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Johnson's Russia List


July 15, 1997   

This Date's Issues:   1047 1048  1049 1050 1051

Johnson's Russia List [list two]
15 July 1997

[Note from David Johnson:
1. Delovoy Mir: Leonid Abalkin,"The Government Will Not
Lead Us Out of the Impasse, But There Is a Way Out!"

2. Radiostantsiya Ekho Moskvy: Interview with former Russian 
Justice Minister Valentin Kovalev.

3. Moskovskiye Novosti: Interview with President of the Czech 
Republic Vaclav Havel.

4. Nezavisimoye Voyennoye Obozreniye: Nikolay Dmitriyev, "The
Cold War Has Ended, But Western Special Services Have Not Ceased 
Acting Against Russia."

5. Itar-Tass: Special Services To Keep an Eye on Investors.
6. Interfax: FSB to Investigate Charges of Banks' Misuse of State 


Abalkin on Ways of Overcoming Economic Crisis 

Delovoy Mir
June 17, 1997
[translation for personal use only]
Article by Leonid Abalkin: "The Government Will Not
Lead Us Out of the Impasse, But There Is a Way Out!"

This is how the situation might be characterized from
the viewpoint of the concept of the way out of the crisis proposed
by academic economic institutes of the medium-term program of Russia"s
socioeconomic development from 1998 through the year 2005 [sentence
as published].
Academician Leonid Abalkin, director of the Russian
Academy of Sciences Economics Institute, took an active part in
the drafting of the program.
The escape of Russian society and its economy from crisis
will require a radical renewal of the strategy and tactics of the
reforms. It is essential to step up the role of the state in the
regulation of economic and social processes. And this is not dictated
by opportunist considerations but reflects the wealth of world experience
and the deep-lying normalities of the transitional era conceptualized
by modern science.
Financial issues—the budget crisis and the need for
a radical sequestration of budgetary revenue and expenditure—has
emerged at the center of the action proposed by the government.
The situation is actually such that in the first quarter of 1997
the federal budget accumulated 9.2 percent of the GDP. With this
volume of funds the government is not in principle in a position
to exercise the functions entrusted to it. Let us note for comparison
that the US federal budget at the present time accumulates 20 percent
of the GDP.
A radical change in the situation as regards replenishment
of the budget, without which speaking about some essential regulatory
pressures of the state is not serious, is required. The central
question is how to extricate ourselves from the impasse of the extremely
low revenue side of the budget?
I would like to formulate my position as follows: This problem
has no autonomous solution, it cannot be solved by wresting it from
the context of reality as an independent isolated objective and
from the overall situation that has taken shape in the national
The point being that the economy of Russia is in an extremely
serious payment arrears crisis. The sum total of national economy
debts as of 1 April of this year constitutes a sum equal to R1.2
quadrillion, of which half, of the order of R600 trillion, that
is, is past due.
I maintain that without having resolved this overall payment
crisis, it will be impossible to resolve the problem of budget arrears.
If only because the budget arrears constitute, at best, merely one-tenth
of this amount. And if the enterprises are not paying one another
and if there is no disbursement of pay, it is altogether unclear
where the money for payments to the treasury will come from.
There is also one further circumstance, which emphasizes the
complexity of the problem. If we take the entire sum of debts as
of 1 April and compare it with the overall money supply in the country
equal to R300 trillion, we see that all the money covers only one-fourth
of the value of the debts.
The second aspect of the impossibility of an isolated solution
of the problem of budgetary revenue is that it is impossible to
imagine a growth of budgetary revenue with a decline in the volume
of production and its reduced efficiency. In such a situation there
is a narrowing of the tax base since our principal taxes are tied
to volume: value-added tax, to the volume of the GDP, and profits
tax, to gross profit. Production continues to decline—the
most reliable data on large and medium-sized industrial enterprises
in the first four months point to this, and the downturn constitutes
5 percent in relation to four months of last year. In 1996 gross
profit in the national economy declined twofold, which, with an
identical rate of tax collection, causes a twofold reduction in
revenue, and this year the reduction in profits continues, albeit
at a slower pace, but now from this halved value.
Consequently, a fundamental solution of the problem of the
payments crisis in the country turns on the problem of economic
growth. The question arises in this connection: If the current tax
system and the relatively austere credit policy of the government
and the Central Bank that has been adopted continue, can economic
