August 14, 1997  
This Date's Issues: 1122 • 1124 • 1125 1126

Johnson's Russia List [list two]
#1126
14 August 1997
djohnson@cdi.org

[Note from David Johnson:
1. Rossiyskaya Gazeta: U.S., Russian Peacekeepers in Bosnia
Contrasted.
2. Delovoy Mir: Russian-U.S. Trade Developments Viewed.
3. Delovoy Mir: Konstantin Zatulin (director of the Institute of
CIS countries), "The October Summit Is Hardly Likely To Bring Joy."
4. Nezavisimoye Voyennoye Obozreniye: Aleksey Arbatov (Duma Defense 
Committee deputy chairman), "A Destabilizing Appeal: Army Must Follow 
Not the Leaders But Representatives of Lawfully Elected Government."
(Critique of Rokhlin).
5. Rossiiskiye Vesti: Alexander Lavrov, DONORS AND RECIPIENTS. 
Dividing regions into these categories is an infantile disorder of 
Russian federalism.
6. Novaya Gazeta: Vremya's Dorenko Interviewed on Svyazinvest 
Scandal.] 

*********

#1
U.S., Russian Peacekeepers Contrasted 

Rossiyskaya Gazeta
August 1, 1997
[translation for personal use only]
Report by Boris Talov: "Russian Savvy on Bosnian Roads"

Uglevik-Moscow -- Our airborne troops do not like to carry weapons
here in Bosnia. There is no point in exciting the local inhabitants yet
again in the zone of responsibility of the Separate Airborne Brigade. As
18 months of experience already show, camouflage uniform with the badges of
the Russian Armed Forces and the Airborne Troops is quite enough. If a man
does not carry a "Kalashnikov" it means he is entirely confident of his own
powers. The Serbs and the Muslims, who respect our peacekeepers highly,
both understand that.
In contrast to their American colleagues from the first armored
division of the U.S. Army, our airborne troops are not afraid of speaking
with people in confidence. Their enormous experience of work in numerous
trouble spots in the former Union, the hard school of Afghanistan,
Chechnya, and the lessons of peacekeeping activity in the Balkans leave
their mark. It is no accident that the martial labor of our "winged
infantry" in this region has received high assessments from the leaders of
many international organizations and primarily the United Nations and NATO.
The Americans are feared and disliked, our men are liked and feared. 
As a result the prestige of our peacekeepers in the region is far higher
than for any other subunit in the Stabilization Force [SFOR]. While the
Americans rely on their own high-class equipment and computers our men are
guided primarily by their own experience and their "soldier's savvy." The
airborne troops quite rightly believe that if there are any complications
it is far more effective to grab whoever has disrupted the calm by the
lapels and give him a shake than to release the catch on a gun and fire
over people's heads, as our partners in peacekeeping activity do.
Our peacekeepers call the Americans "Pindos" [possible reference to
Russian word used as term of abuse for Greeks or reference to the tall
pindo palm]. When I tried to find out where this nickname came from I
learned that that is what the Americans themselves called the local
population in Somalia, where the U.S. army did not actually manage to
accomplish its mission. "They are constantly afraid of something," an
airborne troops officer of my acquaintance, whom I had already met back in
Abkhazia and Chechnya, claims. "Of course constant combat readiness is
essential, but should that be taken to the point of absurdity?"
On Bosnia's roads you constantly meet U.S. convoys with high- mobility
vehicles equipped with heavy machine-guns at the head and bringing up the
rear. In winter and summer the machinegunners turn their guns round like
clockwork, causing the local small boys and our own airborne troops to
laugh. People wave in greeting to our peacekeepers but they make an
internationally familiar gesture of contempt quite often to the Americans.
In the event of trouble the local inhabitants turn to us, the airborne
troops, for help, not to the Americans. They can find understanding from
the Russians while an American in full combat gear will most likely say: 
"I am sorry," which is often equal to the Russian: "Get lost...." I
remember January 1996 when subunits of our brigade began to arrive in
Bosnia and how at the time the Russian peacekeepers immediately started to
help the local population, although it was not part of their duties.
The main danger here is the mines. [Passage omitted] Our sappers are
having in practice to abandon the doctrines they were taught in the
military higher education establishments and learn literally as they go the
specific features of mine warfare in Bosnia. I remember how on a road on
which the mine clearing had been entrusted to Americans our armored
personnel carrier was blown up. Thank god we all survived. Arriving
immediately, our sappers found and defused a further four mines which the
Americans had "missed." Of course the Americans apologized profusely and
promised to punish the culprits severely. But when a UN jeep was blown up
by a mine, the yanks were unable to extract the bodies for three days. Our
men coped with the task very swiftly.
"A local peasant only has to find a mine to come rushing to us," my
sapper friend said. "It is futile to ask the Americans, they cite
international agreements according to which the mines should be cleared not
by the peacekeepers but by the sappers of the opposing sides. But we drive
to the site immediately, after all it is a question of human lives."
The Americans rely on equipment -- they have a lot of it, all kinds of
instruments, robots, and devices of a kind our sappers have never set eyes
on before. But on the other hand when one of our officers took the
controls of an engineer vehicle produced on the basis of the T-55 tank,
skillfully used the enormous manipulator to life a bucket of water and,
without spilling a single drop, moved it from one place to another, our
American colleagues' jaws dropped in amazement. The professionalism of our
sappers does not go unnoticed by various special services. Our boys have
already been offered extremely high wages in various armies, in particular
the French Foreign Legion, and the recruiting officers have tried to entice
them with huge amounts of money and the passports of any country. Without
success, naturally. [Passage omitted]
On the one hand the Americans are great ones for cleanliness and they
are extremely fond of taking showers, of eating a correct and sensible
diet, and enjoying the benefits of civilization. Especially as the U.S.
military budget permits this. On the other hand they are covered in dirt
-- their living quarters, as our officers put it, "are like military
pigsties." Indeed, for all our men's meager and impoverished lifestyle,
cleanliness reigns everywhere, which cannot be said of our American
peacekeeping colleagues. I remember how back in January 1996 the Americans
were extremely surprised at the way our soldiers and officers were able to
organize amenities for themselves. The Americans were ashamed at the time:
Looking at the airborne troops, they began to clean out their own quarters
too. But they did not manage to complete the job.
Our 605th helicopter returned to Tuzla on time, to within a minute. 
The commander of the Il-76 lowered the ramp while still in motion and the
brilliant training of the military transport aircraft pilots accustomed to
working with the airborne troops was in evidence. The third rotation of
our Bosnian brigade had ended and new peacekeepers from Russia had flown in
to the conflict zone.

