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Johnson's Russia List


August 25, 1997  
This Date's Issues: 1144 1146 

Johnson's Russia List
25 August 1997

[Note from David Johnson:
1. Jiri Melich (Carleton University): A Russian Idea.
2. Renfrey Clarke in Moscow: The real McFaul?
3. Albert Weeks: Reply to Specter in the NYTimes.
4. St. Petersburg Times: Mark Whitehouse, ILBE To Return 
U.S. Property.

5. St. Petersburg Times: Mark Whitehouse, ILBE Lashes Back 
With Tax Fraud Claims.

6. St. Petersburg Times: Mark Whitehouse, Government Auditors 

7. The Times (UK): Richard Beeston, Moscow paints over purges 
of Stalin.

8. Christian Science Monitor: Marshall Ingwerson, The Next 
Great Game: Players Jostle To Pipe Home a Share of the Oil Prize. 

9. St. Petersburg Times: Robert Coalson, No News Is Good News 
in Dog Days of Russian August.

10. AP: Ukraine Marks Independence.]


Date: Sun, 24 Aug 1997 09:58:36 -0400 (EDT)
From: (Jiri S. Melich)
Subject: A Russian Idea

To the question of a Russian Idea. Any leitmotif of a national life is
partly "invented" and partly derived from a traditional narrative.
Although we may always question what a national Idea really means in the
process of integration and future developments of a particular nation. Do
the French have their Grand Idea? or do Americans have it (is it the
American Dream)?; has the German Idea changed so dramatically after WWII?
In the same category of question marks would fit a land-based Russian Idea
suggested by John Danzer. If there is something unique about the
Russians, it is (no matter that the concept is rather outmoded) the
Russian soul. It is complex and difficult to pin down, it is full of
contradictions, and (to cut the story short) unfortunately characterized
by a high degree of unpredictability. So if the Russian search for their
Idea, they might find it in working to make their Soul more predictable in
a sense of more consistency with its own positive contents.


Date: Mon, 25 Aug 1997 00:57:59 +0400 (WSU DST)
From: (Renfrey Clarke)
Subject: The real McFaul?
>From Renfrey Clarke in Moscow. The real McFaul?

