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Johnson's Russia List


October 20, 1997 
This Date's Issues: 1296 1297  1298
Johnson's Russia List
20 October 1997

[Note from David Johnson:
1. St. Petersburg Times editorial: Taking a Clearer, Closer Look 
At Russia's 'Great Achievement.'

2. Reuters: Russian general rebuked for slamming Yeltsin.
3. Boston Globe editorial: A needless rush on NATO.
4. Baltimore Sun: Kathy Lally, West sets spark to Russian smoking. 
Foreign firms market tobacco where use is high, restrictions low.

5. Vladimir Raskin: Jaworsky/Dissidents.
6. Dale Herspring: Weeks on Ogarkov.
7. Paul Goble (RFE/RL): The Security NATO Can't Provide. 
8. Delovoy Mir: Duma Holds Hearings on Central Asia Policy.
9. St. Petersburg Times: Eric Schwartz, Soros Defends Svyazinvest 
Deal, Looks to Provinces.

10. Reuters: Communist wins landslide in Siberian poll. (Aman 

11. K.P. Foley (RFE/RL): Gorbachev To Testify At Computer Hearing.
12 Reuters: Russian economic growth depends on politics--minister.]


St. Petersburg Times
OCTOBER 20-26, 1997
Taking a Clearer, Closer Look At Russia's 'Great Achievement' 

IN A RECENT Wall Street Journal op-ed article, Russia's privatization 
program was described as "one of the greatest achievements of the late 
20th century anywhere in the world." The author, Martin Feldstein, 
speaks with authority: He is the former chairman of the U.S. President's 
Council of Economic Advisors. The magazine Euromoney has knighted the 
architect of Russian privatization, Anatoly Chubais, "the best finance 
minister in the world."
Others are less impressed with Chubais' handiwork. Konstantin Borovoi, a 
Duma deputy and successful businessman, has called privatization "a 
fiction." Moscow Mayor Yury Luzhkov has likened the program to a drunk 
who trades his clothing for another bottle of vodka. Larisa Pyasheva, a 
free-market economist, has derided it as "socialism with a capitalist 
Who's right? What is this privatization? 
With this issue, The St. Petersburg Times launches an on-going series of 
occasional articles looking into privatization, Russia's No. 1 domestic 
policy. The first in the series, by Yevgenia Borisova, examines how the 
City Property Committee under Mikhail Manevich handled the privatization 
of real estate. 
What is most remarkable is the secretiveness and lack of justice with 
which property has been doled out: A formerly state-run company quietly 
privatizes itself; an official from the privatization committee is 
suddenly one of the "founding owners" of the new company; the 
privatization committee gives that new company a list of choice cheap 
properties. And it's all "legal."
Clearer thinking here is long overdue. Anyone who doubts this ought to 
check out the Aug. 25 issue of the magazine Ekspert, in which Chubais 
can be found defending the blatantly rigged auctions for the major oil 
and metals companies he organized. Criticisms of those infamous auctions 
have not been "entirely fair," Chubais says, adding that "an important 
argument for me" has been that the courts have ruled everything legal. 
Chubais does admit to some, "ethical" concerns, but he moves quickly to 
sum up with some truly tortured Duckspeak: "Although there was 
competition [at the auctions], the [negligible] differences between the 
starting prices and the sales prices show that there wasn't a civilized 
competition ... [P]articipants put pressure on the auction itself with 
other means."
Ah, yes: the auctions were legal and there was competition, it just 
wasn't "civilized" - people weren't competing by bidding or anything, 
they were exerting "pressure" and wielding "other means." Confused? It 
gets better. This all happened because in 1995 "the state was weak." 
The poor state! Chubais is right, we haven't been fair to it. It had to 
let Chubais' cronies make off with the oil companies! He really is the 
world's best finance minister though, isn't he? 


