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Johnson's Russia List


August 20, 1997  
This Date's Issues: 1133    

Johnson's Russia List
20 August 1997

[Note from David Johnson:
JRL returns. 
1. AP: Yeltsin marks coup anniversary.
2. Fred Weir in Moscow on Mayor Luzhkov.
3. Max Smetannikov: re US Diplomat Hits a Woman.
4. Renfrey Clarke in Moscow: COLD WAR AND WORKERS' 

5. Matt Bivins: Re "Secret Battle: Anatoly Chubais vs. 
Boris Yeltsin."

6. Peter Duncan: Threat to SSEES staff.
7. Alan Fahnestock: ILBE office-equipment scandal.
8. Reuter: Russia's Nemstov raps media tycoon Berezovsky.
9. St. Petersburg Times: Bronwyn McLaren: Big Brains Bog 
Down in Hunt for the Russian Idea.

10. Financial Times (UK): John Thornhill, Russia: A quiet 


Yeltsin marks coup anniversary
August 19, 1997
MOSCOW (AP) - President Boris Yeltsin paid tribute Tuesday to Russians'
``victory of democracy'' in thwarting a coup attempt six years ago, as the
nation marked the anniversary of a historic watershed with little fanfare. 
But the other leading figure in the dramatic events of August 1991, the last
Soviet premier, Mikhail Gorbachev, voiced new regret that things didn't turn
out differently. 
Gorbachev, who lasted only four more months in the Kremlin after the failed
coup, rued the Soviet Union's collapse and said the reforms by Yeltsin's
``authoritarian'' government have led to ``disaster.'' 
The two bitter rivals' comments came as Russia quietly marked this week's
anniversary of an event that hastened the end of 74 years of communist rule. 
The coup began Aug. 18, 1991, when several Soviet leaders - including the
heads of the KGB and army - set up an emergency committee to govern the
country, bypassing Gorbachev, who was placed under house arrest at his dacha
on the Black Sea. Yeltsin, president of the Russian republic, made his
historic stand on a tank, rallying tens of thousands of people outside the
parliament building, or White House, to oppose them. 
By Aug. 22, the coup had collapsed. Yeltsin emerged as the most powerful
politician in the country and quickly unraveled what little Soviet power
While large crowds rallied on previous anniversaries of the coup, the
atmosphere has been less politically charged since the communists lost last
year's presidential election - their best chance to return to power. 
Only a few low-key events are scheduled in Moscow this week, including a
communist rally and a memorial march to the spot where three pro-democracy
protesters were killed resisting the attempted coup. 
Most Russians are preoccupied with day-to-day concerns in a country still
dogged by a protracted economic crisis and violence on its southern flank:
Chechnya, Tajikistan, Afghanistan. 
``Another life is around us - a life that has none of its former
predictability or dullness,'' the daily Izvestia wrote in a front-page
``But its brightness ... comes not only from an abundance of goods in stores
and the lights of billboards, but also from terrorists' explosions in
conflict zones,'' the newspaper said. 
Speaking to reporters at the Moscow International Air Show on Tuesday,
Yeltsin said a successful coup could have thrown Russia back several decades.
Had the plotters won, ``we would not have a democratic country now advancing
along the road to reform,'' Yeltsin said. 
Gorbachev, in an interview with the Interfax news agency, heaped blame on
``the Russian leadership'' of 1991 for destroying his efforts to keep the
Soviet Union intact despite the loss of several republics. 
Despite the abortive coup, the union could have been saved - and deeply
reformed - but for the Russian leaders who blocked it, he said, without
naming Yeltsin. He denied the Soviet Union had been headed toward inevitable
Gorbachev said he does have hope for Russia's recovery, thanks to ``some
gains of democracy remaining in the country since the times of perestroika''
- the former premier's policy of reforms - and to the fact that ``people do
not want to give up freedom.'' 


Date: Tue, 19 Aug 1997 17:30:17 (MSK)
For the Hindustan Times
From: Fred Weir in Moscow

