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Johnson's Russia List


August  29, 1997  
This Date's Issues: 1155 1156  

Johnson's Russia List
29 August 1997

[Note from David Johnson:
1. Stanislav Menshikov: Reddaway reprinted in Moscow.
2. Journal of Commerce: John Helmer, Defying Kremlin reforms, 
region thrives with command economy.

3. Matt Bivens (editor, St. Petersburg Times): editorial
on Channel 5 affair.


5. Interfax: Committee Chairman says Yeltsin's resignation 

6. Nezavisimaya Gazeta: Maxim Boiko Chose Not to Ruin the 

7. Nevskoe Vremya (St. Petersburg): The Military-Industrial 
Complex Is on Its Death Bed.

8. Sankt-Peterburgskye Vedomosti: Uneximbank Has Connections and 
Influence Everywhere.

9. Journal of Commerce: Deborah Anne Palmieri, Russia's 
productive summer.

10. Obshchaya Gazeta: "Between Oligarchy and Dictatorship.
What Sort of Country Could We Wind Up in Tomorrow?" 

11. Moskovskiy Komsomolets: Premier's Aide Cited on Korzhakov 

12. NTV: Yeltsin Photograph Exhibition Opens in St. Petersburg.]


Date: Fri, 29 Aug 1997 00:41:18 +0200
From: Stanislav Menshikov <>
Subject: Reddaway reprinted in Moscow

Dear David:

A funny thing happened to Peter Reddaway's article on Chubais in the
Washington Post (JRL #1142) on the way to Moscow. 

Editors of some Moscow newspapers got copies of the article even
before WP printed it because it first appeared in "New Statesman" on August
21. After sitting on it for a few days, the "Nezavisimaya gazeta" finally
printed excerpts from it on August 27 under the heading "Washington Says
Beware of Anatoly Chubais". More important is the commentary printed after
these quotes. It runs as follows:

"The article in the Washington Post is very unexpected. Until now,
Anatoly Chubais was considered an undisputed favorite in the US. His agency
received technical assistance for Russian privatisation, the IMF granted
credits, and private investors invested their money into shares of Russian
"If the Washington Post is more than the personal view of a
university professor (and, knowing the influence of the Washington paper, we
believe that such big articles are not published there "by chance"), then it
means that the West has radically changed its attitude towards the most well
known Russian reformer. It changed its attitude and chose to inform the US
establishment as to the new trends in Washington's Russian policy. If all
this is true, then after this publication one is to expect practical steps
of the US government in that direction.
"The article in the Washington Post is not the first occasion when
the western press prints materials in which Russian political figures are
given very unexpected characteristics. Let us recall the scandalous
publication in Le Monde of the $5 billion of Viktor Chernomyrdin, the
estimates in Forbes of the personal wealth of the richest Russian
businessmen, the revelations in the Financial Times of the dominance in
our country of the "seven bankers", articles in other publications about
connections between the Russian elite and the criminal world.
"It is astonishing that such publications are inevitably becoming an
important factor in the domestic political life of Russia. Thus, a small
item in Le Monde (thereafter refuted) closely missed creating a government
crisis in our country. There is a solid basis to conclude that western media
are used by Russian and foreign politicians and businessmen for their own
private purposes. The western press in Russia is becoming a serious
instrument of exerting influence.
(Paragraph deleted about alleged attempts of the Financial Times to
undercut "Gazprom's" efforts to secure loans abroad).
"It is not excluded that the article in Washington Post will also
be used by Russian politicians - opponents of Anatoly Chubais. But we shall
risk making a controversial conclusion that that publication first and
foremost benefits the first vice-premier himself. Peter Reddaway is
absolutely right in indicating that Chubais is one of the most unpopular
government officials with the Russian people, and that this unpopularity is
not in the last degree earned by his close ties to the West, primarily to
the US. Reddaway also even claims that Chubais is a key figure in the
American policy in Moscow. And it is obvious that by publicly breaking off
from his former patrons Chubais can expect growing trust in him of
rank-and-file voters. All the necessary prerequisites have been created for
such a decisive step. As Reddaway rightly indicates, Chubais is now
supported by certain influential Russian banks and that the support from the
West is not as important for him any longer".

Let me leave the JRL gurus in wonder as to whether the
"Nezavisimaya" was defending Chubais from Reddaway or putting a carefully
camouflaged mine under the first vice-premier. Or perhaps the "Nezavisimaya"
was simply hedging against an "adequate" response from Mr. Chubais whose
duties include overseeing the media. If so, then why print the article, at
all? The safer way would be to keep mum, following the lead of most other
Russian newspapers, as well as the "International Herald Tribune" which
normally reprints all articles of interest from the "Post" but in this case
preferred to reprint a piece on Tobacco instead of Reddaway. Chubais is
certainly of less interest to the readers than smoking.