Russian general rebuked for slamming Yeltsin
By Martin Nesirky 

MOSCOW, Oct 19 (Reuters) - An outspoken Russian general who is building a
political movement to force President Boris Yeltsin from power drew sharp
criticism himself on Sunday after saying he was planning a mysterious
``rehearsal'' to gauge support for the plan. 
Interfax news agency quoted Lev Rokhlin, who once commanded Russian troops in
Chechnya and is head of the State Duma lower house of parliament's defence
committee, as saying his movement intended to carry out its ``mission'' to
oust Yeltsin by spring. 
Spring in Moscow is considered to be from March 1 to the end of May. 
The organisation was planning for February 23 a kind of ``rehearsal with the
aim of determining whether there is enough accumulated strength to throw the
regime out by the scruff of its neck,'' Interfax quoted Rokhlin as telling
He branded Yeltsin's reformist team as ``the hated regime.'' 
In the Communist era, February 23 was widely celebrated as Soviet Army Day.
It is now known as the Day of the Defenders of the Fatherland and there are
usually big nationalist and communist rallies in Moscow and elsewhere. 
Rokhlin did not say what form this ``rehearsal'' would take. 
But a senior pro-government politician was quick to respond, calling the
general's comments unconstitutional and saying his parliamentary faction
would renew its call for Rokhlin to be removed as head of the influential
Duma defence committee. 
Rokhlin launched his Movement in Support of the Army, Defence Industry and
Military Science on September 20 to oppose Yeltsin's military reforms and
force him to step down by non-violent, constitutional means. 
But Rokhlin, who like fellow rebel general Alexander Lebed is widely
respected in the armed forces, has used increasingly harsh rhetoric as he
tries to build up support across the vast Russian Federation. 
Ekho Moskvy radio quoted a judicial source as saying Rokhlin's comments could
fall under an article of the criminal code that outlaws ``public calls for
the violent change of the constitutional structure of the Russian
Federation.'' Those convicted face up to five years in prison. 
Presidential officials were not available for comment. 
But Alexander Shokhin, head of the pro-government Our Home is Russia grouping
in the Duma, told Interfax Rokhlin's remarks were incompatible with his role
as a parliamentary deputy. 
Rokhlin's comments ``are beginning to turn more and more into
unconstitutional extremism,'' Shokhin was quoted as saying. He also said
prosecutors would sooner or later react to Rokhlin. 
Interfax said Rokhlin told supporters at a meeting near Moscow the
organisation already had branches in 41 of the country's 89 regions and was
aiming to complete the set. 
``Now everywhere committees for constitutional support for armed forces
personnel are being set up and they are ready to send their detachments to
Moscow to help or offer support,'' the agency quoted Rokhlin as saying. 
Most Western and Russian military analysts consider Rokhlin to be a potential
irritant but not a threat at this stage. 
But Yeltsin's team are unlikely to be pleased about having to open a second
front just as they seek a compromise deal with the main opposition Communist
Party in the Duma to stave off a possible no-confidence vote in the
government on Wednesday. 
Russia's armed forces, heir to the once proud Soviet military machine, is
demoralised after years of retreat from Eastern Europe, defeat in the Cold
War and a drubbing at the hands of separatists in the 1994-1996 war in
One Rokhlin aide told Reuters that even if many serving officers and troops
backed Rokhlin ``in their souls'' they would be unlikely to express that
support openly for fear of repercussions as the military seeks to cut


Boston Globe
19 October 1997
[for personal use only]
A needless rush on NATO 

Once a crucial policy decision such as the expansion of NATO has been 
taken, it is considered bad form to reconsider yesterday's flawed 
arguments. But the Clinton administration's conduct of the NATO 
expansion debate is worth a little scrutiny. It demonstrates how a 
crucial policy question was reduced to an unnecessary either/or 
proposition - between immediate expansion of NATO or no expansion ever. 
A third possibility - a delay that would have given the parties more 
time to gauge developments in Russia and Central Europe - was given 
short shrift. 
Russia, the administration contended, would have taken a delay as a 
polite refusal of more NATO members and concluded that it was able to 
determine Western policies. But a delay could have been presented so it 
would not have been mistaken in Moscow as a polite refusal. 
The second argument against delay was that it would have had a 
destabilizing effect, creating a security vacuum in Eastern Europe and 
leading to a renewal of regional and ethnic conflicts. Experience 
suggests the contrary, however. 
The time those nations have spent in the NATO waiting room has 
stimulated their governments to resolve border disputes and protect 
minority rights. More time in NATO's antechamber would mean greater 
striving to create the conditions for enduring stability in Eastern 
Europe. A delay also could have increased pressure on the European Union 
to admit as members its new democratic neighbors - the form of 
acceptance that those countries need above all. 


Baltimore Sun
19 October 1997
[for personal use only]
West sets spark to Russian smoking 
Foreign firms market tobacco where use is high, restrictions low 
By Kathy Lally 

