July 15, 1997   

This Date's Issues:   1047 •1048  1049 1050 1051

Johnson's Russia List
#1048
15 July 1997
djohnson@cdi.org

[Note from David Johnson:
1. Reuter: Kremlin hails reformer's victory in regional poll.
2. Paul Goble (RFE/RL): Federalism By Default.
3. Interfax: Former Russian Deputy Finance Minister Accused 
Of Abuses.
4. Boston Globe editorial: Power of Russia's press.
5. New York Times: Philip Taubman, Divorce, Washington-Style.
(Strobe Talbott vs. Michael Mandelbaum).
6. AP: Forbes' Richest People in the World. (3 Russians).
7. PRNewswire: Russian Banks Enter Global Capital Market, 
4 Get 1st S&P Ratings.
8. The Economist: A survey of RUSSIA: In search of spring.
Part 7: The wounded bear. Power, abroad and at home, has drained 
away from the Kremlin.
9. Moskovskiye Novosti: Luminaries Preview Year 2 of Yeltsin 
Term. 
10. AP: Senators Wary of NATO Expansion.
11. Rabochaya Tribuna: Nemtsov's Wife 'Would Try To Dissuade 
Him' From Presidency.
12. Reuter: Russian central bank chief names private bank in 
theft.]

*********

#1
Kremlin hails reformer's victory in regional poll
By Oleg Shchedrov 
NIZHNY NOVGOROD, Russia, July 14 (Reuter) - Boris Yeltsin's drive for market
reforms won implicit popular endorsement on Monday with the defeat of a
communist challenge for control of a key reforming region. 
Liberal Ivan Sklyarov defeated a communist candidate elections for the
governorship of Nizhny Novgorod, a testing ground for market economics under
outgoing chief Boris Nemtsov. 
A communist victory would not only have dealt a personal blow to
Nemtsov, the
'Golden Boy' summoned to the Kremlin in March to oversee reform, but would
have provided powerful ammunition to opponents who argue that Russians are
opposed to further reform. 
Both Nemtsov, a possible future presidential candidate, and Prime Minister
Viktor Chernomyrdin visited the four million strong region on the Volga 420
km (260 miles) east of Moscow ahead of the poll. 
Chernomyrdin, quoted by Itar-Tass news agency, expressed satisfaction over
the defeat of communist Gennady Khodyrev, backed by an unusual alliance of
communists and ultra-nationalists. 
``I was convinced that the Nizhny Novgorod people would sort out which
candidate deserves this post more and as you can see I was right,''
Chernomyrdin said. 
The election commission said on Monday that Sklyarov, the 49-year-old mayor
of Nizhny Novgorod city, had won 52 percent of the votes in Sunday's
election. 
Khodyrev, who ran the region, then known as Gorky, in the Soviet era
received
42 percent. 
Turnout was 49 percent. 
Nemtsov congratulated Sklyarov after the provisional results had been
announced, Interfax news agency said. 
``The people of Nizhny Novgorod have proved that they want to enter the
21st
century living in a democratic society with a developed socially-oriented
market economy, without turning back to empty communist slogans and ideals,''
the agency quoted Nemtsov's spokesman as saying. 
The outcome was clearly a relief for the Kremlin after a tough campaign
battle since a first round election two weeks ago in which the two candidates
emerged as the front-runners but neither won enough votes for an outright
victory. 
``This was a regional election of national importance,'' political analyst
Vladimir Okmyansky told local television. 
``In all previous elections, results in Nizhny Novgorod differed by only
one
percent or so from the (average) results for Russia as a whole. Victory by
the 'party of power' over the region's communist opposition can be seen as
showing the balance of forces on the national scene.'' 
The result overshadowed a disappointment for the Kremlin on Sunday in the
central city of Samara, formerly Kuybyshev, where a supporter of outspoken
General Alexander Lebed was elected mayor -- a post which holds less power
than a regional governor. 
Georgy Limansky, head of the regional branch of a party led by Lebed, won
more than 54 percent of the votes compared to the 38 percent cast for
Kremlin-backed Anatoly Afanasyev. The result will encourage Lebed, a fierce
critic of Yeltsin who is expected to run for president in the year 2000. 