The next funny thing was that the very next day the same
"Nezavisimaya" printed Reddaway's article IN FULL appending only a short
caption this time around: "This is certainly one of the indications that
London and Washington intend to change their priorities as to which
political forces they support in Russia". No defense of Chubais this time.
Simply the intention of the US to sack him. 

What happened after the first publication in "Nezavisinaya"? The
feeling in Moscow is that Mr. Berezovsky who helps finance the NG was
displeased with its previous comments on Reddaway's article and asked the
paper to correct its obvious slip. But where was Mr. Berezovsky in the
previous couple of days? Perhaps he should travel less, and watch his paper
more closely.


Journal of Commerce
29 August 1997
[for personal use only]
Defying Kremlin reforms, region thrives with command economy 

MOSCOW -- A region that has largely defied Boris Yeltsin's economic 
reforms has produced the highest living standard for its residents, 
according to an American economist working in Russia.
Robert McIntyre, a professor at Bowdoin College in Maine, said reforms 
in three highly touted regions -- Moscow, Tyumen, in the center of 
Siberia's oil fields, and Nizhny Novgorod, whose governor, Boris 
Nemtsov, was appointed First Deputy Prime Minister in March -- haven't 
been the success stories they are reputed to be.
Rather, he said, a far higher standard of living prevails in Ulyanovsk, 
a region some 400 miles southeast of Moscow. He reached that conclusion 
by dividing government-compiled figures for average wages by the cost of 
the minimum consumer budget.
Mr. McIntyre, who is on a Fulbright fellowship to teach in Russian 
universities, said Ulyanovsk has proved the success of a reform model 
diametrically opposed to the one the president and his advisers have 
been pursuing since 1991.
Ulyanovsk, writes Mr. McIntyre in a new academic study, resisted 
pressure from the Kremlin, creating "what was in effect a country within 
a country."
Controls were enforced over local farm producers to prevent food from 
leaving the region until local needs were satisfied. Price rationing was 
introduced over bread, meat, sugar and other basics, in combination with 
free-market sales. Wholesale and retail distribution networks were 
policed to prevent criminal takeover. Local taxation funded welfare 
payments and subsidies. A type of regional mortgage was invented to 
stimulate local housing construction.
Measuring money income, food prices and real income in regions 
throughout Russia in May 1996, Mr. McIntyre found Ulyanovsk was 39% 
better off than Nizhny Novgorod. Moscow and Tyumen are acknowledged as 
"high-income islands." But according to Mr. McIntyre, this is not 
attributable to the type of price and privatization policies advocated 
by reformers like Mr. Nemtsov.
The Ulyanovsk model has been criticized in the Russian and foreign press 
as reactionary opposition to the market, but it has been popular among 
the locals. Their support has protected Yury Goryachev, the regional 
Communist Party boss since 1990. He has resisted several Kremlin 
attempts to remove him. 
Mr. Yeltsin, on the other hand, has fared poorly in Ulyanovsk. In the 
first round of last year's presidential election, the Communist Party 
candidate, Gennady Zyuganov, won twice as many votes as the president. 
In the second round, Mr. Zyuganov took 56.3%, making Ulyanovsk a bastion 
of the opposition.
One of the keys to Ulyanovsk's successful economic transition, Mr. 
McIntyre said, is that local regulation of the market prevented Mafia 
penetration that has occurred almost everywhere else. "Rather than being 
'anti-market,' (the Ulyanovsk policy makers) take seriously the 
institutional requirements for the successful functioning of markets. 
Because criminalization couldn't develop and entrench itself, markets 
are better able to function now," he said in an interview.
The World Bank recently came to a similar conclusion after surveying 
market reforms in 69 countries.
In a report just issued, the bank said that corruption and 
criminalization, especially in Russia, are destroying the credibility of 
government, sabotaging reform and retarding economic growth. Russia 
scored among the worst of the 69 countries surveyed on measures of 
corruption, insecurity, and lawlessness. 


Date: Thu, 28 Aug 1997 15:14:46 -0400

From: matt <> 
Subject: channel 5 

Here's our St. Petersburg Times editorial about Channel 5, which I had
more fun writing than I usually do with the editorial. [DJ: September 1st
Cheers, Matt Bivens

"First Deputy Prime Minister Boris Nemtsov met in the Russian White
House with the famous American actor Chuck Norris -- the former world
champion of karate and the man who plays the lead role in the popular
television series "Walker: Texas Ranger." After that 20-minute meeting,
Chuck Norris said that he had had "a great wish to meet one of the
leading young politicians of Russia." The actor noted that he was
"pleasantly surprised with the youth, competence and bravery of Boris
Nemtsov and had an interesting conversation with him, during which
Nemtsov shared some of his plans.""
-- Smena, Aug. 28