MOSCOW -- Sleek and glistening, it soars above Manhattan
like a powerful guided missile, heading straight for
the heart of the patriotic Russian consumer.
The missile is a pack of cigarettes, and it is emblazoned on
billboards and light poles all over Moscow, along with a Cold
War slogan resonating with nationalistic feeling.
"Strike Back," it says.
The message is clear. Buy these cigarettes, called Yava
Gold, and you'll be buying Russian, striking back at the
Western companies that are assaulting this nation with their
products, particularly their cigarettes.
There's one thing the ads don't mention. Yava Golds,
like about 45 percent of cigarettes sold here, are made by
Western-controlled companies, in this case the British
American Tobacco Co.
Operating under tighter and tighter restrictions in the
West, their profits threatened by high-cost lawsuits in
America, Western tobacco companies are waging a hard-fought
campaign to sell their cigarettes here.
"Our market is huge," says Vassily N. Terevtsov,
chairman of Tobakprom, the tobacco lobbying association here.
"Russians smoke 250 billion cigarettes a year," he
says, a cloud of Yava Gold smoke issuing from his cigarette.
About 60 percent of all Russian men smoke every day,
according to polls. About 150 billion cigarettes are
produced here, and 100 billion are imported every year.
A few years ago, a cigarette only had to look American
to sell. At the end of the 1980s, Marlboros symbolized the
West and freedom.
A foreigner had only to stand on the side of a street,
hold up a pack of Marlboros and a taxi would appear out of
nowhere, screech to a halt and take him wherever he wanted to go.
Today, many Russian adults are recoiling from things
Western. For many, freedom has come to mean only poverty and
So it was no wonder that Peter the Great cigarettes
were a big hit when they appeared last year. The cigarettes are
clad in elegant black, the packages emblazoned with the
national -- and czarist -- double-headed eagle, in gold.
"Great Russia," trumpets the front of the pack. An
inscription on the back says the cigarettes are designed for those
who "believe in the revival of the traditions and grandeur
of the Russian lands."
They're made by R. J. Reynolds Tobacco Co. at its St.
Petersburg plant.
"They're moving fast," says Dr. Ronald Davis, editor of
the journal Tobacco Control. "The more governments clamp
down in the West, the more aggressively they're
marketing their products in Eastern Europe."
Davis and other anti-smoking activists have been
lobbying the U.S. Congress to allocate money from the proposed $368
billion national settlement of tobacco litigation to
campaign against smoking in Eastern Europe, Asia and other
foreign targets of U.S. companies.
They say the tobacco companies will advertise
ruthlessly to recruit young smokers in countries where legal
restraints are not in place, using whatever imagery will sell. And
they think America has an obligation to clamp down on the
exportation of smoking.
The tobacco companies argue that they don't export
smoking, only cigarettes.
"It's cynical, but it's the cornerstone to their survival," said
John Brier, an anti-smoking activist from Scarborough, Maine.
"People don't start smoking after the age of 20 -- only 1
percent do. The only way is to get the young kids hooked.
They have to get cigarettes in the hands of young
people before they're old enough and smart enough to make an
nformed decision. It will offset their losses in the U.S."
Young people here, unlike many of their elders, are
still wooed by the American siren song. Brier, a marketing
consultant, spent a month last summer in the Siberian
city of Novosibirsk.
"I quickly found that it was no longer Communist
country, but Marlboro country," Brier said by telephone from Maine.
"The Marlboro man died of cancer here, but he's alive and
well there."
Brier, who has an M.B.A. with a concentration in health
care administration, says Philip Morris had put the Marlboro
man everywhere -- looming over the city on the sides of
10-story buildings, peering out from ashtrays in bars and
beckoning to young people at a disco tent set up in a park.
"In order to get in, you had to produce five packs of
Marlboros, three if you were a student. You showed your
packs at the gate. You couldn't say, `I don't smoke.
Can I pay to get in?'
"You had to have the cigarettes," Brier said. "They
advertised it consistently for a month. It was on the radio. There
