons is securely
guarded and safely stored. In March of 1996,the government
approved a 1998-2005 federal programme of disposal of chemical
weapons stored at seven depots.
The stockpile is to be disposed of in stages. Some 7,500 tonnes
of mustard gas, lewisite and mixtures of these gases, or 18.8
percent of Russia's total store of chemical weapons, will be
destroyed first.
Land mines, shells and bombs filled with deadly nerve gases will
be destroyed in the second stage.
However, in addition to financial difficulties, efforts to
dispose of the weapons are being hampered by increasingly
effective environmental protests. This has increased the cost of
destruction because of the sweeteners which need to be offered to
the local communities near the proposed sites of destruction.
The government has promised finance for new social and economic
infrastructure and for medical monitoring. The money being made
available for the programme is not sufficient. The 1997 budget
provided 21 million dollars while the actual sum needed was around
210 million dollars.
Despite official reassurances about the safety of the weapons,
there is growing concern about the condition of the stockpile.
''This is an extraordinarily complex problem because first of all
the storage facilities for chemical weapons are incredibly worn
out and corroded,'' says Viktor Danilov-Danilyan, head of the
state committee for the environment. ''To continue to store them
as they are today in many cases would be incredibly dangerous.''
However, Lieutenant-General Viktor Kholstov, first deputy
commander of the nuclear, chemical and biological defence troops,
insists that the stores are safe.
''In 1994, there were visits to Russia of American military
specialists in the framework of international accords. They chose
sites on their own and carefully examined the sites of storage of
war gases. They did not raise any questions about safety,'' he
says.
The seven storage depots for chemical weapons are at Kambarka in
Udmurtia where there are 6,400 tonnes of lewisite, and Gorny
(Saratov) where there are 1,125 tonnes of mustard and lewisite.
U.S. experts visited the Kambarka site in August 1990 where the
liquid Lewisite is stored in 80 huge containers made of thick
steel. Nerve agents are stored at Kizner in Udmurtia and Shchuchye
near Kurgan, and also at Maradykovsky, near Kirov, Leonidovka,
near Penza and Pochep, near Bryansk.
These are stored in munitions -- missile artillery munitions at
two sites and aviation munitions at three sites.
Meanwhile Russia is moving ahead with plans to build a facility
at to dispose of stockpiles of weapons filled with nerve gases.
The plant is being financed by the United States. The Kurgan
facility, however, is being opposed by local residents and
politicians. 

**********

#5
New York Times
10 July 1997
[for personal use only]
2 Financiers to Establish Big Investment Bank in Russia
By MICHAEL R. GORDON

