July 27, 1997   

This Date's Issues:   1088  •1089  

Johnson's Russia List
#1089
27 July 1997
djohnson@cdi.org [info@cdi.org until July 28]

[Note from David Johnson:
1. Reuter: Alastair Macdonald, War of words echoes around 
Kremlin business circles.
2. Gordon Hahn (Hoover Institution): Hersrpring's Rejoinder.
3. Sydney Morning Herald: Robyn Dixon, Pity the poor 
politicians - even the odd billionaire.
4. Interfax: Justice Minister, Moscow Mayor Concerned Over 
Funding Of Courts.
5. AP: MAURA REYNOLDS, Russian Church-State Alliance Tears.
6. AP: Russian Religious Rivals Congregate. 
7. St. Petersburg Times: Robert Coalson, Wild Capitalism 
Brings New Russian Anecdotes.
8. St. Petersburg Times: Peter Ekman, Training Future MBAs 
Should Be Done Here.
9. St. Petersburg Times: Brian Whitmore, Kremlin Uses 
President's Men To Cut Region's Powers.
10. Reuter: Mary Rees, Experts scramble in Yeltsin's Karelia 
woods.
11. The Sunday Times (UK): Mark Franchetti, Mir mortal heads 
for hell on Earth.]

*********

#1
War of words echoes around Kremlin business circles
By Alastair Macdonald 

MOSCOW, July 27 (Reuter) - Russian economic supremo Anatoly Chubais has
returned from his summer holiday to face what seems an increasingly public
falling out among the tycoons he enlisted to bankroll Boris Yeltsin's
re-election last year. 
The first deputy premier and former presidential campaign chief was due back
at work on Sunday after three weeks abroad. Since he left, something close to
open warfare over the carve-up of state assets has broken out among
Yeltsin's wealthy backers. 
The latest dispute blew up this weekend after a consortium of Russian and
German banks led by a 36-year-old former cabinet minister won a tender late
on Friday for a lucrative quarter share in the state telecoms holding
company, Svyazinvest. 
The result provoked an outspoken attack by a presenter for Russia's top
television channel. One government source said the losing bid was backed by
another magnate with Kremlin ties who is said to have a big stake in the
television station. 
Separately, allegations of corruption on a grand scale have been reported,
often by media controlled by the various feuding parties and which played a
key role in Yeltsin's re-election. 
At stake is control of billions of dollars worth of assets being sold off in
Russia's "sale of the century" privatisation programme, masterminded since
the early 1990s by Chubais. 
A jaded Russian public has so far evinced little interest in the war of
words. But analysts say attempts to discredit certain figures may also
herald a jockeying for position among those seeking to be annointed Yeltsin's
successor for the year 2000. 
Shortly after Chubais left on holiday, central bank head Sergei Dubinin cited
ex-deputy finance minister Andrei Vavilov, 36, in a statement accusing
officials and a private bank of conniving to syphon off half a billion
dollars in public money. 
Vavilov, who stepped into a top private finance group after a cabinet
reshuffle in March, strongly denied any wrongdoing. 
Some Russian media speculated that Dubinin, seen as an ally of Prime Minister
Viktor Chernomyrdin, was out to discredit Vavilov and his ally, Vladimir
Potanin, who is close to Chubais. 
Ministers deny any rift within the government. But political sources say
Chubais, 42, is somewhat at odds with Chernomyrdin, 59, over the speed of
market reforms and Yeltsin's succession. 
Potanin heads Uneximbank, Russia's third largest bank, and was a first deputy
premier until March. Uneximbank led the consortium that paid $1.875 billion
for the Svyazinvest stake. 
Unlike many previous auctions, which analysts said appeared to be little more
than stage-managed shows concealing a cut-price carve-up of state assets, the
Svyazinvest tender seemed both reasonably competitive and raised a fair sum. 
But the winners were denounced on ORT television on Saturday by presenter
Sergei Dorenko. He accused government privatisation chief, Alfred Kokh, a
Chubais ally, of favouring Potanin. 
On Sunday, Dorenko told Ekho Moskvy radio the government, which owns 51
percent of ORT, could react by imposing tighter control over it. Ownership of
Russia media groups is hard to pin down. But analysts say the main other
shareholder in ORT is Boris Berezovsky, another of Yeltsin's financial
backers. 
Dorenko said a rival offer for Svyazinvest, which he said was led by Spanish
phone company Telefonica, would have invested much more in updating Russia's
poor telephone network. 
State officials refuse to say who was behind the rival bid. But one
government source said Berezovsky was involved. The tycoon, who says he has
had no business dealings since joining Yeltsin's Security Council, could not
be reached for comment. 
It is not possible to say that Berezovsky and Potanin, key figures whom
Chubais rallied behind Yeltsin's re-election campaign last July, are
definitely at odds. 
Kommersant weekly said the pair had tried to resolve their claims to
privatised assets. It said those involved in Kremlin feuds had an interest in
stopping short of unwelcome revelations about the funding of the 1996
campaign against the communists. 
"If this grenade went off, there would be no victors in the war of the
banks," Kommersant said. But it added that solidarity among the tycoons was
based on the now faded communist threat. 
"As soon as the danger of a common external threat passes, the war of the
banks continues," the magazine concluded. 
Analysts say Chubais may have to soothe passions to avoid any political
fallout from the feuding harming Yeltsin. 