*******

#2
Russia: Analysis From Washington -- Federalism By Default
By Paul Goble

Washington, 14 July 1997 (RFE/RL) - Russian President Boris Yeltsin's
efforts to dismiss a regional governor and thus reassert central power over
the country's farflung regions appear to have backfired. 
A month ago, Yeltsin decreed that Yevgeniy Nazdratenko, the duly elected
governor of the Russian Far East, should be removed from office because of
Nazdratenko's refusal to obey orders from Moscow. 
At that time, the Russian president indicated that he was seeking to
send a message to all regional leaders who were pursuing an independent line. 
"I know there are a lot of bosses who got big powers," Yeltsin said.
"They think they are far away from Moscow, and there will be no control
over them. They are wrong." 
But a month later, Nazdratenko is still in office. And last week,
following a unanimous vote in his favor by the Russian Parliament's upper
house, Nazdratenko told journalists that "beyond any doubt, it is I who has
the power, just as I had before." 
On the one hand, this episode reflects only a personal struggle between
a Moscow leader and a regional one who has regularly snubbed his nose at
the center. 
But at another and more fundamental one, it highlights the continuing
weakness of Moscow and the growing strength of the country's regional
institutions and elites. 
Some observers both in Russia and abroad have seen this development as a
prelude to secession by one or another of the country's 89 regions. Others
have argued that it is the surest way for the Russian Federation to become
a genuine federal state. 
But the nature of the center's current weakness and the region's current
strengths suggest that Russia's future is likely to fall somewhere in
between complete disintegration and genuine federalism. 
There are three reasons for Moscow's current weakness. First, the
Russian government has lost its former levers of control - the Communist
Party, the secret police and the army - without having yet been able to put
new democratic ones in their place. 
Second, precisely because the center had so much power in the past,
Moscow faces deep suspicion from the regions whenever it attempts to act
against them. 
Indeed, one of Nazdratenko's opponents in Vladivostok said last week
that Yeltsin's attack on the governor had strengthened rather than weakened
that official. 
And third, Moscow itself is divided, a situation that allows the regions
to play off one part of the center against another. If Yeltsin opposes the
Nazdratenkos of the world, other Russian officials clearly see him as a
potential ally. 
Similarly, there are three reasons for the new strength of the regions.
First, most regional governors are now elected rather than appointed and
thus have a natural legitimacy at the local level. 
Second, regional leaders like Nazdratenko face fewer constraints on
their power locally. They dominate the press, and they often actively
repress any opposition. 
Moreover, they are helped in this autocratic direction by the fact that
Moscow allows them to allocate the financial resources sent from the center. 
And third, the governors often are able to form close ties to powerful
regional business interests and even to military commanders on their
territory. 
This combination of central weakness and regional strength is likely to
prove unstable over the longer term, but just how it will be resolved
remains to be seen. 
Given the Russian tradition of a unitary state, at least some in Moscow
may try to take back all the power the center has lost over the last
decade. But any efforts to do so could have serious consequences. 
The regions are as the Nazdratenko case shows in a position to resist.
And the center would likely have to invoke a foreign threat to overcome
that. Both of these developments would hinder Russia's moves toward
democracy and economic development. 
Consequently, both Moscow and the regions have a common interest in
reaching an agreement on a division of power that would leave both in a
stronger position. 
But as the war of words between Yeltsin and Nazdratenko over the past
month shows, both central leaders and regional ones still see
center-periphery relations as something where a victory by one is
necessarily a defeat by the other. 
Until both Moscow and the regions overcome that longstanding attitude,
Russia as a whole will have relatively few chances to become a prosperous
and genuinely federal state. 

**********

#3
Former Russian Deputy Finance Minister Accused Of Abuses

MOSCOW, July 14 (Interfax) - Bank of Russia Chairman *Sergei Dubinin* has
accused former Deputy Finance Minister Andrei Vavilov of abuse of office in
releasing budgetary funds. He also accused Unikombank of offenses in
handling budgetary funds. 
Vavilov signed agreements in 1996-1997 on advancing budgetary funds
which were placed on the accounts of several banks in the form of domestic
currency bonds, Dubinin said in a statement. 
"The bonds finally ended up on Unikombank accounts and were sold by it,
but the proceeds were absolutely not used in the intended way and never
reached the accounts of those who were to receive the money. The budget
lost an estimated $275 million in the first deal which was with the Moscow
regional administration and at least $237 million in a second deal, with
MAPO-MiG," he said. 
The Finance Ministry has on numerous occasions departed from accepted
procedures and rules in releasing budgetary funds, Dubinin said. 
Finance Ministers Alexander Livshits and Anatoly Chubais did not know of
the transactions, he said. 
The Unikombank managers have made numerous grave departures from the
rules of transactions with currency bonds and of their accounting, Dubinin
said. "Consequently, the Bank of Russia can punish the bank and its
managers for specific transgressions of banking rules but the prosecutors
and courts will attend to infringements on the criminal law," his statement
said. 
"The other banks involved in the transactions seem to have carried out
the orders from their customers faithfully," Dubinin said. 
The protagonists of this story will bitterly resist, he expects. "They
will try to mess up the case saying that they carried out orders, but they
were told to help budget-financed organizations, not to pump money out of
the budget. They will say they fell victim to intrigues and try to pose as
political figures suffering for their views. The reply is straightforward,
pay back the money and then we may discuss your political views," Dubinin
says. This story will show society that the state authorities effectively
uphold the law, he said.