*********

#2
Russian-U.S. Trade Developments Viewed 

Delovoy Mir
August 6, 1997
[translation for personal use only]
Report by Yuriy Paniyev under the "World Economy" rubric: "U.S.
Congress Carries On the Jackson-Vanik Cause"

The U.S.-USSR agreement on trade relations went into effect 60 years
ago.
Over a long period of time, the nature of trade and economic ties with
the United States was determined by the state of political relations, which
were not, to put it mildly, always smooth. It is only in recent years that
Russia and the United States have made significant progress in developing
economic cooperation. Moreover, during their first meeting in Vancouver in
1993, the presidents of the two countries gave this aspect of bilateral
relations top priority.
Russia attaches great importance to expanding trade and economic ties
with the United States, regarding it as one of its most important and
promising partners. American leadership in the world economy is taken into
account, as well as the enormous production, financial, and scientific and
technical potential of U.S. companies. At the same time, there is awareness
of the fact that the American market is one of the most capacious for sales
of Russian advanced technologies in such fields as space research, nuclear
energy, computer software, etc. And, of course, Russia is also proceeding
from the fact that constructive interaction with the United States will
enable it to more effectively integrate into the world economic system.
The U.S. approach to cooperation with Russia has also changed
fundamentally in recent years. The reasons for such transformations are
obviously not only political, but also economic. After all, Russia's
immense market is extremely attractive to American business. It is no
accident that in the United States, as the influential New York newspaper
The Wall Street Journal writes, there is a widespread view that "those
willing to take a risk in Russia are rewarded with the most incredible
>earnings in the world."
The improvement in the climate and conditions of Russian-American
relations had an immediate impact on trade turnover indicators. Russia's
trade with the United States is growing faster than its total foreign
trade. Whereas trade turnover between the two countries increased by
>almost 2.2 times in 1992-1996, Russia's total foreign trade rose by only
1.6 times. After several decades during which imports from the United
States exceeded [Russian] exports many times over, since 1994 the balance
of Russian-American trade has begun to tip in favor of Russian exports. 
> True, the bulk of exports to the United States still consists of raw
materials: ferrous and nonferrous metals, mineral fuel, lumber, precious
stones, chemicals, etc. Imports from there consist primarily of raw and
processed agricultural products, as well as machinery and equipment. The
latter account for more than 40 percent of Russia's imports from the United
States.
The volume and dynamics of Russian-American trade are largely
determined by the scale of investment cooperation. American companies are
the leaders among foreign investors in terms of the total volume of
investments. This is in spite of the fact that they are mostly limited to
fast-yielding export-oriented joint projects. As of the beginning of 1997,
the sum total of American investments in the Russian economy was about $2
billion. There are about 3,000 Russian-American joint ventures listed on
the state register, or about 19 percent of all enterprises with foreign
capital registered in Russia. Despite the obvious progress, trade relations
are still far from entirely free from the legacy of the past. This affects
primarily the interests of Russian exporters. As Viktor Chernomyrdin
recently noted during a meeting in San Francisco with business officials
from the U.S. West Coast, several U.S. legislative provisions still
categorize Russia as a "country with a nonmarket economy." As a result,
tougher anti-dumping procedures are applied to Russian commodities than to
those from most other countries. These duties are virtually prohibitive
and have been in effect for many years. They have affected such Russian
export items as magnesium, uranium, titanium pipes, ferroalloys, steel, and
others.
Characteristically, fundamental documents like, for example, the U.S.
president's annual message on foreign economic activities do not say a
single word about Russian-American declarations such as the "Partnership
for Economic Progress." As is known, this joint statement, which was
signed by the two countries' presidents in 1994, was the first major
Russian-American document to set priorities for economic cooperation and
take into account the realities of Russia's transition to a market economy.
One of the remaining anachronisms is the situation whereby Russia,
unlike other former Communist countries, still comes under the notorious
Jackson-Vanik amendment and therefore enjoys most- favored-nation status in
its trade with the United States only on a temporary and not a permanent
basis. Although the U.S. government has initiated a review of the
amendment to change Russia's status to that of a "country with a transition
economy" and grant it most- favored-nation privileges without any
qualifications, the problem has not yet been resolved definitively.
This problem -- like, incidentally, many others -- could possibly be
removed altogether if an agreement on creating a free trade zone between
Russia and the United States is reached. This idea was voiced by Boris
Yeltsin several years ago; however, there has been no proper response from
the American side so far. But nevertheless there is hope for progress in
this area, taking into account that the United States has acquired
extensive experience in concluding and implementing preferential agreements
with various countries.