What a wonderful scene: Nemtsov, a leading member of a government
determined to hobble independent and high-quality television, meeting
with Norris, a leading beneficiary of that policy.
For proof that Russian television is across-the-board awful, one need
look no further than the popularity of the American television series
"Walker: Texas Ranger." (Or, as it is titled in Russian, "Big [Krutoi]
Walker: Texas-Style Justice.") This horrible, formulaic Chuck Norris
vehicle is a loser even among American audiences (who have rarely been
accused of being discerning viewers). Only in Russia, where the four
national television stations are a never-ending yawn, has "Walker" been
able to shine by comparison -- to the point that Norris' fame earns him
meetings with the reformer boy wonder.
One wonders which specific plans Nemtsov shared with Norris. Perhaps he
discussed the Kremlin plan to shut down St. Petersburg's Channel 5
television station -- reorganizing it so it will be an exclusively local
station firmly under the thumb of Governor Vladimir Yakovlev.
The thought of shutting down Channel 5 probably troubled Norris briefly
-- for even in a country of horrible television, Channel 5 was awful.
When switching over from one of Channel 5's painfully drawn-out,
on-the-scene reports from the Sixth International Russian Farm Equipment
Exhibit or from some obscure British detective theater or some woman
sitting in a chair reading Marina Tsvetayeva poems, "Walker" always
looked that much better. Could "Walker" still look good in a
post-Channel 5 world?
But never fear, Chuck: Channel 5's national network will now be given
over to a new television station called Culture. It promises to live up
to its name -- especially since no one seems clear on whether or how it
will be funded. Lots of reruns of circa 1985 performances of "Swan
Lake," obscure British detective theater, some woman sitting in a chair
reading Marina Tsvetayeva poems -- Texas-style justice will continue to
dominate the air waves.
Of course, if those young and brave reformers we hear so much of, or
their plodding bosses Viktor Chernomyrdin and Boris Yeltsin,
***really*** cared about better television, they'd be issuing licenses
by the dozens to start up lots of new TV stations. Of course, that would
make it harder to organize news blackouts of rival politicians like
Gennady Zyuganov, Alexander Lebed, Lev Rokhlin, Yury Boldyrev and
Grigory Yavlinksy. Better to stick with Big Walker and that
tried-and-true Kremlin-style Justice, and let the voters sit through a
few more years of poetry readings.


MOSCOW, AUGUST 28 (from RIA Novosti correspondent Oleg
Lebedev) -- Victor Mikhailov, federal Minister of Nuclear Power
Industry, met with Hans Blix, Director-General of the
International Atomic Energy Agency. Dominating their agenda was
an essential importance of international control of materials
produced as nuclear arms were dismantled.
As ministerial officers informed RIA, the conferees
recognised the necessity of further efforts to implement a
Tripartite Initiative launched in September 1996 as Messrs. Blix
and Mikhailov were negotiating with Hazel O'Leary, US Secretary
of Energy, to debate IAEA control of fission materials produced
from nuclear arms.
Addressing the April 1996 nuclear safety summit in Moscow,
President Boris Yeltsin stressed the importance of a nuclear
material depot in the Mayak production amalgamation, under
construction with US participation, which was to store close on
40 per cent of Russia's total arms plutonium stock.
Russia was intending to put the depot under IAEA control,
said the federal president as he expressed his hope that the
pattern would eventually spread to other countries.
Mr. Blix visited this crucial construction site yesterday.


Committee Chairman says Yeltsin's resignation possible
MOSCOW, Aug 28 (Interfax) - Chairman of the Russian
Duma's Security Committee Viktor Ilyukhin of the Communist
Party faction said at a press conference in Moscow Thursday
that the question of President Yeltsin's early resignation may
be raised. "The stake is being put on Chubais," he said.
"U.S. banks have allocated $4 million to a British
company which has received the order to create Chubais's new
image," he said.
He also said that CIA people and highly-placed experts in
organizing elections campaigns - the ones who were in Russia
during the 1996 presidential elections, have already arrived
in Moscow.
He argued that Russia is being run by Yeltsin's
entourage, not by Yeltsin himself.
He stated that the journalists arrested in Belarus were
"hostages to an adventurous policy pursued by the ORT leaders
and those who run this company and foot its bills." "It was an
open provocation aimed against the Belarussian-Russian Union,"
he said.
A so-called Moscow group has been set up in Moscow which,
jointly with the Belarussian Popular Front and a number of
foreign organizations, has drafted and is implementing a
program for discrediting Belarus and its president, he said.
He acquainted reporters with documents and videos which,
he said, provide proof "that the provocation on the border has
been planned and has far-reaching goals."
Noting that criminal proceedings against the ORT
journalists were legitimate, he urged the ORT leaders "not to
stir up tensions and ask the Belarussian leaders not to punish
the journalists too severely."
He expressed indignation that President Yeltsin, his team
and press secretary Yastrzhembsky are grossly interfering in
Belarus's internal affairs.
He also expressed surprise that "Yeltsin sent Foreign
Minister Yevgeny Primakov to Belarus yesterday to settle the
journalists' problem." "Nothing of the kind was done when
Chechen gunmen held NTV journalists for 100 days," he said.
"No one, including the presidential press secretary, said then
that Russia's geopolitical interests may be sacrificed to save
the lives of these journalists," Ilyukhin said.