********

#2
Date: Sat, 26 Jul 1997 
From: Gordon Hahn <hahn@hoover.stanford.edu>
Subject: Hersrpring's Rejoinder

In response to the rejoinder from Dale Herspring (who I have great
respect for going back to halycon heydays of the Kolkowicz-Odom-Colton
debate on the nature of Soviet civil-military relations) I can only request
that he read more closely what I wrote, as I will do with what he wrote
forthwith:
First, I did not, as Herspring seems to think, claim that "there is
a direct casual (sic) relationship between it (NATO expansion) and the
current state of Russian civil-military relations." What I did assert is
that a "predictable consequence of NATO expansion" - which, as I assume Mr.
Herspring knows, has just gotten underway - is, will be and it seems may
have already been (the Rokhlin affair and the
Rokhlin-Rodionov-Kryuchkov-Terekhov-Achalov operation) "the worsening of
already poor civil-military relations", "already strained by years of
weapons cuts, declining military budgets, housing shortages for officers,
six-month delays in pay, budget favoritism for other 'military' and police
structures, and politicization of the officer corps these processes and
intervention in two coup episodes have produced."
Hence, I argued that NATO expansion was likely aggravating already very
strained relations between Russia's civilian leadership and the military.
This seems to be a rather reasonable claim given, as Mr. Herspring himself
acknowledged, "senior Russian military officers are not happy about NATO
expansion" and that the civilian leadership it considers incompetent in
security matters is presiding over the precipitous decline of Russian
influence from Paris to Prague to Pyongyang and touting a tenuous roundtable
forum in Brussels under the NATO-Russian Founding Act as a veritable veto in
NATO affairs.
I understand quite well that "the essence", as Mr. Herspring put it,
of what is happening in Russian civil-military relations is the long overdo
'civiliniazation' of those relations. However, I would be more careful about
assessing the progress made and the degree to which "(c)ivilians are behind
the decisions made on almost every issue. Pavel Felgenhauer's piece in the
22 July edition of Segodnya suggests that the emerging split among the
civilian leadership between Prime Minister Chernomyrdin and the 'Young
Turks' of the 'second liberal revolution' (Chubais, Nemtsov) was expertly
used by the military to wrest the drafting of the new military reform plan
from Baturin and the Defence Council and return it to the Ministry of
Defence and the General Staff in the person of Col. Gen. Valerii Manilov.
According to Felgenhauer, Baturin renounces the plan, and Minister of
Defense General Igor Sergeev says he intends to circumvent the Defence
Council in the reform process. Indeed, Chernomyrdin, according to
Felgenhauer, already has got around the SO in passing Yeltsin's 16 July
decree 'On Emergency Measures to Reorganize the Armed Forces' by submitting
it to the military reform committee he chairs. This is another in a series
of signs that Chernomyrdin may be turning to the good old
military-industrial complex (military + RosVooruzhenie) to beef up his base
of support for a coming showdown with the Turks from Petersburg and Nizhnii
Novgorod.
However, I think that the old line generals' days are numbered and
that Herspring is correct in saying that Sergeev and Kvashnin have been
coopted, if you will, and are proposing a fairly bold program along the
lines of Baturin and Alexei Arbatov's preferences. Of course, as Herspring
notes, the funds need to be found to implement the reforms and Yeltsin needs
to remain healthy. I think the former is the shakier proposition; one that
can easily be undermined by a bad harvest and a food crisis, some other
economic crisis, or by a Che-Chu power struggle that rearranges the
political landscape.
To conclude by returning to the main point, however, it is Mr.
Herspring's claim that I asserted that NATO expansion was "the primary
variable impacting on civil-military relations" that "simply does not hold
water." It should be remembered, moreover, that historical outcomes (by the
way, I am a political scientist too, Mr. Herspring) are often determined not
by the primary variable, but by the one that breaks the camel's back. In
1917 flawed but important reforms were bringing Russia to the West despite
deep structural challenges - this, until World War I began. NATO expansion
may not be World War I, but it is surely not a Marshall Plan either.