************

#3
K. Zatulin Pessimistic About CIS Summit 

Delovoy Mi
August 8-11, 1997
[translation for personal use only]
Statement by Konstantin Zatulin, director of the Institute of
CIS countries, recorded by Delovoy Mir correspondnet Boris Krotkov
under the "Commonwealth" rubric: "The October Summit Is Hardly
Likely To Bring Joy" -- first paragraph is introduction

Another meeting between heads of CIS member-states will take place in
October. The last meeting took place in March and wound up being
unsatisfactory: Only one signature -- that of Boris Yeltsin -- appeared on
the main document of the summit. How is the situation in the Commonwealth
shaping up? Delovoy Mir's correspondent addressed this question to
Konstantin Zatulin, the director of the Institute of CIS countries.
Fundamentally there has been no radical change to make the
Commonwealth more effective since the March summit. Although attempts have
been made. First and foremost I would like to note the attempts to resolve
the ethnic conflicts on the territory of the former USSR by means of a
"cavalry charge." Second is the activization of the diplomacy of Russia
and other CIS countries in bilateral and multilateral relations in
connection with the battle for influence, or the redistribution of
influence.
If we are speaking specifically, then the following milestones should
be noted.
A document has been signed between Russia and Belarus: Following
bitter polemics, a Union of the two states was proclaimed on the
anniversary of the Commonwealth of Russia and Belarus.
Russia formalized its relations with NATO, after which Ukraine
followed suit. However, Russia confirmed its negative attitude toward
NATO's eastward expansion, after which Ukraine made it clear that it
welcomes such expansion.
Russia signed a Treaty on Friendship with Ukraine, which had been
postponed for five years.
As for the so-called hot-spots, a protocol between Moldova and the
Dniester region was signed, with the mediation of Russia and the
participation of Ukraine.
Intermediary efforts were stepped up in the zone of the Karabakh
conflict, where, for the first time, the mediators -- Russia, France and
the United States -- presented a joint plan for settlement.
Russia undertook emergency measures in the zone of the Georgian-
Abkhazian conflict on the eve of the expiration of the term -- 31 July --
of the current mandate of the peacekeeping forces. And finally, in June
the document about a political reconciliation in Tajikistan was signed
here, in Moscow.
Let us try to analyze this calendar of events. In my opinion, there
was a contradictory process connected with the consequences of Russia's
further weakening. We did not achieve anything in earnest with the signing
of the treaty with Kiev, the main issues of which were not resolved the way
they should have been for Russia. Ukraine continued to flirt with NATO. 
We were also too hasty in Dniester region. There we agreed for Ukraine to
be involved in resolving the conflict. And, as they say, we came a
cropper. As soon as we forced the Dniester region to sign the document
with Moldova, the Dniester region started changing its foreign politicy
orientation -- from Russia to Ukraine, which soon announced that it was
prepared to bring in its own peacekeepers, instead of Russian peacekeepers.
In general, the impression that one gets is that Russia is conducting a
rather strange policy in the zones of conflict. Having at first achieved
considerable success in ending the hostilities, we then begin giving up
unrecognized states -- the Dniester region, Abkhazia, Karabakh. As a
result in [losing] the Dniester region we are losing an enclave that could
influence Moldova and Ukraine in the interests of Russia. And in Karabakh
we are twisting Armenia's arm so that it renounce the fruits of its
military victories. And we are doing this together with the United States
and France. But, unlike them, we are not offering anything to the
Armenians in return. The West is prepared to give Yerevan economic aid and
guarantees. In this way we are simply encouraging Armenia to change its
foreign politicy bearings. We are losing a strategic ally for the sake of
a dubious, illusory friendship with "oil[-rich]" Azerbaijan and the
approval of the international community.
And finally, last of all -- about the Georgian-Abkhazian conflict. 
Both under the last minister of foreign affairs -- I mean Andrey Kozyrev --
and under the current one -- Yevgeniy Primakov -- our policy in this
conflict has been as follows: To use all our energy to exert pressure on
Abkhazia so that it goes back to being part of the Georgian state. Why did
we do this? Figuring that Georgia would throw in its lot with Russia. The
result? Today it can be said with certainty that Georgia does not want
peace at Russia's hands. It is becoming increasingly oriented toward the
West, toward its money, its economic aid and guarantees. In short, another
miscalculation.
Now about the Commonwealth proper. What happened there? What can be
said about the work of the multilateral bodies of the CIS? Unfortunately,
only one thing: There was no distinct change for the better. And there
could not have been one. Why? Because the foundations of the Commonwealth
are ephemeral. The principle of "one country -- one vote" does not
envisage the transfer of substantial authority to inter-state
multi-national bodies. And evidently this will continue to be the case
until we create some sort of common political field. Say, a common
parliament. Like the Europarliament. But to this day Russia is not
striving toward this, and such figures as H. Aliyev, I. Karimov and N.
Nazarbayev do not need any kind of parliament whatsoever. As regrettable
as this may sound, these countries will continue to move away from Russia,
since today we are a weak state that has squandered all of its resources
for achieving integration on Chechnya. The CIS countries will try to find
themselves stronger patrons. Although, I should note here that these
calculations are illusory to a significant degree: The West does not have
a great interest in the countries of the CIS. At least they [Western
countries] are not demonstrating any readiness to squander money on a
rapprochement with the CIS countries. Least of all are they going to pay
with the lives of their soldiers to suppress those same conflicts in
Abkhazia and Karabakh.
In conclusion, about the coming summit. I do not believe that the
October summit will bring about any major results. Miracles do not happen.
It will most likely demonstrate the continuing agony of the CIS. We can
only expect a change for the better in the situation after Russia overcomes
its economic crisis or changes its political course, two interconnected
factors. And where is it, this "overcoming?"

