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17 February 1998
[Note from David Johnson:
1. Voice of America: Peter Heinlein, YELTSIN SPEECH PREVIEW.
2. Jerry Hough: Re 2064-Goble/Iraq.
3. Karina Wood: NATO expansion & Russian nuclear weapons policy.
4. RFE/RL NEWSLINE: BABURIN URGES COMMUNISTS TO ALTER STRATEGY
and DEFENSE INDUSTRY IN STEEP DECLINE.
5. Reuters: Yeltsin Rules Out Immediate Government Changes.
6. Reuters: Olympics: Russia Struggles to Stay Sporting Superpower.
7. Los Angeles Times editorial: Russia's Risky Strategy.
8. Chicago Tribune editorial: SHEVARDNADZE'S ENEMIES ARE MANY.
9. Jerusalem Post editorial: Respecting Russia.
10. Newsweek: Russell Watson and Bill Powell,Yeltsin's War Games.
As diplomacy ebbs, an American air war against Iraq draws closer.
But whose side is Moscow on?
11. Reuters: IMF all ears as Yeltsin to address nation.
12. Interfax: Duma Commission Recommends Gov't Stop Privatization
of Strategic Firms.
13. Tony Weselowsky (RFE/RL): Russia: Idle Workers Plague Industry.]
Voice of America
TITLE=YELTSIN SPEECH PREVIEW
INTRO: RUSSIAN PRESIDENT BORIS YELTSIN IS MAKING FINAL
PREPARATIONS FOR HIS ANNUAL STATE OF THE NATION ADDRESS TO
PARLIAMENT (EDS: TUESDAY -- 8 HRS UTC). VOA MOSCOW CORRESPONDENT
PETER HEINLEIN REPORTS THE SPEECH WILL BE CLOSELY WATCHED FOR
SIGNS WHETHER MR. YELTSIN CHOOSES TO PUSH AHEAD WITH ECONOMIC
REFORM, OR COMPROMISE WITH COMMUNIST AND HARDLINE OPPONENTS.
TEXT: THE RUSSIAN LEADER HAS SPENT DAYS WORKING ON HIS SPEECH.
DURING A BRIEF PHOTO SESSION MONDAY, HE TEASED REPORTERS WHO
ASKED FOR CLUES ABOUT ITS CONTENTS.
///YELTSIN ACT IN RUSSIAN -- UP, THEN FADE TO...///
HE SAID "THERE ARE SOME NEW AND INTERESTING THINGS."
BUT WHEN A REPORTER ASKED WHETHER HE MIGHT ANNOUNCE A MUCH-
RUMORED CABINET RESHUFFLE, MR. YELTSIN SAID "NO".
///SECOND YELTSIN ACT IN RUSSIAN -- UP, THEN FADE TO...///
IT WILL BE "WITH ANALYSIS, BUT WITHOUT CONSEQUENCES". HE EARLIER
SAID HIS OFTEN CRITICIZED ECONOMIC REFORM TEAM WOULD STAY IN
PLACE UNTIL THE END OF HIS TERM.
///OPT/// LAST YEAR, THE STATE OF THE NATION ADDRESS MARKED MR.
YELTSIN'S RETURN TO PUBLIC LIFE AFTER MONTHS OF ILLNESS. HE MADE
A FORCEFUL SPEECH, PUTTING TO REST REPORTS HE WAS TOO SICK TO
THIS YEAR, HE IS AGAIN STRUGGLING. HIS UNSTEADY PERFORMANCE
DURING A VISIT TO ITALY LAST WEEK LEFT MANY COMMENTATORS
WONDERING ABOUT HIS FITNESS. ///END OPT///
HIS 30-MINUTE ADDRESS IS EXPECTED TO FOCUS ALMOST EXCLUSIVELY ON
ECONOMIC ISSUES. IT COMES AS INTERNATIONAL MONETARY FUND DIRECTOR
MICHEL CAMDESSUS ARRIVES IN MOSCOW FOR WHAT ARE EXPECTED TO BE
TOUGH TALKS ON RUSSIA'S PERFORMANCE UNDER A 10-BILLION DOLLAR
MR. CAMDESSUS WAS QUOTED LAST WEEK AS SAYING HIS LENDING AGENCY
IS LOOKING FOR EVIDENCE RUSSIA HAS NOT LOST MOMENTUM IN ITS
///OPT/// RUSSIAN TELEVISION ANALYST IRINA KOBRINSKAYA SAYS MR.