********

#4
Boston Globe
14 July 1997
[for personal use only]
Editorial
Power of Russia's press 

One of the novelties of Russia's unruly capitalism is the advent of the
tabloid scandal. Westerners may take for granted the premises that underlie
a culture of scandal, but Russians can hardly ignore the political
significance of seeing published photos of a justice minister frolicking
with unclothed ladies in a sauna frequented by one of Moscow's most
notorious mafias. 
The first implication of Valentin Kovalyov's starring role in a
videotape shot by a hidden camera is that the era of government secrecy has
gone the way of all the other Leninist relics. Suddenly a vulgar and
rambunctious press allows some big shots to embarrass other big shots in
full view of the Russian public. 
The spectacle of ministerial debauchery might be undignified. The fusing
of public and private life might seem as unfair to some Russians as it does
to some Americans. Nonetheless, the two million readers of the Russian
tabloid ``Top Secret'' have a right to regard the vulgarity of its photos
as a worthwhile antidote to government corruption. 
Since Kovalyov was fired for his revealed relations with the infamous
Solntsevo mafia, it is clear that the antidote works. Another lesson of
Kovalyov's downfall is that elections - so easily manipulated by big money
and slick image-making - are not the only means by which a democracy can
correct its flaws. Mass-market newspapers greedy for readers and
advertisers stand ready to help whistle-blowers reach the public. In
Stalin's time there were no scandal sheets, no whistle-blowers and no
accountability to an indignant public. 
Kovalyov's ties to the underworld were disclosed when the fateful
videotape was found in the safe of a banker, Arkadi Angelevich, who had
been a close adviser to Kovalyov and has been in jail since April, accused
of embezzling more than $6 million. The banker was allegedly linked to the
mafia that owned the nightclub where Kovalyov forgot his troubles in the
sauna. The videotape was to be his passport to immunity. But some rival of
Kovalyov leaked the videotape before it could be used for blackmail. So it
goes in an open society. 

*********

#5
New York Times
14 July 1997
[for personal use only]
EDITORIAL NOTEBOOK / By PHILIP TAUBMAN
Divorce, Washington-Style

Washington's policy wars can strain and sometimes shatter longstanding
friendships. As the capital starts to take sides over the wisdom of NATO
expansion, one casualty may be a remarkable partnership between two of the
country's most thoughtful foreign policy specialists, both among the oldest
friends of Bill Clinton. For years Strobe Talbott, the Deputy Secretary of
State, and Michael Mandelbaum, a professor at the Johns Hopkins School of
Advanced International Studies, were the closest of intellectual
confederates. Today they are highly visible combatants in the developing
battle over NATO's ill-conceived plan. Mr. Talbott believes fervently in
eastward expansion. Mr. Mandelbaum just as fervently opposes it. 
No one knows the intricacies of the issue better than these two.
Ironically, Mr. Talbott opposed an early version of NATO enlargement, and
Mr. Mandelbaum was initially a proponent of expansion. That two specialists
steeped in European security matters see the matter so differently, and
passed each other going in opposite directions, gives some idea of the
challenge that will confront the Senate as it considers whether to approve
the plan. It has not tackled a foreign policy issue of such complexity and
importance since it considered the arms control treaties of the cold war. 
As the debate begins, the conflict between Mr. Talbott and Mr.
Mandelbaum promises to provide a fascinating subplot, as well as a guide to
the critical questions about expansion. 
Mr. Talbott has inherited the place of George Kennan as the State
Department's senior student of Russian affairs. Like Mr. Kennan a
generation ago, he is trying to redesign the architecture of European
security at the beginning of a new era on the Continent. It pains Mr.
Talbott that Mr. Kennan, whom he admires greatly, considers NATO expansion
to be, in Mr. Kennan's words, "the most fateful error of American policy in
the entire post-cold-war era." 
Mr. Mandelbaum, a student of international affairs, is the most prolific
critic of the NATO plan. On newspaper opinion pages, television newscasts
and in a new booklet entitled "NATO Expansion: A Bridge to the Nineteenth
Century," he attacks the idea with zest. Last week he instructed readers of
The Wall Street Journal that "The Senate now has the opportunity to save
the United States and its allies from the administration's folly by
rejecting a scheme that is at best pointless, at worst extremely dangerous." 
These sallies clearly sadden Mr. Talbott, not so much because they
challenge the NATO plan, which last week moved ahead as the alliance
offered membership to Poland, Hungary and the Czech Republic. He recognizes
there must be a vigorous debate before the Senate votes on the matter in
1998. His distress comes from frustration and disappointment that one of
his closest friends should wind up one of his most determined opponents.
The break was foreshadowed early last year when Mr. Mandelbaum published a
stinging critique of Mr. Clinton's foreign policy in Foreign Affairs. 
These were not just two classmates at Yale in the mid-1960's who stayed
in touch over the years. They came to share a consuming passion for the
same intellectual enterprise, the study of foreign affairs and diplomacy,
particularly nuclear weapons policy. Mr. Talbott became a correspondent and
editor at Time. Mr. Mandelbaum taught at Harvard, then worked at the
Council on Foreign Relations in New York. 
When the two men got together in Washington early in their careers they
loved to brainstorm about nuclear strategy, starting with drinks in Mr.
Talbott's sunroom, moving to the dinner table and continuing over coffee in
the living room. 
Mr. Mandelbaum's interests eventually led him to a closer study of
Communism and the Soviet Union, and the work of the two friends converged
in 1987 in a jointly produced book about Ronald Reagan and Mikhail Gorbachev. 
Mr. Talbott and Mr. Mandelbaum met Mr. Clinton at Oxford in the late
1960's. Mr. Talbott was a fellow Rhodes Scholar and housemate. Mr.
Mandelbaum was a frequent visitor from Cambridge University. They stayed in
touch with the aspiring Arkansas politician. By the time Mr. Clinton was
elected President in 1992, it was clear he wanted both men in senior
foreign policy posts. Mr. Talbott accepted a job. Mr. Mandelbaum did not. 
"I guess that's just as well," Mr. Mandelbaum said the other day. 
Neither man could have guessed when Mr. Clinton took office that NATO
expansion would one day become Mr. Talbott's greatest cause and Mr.
Mandelbaum's greatest concern. 
     