MOSCOW -- Combining Western financial expertise with Russian political and
economic power, two of the nation's most influential financiers have joined
forces to establish Russia's largest investment bank. 
The new company will merge the Renaissance Capital Group with the
International Co. for Finance and Investment, which is now Russia's
fifth-largest bank. 
The merger will also formalize the alliance between Boris Jordan, the
ambitious 31-year-old American who founded Renaissance Capital, and Vladimir
Potanin, the 37-year-old former head of Uneximbank, parent company of the
Russian bank. 
For Russia's leaders, eagerly awaiting the country's long-delayed economic
turnaround, the announcement of the merger is an important sign that at least
some Russian bankers believe there is real money to be made by investing at
home. 
"Russia needed a Russian-controlled international investment and merchant
bank," said A. Robert Towbin, who is the managing director of Unterberg
Harris, an American investment bank and brokerage firm, and the former
president of the Russian-American Enterprise Fund, which was established by
the U.S. government to encourage the development of Russia's market economy. 
"The image in the West is that Russia is the place of flight capital,"
Towbin added. "This says to the world that there are Russians with equity
capital who are investing in Russia." 
The announcement comes at a critical time in Russia's economic development.
After six years of economic decline, inflation has been brought under
control. Economic reformers occupy top slots in the government of President
Boris Yeltsin. The Moscow stock exchange has soared. 
Still, the economy has yet to show sustained growth. Key reforms of the tax
system, housing and agriculture have yet to be carried out. Much of Russian
industry has yet to be restructured. Direct investment in Russian companies
is anemic. 
The new bank, MFK Renaissance, will have equity capital of $400 million. It
will manage more than $1 billion in funds and will have total assets of more
than $2 billion. The bank plans to employ about 600 people. 
Jordan will serve as president and chief executive. Potanin will become the
chairman. Each side will own 50 percent. The merger is expected to be
formally completed within six months. 
The relationship between Jordan and Potanin goes back several years, when
Potanin helped Jordan get his big start. Jordan, grandson of a Russian
immigrant, was sent to Russia in 1992 by CS First Boston Corp. He left that
company in 1994, along with other investment bankers and traders, to
establish Renaissance Capital. 
Potanin's Uneximbank provided important start-up capital and acquired a
minority stake in Renaissance Capital. 
"They were the only people we found that thought the way we did, were
transparent enough and were of the generation we wanted to be associated with
in Russia," Jordan recalled in an interview. 
Uneximbank's effectiveness in restructuring former Soviet enterprises
remains a matter of considerable debate among economists here. But there is
no doubt about Potanin's ability to wheel and deal his way to the top of
Russia's new financial elite. 
A graduate of the Moscow State Institute of International Relations,
Potanin worked at the Foreign Trade Ministry at the start of his career. As
president of Uneximbank, he pioneered the "loans for share" privatization
arrangement in which powerful banks lent money to the Russian government in
exchange for shares of some of the country's most valuable assets. Potanin
became a first deputy prime minister last year but returned to Uneximbank
after one of many Cabinet shake-ups. 
Today, Uneximbank is the custodian of 38 percent of Norilsk Nickel, which
produces one-fourth of the world's nickel. Uneximbank also owns 85 percent of
Sidanko, Russia's fourth-largest oil producer, and it is trying to put
together a bid for a 25 percent share of RAO Svyazinvest, the huge Russian
telecommunications company. 
Russia's investment community abounds in skeptics, who say Jordan was
driven to the merger out of fear that he was losing his competitive edge or
out of pressure from the powerful Uneximbank. Others challenge Potanin's
business acumen. 
"They are trying to gain muscle with closer collaboration with Potanin,"
Anders Aslund, an expert on the Russian economy at the Carnegie Endowment for
International Peace, said of Renaissance Capital. "I am skeptical of Potanin
as a business manager." 
Potanin, for his part, insisted that MFK Renaissance would help attract
investment to ailing Russian companies and facilitate their restructuring.
And he said that Renaissance Capital's Russian coloration would ease the
merger. 
"It is not a 100 percent foreign firm," he said. "There is Russian
participation in Renaissance. And let's not forget that Boris Jordan is
Russian even through he is an American citizen." 
For his part, Jordan said that MFK Renaissance now needs to find new
clients within Russia. "You have to build a business that has a large
domestic client basis," he said, so that it can help direct "domestic flows
to domestic corporations and international flows to domestic corporations." 

***********

#6
>From 
http://www.russiatoday.com
Press Review
Pravda-5
Date?
Americans Scare the Caucasus with Russian Hegemony 
Summary

In Yerevan, an international conference entitled "The Trans-Caucasus 
region, today and tomorrow: Prospects for regional integration" ended 
recently. 
It was arranged by the McArthur Foundation at the local American 
University. The daily wrote that Western politicians have long been 
pushing the idea of regional integration of Trans-Caucasus states and 
North Caucasus autonomies, to form a Greater Caucasus region. The idea 
was conceived to prevent the re-establishment of Russian economic and 
political influence in the region. 
On the problem of Nagorno-Karabakh, a disputed area between Armenia and 
Azerbaijan, analysts were unanimous that it should remain within 
Azerbaijan. The chief expert of the Armenian Center for Strategic and 
National problems emphasized that the Americans view Nagorno-Karabakh as 
a stronghold of Russian influence in the region. Western experts made it 
clear to their Armenian colleagues that Armenia should concede the 
region to Azerbaijan in exchange for the prospects of Caspian oil 
transport through Armenia. This will give Armenia $300 million in annual 
income. 