*********

#4
Arbatov Takes Issue With Rokhlin"s Appeal 

Nezavisimoye Voyennoye Obozreniye, No. 24
July 5-11, 1997
[translation for personal use only]
Article by Aleksey Georgiyevich Arbatov, State Duma
Defense Committee deputy chairman from the "Yabloko" section: "A
Destabilizing Appeal: Army Must Follow Not the Leaders But Representatives
of Lawfully Elected Government"

General Rokhlin"s appeal was not on the agenda for
the meeting of the defense committee. Consequently this document
was not discussed at all, and I did not see it until it came out
in its final form. The general"s appeal has no official
status, because the agreement of certain members of the committee
was obtained by individual polling—without voting in the
defense committee.
As for the essence of the document, it is a strange mixture
of different subjects and levels of analysis, and it is an impossible
tangle of specific and general concepts. However, a large number
of the premises are fully justified. The president does in fact
bear the main responsibility for the war in Chechnya, and mainly,
he is to blame for the failures of military reform. As the Supreme
Commander-in-Chief, he is certainly responsible for disintegration
of the Armed Forces and their truly disastrous situation of the
last several years. We would have to agree with these points in
Rokhlin"s appeal, all the more so because all of this has
already been discussed several times by various politicians, specialists,
and representatives of the mass media.
On the other hand all of this is served up dressed with a
kind of sauce: According to him, the army must stand up for itself,
it must unite and rise in defense of its interests. Moreover, not
only in regard to purely military issues but also a wider range
of economic, administrative, and domestic and foreign policy problems.
This makes it an indirect call for a military overthrow. This isn"t
something new, by the way: Rokhlin is marching on the same road
as officials like Makashov, Anpilov, and Zhirinovskiy. And therefore,
by its orientation and its results, this document can have destabilizing
consequences. Although Rokhlin"s appeal has not made a
great impression on the Armed Forces, in the future, were the
sociopolitical
situation, the economy, and the state of affairs of affairs of the
army to worsen further, all of the negative tone of the document
could play an extremely dangerous role as the detonator of a delayed-action
mine.
The appeal was sent out to the forces—all the way
down to the level of divisions and separate brigades. Rokhlin distributed
his documents in this way before as well, because a deputy has this
right. As for how ethical this is, that"s another matter.
Rokhlin"s appeal, you see, has a clearly expressed political
orientation, and the army must remain outside politics. Is it right
to do such a thing in the presently difficult situation? Is it right
to incite the army to any kind of political demonstrations? Of course
not. This carries the danger of splitting the army into hostile
blocs, creating a conflict between the Armed Forces and other enforcement
organizations, and causing the corresponding consequences in regard
to the stability of the state and society. Coming from a well-known
person such as the chairman of the State Duma defense committee,
this is irresponsible.
One begins to doubt that the main and only concern of the
appeal"s author is Russia"s security. I would
like to turn the reader"s attention to an interesting peculiarity:
Rokhlin made a survey of the possible threats to Russian
security—expansion
of NATO, growth of China"s military might, dominance of
foreign capital, plunder of national wealth, and growth of armed
separatism. But why did he "forget" to mention Turkey? It is commonly
recognized, after all, that a very complex situation is developing
for the Russian Federation in the south in terms of security, separatism,
and Islamic radicalism, with Turkey playing the most active role
of all foreign states. We know, however, that Rokhlin has "special
relations" with Azerbaijan, and that this state is closely tied
to Turkey. General Rokhlin appealed for withdrawal of Russian troops
from Armenia. He adheres to a one-sided orientation on Baku. And
this is not the only example of Rokhlin"s highly unique
interpretation of Russia"s national interests.
One other point. While he criticizes the government for insufficient
financing of the army, Rokhlin nonetheless voted in favor of the
1997 budget, thus accepting responsibility for its failure and the
imminent sequestration. So what moral right does Rokhlin now have
to attack the leadership"s policy regarding the budget
and the economy? This is inconsistent, to say the least.
A serious moral and ethical issue arises in connection with
the appeal. Upon winning a seat in parliament at the head of the
NDR slate, Rokhlin was awarded the post of chairman of the defense
committee by this party, because the NDR had inherited it from its
predecessor—the government party "Russia"s Choice"
in the last Duma. One could of course not respect one"s
party (and after the recent plenum the NDR hardly deserves any kind
of respect). But some sort of ethical norms must be observed, especially
by an officer who knows what honesty and loyalty are. You didn"t
get your seat in parliament and your post as committee chairman
on your own, you got everything from the party, and now you"re
opposing its line, literally trampling it in the mud. Be consistent
and honest: Leave this party, resign from your post as chairman,
and from the State Duma in general, and start your own political
struggle. Had the same kind of problems arisen for me with my "Yabloko"
party, this is precisely what I would have done, as would have any
other respectable deputy who won a Duma seat on a slate.
As follows from his appeal, General Rokhlin has begun the
work of convening an all-army officers" conference in fall,
in which he plans to realize his idea—to voice complaints
against the political leadership of Russia in the name of the Armed
Forces. This would be a continuation of the line toward politicizing
the army, which is extremely harmful and dangerous. There are other
means of defending army interests, for example through laws, activity
in parliament, hearings, and work on the budget. The position occupied