>From Russia Today press summaries
Nezavisimaya Gazeta
28 August 1997
Maxim Boiko Chose Not to Ruin the Tradition
Two weeks after his appointment to the post of head of the State Property
Committee, Maxim Boiko submitted to the Duma the draft project for
privatization in Russia in 1998. 
The daily said the program, which lists 37 large state enterprises, was
prepared with the active participation of American consultants again. 
Formally, Boiko did not work on the project for selling off 30 trillion
rubles worth of state property, because it was developed before he was
However, Boiko has been one of the driving forces of Russian
privatization since 1992. In 1995, he authored a book in cooperation with
his American colleagues, Andrey Shleifer and Robert Vishni. They all worked
on the voucher privatization program in the early '90s. 
Shleifer worked as a consultant of the Federal Security Market Commission
until he was charged with abuse of his position for personal enrichment by
his American bosses. 
The daily wrote that the team of "young reformers" which Boiko belongs to
does not depend on American money any longer, but they need American advice
and expertise to maintain the extremely accelerated rate of privatization in
Now, the daily added, the rate is not being dictated by the West, but by
the real need of money for the Russian budget.
Boiko was appointed in place of Alfred Kokh, who resigned recently to start
up his own business. He has been linked with the reformist team of First
Deputy Prime Minister Anatoly Chubais. 


>From Russia Today press summaries
Nevskoe Vremya (St. Petersburg)
28 August 1997
The Military-Industrial Complex Is on Its Death Bed
St. Petersburg's industrial output is declining at a rate of 3 percent to
4 percent annually, according to reports from a Wednesday meeting between
the city Committee for Economics and Industrial Policy and Yakov Urinson,
deputy prime minister and economy minister.
Since the beginning of this year, 49,000 workers at industrial
enterprises have been laid off because few factories have orders. 
Sergei Petrov, the committee's first deputy, said many industrial
enterprises in St. Petersburg are lying on their death beds. The
military-industrial complex is the worst off. Just a few years ago their
situation was not that bad -- and they were in fact the pride of St.
Petersburg. The committee, however, said that now the military-industrial
complex awaits a 40 percent decrease in output this year. The average age of
the factory workers is a little above 50, and the committee members
expressed concern that in a few years there would be no one left to work in
these factories. 
Many industrial enterprises remain Soviet in spirit -- that is, they are not
cost-efficient and their leadership is not competent to run a company in a
free market. Few factory directors have any idea how to minimize costs, and
they expect the government to keep bailing them out, or providing tax and
customs privileges. Some factories, however, such as Izhorsky Works -- St.
Petersburg's largest industrial enterprise -- are making a successful
transition to the market economy. The firm, which manufacturers nuclear
reactors and equipment for the oil and gas industry, has posted profits for
the past several years, and the value of its stock has increased 800 percent
in the past year. 


>From Russia Today press summaries
Sankt-Peterburgskye Vedomosti
August 28, 1997
Uneximbank Has Connections and Influence Everywhere
Uneximbank has emerged as the country's leading private bank, not only in
terms of capital but in terms of popularity, said the daily.
After all the commotion this summer, there is hardly a person alive who
has not heard the name Uneximbank. Even the Western press has devoted a lot
of space to the bank. The Financial Times and the New York Times call it the
most influential financial-industrial group in Russia, and one that will
soon be able to compete with the leading American, German and Japanese
At the beginning of this year, Ueximbank only had assets of 21 trillion
rubles ($3.5 billion). But it also owns a large part of the Rossos
financial-industrial group, which in turn owns 24 companies that have a
sales volume of $10 billion annually.
One wonders, the daily wrote, how such a mighty financial industrial
concern was created while the Russian economy collapsed.
Uneximbank's head, Vladimir Potanin, had previously worked in the Soviet
Foreign Trade Ministry. In 1991, he created his own bank, the Amalgamated
Export-Import Bank, the name of which was eventually shortened to
Uneximbank. Using his contacts in the government, Potanin bought up shares
in the most profitable Russian companies, most of which were in oil and
non-ferrous metals.
Contacts are the key here, said the daily, and it is recognized that
there is no one in business as well connected as Potanin. 
While the true size of Russia's banks is not known because of the extent of
the shadow economy and massive tax evasion, Uneximbank is often ranked as
the country's largest private bank, and third or fourth largest bank
overall. The state-owned Sberbank is the largest. To conceal their true
worth, many banks and companies hold their assets in subsidiaries, primarily
located abroad. For instance, Uneximbank did not buy the recent 25 percent
share in telecom holding Svyazinvest outright. It did so through a
Cyprus-based company that it created specially for the deal. Also,
Uneximbank's leading contact is with First Deputy Prime Minister Anatoly
Chubais. They have a close relationship that is mutually beneficial.
Potanin wants to control the Russian world of business, and Chubais wants to
have that economic power serve the party of reform to defeat the opposition,
especially in the presidential elections in the year 2000. 


