July 31, 1997  
This Date's Issues: 1103 •1104 •1105  1106

Johnson's Russia List
#1105
31 July 1997
djohnson@cdi.org

[Note from David Johnson:
A contest: who has the best idea for how to spend one's time 
while JRL is on vacation next week. Prize: Two weeks vacation 
from JRL?
1. Harley Balzer (Georgetown): question re Svyazinvest deal.
2. Baltimore Sun: Aim of U.S. nuclear weapons is to force 
Russian disarmament. (DJ: Who is the author of this most
interesting Knight-Ridder story?)
3. Wallace Kaufman: Central Asian Water.
4. Wendell Solomons: Re How to Get Rid of Lenin.
5. Max Smetannikov (Bloomberg): Re 1101-Communist Party of the 
Russian Federation...
6. Rossiyskaya Gazeta: Blueprint for Enterprise-Level Reform 
Outlined. 
7. Interfax: Russia's Most Group Denies Nemtsov Charge on 
Svyazinvest.
8. RFE/RL NEWSLINE: SELEZNEV CRITICIZES SVYAZINVEST DEAL, DEFENDS
DUMA and NEXT BATTLE IN BANK WAR TO BE FOUGHT OVER NORILSK NICKEL
and LEBED SLAMS MILITARY REFORM PLANS...ATTACKS BEREZOVSKII. 
9. Vek: Yeltsin Cares. An interview with Georgy SATAROV, a political 
adviser to the President. (DJ: This reminds me that very occasionally 
it is suggested to me that JRL deliberately avoids carrying "pro-reform"
items. I don't believe this is true but I certainly encourage anyone
to pass on to me materials they think have been neglected. I have tried
to right the balance--in my perspective.)
10. New York Times: Thomas Friedman, Clinton's Folly.
11. RIA Novosti: STATE COMMITTEE FOR YOUTH AFFAIRS WILL 
HOLD COUNTRYWIDE COMPETITION FOR THE BEST PROGRAM TO DEVELOP 
A CIVIC SPIRIT AND PATRIOTISM IN YOUNG PEOPLE.
12. RIA Novosti: THE POSSIBILITY OF SVYAZINVEST MONOPOLISATION 
IS DANGEROUS FROM THE VIEWPOINT OF RUSSIA'S NATIONAL SECURITY, 
HOLDS VYACHESLAV KOSTIKOV.
13. Interfax: Poll: Russians Believe Nemtsov Will Become Next President.
14. Reuters: Spycatchers Claim Fruitful Three Years.
15. RIA Novosti: Marina Shakina, SCANDAL WITH THE SALE OF 
SVYAZINVEST. Russia's federal budget received over $1.5 billion 
while businessmen scratching each other's eyes out.] 

********

#1
From: BALZER@guvax.acc.georgetown.edu (Harley Balzer)
Date: Thu, 31 Jul 1997 11:07:16 -0500 (EST)
Subject: Re: 1104-Nemtsov Defends Svyazinvest Deal...

Has anyone out there been trying to read between the lines of the flap over
the Svyazinvest auction to figure out what it means for the still-to-come
"closed" auction of an additional 24% of the shares? Does the "extra" $600,000
paid for the "open" 25% make it more difficult or less difficult to sell the
other 24% to 2 or 3 banks for a lot less money?

********

#2
Baltimore Sun
July 31, 1997
[for personal use only]
Aim of U.S. nuclear weapons is to force Russian disarmament 
United States offers stark choice as nations feel their way in new era 
KNIGHT-RIDDER NEWS SERVICE