MOSCOW (HT) -- Assuming Boris Yeltsin hangs on to his
current vigorous health, Russia's next change of presidential
power is a distant 3 years away. But for one man, the electoral
race to grab the top Kremlin job is already afoot, and he is
running hard.
Moscow Mayor Yuri Luzhkov, 60, a hyper-popular politician in
his own city and a man of seemingly boundless energies, barely
conceals his ambition to run the whole country once Mr. Yeltsin
has shuffled off into retirement.
And now, as Moscow prepares to celebrate its 850th birthday,
Mr. Luzhkov's campaign for the presidency is switching into high
gear, and becoming explicit.
"If, for some reason, there is no longer Yeltsin, and if
there are normal, fair elections, then I think that Yuri
Mikhailovich (Luzhkov) will be elected, and that will be a
blessing for the people," Valery Shantsev, Mr. Luzhkov's top
deputy, told a recent interviewer.
Thousands of foreign visitors and celebrities are expected
to converge on Moscow for the gala, week-long party in early
September. Huge sums have been spent to turn Moscow into a
spanking clean, glitzy and glamorous stage, swirling with happy
crowds and frenetic activity. 
Basking in the limelight will be Mayor Luzhkov, a short,
bald, bullet-headed man with a broad smile, athletic carriage and
a conveniently telegenic air of supreme confidence.
"He's been extraordinary as Mayor of Moscow, there's no
denying that," says Alexei Chesnakov, an analyst with the
independent Centre for Political Trends. "He's a builder, he's a
problem solver, he's a man who can talk to people."
Mr. Luzhkov's achievements will be on full display. These
include a vast $300-million cathedral built on the site of an
identical one destroyed by the Communists 60 years ago, a
cavernous underground shopping mall built beside the Kremlin
wall, hundreds of beautifully renovated pre-revolutionary palaces
and historic buildings, several hulking new monuments to Russian
Czars and war heroes, and thousands of miles of newly-paved
Moscow police have already begun rounding up the city's
estimated 50,000 homeless children, dumping them into squalid
holding tanks or deporting them to far-off towns. The city's
teeming population of prostitutes are being swept off downtown
boulevards and banished to the suburbs. Beggars, gypsies and
impoverished refugees are marched onto trains and told not to
"Nothing can be allowed to spoil the image of post-Soviet
Moscow as a place where the economy is booming, people are
satisfied and public order prevails," says Mr. Chesnakov. 
"Luzhkov's message to the whole country is: 'Look, I did
this for Moscow, and I can do it for you too'," he says.
While much of Russia has traced a downward spiral of
economic collapse, poverty and despair over the past six years,
Moscow has at least partially managed to buck the trend. The city
centre has the glow of commercial bustle and is jammed with
traffic, new offices and luxury apartments are construction, the
streets are cleaner than they've been in years and unemployment
is just a tenth the national average of 9 per cent.
Mr. Luzhkov, a former Soviet technocrat turned populist
politician, has governed Moscow with a ubiquitous, hands-on style
for the past five years. 
A conservative and moderate nationalist, he has carved out a
separate path for Moscow, often shunning the radical market
reforms decreed by the Kremlin. He noisily opposed the Russian
government's campaign to privatize most state property, and made
sure his office remained a big shareholder in most profitable
Moscow businesses and many foreign joint ventures.
Recently he demanded, and won, the right to keep Moscow out
of a fresh wave of social service reforms, which are expected to
triple the cost of housing and utilities for most Russians over
the next five years.
Muscovites clearly like his style. In mayoral elections last
year, Mr. Luzhkov was returned with a staggering 91 per cent of
the vote -- an almost miraculous event in Russia's usually
fractious politics.
But despite his undeniable popularity, some in Moscow are
leery of Mr. Luzhkov's formula for success.
"Basically Luzhkov is Moscow's Godfather," says an
independent analyst who asked not to be named. "He has his hand
in everything and a piece of all the action. Everyone who wants
to do business in Moscow pays tribute to Luzhkov. And the mayor
uses some of the proceeds to build monuments, fix the roads, pay
the teachers and cover the veterans' pensions.
"But it's not a free and open system. It's a kind of
criminal state paternalism. It works as long as everyone keeps
his mouth shut and knows his place," he says.
Always careful to avoid crossing President Yeltsin -- who is
notoriously sensitive to rivalry -- Mr. Luzhkov has vigorously
denied having presidential ambitions while at the same time
labouring to build what can only be a big-time political
launching pad.
This month the Moscow government inaugurated a new Luzhkov-
controlled television network, Centre-TV, which will be
broadcasting nationwide by next year. His life has recently been
the subject of a laudatory film, clearly aimed at raising the
Moscow mayor's profile in Russia's deep provinces -- where
elections are won or lost.
But despite the showcase Moscow can provide and the
undoubted power of the money-and-media machine he is building,
Mr. Luzhkov will have a hard time overcoming the sharp distrust
of all those Russians who don't enjoy the blessings of Moscow
There are even some who suspect that Mr. Luzhkov's Moscow is
a hothouse economy that prospers at the expense of far-flung
regions. Almost 80 per cent of Russia's financial resources are
concentrated in the capital city, along with all the leading
banks and corporations, and most foreign investment begins and
ends there. 
"It's hard to talk about solving Russia's problems by
applying the solutions used in Moscow, because Moscow exists in a
totally different universe from the rest of the country," says
Sergei Oznobychev, an analyst at the independent Institute of
Strategic Assessments.
"Luzhkov will have trouble convincing most Russians that
he's serious about helping them unless he's willing to abolish
some of Moscow's privileges. And if he does that, he'll lose his
political base in the Moscow elite," he says.
"He's an energetic man, an effective politician, and he has
Moscow in the palm of his hand. But that's a very long way from
winning national power."