were fliers on light poles. Every night there were hundreds
of people, sometimes a thousand on weekends."
In a city of 2 million, with little to do, the disco
tent with its bright lights and state-of-the art sound system was
irresistible to the young, he said.
Andrew White, a spokesman in Moscow for Philip Morris,
said promotions such as those in Novosibirsk are aimed
at smokers over age 18. The disco hostesses were trained
to check identification of anyone who could have been
younger, he said.
"Fifteen percent of those people were turned away,"
White said. "We take this very seriously. Philip Morris does
not want young people to smoke."
He said cigarette advertising is directed at people who
already smoke and Philip Morris was aiming for the 10 percent
of smokers who switch brands every year.
A recent survey in Moscow found that 14 percent of
fifth-grade boys smoke; by 10th grade, 53 percent do
So many children were smoking in the lavatories at
School 1041 in industrial southeastern Moscow that school
authorities gave up trying to prevent it. Any child whose parents
signed a form acknowledging that they knew their child smoked
was allowed to go outside for a cigarette break after third
"Of course we all signed our parents' names," said
Sergei Sergeyevich Sergeyev, 14, standing in the rain and
smoking with a dozen friends outside the school.
"My parents say I can smoke as long as they don't see
it," said Sasha Scherbakov, 15.
"I started in the usual way," said Zhenya Kudachyov,
15, proudly showing off a gleaming Zippo lighter. "You try
it once and then you don't want to stop."
"We understand it's dangerous," he said.
And Sergei added, "When you have problems and get
nervous, then you have to smoke."
They all smoke foreign-made cigarettes. "Russian
cigarettes are terrible," said Zhenya. "The flavor is horrible."
Terevtsov disapproves of the tactics some of the newly
arrived Western firms have taken. He says some clearly
are trying to hook kids.
"I agree with Clinton," he said. "This shouldn't be
done. When a young person is shown a cowboy or motorbike, he is
stimulated to use cigarettes."
Free cigarettes are constantly being handed out around
Moscow subway stations by manufacturers with Western
financing, he said, and his 19-year-old son has
reported how they're distributed at the college where he studies.
"If a young person is given a pack and tries one
cigarette from it," Terevtsov said, "there are still 19 more in the
pack. It will be enough for one or two days, and the next day you'll
go to a shop and buy it.
"This kind of advertising is aimed directly at young
people, and it's very undesirable."
A nation struggling with economic survival has little
money to invest in smoking research or anti-smoking campaigns,
says Rafael Oganov, director of the Russian Public Health
Ministry's Center for Preventive Medicine, even though
smoking and drinking are taking an enormous toll.
The average male life expectancy here is 57 years,
compared with 74 in the European Union. Russia reports 1,343
deaths per 100,000 males from cardiovascular disease, compared
with 704 in Britain and 330 in France.
In 1975, a Russian study examined 8,000 men, ages 40 to
60, half from Moscow and half from St. Petersburg, Oganov
Twenty years later, all of those who smoked 20 or more
cigarettes a day were dead. Only half of the nonsmokers
were dead.
"This is proof smoking is really harmful," he said.
Even so, he sees some benefit to the invasion of
Western tobacco.
"Ten years ago, the population smoked mainly Russian
and Bulgarian cigarettes," he said. "Our cigarettes always
had higher nicotine and tar content than Western
"So the fact that we now have a lot of high-quality
cigarettes from the West is good on one hand."
The cheapest Russian cigarettes cost about 15 cents a
They're unfiltered and high in tar and nicotine. More
expensive cigarettes, such as the filtered Yava Gold, cost about
60 cents. Some Western cigarettes cost $1 or more.
"Cigarettes with filters are less harmful to people
because filters diminish the cancer contamination," Terevtsov
said. "As the economy improves, more people will be able to buy
filtered cigarettes."
He predicts that anti-smoking sentiments will be slow
to develop here. Too many people enjoy a good smoke, he
"Of course I worry about my health," he said. "All
normal people do. If I weren't working in this field, I
probably would have given it up by now."