**********

#3
Sydney Morning Herald 
July 28, 1997
[for personal use only
Pity the poor politicians - even the odd billionaire 
By ROBYN DIXON, Herald Correspondent in Moscow

The first Russian experiment with disclosure of politicians' wealth has 
not been a resounding success.
Some officials simply refused to submit the required declaration of 
income by the July 20 deadline. And some of those who did put their 
declarations up for public scrutiny were just as brazen.
Mr Boris Berezovsky was a wealthy Russian businessman before he became 
deputy chief of the Security Council, a job which gave him access to 
top-level negotiations on oil pipeline routes and other crucial 
commercial issues.
Mr Berezovsky, who has just made it into the Forbes Magazine list of the 
world's richest people, declared his Russian assets at a paltry 223 
million roubles ($A52,700). Forbes values him at $US3 billion ($4.05 
billion).
Under Russian rules, Mr Berezovsky is not supposed to carry out any 
business activities as a public official, although he is reputed to 
control the giant Russian oil company Sibneft.
Russian officials were forced to declare their income and assets this 
year after a decree by President Boris Yeltsin, but a presidential 
adviser, Mr Alexander Livshits, admitted the results were "far from 
ideal".
Another presidential aide, Mr Yevgeny Savostyanov, said the amount 
declared by Mr Berezovsky was suspiciously modest. "I concede that what 
is declared in the name of Boris Abramovich Berezovsky is very small," 
he said. "That will be subject to checking."
One Russian newspaper was more blunt. "Berezovsky - the poorest 
billionaire in the world" screamed the headline of the Moscow paper 
Kommersant Daily.
The Russian Prime Minister, Mr Viktor Chernomyrdin, also strained 
credibility with his income statement - 46.3 million roubles ($10,684). 
He is said to own a chunk of Gazprom, the world's biggest gas company, 
formerly publicly owned but privatised after the overthrow of communism.
However, the size of the Chernomyrdin holding has never been confirmed 
and he denies he got rich out of the Gazprom privatisation.
Mr Yeltsin put his own income at 243 million roubles ($56,000), which 
makes one wonder why he does the job. This was considerably lower than 
the income declared by many of his ministers.
Ministers who did admit to more generous incomes often claimed to have 
been paid monumental sums for books or speeches. The First Deputy Prime 
Minister, Mr Anatoly Chubais, claimed a large part of his $401,000 
income came from public speaking engagements, rather odd given that his 
Kremlin job leaves little time for the public speaking circuit.
And the Deputy Prime Minister, Mr Alfred Kokh, claimed he was paid 
$130,000 for a book on Russian privatisation which has not even been 
published yet.
Mr Yeltsin put on a tough performance last week, threatening on Russian 
television that he would sternly punish any public official who did not 
put in an open income declaration.
But Mr Savostyanov has admitted the avenues for punishing the errant 
officials are limited. The presidential aide also conceded that there 
was no structure set up to check the truthfulness and accuracy of the 
declarations.

***********

#4
Justice Minister, Moscow Mayor Concerned Over Funding Of Courts

MOSCOW, July 26 (Interfax) - Russian Justice Minister Sergei Stepashin 
and Moscow Mayor Yuri Luzhkov plan to send Prime Minister Viktor 
Chernomyrdin a memorandum on the financing of the courts and judicial 
organs. 
Stepashin and Luzhkov met with top judges of the Moscow City Court on 
Saturday, an Interfax correspondent has reported. 
They in particular discussed problems facing legal proceedings and the 
implementation of verdicts. 
Stepashin said it was inadmissible that one-third of Russians held in 
detention centers and prisons were persons awaiting trial, i.e. are 
being held behind bars without the court's verdict. 
There are now 1.05 million people in detention centers and prisons, 
including over 400,000 people in detention centers, he said. Such a 
situation largely results from the unsatisfactory work of judges, who 
fail to consider criminal cases on time, Stepashin added. 
Moscow City Court Chairperson Zoya Korneva promised to do her best to 
"unload detention centers" and requested financial assistance from the 
authorities. 
Under a decree issued by Russian President Boris Yeltsin, expenses on 
the courts will not be sequestered, Stepashin said. He promised that 
next year's budget would envisage necessary funds for the judicial 
system. 