******

#7
>From RIA Novosti
Segodnya
July 9, 1997
THE SECRET WEAPON THAT DIDN'T WORK
By Andrei KOLESNIKOV

Back in 1993, when financial stabilisation programme was
launched, Russia's gold and currency reserves grew 12-fold.
Since then the figure doubled to 23.8 billion dollars. In late
1995 Anatoly Chubais informed the public that "the backbone of
inflation expectations has been broken." Inflation still grows,
and can exceed the planned 11-12% this year, but still, it is
kept down. This is an obvious achievement, and the beginning of
economic growth is hindered only by the unbearable burden
weighing down on the government. I mean that government
investments into the social sphere should be replaced with
private investments.
The second stage of the reform, which began, as usual,
with low initial figures but at a high speed, slowed down by
mid-summer. In principle, it is traditional to idle in summer.
The Duma is on holidays, the President is in Chupa, and Chubais
is in Denmark. All major battles have been postponed, by mutual
agreement of the sides, till autumn.
The speed of the reform has been lost. It looks as if the
Cabinet is torn apart by differences of opinion. For example,
we knew in May that the government presidium would meet to
discuss a concept of the pension reform on July 4. The concept
was drafted, extremely quickly, by a group of specialists led
by the new First Deputy Minister of Labour, Mikhail Dmitriyev.
However, it turned out that by July 4 the government was not
ready to discuss this delicate issue. 
It transpired even before that that Vasily Barchuk, head
of the Pension Fund, is against the gradual introduction of the
accumulation system despite the difficulties which his Fund
faces. The thing is that the government finds it more and more
difficult to maintain such a large number of pensioners, which
keeps growing. 
There are problems also with the natural monopolies. Take
the issue of the economic status. RAO EES Rossii litigated with
the Anti-Trust Committee for a long time, arguing that a power-
generating monopolist cannot be regarded as a monopolist
proper. This giant is to be restructured very soon, but this
will not improve the situation very much in the next few
months. 
A compromise with Gazprom provided only for reducing
tariffs and the repayment of its debts to the budget. 
The third monopoly behemoth, the Ministry of Railways, has
not been reformed. The reduction of tariffs and the appointment
of Mr. Kislyuk can hardly be regarded as a reform. Specialists
have calculated that tariffs should be reduced to one-fifth in
order to maintain economic contacts, but the reduction of
tariffs alone will not change anything in the industry. 
And one more example. We suddenly remembered about the
land reform, probably for the first time in the past five
years. This fact alone is a great achievement. But the
beginning of the reform took too long and, given the guaranteed
resistance of the Parliament, it will not change the situation
for a long time yet.
The government and the administration are focusing their
attention on the regions. And this is logical, as the
resistance of the regional heads to the reforms, in addition to
the intra-government contradictions and the pathological
obstinacy of the Parliament, creates another problem for the
reformers. In this sphere, too, the executive authorities
suffered a defeat before the summer holidays: Yevgeny
Nazdratenko won the drawn-out dispute with the Kremlin and the
government, which looked as if it was withering away. The
"production" solidarity of the Federation Council did it.
So, what do we have? We have a summer defeat of the
reformers. Resistance proved to be too strong, and they have
retreated to nurse their wounds until autumn. Indeed, they can
hardly expect to score in summer. 
A draw. 

*********

#8
Yeltsin Election Promises Remain Unfulfilled 

Selskaya Zhizn
July 8, 1997
[translation for personal use only]
Article by political commentator Aleksandr Bykovskiy under "View of
Events: From Tuesday to Tuesday" rubric: "Dummy on the Tracks"

Last week it was a year since B. Yeltsin was elected for a second
presidential term. This landmark provides an opportunity to assess the
genuineness of the president's election promises and to consider how
closely he is following his election program. And even a cursory analysis
of current events reveals that the head of state's promises are as far from
implementation as the sky is from the earth.
There is probably just one area in which B. Yeltsin has succeeded over
the past year: Despite his illness he has consolidated his power even
further. His latest government reorganization demonstrated clearly that
the president continues to base his decisions on a highly personal view of
the professional qualities of candidates for senior posts. He remains
indifferent to public reaction to key personnel changes in the cabinet.
And it was no coincidence that he recruited to the government A.
Chubays and B. Nemtsov, whose economic views are virtually entirely in
accord with Gaydar's. So now there is every basis to claim that the White
House is dominated by Russia's Democratic Choice, which was crushingly
defeated in the 1995 State Duma election. At any rate, prominent
"democrats" have already started saying openly that
Chernomyrdin is playing Ye. Gaydar's tune. And unfortunately such
allegations are not far from the truth.