Date: Fri, 17 Oct 1997 
From: Vladimir Raskin <> 
Subject: Jaworsky/Dissidents 

Dear Ivan,
I hope you remember me: we met two years ago at the conference in

With regard to your remark in the last JRL, I believe that the reason that
the former dissidents in Ukraine are more involved in politics than their
Russian collegues is that in the old days they fought for Ukranian 
self-determination (or national liberation, if you like), i.e. represented
the political movement. No surprise that they remained engaged in
politics after Ukraine has gained its independence. 

Many Russian dissidents, however, at least those
mentioned in the Washington Post article (Kovalev, Bogoraz and Podrabinek)
were involved in human rights activists in the USSR. The human rights
movement was never a political one; on the contrary, the human rights
activists always emphasized that they were fighting not to change the
system but make it act in compliance with the Soviet constitution and
(later) with the Helsinki Final Act. In other words, they were much less
politically oriented than their colleagues from the Baltic republics and
Ukraine. This is just one of the reasons why they found themselves on the
periphery of today's political life in Russia. 


Date: Fri, 17 Oct 1997 
From: Dale R Herspring <>
Subject: Weeks on Ogarkov

While I take no position on the debate over Lenin's right to be considered
an intellectual (much depends on the criteria one uses to define an
intellectual), I cannot permit Weeks' comments on Ogarkov pass without a
rebutal. Weeks refers to Ogarkov as a hawk. In some sense that was true,
but having written a book in which he figures prominently, and having
discussed him and his role in the high command with a variety of senior
Russian/Soviet military officers, I think he was a much more complex
individual than Weeks' comments might suggest. 
First, the issue of nuclear weapons. One of the things I
discovered going through his writings is that Ogarkov had a more nuanced
position on this topic that Weeks' suggests. First, Ogarkov felt that if 
a nuclear war was forced on the USSR -- Moscow would fight to come out
victorious. Second, however, he made it clear throughout his writings
that there would not be any victor in a nuclear war. I remember one
case where he suggestsed that nuclear weapons were similar to chemical
weapons in World War II. Both sides had them, but the Germans were afraid
to use them because they feared retaliation by the other side. Nuclear
weapons were similar he argued.
Second, Ogarkov argued constantly that the future lay in "weapons
based on new principles." If he can be accused of having an obsession, it
was with these kind of weapons. They could be used and would not radiate
Paris or Berlin in the process.
Third, I can't remember how many times I heard senior
Russian/Soviet military officers (especially those involved in planning or
operations) talk about Ogarkov's major impact -- from the introduction of
warrant officers to the idea of a TVD. Indeed, General Milshteyn once
told me that Ogarkov was the brightest student he every had at the General
Staff Academy. Others such as Garayev -- certainly not an intellectual
slouch -- spoke of Ogarkov as a man with more ideas than one could absorb
at one time. I heard the same opinion from Gorshkov, Moiseyev, and
Volkogonov. When I raised the nuclear war idea that Dr. Weeks' has
propounded for some time -- even after the fall of the USSR -- my
interlocuters were unamimous in saying that Ogarkov's views were much more
complex than that.
Fourth, I think it is worthwhile noting that Ogarkov opposed
Moscow's intervention in Afghanistan -- a fact that is well known now. He
was a very cool, calculating military officer and recognized from the
beginning that getting the USSR involved militarily in Afghanistan was not
in the country's best interest.
The one time I met Ogarkov I found him to be a very serious, no
nonense type individual -- one who carried an encyclopedia's worth of
knowledge in his head. If war had occurred, I have no doubt that he would
have been a worthy opponent and that he would have fought with every
weapon at his hand (except nukes if he could have avoided it). Everyone
is certainly welcome to their own opinions, but my own impression of
Ogarkov is that he was more sophisticated than Weeks suggests. 


East Europe: Analysis From Washington - The Security NATO Can't Provide
By Paul Goble

Washington, 17 October 1997 (RFE/RL) - Ever more East Europeans recognize
that they face threats to their national security that NATO membership by
itself will not solve. 
This new understanding about the nature of both the Western alliance and
the threats they face has not made most East Europeans any less interested
in being included in the Western alliance.
But it has simultaneously transformed discussions about NATO in Eastern
Europe and led an increasing number of governments there to take steps that
will promote the national security of their countries
regardless of whether NATO invites them in.
With the collapse of the Warsaw Pact and then of the Soviet Union,
virtually all countries in that region saw NATO membership as the foundation
of their future security. 
Indeed, many tended to view NATO membership as a panacea to all their
problems. If they got in, they would be taken care of and their security
would be assured. But if they did not, then they would be left without any
hope of a secure future. 
Those perspectives helped frame the debate about security in many of these
countries, but three developments have helped to change both the
understanding of NATO and the role these countries can play in
promoting their own national security. 
First of all, these countries have had to deal with a West that has been
anything but unanimous about the desirability or even the possibility of
expanding the alliance to the east anytime soon. 
Many Western leaders have worried about the dangers involved in offending
Russian sensibilities, and many Western populations have been concerned
about the costs involved, costs that many in the West are reluctant to pay
now that the Cold War is a thing of the past.
As a result, these countries have had to think about a future in which only
a few may become members of the alliance soon and in which any of these
countries will never join.
Second, NATO's outreach programs such as Partnership for Peace have taught
many East European leaders just what NATO can do and even more important
what it cannot.
NATO, as ever more of them understand, is a military defense alliance. It
is intended in the first instance to prevent or in the worst case respond to
military aggression. 
It was not intended to deal with violence within countries. And as the
West's reluctance to get involved in Bosnia has shown, the alliance remains
reluctant to do so.
But even more, NATO as a political and military organization does not
provide either the structure or the weapons to combat other threats to
national security that many countries in that region now face.
The Western alliance cannot prevent illegal migration. It cannot develop a
legal or judicial system for countries lacking them. And it cannot create a
stable banking system or tax regime, without which
any government is at risk of subversion.
The Western alliance may create a climate in which governments and peoples
can take those often difficult steps. But it cannot take those steps for any
country. Rather the governments and peoples of those countries must do so on
their own.
Indeed, many East European countries have learned that NATO member states
face many of these same threats -- such as illegal migration, organized
crime, and subversion of banking systems -- without being able to count on
Brussels for a solution.
And third, ever more East Europeans recognize that these threats that NATO
cannot defend against are precisely the ones that they must overcome and
that the threat NATO was intended to combat is for most of them less
immediate. Virtually all East Europeans continue to fear the possibility
that Russia will once again seek to dominate the region and hence see in
NATO membership a guarantee against that possibility. 
But ever more of them also understand that the threat to their countries
over the next decade is less likely to take the form of an invading army
than that of the subversion of their banking systems or economies.
And they recognize that improving their own domestic situations will have
security consequences: it will attract ever more Western investment, and
that investment will tend to provide a bulwark against the more immediate,
non-military threats.
Again, this new understanding in Eastern Europe has not made the
governments and peoples there any less interested in joining NATO. And it
has not made NATO any less important for the future of Europe. 
But it has meant that the countries of this region now recognize just how
much they must do to promote their own security rather than waiting for
someone else to do it for them. Paradoxically, that in itself makes them
even better candidates for inclusion in the Western alliance. 