*********

#5
Russian Church-State Alliance Tears
July 26, 1997
By MAURA REYNOLDS
MOSCOW (AP) - As incense and chants filled Moscow's glittering
new Cathedral of Christ the Savior, a long line of dark-suited
politicians waited patiently off to one side.
It was well past midnight, but the hour could hardly deter the
prime minister and other top officials eager to be seen on national
television being blessed by one of Russia's most powerful men -
Alexy II, Patriarch of Moscow and All Russia.
After decades of suppression by the Communist regime, the
Orthodox Church and its patriarch have clearly found themselves at
the apogee of political power in the new Russia.
Scenes such as last Easter's benediction suggest the church is
stronger than ever. So does the battle over so-called ``foreign
religions,'' in which a Russian Orthodox-sponsored bill to restrict
other faiths - including Roman Catholicism and evangelical
Christianity - nearly became law last week.
But some observers warn that such appearances may be deceptive.
``A church that finds it necessary to appeal to the state to
limit its competition is obviously a weak church,'' says Martin
McCauley, a professor of politics at the University of London.
President Boris Yeltsin set off a storm of opposition and
recrimination last week by refusing to sign the bill - the first
time he explicitly and publicly rebuffed the Russian Orthodox
Church on a matter of national policy.
The incident opens a rift between the state and the church,
whose fortunes have otherwise been entwined ever since the Soviet
collapse.
Alexy was an open supporter of Yeltsin even before the collapse,
publicly blessing him during his first inauguration as Russian
president in 1990. During last year's hard-fought presidential
campaign, Alexy made a point of reminding believers of Soviet-era
repressions and urged them to ``make the right choice'' between
Yeltsin and his communist opponent.
For his part, Yeltsin has given the church extremely high
visibility, attending services at Christmas and Easter, and
incorporating Alexy in many ostensibly secular Kremlin ceremonies,
such as treaty signings.
The partnership was important for both sides: The nascent
Russian state needed the legitimacy the church could provide, and
the long-repressed church was eager to throw off its shackles and
regain its stature.
Russian nationhood and Russian Orthodoxy have long gone
hand-in-hand. The conversion of Prince Vladimir to Orthodoxy in 988
is generally considered the founding of Russia as a nation. Before
the Russian Revolution, the czar was the head of the church.
``Who's a Russian? Many would say that if you're not Orthodox,
then you're not Russian,'' McCauley says.
The church now claims 80 million followers, or more than half of
Russia's population. With the government's support, it has restored
hundreds of churches and rebuilt - after Josef Stalin razed it -
the Cathedral of Christ the Savior, whose massive white walls and
gold domes rise just a stone's throw from the Kremlin.
But the battle over the religion law illustrates that the
post-Soviet church-state alliance has weakened.
For one thing, Yeltsin's regime is now primarily reformist while
the church has moved into closer alignment with nationalists in the
hard-line Parliament - as the strong vote on the religion bill
showed. Ironically, the religion bill allies the church with its
former atheist enemies, the communists.
Perhaps a more important motive for the bill is that although
the church is enshrined in power at the top, it fears an erosion of
support from below, particularly through evangelicals and cults
with a strong commitment to conversion.
Proselytism was illegal in Soviet times, so while the church was
unable to campaign for converts, it didn't have to fear that other
churches would do so.
That has changed dramatically. The number of Protestant
evangelical churches has increased 16 times - from 50 to 800
congregations - in the last seven years. Religious groups pass out
leaflets at metro stops. Hare Krishnas dance along historic Moscow
streets.
Alexy argues the law on religion is needed to protect Russians
from ``destructive pseudo-religious cults and foreign
false-missionaries.''
Michael Bourdeaux, director of the Keston Institute, which
monitors freedom of religion in Russia, calls that impulse a kind
of fundamentalism directed more at gaining political power than
promoting faith.
``They reckon they have one chance in history of reasserting
their position in Russian society,'' he says. ``It's not a
religious goal at all.''
Bourdeaux argues that the real problem is that the church
hierarchy wants to return to its cushy pre-revolutionary position
instead of learning to compete in a marketplace of religious ideas.
And so he has some sharp advice for Alexy.
``Look for winning souls among the huge number of atheists and
those disoriented by the Soviet collapse,'' he says. ``Put your
energies into that instead of fighting other denominations.''

*********

#6
Russian Religious Rivals Congregate
July 26, 1997
VILNIUS, Lithuania (AP) - Signaling warming ties with the Roman
Catholic Church, Russian Orthodox Patriarch Alexy II took part in a
joint blessing Saturday at a site holy to both faiths.
Alexy and Roman Catholic Archbishop Audris Joseph Bachkis kissed
each other to open the ceremony at the Gate of the Sunrise Chapel,
each reading a short address and offering a benediction to more
than 4,000 congregants.
Among those in the crowd was Lithuanian president Algirdas
Brazauskas.
Alexy has been at the center of a political battle over his
efforts to curtail the activities of many non-Orthodox
congregations in Russia, including Catholics.
Opposition by the Vatican and other international groups
convinced President Boris Yeltsin to reject Alexy's proposed law on
``foreign'' religions. The Vatican was also displeased when Alexy
decided to cancel what would have been a historic meeting with the
Pope earlier this summer.
In that light, Saturday's ceremony was an important gesture, the
archbishop said.
``I think it's a very good example of the way we can stay
together, pray together,'' Bachkis said. ``I think it's a good step
toward better comprehension between Catholic and Orthodox.''

********

#7
St. Petersburg Times
JULY 28-AUGUST 3, 1997
W O R D ' S    W O R T H 
Wild Capitalism Brings New Russian Anecdotes 
By Robert Coalson