by Rokhlin allows him to do this; it is a very high post, practically
equal to a minister"s. That one person can work in parliament
at this post while another cannot is another matter. Rokhlin"s
main mistake was that right from the very beginning, he saw the
defense committee as nothing more than a "subsidiary" of the Ministry
of Defense and the General Staff in parliament, the mouthpiece of
their positions and interests. The independent role and authority
of the defense committee were fundamentally undermined in this way.
All hearings along these lines have always been tiresome and
a waste of time, and they produced not a single critical remark
regarding the activity of the Ministry of Defense under both Grachev
and Rodionov, not a single serious practical recommendation on solving
urgent problems. Everything usually reduced to a single theme: "Give
the army more money, and don"t ask how it will be spent,
or on what." How can anyone in the presidential administration and
government want to talk with the defense committee under these conditions
if the issues could be resolved right away and directly with the
Ministry of Defense? And that"s what they did.
During discussion of the 1997 budget, the defense committee
upheld—by a majority, without reservations, and with no
criticisms whatsoever—the Defense Ministry"s request
first for 260 trillion rubles, after which the Ministry of Finance
and the Ministry of Defense agreed on R104 trillion behind the
committee"s
back. So who can possibly pay any attention now to the committee
chairman"s indignation regarding sequestration and cutting
of the military budget to R82 trillion? And after this Rokhlin says
that he exhausted all possibilities of legal parliamentary struggle
for the interests of the Armed Forces, and was now "forced" to resort
to "unorthodox" forms of activity.
Rokhlin accuses the president of delaying the military reform,
but he himself adheres to a position against the reforms: He favors
stricter draft laws, he opposes reduction of the Armed Forces, without
which military reform would be impossible in principle, he is fighting
against the law on alternative civilian service, and so on. Take
as an example civilian control of the Armed Forces. In his appeal,
Rokhlin attacks Yuriy Baturin simply because the secretary of the
Defense Council does not wear shoulder boards but deals with defense
issues. How can there be any discussion of democratic control when
such an attitude is expressed toward civilian specialists, one which
I myself have experienced several times in the State Duma defense
committee?
Let"s return to Rokhlin"s appeal. According
to it, Boris Yeltsin was unable to fulfill his obligations in a
single area of administration, he is totally incompetent, and is
unqualified for the position he holds. But we did hold presidential
elections, and there was a possibility for electing another politician
to the supreme state post by constitutional means. Even so, Lev
Yakovlevich remained quiet, although he could have seriously changed
the balance of forces by virtue of his position, which is something
he didn"t do. Didn"t he know then that Yeltsin
was responsible for the war in Chechnya? For the failure of military
reform? For the economic crisis and corruption?
Or could it be that he had no suspicion of this when he ran
in 1995 under the NDR? I have no intention of defending Yeltsin
or Chernomyrdin, or all the more so of campaigning for Zyuganov.
What I"m talking about is simply political hypocrisy, all
I"m saying is that outraged innocence is out of place here.
In politics, accidents are a rarity in such serious matters.
I think that Rokhlin"s step must be viewed as the beginning
of his election campaign under the framework of possible elections
to the State Duma if it is dissolved this fall or in early 1998.
It must be clear to the general that he will not get on the NDR"s
slate again. Judging from everything, the general wants to win a
seat in parliament again. And so he committed this political demarche
from behind the curtain, at the time of the Duma"s recess,
in order to attract attention to himself. In the new election campaign
he will most likely be elected from Volgograd, meaning that he will
have to win the sympathies of servicemen and communists making up
the majority of this region"s electorate. Rokhlin"s
act simultaneously marks the beginning of his direct cooperation
with the majority wing of the Communist Party of the Russian Federation
so as to be able to hold onto the defense committee chairmanship
contrary to the wishes of the NDR.
The army must follow not unofficial leaders but representatives
of lawfully elected government. It must remain above politics. It
was given weapons by the state and society to repel aggression,
and not to brandish them as a way to extort extra money or privileges.
We must fight for the interests of security and the ability to defend
ourselves (which is not always equivalent to the bureaucratic requests
of the Ministry of Defense or the Armed Forces) only by legitimate
means: through elections, activity in parliament, laws, the budget,
and local authorities, through creation of public opinion by means
of the press, through defense of the lawful and doubtlessly trampled
interests of the Armed Forces and defense industry in the government.
In the final analysis, if the country"s leadership is as
unreliable as Rokhlin"s appeal implies, let"s
change the president in the next elections, let"s try to
retire the government (I think, by the way, that Rokhlin did not
sign the list of initiators of a vote of no confidence in the government
in May of this year).
Rokhlin"s demarche, which presupposes an alternative
means of direct forcible pressure upon the government by the army,
not only is no help, but it can also seriously undermine the legitimate
means of supporting the interests of defense capability and the
lawful rights and needs of the armed forces. All of this is the
same as encouraging doctors to threaten to create a plague epidemic
in the country, or incite nuclear power plant workers to blackmail
the government with the threat of blowing up reactors. Where will
such methods lead us? No matter how much we might condemn the course
of the president and government, we must not capsize the ship in
attempting to change its course.