YELTSIN MUST PUSH AHEAD WITH ECONOMIC REFORM NOW. (D- BECAUSE IT
WILL SOON BE TOO LATE. )
BECAUSE AS EVERYONE UNDERSTANDS, THIS IS THE LAST YEAR
IN FACT THAT GIVES A CHANCE TO IMPROVE THE SITUATION
SIGNIFICANTLY, BECAUSE NEXT YEAR AND THE YEAR 2000 WILL
BE COMPLETELY DEDICATED TO POLITICS.
DESPITE THIS "LAST CHANCE" SCENARIO, //END OPT// MANY OBSERVERS
BELIEVE MR. YELTSIN WILL EASE UP ON REFORMS TO MAKE PEACE WITH
COMMUNISTS AND HARDLINERS WHO DOMINATE THE LOWER HOUSE OF
ANALYST ANDREI RYABOV OF THE GORBACHEV FOUNDATION SAYS MR.
YELTSIN MUST COMPROMISE TO WIN LEGISLATIVE APPROVAL ON IMPORTANT
ISSUES, SUCH AS THE "START TWO" ARMS CONTROL TREATY AND A REVISED
IN THE LAST (FEW) DAYS, THESE DIFFERENT POLITICAL FORCES
MAKE A LITTLE COMPROMISE AROUND THE TEXT OF THE MESSAGE,
AND SO IT WILL BE NOT VERY INTERESTING IDEAS IN THIS
MESSAGE. I THINK THAT THE PRESIDENT WILL REPEAT THE
IDEAS WHICH HE SAID IN 1996 AND 1994.
REGARDLESS OF WHAT PATH MR. YELTSIN CHOOSES, MOST RUSSIANS SAY
IT WILL MAKE LITTLE OR NO DIFFERENCE IN THEIR LIVES.
THIRTY-YEAR OLD ALEXANDER GORSHKOV SAID THE ONLY IMPORTANT ISSUE
IS WHETHER PEOPLE GET PAID.
///GORSHKOV ACT IN RUSSIAN -- UP, THEN FADE TO...///
HE SAID "I DON'T SEE THIS ECONOMIC GROWTH. SOME PLACES, OLD
PEOPLE ARE NOT PAID, SOME PEOPLE IN THE COUNTRY DON'T GET THEIR
SALARIES FOR A YEAR AND A HALF."
MOST PEOPLE SEEM TO AGREE WITH MR. GORSHKOV. A SURVEY RELEASED
LAST WEEK BY THE RESPECTED "PUBLIC OPINION FOUNDATION" SHOWED THE
ECONOMIC ISSUES ON RUSSIANS' MINDS ARE SALARY AND PENSION
PAYMENTS, IMPROVING THE QUALITY OF LIFE, AND NARROWING THE GAP
BETWEEN RICH AND POOR.
Date: Mon, 16 Feb 1998
From: "Jerry F. Hough" <firstname.lastname@example.org>
Subject: Re: 2064-Goble/Iraq
I just wanted to say that I think Paul Goble's piece reprinted in
#2064 was one of the most encouraging to me you have published. We have
been reading that the IMF is crucial for international economic
stability, but on Sunday the Washington Post editorially echoed others in
insisting that a Russian failure to support the US 100 percent on Iraq
would and presumably should have an impact on IMF aid. Goble's
understanding that international relations inevitably involves conflicts
of interest seems totally lacking. The United States must learn to
think about a world in which there is a multiplicity of interests, and it
must think much more clearly about the role of the international economic
institutions. This weekend's Barrons, on the newstand all this week, has a
relatively long and very pessimistic note about Russia's finances, and anyone
reading about Indonesia must be crossing his or her fingers in hope that
excessive and premature exposure of that Moslem country to the world economy
does not have the political results it had in Europe in the first decades of
this century. We must begin thinking seriously about the international
economic institutions as guarantors of stability--and that includes political
stability--not as instruments of American foreign policy even when the West
is divided. The real causal arrows do not--and should not--run from
Russian policy on issues such as Iraq to IMF support--but the reverse.