From: "max smetannikov" <>
Organization: Bloomberg News Washington D.C.
Date: Tue, 19 Aug 1997 12:53:52 GMT-0500
Subject: US Diplomat Hits a Woman

David and all the readers:
Anybody knows more on this?

MOSCOW, Aug 19 (Interfax-Moscow) - A U.S. diplomat has
seriously injured a woman in a car accident in Moscow, the City
Law Enforcement Department told Interfax Tuesday. The car, an
Isuzu Trooper driven by Second Secretary of the U.S. Embassy 
Matthew Bryza, 33, hit an unidentified woman near house 13 Ul.
Panferova, the Southwestern precinct, at 10:00 p.m. Moscow time
Monday, police have reported. The woman, about 30 years old, was
taken to hospital with a serious head injury. She is in a coma.


Date: Tue, 19 Aug 1997 18:36:12 +0400 (WSU DST)
From: (Renfrey Clarke)

#By Renfrey Clarke
#MOSCOW - For American aid agencies in the post-Soviet world,
these are trying times. In April, a scandal erupted when two US
economic advisers in Moscow were accused of using their positions
with the Harvard Institute for International Development for
personal gain. Then early in August the United States Agency for
International Development (USAID) accused a Russian collaborator
body, the Institute for a Law-Based Economy, of making off with
$500,000 worth of US-purchased office equipment.
#None of these reports can have been altogether surprising to
officials and activists of Russia's trade unions. Since the days
of perestroika the US government, working through quasi-
independent aid bodies and the main US labour federation, the
AFL-CIO, has spent millions of dollars trying to fashion a new
Russian labour movement. Of the absurdities and abuses that the
media are now reporting in other aid programs, there are few that
do not have some parallel in the experience of Russian workers
over the years with the labour emissaries from across the
#It is true that not everything in this collaboration has been
negative. The contradictions of US foreign policy can sometimes,
if rarely and briefly, rebound to workers' benefit. And if little
good can be said of the US intervention in the Russian labour
movement during the first half of the 1990s, an extensive house-
cleaning in the AFL-CIO since 1995 has meant that the joint work
in the most recent years has been relatively useful.
#When envoys of the US labour movement first contacted Soviet
mineworker activists following the great strikes on Soviet
coalfields in the summer of 1989, these direct links were an
absolute novelty for the Soviet workers concerned. The US unions,
by contrast, had carried on activity outside American borders for
more than 40 years. Today's International Affairs Department
(IAD) of the AFL-CIO traces its history back to the opening years
of the Cold War.
#The fact that the American trade unions carried out activity
abroad did not mean that these operations were in the interests
of workers. Until the 1970s, the IAD was funded by the Central
Intelligence Agency. Part of its brief was to optimise the labour
environment in which US corporations operated abroad. Right-wing
labour organisations in many countries were subsidised or if
necessary, set up from scratch. Militant trends were sabotaged
using a broad array of ``dirty tricks''.
#In the mid-1970s the Church Committee hearings in the US
Congress exposed abuses by the CIA, and opened the lid on the the
agency's work with the AFL-CIO. Funding for the IAD was then
rerouted through USAID, and later also the National Endowment for
Democracy (NED). The ultimate source of the money, however,
remained the US government. By the 1990s about US$40 million a
year was being channelled through four quasi-independent
institutes: the American Institute for Free Labor Development,
which ran USAID and NED programs in Latin America; the Free Trade
Union Institute (FTUI), which conducted them in Eastern Europe;
and similar bodies in Asia and Africa.
#In April 1992 an office of the FTUI was opened in Moscow. Over
the next few years several million dollars were spent on setting
up and maintaining a whole network of research, information and
organisational structures. Late 1992 saw the appearance of the
first issue of ``the all-Russian newspaper of social partnership
<I>Delo<D>'', funded and supported by the FTUI. An ambitious
trade union education initiative was in place by June the
following year.
#A paradox of FTUI's activity in Russia during these years was
that the organisation deliberately avoided contacts with the
great bulk of the country's trade union movement. The AFL-CIO
leadership had always shunned the Soviet trade unions, ostensibly
on the basis that these were not real workers' organisations.
When the ``traditional'' unions refashioned themselves into the
Federation of Independent Trade Unions of Russia (FNPR), the IAD
chiefs refused to accept that anything important had changed.
#Instead, the FTUI's representatives focused exclusively on the
newly-established ``free'' trade unions. These had been set up
for the most part by militants following labour struggles in
various sectors, especially the coal industry. The new unions
were supplied by the FTUI with office equipment, training, and
other help.
#Ultimately, the FTUI's choice of targets for its aid-giving had
little to do with the legitimacy of the new unions as workers'
organisations, and much to do with their politics. The members of
the ``free'' unions were broadly anti-communist, identifying the
Communist Party (or its surviving fragments) with the anti-worker
repressions of the past. The support of these workers for the new
Yeltsin regime tended to be conditional and guarded, but this did
not prevent the FTUI from identifying the new unionism with the
government and its program of restoring capitalism. ``The AFL-CIO
is giving its solidarity and support to those independent trade