**********

#6
Excerpt
Forbes' Richest People in the World
Associated Press
July 13, 1997
Ranking of the world's richest people as estimated by Forbes
magazine, excluding dictators and royalty who have no direct role
in managing businesses. The list appears in the July 28 issue.
1. William Gates, U.S., Microsoft, $36.4 billion
....
97. Boris Berezovsky, Russia, oil, automobiles, media, $3
billion
....
133. Mikhail Khodorkovsky, Russia, oil, banking, $2.4 billion
.... 
194. Vagit Alekperov, Russia, oil, $1.4 billion
....
200. Amalia Lacroze De Fortabat, Argentina, cement, $1.3 billion

*********

#7
Russian Banks Enter Global Capital Market, 4 Get 1st S&P Ratings

NEW YORK, July 14 /PRNewswire/ -- While Russian banks still face a
relatively risky operating environment, some will be better able to adapt to
the challenges than others, according to a Standard & Poor's report on the
Russian banking system released this week in conjunction with its first
ratings on four Russian banks.
The report featured in this week's edition of Standard & Poor's
CreditWeek
provides a general overview of the evolving Russian banking system and the
challenges it faces, as well as the financial profiles and strategic
strengths and weaknesses of the rated banks.
"The risks of the Russian financial system are in many ways similar
to those of other transition economies," said Standard & Poor's analyst Tanya
Azarchs. Challenges facing Russian banks include: a brief track record of
operating on a commercial basis; shortage of seasoned management expertise;
tight liquidity conditions; difficulties in analyzing the condition of
borrowers; a shortage of creditworthy borrowers; and a general distrust among
depositors wary of placing their savings in Russian institutions.
Despite the challenges, Russian banks have made great strides in
coping with the environment. According to Ms. Azarchs, systems
infrastructure has
improved, International Accounting Standards audits are in their second or
third year, credit departments are maturing, and security departments have
become quite effective in blocking access to criminal elements.
"The era of easy money, when banks were able to live off the wide
spreads on government bonds, is over," Ms. Azarchs added. "The time has
come when
banks must begin in earnest to do what banks everywhere are ordained to do --
which is lend money."
Falling interest rates in Russia should spur loan demand, Ms.
Azarchs added. To be able to fund demand for loans, banks are turning to
western
capital markets. They began with syndicated loans and are preparing for
Eurobond issues. Commercial paper may eventually be in the works.
According to Ms. Azarchs, the client franchise will be an important
determinant of success in the new world of intensified lending efforts.
Competition for "blue chip" customers is intense, and the "blue chips" -- who
tend to dwarf the banks that lend to them -- cluster around a limited number
of banks considered to be the most trustworthy. Increasingly, larger banks
are members of formal or informal financial-industrial groups (FIGs).
The speculative grade long-term counterparty ratings and outlooks
assigned to the Russian banks -- Aljba Alliance (single-'B'/stable), Alfa Bank
(single-'B'/stable), Rossiyskiy Kredit Bank (single-'B'/stable) and SBS-AGRO
Bank (single-'B'-plus/positive) -- reflect each bank's financial condition in
the context of the Russian banking system's industry risks. The ratings are
not constrained by Russia's double-'B'-minus sovereign rating for foreign
currency obligations. Although they face many of the same risks, the banks
rated are widely divergent in their strategies and in their client
franchises.
Standard & Poor's does not factor in government support for the
private 
commercial banks. Russia's Central Bank monitors closely the largest banks
and expects to exercise prompt corrective action to avert disasters. In
addition, the Central Bank is committed to allowing banks that run aground
due to poor management to liquidate.
At this point in the banks' development, deposit insurance would
help establish confidence in the banks, furthering the growth of the system
and
stabilizing funding, potentially reducing industry risk, Ms. Azarchs added.
While there is no explicit depositor insurance, Standard & Poor's
would nevertheless see the government as slightly more inclined to protect
those
banks that have more of a retail client base or those that perform important
roles in favored government programs. -- CreditWire

*********

#8
The Economist
July 12th - 18th, 1997
[for personal use only]
A survey of RUSSIA: In search of spring
7/8. The wounded bear
Power, abroad and at home, has drained away from the Kremlin

WHOEVER runs Russia these days, be he reformer or reactionary, has to
recognise that,
compared with the past, his might is hugely diminished. It is not so much
that power must now be shared among democratic politicians in Moscow; it is
more that power has slipped away from Moscow altogether, in ways that look
hard to reverse.