WASHINGTON -- For a half-century, U.S. nuclear
weapons were aimed at the Communist Soviet Union to deter
war. Today, they are aimed at making democratic Russia
destroy its own weapons.
The drive to reduce the huge arsenals of the Cold War has
stalled, at least temporarily, as the United States and Russia
feel their way into a new era.
No longer rivals, they are not exactly allies, either. And in each
country, the internal political changes of the last few years are
rippling through the dangerous game of nuclear politics.
No one is threatening a new arms race. But the United States
is quietly offering Russia a stark choice: Take more nuclear
weapons out of service or face a determined U.S. military
willing to maintain its nuclear forces, even at a cost of more
than $100 billion over the next decade.
"There are two alternative futures here," said U.S. Arms
Control Director John Hollum. "We very much favor further
reduction. But we're prepared, as the Congress has indicated,
to live with the less attractive proposition, with these larger
forces."
The pause in destroying the nuclear arsenals left by the Cold
War is largely due to the failure of the Duma, Russia's
parliament, to ratify the START II arms-control agreement.
When it approved the treaty last year, the Senate insisted on
keeping all U.S. strategic weapons until the Duma also ratified
it. Only then would half of the 7,000 remaining U.S. strategic
weapons -- on board submarines, bombers and missiles -- be
taken out of service, as the treaty requires.
Nineteen months later, the Duma still has not voted.
As a result, the Senate this month approved a small but
meaningful amount of money for a larger, more expensive
nuclear-weapons complex to maintain the arsenal. The Senate
added $258 million to the $4 billion the Clinton administration
wants to build supercomputers to model nuclear explosions
and pave the way for new facilities that make plutonium pits
and tritium gas, ingredients of nuclear warheads.
The House hasn't included the new money in its bill, but it
usually gives the Senate what it wants on matters involving
nuclear weapons.
"START II has not been ratified," said Sen. Pete V. Domenici,
a New Mexico Republican and the author of the additional
spending with Sen. Harry Reid, a Nevada Democrat. "So the
laboratories are having to maintain a larger number of
weapons of more designs than they anticipated."
The Clinton administration, too, is making adjustments to keep
up its nuclear arsenal at a time of tight budgets. In recent
weeks, planners at the Pentagon, White House and Energy
Department have begun weighing a shift: moving some nuclear
weapons off costly submarines to cheaper, land-based
missiles, according to a senior administration official.
The wariness between the two countries stems, in part, from
changes in the political landscapes of both, Hollum said.
"The relationship is more cautious than it had been in the past,
largely because the Russians have gone through some
negotiated," he said. "We have, too."
The Communist-led coalition in the Duma is wary of the
United States. Influential lawmakers there have expressed an
interest in building missile defenses and have complained about
the expansion of NATO toward Russia's borders, to include
Poland, Hungary and the Czech Republic.
Economically crippled, Russia also faces the huge cost of
replacing old, multiple-warhead missiles with single-warhead
ones at a time it cannot even pay its troops.
In the United States, the Republican Congress is wary of
arms-control efforts in general and critical of the Clinton
administration for not cracking down on alleged arms-control
violations by Russia.
Congress also had second thoughts before agreeing this month
to pay $500 million each year to help Russia destroy its
nuclear weapons and secure its massive and chaotic complex
of nuclear weapons factories, once known as "secret cities."
The price tag for maintaining U.S. nuclear weapons at sea, on
bombers and deep in underground bunkers, is huge: $54
billion to $64 billion up to 2003, according to the Pentagon.
The cost of maintaining these weapons until about 2007 is
another $40 billion.
Clinton and Yeltsin have tried to breathe new life into arms
control, most recently at their March summit in Finland, where
they gave each other more time, until 2003, to live up to the
START II agreement -- once it's ratified. Clinton's promise of
another arms treaty, START III, was designed to entice the
Duma into acting.
The Clinton administration hopes the Duma will ratify START
II in the fall, restoring a reliable rhythm to the business of
destroying nuclear weapons. Then the United States would
begin taking its weapons out of service.
"The case for [Russia] is so compelling," Hollum said. "There's
some basis for believing that, as the Yeltsin government starts
to address these issues in a very forceful way, the Duma will
be receptive."

*********

#3
Date: Thu, 31 Jul 1997 00:36:40 +0600
From: Wallace Kaufman <wkaufman@iarcticmail.com.emji.net>
Subject: Central Asian Water

Russell Zanca seems to suggest the solution to agricultural problems and
water issues in Central Asia is the same as its cause--more bureaucracy
and collectivism. International donors have already created the Aral
Sea Commission, a multi nation bureaucracy that has spent millions on
conferences and offices and achieved almost nothing. An "Independent
Water Commission" would almost surely end up employing yet more
bureaucrats obligated for their livelihood to political powers instead
of a rational market.

Collectives need to deal with real world prices and costs for water and
their production. They can do this as corporate farms or broken up in 
economically and administratively logical units. 

Water rights should be auctioned and become salable so that those who
can put them to the most efficient and productive use (creating the most
wealth and tax revenue) can claim them. 

In many areas of Central Asia, agriculture is not feasible without
subsidies. Governments are increasingly incapable of subsidizing what
the Soviet central planners decreed for Central Asia. International
donors have stepped in providing subsidies based more on emotion than on
economics. The emotion is generated by the sorrowful sight of poor
people and boats in the desert where the waters of the Aral Sea once
lay; also by Western environmentalists who blame all the region's
economic woes on the devastation of the rivers and Aral Sea. Films have
been shot, books written, songs sung, poems recited and tears shed, but
nothing effective has been done. The result is that sick and desperate
people have been encouraged to stay in areas that will never be able to
employ them. Water pipelines and pumping stations have been built where
no economic basis can ever exist to maintain them or pay the cost of the
water delivered.

Collectives, intact or broken up, must begin to project realistic
business plans. Where the results are uneconomical, the most merciful
response would be humanitarian aid to move people and sell assets before
they depreciate below salvage value. Where viable plans exist,
including the ability to pay the real costs of water, there may exist a
productive use of loans or loan guarantees.

Large scale agriculture in most of Central Asia was a central planner's
dream and nothing more. Central Asians and donor nations should not
focus on how to prolong the trance, but how to wake up and begin living.

**********

#4
Date: Thu, 31 Jul 1997 
From: "Wendell W. Solomons" <solomons@slt.lk>
Subject: Re: How to Get Rid of Lenin

>Date: Sat, 26 Jul 1997 17:47:36 -0700
>From: Gary Kern <gkern@ucr.campus.mci.net>
>Subject: How to Get Rid of Lenin

>If someone in Moscow on the Yeltsin team should happen to read this
>proposal, please pass it on to Boris Nik. We all want democracy in
>Russia, but a costly national referendum on the founder of Gulag is
>ridiculous! Drop-kick him out of Red Square!