unions which are consistently defending the course of the
reforms," declared the sub-head on a March 1993 interview in
<I>Delo<D> with the then head of the FTUI's Moscow office, Tom
#The FTUI's efforts to help prepare Russia for US investors were
impeded by the fact that the Russian economy in 1992 and 1993 was
in a process of headlong collapse. Nevertheless, a coal industry
project named Partners in Economic Reform was launched, with US
coal firms among the sponsors. The purpose of this initiative was
described in its registration document as ``aiding in the
reconstruction of the centralized and state-controlled coal-
mining industry''; in other words, the goal was to assist in
bringing the industry out from beneath state control and
privatising it.
#For its efforts and money in Russia during these years, the FTUI
eventually had little to show. The newspaper <I>Delo<D> made no
significant impact. Meanwhile, the ``free'' trade unions failed
to thrive, remaining tiny compared with the FNPR. Part of the
reason was that the FTUI, wanting conservative, pro-regime
unions, avoided encouraging them to democratise their internal
structures. Also, the political support pledged by most of the
new unions for the government and its ``reforms'' had little
appeal for the mass of workers.
#Unable to function on their tiny dues base, and without the
FNPR's income from property accumulated during the Soviet era,
the ``free'' unions depended heavily on funds from Western
sources. Competition for these grants heightened rivalries
between union leaders. With a key role in directing the flow of
money, FTUI employees used their positions to interfere crudely
in internal union affairs; by 1994 these practices were drawing
sharp protests from union chiefs.
#Developments in the US eventually brought the early period of
the AFL-CIO's activity in Russia to a close. At the 1995 AFL-CIO
convention, a reform slate headed by John Sweeney won the
leadership. Sweeney and his supporters presaged a break with the
Cold War perspectives of the past, and pledged to link up with
unionists in other countries in order to thwart the efforts of
multinational corporations to cut jobs and drive down wage
#The politico-economic logic that had driven the FTUI's work in
Russia since 1992 - of seeking to build right-wing trade unions
under strong US influence, and through them, to promote US
investment - was now in serious question. At the same time, US
government budget cuts were curtailing the funds available
through USAID and NED for the AFL-CIO's international programs.
#Over the past two years the FTUI's operations in Russia have
changed dramatically. The flow of grants coming into the country
has been severely cut, forcing the FTUI to shed many activities
that were not viewed as central. As a result, the newspaper
<I>Delo<D> is no more, and the FTUI's more deliberate efforts to
multiply the number of ``free'' trade unions - the source of some
of the worst frictions of the past - have been abandoned.
#Talking to <I>Green Left Weekly,<D> the FTUI's present Moscow
director Irene Stevenson stated that her organisation's work is
now focused heavily on education (using mainly Russian
instructors), on the defence of workers' rights, and on news
gathering and dissemination. A further priority has been
developing the legal aid resources available to unions.
#The FTUI's assistance to the Russian labour movement remains
concentrated almost exclusively on the ``free'' trade unions. But
according to Stevenson, this is no longer because of the
traditional anathematisation of the FNPR, but simply because the
FNPR has its own education, legal aid and other structures, and
has less need of outside help. ``We're here to assist
activists,'' Stevenson argues, indicating that their affiliation
is no longer viewed as important. ``Russia needs strong trade
unions,'' she maintains, ``and if anyone can get a victory for a
worker, that's good.''
#For millions of trade unionists in Russia, the crucial issue of
the past few years has been the failure by the government to
force enterprises to pay wages on time - or indeed, to meet its
own wage bills. As a matter of necessity, the FTUI has had to
take support for Yeltsin out of its institutional shop-window.
The organisation has not endorsed the FNPR's consciously
political strategy of calling periodic mass protests centred on
the wage payments issue. Instead, it has concentrated on
educating unionists about the various avenues - often neglected
by Russian unions - that can be used to force specific
enterprises to pay up. In most cases, Stevenson notes, Russian
courts will rule in favour of workers who sue for their wages.
But she admits that forcing the executive authorities to
implement these rulings is extraordinarily difficult.
#In their present form, the FTUI's programs in Russia are at
least modestly useful to the country's labour movement. But the
contradictions are monumental. Most fundamentally, the source of
the money is still the US government, which has never needed
strong and effective trade unions in the US, Russia, or anywhere
#If the continuation of funding is simply an oversight, the
grants are likely to stop quite soon. More likely, the US
authorities regard the FTUI programs in Russia as a kind of
``sleeper'' operation. If this is the case, the help the FTUI
provides for building the Russian labour movement is being
tolerated as part of the cost of maintaining contacts and
building credibility against the day when the movement explodes
into a serious struggle to defend workers' interests.
#At that point, the pressure will become intense for the FTUI to
switch to consistently serving its paymasters. That demand will
pose a fundamental challenge not only to the staff of the FTUI,
but also to the leaders of the AFL-CIO.