At last, I too have had a bite from Michael McFaul! The excuse
to reply, and in the process to expand on a variety of points, is too
good to miss. Anyone who has to work within the limits of a tabloid
page (minus space for a graphic) inevitably leaves many telling
arguments and illustrations on the electronic equivalent of the
cutting-room floor.
For a start, I would not say that I "regret the collapse of
`communism'". What I regret is the failure of the reform effort of
the late 1980s (which I do not see as having been automatically
doomed), and the fact that it was succeeded by counterrevolution. I
can also report that Boris Kagarlitsky is bemused to learn that in
1990 he was promoting privatisation. Perhaps the problem here is that
the device of irony is beyond Dr McFaul's ken.
Nor have I ever viewed the AFL-CIO as an enemy of labour. The
AFL-CIO for decades was an undemocratic, deeply bureaucratised
organisation whose leadership offered no serious resistance while the
proportion of the US workforce that was organised in trade unions
fell by two thirds. The Meaney and Kirkland leaderships were
obstacles to the defence of the rights of American workers. But it
never followed that the AFL-CIO itself was such an obstacle, or that
the correct move for defenders of labour was to split from the AFL-
CIO, organise in opposition to it, denounce it and in general seek
its demise.
To decide that a labour organisation is irredeemably degenerate,
and that efforts to reform it are futile, is a very serious step that
should be taken only after long and strenuous efforts to reform it
have failed. This was the thinking of the anti-Kirkland forces in the
AFL-CIO, and their attitude has now been vindicated. But this wasn't
the approach the Kirkland leadership took when it sent its emissaries
to Russia in 1992. I'm not so devoted an archivist as to have filed
away the utterances of Tom Bradley during the years when he headed
the FTUI office in Moscow, but I certainly recall the thrust of what
he was saying; it left no opening for collaboration with the FNPR or
with the organisations, at any level, that made it up. According to
Bradley, the only approach one could take to the FNPR was to try to
bypass and replace it.
Was Bradley right? I have no wish to prettify the FNPR under
Shmakov, any more than the AFL-CIO under Kirkland. Nevertheless I
would argue that the Russian labour movement, including unions
affiliated to the FNPR, has not stood still in the years since Dr
McFaul found himself talking to a common front of union and
management. Behind the shifts is the logic of capitalism, as
directors have turned to attacking the workforce which they used to
patronise. Workers have increasingly lost faith that directors who
fail to pay wages are genuinely unable to find the money, and union
leaders are being forced to react to this skepticism. Also, union
leaders especially at the enterprise level are steadily being
replaced, and people with long-standing ties to management are giving
way to others whose friendships and loyalties are quite different.
The process of reform is obviously very uneven. If top leaders
of the FNPR insist they support it, there are many complaints of
middle-level leaders who resist change. I've no doubt that there are
many areas of the FNPR where progress has been negligible. But there
are also such relatively impressive FNPR unions as Rosugleprof, whose
record to my way of thinking has not been inferior to that of the
"free" Independent Union of Miners. So long as the rank and file
pressures on union officials continue to expand, the future movement
can only be in one direction.
Dr McFaul concedes that the FNPR "may have some future
potential". I'm more optimistic, though not wildly so. But even if we
limit ourselves to Dr McFaul's position, and acknowledge that today's
FNPR isn't quite a write-off, that still means that the AFL-CIO was
wrong in the early 1990s when it refused to admit any possibility of
collaborating with the FNPR or of trying to aid the processes of
reform and democratisation within it.
Whether it was correct or not for shop-floor activists in the
early 1990s to set up independent unions in opposition to the FNPR
bodies - and my instinct is to believe that most of these actions
were too hasty - the non-FNPR unions have generally become real
workers' organisations, and one has to relate to them as such. Their
need for help from trade unions in the West has been much more
crucial than in the case of the FNPR. For the FTUI to have
concentrated on assisting them was arguably a reasonable choice. But
the FTUI's work should not have been concentrated on the "free"
unions to the exclusion taking an open, collaborative attitude to
their FNPR counterparts.
Meanwhile, it should not be assumed that the AFL-CIO's
International Affairs Department in the days of Kirkland was out to
serve the interests of workers, except perhaps as these interests
appeared in the contorted reasoning of IAD officials. If the
structures of the IAD were formally part of the AFL-CIO, the money
came from the US government via bodies that especially in the case of
the National Endowment for Democracy were closely identified with the
Cold War right. This situation, I submit, was clearly reflected in
the FTUI under Bradley.
Whatever nodding concessions were made to the concept of
workers' stock ownership, under Bradley the interests of workers were
considered to include placing ownership of the bulk of the economy in
private hands, in circumstances where decisive control could not have
failed to finish up with a small layer of large shareholders who were
very often the existing enterprise directors. Workers' interests were
also assumed to include unconditional support for the Yeltsin
administration. The contradictions of this stance were illustrated at
an early stage when one of the best-organised and most
democratically-run of the non-FNPR unions, the Federation of Trade
Unions of Air Traffic Controllers, tried to mount a strike against
intolerable work conditions. This attempt was quickly smashed by the
government using savage legal reprisals, in an episode reminiscent of
Reagan and PATCO.
As Dr McFaul points out, the FTUI has never been in the big
league of wasters of USAID funds. But to the extent that the FTUI's
purpose under Kirkland and Bradley was to round up labour
organisations and herd them after the Yeltsin administration, I am
inclined to lament that more of its budget did not go on expensive
hotels. As it was, the FTUI during its early years had its share of
gravely misconceived programs, and of employees who drew comfortable
incomes by Russian standards while making no real contribution to the
development of Russian trade unionism. (Many of the details are set
out in a 1995 paper by Kirill Buketov, one of the activists of the
KAS-KOR Labour Information Centre. Buketov in this paper also
explores several particularly sharp crises in the relations between
FTUI and various trade unions during 1993 and 1994).
Fortunately, the AFL-CIO and IAD now have new leaderships, and
Bradley no longer ministers to the Russian labour movement. The FTUI
is in many ways a transformed organisation; the primary credit
belongs to Irene Stevenson, for whom my admiration is sincere. But if
I see the FTUI in the recent period as having played a basically
positive and useful role, I am still struck by the ambiguities of its
I now regret having culled from last week's article a sentence
pointing out that the FTUI as a foreign organisation in Russia was
extremely limited in the political stances it could take; this
excision put the fact that the FTUI has not endorsed the FNPR's Days
of Action in an inappropriately critical light. Irene Stevenson when
I interviewed her made the point that it is necessary to bring
pressure on delinquent employers from all possible directions, and I
agree completely. Logically, the pressure on these employers (and on
the worst of them, the government) must include political pressure
exerted by mass public mobilisations. Indeed, the ability of the
labour movement to stage mass protests becomes absolutely critical
when economic depression means that the strike weapon is often
The FTUI has put a great deal of work into helping unions bring
court cases against delinquent employers. This task is absolutely
necessary. The fact that the FNPR has given little priority to it
reflects both routinism and sloth within the FNPR's structures, and
continuing psychological resistance on the part of many union
officials to entering into confrontation with enterprise directors
even where the latter are flagrantly robbing workers. But court
actions cannot take the place of mass political protests. As
Stevenson points out, winning court cases against employers tends to
be the easy part; much more difficult is having the decisions
implemented, when the state structures for doing this are almost non-
existent and the will among officials is lacking. The path leads back
ineluctably to the necessity for workers to enforce the recognition
of their rights through public protest action.
The fact that the FNPR has called periodic days of protest by no
means proves that it is a healthy labour federation. Top leaders have
often seemed ambivalent about wanting real mass participation. The
efforts made within the enterprises to convince workers to turn out
have rarely been vigorous, and the mobilisations have often been
marred by poor organising. But the concept that wage justice has to
be won by workers themselves, in broad protest actions, has at least
received the leadership's imprimatur. An idea that will be critically
important for further advances has been implanted.
What does Dr McFaul have to say about this? "I applaud FTUI for
not endorsing the FNPR's strategy, as this so-called political
strategy is at best a poor substitute and at worst a deceptive
facsimile of a real strategy for defending workers' rights in
So what's "a real strategy"? For workers to stay on the job, and
pray for a wage pay-out? Or in a lawless country, to put all their
faith in the law? Or perhaps they should trust in Yeltsin,
privatisation, and the market to defend their rights? In the last of
these suggestions, I suspect, we may be seeing the real McFaul.