THESE are the days of dikii kapitalizm (wild capitalism) in Russia, and 
the surest sign of this has been the emergence of a whole new class of 
people, Novyye Russkiye, the New Russians. 
Sometimes it seems that when historians look back on these times, the 
main legacies of the age of the Novyye Russkiye will be a lot of 
unbelievably gaudy grave sites scattered across the county and an 
enormous number of extremely unflattering anekdoty (jokes). 
Since these jokes make up such a big part of the Russian language these 
days, and since I imagine relatively few people who might be offended 
read this column, here are a few that I've heard lately. 
The basic stereotypes of the New Russians are that they are really rich 
and really stupid. 
And the jokes play on both these images. 
My favorite is the one about the New Russian who stumbles away from the 
wreckage of his smashed-up Mercedes missing his right arm. "Oh, my 
Mercedes!" he moans until a passerby (a Staryyi Russkii, or "Old 
Russian") says, "What do you mean, your Mercedes? What about your arm?" 
At which point, the new Russian looks down at his stump and moans, "Oh, 
my Rolex!" 
Another joke has a New Russian telling his architect, "Ryadom s villoi, 
postroite tri basseina. Odin - s tyoploi vodoi, odin - s kholodnoi, a 
tretii - voobshche bez vody" ("Next to the villa, build three swimming 
pools. One with warm water, one with cold water and one with no water at 
all"). When the architect asks what the third one is for, the New 
Russian answers, "Nekotoriye iz moikh druzei ne umeyut plavat'" ("Some 
of my friends don't know how to swim"). 
Or what about the one where the New Russian comes into a restaurant and 
asks, "Ya zdes' vchera uzhinal?" ("Did I have dinner here last night?"). 
The waiter answers, "Yes," and the New Russian asks, "A 10 tysyach 
dollarov ya u vas propil?" ("And did I really spend $10,000 on 
drinks?"). Again, the answer is "Yes," and the New Russian sighs with 
relief and says, "Slava Bogu! Ya dumal, chto poteryal!" ("Thank God! I 
thought I lost it!"). 
Finally, many New Russian jokes involve the tax authorities. Such as the 
one where a New Russian is asked where he got the money to pay for his 
Mercedes. "U menya byl BMV, ya yego prodal, nemnozhko dolozhil i kupil 
Mersedes" ("I had a BMW, which I sold, added a little money and bought a 
Mercedes"). When asked where he got the BMW, he answers that he had a 
Suzuki motorcycle, which he sold, added a little money and bought the 
BMW. Asked where he got the money for the motorcycle, he explains, "A za 
eto ya uzhe sidel" ("Oh, I already did time for that"). 

********

#8
St. Petersburg Times
JULY 28-AUGUST 3, 1997
Training Future MBAs Should Be Done Here 
By Peter Ekman
Peter Ekman is professor of Finance at the American Institute of 
Business and Economics and co-chairman of the American Chamber of 
Commerce's Human Resources Development Subcommittee

MANY RUSSIAN managers are corrupt, so they should be replaced by younger 
managers trained to Western standards. So President Boris Yeltsin said 
in a recent Friday radio address, and for the most part, I agree. 
Russian managers have not been subject to the usual disciplines of the 
market economy. They do not need to be sure that their firm's monthly 
cash flows will cover salaries, and bankruptcy procedures are 
ineffective here. Managers can defy shareholders for long periods - as 
the battle at Novolipetsk Metallurgy showed. Corporate takeovers, where 
an outside investor buys a majority of shares and replaces inefficient 
management, have not worked yet in Russia. Therefore managers are free 
to siphon cash into their own pockets without paying wages, taxes, 
dividends or making needed investments.
The first thing that the government should do to stop these managers is 
to enforce existing laws - bankruptcy laws, tax laws, and securities 
laws. Reforming the laws, especially the tax and labor laws that are 
impossible to follow, is an important second step.
Yeltsin's proposal to train over 30,000 young managers abroad each year 
would also be an important step - if it were done carefully. If done 
haphazardly, this training will create more problems than it solves. 
Managers mostly need training in business and economics. Russian 
graduates are still well prepared in engineering, mathematics and the 
sciences. So the biggest training need for managers is for Masters of 
Business Administration or similar programs. 
The biggest difficulty will be the cost. A two-year education in a top 
American MBA program can easily cost $80,000. At only $15,000 per 
student, Yeltsin's program would cost about $500 million per year. Half 
a billion or even a billion dollars per year would be worth it if 
managers learned business skills and learned how to apply them in 
Russia. Unfortunately the size of the program makes high-quality 
education unlikely. 
Good quality American business schools graduate about 50,000 new MBAs 
each year. Thus Yeltsin's program seems to call for the creation of a 
new educational capacity of about 60 percent of America's high-quality 
business school capacity - a capacity that took 80 years to build. 
The "solution" to this problem will probably be to offer Russian 
student-managers low quality courses lasting a few weeks. These junkets 
are unlikely to give student-managers a real educational experience. 
After the jet lag wears off, they will have just enough time for a 
shopping spree and the required networking - that is partying - before 
they fly back to Russia. Even at Ivy League schools, these short courses 
should not be expected to bring real results.
One of the problems is that often students are never allowed to use 
their education. Managers must be developed by giving them progressively 
greater responsibilities. Thirty thousand 22-year-olds, even with high 
quality MBAs but no managerial experience, will not accomplish much in 
Russian business. Nevertheless, even a few hundred well-educated 
25-year-olds with three years of good experience could accomplish 
wonders. 
Developing managers in Russian companies will be a challenge. Older 
managers will see new graduates as potential replacements and be loath 
to give them responsibility. Russian managers are also used to keeping 
most information and responsibility to themselves - the better to avoid 
the taxman, bureaucrats and shareholders - so they probably won't offer 
good development programs.
The real solution to many of these problems is to develop management 
education programs in Russia. Moscow alone could use 2,500 quality MBA 
graduates per year if the job market absorbed them at the same pace as 
in the United States. There are only 10 or 12 wholly Russian business 
schools that have the potential, someday, to offer Western quality 
business education. 
Probably none of these programs has a professor who has a Western PhD or 
even a Western MBA. The schools cannot pay enough to attract such 
teachers, who can get 10 or 20 times the salary in the private sector. 
Many of the least qualified teachers from the Soviet era stay on at the 
business school faculties, and the most qualified leave. To develop 
Russian business schools, money needs to be invested now and objective 
quality standards need to be maintained.
In educating Russian student-managers, Russia needs to develop its own 
quality business education programs. Students should be selected by 
objectively scored tests such as the GMAT, GRE and TOEFL exams. Short 
junket-type programs should be rejected in favor of long-term quality 
education. Finally, loan guarantees, with adequate controls to prevent 
abuses, would lower costs over straight giveaway programs, and would 
motivate students to select quality programs that will enable them to 
pay back the loans.