*******

#5
>From RIA Novosti
Rossiiskiye Vesti
August 6, 1997
DONORS AND RECIPIENTS 
Dividing regions into these categories is an infantile 
disorder of Russian federalism 
By Alexander LAVROV, adviser to the territorial department 
of the President of the Russian Federation

The idea that Russia has no more than 10 donor regions has
gained wide currency recently. Donor regions are ones that get
no transfers from the Federal Fund of Financial Support to the
Federation's constituent members. (In 1997, these were the
Moscow, Lipetsk, Samara, and Sverdlovsk regions, Krasnoyarsk
Territory, Bashkortostan, and the Khanty Mansi and Yamal Nenets
autonomous areas). The implication is that the rest of the
regions are "recipients". 
Actually, the picture is somewhat more involved. To begin
with, the terms "donor" and "recipient", when applied to the
regions, are a formality. None of the regions as such pays any
taxes to the federal budget, this being done by tax payers,
that is, enterprises and individuals. It is they that after all
get allocations from budgets of various levels. So a financial
balance of flows between regions and the federal budget is an
arithmetical sum of financial flows between the federal budget
and specific taxpayers or budget recipients, put by a twist of
history within some or other administrative boundaries. 
Second, the budget support of any region is determined
mainly by objective factors and cannot be regarded in isolation
from the country's overall territorial structure, the economic
situation, the budget structure, and so on. 
On the one hand, the economic potential of any region has
been, and continues to be, built up by the efforts of the
entire country. For example, before oil and gas fields in
Western Siberia began yielding returns, tremendous resources
had been invested into them, including by the now subsidised
regions. More, this potential can function only within the
framework of a common economic space. To be sure, regional
authorities can and must bolster up the taxing potential of the
territory "in their charge", but in this case it is difficult
to separate their contribution from objective trends. 
On the other hand, distribution of federal aid between
regions or allocation of direct expenditures of the federal
budget depends largely on the interests of the state in general
and on factors "inherited" from the past. For example, farming,
coal mining or textile regions are in need of support because
of their specialisation, which is not very beneficial at the
current juncture. Border areas carry an additional burden of
supporting troop contingents. Some regions lack an
infrastructure required for economic development, while others
suffer from an excessive demographic load on the able-bodied
population; and so on.
That is why a balance of financial flows established at
one time or other between the federal centre and a particular
region is not an "assessing" category. In other words, a high
or low level of budget support cannot be either credited to or
blamed on the local population, far less on regional
authorities. 
Third and last, for a region to receive or not to receive
financial aid from the federal budget is not a criterion for
placing it among "donors" or "recipients". The fact is that
federal assistance to regional budgets is only a part of total
expenditures of the federal budget, with every rouble of it
being spent in the final analysis on one or other territory. 
Regions can be divided into "donors" and "recipients", if
at all, only on the basis of objective criteria. 
Now let us restore as fully as possible a balance of
financial flows that established itself between the federal
centre and the regions in 1996. 
Every region's territory routinely contributes tax
revenues to the federal budget (in 1996 these amounted to 215
trillion roubles), which are recorded by the State Tax Service
for each Federation constituent member individually. 
In addition, the federal budget receives customs fees,
collected by the State Customs Committee (in 1996 it was 37
trillion roubles). The existing statistical system does not
provide for their distribution between the members of the
Federation. But tentative assessments can be obtained if we
divide customs payments between regions in proportion to their
share in all-Russian foreign trade. 
After totting up tax and customs payments, we can
calculate the "contribution" made by each region (or more
precisely, by taxpayers situated on its territory) to the
revenue of the federal budget. 
The "reverse" flow from the federal budget into the
territory of a region is likewise made up of two ingredients. 
First, it is all money remitted to the budgets of members
of the Federation - transfers of the Fund of Financial Support
to Regions, subventions, subsidies, loans and offsets. In 1996,