Date: Sun, 24 Aug 1997 13:11:16 -0400
From: Albert Weeks <>
Subject: Reply to Specter in the NYTimes

Permit this Russian specialist--for shame, with an
interest in military and security affairs--to comment on NYTimes Moscow
correspondent Michael Specter's 20/20 hindsight (JRL, Aug. 24) as concerns
Russian (Soviet) military strength during the Cold War. Which he alleges,
retrospectively, was all but nonexistent. 
First, he, and the selection of people Specter quotes to advance
his tendentious point--e.g., Jonathan Sanders, Marshall Shulman, and for
that matter novelist LeCarre--all happen to share a common outlook toward
that era of the "two apes on a tread-mill." To them, the superpower
confrontation was phony and unnecessary through and through. It was a
confrontation egged on, as Strobe Talbott would say and did say in his
notorious encomium to Gorbachev in Time Magazine seven years ago, mostly by
stubborn "cold warriors" frothing at the mouth in the U.S. of A. Too, in
his book, ghost-written or not, the Canada-born ABC-news anchor, Peter
Jennings, minced no words in blaming the Cold War exclusively on America.
Fine, it's a free country and no "McCarthyism" is meant here, so
let's not indulge in "CarthyMc" epithets at this rival notion. Just notice
how, in typical NYTimes fashion, the dice get loaded by the choice of
notable-quotables in Specter's little analysis. An all-too-familiar device.
Indeed, just as during the Cold War, especially in the Reagan phase,
everything the Pentagon or various military analysts here or in the UK
reported about Soviet military power was universally ignored, pooh-poohed,
or pilloried in much of the mainstream media and, of course, universally in
So, what else is new? This type of "liberal" ideology on matters
military was peddled by them only a little more subtly than by the late
Tom Gervasi, author of the infamous Black Mass spoof of DoD's annual
"Soviet Military Power." In this mid-'80s book, Gervasi, thanks to Random
House's Vintage Press, mocked with tendentious statistics the calculations
made of Soviet military power by Western intelligence, the Pentagon,
independent analysts, et al. But alas! Gervasi's cretanized stats on the
Soviet military look bizarre now that the lay public has learned just how
much the Soviets spent in resources and human capital on arms, and the
imposing arsenal they succeeded in building into a sizable threat to NATO
and the U.S. coupled to their offencist military doctrine and strategy (as
admitted by them). In the light of today's readily-available facts,
Gervasi's book makes for light reading...
The point is that the Soviet threat was real, the danger clear and
present. As, incidentally, any number of ex-Soviet memoirists themselves
have admitted. Among them, Gen. Dmitri Volkogonov, Arbatov Sr., KGB senior
officer Oleg Kalugin together with super-spy Pavel Sudoplatov, who wrote
candidly in "Special Tasks": "Only military strength...could ensure us a
superpower role. The idea of propagating world Communist revolution was an
ideological screen to hide our desire for world domination." Sudoplatov
reproduced a quote from Stalin of the same expansionist nature.
In a nutshell, the threat was, as Marxists like to say, "concrete,"
and can be easily documented today as it was then. Outclassing them and
challenging them--as, say, with the Strategic Defense Initiative or on the
ground with GLCMs and Pershings deployed by NATO--made sense, as, in fact,
any number of ex-Soviets themselves concur. Some current, held-over
revisionism to the contrary, this response, moreover, helped bring down the
USSR by virtually "spending it into the grave." Ignoring this while viewing
the deplorable state of the Russian military today and projecting that
backwards to, say, 1979 is myopic and nothing more than a semantical trick.
Finally, one would think that post-Communist revisionism is a bit
redundant after a whole generation of Cold War revisionism la Kolko,
Alperovitz, Schlesinger, Hough, Churchward, Lane, and on and on--to whom
even the era of Leonid Brezhnev was depicted as "democratic,"
"progressive," and "peace-oriented." 
If any of this criticism seems unfair to anyone, "don't blame me."
Let them read Walter Lacqueur's essay in Commentary, July 1988. There,
ample illustrations of the aforesaid's and other's misguided revisionism
are cited and discussed. 