*********

#9
St. Petersburg Times
JULY 28-AUGUST 3, 1997
N E W S   A N A L Y S I S 
Kremlin Uses President's Men To Cut Region's Powers 
By Brian Whitmore
STAFF WRITER

St. Petersburg, along with the rest of Russia, might spend the autumn 
political season trying to sort out who is who among two chief 
executives - one, a governor elected by the people; the other, a more 
shadowy "envoy" appointed by the Kremlin.
In a move that one local politician called "undemocratic," and which 
Moscow Mayor Yury Luzhkov has said "can only lead to chaos," President 
Boris Yeltsin has signed a decree that grants sweeping new powers to his 
personal envoy in each of Russia's 89 regions.
Thus St. Petersburg Governor Vladimir Yakovlev - elected to a five-year 
term of office last summer - could end up spending this autumn jockeying 
for power with Sergei Tsyplyayev, who was appointed Yeltsin's official 
representative in St. Petersburg in 1992.
The decree, published Wednesday in the state newspaper Rossiiskaya 
Gazeta, gives presidential representatives control over the use of 
federal funds and federal properties in the regions, and also authority 
to "coordinate" the regional branches of federal governmental organs.
Exactly what this means in practice remains to be seen. But analysts 
said the Kremlin was once again trying to weaken regional governors, 
after years of watching them grow more and more powerful.
Yeltsin has a representative in every region of Russia. The post was 
created in 1991 and was originally intended to be as powerful as a 
region's governor. 
But during 1993's showdown between the Supreme Soviet and the Kremlin, 
regional governors won new powers - including a constitution that 
established elections for the governorship and seats in the Federation 
Council, Russia's upper house of parliament.
Since then, the Kremlin has struggled to take that power back. In the 
fall, during Yeltsin's protracted absence due to heart problems, 
then-Kremlin chief of staff Anatoly Chubais spoke of creating an 
"executive vertical" comprised of presidential representatives to 
counter the governor's new power.
More concretely, Yeltsin and Chubais - now first deputy prime minister - 
publicly battled last month with Yevgeny Nazdratenko, the governor of 
the Far East's Primorsky Territory. 
Yeltsin accused Nazdratenko, a plain-talking former welder who was 
elected in December 1995 with 60 percent of the vote, of "illiterate and 
shortsighted policies" and ordered him to turn over most of his powers 
to the region's presidential representative.
The Federation Council hit back with a resolution ordering Yeltsin to 
return Nazdratenko's authority and warning against attempting to remove 
elected governors. Yeltsin's new decree expanding the powers of his 
point men is thus yet another twist in that tale.
But whether Yeltsin's latest salvo will intimidate the governors remains 
unclear.
"Most of these [presidential] representatives are local people and are 
in the pockets of the governors," said Andrei Piontkowsky, director of 
the Center for Strategic Studies in Moscow. "It is the Kremlin's wish to 
change this, but it is complicated. It appears that they have lost the 
battle with the governors."
"The tendency is toward more independence for the regions," Piontkowsky 
added. "If Yeltsin pressures the governors, then they can make things 
difficult for him in the Federation Council, and in a conflict with the 
Duma, Yeltsin will need the Federation Council."
Sergei Markov, an analyst with the Carnegie Foundation for International 
Peace, agreed the regions would steadily grow more powerful despite 
Yeltsin's decree and any other Kremlin protestations. 
Even prior to the publication of the new decree, however, St. 
Petersburg's Tsyplyayev has been a strong and independent political 
actor. He has sparred at times with both Yakovlev and his predecessor, 
former mayor Anatoly Sobchak, and has usually come out on top.
Tsyplyayev, who is on vacation, was unavailable for comment. But in an 
earlier interview with The St. Petersburg Times, he alluded to Yeltsin's 
then-unpublished decree, saying it would make him the head of the vast 
federal bureaucracy in St. Petersburg.
Some local politicians are nervous about "the president's man" being 
vested with more formal authority.
"This is bad because it is not democratic," said lawmaker Leonid 
Romankov. "Governors are elected by the people and should be dependent 
on the people."
"Tsyplyayev is a very ambitious person," he added.
Neither Yakovlev nor his press secretary could be reached for comment 
and other City Hall officials were reluctant to speak on the matter.
"Our committee does not have the authority to comment on presidential 
decrees," said a secretary from City Hall's Legal Committee reached by 
telephone Monday.
Legislative Assembly deputies, however, were less shy.
"This makes direct presidential rule [in the regions] possible. It is 
similar to the situation when the tsar sent his governor-general to 
places like Finland and Poland," said deputy Romankov. "Such rule is 
only necessary in a crisis or extraordinary situation."
Valery Ostrovsky, a colleague and member of Russia's Democratic Choice, 
disagreed, citing a need for tighter control over how regions spend 
federal funds.
"According to [Prime Minister Viktor] Chernomyrdin, from 25 to 30 
percent of federal funds transferred to the regions are stolen. If we 
can stop this, all the federal debts could be paid," said Ostrovsky. 