Journal of Commerce
29 August 1997
[for personal use only]
Guest Opinion
Russia's productive summer
Deborah Anne Palmieri is president and chief executive of the 
Russian-American Chamber of Commerce. 

By most counts, Russia has scored a large number of economic successes 
this summer. Is it by luck or good policy?
On the domestic front, things seemed to be going the right way. The 
income gap between Russia's rich and poor narrowed for the first time in 
five years. Industrial production, for the first time in six years, 
registered a slight increase (0.8%), primarily as a result of output by 
small firms and joint ventures. Those figures don't even take into 
consideration the shadow economy, which is estimated at minimally $129 
billion a year and takes in almost 50% of the country's economic 
And the list continues. The government made a dent in paying off pension 
arrears. The stock market continued to soar at a breakneck pace, 
privatization of the largest monopolies went as scheduled (albeit not 
without charges of controversy and mishandling) and Russia's foreign 
reserves increased from $15 billion in January to $23.8 billion by the 
end of the second quarter.
The trade surplus grew by $2.2 billion to $11 billion (although foreign 
trade turnover in general slightly decreased). President Yeltsin signed 
an important decree protecting the rights of investors in Russia's 
financial and stock markets. The government's anti-corruption campaign 
got off the ground.
Many Russian companies registered stunning performances. Gazprom made it 
to 146 on Fortune Magazine's Global 500 list on the world's largest 
companies, and was rated second on Business Week's list of 200 leading 
companies. Three Russians made Forbes richest people in the world list 
(Boris Berezovsky, Mikhail Khadorovsky and Vagit Alekperov).
And to America's surprise, Lukoil, Russia's largest oil company, 
christened the opening of its own gasoline station chain in Virginia, 
marking the first Russian filling station in the United States and first 
large-scale Russian investment in an American consumer retail market.
But three key events stand out above all others. First was Mr. Yeltsin's 
veto of a controversial law restricting religious freedom in Russia. 
Prior to the veto, the U.S. Congress voiced its strong opposition to the 
legislation and even attached release of its $200 million foreign aid 
package to Russia to its demise.
In addition, Mr. Yeltsin launched a complete overhaul of the Russian 
military, involving a massive scaling back, reorganization and reform of 
the armed forces. It is the most comprehensive restructuring and 
military overhaul in the history of Russia.
Finally, Mr. Yeltsin swallowed NATO expansion into Central Europe with 
an astonishing mildness. Russia simply held its breath, closed its eyes 
and barely uttered a cry as Poland, Hungary and the Czech Republic were 
nominated into the NATO family. Mr. Yeltsin's strategic decision not to 
force a confrontation may be based on the hope that the actual expansion 
will stumble before it is finalized.
On the foreign affairs front, Russia's performance was no less 
impressive. The Group of 7 largest economies at their Denver summit for 
the first time since 1975 included Russia as an equal participant. 
President Yeltsin stole the show with his statesmanlike demeanor, and 
his delegation displayed unexpected professionalism.
Russian foreign policy strategy clearly displayed an effort to reach out 
to its neighbors and regional strategic partners in order to foster 
political goodwill and enhance economic ties. Its display of 
neighborliness included overtures to Ukraine, Azerbaijan and other 
former Soviet republics and the signing of key cooperation agreements 
with Japan. On his visit to China, the Russian prime minister and Li 
Peng signed billions of dollars in trade and energy deals, including a 
$7 billion agreement to supply China with natural gas from Siberia and 
provide electricity and a gas pipeline.
All of this demonstrates that Russia is on the move, both at home and on 
the world's economic and political scene. But this time, its status is 
not founded on military might but on the basis of sound diplomacy and 
constructive regional policy. Clearly, the Russians are hoping the links 
with its neighbors will help accelerate Russia's recovery and establish 
vital long-term economic partnerships.
There is every reason to believe that this summer's trend will continue.
It's not luck that's produced these results; it's a combination of 
strong leadership with vision, good policy and political willpower. 
There is no doubt about Russia's resolve and capability to change, 
stabilize and forge a market economy.
In fact, this quick pace exceeds all expectations, even our own here in 


Paper Sees Russia Moving Toward Oligarchy 

Obshchaya Gazeta, No. 33
August 21-27, 1997
[translation for personal use only]
Unattributed article: "Between Oligarchy and Dictatorship.
What Sort of Country Could We Wind Up in Tomorrow?"