St. Petersburg Times
AUGUST 25-31, 1997
ILBE To Return U.S. Property 
By Mark Whitehouse

MOSCOW - The United States government and the Russian non-profit 
Institute for a Law-Based Economy have reached preliminary agreement in 
a public dispute over the rights to property left over from a canceled 
U.S.-funded aid project.
ILBE Director Sergei Shishkin said at a news conference Wednesday that 
his institute would probably start returning the U.S. property next 
week. Movers working for ILBE removed computers, books and office 
equipment earlier this month from a central Moscow office where it had 
worked on U.S.-funded economic reform projects with the Harvard 
Institute for International Development, another U.S. government 
"At the beginning of next week the process of transferring the property 
will begin," said Shishkin. "We are ready to return everything to the 
last computer, to the last chair."
In return, he said, the U.S. government has agreed to publicly apologize 
for accusing the ILBE of theft. The U.S. embassy issued a statement last 
week saying that the institute took the equipment despite repeated 
warnings, but Shishkin has said that he received no such warnings until 
after the fact.
It was not clear, however, exactly when or in what form such an apology 
would appear. A U.S. Embassy official said that the two sides had not 
agreed on the text of a statement, and that there was no guarantee that 
it would be an apology. "The U.S. government will have a statement once 
the equipment has been returned," the official said, pointing out that 
the United States had never specifically used the word "theft." 


St. Petersburg Times
AUGUST 25-31, 1997
ILBE Lashes Back With Tax Fraud Claims 
By Mark Whitehouse

MOSCOW - The head of the Institute for a Law-Based Economy, under fire 
for allegedly stealing U.S. government property, struck back Friday by 
charging a U.S. aid contractor linked to Harvard University with 
avoiding Russian taxes.
ILBE Director Sergei Shishkin said at a news conference that the Harvard 
Institute for International Development, which founded his institute and 
was its biggest partner, had violated Russian tax law by failing to 
register as a legal entity and to account for computers, desks, tables 
and other property. He declined to estimate the equipment's total value.
"There is a lot of such property," he said. "If Harvard used it, then it 
must put it on tax records in Russia." 
Harvard institute officials dismissed the accusation, saying that as an 
aid contractor providing technical assistance to Russia, it has been 
exempted from local taxes. Under an April 1992 agreement between the 
U.S. and Russian governments, "commodities, supplies or other property 
provided or utilized in connection with the United States assistance 
programs" cannot be taxed. 
"That's a big thing [U.S. Agency for International Development 
officials] work on in any country," said David Weiler, a senior Harvard 
institute employee in Russia. "They don't pay the local taxes."
Shishkin also said USAID owed ILBE employees $170,000 for services 
rendered. A USAID official said an agreement had already been reached on 
paying the debt.
ILBE has been at loggerheads with the Harvard institute and USAID over 
the rights to books and office equipment left over from Harvard projects 
that are now being closed down. Last weekend, movers working for ILBE 
took a large amount of equipment from a central Moscow office where the 
two institutes had worked together on economic and legal reform 
The U.S. government has said Shishkin removed the property, which it 
claims is worth $500,000, despite repeated warnings not to. Shishkin has 
said the property is worth a lot less, he was never officially warned 
not to take it and he had advised the U.S. government well in advance of 
his intention to move to a nearby office.
Several days after the incident, USAID suspended an $890,000 grant to 
Relations between ILBE and Harvard have been deteriorating since May, 
when USAID accused two top Harvard advisers, Jonathan Hay and Andrei 
Shleifer, of using their positions for personal gain. In June, USAID 
canceled most of the Harvard institute's remaining economic reform 
projects in Russia.
On Friday, Shishkin showed a small group of foreign journalists 
documents to support his accusations of tax avoidance. Among them was 
his proposal, dated July 18, under which nearly all of the equipment 
that Harvard and the ILBE had shared would go to the Russian institute. 
Shishkin said in the proposal, addressed to USAID Moscow head Janet 
Ballantyne and other aid officials, that much of the shared equipment 
was on ILBE's balance sheet. If the institute were to transfer that 
property to USAID or to other aid contractors, he wrote, a 40-percent 
tax would have to be paid. "Since ILBE currently does not have the money 
required to pay those taxes, it has to receive the relevant amount in 
advance," he said.
One of the Harvard institute's reasons for setting up ILBE had been to 
put the U.S. property on the Russian foundation's balance sheet and thus 
avoid responsibility for local taxes, Shishkin said. He estimated the 
property's present value at $86,000, but later added that Harvard had a 
lot of other equipment that hadn't been declared or taxed. 
Regarding the equipment on ILBE's balance sheet, Weiler countered that 
"Harvard did not dictate to ILBE how to treat that equipment." 
"If they put it on their balance sheet, that's the way they did their 
accounting," he said.
USAID declined Shishkin's proposal on the property and on Aug. 6 
approved a Harvard plan under which ILBE would get only about one-third 
of the equipment. 