*****Kicking? It isn't easy to be drop-kicking, say, pyramids in Egypt
because they are dedicated to totalitarian Pharaohs. Speaking of costliness,
one might look at the civil measure of taking Harvard's Dr. Jeffrey Sachs
to court for fraudulently applying U.S. community money for a privatization
scheme which has 'drop-kicked' Russia into a mortality rate of 1 million
more deaths than births. Larger than Albania, the former 320 million USSR
is gradually becoming Europe's cross. Huge human and material costs are
involved and this will affect the quality of life on the continent.

*****Just try kicking autos, TVs, CDROM drives and more new products from
Korea, Japan and Taiwan as their sales expand further in voodoo-economics-
blighted Western markets ... China now has a yearly GDP growth of 10% and
is on the heels of the USA as the next largest world magnet (without
Dr. Sachs) for foreign capital investment.

*******

#5
From: "max smetannikov" <msmeta@bdc1.bloomberg.com>
Organization: Bloomberg News Washington D.C.
Date: Thu, 31 Jul 1997 11:22:10 GMT-0500
Subject: Re: 1101: Communist Party of the Russian Federation: The Russia

Comrad Jim:

Before you all chip to buy an ICBM to nuke Kremlin, please tell me 
what is more important: to feed the poor in Russia or to build 100 
percent Russian food processing industry.

Russians starve not because there is no food but because there is no 
money to buy it: reforms so far failed to create jobs and revenue 
across the board.

Fight to reform the economy according to GLOBAL rules,
and stop Karl Marx necrophilia!

*******

#6
Blueprint for Enterprise-Level Reform Outlined 

Rossiyskaya Gazeta
July 26, 1997
[translation for personal use only]
Article by Aleksandr Velichenkov: "Enterprise Reform: Start
Announced" -- from the "Business in Russia" section

At a government session Thursday [24 July] the prime minister approved
in practice the draft "Model Program for Enterprise Reform" submitted by
the Russian Ministry of the Economy.
The bulky document is a professional, clear summary of good management
and marketing textbooks, which has been supremely tailored to fit real
current Russian conditions.
The first thing that should be noted is the program's requirements of
an enterprise. They include the keeping of a register of shareholders by
an independent registrar (there have been countless scandals with some
shareholders lacking formalized rights of ownership); the need for an
enterprise's charter to conform with current legislation and the existence
(amplification) of contracts with top managers; the enterprise's exercising
its rights to land; the restructuring of budget payments; a switch to the
accountancy method [bukhgalterskiy metod] of paying value-added tax and
excise duties (unlike the cash [kassovyy] method); and the elaboration of a
series of measures to reduce nonmonetary forms of payment.
The implementation of these demands is effectively mandatory if an
enterprise intends to attract investment, diversify its activity, take part
in state programs, or enjoy state backing. People are admitted to an
audience with the British queen in tuxedos, shoes, and with a smart
hair-do. "Entrance in jeans and sneakers is barred."
The program also contains six standard methodological recommendations:
on supply and selling policy; production- technological and innovations
policy; pricing policy; financial policy investment policy; and cadre
policy and personnel management.
Any enterprise needs an exhaustive manual to cover every eventuality. 
And although some of the program's requirements -- regarding the method of
payments and the reduction in the proportion of nonmonetary transactions --
seem fairly tough, the enterprise is obliged to map out and begin movement
in this direction.
The program is by no means a mandatory directive, with the exception
of those aspects associated with the introduction of international
accounting standards this year. But it does not follow that there is no
need to "swap jeans for tails."
Following the program will enable an enterprise to gain a more rapid
understanding of its internal problems, adapt to the market less painfully,
and enter new financial markets in order to resolve its long-term tasks.

*********

#7
Russia's Most Group Denies Nemtsov Charge on Svyazinvest 

MOSCOW, July 29 (Interfax-FIA) - Russia's Most Group banking group
has issued vehement denials after First Deputy Prime Minister Boris Nemtsov
said on Tuesday the group had wished to buy shares in the Svyazinvest
communications company for a song last Friday but was outbidden by another
company and refused to accept its defeat.
Nemtsov's words that Media-Most, a Most division which owns the NTV
television company, the Segodnya newspaper and the Ekho Moskvy radio
station, "wanted to acquire a package of shares in the Svyazinvest joint
stock company 'for a song' or even 'gratis' are a blatant lie," the group
said in a statement made available to Interfax.
"We consider it necessary to assure society and the Russian leadership
that if an inspection by relevant authorities or a possible court
investigation show that there has been no underhand deal between some
members of government and the Russian part of the company which has won the
competition, we will not make the slightest attempt to call the competition
results into question," Most said. The group did not make it clear what it
meant because none of the bidders has officially questioned the auction
results.
Most "fully shares the desire expressed by Boris Nemtsov to prevent
the creation of 'bandit capitalism' in Russia and henceforth to carry out
honest privatization, and hopes that he will take practical steps toward
that goal and not merely pay pure lip service to it," the group said.
"As for the first deputy prime minister's description of the preceding
privatization period as a 'freebie' one, he obviously knows what he is
talking about. The Most group, which has taken part in no privatization
projects, believes that Nemtsov has targeted his reproaches at his
colleagues in the government."
Talking to reporters in the Volga city of Cheboksary on Tuesday,
Nemtsov said: "The owners of major television companies, ORT (Public
Russian Television) and NTV (Independent Television), wanted to acquire one
quarter of Russia's telecommunications ... The government has embarked on
a course the goal of which is to rule out any privatization that is done
gratis or is based on friendships. It was the result of this rule that [the
Svyazinvest auction] was won by another company, which had offered a
gigantic sum for the shares ... Those guys (Most) lost because they had
offered less and now they can't accept this."