Duma Holds Hearings on Central Asia Policy 

Delovoy Mir
October 9, 1997
[translation for personal use only]
Article by Boris Krotkov under the "In the Corridors" rubric:
"Russia Moves Away From Central Asian Countries"

Closed parliamentary hearings held in the past few days in the State
Duma were devoted to Russia's policy in the Central Asian Region (Central
Asia and Kazakhstan.) Delovoy Mir has received information from reliable
sources on what was discussed there.
Since December 1991, the shaping of Russia's foreign policy in regard
to the Central Asian Region has proceeded without consideration for the
problems that have arisen on the North-South axis (between Western
countries and Turkey, Iran, Afghanistan, China, and Pakistan). As a
result, the rapprochement between the countries of the Central Asian Region
and the aforementioned states is taking place on NATO's terms and to the
detriment of Russian security.
Further, the state system in the Russian Federation continues to be
built without consideration for Russia's historical responsibility for the
position of the Russian population in the Central Asian Region. The tough
egoism of Russian business is leading to the Russian population being
squeezed out of the new economic policy processes in the region's states. 
At the same time, Russians and Russia are being made out to be enemies. As
a result, up to half a million Russians emigrate from the Central Asian
Region annually.
Meanwhile, the Central Asian region is an extremely important zone of
Russia's geopolitical, economic, and defense interests. Its strategic
economic interests are determined, first of all, by the region's role as a
traditional supplier of many kinds of products. Russia is interested in
receiving tin, tungsten, platinum, and palladium from Kyrgyzstan; gold from
Uzbekistan and Kazakhstan; cotton from Uzbekistan, Tajikistan, and
Turkmenistan; grain, meat, iron ore and coking coal, nuclear fuel for
nuclear electric power stations, and superconductive materials from
Kazakhstan; and cheap electricity produced on the mountain rivers of
Tajikistan and Kyrgyzstan. Russia's participation in the development and
exploitation of the region's very large oil and gas resources would allow
it to use some of the energy produced here to improve supplies to the
eastern regions of the Russian Federation, freeing up additional fuel
resources for export.
But it is even more important to maintain positions on the markets of
the region, which is a traditional purchaser of output from Russia's
manufacturing industry, first and foremost machine- building. The
technological services market is also very promising, as are contracts for
irrigation and hydroelectric construction.
The region's infrastructure network -- transportation, communications,
pipelines -- is of particular significance for Russia. Transportation
projects being implemented here at present guarantee Central Asia's access,
and Russia's access through it, to the markets of the Near and Middle East,
South Asia, and the Asian- Pacific region. In terms of Russia's national
interests, it is also important to seek coordinated, effective, and
mutually advantageous options for transporting oil and gas, especially from
the Caspian fields.
Experts believe that, in the long term, an influx of foreign
investments may lead to an upsurge in the region's national economies, but
it is unlikely that profound, qualitative changes will take place in the
present generation's lifetime. They are convinced that the Central Asian
countries cannot really expect to make a big spurt in any area today or in
the foreseeable future. It is also unlikely that manufacturing industries
geared to exports and built into the world market system will be set up in
the region in the near future. This is hindered both by the weakness of
the production base inherited from the USSR, which, moreover, has to a
large degree been destroyed in recent years, and by the low skill level of
the local work force.
Let us return, however, to what was said at the hearings on Russian
Federation policy in the Central Asian Region. If we set forth what was
said in the most condensed form, it goes like this: There is no single
opinion in Russia on the prospects for interaction with Central Asia; it
[Russia] lacks, in effect, an integral and clear policy in regard to the
region's countries; Russia's approach is dominated by the passive
wait-and-see view that all our CIS partners are anyway mere ballast on the
path of reform of the Russian economy and its joining the world economy.
And what of the West? It is a well-known fact that it did not pay
much attention to the Central Asian Region in the first years of reform, as
if "leaving" it to Russia. The situation changed radically when colossal
oil and gas reserves were discovered on the Caspian shelf. And immediately
the whole region, together with the Transcaucasus, was declared a sphere of
U.S. priority interests. At the present moment multinational corporations
and major Western companies have not only taken firm positions in the oil
and gas sectors and the mining of gold and other precious and nonferrous
metals, but are getting more and more involved in the processing
And in conclusion a few words on the nearest neighbors of the Central
Asian states: They are using the common religious and ethnic factor to
increase their presence in the region more and more actively. According to
the predictions of Russian experts, Turkey has the best chances for
asserting its influence here. This is both because of the attractiveness
for the aforesaid states of Turkey's experience in modernization and
building a secular state, and also because of the great economic potential,
mobility, and significant experience in international cooperation of
Turkish private business, which desperately needs new markets. It is also
very important that its [Turkish private business] activity in Central Asia
relies on the support of Western firms that have subsidiaries in Turkey. 
It is in Kazakhstan that Turkey has achieved the greatest success.
China's presence in the Central Asian Region is also gaining momentum.
This region interests it not only as a market for its goods, but as a sort
of springboard for developing trade and economic ties with the Near East
and West Asia, and as the shortest route to Europe. China has established
the closest trade links with Kazakhstan, Uzbekistan, and Kyrgyzstan. As
far as investments go, China directs the main flow of these toward the
development of transportation infrastructures.
Now, more about Russia: What, in the view of the participants in the
parliamentary hearings, could be the priority areas for the Russian
Federation's cooperation with the Central Asian Region countries? First: 
transport projects. Linking up the railroads of Turkmenistan and Iran will
give Siberian regions quick access to the markets of Iran, Turkey, and the
Persian Gulf countries. The opening of communications to Afghanistan,
Pakistan, and India will significantly improve foreign trade transport
conditions for the North Caucasus, Volga, Urals, and Siberian regions of
Russia. The second significant area is the use of the surviving scientific
and technical and production sharing links in the modern sectors of
manufacturing industry, first and foremost the military-industrial complex,
for a joint breakthrough in the sphere of innovative production. Thirdly,
using the surviving mutual interests of Russia and the Central Asian states
in exchanging machines and technologies through the setting up of
multinational structures. But in order to implement all this, a
constructive Eurasian dialogue is necessary, directed at overcoming the
growing estrangement of the peoples of Russia and Central Asia.