they accounted for 57 trillion roubles, or around 13 per cent
of the federal budget's total expenditures, or 16 per cent of
the budget revenue of the regions. 
Second, it is direct expenses of federal ministries and
departments in the regions (in 1996, they made up 74 trillion
roubles, minus expenses for national defence, international
activity, state debt servicing, and other "non-territorial"
expenditures). Until now this component has not been taken into
account when drawing up a balance of financial flows. 
By comparing the contributions of tax payers into the
federal budget and aggregate receipts by budget recipients from
the federal budget, one can calculate a balance sheet of
financial flows between the regions and the federal centre in
per capita terms. For donor regions this balance is positive
and for recipient ones, negative. 
Calculations have shown that the number of donors can
include, with a measure of certainty, 32 regions, for which the
balance of financial flows in 1996 topped 400,000 roubles per
person. The regions of this group have a sufficient margin of
safety to remain among the donors even after a fuller account
is taken of federal budget expenditures on their territories or
of any change in proportions of revenue distribution in favour
of the federal budget. With 61 per cent of the population, they
are responsible for 80 per cent of federal budget revenue (in
the first 10 regions of this group the ratio is 25 per cent and
57 per cent, respectively). 
The group of "conditional" donors includes 19 regions with
a balance of financial flows between 0 and 400,000 roubles per
capita. Also, one can include here three regions (the Murmansk,
Kemerovo, and Kamchatka regions) with a specific balance
ranging between 400,000 and 600,000 roubles, calculated without
regard for direct federal budget expenses on their 
territories. 
A fuller account of the territorial distribution of
federal budget expenditures in most of the "conditional" donor
regions is highly likely to move them into the category of
recipients. On the other hand, some of these regions, given a
better economic situation, higher tax collection and some cuts
in federal aid, stand a good chance of moving into the donor
category. 
The regions of this group, concentrating 21 per cent of
the population, are responsible for 12 per cent of federal
budget revenues. 
Among the recipients are 33 regions with a negative
balance of budgetary flows. For them a fuller account of
federal expenses will result in a further deterioration of the
balance of financial flows. Transition into the number of
"conditional donors" is possible only for individual regions
(the Kaluga, Novgorod, and Orel regions) given a substantial
rise in tax collection or reduction of federal expenses on
their territory.
The 18 per cent of the Russian Federation's population,
living in the recipient regions, are responsible only for eight
per cent of the federal budget revenue.
To sum up, contrary to a widespread view, federal budget
donors are not 10, but 32 regions, having more than half of
Russia's population. This is better than in the US, where out
of 50 states, only 15 are donors, and have just 34 per cent of
the country's population (possibly this US "lagging behind" is
explained by a much more precise accounting of the territorial
distribution of federal expenses).
By and large, however, it has to be admitted that enhanced
and somehow morbid interest in the division of Russian
Federation members into donors and recipients is a kind of
infantile disorder of Russian federalism. It reflects unsettled
federal relations, a desire by some Federation territories to
secure a "special relationship" with the federal centre and the
confused and unjust existing system of budget relations. In the
United States, for example, this problem attracts little if any
public attention. 
For this disorder not to become chronic, it is necessary
to:
-- clearly differentiate between sources of income and
especially the responsibility of authorities of different
levels - federal, regional and local - for the financing of
budget expenditures;
-- to adopt lucid and possibly the most objective criteria
and rules for the distribution of financial help between
regions, targeting the bulk of it for specific purposes
(education, health, social welfare, etc.);
-- organise a system of monitoring the territorial
distribution of expenses by federal ministries and departments
and of keeping track of the regional component of federal
programmes.
The experience of other federations suggests that all this
makes it possible not only to avoid conflicts between the
centre and Federation members, and also between regions with
different measures of budget support, but also to make the
state's regional policy much more effective. 