Countries turn to the nationalist right when the insecurity produced by
excessive and premature economic strains make this seem the most viable
political option for leaders trying to succeed. If we tell the
successor to Yeltsin that he must toe the line on US foreign policy, he
will move even further to the right.
Date: Mon, 16 Feb 1998
From: Karina Wood <email@example.com>
Subject: NATO expansion & Russian nuclear weapons policy
For those of you primarily focused on nuclear weapons reductions and
abolition, please be aware of NATO expansion's serious adverse effects on
Russian nuclear weapons policy, which is and will undermine the prospects
for disarmament. NB: It's more than just START II going unratified.
Please raise the points below with your member of Congress and Senators, and
incorporate them into your nuclear abolition work.
My thanks to George Rathjens for bringing up these points.
How Russian military policy might be affected by NATO enlargement should be
a matter of special concern for the U.S.
With its conventional military forces reduced to ineffectiveness - as
demonstrated in Chechnya - and with prospects of near-term reconstruction
being unrealistic considering the state of the Russian economy, we can
expect Russia to turn increasingly to reliance on nuclear weapons as its
only affordable counter to perceived NATO superiority in conventional
military strength; a mirror-image of the western reaction in the 50s and 60s
to what we then regarded as unmatchable Warsaw Pact conventional superiority
We have already seen clear evidence of this:
1. The current manifest resistance in the Duma to ratifying the START II
2. Since NATO announced its plan to expand, Russia has rescinded its pledge
of some years ago never to be the first to use nuclear weapons in the event
3. Recent proposals from, for example, Victor Mikailov, Russia's Minister
for Atomic Energy, for the construction of thousands of low-yield
"mini-nukes", and for the re-opening of production lines for a variety of
missiles, as well as for redeployment of tactical nuclear weapons back into
Belarus, from which they had been removed - all as responses to NATO
4. Mikailov also suggests that Russia should consider possible withdrawal
from the INF (Intermediate Nuclear Forces) and CTB treaties, and cutting off
of new NATO members from Russian energy and other exports as responses to
5. On 23 January, the Duma approved a resolution asking the Russian
president and government to devise
a program to counteract NATO expansion. The resolution described NATO
enlargement as the "most serious military threat to our country since 1945"
and charged that NATO member states "have not renounced the use of force as
a method to resolve foreign-policy problems."