St. Petersburg Times
OCTOBER 20-26, 1997
Soros Defends Svyazinvest Deal, Looks to Provinces 
By Eric Schwartz

Philanthropist-businessman George Soros swept into St. Petersburg last 
week and eagerly defended the scandal-tainted tender for the mega 
telecommunications holding Svyazinvest, calling the results of the 
tender a "watershed, moving away from the insider deals of the past." 
Soros' Quantum Fund was among five founders of the Cyprus-based Mustcom 
company that won a 25-percent stake in Svyazinvest last July. The 
Mustcom consortium is headed by Moscow's powerful Uneximbank. 
Mustcom's victory in the sale has been overshadowed by media reports 
that government privatization officials rigged the auction in favor of 
Uneximbank, and President Boris Yeltsin has publicly taken those 
officials to task. 
Earlier this month the Moscow prosecutors' office opened a criminal 
investigation into former federal privatization chief Alfred Kokh, who 
oversaw the Svyazinvest tender.
They are investigating why Kokh received $100,000 for an 
as-yet-unpublished textbook from a little-known Swiss accounting firm 
with purportedly close ties to Uneximbank. 
Kokh left his post in August when media furor over the Svyazinvest 
tender was at its peak, and Yeltsin publicly accused Kokh of favoring 
Uneximbank in the sale. 
Soros said on Friday, however, that the Svyazinvest tender had been a 
success. "The tender marked a watershed, moving away from the insider 
deals of the past," he said to reporters at the press conference. 
"[The tender] meant more money for the government, and more money for 
the companies concerned. So if that is what has happened, it will help 
make the investment a success."
Soros called his part in the acquisition of Svyazinvest "very risky" and 
said "I can very easily imagine that [the acquisition] will be a 
failure. But if it succeeds, then the rewards will be paid." 
Soros added that the Quantum Fund would not be participating in the 
upcoming auction of Russian oil giant Rosneft, according to Interfax. 
Soros has donated more than $350 million to educational and cultural 
programs in Russia and plans to continue his donations, focusing on the 
provinces. "The future of Russia is in the provinces," he said. 
"The Russian administration is far too centralized and the economic 
activities are also too centralized. It is the express policy of the 
foundation to reach out to the regions."
An Internet project Soros has already invested in will help coordinate 
the philanthropic efforts of the organization, he said. 
Internet centers have been established in 32 areas of Russia, including 
St. Petersburg. These centers can be used to coordinate not only Soros' 
foundation's activities but also other philanthropic work, he said.
But while Soros is making plans to continue his philanthropy into the 
next century, he injected a dose of realism about its benefits. 
He also noted that the Open Society Institute has no intention of 
getting involved with activities that should be government 
"Philanthropy cannot solve the problems of capitalism. There are certain 
things that need to be done by legislation," he said. 