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#10
Experts scramble in Yeltsin's Karelia woods
By Mary Rees 

KOSTOMUKSHA, Russia, July 27 (Reuter) - Deep inside the forests of Karelia, a
favoured holiday destination of Russian President Boris Yeltsin, scientists
are battling to catalogue the wildlife even as the lumberjacks fell trees. 
``As soon as we put forward an area for protection, they try to log it
first,'' said Alexei Kravchenko, a forestry expert at the publicly-funded
Karelian Research Centre. 
Karelia borders Finland in northwest Russia and holds much of the last
remaining old-growth forest in Europe. Many trees are between 150 and 400
years old, and the area has been little touched since Ice Age glaciers
receded 10,000 years ago. 
Scientists and volunteers from Russia and beyond are scrambling to draw up
lists of the flora and fauna across as wide an area as possible to make the
case for creating national parks that would be off-limits to logging
companies -- including some of Europe's largest forestry groups. 
``I think the territory is so obviously virgin that there will be no problem
gathering enough basic data to establish that it deserves protection,''
Kravchenko told Reuters in this remote corner of Karelia just south of the
Arctic Circle. ``It's typical taiga territory, of which rather little
remains.'' 
It is not certain that the authorities will accept the findings. 
CHAINSAWS SPOIL THE SILENCE 
Even as the scientists headed into the forests, the sound of chainsaws was
cutting through the silence. 
``It's still incomprehensible,'' said Dmitry Aksenov of the Biodiversity
Conservation Centre in Moscow. ``While our work is going on, the woods are
continuing to be cut.'' 
A Finnish firm has started cutting old-growth wood in an area near
Kostomuksha covered by the more extensive of two proposals for Kalevala
National Park, itself one of a number of projects under consideration. 
So far the Karelian government has not intervened, although Mikhail Nikolayev
of the Karelian Forestry Committee said the authorities could decide soon to
halt that logging. 
In at least one other part of the region, which covers some 100,000 hectares
(250,000 acres) in all, the damage has already been done. 
Kravchenko said that in the late 1980s one section was put forward as being
suitable for part of a national park. 
``When we arrived in 1995, it had already been nearly completely cut down.'' 
The money to conduct this year's scientific work comes from the Finnish
Forestry Ministry, according to Ilkka Luotamo of the Finnish consulate in St
Petersburg 
MORATORIUM SCIENTISTS GATHER INFORMATION 
Enso Oy, Finland's second largest forest industry group, declared a
moratorium on Karelian old-growth forests in October 1996. Trading partners
had refused to handle old-growth timber. 
In June, UPM-Kymmene Oy, Europe's largest forestry group, joined the
moratorium. 
For these companies, an inventory is needed to certify the origin of the wood
and to prove it is not old growth. 
``It wasn't always clear who had the right to sell timber,'' said Luotamo.
``The idea arose that it would be useful to both sides to know which forests
could be cut and which should not.'' 
The Finnish government is interested in taking an inventory of the proposed
park areas for another reason. 
Kalevala Park, for example, would protect the villages and forests where the
Finnish epic poem ``Kalevala'' originated 160 years ago when Karelia was part
of Finland. 
The epic reflects the everyday life of the Karelians, whose culture was
closely tied with use of the forest. 
``I remember my father...sometimes went to the forest for several days at a
time to find just the right tree, the one he needed to make, say, a sleigh, a
boat,'' said Santeri Lesonen, who lives in Vehnejarvi, a village that would
become part of Kalevala Park. 
GOVERNMENT DECISION 
The final decision on which borders to propose for each park belongs to the
Karelian government, which must inevitably weigh environmental and financial
considerations in the emerging Russian market, and Viktor Stepanov, the
republic's governor. 
They are not bound by the research centre's recommendations. It has not been
announced when the decision will be taken. 
The centre's scientists will be paid for their work, but the researchers from
environmental lobby groups are donating their time, with no assurance that
their data will be included. 
Stepanov wrote to the Russian central government in May asking that measures
be taken to ``suppress unlawful activities on non-governmental nature
conservation organisations,'' lobby groups say. 
It was not clear whether the authorities would react. 
The scientists are fanning out across a wide area, beyond the realms of the
three proposed national parks. 
``Many neighbouring territories also interest us,'' said Aksenov. ``We will
carry out our inventory work more broadly and try to get that included in the
final design.'' 