********

#8
RFE/RL NEWSLINE Vol 1, No. 85, Part I, 31 July 1997

SELEZNEV CRITICIZES SVYAZINVEST DEAL, DEFENDS DUMA. State
Duma Speaker Gennadii Seleznev has charged that by selling the
Svyazinvest stake, Russia has lost its "information independence,"
Interfax reported on 30 July. He added that Russia has become a
"bandit country." Seleznev also discounted recent criticism of the
Duma's activities by Yeltsin and officials in the presidential
administration. He noted that in the last week of its spring session
alone, the Duma had passed 31 laws that were later approved by the
Federation Council and that Yeltsin has signed 18 of those laws.
Seleznev accused the president of vetoing the controversial law on
religious organizations "under pressure from the [U.S.] Capitol and the
Vatican."

NEXT BATTLE IN BANK WAR TO BE FOUGHT OVER NORILSK NICKEL.
State Property Committee Chairman Kokh on 30 July predicted that
another scandal will erupt over the upcoming sale of a 38 percent
stake in Norilsk Nickel, Interfax reported. He added, "None of our
auctions have passed without screams or fits of hysteria."
"Kommersant-Daily" predicted on 30 July that Berezovskii and
Potanin will clash over the Norilsk sale, planned for 5 August.
"Nezavisimaya gazeta" -- partly financed by Berezovskii's LogoVAZ
group -- on 31 July charged that the conditions for the Norilsk
auction violate Russian laws and that the starting price for the stake
is far too low. Oneksimbank acquired a 38 percent stake in Norilsk in
November 1995 in exchange for a $170 million loan to the
government. The Audit Chamber has already called for a halt to the
Norilsk auction (see "RFE/RL Newsline," 22 and 28 July 1997).

LEBED SLAMS MILITARY REFORM PLANS... Former Security Council
Secretary Aleksandr Lebed has charged that a "narrow circle" of
officials who lack the expertise to deal with the problems of the
Russian armed forces have made recent key decisions concerning
military reform plans, RFE/RL's Moscow bureau reported on 30 July.
He named Deputy Defense Minister Andrei Kokoshin, the highest-
ranking civilian in the Defense Ministry, and Col.-Gen. Valerii
Manilov, a senior officer at the General Staff, as two of the officials
who drafted the plans. At the same time, Lebed called Defense
Minister Igor Sergeev a "worthy and sensible person," according to
the 31 July "Nezavisimaya gazeta." But he did criticize Duma Defense
Committee Chairman Lev Rokhlin for not letting Lebed's Honor and
Motherland movement join Rokhlin's new movement to support the
military. Several influential Communists who have long criticized
Lebed have already joined Rokhlin's movement.

...ATTACKS BEREZOVSKII. At the same press conference, Lebed
blamed Security Council Deputy Secretary Berezovskii for the war in
Chechnya and said Berezovskii had profited from the bloodshed
there, RFE/RL's Moscow bureau reported on 30 July. According to
Radio Rossii, Lebed added that after he had negotiated the peace deal
with Chechen chief of staff Aslan Maskhadov in September 1996,
Berezovskii approached Lebed and accused him of spoiling "a very
good business." Berezovskii was appointed to the Security Council
soon after Lebed's ouster in October. Meanwhile, "Moskovskii
komsomolets" charged on 30 July that since May 1996, some $98
million has been channeled from the state-owned airline Aeroflot to
the Swiss company Andava, which Berezovskii owns. The paper
noted that Berezovskii's longtime associate Nikolai Glushkov, co-
founder and acting chairman of LogoVAZ, joined the Aeroflot board
of directors in November 1995 and soon became the airline's chief
financial officer.