St. Petersburg Times
AUGUST 25-31, 1997
Government Auditors Silenced 
By Mark Whitehouse

MOSCOW - The deputy head of Russia's independent Audit Chamber broke 
ranks Monday by saying that top government officials had illegally 
squandered billions of dollars in budgetary funds but that political 
pressure had thwarted his attempts to make details public.
Audit Chamber Deputy Chairman Yury Boldyrev said that in three cases 
over the past year, the chamber's governing collegium has hidden the 
complete results of major investigations involving top bureaucrats, 
contradicting the agency's stated role as an independent watchdog.
"It's already a tendency," he said. "I think the media and society 
should find a way to defend their rights. When we start to limit access 
to information ... we become a tool for political battles."
Boldyrev said the squelched results were from investigations into a 
bilateral Russian-American partnership center, the Defense Ministry and 
the National Sports Fund. He said that in each case, top government 
officials had improperly used money from the federal budget, but the 
prosecutor general had not acted on the chamber's recommendations to 
launch criminal cases.
The parliament created the Audit Chamber in 1994 to verify the proper 
use of government funds. 
Much like the U.S. General Accounting Office, the chamber is an 
independent watchdog and its findings are supposed to be made available 
to the general public. 
But there is one catch: The chamber's collegium, elected half by the 
State Duma and half by the Federation Council, can vote to quash 
According to Boldyrev, the collegium has fallen under the influence of 
the same officials whom the chamber is supposed to investigate. For 
example, Vladimir Panskov, who was finance minister at the time when 
much of the money was lost, now sits on the chamber's collegium.
In the case of the National Sports Fund, said Boldyrev, one auditor in 
the collegium voted to close the results because the media might not 
"comment correctly." 
Boldyrev said Monday the federal budget had lost a whopping $9 billion 
in 1995 under special tax privileges granted to the sports fund, which 
presided over billions of dollars in alcohol and tobacco imports. 
Among the responsible officials, he named President Boris Yeltsin, First 
Deputy Prime Minister Anatoly Chubais, former deputy finance minister 
Andrei Vavilov and former tax service deputy head Valery Kruglikov. 
Yeltsin signed the original decree granting the fund's exemptions in 
1993, but repealed it in early 1995 under pressure from the World Bank 
and the International Monetary Fund. Soon afterward, however, a separate 
resolution that effectively revived the exemptions until November 1995 
was signed by Chubais, Vavilov, Kruglikov and Shamil Tarpishchev, 
Yeltsin's tennis partner and then-head of the National Sports Fund.
"They are responsible for a loss of $9 billion," said Boldyrev. "That's 
only what we happened to find."
The sports fund issue has long been an embarrassment for the government, 
and experts agree that the privileges did result in big budgetary 
But World Bank economist Vladimir Drebentsov doubted Boldyrev's $9 
billion figure, which would exceed all the International Monetary Fund's 
credits to the Russian government.
"It's ridiculous," he said. "It's like him to make a mistake. Nine 
billion would be at that time about one-third of imports."
Drebentsov, who has studied the sports fund's exemptions and their 
effect on the budget, said that the World Bank's estimate was closer to 
$1 billion.
National Sports Fund head Boris Fyodorov defended his organization, 
saying several investigations by the Audit Chamber, the State Tax 
Inspectorate and the Finance Ministry had found no serious violations.
"He doesn't know how to count," said Fyodorov of Boldyrev, pointing out 
that estimates of losses to the federal budget did not take into account 
the fact that if the exemptions had not existed, the sports fund would 
have imported far less and subsequently paid less taxes.
Boldyrev came third in the first round of last year's gubernatorial 
elections in St. Petersburg, behind former mayor Anatoly Sobchak and 
eventual winner, Governor Vladimir Yakovlev. 


The Times (UK)
25 August 1997
[for personal use only]
Moscow paints over purges of Stalin 

AS MOSCOW races to beautify itself in time for next month's lavish 850th 
anniversary celebrations, one task still eludes the capital's diligent 
municipality how to erase the most evocative memory of Stalin's bloody 
purges from the city's skyline. 
Besides workmen completing the mayor's ambitious building projects, a 
small army of painters, plasterers and scaffolders has nearly completed 
restoration work on the infamous House on the Embankment. The giant 
1930s modernist apartment block across the river from the Kremlin has 
for generations served as the most prestigious residential address in 
Moscow. Although the building's depressing dark exterior is now covered 
in a fresh new coat of light grey paint, for many Muscovites terrible 
memories lie behind its walls. 
The building at Serafimovich Street was completed in 1931, under orders 
of the Bolshevik leadership, to house generals, party leaders and the 
cream of the scientific community. "Moscow had never seen anything like 
this building before," said Tamara Ter-Egiazaryan, a sprightly 
89-year-old and the last original inhabitant. "It was not only clean, 
new and ultra-modern for its day, but it was designed for communist 
life." The building, the first to have central heating, hot water and 
gas in the city, also boasted its own private shops, hairdresser, 
cinema, theatre and even an indoor tennis court, where high-ranking 
Communists could indulge in what their own party condemned as a 
bourgeois sport. 
But in the Stalin purges the party leadership suffered the worst. "I 
remember those days well. Sometimes they would take as many as five or 
six people a day from the building," said Mrs Ter-Egiazaryan, who lived 
there at the time with her young son. "You did not dare speak to anyone, 
particularly relatives of someone arrested." Lights would come on at 
night, she said, "then you would know that another poor soul had been 
led off". She has opened a small museum inside the building dedicated to 
the memory of the 600 residents who were persecuted by Stalin. 