growth be expected in 1997 or, at least, in 1998? According to estimates
made by specialists of our institute, if financial, credit, and
tax policy remains unchanged, there is no hope of economic growth
either this year or next.
In what way, then, may a change be achieved? According to
the proposals of the members of staff of our institute and other
economists that have been reflected in material of the Economics
Department, there are grounds with the aid of a number of measures
not simply for the achievement of stabilization and the start of
growth but for quite a serious economic spurt measured at roughly
6-8 percent annual growth, primarily in industry. On what is this
based? On the fact that an enormous amount of underloaded production
capacity has now emerged. With the significant downturn in production
there are plants that, without any major investments, at the present
engineering level, of course, and without appreciable changes or
modernization, could increase volume. There are the manpower potential
and the raw material reserves for this.
It is frequently asked: But how will this happen—so
many years of decline, and suddenly 8 percent annual growth? It
is forgotten here that this is 8 percent from the present meager
level. If we have at this time 25 percent of the 1990 level in terms
of investment volume, an 8 percent increase from this will equal
only 2 percent of the 1990 level. We understand, of course, that
such a spurt cannot last for long—two or three years,
that subsequently the rate will decline, but structural changes
would begin. And then on the basis of this upturn the arrears would
be untied, budgetary revenue would increase, and it would be possible
to agree to some investment programs, begin the modernization of
production, plug in resource-saving procedures and techniques, and
improve product quality. At the second stage, after the year 2000,
the rate of growth could decelerate.
What, though, might stimulate or incite this growth? The expansion
of aggregate demand, of course, supported, in turn, by real "cash."
As a result of the actions that have been pursued as of late,
there has been a sharp reduction in aggregate demand. This is the
result of a deliberate policy aimed at curbing inflation by any
means. This has been accomplished, and the rate of inflation really
was knocked down in 1996 and has been held at a relatively low level
in 1997, which is an indisputably positive aspect. But the economy
cannot be evaluated by one parameter, just as in medicine it is
impossible to make a diagnosis only based on the patient"s
The constriction of demand has had, aside from the lowering
of the rate of inflation, other consequences also. It has been the
principal means of the suppression of production. There has to be
a sense of proportion. If we want to reach the point of economic
growth, we have to stimulate demand.
No one is proposing a mechanical increase in the ruble supply,
further ruble issue. No good would come of this, and it could destabilize
the entire consumer market and bring about a growth of prices. In
addition, a substantial part of such money could go not into the
untying of the arrears crisis and not into clearance of the debts
to the populace but could be spent on the purchase of government
securities or be converted into hard currency and in no way stimulate
actual consumer or investment demand or stimulate production.
The channels by which this money supply is to enter the national
economy should be very clearly defined, therefore. It is this that
is a matter of government regulation. The classical version could
be credit issue connected with the allocation of earmarked, tied
credit. That is, the money is not simply granted, a line of credit,
which may be used only to pay for what constitutes a component of
the investment process, is opened. Machinery and equipment in place
of obsolete equipment, construction materials, raw material, and
so forth may be purchased and leasing employed. The functioning
of such money results in a growth of production, and the money supply
and the commodity structure of the market begin to balance, allowing
of no serious inflationary surges. Although there are certain time
lags here. This is an instrument of relatively fine regulation,
and it needs to be used carefully, but world practice is familiar
with it, and the government could learn to control this lever perfectly
The proposed measures are designed to change the socioeconomic
situation and, which is no less important, the psychological situation.
In order for quite broad strata of society to sense a revival of
their hopes and for some zones of revitalization to emerge. People
yearn for work, but meaningful work. And vigorous work for real
"cash" will itself become a most powerful factor of the development
of the market economy.


Former Justice Minister Interviewed 

Radiostantsiya Ekho Moskvy
July 10, 1997
[translation for personal use only]
Studio interview with former Russian Justice Minister Valentin
Alekseyevich Kovalev by correspondent Aleksey Venediktov -- live