*********

#9
>From RIA Novosti
Vek, No. 27
July 1997
YELTSIN CARES
An interview with Georgy SATAROV, a political adviser to the President

Vek: A year ago the central electoral commission announced
Yeltsin's victory and Russia was preparing for his
inauguration. What has been done, and what has not been done,
over the year?
GS: The main thing that has been done is launch a new, and
maybe decisive, stage of the reform drive. There are two sides
to it. 
First, the new Cabinet is acting rather decisively and
consistently. It does not do everything it can, I believe -
this is evident, because we are now strictly monitoring the
implementation of the President's message. Thus, it does not do
everything to reform the enterprises that were mentioned in the
message. But there is a great difference between what we saw
earlier and what we see today.
Second, the current stage of the reforms is not a rescue
operation, like it was in 1992, but planned long-term work. It
is strategic work, aimed into the future. It is dovetailed to
the things that have to be done right now, of course: pay
pensions (something that has been done), pay delayed wages to
the state-sector workers, improve settlements between
enterprises and normalise the fiscal system. The Cabinet has
started and is implementing many long-term programmes in the
economy, the social sphere and military development. This is
serious. This maybe the main result of the past year. 
Vek: Some people suggest that Yeltsin may run for a third
term: either for a new post in the Russia-Belarus Union, or
because in 1991 he was elected the head of another state - the
RSFSR within the Soviet Union. Your comment?
GS: The integration processes would not reach this far by
the year 2000, of course, to form a realistic power structure
uniting the two states and establishing a powerful institute of
Union Presidency. This suggestion is laughable. 
As to the Russian Constitution - it does contain
intermediate stipulations, in particular Part 3 which reads:
The President of the Russian Federation, elected in accordance
with the Constitution of Russia - the basic Law of the Russian
Federation - shall execute the powers established by it since
the date of the current Constitution coming into force and
until the end of the term in office he has been elected for."
That is to say, this term is a part of his Presidency. Yeltsin
said he was running for a second term in office because he
cared about Russia at the end of his Presidency. 
Vek: Still, there is a theoretical possibility - with the
help of a referendum or amendments... Your opinion?
GS: There is a theoretical possibility, but then the
Constitution has to be amended, which is not advisable in my
opinion. I do not think Yeltsin would do this.
Vek: If the State Duma were to be prematurely dissolved,
what is the method of electing the next legislature? I know you
favour elections by a majority vote.
GS: This is my personal opinion. But then, other people
share it - the Constitutional Court has received three requests
to check the compliance of the current electoral system with
our Constitution. I have always said and do say that having a
half of the Duma lineup elected by party lists is objectively
pernicious. I stand for a majority vote, two-round elections,
and some benefits for parties - to promote the development of a
party system. 
Vek: There have appeared the parties of beer lovers, of
love, of housing management commissions, etc. prior to the
latest Duma elections. They received the funds for their
election campaigns, but only a handful voted for them. Is there
a way to oust the patently marginal, no-go or simply
money-hungry 'enthusiasts'?
GS: There is no ideal electoral system; each has its
strong
points in a given situation. In a country in transition to
democracy which has no ready-made party system, a proportionate
voting system patently hampers the formation of a party system,
paradoxical as it may sound. One explanation for the appearance
of candidates which have no chance of being elected is the
existence of a proportionate system, which means the inevitable
nation-wide election campaign, the provision of financial
resources, TV time and promos in the media. It is a chance to
get in the limelight. 
If you are running to the legislature in an electoral
district, nothing of the above applies. You have to work with
the electorate every single day to win the right to be elected.
It is an absolutely different political style. In our
conditions, a proportionate voting system only fuels the
striving to get into the limelight. There are other more
negative consequences, like split parties turned into downtown
clubs of a sort.
The introduction of a majority vote system would help oust
the marginal formations. 
Vek: Do you think the Duma may be dissolved soon?
GS: The legislature has an important role to play in the
effort to implement the President's message and the subsequent
Cabinet programme. The Tax Code, for one, cannot be introduced
by a decree. Dissolving the Duma means dooming an appreciable
part of this year's programme to failure. 
Vek: Do you mean dissolving the Duma promises no
dividends?
GS: Absolutely. Therefore, we need a compromise solution.
Vek: The Cabinet has to tackle the 'seven basic tasks'.
Are you facing seven, or ten, or maybe only one 'basic task'?
GS: I would not name paying the debts to the people - this
is self-evident. I would name larger, strategic tasks. You may
know that a major breakthrough was made several days ago in the
military reform. A programme of reforming the state management
system is in the making: the executive authorities, the civil
service, etc.
Vek: You mentioned the military reform. But Rokhlin,
Rodionov and participants in all putsches have united to launch
an offensive against the reform. The bureaucracy do not like
everything about the reform proposed for the state apparat. Of
course, there are people who understand the need to reform both
the military and the state apparat. Your vision?
GS: The reform of the apparat is well under way: the
incomes and expenditures of the bureaucracy are strictly
monitored in line with the President's decree. Of course, they
are finding it more difficult to exist, but there is no
avoiding it. 
Vek: But they have fast learned to write in their tax
declarations that they have bought 'dachas' for peanuts. Your
comment?
GS: There is no absolute control, but this does not mean
it should not be aspired for. Corruption cannot be fully
eradicated - naturally. Like zero temperature is a abstract
physics, zero corruption is abstract politics. But corruption
should be fought and kept way down from the current level.
Vek: Tatyana Dyachenko is a newcomer to the Kremlin. Do
you find it easy to work side by side with her? How is she?
Clearly, the President's image is not limited to a hair style
and a number of cravats?
GS: I do not fret about Tatyana Dyachenko's appointment,
and all allusions to Tsarist dynasties are silly in my view.
Moreover, in the new conditions the appointment of the
President's daughter to a bureaucratic post is good, because
her activities, her incomes, etc. can now be better monitored.
We are cooperating in some respects. We meet every Monday
at plenary conferences staged by the chief of the President's
staff.
(Transcript by Mikhail GUREVICH.)