Much of this came with the shedding of Russia's empire, or rather two
empires - the one acquired over the centuries by the tsars, which became
the Soviet Union, and the one that the Communists extended into Eastern and
Central Europe. Both are gone, in a double winding-up that has been
astonishingly swift and peaceful, certainly compared with the ends of other
empires. It has, however, inevitably left its marks upon the Russian psyche.

That is partly because it has also left at leas 20m Russians in foreign
lands. It would be odd if that did not concern the mother country:
remember the pieds noirs in Algeria, British kith and kin in Africa and
America's periodic interventions either to protect its citizens overseas or
to rearrange the politics of its own "near abroad" in the Caribbean and
Latin America. For Russia, with the Caucasus unstable and huge quantities
of oil gurgling under and around the Caspian Sea, there are and will be
plenty of opportunities for disputes with the neighbours. Crimea - which
Russia gave to Ukraine only in 1954 -will remain a neuralgic point, even
after the recent signing of a friendship treaty by the two countries'
presidents. The Baltic states, home to many Russians and with good
historical reason to mistrust their former masters, have especially uneasy
relations with Moscow. Some Central Asians look north with a similar sense
of nervousness.

Russia has a legitimate interest in these places, especially those beyond
its long, impossible-to-defend southern border. Some of its foreign-policy
analysts worry greatly about Islamic fundamentalism, the Taliban in
Afghanistan, and the multitudes of potentially assertive Chinese to the
south of the great empty expanses of the Russian Far East. And so they
should. But, to judge by the recent commotion, nothing threatens Russia
quite like the enlargement of NATO. According to MrYeltsin in early May,
it has been the cause of the biggest dispute with America since the Cuban
missile crisis in 1962.

This is absurd, as other remarks of MrYeltsin's and his signature on a
NATo-Russian agreement later that month, and his retargeting of Russia's
missiles away from the West-have made clear. NATO poses no threat, and
every open-minded Russian knows it. NATO's enlargement does, however, stir
in Russians deep worries about encirclement, about invasion from the west
(remember 18l2, 1914, 1941), and so raises questions about whether Russia
is a western country or something altogether different.

Those who see it as something different are the Slavophiles, most of them
hostile to the democratic and market reforms that are convulsing the
populace. The reformers, by contrast, are the ones who want Russia to
embrace western ideas and practices, as well as western markets and
investment. For them, however readily they may understand that NATO
represents no military threat, the decision to expand the alliance
nonetheless comes as a rebuff. It is a sign that the West does not regard
Russia as wholly trustworthy. The bear feels hurt.

NATO's expansion, whatever its merits, has thus diverted attention from the
foreign-policy issues that Russians really ought to think about. It has
encouraged Russia to do some foolish cosying-up to Iran and China. It
could conceivably, by giving an issue to nationalists, help to bring to
power an antidemocratic president were Mr Yeltsin to succumb to a fatal
heart attack; and this could in turn have worrying consequences for the
thousands of nuclear weapons still on Russian soil. It has unquestionably
made the task of the reformers a bit harder.

And the bear cubs

The reformers now also find the going harder at home, because no longer
does all power in Russia reside in Moscow. Out in the capitals of the 89
republics, krais and oblasts of the federation, all sorts of things are
going on-or being held in check.

This is partly a consequence of the breakdown of government: if Moscow
fails to deliver services, the regions refuse to deliver taxes. But mainly
it results from the direct election of governors, who now enjoy a
legitimacy and therefore independence they never had when they were
appointed. They are using it in various ways. In the St Petersburg and
Saratov regions, liberal governors have been pushing ahead with land
privatisation. In Ulyanovsk, the birthplace of Lenin, a diehard Communist
governor honours the old dictator by stamping on almost any sign of private
enterprise.

Some regions are going much further. Chechnya, the paramount example, has
broken away almost completely. It is, however, unlikely to be emulated, if
only because it has won its freedom at such cost. Few other regions are
anyway tempted to try to win outright independence. Most - 79 of the 89
receive more from the federal treasury than they pay in. And all know
that, even if oil or gold or diamonds made them economically viable,
independence in the middle of a huge Russian land mass would be largely
illusory.