Date: Sun, 17 Aug 1997 15:48:53 +0300
From: matt <>
Organization: The St Petersburg Times
Subject: Kremlin Power Struggle


I've only recently been catching up on my Johnson List reading and was
intrigued by the MK July 14 article by Alexander Tumanov and Steve
Kreyn, "Secret Battle: Anatoly Chubais vs. Boris Yeltsin."

What I was wondering is, Has anyone among your readers ever heard of
this British public relations company Tim Bell (which the authors say
has received money from U.S. banks to clean up Chubais' image)? The
article says Tim Bell is "credited with the successful organizatoin of
the election campaigns of M. Thatcher and Clinton." Or has anyone ever
heard of this Nick Tvil, the supposed close friend of former president
George Bush?

This MK article seems pretty outlandish, but just out of curiousity I'm
asking ...

Matt Bivens
The St. Petersburg Times


Date: Tue, 19 Aug 1997 11:20:11 +0100 (BST)
From: Peter Duncan <>
Subject: Threat to SSEES staff

Message from Pete Duncan, Acting President of SSEES AUT

As a result of the financial crisis facing the School of 
Slavonic and East European Studies, University of London, 
seven members of the academic staff have been asked to
take voluntary early retirement. The Director, Professor 
Michael Branch, has sent them all a letter saying that
their posts "can longer be sustained" [sic]. 

The staff affected are as follows:

Daniel Abondolo (Hungarian)
Jim Dingley (Ukrainian)
Martin McCauley (Politics)
Diana Myers (Russian)
Dusan Puvacic (Serbian and Croatian)
Peter Sherwood (Hungarian)
David Short (Czech and Slovak)

This list includes some of the most well-known figures in
their fields. One was highlighted in the RAE, and another is 
responsible for one of the largest externally funded projects 
in the School.

The Director has applied to HEFCE (the Higher Education
Funding Council for England) for restructuring funds, part
of which would be intended to compensate those taking early
retirement. How much he will succeed in getting remains
to be seen. Whether the sums offered in compensation
will be acceptable is another question.

Five of the members of the staff, who are in the Department of East 
European Languages and Culture (EELC), have been told 
that their posts will end because of 
the opening of a language unit in 
the Department of East European Languages and Culture. 
This is defended by reference to the report of Ulrich 
Kratz of SOAS which was commissioned by the Director. In 
reality, however, Dr Kratz stated that, " strengthen 
research active units, staff who see it as their main vocation 
to contribute to the teaching of a newly designed degree 
programme and not to research, might be located in a 
language teaching unit yet to be created." There was no 
suggestion that staff would have their contracts terminated 
or that teaching in the unit should be divorced from 
research. He also said that the unit should "include teachers 
from the Russian Department." 

The remaining two members of staff (Dr Myers and Dr McCauley) were told
that their posts would terminate following scrutiny of the work of their
department (Russian and Social Sciences, respectively). Who conducted this
scrutiny and what this scrutiny consisted of is unknown. Moreover, it has
become clear that the 7 July meeting of the School's Strategic Issues
Management Group (SIG), which decided that the early retirement letters
should be sent out, were not told to whom the letters were going to be
sent. In the SIG minutes for 7 July, there is no reference to anyone other
than the members of EELC being targeted. The implication is that the
selection of the seven colleagues was decided by the Director and a small
number of other people. Staff are concerned that the implementation of all
this is being pushed through in the summer vacation, without discussion in
the School. AUT wrote to the Director asking that the meetings of 7 July
which took some of these decisions be postponed, but he went ahead with

It is intended that the teaching in the language unit will be 
done by part-time staff. A dangerous precedent is being set 
where full-time academic staff may be dismissed and 
replaced by others employed much more cheaply, as has 
been occurring in further education. This would have the 
effect of demoralising existing members of staff and 
lowering teaching standards. Today the teachers of East 
European languages have been selected; but the same could 
be done to teachers of Russian History or East European 
Politics. What is happening now is a threat to each member 
of staff.