*******

#10
New York Times
31 July 1997
[for personal use only]
FOREIGN AFFAIRS / By THOMAS L. FRIEDMAN
Clinton's Folly 

Now that the Madrid NATO summit meeting is over, and Poland, Hungary and
the Czech Republic have been invited to join the alliance, the Clinton team
is again peddling the notion that it's all O.K.: NATO can be expanded,
Russia won't care, the costs will be minimal and anyone who opposes it is a
Yalta-loving, umbrella-carrying, Munich-leaning isolationist. 
Hogwash. NATO expansion is quietly eating away at what really matters:
the U.S.-Russia strategic relationship. When you ask Clinton officials how
NATO expansion will affect Russian implementation of the most far-reaching
nuclear arms reduction treaty ever signed -- Start 2 -- they mumble that
Boris tells them it will all be O.K., but they can't say for sure. They can
say for sure that Poland has to be in NATO, because there are votes in
that, but they can't say for sure how this will affect nuclear missiles
pointed at us. What a way to run a railroad. 
Well, someone who can tell you was in Washington last week: Aleksei
Arbatov, deputy chairman of the Russian Parliament's Defense Committee. Mr.
Arbatov is a democrat and a strong advocate of U.S.-Russian cooperation and
arms control treaties, and here's what he had to say: 
First, there remains "a widespread feeling of betrayal among Russian
democrats" in the wake of Madrid, said Mr. Arbatov. The way in which NATO
expansion was forced on Russia, after all the talk about cooperation, was
"a shock for those trying to improve relations." 
Second, after the Soviet Union collapsed the general consensus in the
Russian foreign policy elite was that the major threats to Russian security
would come from the south (the Muslim world) and eventually the East
(China), said Mr. Arbatov. NATO expansion has shifted Russian thinking to
the view that there will also be a long-term threat from the West. "The
consensus now is that, at best, the West will be neutral and may even be
hostile. But for sure we will not be strategic partners. We will be rivals." 
Third, Russia is now embarking on a major debate about how much to
downsize its conventional armed forces, and "NATO expansion will figure
into every discussion and paper written on the military reform question,"
said Mr. Arbatov. Hard-liners are already using it to embarrass advocates
of sweeping reform. Moreover, even centrist Russian strategists now argue
that with NATO expanding, and Russia's army shrinking, Russia will have to
rely more heavily on nuclear deterrence and a doctrine of first use of
nuclear weapons, said Mr. Arbatov. He said that even with a smaller defense
budget he expected appropriations for Russian long-range nuclear weapons
would grow by 100 to 150 percent over the next two years. 
Fourth, in the wake of the NATO expansion there is "no chance
whatsoever" that Russia's Parliament will ratify Start 2 by this fall, said
Mr. Arbatov, a supporter of the treaty. If Start 2, which calls for the
U.S. and Russia to slash their long-range nuclear weapons from 7,500 to
3,500 each, is not ratified before NATO expansion is ratified by the
Western parliaments, the treaty will probably remain in limbo. "Yeltsin
promised [the Americans] at Helsinki that he would move quickly on Start
2," said Mr. Arbatov, "and when he came back to Moscow he immediately
'forgot' about it." 
What Mr. Arbatov is telling us is that we are already paying a price for
NATO expansion: America's allies in Russia are already feeling less room to
maneuver. And those U.S.-Russian strategic accords already signed, but not
implemented, are even less likely to be. The only reason things are not
worse is because the West has Boris Yeltsin. Mr. Yeltsin is a huge, unique,
historic figure, who has singlehandedly suppressed and absorbed the
simmering U.S.-Russian tensions over NATO. But we are living in a fool's
paradise. Boris is sicker than people think. And when he goes, these
tensions will come roaring to the surface. 
I can understand the Poles or the anti-Russian cold warriors not
worrying about this. But I can't understand those U.S. officials who value
the U.S.-Russia relationship -- like Deputy Secretary of State Strobe
Talbott or Senators Joe Biden and Dick Lugar -- selling it out for NATO
expansion. Oh, they say, it won't damage U.S.-Russian relations. Sure. Tell
it to Aleksei Arbatov. 