At one time the publication of the so- called "Version No. 1" in
Obshchaya Gazeta -- about a possible coup
-- aroused great discontent, especially at the top. The very
expediency of prognoses that stir up society was thrown into doubt. Why
upset the people for nothing? But Obshchaya Gazeta still believes that in
our unpredictable time, as people now love to say, when reality is capable
of offering nightmarish "surprises" like the Chechen war, it is better to
be ready for anything rather than to be ready for nothing. And we have no
right to hide from the reader a single hypothetical scenario of our future,
including the most cheerless ones. May God forfend that they do not come
By midsummer we were right on the verge of believing that some signs
of stability had finally appeared in the Russian economy, that the business
of reform was in the hands of energetic, young, experienced professionals,
and then the furor over the sale of Svyazinvest and Norilsk Nickel stocks
broke out, arousing alarm, vexation, and bewilderment in society. How does
one react to all of this? Having discussed the situation, Obshchaya
Gazeta's friends and advisers, its permanent constituency -- political
scientists, economists, lawyers, and thinking people, plain and simple, of
various professions who are close (or otherwise) to the newspaper -- whose
opinion is worth considering, failed to agree upon a unanimous position. 
Some feel that there is no cause for alarm, that everything is taking its
normal course, and what we see is the natural side-effects of market
reform. Yes, it seems that everything has already "melted away": Alfred
Kokh was forced to leave his post for having organized the sensational
auctions, after which the president himself uttered some strictly
moralistic phrases about Kokh's partiality to certain bankers. So the
situation is under control. Others, on the other hand, feel that the
"showdowns at the top" are not over, and that not only do they mark an
aggravation in the battle over property but also the alarming evolution of
the Russian political system. This point of view looks the least
consoling, but we have already said: It is better to be prepared for the
worst. The Russian people have lived through many illusions in recent
years, enough to last several generations.
Right now we are observing the sixth anniversary of the "August
revolution." This was long enough for us to have parted with our romantic
dreams. After the nomenklatura, freedom did not come; a new nomenklatura
is what came, a new oligarchy. Instead of the Politburo [we have] "rule by
the seven bankers." A rank-and-file individual sees neither a moral nor an
important political difference between the numerous carnivores biting away
at our former national wealth. Apart from his name and the numbers of his
bank accounts, the "bad" [Former Vice Premier Oleg] Soskovets is no
different from the "hope of democracy" [First Deputy Premier Anatoliy]
Chubays. This reaction is entirely understandable. But does this mean
that it is correct?
Our liberals are usually accused of having created nomenklatura- style
or official capitalism. The officials "appoint the capitalists," who, for
their part, pay the officials, and not just with sympathy. This is how an
oligarchy emerges. In essence this oligarchic system is parasitic and
temporary. It must develop into something, and fairly soon. But what?
It seems that today we have no choice between "good" and "bad" people,
between democracy and oligarchy, but there is a choice between "bad" and
"very bad," between an active oligarchy and a possible dictatorship. The
most difficult part is understanding where the real threat is coming from. 
The level of freedom that has been reached, our withered shrubs of
democracy -- who can stamp them out? Those traditionally considered as
possible dictators -- Communists, [LDPR leader Vladimir] Zhirinovskiy,
Aleksandr Lebed -- are already yesterday's men. Democracy, just like
revolution, is prepared to battle with the people whom it originally
proclaimed to be its enemies [as published]. That is why the enemies have
no real chances of winning, that is why they pose no threat. But
democracy, just like revolution, is powerless before those who are regarded
as its leaders and bosses. And they are the ones who, in certain
conditions, can turn democracy inside out, like a glove.
To assess the probability of such an outcome, let us try to recall the
1996 presidential campaign. It was then that their common state of
jeopardy united bankers who hated one another; it was then that the "ruleby
the seven bankers" evolved. It was then that mechanisms of precise control
over all the media -- from television to newspapers and magazines -- were
found. This was a successful testing of the methods of securing a victory
for the necessary candidate, without discarding relative democracy. Not
only was a president elected, but a ruling oligarchy was designed. Anatoliy
Chubays became the system's general designer.
Now we are witnessing the merciless and purposeful destruction of what
has been designed. The noise coming from the notorious Svyazinvest and
Norilsk Nickel auctions is the cracking of the system as it breaks into
pieces. Only a year later it is being destroyed by the same general
designer. Why? What will be built in the space that has been cleared?
The "rule by the seven bankers" is no more; there is one bank and
rivals are being carefully cleared out of its way. Like leaves that have
fallen during a storm, newspapers (Izvestiya, Komsomolskaya Pravda) are
being swept aside. Controlling interests were not just snatched in this or
that major company, but in entire crucial sectors of the Russian economy --
the fuel and energy complex, the mass media, and nonferrous metallurgy. 
The bank is conquering one strategic height after another, from which it is
easy to rule over the entire economy. Uneximbank is not turning itself
into a monopolist bank in the Russian economy; Uneximbank is being made one
such. The point of it all does not seem to be deriving super- revenues,
but something greater, that is worth risking your own reputation, stable
management, and even the good graces of the president.
Chubays is one of the few people in Russia who is capable of thinking
in terms of state interests. He designed the system to suit the election
of President Yeltsin. Now he will design a new system to suit the same
large-scale task: the election of the next president. This is the natural
conclusion that can be reached if one strips away the small episodes and
discerns the logic of events which is hidden in the commotion of the
Chubays cannot help but realise that he will not become the president
of Russia under any circumstances. This means that he is gambling on the
most popular politician today: [First Deputy Premier Boris] Nemtsov. But
the problem is that, to the ruling elite, Nemtsov is only one of the
possible, equally worthy candidates. Neither [Moscow Mayor Yuriy] Luzhkov,
nor [Premier Viktor] Chernomyrdin (for whom the year 2000 is definitely the
last frontier), nor the interest groups that stand behind them will even
think of deferentially getting out of the way, using the feathers on their
hats to sweep the dust away from [under the feet of] "Boris junior."
If Nemtsov and those who are promoting him want to win for sure, they
must behave more aggressively than they did during Yeltsin's campaign. 
First they need to win the preliminary elections -- elections in their own
party, among their own. And here they will not be able to do this without
resorting to harsh measures. No matter how popular Nemtsov might be, the
ruling elite will have to impose him by force. And there is only one way
of doing this: crush all the competing groups. Cut them off from the
media. Knock their financial base out from under them. Break their will. 
This is precisely what is being done, in what would seem to be such an
inconspicuous manner and so far away from the place of the future general
And this is already a step away from the "oligarchic freedom" and
toward dictatorship. The horizontal structure of the oligarchy is turning
into a vertical, Latin American model. An end must be put to the small
elements of free competition in the press and on the market.
The risk is, of course, great, but so is the potential gain. A gain
for the ringleaders of the game, naturally, and not for society. For
society this is, without a doubt, a bad scenario.