It seems that the questioning of some members of staff in 
May about their research plans was not a genuine attempt to 
raise the research activity of the School, but was intended to 
push them towards accepting early retirement.The costs of 
past and current mistakes, by those senior managers with 
responsibility for the budget, should not be borne by the 
other academic, academic-related, and clerical staff of the 
School. AUT is trying to ensure 

*that there are no compulsory redundancies;
*that nobody is dismissed unfairly;
*that all early retirements are genuinely voluntary; and
*that all who leave the employment of the School receive 
fair compensation.

I would be grateful for support for those under 
threat of losing their jobs. 

Thank you for your attention.

Pete Duncan, Acting President, SSEES AUT
0171-637 4934 ext 4056
18 August 1997


From: (Alan Fahnestock)
Date: Sun, 17 Aug 1997 02:27:58 -0400 (EDT)
Subject: ILBE office-equipment scandal

David, this seems to be a bit of a tempest in a teapot. Considerable
experience in Russia, importing large wads of equipment for the
telecommunications industry, suggests to me that these bright boys may have a
point that the USAID folks aren't picking up on: if, indeed, the office
equipment in question was imported to the ILBE, a Russian entity, and entered
in its books (its '"balans"), then there's little question but what they have
to maintain control over it until it can be transferred to another entity in
the legally and administratively prescribed manner. Otherwise, they are in a
world of hurt when the tax cops come calling: tangibles that simply up and
evaporates are not not the thing at all. 

I'm not suggesting that the ILBE is strictly on the up-and-up --- haven't a
clue, and flitting with the stuff without more fanfare was, at least,
impolitic. But what evidence I can glean from all the foofaraw seems to
indicate that USAID isn't paying attention to the laws of the country they
are fooling around in. This is not altogether surprising: otherwise savvy
business people get hung up on this kind of thing every day over there,
importing stuff in a manner calculated to avoid customs duties without fully
understanding the ramifications of the transaction. On the other hand, USAID
looks quite sufficiently idiotic, as a general proposition, without adding a
judgment for libel to its rap sheet.


Russia's Nemstov raps media tycoon Berezovsky
By Gareth Jones 
MOSCOW, Aug 19 (Reuter) - Liberal First Deputy Prime Minister Boris Nemtsov,
embroiled in a bitter row with Russia's financial barons, has taken a fresh
swipe at media tycoon Boris Berezovsky for combining business and state
In an interview carried in Tuesday's edition of the Moskovsky Komsomolets
newspaper, Nemtsov said Berezovsky was still heavily involved in money-making
despite belonging to Russia's policy-making Security Council. 
``It is impermissible to combine business with governing the state,'' said
Nemtsov, a charismatic reformer tipped as a future contender for the Russian
``Formally he does not engage in business but in fact that is the only thing
he does,'' Nemtsov said in his interview, also given to Radio Liberty and the
Russian weekly ``Argumenti i Fakti.'' 
Berezovsky has said he put aside his business interests when he joined the
Last month Nemtsov and Berezovsky clashed over the sell-off of a 25-percent
stake in the state telecoms giant Svyazinvest. 
Nemtsov hailed the $1.8-billion sale, saying the stake had gone to the
highest bidder, an international consortium led by the powerful Uneximbank.
Previously state assets often passed into the hands of a few favoured groups
at rock-bottom prices. 
Berezovsky and another magnate, Vladimir Gusinsky, fiercely attacked Nemtsov
through their media, charging that the auction had not been the open affair
he claimed it to be. 
Nemtsov said he considered Berezovsky a very intelligent man who had had a
generally positive influence on the course of events in breakaway Chechnya,
which falls partly under his sphere of responsibility in the Security
`` is bad when a person involved in business has privileges only
because he has direct access to the state leadership,'' he told Moskovsky
Berezovsky, Gusinsky and Uneximbank chief Vladimir Potanin -- a former
government minister -- were part of a group of seven businessmen who last
year decided to combine forces in support of President Boris Yeltsin's
successful re-election bid. 
But the row over Svyazinvest revealed that their marriage of convenience had
come to an end. Potanin's former allies now seem bent on preventing him
building too powerful an empire. 
Nemtsov, whose boyish good looks and lack of pomposity have given him high
popularity ratings, said the government's priority should be raising the
maximum amount of cash from privatisation to pay Russia's teachers, doctors
and soldiers, many of whom have to wait many months to be paid. 
He said it was absurd that the magnates should expect a reward for backing
Yeltsin's re-election. 
``They campaigned for Yeltsin not because they loved him but because they
would long since have disappeared from the picture if Yeltsin had lost,'' he
said, referring to the implications of a Communist victory for Russia's
fledgling private sector. 
Nemtsov, who is currently holidaying in the Black Sea resort of Sochi, said
there could be no return to the shadowy deals that have characterised much of
Russia's privatisation process. 
``A transition is now taking place from unlimited semi-bandit capitalism,
where the rules are dictated by those who are trying to take control of state
property, to a situation where the rules are dictated by the state,'' he
He praised his fellow-First Deputy Prime Minister Anatoly Chubais, architect
of Russia's privatisation programme, as a brilliant administrator and a
guarantor of market reforms. 
Nemtsov, whose wide range of duties include the energy sector, housing reform
and revamping the big Soviet-era state utilities, also said Yeltsin's support
was crucial for him. 
Asked about persistent speculation that Yeltsin -- who is barred from running
for a third term -- would adopt him as his heir-apparent, Nemtsov said: ``I
have a mass of problems to tackle. Why do you want to give me yet another?''