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#11
STATE COMMITTEE FOR YOUTH AFFAIRS WILL HOLD COUNTRYWIDE
COMPETITION FOR THE BEST PROGRAM TO DEVELOP A CIVIC
SPIRIT AND PATRIOTISM IN YOUNG PEOPLE
MOSCOW, JULY 31 - RIA NOVOSTI CORRESPONDENT EDUARD PUZYREV.
At its today's enlarged meeting the board of the State
Committee for Youth Affairs (GKDM) of the Russian Federation
took the decision to hold, within the next six months, a
nationwide competition for the best program to foster a civic
spirit and patriotism in young people. A competition of ideas
helping to realize that task will be held simultaneously.
Tatyana Novikova, GKDM Chairman, said opening the meeting
that the committee was entrusted with that task by the
Government Commission for Social Issues of Servicemen which was
convened on July 16 by Boris Nemtsov, First Vice-President of
the Russian Government. Novikova said that the First
Vice-Premier believes that the competition will help formulate
"the Russian super-dream" for the rising generation.
Novikova also noted that the GKDM had set up a working
group to work out the terms for the competition. Earlier
adopted programs, such as "Russia's Youth" and "Russian
Language", are invited to take part in the competition, as well,
she said. 

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#12
THE POSSIBILITY OF SVYAZINVEST MONOPOLISATION IS DANGEROUS
FROM THE VIEWPOINT OF RUSSIA'S NATIONAL SECURITY, HOLDS
VYACHESLAV KOSTIKOV
MOSCOW, July 31. (RIA Novosti correspondent Alexandra
Akayeva). The activity of the Svyazinvest company lies within
the sphere of Russia's national security interests, that is why
the possibility of its monopolisation in general and by foreign
investors in particular is extremely dangerous. This opinion was
expressed today at a press-conference by deputy director of the
"Media-Most" group Vyacheslav Kostikov. "It is to be hoped that
such a powerful telecommunications system will remain in
Russia", he noted.
Kostikov expressed concern over the fact that the scandal
over Svyazinvest involved some members of the Russian Cabinet of
Ministers.
According to him, the management of the "Media-Most" group
is still not sure that the state really gained maximal profit
from the sale of a block of shares of Svyazinvest. In this
connection, Kostikov expressed hope that the instruction of
Chairman of the Government Viktor Chernomyrdin to verify the
legality of the tender will be carried out.
He also expressed concern over the rumours, which have been
circulated of late, that the block of the company's shares may
be distributed between many buyers. Then, according to Kostikov,
the tender would make no sense, since its aim was to attract
major investors that could invest heavily in the development of
Svyazinvest. "Petty investors would just line their pockets on
the growth of the market value of shares," he noted. 

*********

#13
Poll: Russians Believe Nemtsov Will Become Next President
MOSCOW, July 31 (Interfax) - Current Russian First Deputy Prime Minister
*Boris Nemtsov* will be elected as president in the year 2000, according to
the results of a nationwide poll conducted by the Public Opinion Foundation
on July 5. 
In total, 24% of respondents said Nemtsov would become Russia's next
president. 
The poll involved 1,500 Russians who were asked to forecast how the
popularity ratings of politicians would change by the end of the century
and who would be the country's next president. 
According to the results of the poll released on Thursday, Nemtsov's
nationwide popularity rating will rise to 38% while that of Moscow Mayor
Yuri Luzhkov will increase to 17%. 
By the beginning of the new century, the popularity of incumbent
President Boris Yeltsin and Liberal Democratic Party of Russia leader
Vladimir Zhirinovsky will decrease considerably, said 40% and 27% of
respondents respectively. 
Almost half of the respondents said living standards would not rise by
the year 2000 and the crime rate would not go down. This was the opinion of
46% and 43% of respondents respectively. 
About a quarter of respondents think that small and medium-sized
businesses will continue to develop and that the role of the Orthodox
Church will grow and so will the number of believers. This was the opinion
of 26% and 24% of Russians respectively. 

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#14
Reuters
30 July 1997
Spycatchers Claim Fruitful Three Years 
MOSCOW -- Russian spycatchers have identified 1,200 foreign spies or
foreigners suspected of spying in the past three years, Interfax news
agency quoted a senior counter-intelligence official as saying on Wednesday. 
The unnamed official told Interfax that in the same period 130 illegal
operations by foreign secret services had been disclosed and 52 foreign
spies had been expelled. 
He also said 46 Russian citizens who cooperated with foreign
intelligence services had been detected and arrested. 
A spokesman for Russia's Federal Security Service, which leads the
country's fight against espionage, declined to comment on the report. 
The official quoted by Interfax hailed as a huge counter-intelligence
success the arrest in early 1996 of a junior Foreign Ministry official,
Platon Obukhov, who faces charges of spying for Britain's MI6 foreign
intelligence. 
"Obukhov's arrest has been the biggest failure of MI6 since Oleg
Penkovsky," he said referring to a Soviet colonel executed in 1963 for
passing secrets to Britain through businessman Greville Wynne. 
The official said that following Obukhov's arrest 14 MI6 officers had
been disclosed and forced to leave Russia. 
"The MI6 has been actually forced to stop its active work in Russia," he
added. 
Earlier on Wednesday Russian judges ruled that Obukhov, 28, was mentally
unstable and needed psychiatric treatment. They decided to return to his
case when he feels better. 
Obukhov's lawyer and parents insist that he has been mentally unstable
since childhood, including the period when he is said to had spied for
Britain. They insist that all charges against him be dropped. 
The prosecution says he was sane when dealing with the British agents
and should sooner or later answer for high treason in court. 
The counter-intelligence official told Interfax that a senior officer of
the Mossad Israeli intelligence service had been seized red-handed in
Moscow when trying to receive materials from an agent and expelled. 
"For the time being Mossad activities in Russia have been halted," the
official said. 
Russian counter-intelligence officials have said that MI6 and Mossad
were the best-run spy agencies they had to deal with even though they were
far smaller that the U.S. Central Intelligence Agency. 
Earlier this year two Russians were tried in court and found guilty of
spying for Britain and the United States. 
The official told Interfax that more spy stories were still ahead. 
"A number of operations involving foreign citizens who are spying
against Russia are under way now," he said. "But it is too early to name
the names." 
Russian counter-intelligence officials have said that foreign secret
services have stepped up their activities in Russia after the euphoria of
the West's honeymoon with the post-Soviet Kremlin started fading. 
Last month counter-intelligence chief Nikolai Kovalyov set up a
telephone number inviting all Russians working for foreign spy agencies to
call and confess in exchange for a promise that they would not be charged. 
Kovalyov later said that the hot line was a huge success but gave no
details. 