[Venediktov] Valentin Alekseyevich, straight to the point. You turned
out to be at the center of probably the first scandal in Russia that
touched, above everything else, on the citizen's right to privacy. This
notion has probably not existed in the Soviet Union, in the Russian
Federation before. Let us look at this scandal from the viewpoint of
private life. What do you think in connection with this?
[Kovalev] I am truly grateful to Moscow Echo radio for defending the
constitutional principle of the right to privacy. I would like to
highlight certain points here. The right to privacy in connection with the
publication of scandalous material has not been violated. I believe that
what I just said is of fundamental significance and say that my rights were
not violated for a very simple reason, namely that everything shown during
those scandalous scenes has nothing to do with me whatsoever. I
categorically deny that the scenes shown in these videos are identical to
the real facts of my private life. Therefore, it seems to me that
different questions should be asked here. One should ask about
establishing the truth in this matter. One should ask about discrediting
an official and a citizen, about violating the right to a good name and
reputation. These are the questions that I think should be raised. I am
not going to try to justify myself. I have nothing to justify. I have not
done anything that I should be ashamed of to society and my colleagues,
friends, and comrades. The only thing that I insist upon is truth and
nothing but the truth. The question of how to establish it arises here.
[Venediktov] Are there any ways of establishing it?
[Kovalev] Yes, of course. [passage omitted: lengthy comments about the
fact that truth can be established] In order to check the authenticity of
information, the source from which it was received must be established. 
Without this, the information is anonymous material. On this particular
occasion, we are dealing with a new type of anonymous material. 
Essentially, it is an electronic poison-pen. You see, we do not know who
made it, we do not know the conditions under which the film was made, we do
not know who was filmed. Finally, we do not know who fed this material to
the mass media. Here, I think, we are coming to an interesting topic for
conversation, which is definitely of public interest.
I must say that I would like to concentrate the attention of those
here to these public matters, because I do not intend speaking about my
private life. This is my constitutional right and I intend to defend the
inviolability of my private life myself. Moreover, I do not think that
society received a single piece of information about my private life as a
result of these scandalous publications. Not one, I stress. I consider all
of these publications false. I consider them unverified. I consider that
the truth will definitely be established.
[Venediktov] Valentin Alekseyevich, let us look at some of the
opinions. On around 30 June, Anatoliy Kulikov, Russian Deputy Prime
Minister and Internal Affairs Minister, confirmed the authenticity of the
video tape in an interview to the mass media. Those were his own words. 
It would seem this is a case of one minister's word against another's. 
Although no proof has been presented here either.
[Kovalev] I would rather not start our conversation with this because
a whole range of problems are overlooked in this case, the problems
[Venediktov, interrupts] We will return to this. However, we are
talking about...[pauses] You said that...
[Kovalev, interrupts] Yes, which are of public interest. But since
you wish to personalize the problem -- as it seems to me -- I can say about
my colleague Anatoliy Sergeyevich Kulikov that he is a very decent person. 
We have never ever been in conflict with each other. Moreover, I have
always treated him as my comrade and it seemed to me this was mutual.
Anatoliy Sergeyevich Kulikov and I were involved in a lot of work, not
only in the Security Council, the government, or the emergencies
commission. Together we carried out over 80 operations within the federal
program for the fight against crime. This is a lot. This is a lot of
work, and we always found understanding. As for our principled policy at
the Security Council, in the government or in the emergencies commission,
our positions may have been different, but only on minor points, never
fundamentally. Therefore, this could not possibly have complicated our
personal relations.
As for his statement, I have no intention of changing my opinion about
a colleague, depending on whether the circumstances are happy or sad, or
for any mercenary reasons. The Prosecutor's Office is looking into this
case and I am absolutely convinced that the truth will be established.
[Venediktov] Let us return to talking about how this tape got to the media.
I would like to remind our listeners that the author of the article in the
Top Secret newspaper, Larisa Kislinskaya, said that the tape was given to
her by a member of the Interior Ministry staff, a member of an
investigation group. However, the Interior Ministry insisted that the tape
belonged to the Solntsevo [Moscow district] Mafia and was most likely given
to her by them. Kislinskaya also said that she had been stripped of her
accreditation by the Interior Ministry. There is probably also the fourth
version, and the fifth, and probably the sixth one, too.
[Kovalev] There are also other versions, but let us look into the ones
you have mentioned. This makes a lot of sense. It is true that there are
clear discrepancies between what Kislinskaya said and the statements by
some quite highly-placed officials from the Interior Ministry. Let us
consider each of the versions of events. If the Internal Affairs Ministry