St. Petersburg Times
AUGUST 18-24, 1997 
Big Brains Bog Down in Hunt for the Russian Idea 
By Bronwyn McLaren

MOSCOW - More than a year ago, President Boris Yeltsin created a special 
commission of intellectuals to find a national idea that would unite all 
Russians. The commission has now delivered its enlightening conclusion: 
The idea itself is not the idea.
"World and historical experience has shown us that it is not just the 
national idea that is important, but the process of finding it, too," 
explained Georgy Satarov, a presidential adviser and member of the 
National Idea Commission.
Navel-gazing seemed the order of the day Friday as the commission 
unveiled not an idea, but a compilation of opinions and analyses, 
hinting that Russia's identity could be a long time in the making. 
The idea is to be an ideology or slogan that would instill in Russians 
both a sense of citizenship and a feel-good factor about their 
motherland. It should succeed the tsarist ideology "Orthodoxy, 
Autocracy, and Nationhood" and Communist slogans such as "Workers of the 
World Unite." This time around, in the spirit of democracy, it should be 
bereft of political overtones. 
"The national idea cannot be used as a political instrument," said 
Alexander Rubtsev of the commission. "It must be above politics."
Yeltsin launched the search for a Russian national idea shortly after 
his re-election in July 1996, establishing a commission of experts and 
giving them one year in which to come up with an acceptable statement. 
Yet more than a year later, nobody seems to know exactly what Russia's 
national idea will be or when it will be pronounced. In what could be 
construed as an attempt to detract attention from the fact that they are 
now beyond Yeltsin's deadline, the commission concentrated on the value 
of soul-searching and analysis, lauding the fact that the issue has 
entered the realm of public debate.
A broad range of conflicting ideas and opinions from across the 
political spectrum have been compiled in a publication nebulously titled 
"Russia in Search of an Idea." It was distributed to journalists Friday.
"This is important not just for society, but for those involved in 
analyzing the process," said Rubtsev.
With the help of an army of intellectuals - including sociologists, 
philosophers, linguists and historians - the group of experts has put 
together nine chapters covering almost every possible angle of the 
Russian national idea, including "The Birth of the Idea," "The 
Construction of the Idea" and "The Idea, Power, and Politics." 
Intellectuals will be able to spend angst-filled hours pondering the 
meaning of a particularly contemplative chapter: "The Ideology of 
Language and the Language of Ideology - A Linguistic Analysis." 
The publication also includes baffling tables and graphs including "The 
Distribution of Metaphors Related to the Understanding of the National 
Idea" and "The Correlation Between Intepretations and Estimates." 
And that's not all. Rubtsev said the opinions and insights of the 
regional press will be compiled and distributed in September. And an 
analysis of world and historical experience in the search for national 
identities is also in the pipeline. 
The issue of establishing a national identity comprised one of the most 
significant stages of Russian philosophical development from the 1830s 
to the 1870s, when the intelligentsia sought to establish a Russian 
identity distinct from that of the West.
The national idea has been denounced by some as a superfluous concept 
and has come under attack for contravening Russia's 1993 constitution, 
under which "no state or compulsory ideology can be established in 


Financial Times (UK)
August 19, 1997
[for personal use only]
Russia: A quiet revolution
By John Thornhill