The arrogance of the political Khlestakovs [main character in Gogol's
"The Government Inspector"] is already beginning to cause irritation even
among regional leaders, who realize how cavalry charges on the economy
could have repercussions in the provinces. And this gives V. Chernomyrdin
the chance to make a more determined effort to restrain the "reforming"
outbursts of his first deputies. The president himself cannot ignore this
irritation. There are various signs that he intends to give the premier
greater independence in the conduct of economic policy, including foreign
economic policy. We cannot help noticing that V. Chernomyrdin has recently
made a number of important foreign trips. It is also highly significant
that the "reformers" have not managed to gain control of the notorious
Gazprom.
The increased activity of regional leaders has been most evident
within the walls of the Federation Council. The senators came to the
defense of Maritime Kray Governor Ye. Nazdratenko, who was in fact on the
verge of dismissal. The members of the parliament's upper chamber
considered it abnormal for a Federal Security Service general to be
appointed to monitor the activity of a legally elected governor, as
happened in Maritime Kray. It is noteworthy that such a view was expressed
by senators of all sorts of political outlooks.
The present author has no wish to exaggerate the results of the
regional leaders' activity. Economic difficulties are evident almost
everywhere. But, to be fair, it should be said that the governors, who, of
all the power structures, are in closest touch with the population, feel
intuitively that it is high time to change the economic policy currently
being implemented. And it was entirely natural that the Federation Council
supported both the Land Code and the law on state regulation of
agro-industrial production. Incidentally, this caused turmoil in the
"democratic" press.
Meanwhile, the public is becoming increasingly aware that reform
cannot be achieved by means of sudden onslaughts. Reform requires all the
branches of power to work harmoniously and purposefully. In the end, it
will require the population's trust. And now the Kremlin is having to
appoint A. Tuleyev, a representative of the people's patriotic forces,
governor of the troubled Kuzbass. Though I concede entirely that a hidden
scheme lies behind this: He will break his own neck if he does not respect
the ground rules of Russian officialdom.
And yet I venture to suggest that A. Tuleyev's appointment will be a
turning point in contemporary Russian history. It could dispel the myth
persistently spread by the "democrats" that the people's patriotic forces
suffer from a shortage of outstanding managers capable of finding sound
solutions in the current dire conditions. Indeed, A. Tuleyev himself could
become a politician of national stature. Especially since he has the
experience of having worked as minister for cooperation with CIS countries,
as well as having been involved in concluding the Union [Treaty] between
Russia and Belarus. He is also renowned for striking the right note in
relations with officials, some of whom, of course, are honest, respectable
people.
Tuleyev replaces a figure who was swept into big-league politics by
the events of August 1991. At that time B. Yeltsin selected his team
according to the principle of personal loyalty, and professionalism was not
taken into account. This practice has continued throughout recent years. 
The natural result is that Russia is now only a step away from the abyss. 
So should we be surprised that, while the president marks the anniversary
of his election victory, Maritime Kray's inhabitants are laying a straw
dummy of Yeltsin on the railroad tracks? Is there any need to comment
further on Russia's economic achievements one year after the presidential
election?

********

#9
Jamestown Foundation Monitor
10 July 1997

FRAUD CHARGES FLY ANEW IN THE RUSSIAN PRESS. Clan warfare has once again
erupted in the pages of the Russian press, and a central theme of the most
recent round of charges is the allocation of interest-free credits by
commercial banks. The latest volley was fired off in the government
newspaper Rossiiskaya gazeta, which published an article accusing two former
state officials, now working for Oneksimbank, of organizing a fraudulent
loan in February of this year. (Rossiiskaya gazeta, July 9)

The paper says that the $100 million loan to the MiG-MAPO company,
supposedly an advance credit for the purchase of MiG-29's by India, was
approved by former deputy finance minister Andrei Vavilov and ex-first
deputy prime minister Vladimir Potanin, who was ousted in March and who
returned to his former position as chairman of Oneksimbank. The publication
can be seen as a response to the articles in Izvestia on July 1-2 accusing
First Deputy Prime Minister Anatoly Chubais and Central Bank chairman Sergei
Dubinin of corrupt dealings.