Premier's Aide Cited on Korzhakov Claims 

Moskovskiy Komsomolets
August 20, 1997
[translaton for personal use only]
Article by Mikhail Rostovskiy: "Kremlin Guard Thirsts For
Premier's Blood. Was Chernomyrdin a Conspirator?" -- passages
within slantlines printed in boldface

"Aleksandr Vasilyevich, we have to work out a strategy. We are
approaching a decisive period right now. If we are going to agree to some
sort of a dialogue with the Communists, then /it will be better to postpone
the election/" -- these words, spoken in April 1996, belong by no means to
some kind of Korzhakov minion. According to the former Kremlin guardsman,
the proposal to carry out an effective constitutional coup was made to him
by none other than... Russian Premier Viktor Chernomyrdin.
The former Kremlin "godfather's" book, which finally went on sale
early this week, turned out to be filled with more than just fairy tales
from the life of Boris Nikolayevich [Yeltsin]. Branded by all the friends
of the current regime as "vile rubbish," Korzhakov's work also contains
revelations capable of ruining the reputation of Russia's constitutional
heir to the throne, Premier Viktor Chernomyrdin.
...Russian Premier Viktor Chernomyrdin, ready to join the presidential
race, was doing everything he could to meet with the former all-powerful
gray cardinal of the Kremlin, Aleksandr Korzhakov, from as early as
mid-February of 1996. But, as Aleksandr Vasilyevich recalls, he
[Korzhakov] did everything he could to delay the moment of rendezvous. 
However, he writes, on 16 April the premier's massive figure almost
literally blocked the Kremlin guardsman's way out of the building of the
Vnukovo-2 government airport.
Viktor Chernomyrdin may have cause to regret more than once that on
that day he finally managed to get what he wanted. Because the lengthy
transcript of what the former Kremlin guardsman calls his superconfidential
conversation with the premier has now become public knowledge.