Christian Science Monitor
August 25, 1997 
[for personal use only]
The Next Great Game: Players Jostle To Pipe Home a Share of the Oil Prize 
By Marshall Ingwerson, Staff writer of The Christian Science Monitor 

BAKU, AZERBAIJAN -- Tar clots the seashore, and the smell of petroleum 
wafts off the water.
The proud European architecture of the turn-of-the-century boom years 
may be crumbling and dirty, but now wind-blown Baku, in tiny Azerbaijan, 
has become a global pivot point, the hub of a new geopolitical wheel.
The dry, sagey hills here recall the Mediterranean coast of Greece or 
southern Italy. The Arabs conquered them in the 7th century and used the 
oil that bubbled out of the ground as a skin salve and a weapon of war.
By the 15th-century this was a Persian city, the world's first oil town, 
with more than 500 oil fields. Oil was collected in leather bags and 
carried by camel. The courtyards of medieval stone caravansaries, inns 
built for travelers on the Silk Road to China, now house some fine 
restaurants under fig-vine arbors.
By the turn of this century, the Russians had made Baku the leading oil 
producer in the world. The Rockefellers and the Swedish Nobel family 
made fortunes here. Hitler drove his armies unsuccessfully toward Baku 
in World War II hoping to capture fuel.

Pursuing the prize

But now big money has moved in from the United States, Britain, Italy, 
Norway, France, the Persian Gulf states, and - in the past year or so - 
Japan. Germany and Belgium joined the surge in late May. These new 
players are literally building pipelines to the West that will open the 
vast oil reserves of the Caspian Sea, through Azerbaijan, while 
bypassing the regional powers here: Russia and Iran.
Some American conservatives, including former Defense Secretary Caspar 
Weinberger, have argued that US access to Caspian oil is more 
significant to long-term US strategic interests than the expansion of 
Russia, to the north, has used characteristically forceful tactics to 
hold its position. Iran has worked hard for modest inroads. Turkey has 
moved in with small enterprises, but pervasively, like an army of ants. 
These players have battled for this turf for centuries.
Of the five Caspian states, Azerbaijan will certainly be the first to 
see a major field hooked up to a functioning pipeline and the spigot 
turned. A month or two from now, the first oil will flow from the Chirag 
oil field in the middle of the Caspian and begin filling the 
two-foot-wide, 117-mile pipe to the beach south of Baku, then travel 
around the Caucasus Mountains and across politically volatile southern 
Russia to the Black Sea ports.
Compared with the byzantine layers of Russian bureaucracy that have 
frustrated outside oil development, Azerbaijani bureaucracy moves on 
greased skids. "There's a real 'want-to' here," says James Tilley, 
president of one of the multinational oil consortia, in an American 
oil-country drawl.
No outside oil company has yet succeeded in the former Soviet Union, 
notes Peter Ryalls, vice president for operations at the Azerbaijan 
International Oil Consortium (AIOC), a 12-company, six-nation group that 
dominates here. "There are so many people around who don't want things 
to succeed."
But the Azerbaijanis, under the close control of President Heydar Aliev, 
have made business much more orderly and predictable.
Among the outsiders, competition for equipment and pipelines is intense, 
says Mr. Tilley. "There is oil here, so anywhere there's oil, there's 
going to be competition."
Russia may have hurt its position by playing too hard. "Russians want 
all oil to flow north [through Russia], says Azerbaijan's Foreign 
Minister Hasan Hasanov.
"They have made mistakes," says Turkish Ambassador to Azerbaijan Faruk 
Logoglu. "Old imperialistic methods are losers in our day and age."
They tried to force their will on Azerbaijan through hostile pressure, 
says a Western diplomat, "and they can see that they've shot themselves 
in the foot."
When Armenia occupied 20 percent of Azerbaijan, sending a million 
refugees into Azerbaijan territory, Russia and Iran sided with Armenia. 
A Russian official recently said Russia sent Armenia $1 billion in arms. 
Russia's motive, says Foreign Minister Hasanov, was to gain access to 
the region for its troops.
Then, to cut off any potential support from the south for the breakaway 
guerrillas in Chechnya, Russia closed its border with Azerbaijan. The 
result was that the Russians forced Azerbaijan to give up its long 
commercial links to the north and turned it to the West. Most damaging 
to the Russians, the AIOC - with Azerbaijan's official blessing - said 
that the pipeline route through Russia would only carry the first, early 
oil from Azerbaijani fields, and not even all of that. The big pipeline 
would travel straight west.
One of the longest-running diplomatic debates here is whether to treat 
the Caspian as a shared lake, beyond each country's coastal limit, or to 
divide it into territorial seas. Russia and Iran argue for shared 
development, which would give them veto power over questions such as 
pipeline routes. The Azerbaijanis are simply moving ahead as if the 
Caspian were a territorial sea, developing oil fields out to their 
boundary in the middle. On these questions, Russia's foreign policy and 
security establishment is at odds with its biggest oil company, Lukoil, 
which is joining the Azerbaijani consortia. The name of the new game in 
the Caspian is not imperial muscle but mutual benefit, says Ambassador 
Logoglu. "If Lukoil wins, everybody wins.
"I think there will be enough people in Russia who see this," he adds. 
"If so, Russian influence will increase. If not, it will continue to 
Azerbaijan plays a touchier game of cat and mouse with Iran. The Islamic 
Republic is furious over the inroads that the West, especially the 
United States, is making into the Caspian region through Baku. The 
presence of American companies - prohibited by US law from doing 
business with Iran - has shut Iran out of the largest oil consortia 
"Iran is pretty resentful of the pro-Western policy of Azerbaijan, says 
Foreign Minister Hasanov. Azerbaijani officials are even more concerned 
about the encroachment of fundamentalism. They cite Iranian television 
broadcasts from across the border and the opening of Persian-language 
schools as part of an effort to spread the Islamic revolution.
"Iran is trying to push the state out of its secular status," says Mr. 
Hasanov. There is no evidence that Iran is making headway here. The 
secularism of Turkey is the favored model.
Iran also sided with Russia on the most emotionally charged issue in 
Azerbaijan - Armenia's occupation of Azerbaijan's Nagorno-Karabakh 
region. A couple of millennia ago, Persian shahs used Armenia as a 
buffer against the Romans. Now Iran uses an alliance with Armenia to 
fight US and Turkish influence.
Angry about being shut out of oil consortia, Iran at one point all but 
closed down its border with Azerbaijan and cut off electricity to an 
Azeri enclave. As with similar moves by Russia, this only strengthened 
Azerbaijan's trade ties to the West. But to deescalate the 
confrontation, President Aliev let the Iranians participate in a 
consortium developing the Shakh Deniz offshore field. On the other hand, 
he shut down the Iran-backed Islamic Party in Azerbaijan last year and 
arrested its leader.
Iran has other reasons to be edgy. The old territory of Azerbaijan was 
divided between Persia and Russia in 1828 - putting two-thirds of the 
Azerbaijanis in modern Iran. Now that "northern" Azerbaijan is 
independent, Iran is ever watchful against separatist sentiment 
spreading to its own Azerbaijani provinces - where a quarter of Iran's 
population lives.