Scarcely a day passes in Russia without a scandal erupting around the 
country's banks. They are accused of buying state assets on the cheap or 
mishandling budget funds, manipulating government officials or 
corrupting the media.
But amid the noise and fury, a quieter and potentially far more 
significant revolution is under way: some of Russia's 1,700 free- 
wheeling banks are mutating into recognisable financial intermediaries. 
The growing trend is to raise longer term capital from international 
investors and domestic depositors, and pump it into the local economy.
Sergei Aleksashenko, deputy chairman of the central bank, says the 
successful stabilisation of the economy signals the end of fast profits 
for Russia's banks; either they must adapt or die. "Many Russian banks 
lived and live like financial trading companies, making money 
speculating on the currency and government debt markets. But profits 
from these markets have sharply fallen away," he says.
"If banks do not find their place in the normal credit business, then 
they will have a very sad fate."
Already, Mr Aleksashenko's predictions are coming true. Like other 
post-communist transition economies, Russia is experiencing a banking 
crisis - albeit in slow-motion. Over the past two years, 450 banks have 
collapsed, including some large regional banks, such as 
Tveruniversalbank, which ranked as the 17th biggest. Local bankers 
expect a further wave of failures and mergers as the sprawling industry 
But a small group of powerful banks, including Oneximbank, SBS-Agro, and 
Alfa Bank, which have jointly raised $650m from eurobond issues over the 
past few weeks with the aim of making long-term industrial loans, are 
pointing the way to the industry's future.
"The time has come when banks must begin in earnest to do what banks 
everywhere are ordained to do - which is to lend money," wrote Tanya 
Azarchs, an analyst at Standard & Poor's, the international credit 
rating agency, in a recent report on the sector.
Oneximbank, which has recently attracted publicity for controversially 
buying government stakes in the Svyazinvest telecommunications company 
and the Norilsk Nickel metals group, is planning to invest long-term 
capital in developing its related industrial assets. In effect, 
Oneximbank is emerging as the treasury for the associated Interros 
financial industrial group, which controls 24 industrial companies with 
combined sales of $10bn.
Vladimir Potanin, head of Oneximbank, says the bank's chief aims will be 
to strengthen its capital base and broaden its branch network to service 
its diverse industrial assets. With access to capital from abroad, 
Oneximbank will be able to lengthen the maturity of its loans to up to 
three years.
At the current stage of Russia's economic development, Mr Potanin argues 
it is far safer to lend money to enterprises which the bank controls. 
Poor legal and accounting standards make unsecured third-party loans a 
risky business. "We want to be sure that the money we invest will be 
properly managed," he says.
But other banks are pursuing different strategies, arguing it is both 
dangerous and economically inefficient to be over-reliant on a captive 
client base. For example, Alfa Bank, founded to support the Alfa Group 
of companies, is busy disentangling itself from most of its related 
group businesses to strengthen its credibility as an independent 
corporate bank.
Mikhail Fridman, head of Alfa Group, says that being a pocket bank of a 
big financial-industrial group leads to excessive concentration of 
assets and risks, and leaves enormous opportunities begging elsewhere.
"We understand that to develop as a nationwide bank, a universal bank, 
we need to have more transparency for investors. We are therefore trying 
to develop the bank as an independent entity with an independent 
strategy. Now the relationship between the bank and the group is 
absolutely commercial," he says.
At present, Russia appears considerably underbanked - especially outside 
Moscow. The average bank has only two branches. As of mid-1996, 81 per 
cent of all loans extended by Russian banks were for less than one year. 
Total banking assets at the end of 1995 amounted to just $132bn, or 34 
per cent of gross domestic product. In the Czech Republic, for example, 
the comparable figure was 155 per cent.
SBS-Agro, which was formed last year from the merger of the Stolichny 
Savings Bank and Agroprombank, the state agricultural bank, believes its 
future lies in retail banking. At the moment this sector is dominated by 
Sberbank, the state savings bank, which boasts 34,000 branches and holds 
70 per cent of all retail deposits.
But Andrei Lykov, first deputy chairman, argues the vast, unwieldy 
Sberbank is vulnerable to competition. He says SBS-Agro now has 1,400 
branches covering 62 of Russia's 89 regions, and expects to win 10 per 
cent of the retail deposit market by the end of the year.
The bank is offering a growing range of consumer products, such as 
credit cards, savings accounts, and insurance services to attract retail 
depositors. "Our population may have between $20bn to $40bn of money 
under their mattresses and if we can attract even part of that money, we 
will have a very stable and independent funding base," he says.
In contrast to Oneximbank and Alfa, SBS-Agro is concentrating on loans 
to the small to medium-sized business sector, where competition is less 
intense and the demand for efficient banking services is all the 
"One year in Russia is like 10 years abroad," Mr Lykov says. "The 
situation changes very fast. But it is clear that bankers should now 
specialise in banking."



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