Moreover, those who want more autonomy have mostly got it. Thus Sakha
(formerly Yakutia) can take a generous cut on the diamonds and gold
produced there (though where the money goes, no one is sure). And in most
of the 20 republics based on ethnic groups, the ethnics have gained
political control, even where they do not constitute the majority. This
has done much to reduce militancy.

The basic relations between the centre and the regions were set out in the
Federation Treaty in 1992. But 21 regions have drawn up constitutions
since then, 19 of which are said to break the terms of the federal
constitution, and nearly half as many have signed bilateral treaties with
Moscow. These are mostly modelled on the 1994 treaty won by Tatarstan, in
which it extracted a special tax arrangement and the right to conduct its
own "foreign economic policy".

It is too soon to say whether this has led to anything very much, except a
trade deal with Iran and a bit of Malaysian investment. Beyond its
oft-rebuilt Kremlin, Kazan, the capital, looks much like other Russian
cities, with tawdry apartment blocks and run-down factories. But the
Tatars are delighted, claiming all manner of benefits. Their president,
Mintimer Shaimiev, is regarded as a doughty champion of their cause, though
it might be more accurate to see him partly as an experienced lobbyist of
the old school, partly as a skilful practitioner of the new ethnic
politics. It is in the latter capacity that he periodically makes
separatist remarks.

Though some of the regions are run as feudal baronies, the devolution of
power from Moscow has had many excellent consequences. One is that when
Moscow fails in its job, as it always has done, the regions can now do
something to put matters right. Should Moscow one day start definitively
failing - in other words, if social breakdown turned to crisis - the
likelihood is that the regions would simply take more and more power from
the centre and Russia would begin to break up. Dissolution is unlikely,
but less unlikely than coup d'état or civil war.

*********

#9
Luminaries Preview Year 2 of Yeltsin Term 

Moskovskiye Novosti, No. 27
July 6-13, 1997
[translation for personal use only]
Unattributed feature "The Second Year of the Second Term. What Are
You Expecting From the Second Term of Boris Yeltsin's Presidency? Several
People Answer This Question Specially for MN"

[Aleksandr Yakovlev, academician] I look at the future with
apprehension. Our life has taught us to be afraid: If it is not 1991,
then it is 1993, if not the putsch -- then the Chechen war.... Historians
have estimated: "Perestroyka" has been started in Russia 14 times (some
say 18 times). And in every case -- from as far back as the time of Ivan
the Terrible -- everything has failed.
It kind of seems that reasons for cautious optimism have now appeared:
Although reforms may be limping, they have started moving. If, for
example, the renewed government manages to successfully carry out its
housing reform program without any shock, it will be a big achievement on
the road to the market.... Progress has also been made in foreign policy: 
Russia's entry into the G-8 and the compromise with NATO.
However, the main danger, which is always snapping at our heels, lies
neither in the sphere of economics or politics, but in the sphere of
psychology. The main shortcoming of the Russian authorities is an
unwillingness to think about consequences. And policies should always be
built on calculations that take all possible consequences into account, the
most gloomy and the most fantastic included. Salutary feelings like doubt
are not characteristic of Russian leaders. This is a legacy passed down
from communist times, when doubt was associated with opportunism. People
who live in a free and non-confrontational world have no right not to doubt
their correctness. Perhaps then there will be fewer careless actions with
unclear political consequences.
For example, this year has been named the year of accord. With whom? 
With the people? But the people are unlikely to make peace with a
government that does not perform its main function -- paying pensions and
salaries to budget-funded workers. With the opposition? But under what
conditions? Not those which the Communists and the Liberal Democrats are
pushing....
The authorities have stated: It is necessary to reform the judicial
system, the army, the tax system, land relations.... However, everything is
marking time. More often than not, like in the case of the Land Code, this
is the fault of the bolshevik opposition. Everyone knows that in reality
land here is bought and sold and that it serves as a source of profit. 
However, the opposition will not allow the passing of a law that would
place all this within a legal framework. However, there is another
example: tax reform. The government's draft Tax Code law puts medium and
small businesses in a tougher position than they are already in. The middle
class, which is democracy's most reliable pillar and the political and
economic stabilizer of society, is also on the rack. This has to do with
our leaders' inability to have doubts and to estimate the consequences....
Against the backround of this multitude of problems, there is one
-- the most important -- which, if not solved, will spell doom for
reforms. This is the problem of the millions-strong army of little
bureaucrat dictators. Russia's eternal problem with bureaucracy has
developed into a problem of dictatorship by officialdom at all levels. The
president and his circle are either unable or unwilling to see it, hoping
that this army of all-powerful bureaucrats will support the Kremlin in the
event of a political crisis. They will not do so -- functionaries and
democracy are incompatible ideas. The president must smash the dictatorship
of officialdom. Will the president be able to handle all this? I think he
has a chance. The second year of the presidency is creating a field --
moral, economic, political -- for stabilization and development. The
president's latest steps provide hope. If they are once again
unsuccessful, if reforms are stalled again.... In that case it will be
necessary to give up power -- or have it taken away by force. Although I
do not think that our opposition is really ready to take over power. It is
impossible to repeat political bankruptcy, except through a new civil war.
[Anatoliy Strelyanyy, writer] What to expect from Yeltsin next?
Judging by his government's plans, he will do everything so that, after
him, power does not go to the national-communists, but he is hardly likely
to do anything more. It will be the same policy whose general
characteristics we have known since the days of communism. They call it
mobilization. The meaning of this policy is that the population has to pay
for everything, including the mistakes of the authorities, the difficulties
that no one is to blame for, and the bright future.
[Boris Fedorov, member of the State Duma, chairman of the board of the
Vostok-Zapad Bank] First of all, [I expect] that it will not be worse than
it was. Second, that the promises made a year ago will be fulfilled
better. However, I really do not feel any sense of particular optimism. 
We got what we were expecting.
[Sergey Chuprinin, editor in chief of Znamya magazine] I am not
expecting anything special. Let everything go like it is going -- and
thank God....
[Nikolay Petrov, pianist, professor of the Moscow Conservatory] I
travel around the country a great deal, a very great deal, and I can see
Russia reviving. This is perhaps where my optimism comes from. After all,
I am not one of those who has a joint-stock company or even a kiosk, but my
life is getting better and I have not experienced any problems except for
those that are natural in creative work. In general I believe the
president and think that in the near future we will see him start to stand
aside [nachnet ustupat dorogu] in favor of younger politicians. I hope
that they will not be extremists.
[Andrey Vasilyev, director of the ORT News Broadcasting Directorate] 
The extension of the credible presidential team. Everything else will come.
[Nikolay Ryzhkov, leader of the People's Power movement] Exactly a
year has passed since the presidential elections. If the president and the
government continue to take the lead in integration processes we will
support them in that....
[Gennadiy Zyuganov, leader of CPRF [Communist Party of the Russian
Federation] Not one of the president's numerous promises to the people has
been fulfilled. It has been a year of complete disappointment.