is right, and the materials discrediting the minister reached the
journalist from criminal groups, then this means that from my point of view
the implication is clear: the criminal world against the Justice Minister.
If I, through my 30 years of experience in combating crime, have
deserved such hatred from the criminal world, then I am proud of it. This
is one version of what happened.
Version number two. The [Larisa] Kislinskaya version: that the
material emanated from the Internal Affairs Ministry. What is the
implication of this, my dear colleagues? There is a certain official
mechanism for responding to this kind of compromising materials about
If such materials really do exist, they are checked out and the
relevant conclusions are reached. In the case in question -- please take
note of this circumstance -- this legal procedure was not carried out, if,
that is, Kislinskaya is right and that the material came from there.
So what procedure was carried out? An illegal procedure, connected
with a leak of operational investigative materials. This fact points to an
official violation of the law. The following question arises: Why? Why
violate official rules if there is a legal method of exposing a minister
guilty of wrong-doing?
>From my point of view the answer is obvious. A legal means of
discrediting me does not exist. Let me make a pause here, a space for
thought and logic. I ask everyone to give this some thought. Nobody will
start violating official instructions and legal requirements just like
that. There is always a definite aim. If the goal can be reached legally,
there is no problem. But in the case in question it was not possible to
reach the goal by legal means. Because the material was not authentic, it
was not verified, it was evidently forged. And the person who sent it to
the media knew this.
That is how the situation looks today, and it is in this connection
that I ask for the truth to be established by proper verification and by
revealing the source of the information leak. [passage omitted] 
[Venediktov] Valentin Alekseyevich, you claim that there has been a
violation of the procedure and that this was done deliberately. Because it
could not have been carried out legally. Let us return to the hypothetical
situation of how the procedure should have been carried out. During an
investigation, a video tape allegedly portraying the justice minister is
found. This happens on 17 April. When did you find out about the video
tape? Did the Interior Ministry come to you?
[Kovalev] I learned about the whole story from the media. If the
legal procedure had been followed, I should have been familiarized with
these discrediting materials and at the very least should have been
informed about all this. Nothing like this has been done. This
compromising material about the justice minister was fed to the media at a
time -- that is particularly annoying -- when Russian President Boris
Nikolayevich Yeltsin was abroad, when our Prime Minister Viktor Stepanovich
Chernomyrdin was on vacation, when Anatoliy Borisovich Chubays was
accompanying Boris Nikolayevich Yeltsin to the United States, and when I
was abroad, too. In other words, the timing was picked with precision.
[passage omitted]
Many people expected that I would sue [Larisa] Kislinskaya. But this
will not happen because I pity Kislinskaya. She is yet to realize the role
she played in somebody else's drama. [passage omitted]
Few people know about the work of a justice minister. Since this is a
job of the past for me now, I can tell you that this post involves many
conflicts. Speaking about my personal case, I, as justice minister,
received masses of anonymous letters about high- ranking officials. But
what did I do? I acted according to the law. I never attached any
importance to them, because an unsigned letter is nothing other than an
unsigned letter. I never fed them to the press. If I had done so, many
top officials would have found themselves in mud from head to foot. I have
never opted for this sort of thing and will never do so, even in my
memoirs. Now about more serious aspects of work at the Justice Ministry.
[passage omitted]
At present a draft law has been prepared on Justice Ministry
organizations and submitted to the President -- the first one of its kind
in our history. What is the point of my innovations? First, I wanted the
Justice Ministry organizations to be given the status of law-enforcement
bodies. In other words, if previously we only registered law violations
without having any legal levers to take specific measures, now we were due
to obtain them. But that is not the only thing. For two years I have been
trying to get a system of bailiffs going. This is nothing other than the
court police. This kind of structure was supposed to be developed in our
country and it was to engage in making sure that court decisions are
enforced. At present the situation is near-tragic with only 50 percent of
court decisions on confiscations of property being implemented in real
terms. The other 50 percent are being implemented by criminal structures
in some cases [sentence as heard]. In other words, what is happening in
the country is that a system of criminal enforcement of court decisions is
developing. If we allow this, there will be an end to justice as we know
it. This is what I reported to the government. This is why the decision
to set up bailiffs was supported. This is why a draft law to this effect
has been submitted to the Duma and it has already been passed there,
although it is not a law yet because it is yet to be considered by some
other organizations. Another thing is that the corrective labor
establishments should be handed over to the Justice Ministry. [passage