Volume to pick up fast

Offshore oil wealth has not yet transformed the economy of this small, 
post-Soviet country. But this is also one of the least-privatized, 
least-reformed economies of the former Soviet Union. And many people, 
says a Western diplomat, hope oil wealth will permit them to preserve 
their Soviet ways.
On the south side of Baku, old rigs stand in wasted acres of oily ponds. 
Occasionally, a Soviet oil pipe rusts through and dumps thousands of 
barrels before it can be patched.
The Soviet-trained engineers of the state oil company here, a partner in 
all the consortia, don't believe that drilling a well that took them 
nine months can be done in three months, until it happens. Even then, 
acceptance is grudging, says Ryalls.
About an hour south of Baku, lanky Houstonian Wayne Wheeler directs the 
final stage of preparing the Sangachal Terminal, where the pipe from the 
Chirag One platform hits the beach. When the first well begins to 
produce, probably in September, it will take from 20 to 40 days for it 
to fill the 117-mile pipe to shore. It will take another week or two to 
fill the system at the terminal here, then the oil will travel north 
into Russia, though Chechnya to the Black Sea for tanker transport 
through the Bosporus and points west.
More wells and platforms will follow. By the end of 1998, another 
pipeline will join old and new segments to carry oil to the Black Sea 
south of Russia. Eventually, the consortia will build a third pipeline 
three times the size of the others.
"Ideally, the best route would be straight south through Iran," says Mr. 
Wheeler, "but we've got six American companies involved."


St. Petersburg Times
AUGUST 25-31, 1997
No News Is Good News in Dog Days of Russian August 
By Robert Coalson