Communist wins landslide in Siberian poll
By Peter Henderson 

KEMEROVO, Russia, Oct 20 (Reuters) - A key Siberian region which once helped
Boris Yeltsin bring down Soviet Communism elected a Communist as governor on
Sunday, the local election committee said on Monday. 
Aman Tuleyev, appointed temporary governor of Kemerovo three months ago
by President Yeltsin, scored an overwhelming election victory in the poll. 
``For Tuleyev -- 94.56 percent,'' regional committee deputy chairman
Vladimir Popov told Reuters, adding that all electoral precincts had been
President Boris Yeltsin named Tuleyev acting governor three months ago
after sacking his previous appointee amid talk of corruption and economic woes. 
Tuleyev advocates increased government control over major industries but
also calls for tax relief for small business. His only major opponent was
independent Viktor Medikov, a member of the State Duma lower house of
Many of the voters were coal miners and industrial workers looking to a
new leader to revive their once-rich region, four time zones east of Moscow,
and rid it of corruption. 
Tass put turnout among the 2.1 million registered voters at more than 53
percent, more than double the 25 percent needed to make the election valid. 
Most of Russia's 89 regions want to beat crime and improve living
standards, and were closely following events in the Kuzbass, as the Kemerovo
area is popularly known. 
``Kuzbass is a politicised region...What starts here spreads,'' Tuleyev
said as he voted and listened to a choir decked with medals singing
patriotic songs on Sunday. 
No outright liberal reformers stood for governor of Kemerovo, whose
miners have long been admired as a workers' elite and whose strikes backing
Yeltsin after the fall of the Soviet Union galvanised Russia into supporting
Russia, teetering on the edge of economic growth, needs its metals
industry and energy resources to thrive. But Kemerovo must first clean up
its economy and cut crime. 
Tuleyev claims the support of both Yeltsin and the national Communist
Party, a sign that political loyalties to reformers and Communists are
blurring in the regions. The top local Communist refused to toe the party
line and endorse him. 


Russia: Gorbachev To Testify At Computer Hearing
By K.P. Foley

Washington, 17 October 1997 (RFE/RL) - Former Soviet President Mikhail
Gorbachev is scheduled to appear today before a U.S. congressional panel
studying potential computer failures that may occur in the year 2000.
Gorbachev is a on a lecture tour of the United States. He plans to meet
with members of the House of Representatives Government Reform and Oversight
The subcommittee has been investigating the threat of computer failures
in the federal government and private industry because of problems that may
develop when the year 1999 changes to the year 2000. The subcommittee has
expanded its investigation to the international level. 
John Hynes, a spokesman for the subcommittee says Gorbachev will speak as
a concerned citizen of Russia. Hynes says Gorbachev has had a longstanding
interest in technology. He is said to be especially concerned about Russia
because the majority of its computer software is not licensed and cannot be
The hearing is being held in Beverly Hills, California, not far from
where California's sophisticated technology industry is based.


Russian economic growth depends on politics--minister

MOSCOW, Oct 17 (Reuters) - Russia's economy has begun to show the first
modest signs of growth but is quite sensitive to political problems, the
economy minister said on Friday. 
``We have entered a period of stabilisation, with obvious signs of economic
growth,'' Yakov Urinson told a news conference. 
``But it is very sensitive to political instability. Political stability is
extremely important.'' 
He said that unlike in previous months, when the government noted signs of
growth in specific sectors, overall production was now recovering. 
He quoted central bank data showing that third-quarter volumes of interbank
credits had dipped, while bank credits to industry had increased -- a sign
investment was on the rise. 
Gross Domestic Product, the broadest measure of an economy's wealth, rose 0.2
percent in the first nine months of 1997. Analysts forecast 0.5 percent
growth for the year. 
Based on these figures, the government has forecast two percent GDP growth
for 1998. 
The target is laid out in the draft budget, which the communist-led State
Duma lower house of parliament has rejected over low spending forecasts. The
budget is now in a special commission grouping Duma and cabinet officials. 
The Duma tried to pass a no-confidence vote in the government on Wednesday
but postponed the motion to next week. 
The pro-reform government has said it will not significantly alter targets
laid out in the 1998 budget but on Thursday suggested raising the document's
GDP forecast to 2.84 trillion redenominated roubles ($460 billion) from the
original 2.75 trillion. 
Russia will knock three zeroes off its rouble at the beginning of 1998 in a
redenomination process. 


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