**********

#10
Senators Wary of NATO Expansion
July 14, 1997
WASHINGTON (AP) - The Clinton administration is preparing for what could be a
tough lobbying campaign to win Senate ratification of an expanded NATO
alliance. 
The just-completed Madrid summit had all the appearance of the final step
needed to add Poland, Hungary and the Czech Republic to the security umbrella
of the North Atlantic Treaty Organization. It wasn't. 
Sometime in the next year, the Senate is expected to take up the issue and
will need to muster a two-thirds majority - 67 votes - to agree to the
expanded alliance. The legislatures of NATO's other 15 members must do the
same. 
Sen. Richard Lugar, R-Ind., one of the leading advocates of an expanded
alliance, said Monday that the chief problem with predicting the outcome of
the NATO debate is that lawmakers have not focused on the issue. 
``I believe the final vote will be well over two-thirds of the Senate,''
Lugar predicted. ``But I think it will not be clear until the weeks preceding
that the two-thirds is going to be obtained at all.'' 
Sen. Kay Bailey Hutchison, R-Texas, a leading skeptic on the NATO expansion
issue, said that with so many lawmakers undecided, the administration must
make a strong case to counter arguments that the expanded alliance will be
too costly, or risk putting U.S. troops into remote conflicts in Central
Europe. 
``I think it's very much up in the air,'' Hutchison said. ``I think the
president could win it if he appears very clear on what our costs will be. He
could lose it if he ignores the questions.'' 
The Senate on Monday began considering two amendments to a defense
appropriations bill, one that would place a cap on the cost to the United
States of NATO expansion and a second that would seek a report from the
administration with a detailed explanation of those costs before any vote on
ratification. The Congressional Budget Office estimated expansion could cost
the United States $5 billion to $19 billion over 15 years. 
The State Department has established a full-time office devoted to the
issue
of NATO ratification, and Clinton administration officials, beginning later
this week, will be making the case to Congress. 
The latest indication that ratification of an expanded alliance remains an
open question comes from a survey to be released later this week by the
Council for a Livable World, a group that opposes NATO expansion. 
Based on interviews with members and an examination of floor votes,
newspaper
opinion pieces, letters and public statements, the survey listed 26 senators
as skeptics or potential opponents of NATO expansion and 25 members with
either undecided, unstated or contradictory positions. The council found 49
members either definitely for expansion or leaning in that direction - well
short of the 67 needed. 
``The bottom line is the administration has a lot of convincing to go
before
they get 67 votes lined up,'' said John Isaacs, president of the council. 
The council is a Washington-based arms-control group that opposes NATO
enlargement in part on grounds that it could short-circuit agreements with
Russia to reduce or eliminate classes of nuclear weapons. 
Sen. John Warner, R-Va., was among the most recent to join ranks of the
NATO
expansion skeptics. 
``I am not in favor of the expansion of NATO,'' Warner said during last
week's defense budget debate. ``There may be a degree to which our tinkering
with NATO and changing it in concept could begin to undermine American public
support, and I think that would be a terrible loss.'' 
The ratification vote is expected to come some time in 1998. 
The NATO issue cuts across party lines. Among the ``skeptics'' on NATO
expansion, there are 14 Republicans and 12 Democrats, according to the
council survey. 
NATO expansion has influential supporters, most notably Senate Majority
Leader Trent Lott, R-Miss. 