Havel on NATO Expansion, Post-Communist State 

Moskovskiye Novosti, No. 27
July 6-13, 1997
[translation for personal use only]
Interview with President of the Czech Republic Vaclav Havel by
Valeriy Masterov in Prague; date not given: "'Apolitical Politician' --
That Is
What Many Are Calling Vaclav Havel" -- first two paragraphs are

On the eve of the NATO summit in Madrid, one of the most active
supporters of the alliance's expansion, President of the Czech Republic
Vaclav Havel, received Moskovskiye Novosti's correspondent in Prazsky Hrad.
In spite of the inter-party and economic storms raging in the country
and, in his private life, the lawsuit that he is engaged in with his
relatives about dividing up an inheritance, Vaclav Havel still enjoys
stable authority in the Czech Republic. [passage omitted]
[Masterov] On the eve of the summit in Madrid one can say that the
world is facing another challenge. Even in Russia now almost everyone
feels that the question of inviting the Czech Republic, Hungary, and Poland
to join NATO is already decided. What do you think, will the expansion of
the military bloc, created as an instrument of pressure and threat, bring
good to the peoples of these countries?
[Havel] I believe that every country's politicians have a duty to
think about protecting the interests and the security of the current
generation of its citizens, and especially the future of their country, and
about defending the principles on the basis of which their state is built. 
[Politicians] in our country, which is situated in the very center of
Europe, should think about this all the more. We have, on more than one
occasion, been victims of the most diverse occupations, and this is
precisely why we, keeping in mind the interests and security of future
generations, see that the only organization that could become an instrument
of collective European defense is NATO, and this is why the Czech Republic
is trying to become a member of this alliance. We perceive NATO as an
organization that is striving to become a collective organ of European
integration and to protect Europe from all kinds of threats in the future. 
We are prepared to take on our share of the responsibility for the events
in Europe.
[Masterov] When I arrived for my meeting with you, I found out that
in some Prague schools the students were offered [a book called] "Tales of
the NATO Peoples." What tale would the Czech Republic contribute to this
[Havel] I have not seen this book, I have nothing against it, my
attitude toward it is unbiased, but all the same it seems to me that what
is more important than this book of tales is the modern reality and the
real discussion of it. It must be explained to the citizens what the point
of this alliance with NATO is.
[Masterov] People in Russia often cannot understand one thing: The
Warsaw Pact, the signing of which was brought about by the activity of
NATO, has been dissolved, and NATO itself, which has not even reorganized
itself, is "taking in hand" the former allies. There can only be one answer
-- the isolation of Russia. [Havel] This is nonsense, of course, and it
probably needs to be repeated over and over to the Russian citizens that
this is not how it is at all. First, NATO is no longer Western Europe's
instrument of defense against the threat from the East, it is not an
instrument for containing communism. NATO is now turning into an instrument
of defense for the entire Euro-Atlantic area. And second, not only does
this alliance not wish to isolate Russia, but it accepts Russia as its
equal partner, as a great power. And I think that the Founding Act which
was signed recently between the Russian Federation and NATO, is serving
precisely this goal. The Russian Federation and the states that will join
NATO, or which are already its members, are a sort of united whole which
should maintain equal and balanced relations within itself. This, of
course, is a difficult process, but it is a prerequisite of any kind of
peaceful solution. The Warsaw Pact was not an alliance for protecting
democratic values, but rather served to protect the Soviet Union and its
spheres of interest. The Russian Federation today is a democratic power
that does not want to create any kind of zones or spheres of influence
along its far-flung borders. And I think past prejudices must be overcome.
[Masterov] But now people are talking more and more often about a
"gray security zone," in which some observers have "included," in
particular, Ukraine and the Baltic countries.
[Havel] The cause for this concern is people who to this day have not
gotten rid of their bipolar vision of the world, that is, those who still
believe that NATO and Russia are mutual enemies, that these are two forces
that are standing against one another, and that between them there must be
this, as you put it, "gray zone," which, like a ditch, would separate them
like two rabid dogs to keep them from ripping each other to bits. And
anyone who thinks this way has failed to understand what today's world is
like. Such a bipolar division of the world existed in the 1950s, and that
was when these "gray zones" were needed.
[Masterov] At the "NATO Seminar" which has just ended in Prague, it
was stated: "The door will not shut behind the first candidates...." Does
the presence of the president of Romania at the Prague seminar mean that
the Czech Republic also has its priorities?
[Havel] We invited many participants to Prague, but the only ones who
came were those who had an interest in this meeting or who had time to
come, so you need not look for any priorities here. As for the Madrid
summit, if certain states are invited to join NATO there, it should also be
said that the process does not end there, and that some sort of schedule or
logic for further expansion has been designated.
[Masterov] Mr. President, recently much has been said and written
about the situation in the Czech Republic, which was regarded as a leader
of post-socialist reorganization, about, more or less, the end of the
legend of economic success and the aggravation of domestic political
struggles. How would you explain the fact that, as has been remarked, "the
promises of the painless construction of capitalism turned out to be a
political myth"?
[Havel] I would not say that we were living in a world of delusions,
illusions, legends, or myths. This reform really did happen quickly and
successfully, from many standpoints. But nonetheless, this speed and the
success of the first steps must obviously be paid for. It so happens that
this bill has now been presented. Some economic problems and difficulties
have arisen, including those that you have mentioned. However, this does
not come as a surprise or a shock to us. Many of us expected these
difficulties, and now the whole thing is about us handling them just as
bravely as we took our first steps on the road to reform.
[Masterov] Right now the Czech political scene looks like a hot
frying pan. How do you, Mr. President, manage to maintain such a high
rating of a politician and statesman?
[Havel] I observe only one imperative -- serve your country and your
people as best you can. To me this is much more important than what this
or that commentator writes, or than various public opinion surveys about
popularity percentages.
[Masterov] In your opinion, is the Czech Republic threatened with a
"step to the left"? Will the impending trial of the Communist Party of
Czechoslovakia leaders of "August 1968" be a warning against a return to
the past?
[Havel] I believe that it is necessary to sum up our past, to look
the past in the face, it is necessary to say clearly where mistakes were
made. We are doing this, but whether or not we are doing it correctly or
well is another matter. I personally believe that it is working out for
us, in any case I do not know of any other post-Communist country that
might be doing this better. But this is a problem that any post-Communist
state encounters.
[Masterov] What is your view of Russia today? How do you find
relations between the Czech Republic and Russia?
[Havel] I would say that we have traditional friendship and
traditional sympathies toward Russia. In our country people have always
known and loved Russian culture. Not even the occupation of 1968 or other
very unfavorable things were able to destroy this. The only thing I would
like is for our relations never to be a friendship imposed and commanded
from the top, but for them to be based on traditional sympathies.