Let's Put Pressure on Yeltsin [subhead]

Judging from the transcript, the country's premier's initial response
to Yeltsin's head bodyguard's frank statement "I am in favor of canceling
the election," had been deathly silence.
However, after a pause Viktor Stepanovich had begun to question his
counterpart with interest about the details of the Kremlin's secret
negotiations with Communist leadership emissary Viktor Zorkaltsev. "He
came to me himself about organizing a meeting between Zyuganov and the
boss.... I set the Communists a tough condition: If they were ready to
discuss the idea of postponing the election, then let us have some concrete
proposals.... I felt that Zorkaltsev was terrified and wanted a peaceful
The premier had clearly been interested in what he heard. Initially,
Viktor Chernomyrdin had retorted: "So, they are serious." And had then
begun discussing with Korzhakov... /the details of the upcoming
constitutional coup/.
"Of course, we need to ban (the Communist Party) and think beyond
that. We certainly do not need an election. ...Of course, everyone will
agree.... Only the election should be postponed, not canceled.... So come
on, let's put on the pressure. In which case I will tell Boris
Nikolayevich right now....

"Korzhakov's People Checked Everyone" [subhead]

"Only in the fifth hour of the conversation did I understand why
Viktor Stepanovich had been so adamant about the meeting. He knew that the
operative materials concerning the financial abuses of his closest crony,
the director of the premier's secretariat, /Gennadiy Petelin/, had been
passed by the president's security service to the prosecutor's office" --
this is the statement with which Aleksandr Korzhakov prefaces the
transcript of his secret conversation with the head of the Russian Cabinet
of Ministers. The name of Tyumen native Gennadiy Vasilyevich Petelin says
absolutely nothing to the average citizen. At the same time, Petelin, 51,
carries no less influence in the White House than Aleksandr Korzhakov once
held in the Kremlin. Petelin and White House apparatus head Vladimir
Babichev determine what documents and which people reach the premier's
office. Ultimately Petelin is one of Viktor Chernomyrdin's few real friends
in the world of Russian politics. "There is no one I know as closely as
Petelin," Viktor Stepanovich himself had said in the conversation with
It is precisely this person whom Russia's then chief guardsman accused
of being corrupt. "A lot of your aides are not clean," he had stated to
the premier. Viktor Stepanovich had responded with a sense of foreboding: 
"I agree, that is probably so." And openly stated his willingness to
believe in his associate's guilt: "Let them check Petelin out. If they
find anything, I will get rid of him in two minutes."
...As was to be expected, the White House response to the latest
compromising material from Korzhakov has been close to repugnance. However,
in contrast to the Kremlin, there they have not allowed themselves to
simply brush aside the revelations by the former chief national guardsman. 
The head of the premier's secretariat, Gennadiy Petelin, immediately gave
an interview to MK [Moskovskiy Komsomolets].
MK: How do you assess Korzhakov's accusation?
Gennadiy Petelin: I categorically disagree with what Aleksandr
Vasilyevich wrote about financial abuses. When the book gets to me I will
decide what to do.
Moskovskiy Komsomolets: Did the premier bring any accusations against
you? After all, his words are quoted: "Let them check out Petelin. If
they find anything, I will get rid of him in two minutes."
Gennadiy Petelin GP: I myself did not know that.
Moskovskiy Komsomolets: Can it be said that this incident had no
effect on your work?
Gennadiy Petelin GP: Well, I know that they checked me out. They
checked out everyone they considered necessary. In principle, I did not
complain to anybody, because no one talked to me personally or interrogated
me about it. I had no need to specify whether or not my rights were being
Moskovskiy Komsomolets: There is still another point. What do you
think about Korzhakov's claims that the premier supported the idea of
canceling the presidential election?
Gennadiy Petelin GP: Well, I can neither confirm nor deny that. Again
you will have to ask the participants in the conversation. It is just that
I myself have not yet asked my boss. But I certainly will.


Yeltsin Photograph Exhibition Opens in St. Petersburg 

August 26, 1997
[translation for personal use only]
Video report from St. Petersburg by correspondent Andry Razin --
from the "Segodnya" newscast

[Razin] Every school pupil in the United States knows the American
President's cat and the colour of the US Secretary of State's favourite
dog. By contrast, in Russia only a narrow inner circle knows the family of
its best-known citizen, the President. St. Petersburg has become the first
Russian city to break this tradition. An exhibition of the work of
Yeltsin's private photographer, Dmitriy Donskoy, opened at the exhibition
center in the harbor today. The exhibition includes 180 photographs which
show a side of the Russian President's life which usually remains out of
range of photographic and video cameras.
In spite of the fact that many of the photographs exhibited here were
published in the President's election album, most of them are being shown
for the first time. In Donskoy's photographs Yeltsin comes across in
different ways: He can be tough, kind, or animated. He remains the
President at work, a family man at home, and a sportsman on a tennis court
or when out hunting.
[Dmitriy Donskoy, photographer] He is not someone who always has a
stock response, I mean he has a different expression on his face in every
situation. He perceives everything through his heart. In practice he
cannot hide his emotions. [video shows exhibition photographs of Yeltsin;
exhibition is entitled "The Unknown Yeltsin"]


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