*********

#11
The Sunday Times (UK)
27 July 1997
[for personal use only]
Mir mortal heads for hell on Earth 
by Mark Franchetti 
Moscow 

IT COULD be the ultimate film set. As Vasili Tsibliyev, commander of the 
Russian space station Mir, battles to regain control of his stricken 
craft, his countrymen back on Earth are planning a feature film in space 
that could bear an ominous resemblance to reality. 
Yuri Kara, a respected Russian film director, is talking to the 
country's space agency about sending actors up to Mir next year to film 
a psychological thriller about a cosmonaut who does not want to return. 
It could strike a chord with Tsibliyev, given the reception he is likely 
to receive after he returns to Earth next month. 
There will be no ticker-tape parades or state banquets for the Mir 
commander. Pilloried in the Russian press for mishaps that have reduced 
the space programme virtually to a laughing stock, the unfortunate 
Tsibliyev will instead face an inquiry into what went wrong. 
"He is certainly the one who has had most problems," said a mission 
control insider last week. "He has clearly been under enormous 
psychological and emotional strain, and it shows. We have treated him 
with utmost care ever since he developed a heart problem due to stress, 
but some very frank words will be exchanged when he returns." 
Unless the 43-year-old commander, whose heart condition emerged during 
the mission, can convince his superiors that he is not to blame for the 
blunders, he could be deprived of his financial bonus for taking part in 
the mission as well as facing national humiliation. 
Having floated in space for 188 days, Tsibliyev appears blissfully 
unaware of the bad news awaiting him in Moscow. Disillusioned with the 
sagging image of the space programme, the country's media have severely 
criticised the Russian commander, accusing him of incompetence and 
blaming him for nearly every mishap since Mir collided with an unmanned 
cargo ship last month. 
The cosmonaut's 20-year-old son, who shares a room with his teenage 
sister at the commander's small flat in Star City, where Russian 
cosmonauts are trained, is said to have had heated arguments with his 
neighbours after they criticised his father. To make matters worse, 
Tsibliyev's stepfather, to whom he was very close, died recently. The 
news was kept from him to avoid further stress. Tsibliyev's sister died 
during his last space mission in 1993. 
Friends of Larissa, the commander's wife, say she is on the verge of a 
breakdown. "The whole thing has become very unpleasant," Larissa 
complained after the latest criticisms of her husband. 
At the end of their missions, cosmonauts used to receive a Volga car 
with personalised numberplates, but this Soviet-era perk has been 
scrapped because of spending cuts. Instead Tsibliyev will have to make 
do on a $250 monthly salary. "A truck driver earns more than a 
cosmonaut," said Sergei Yagupov, former deputy head of political 
education at Star City. 
It is a far cry from the days when cosmonauts were hailed as national 
heroes and living examples of the greatness of the former Soviet Union. 
Yuri Gagarin attained god-like status when he became the first man in 
space in 1961 and for decades millions of Russian schoolchildren dreamt 
of becoming a cosmonaut. 
A hero to all Russians, Gagarin was received with open arms by the 
politburo and was a frequent guest of Nikita Khrushchev, the Soviet 
leader. He was rewarded with 10,000 roubles when the average salary was 
100 roubles a month. 
When Gagarin died in a plane crash in 1968, the findings of the 
investigating commission were kept secret until last year when it 
emerged that he had been to blame for the accident. The official version 
at the time was that there had been a technical fault. 
In recent years Russians have been shocked by countless stories 
depicting Gagarin as a man with a reckless weakness for women and 
alcohol. 
There is no more potent symbol of the space programme's decline than the 
fate of the Buran space craft, Russia's version of the American space 
shuttle, which once circled the Earth. It has been turned into one of 
the rides in a funfair in Moscow's Gorky Park. 
Russia's mission control, which is housed in a dilapidated former Soviet 
building on the outskirts of Moscow, has tried, publicly at least, to 
play down the criticism of Tsibliyev by emphasising that the initial 
accident that triggered Mir's problems could have been caused by a 
number of factors. 
However, insiders say sharp words were exchanged between the commander 
and his superiors and that many on the ground put the blame squarely on 
him. Tension rose further when Mir lost more power after a plug was 
accidentally disconnected. Tsibliyev was also blamed for that. 
People involved with the Russian space programme are hoping Mir's tired 
image will be boosted by Kara's film. The director has already received 
the support of Valery Poliakov, a former cosmonaut who spent 438 days in 
space and who has agreed to be a consultant on the project. 
Medical tests have already begun on actors auditioning for the parts to 
determine whether they are fit to be sent into space and Kara hopes to 
pick a Russian and a Japanese actor. 
The film tells the tale of a scientist who refuses to return to Earth 
from space. Worried at the potential dangers, the government sends an 
attractive female friend of the scientist up to the station to lure him 
back, but the two fall in love and decide to gravitate in space happily 
ever after. 
Considering what awaits Tsibliyev when he returns to Earth, the Russian 
commander might find that final scenario rather appealing. 

*********