Such accusations of fraud should be investigated by the independent State
Auditing Chamber. However, as the deputy director of that office, Yury
Boldyrev, explained in a recent interview, the chamber is starved of
resources, is often ignored by the executive and legislative branches, and
lacks the authority to bring cases directly to court. (Pravda-5, July 8) The
agency's actual budget was a mere 19 billion rubles ($4 million) in 1995 and
30 billion in 1996, despite the fact that it uncovered 5.8 trillion rubles
of waste in 1995 and 9 trillion in 1996. 

Boldyrev noted that much fraud involves the granting of low-interest loans
by commercial banks, a practice which is apparently not a punishable offense
under current law. On June 4 the Duma asked the Chamber to investigate the
financing of Russian Public Television (ORT): Boldyrev said he had uncovered
a dubious low-interest loan to ORT from Stolichny Bank in 1995. He also
questioned the income and wealth declaration recently filed by President
Boris Yeltsin, noting that Yeltsin's wages amount to only 10 percent of his
income, and that he seems to have depended on interest-free loans to buy his
dacha and land. The Auditing Chamber itself came under criticism last month,
however, for building itself a lavish new headquarters. 

RUSSIA DENIES NUCLEAR EXERCISE STORY WHILE SHOWCASING NEW MISSILE. The
Russian Foreign and Defense Ministries yesterday denied that the Russian
armed forces had recently rehearsed repelling an attack by NATO, Polish, and
Lithuanian forces -- and that the Russian exercise had practiced the use of
nuclear weapons in the process. The officials were responding to a story in
the July 8 Washington Times which was said to be based on a Pentagon
intelligence report. The story said that troops as well as nuclear-armed
aircraft had been involved in the exercise. Moscow Military District
spokesman Igor Petrischev admitted that a command-post exercise had been
held in the district at the time mentioned in the Times article, but denied
that any troops had participated. "The maneuvering was done only on the
map," he said.

The Times report said that the exercise had taken place just a few days
after the Helsinki Summit meeting of Presidents Bill Clinton and Boris
Yeltsin. An unidentified source in the Russian Defense Ministry, however,
said that the Pentagon should instead have paid better attention to the
successful test launch of a Russian Topol-M intercontinental ballistic
missile from the Plesetsk cosmodrome during the Madrid NATO summit. This
launch was the 4th test flight of this missile -- a modernized SS-25. Unlike
present Russian missiles, it has only Russian-built components and will be
deployed in both silo-based and mobile versions. 

While the Russian military might have been pleased with the July 8 Topol-M
test, the 1,800 inhabitants of a village in the Arkhangelsk region certainly
were not. Two spent stages of the missile landed nearby, polluting the water
reservoir that serves the village. (AP, July 8; Russian agencies, July 9)

*********

#10
Russian prime minister declares modest income
MOSCOW, July 10 (Reuter) - Russian Prime Minister Viktor Chernomydrin, who
some media reports have said has vast riches, on Thursday declared his
personal wealth at $46,000, Russian news agencies said. 
In a declaration required by President Boris Yeltsin's recent
anti-corruption
drive, Chernomyrdin declared a 1996 income of 46 million roubles ($8,000),
and overall property and other holdings together with his wife worth 268
million ($46,000). 
His main property holding is a country home outside Moscow on 1,473 square
meters (a third of an acre) of land which he valued at 156 million roubles
($27,000). 
He also owns an Chevrolet Blazer compact sport/utility vehicle which he
bought this year and values at 112 million ($19,343). The report did not say
if the vehicle was assembled by General Motors at a new plant in Russia's
Tatarstan region. 
``Perhaps this is not keeping with the spirit of the times, but I do not
have
any stock holdings,'' Interfax news agency quoted Chernomyrdin as saying.
``And I have no property abroad.'' 
Some media reports in the spring said Chernomyrdin had huge stock
holdings in
Russia's Gazprom gas monopoly, which he headed before joining the Russian
government in 1992. 
Yeltsin in May declared his family worth more than $200,000 with $42,000 in
1996 earnings. 

********

#11
International Herald Tribune
July 10, 1997
[for personal use only]
U.S. Ambitions Outstrip Its Domestic Appetite
By William Pfaff International Herald Tribune / L A Times Syndicate.