Intelligence Efforts Against Russia Viewed 

Nezavisimoye Voyennoye Obozreniye
July 5-11, 1997
[translation for personal use only]
Article by Nikolay Dmitriyev under the "Investigation" rubric: "The
Cold War Has Ended, But Western Special Services Have Not Ceased Acting
Against Russia"

Kaliningrad -- The chief task of intelligence has always been to
gather preemptive information on the enemy. The Cold War has ended, and
you would have thought that the special services of our former enemies
should have reduced their activities. But this has applied only to Russian
intelligence and the organs which ensure the state's security. The SVR
[Foreign Intelligence Service] and the GRU [Main Intelligence Directorate]
have curtailed their presence in many parts of the world, the FSB [Federal
Security Service] is going through yet another reorganization, and border
guards are suffocating in the vise of impecuniousness. Many professional
staffers who could still have served the people and Russia faithfully have
been pensioned off.
Over the past five years the information-gathering potential of
Russian intelligence has been sharply reduced. It will take decades to
restore its potential.
But what about our former enemies, who have now become our friends,
and our former allies, who are seeking to join NATO as quickly as possible?
Far from curtailing their "work," they have extended their field of
activity. This can be judged from the number of cadre staffers of foreign
special services established and taken under control by Russian
counterintelligence officers -- more than 300 people last year. The forms
of the struggle have also become more diverse, and the range of methods
employed by foreign intelligence services has expanded.
At the end of 1995 the U.S. Defense Intelligence Agency (DIA), for
example, created an entire network of various commercial enterprises,
stores, banks, currency exchange points, attorney's offices, and publishing
houses outside national territory within the framework of a secret program.
These and other similar projects were designed as a cover for illegal
work. The activities of all the "businessmen-intelligence officers" are
coordinated by the DIA Agent Intelligence Office.
As a rule, there are not many professional intelligence officers in
such cover organizations. The owner of such an enterprise is usually a
citizen of the country where the DIA is operating, who is entrusted with
the tasks of registering "his enterprise" in accordance with the
established procedure, abiding by the laws, seeking sources of information,
paying taxes in a timely manner, and, most importantly, increasing the flow
of money into the DIA's coffers to carry out secret operations.
According to information which filtered through to the press, the
forming of cover establishments outside national territories was sanctioned
by the U.S. Congress.
Other forms of intelligence are also being seen to become more active
-- space, radio, radiotechnical, air, and naval intelligence. Not just from
the territory of contiguous states or from the open sea but also on Russian
territory proper. Relatively recently staffers of the Russian FSB put an
end to attempts by the U.S. and FRG special services to set up instruments
on our territory to gather information by technical means.
To judge from agents neutralized by Russian counterintelligence in
1996, the special services not only of the United States and the FRG but
also of Britain, China, Poland, the Baltic countries, and Israel are taking
an interest in Russia. An analysis of articles in the mass media of
foreign countries makes it possible, with a large degree of certainty, to
include Denmark, the Netherlands, Sweden, Switzerland, Turkey, and Japan
among the "curious" countries. It is noteworthy that even South American
and African countries have been noticed among the special services which
have stepped up intelligence activities against Russia and the other CIS
countries -- Argentina, Brazil, Mexico, Egypt, Jordan, and Tanzania.
Foreign intelligence services are now characterized not by the
infiltration of professional spies among us but by the more active
involvement of Russian citizens in illegal cooperation. There is a very
simple explanation for this. First, the "natives" can be paid peanuts. 
Thus, for example, a Russian might get $200-1,000 as recompense for
information gathered, while their "own" staffer gets 10-15 times more for
exactly the same information. Second, if he is exposed, there is no need
to worry about getting him out of trouble.
The range of "interests" of foreign intelligence services is very