AUGUST is supposed to be the myortvyi sezon (dead season) in Russia, 
when everyone is either v otpuske (on vacation) or na dache (at the 
dacha) or both. Nothing happens in Russia in August, right? Wrong. You 
could easily write a whole book about the important events in Russian 
culture that occurred in the second half of August.
On Aug. 26, 1812, for instance, the Borodinskoye srazheniye (the battle 
of Borodino) was fought, marking the beginning of the end for Napoleon. 
On Aug. 23, 1939, the infamous sovetsko-germanskii dogovor o nenapadenii 
(Soviet-German Non-Aggression Pact, better known in the West as the 
Molotov-Ribbentrop Pact) was signed, signaling the beginning of World 
War II. 
Exactly three years later, Aug. 23, 1942 saw the beginning of the 
Stalingradskaya bitva (the battle of Stalingrad), the beginning of the 
end for Adolf Hitler. 
In fact, the end of August, it seems, is a great time for endings and 
beginnings in Russia. Ballet greats Sergei Diaghilev and Mikhail Fokine 
both died then, as did writers Ivan Turgenev and Marina Tsvetayeva. 
Writers Lev Tolstoy, Alexei Tolstoy and Yuri Trifonov were all born, as 
was Tsar Ivan the Terrible. 
On Aug. 20, 1940, Lev Trotsky was murdered. Aug. 17, 1934 was a 
particularly black day in the history of Russian culture, the opening of 
the first national congress of the newly created Soviet Union of 
Writers. Maxim Gorky's opening address noted, "My vystupayem v epokhu 
vseobshchego otchayaniya burzhuazii" (We are entering into the age of 
total despair of the bourgeoisie). 
I don't think the bourgeoisie trembled much at these words, but within a 
few years Isaak Babel, Boris Pilnyak and many, many other great Russian 
writers were dead.
Another speaker at the congress declared, "Nash vek - eto utro novoi 
ery" (Our age is the dawn of a new era). 
Aug. 20, 1968 marked the end of the Prazhskaya vesna (Prague Spring), 
when the tanks of the Warsaw Pact put an end to Czechoslovakia's attempt 
to create sotsializm s chelovecheskim litsom (socialism with a human 
By Aug. 24, Leonid Brezhnev could cynically declare, "Nashi tovarishchi 
soobshchayut iz Pragi, chto tam gospodstvuet spokoistvie" (Our comrades 
report from Prague that all is quiet there).
Of course, the freshest August anniversary is that of the August 1991 
attempted coup that ended the Soviet Union and marked the beginning of 
yet another new era in Russian history. 
As Mikhail Gorbachev boarded his plane back to Moscow after the coup had 
collapsed, he noted, "My letim v novuyu epokhu" (We are flying into a 
new era). 
Now, just six years later, the beginning of this "new era" is virtually 
forgotten. Maybe Russia has just had too many endings and beginnings 
Maybe it is easier just to think of August as the myortvyi sezon and let 
it go at that. Maybe no news really is good news. 


Ukraine Marks Independence 
By Steve Gutterman 
August 24, 1997
DONUZLAV NAVAL BASE, Ukraine (AP) -- Ukraine celebrated the sixth 
anniversary of its declaration of independence from Moscow on Sunday 
with a military exercise that reflects its complex relationship with 
Russia and its tightening ties with the West. 
Ukraine's navy chief, Rear Adm. Mikhaylo Yezhel, announced the official 
opening of Sea Breeze '97, which brought two U.S. ships to Crimea and 
unloaded more than 100 American sailors and Marines onto shore -- an 
unprecedented U.S. presence on the mostly ethnic Russian peninsula. 
Also participating in the peacekeeping exercise, which is similar to 
others Ukraine has hosted since joining NATO's partnership for peace 
program in 1994, are Turkey, Romania, Bulgaria and Georgia. 
Ukraine has cultivated close relations with both Russia and the West. In 
recent months, President Leonid Kuchma signed a charter tightening ties 
with NATO and a pact establishing friendly relations with Russia. 
No military activities took place Sunday. Instead, sailors drank beer or 
competed in arm wrestling matches, tugs-of-war and other tests of 
The peaceful nature of Sunday's activities was a bid to appease Russia, 
which refused last year to participate in Sea Breeze because initial 
plans had U.S. Marines making an amphibious landing on Crimea. 
In hope of persuading Russia to take part, Ukraine and the United States 
changed the plans for Sea Breeze, moving the land-based portion of the 
exercise off Crimea. 
Kuchma, who attended an air show near the capital Sunday, said the naval 
exercises will help develop Ukraine's navy and promote peace in the 
The American ships -- the landing boat USS Ponce and the destroyer 
Spruance -- are the first U.S. Navy craft to visit Crimea since the 
collapse of the Soviet Union in 1991. 
The naval exercise, which gets under way when the ships set sail 
Tuesday, is to continue through Aug. 31. 
Russia added Crimea to its empire in the 18th century, but Kremlin 
leader Nikita Khrushchev gave it to Soviet Ukraine in 1954, and it 
became part of an independent Ukraine in 1991. 
Many in Russia and in Crimea itself want the peninsula back under 
Kremlin rule. 
Opening the exercise, the rear admiral repeated what Kuchma and other 
officials have been stressing for months -- that Ukraine is not 
currently planning to join any military alliance. 
But for Russian sympathizers on Crimea and opposition politicians in 
Kiev, the presence of NATO forces on the peninsula is a symbol of U.S. 
expansion eastward and a sign the government is severing ties with 
Slavic neighbor Russia in favor of the West. Opposition leaders sought 
unsuccessfully this summer to ban Sea Breeze and have called for closer 
cooperation with Russia. 
About 40 people, many of them not from Crimea, protested Sunday in the 
town near the base and some carried signs saying, ``NATO out of 
Crimean separatists have planned a bigger protest march Monday against 
Sea Breeze and Ukraine's NATO ties. 
``I don't care about independence. It would be better if Crimea were in 
Russia,'' said Yelena Bardacheva, 34, who said she lost her job with the 
Ukrainian navy during cutbacks this year. ``There was work for everybody 



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