PARIS - The Madrid NATO meeting left a fundamental question unsettled. 
What is the larger policy into which NATO expansion fits?
Robert Hunter, the U.S. ambassador to NATO, has made the NATO case in 
the best terms possible. NATO provides a permanent framework for 
trans-Atlantic cooperation, and its expansion, he says, avoids the 
renationalization of Western defense while reinforcing Europe's 
unification.
Expansion is meant to provide security to Central and Eastern Europe, 
and even to Russia. Fair enough. The intentions are benign. But what is 
the administration's larger conception of America in the world? Various 
general statements of policy have been put forward, ranging from a 
sentimental neo-Wilsonianism, which sees the world's eventual and 
harmonious coming-together under American leadership, to severe 
prescriptions of global hegemony, with ''rogues'' dealt with by U.S. 
arms. None really makes sense either in terms of political possibility 
or today's American domestic opinion.
These ideas are also Eurocentric or Atlanticist at a time when American 
interests and opinions (and ''history'') seem to be moving Asia-ward. In 
Asia they certainly don't fit. There is not going to be any harmonious 
melding of American, Chinese, Japanese and Indonesian interests and 
institutions under America's leadership - or hegemony.
American policy discussion of Asia today emphasizes conflict - economic 
conflict, certainly, but also political conflict and, according to some 
of the more excitable or irresponsible commentators, the prospect of war 
with China, or China's ''civilization,'' or indeed, if imprecisely and 
implausibly, with a China allied with ''Islamic civilization.''
As for the Middle East, there is no harmony there. Israel is already on 
the edge of war, or at least of an even worse form of civil struggle and 
repression than now exists, in which the United States will be 
implicated, and for which Washington today seems to have no policy at 
all, only a deliberate abstention from policy - which makes absolutely 
no sense. The United States is already the hegemonic power in the 
region, but it is incapable of using its power even to salvage its own 
interests.
It comes as no surprise that the Clinton administration lacks a clear 
general conception of policy and aims. It can be argued that apart from 
the Monroe Doctrine and what might be called the default mode of 
American policy, isolationism, the United States has had a general 
conception of foreign policy aims during only three periods of its 
history.
The first was in the decades leading up to and immediately following the 
Spanish-American War of 1898, when the United States acquired an empire 
under the influence of the writings on sea power and commerce of Alfred 
Thayer Mahan.
The second was after World War I, when the United States promoted 
national self-determination in Central and Eastern Europe and the 
creation of the League of Nations (which, of course, the Senate 
subsequently voted against joining). This exercise in Wilsonian idealism 
about world organization was renewed in 1944-45 when the United States 
created the United Nations. (The Senate, for its part, is again in the 
mood of its predecessor of 1919.)
The third was containment of Russia, the policy articulated in 1947 by 
George Kennan, subsequently turned into an ideologized and heavily 
militarized program of global struggle against communism, disorder and 
''rogue states.'' With respect to the latter two matters, this policy is 
to an extent still with us.
A general conception of policy becomes essential when the country 
undertakes a major change in its national commitments, including very 
serious downside risks. This is the case with NATO expansion.
Moreover, there is a crucial political question. Is the United States 
government today capable of sustaining the policies to which this 
administration is committing it? Everyone already acknowledges that 
Senate ratification of NATO expansion is uncertain.
In June, Senator Joseph Biden, a Democrat who favors expansion, 
nonetheless warned that Congress cannot be expected to continue to 
support U.S. commitments to NATO and Europe unless there is a much 
increased European contribution to NATO costs (which the Europeans will 
certainly resist) and unless Europe takes over the Bosnian problem in 
June 1998, when the United States is set to leave the former Yugoslavia.
This is consistent with the Congress's present reluctance to pay 
American obligations to the UN and other international agencies, and its 
predilection for attempting to legislate foreign policy for other 
countries, as in the Helms-Burton case.
Moreover, if the European Commission condemns the Boeing-McDonnell 
Douglas merger, which seems likely, the congressional reaction can be 
imagined. And while Europe remains a helpless giant in foreign policy 
matters, it will ferociously defend its economic interests.
There is a contradiction in the Clinton administration's position that 
its leaders refuse to admit. Its ambitious policies lack deep roots in 
Congress and popular opinion. The threat to its ambitions lies at home, 
not abroad. To ignore this is hubris.

***********
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