wide, embracing the gathering of economic and scientific-technical
information, information on the Army and other power structures, on
political parties, public organizations, and movements, and also data on
morale, the psychological state of Russian society, and so forth.
Here, for example, is a short list of issues of interest to individual
intelligence services about the Russian Armed Forces.
The Netherlands: The coordinates of Air Force and Naval Aviation
airfields, as well as of the staffs of the units and combined units to
which the airfields belong.
Britain: The regulations drawn up in the M.V. Frunze General Staff
Military Academy.
Brazil: The authorized organizational structure of artillery subunits
and Army units and combined units and their use in combat.
The gathering of compromising material against representatives of
state organs of power is particularly encouraged. This is understandable,
for the intelligence arsenal has always included blackmail.
The Turkish special services -- the MIT [expansion unknown] -- have
particularly stepped up their activities recently. With the breakup of the
USSR Turkey set itself the task of returning at all costs to the zone of
its former geopolitical interests. This meant squeezing Russia out of
Central Asia and the Caucasus as quickly as possible. Therefore everything
was set in motion -- funding of extremist nationalist movements and
organizations, cadre training, and material and technical assistance for
bandit formations, as happened at the time of the events in Chechnya. An
MIT agent -- Turkish citizen Iskhak Kasap [name as transliterated], who was
detained in Dagestan in 1995 on returning from Chechnya -- spoke about this
and much besides at his news conference. According to him, two cadre
Turkish intelligence officers were also with him at the same time on a
"mission" on Russian territory.
The Turkish special services, along with the military, are trying to
increase their "influence" in the armies of the CIS states, particularly in
the armed forces of Azerbaijan and Georgia.
They have been set the specific task of discrediting the Russian
military presence in the Transcaucasus. In the opinion of official Ankara,
the preservation of Russian military bases in Georgia has a negative effect
on the whole spectrum of Georgian-Turkish relations. Therefore there is
nothing surprising in the fact, for example, that statements by Georgian
members of parliament and leaders and by MIT specialists relating to the
Russian military are sometimes strikingly similar. Turkish intelligence,
as is known, works in close contact with specialists of the U.S. CIA.
The forms, means, and methods of the work of foreign intelligence
services have become increasingly varied. There are invitations to Russian
scientists and specialists to work abroad under contracts, to attend
international symposia, conferences, and seminars, and to pay visits on
private invitations. Such measures have just one purpose -- to obtain the
maximum information.
Direct contacts with representatives of Russian state power, political
parties, and business circles and with the Armed Forces command have begun
to be practiced widely. And specialist psychologists are being brought in
to work with them -- in effect, they "program" negative sentiments in the
most ambitious leaders of the new political elites.
In other words, foreign special services are strengthening their
positions in Russia by means of purposeful work. Many of those who are
processed under this program do not even suspect that they already feature
as "agents of influence" on the card files of Langley or Pulakh [as
transliterated]. Then it is a matter of technique. Having access to the
real levers of power, the mass media, and finances, the "zombies" begin
their destructive activities.
Foreign special services are being seen to consolidate their efforts
against Russia. This is borne out by the activities of developing
countries' intelligence services not only in their own interests but also
in the interests of the United States and leading NATO countries. You can
sense the experienced hand of some invisible coordinator. The activeness of
foreign intelligence organs in work against our country must make Russia's
leadership think about the need not only to preserve all Russian
counterintelligence officers without exception but also to give them all
possible support, including financial support, and to strengthen and
further develop them. For they really do defend the state's interests,
ensuring the implementation of reforms, including in the Russian Federation
Armed Forces.