*******

#6
Vremya's Dorenko Interviewed on Svyazinvest Scandal 

Novaya Gazeta, No. 31
August 4-10, 1997
[translation for personal use only]
Interview with Sergey Dorenko by Sergey Varshavchik under the
"Redistribution" rubric; place and date not given: "Sergey Dorenko:
'A Revolution Will Break Out in the Country Because of Uneximbank'"
-- first paragraph is introduction

For the past week the political top-brass have been shaken by a new
scandal -- the purchase of the shares in the biggest concern on the
information market, Svyazinvest, which Dorenko, host of the news analysis
program Vremya on Channel One, called shady. We had an entertaining
conversation on this subject. Without commenting on Dorenko's belonging to
one of the sides of the conflict, we present it in its entirety.
[Varshavchik] Sergey, what prompted your sensational statement about
the Svyazinvest deal?
[Dorenko] Strictly speaking, in criticizing this deal I never meant
to arouse such a stormy reaction from the government. Particularly, the odd
behavior of Nemtsov, who began attacking me. I was talking about something
a little bit different, but the first vice premier apparently had a chip on
his shoulder. I passed the ball to Nemtsov, but he did not take it, in
fact he really started to panic. What was it all about, why were they
thrown into a panic? They were thrown into a panic because I said and
continue to say: Uneximbank is a channel for foreign money and an
unscrupulous investor.
[Varshavchik] Are you speaking for Berezovskiy and people like that,
and Gusinskiy, who are upset over losing?
[Dorenko] In the first place, neither Berezovskiy nor Gusinskiy had
anything to do with this deal. (That is Dorenko's opinion -- editor's
note). They did not even have an interest in it. Alpha- bank had an
interest in it. Moreover, Potanin himself admits to having taken part in
this deal, but not Most-bank. Meanwhile they promptly start blaming ORT. 
ORT did not lose the auction, the entire country lost. There is no vested
interest on my part -- after all, I had had this material for a whole
month, and logically I should have presented it before and not after the
auction so as to knock the competitors out of their saddles.
[Varshavchik] You said that this deal did not bring Russia any
noticeable dividends. What is your certainty based on? After all, the
money went toward paying off debts to the army.
[Dorenko] Chubays himself admitted that for the army this money is a
drop in the bucket, and in so doing he in fact discredited Nemtsov, who
maintains that this is an outstanding deal. Behind Unexim there is a world
speculator -- Soros, who will effortlessly resell the Svyazinvest shares
for four to five times more money. Therefore, I congratulate everyone on
their acquisition of no one knows what. Unexim is an exaggerated figure, a
colossus with feet of clay. All the enterprises that it controls are
unhappy since this bank, like an ordinary protection racket, is taking all
their money, down to the last cent. And it merely serves as a key to let
in foreigners, who are eager to exploit local resources.
[Varshavchik] Many can criticize, but what can you propose, on your
part?
[Dorenko] It is necessary to educate our businessmen in the spirit of
old man Livshits, who said: "We must share." Otherwise the poor will
begin assailing the rabid rich, who are thinking about how to fill up their
own pockets quickly. If we live the way Unexim lives, then a revolution
soon awaits us.
[Varshavchik] Was there any reaction from the authorities?
[Dorenko] I know for sure that Alfred Kokh demanded ORT's charter
documents for verification purposes. They are actively looking for any
compromising material on us. But the channel's management does not intend
to bend, and my program will continue to go out as it always has, on
Saturdays.

********