***********

#11
Nemtsov's Wife 'Would Try To Dissuade Him' From Presidency 

Rabochaya Tribuna
July 11, 1997
[translation for personal use only]
Report by nonstaff correspondent Georgiy Gritskov: "Will Boris No.
2 Be Hooked?"

Nizhniy Novgorod -- The newspaper Nizhegorodskiy Rabochiy has carried
an interview with Raisa Akhmetovna Nemtsova, wife of the Russian first vice
premier. I believe that one of the questions asked by correspondent S.
Kocherov and the reply to it are of interest to all Russians, for they are
not indifferent to who will end up at the summit of power in the not too
distant future.
Here is the question and the answer to it:
[Kocherov] Nemtsov's position today is such that both a rise to the
very top and a fall into political "oblivion" are equally possible for him.
Do you already know what you will say to him in either of these cases?
[Nemtsova] I do not know what you mean by the path to the top. If you
are speaking about the post of prime minister, Nemtsov is already first
vice premier in the government, and he can stand such an appointment
perfectly calmly. But if we are talking of something else.... I do not
know whether he wants to be president or not.
I have not yet discussed this with him, but I would try to dissuade
him from participating in the presidential election. I would not like to
change my life so drastically. Life in the public eye would not suit me at
all....
But if he goes or is forced to leave the government, I will say to
him: "Borya, all will be well, and you will find your place in life. 
There is nothing terrible about these political falls."

********

#12
Russian central bank chief names private bank in theft
July 14, 1997
MOSCOW (Reuter) - Russia's central bank chief accused a private bank Monday
of filching half a billion dollars of government money, adding official
weight to persistent talk of scandal and a brewing power struggle around the
Kremlin. 
``I have been confronted with clear symptoms of the disease ... of
corruption,'' Bank of Russia Chairman Sergei Dubinin said in a statement. 
He said bank officials had submitted evidence to the state prosecutor after
uncovering suspicious transactions by Unikombank, a medium-sized commercial
bank. 
The accusations marked the first time Dubinin had publicly named names
in the
case, although he previously revealed the loss of the government cash,
prompting a flood of media speculation about who might have taken it. 
That speculation, involving some of the biggest names in Russia's business
and political elite, sparked talk of a power struggle among the financial
barons who banded together to bankroll President Boris Yeltsin's re-election
last year. 
Dubinin said Unikombank misappropriated funds on two state grants in
1996 and
1997, one to the Moscow regional authority and the other to MAPO-MiG, maker
of Russia's MiG fighter jets. 
He also accused the Finance Ministry of breaking its own rules, noting
former
First Deputy Finance Minister Andrei Vavilov authorized the payments. 
Unikombank, a medium-sized operator on Russia's crowded banking scene,
called
the charges ``absurd'' and accused Dubinin of political motives, without
spelling out what those might be. 
Vavilov was due to hold a news conference on Tuesday. A financial
high-flier
who joined the ministry in 1994, he lost his job in a cabinet shuffle four
months ago but immediately stepped over to head another commercial bank. 
An official at the prosecutor's office was quoted on Friday as saying
Vavilov
and former First Deputy Prime Minister Vladimir Potanin, head of the huge and
powerful Uneximbank group, would be among those questioned as part of a
criminal inquiry. 
Potanin also lost his job in the March shuffle, when Yeltsin called in
Anatoly Chubais to spearhead economic reforms. 
Dubinin made no specific accusation against Vavilov but said: ``When
issuing
budget funds, numerous breaches of accepted procedures and rules were
committed at the Finance Ministry.'' 
The central banker, who was himself Finance Minister in 1994, said the
state
had lost $275 million in the Moscow case and a minimum of $237 million in the
MAPO-MiG case. 
An official in the prosecutor's office was quoted as saying Friday that a
criminal case had been opened concerning the MiG deal. But so far prosecutors
have declined to say who, if anyone, is being investigated. 
Russian media, themselves largely controlled by those same financial
magnates
with close links to the Kremlin, have been full of conflicting theories about
who is behind the accusations and what they reveal or conceal about a
struggle for power. 
But most are convinced the issue is politically motivated and see it as
linked to jockeying for position among Yeltsin's wealthy backers for spoils
from privatizations of state assets. 
Several, including Potanin, have already fallen out over sell-offs and
there
are more lucrative assets on offer soon. 
``Today we can only guess who is behind the scandal,'' Sevodnya newspaper
said at the weekend. 
It noted that only a handful of very powerful officials were in a
position to
push the state prosecutor to investigate Potanin and Vavilov. 

***********