Special Services To Keep an Eye on Investors 

MOSCOW, July 11 (Itar-Tass) -- The Russian special services are
obliged to conduct thorough checks of the activity of investors, according
to Pavel Bunich, chairman of the State Duma lower house committee for
ownership, privatisation and economic activity.
Bunich told journalists today that he had sent a deputy interpolation
to the Prime Minister to enquire what steps the government was planning to
take to guarantee that "the potential share-holders in the Svyazinvest
stock company will all act in good faith."
As reported earlier, 25 percent of all shares in the Svyazinvest
state-run company operating in the field of communications are due to be
put on the block at a starting price of 1.18 billion dollars at an auction
sale scheduled for July 25.
According to Pavel Bunich, Svyazinvest Co. is a sort of property that
is "very suitable for privatisation," but the State Duma lower house of
Russian parliament will inevitably put it on the so-called "strategic list"
to ensure that the government retains the controlling interest.
A special law is required to withdraw Svyazinvest from the above list,
Bunich said but the passing of such law is virtually impossible.
He pointed out at the same time that, "even if the government retains
the controlling interest, our interests will not be guaranteed against
anything, should the remaining part of the enterprise fall into dishonest
The sale of the shares to companies must be conducted on condition
that they will abide by their commitments with regard to the total volume
of investments and interim investment deadlines, Bunich said.
With this in mind, the signing of contracts must be preceded by an
agreement on such terms and conditions that would "considerably curtail the
rights of the new shareholders until they fulfill their investment-related
As concerns attraction of monetary resources to the Russian economy,
Bunich noted that the growth in their influx was impeded, above all, by
"red tape, racketeering and the overall instability of the situation."
"The introduction of a five-year moratorium on changes for the worse
in the economic management conditions can substantively improve the
situation with foreign investments," Bunich stressed.
He also said that direct investments were more beneficial to Russia
than the so-called "portfolio investments" which are very popular with
foreign companies.


FSB to Investigate Charges of Banks' Misuse of State Funds 

MOSCOW, July 11 (Interfax-FIA)--Russia's Federal Security Service
(FSB) has become involved in the investigation of charges against several
commercial banks suspected of misuse of state funds serviced by them.
The FSB's involvement "is limited to the fulfillment of one-time tasks
given by the Prosecutor General's Office of the Russian Federation," the
head of the service Public Relations Center, Alexander Zdanovich, told
Interfax on Friday. .
The same day Deputy Prosecutor General Mikhail Katyshev said:
"A criminal case was opened July 4 in accordance with Article 160,
part 3b of the Russian Criminal Code, on misappropriation or embezzlement,
that is large-scale theft."
He told Interfax the case had been handed over to the Prosecutor
General's main department for investigation of priority cases.
"Active investigation is under way; the necessary documents have been
confiscated," Katyshev said. However, no charges have been filed as yet.
"All individuals linked to preparing the contract for supplies of
MiG-29 fighters to India will be interrogated during the investigation. 
Statements will be taken from former Russian First Deputy Prime Minister
Vladimir Potanin, former First Deputy Finance Minister Andrey Vavilov and
Chairman of the Moscow Aviation Industrial Consortium Aleksandr Bezrukov
during the investigation," he said.
The criminal proceedings followed a letter to the Prosecutor General's
Office by Prime Minister Viktor Chernomyrdin and are apparently based on a
report by Central Bank Chairman Sergey Dubinin which cited instances of
supposed misuse, a source in one of the law enforcement agencies told the
Financial Information Agency.
Previously, Dubinin had told the mass media the Central Bank found
evidence of embezzlement committed by commercial banks. A total of $400
million of government funds was misused.
In February, then First Deputy Finance Minister Vavilov and the Moscow
Aviation Industrial Consortium reached an agreement on federal budget
allocations to enable the consortium to fulfil its obligations on the
contract with India, media reports said.
The money came in the form of seventh-tranche MinFin bonds which the
International Financial Company bank acquired at the Finance Ministry's
request and then transferred to the consortium's account at Unikombank. 
Experts believe the participants in the deal did not have sufficient
grounds to make such a deal, valued at $230 million. Unikombank is accused
of failing to report the deal to the Central Bank.
The International Financial Company on July 2 denied that the arms
deal involved any offenses. The bank said in a press release the financial
transactions the deal involved had complied with a presidential instruction
of November 21, 1996, and a government decree of December 24, 1996.
A bank spokesman told the Financial Information Agency at that time:
"These documents are not open due to their secret character, which may have
been the reason for the groundless accusations against the International
Financial Company bank."
International Financial Company president Vavilov is currently on
vacation. The bank did not say whether he was spending his holiday in


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