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#15
RIA Novosti
31 July 1997
SCANDAL WITH THE SALE OF SVYAZINVEST 
Russia's federal budget received over $1.5 billion while
businessmen scratching each other's eyes out 
By Marina Shakina 

The story which began so innocently with the exposure of
ONEXIMbank in the TV news programme Vremya aired on the Public
Russian Television claimed to describe a typical situation: an
audacious journalist exposes highly-placed corrupted officials
and, then, is persecuted for that. The bank has just bought 25
percent of the shares of Svyazinvest enterprise and the
journalist shows the true and unattractive face of ONEXIMbank. 
The journalist's stance evokes respect, corrupted officials
are righteously blamed, and oppressors of the freedom of speech
met with an adequate rebuff. Everything would seem O.K, if there
were not the signs that, in fact, the reporter takes part (or
allows himself to be involved) in a squabble between market
competitors. 
The scandal is flaring up, involving ever new layers of
politicians and businessmen. It would be interesting to look at
what may seem codified statements of some top state officials.
Chairman of the State Property Committee Alfred Kokh said right
after the auction: "In the coming days the deal will be
obstructed in the mass media." How did he guess? First
Vice-Premier Boris Nemtsov made the following remark: "The
winner is the one who has paid more while the loser, instead of
calming down, produces hysteria on television." Whom did he
mean? Finally, First Vice-Premier Anatoly Chubais regarded: "We
met before the auction with Potanin, Berezovsky and Gusinsky,
and told them that those who will give more money, will get the
package of shares." 
As a result, the story looks differently: one can picture
that prior to the tender-based sale of Svyazinvest package of
shares three entrepreneurs - Potanin (ONEXIMbank), Berezovsky
and Gusinsky (Media-MOST) agreed on how they would behave at the
auction. 
At the last moment the conditions changed and, regardless
of preliminary intentions, the package was bought by Potanin who
paid for it 50 percent more than its starting price. His
colleagues feel deceived and the next day a fierce campaign is
launched to discredit ONEXIMbank on the Public Russian
Television (financed by Berezovsky) and NTV (financed by
Gusinsky). 
A day after it, the said two TV channels launched an
unprecedented campaign against Boris Nemtsov to make it obvious
that he played some decisive role in this story. In response to
this attack, Nemtsov again speaks publicly and lifts even higher
the veil of secrecy over this story. Berezovsky and Gusinsky
wanted to buy the package of shares cheaply, asserts he;
however, the government will not allow a 'freeload'
privatisation any more. 
To all appearances, a struggle between two financial and
industrial groups has been developing around Svyazinvest: on the
one hand, ONEXIMbank, on the other hand, two Russian news
moguls. Both have good relations with the government. However,
ONEXIMbank has turned out to be more resourceful and far-sighted
since it managed to collect more money prior to the auction. 
This is not a one-time action for the bank. Attention
should be brought to the fact that in recent months the
enterprise led by Potanin has been intruding ever more actively
in the market of information and the press, ousting the existing
information empires. Gusinsky, as is known, owns NTV television
channel, the daily Segodnya and the weekly Itogi. Berezovsky
runs the Public Russian Television, the daily Nezavisimaya
gazeta and the weekly Ogonyok. And ONEXIMbank has virtually
bought the renowned and influential newspaper Izvestia and the
popular Komsomolskaya pravda recently. 
In this scandal the entrepreneurs have demonstrated the
"beastly look of Russian nascent capitalism." The budget has
received 9 trillion roubles which will enable the government to
repay debts to servicemen. The stock of Svyazinvest has started
to grow in price after this privatisation and will rise even
more when the company sells another 28 percent of its shares to
domestic investors soon, and the budget will get a substantial
amount of money. 
Incidentally, the government has failed, for many years, to
implement its plan of privatisation revenues. Instead of 10
trillion budgeted roubles drafted, it eventually received only 2
trillion. But this one-time deal seems to have the annual plan
fulfilled. No matter how it affects others, but for the thin
federal budget and poor budget-sector employees, whose number a
plenty, this deal is no doubt a good one. 

*********