No to NATO Expansion Speakers Tour
43 Nisbet St, 3rd Fl.
Providence, RI 02906
Tel: 401 751-8172
Fax: 401 751-1476
RFE/RL NEWSLINE Vol 2, No. 31, Part I, 16 February 1998
BABURIN URGES COMMUNISTS TO ALTER STRATEGY. Duma Deputy Speaker Sergei
Baburin sent an open letter to the KPRF Central Committee plenum urging the
party to alter its "cynical" and "mendacious" strategy toward the
government. In an interview with RFE/RL's Moscow bureau on 15 February,
Baburin said he also distributed copies of the letter to Communist Duma
deputies on 13 February. He again accused the KPRF leaders of "flirting
with the authorities" and said his letter is aimed at "preventing the
collapse of the left [opposition] movement." Baburin has long called for
the Duma to vote no confidence in the government even if such action were
to lead to the dissolution of the lower house of the parliament. His
differences with KPRF leaders over strategy have caused a split within the
Popular Power Duma faction (see "RFE/RL Newsline," 9 February 1998). LB
DEFENSE INDUSTRY IN STEEP DECLINE. Deputy Economics Minister Vladimir Salo
announced on 6 February that production in the defense industry declined by
16.4 percent in 1997 and the production of arms and military hardware by
31.2 percent, ITAR-TASS reported. (Overall industrial production was up 3
percent for the year.) Salo attributed the decline to government debts to
the sector. He noted that spending on conversion programs for defense
enterprises totaled just 11 percent of budget targets in 1996 and virtually
nothing in 1997. Duma Defense Industry Conversion Committee Chairman
Georgii Kostin, a Communist, said on 3 February that output in the industry
has fallen elevenfold over the last six years. He described the state of
the industry as a threat to national security. According to "Izvestiya" on
14 February, the government is planning to reduce the number of defense
enterprises from 1,700 to some 600 by the year 2000. LB
16 February 1998
Yeltsin Rules Out Immediate Government Changes
MOSCOW -- President Boris Yeltsin, who on Tuesday makes his
annual address to the two chambers of Russia's parliament, has ruled out
any immediate government reshuffle, Russian media said on Monday.
"With analysis but without consequences," Yeltsin was shown on
television saying to Prime Minister Victor Chernomyrdin during a meeting
in the Kremlin.
Introducing the soundbite, ORT television said the phrase had come in
answer to a question on whether any ministers would be sacked on
Itar-Tass news agency quoted the president as replying to a question on
whether there would be a reshuffle with the phrase: "No, there will be
an analysis but without consequences."
Interfax news agency said Yeltsin told Chernomyrdin he would make no
proposals "on tough personnel measures" in his address.
The government is scheduled to give an account of its record during 1997
to Yeltsin on Feb. 26 and the president has hinted that he might make
changes based on that report.
But he has also made clear he wants to keep key reformers Anatoly
Chubais and Boris Nemtsov, both first deputy prime ministers, in place
until the end of his four-year term in the year 2000.
ORT also showed Yeltsin saying his 30-minute speech in the State Duma on
Tuesday would give the essence of his policy, but that observers should
draw their conclusions from the much longer accompanying written
document sent to legislators.
"It will be interesting for everyone, so I advise you to come," the
67-year-old president told Chernomyrdin with a laugh.
Tuesday's address to the State Duma and Federation Council upper chamber
is expected to focus on Russia's economic problems.
Olympics: Russia Struggles to Stay Sporting Superpower
16 February 1998
NAGANO, Japan -- If Russian Olympic Committee president Vitaly Smirnov
had his way his country would still be the sport's superpower.
"There was a void left after the break-up of the Soviet sports empire,"
he said. "We must fill this void. Russia, the logical inheritors of the
USSR, must claim that spot."
But after the first week of the Winter Games, the situation was far from
perfect in the Russian camp.
Although Russia led the medals table with six golds on Sunday night,
they trailed both Germany and Norway on total medals. It appeared
unlikely that Russia would be able to overtake them by the time the
Games end next weekend.
Even worse for the Russians was the fact that almost all their medals
have come from just two sports -- women's cross-country skiing and
figure skating, while Russian lugers, bobsledders and speed skaters lag
"After the Soviet break-up we lost all our major winter training bases
-- luge-bobsleigh in Latvia's Sigulda, Alpine skiing in Bakuriani,
Georgia and probably what was the world's best speed skating oval in
Medeo, Kazakhstan," Smirnov said.
"Who would ever thought that we, once the world's top skating nation,
would be left without a single speed skating arena and would be forced
to host our national championships in Berlin."
Some sections of the Russian press have criticized the country's sports
officials, who failed to persuade the Russian government to build an
indoor speed skating rink.
Russian sports daily Sports-Express compared their speed skaters to
lowly Kenyan skiers, who must train in Finland simply because there is
no snow in their own country.
"Well, imagine, in Russia we don't have the ice," the newspaper wrote.
"In a country of over 180 million people we don't have a single arena
with artificial ice where we could held our national championship. We
must train in Germany or elsewhere."
Smirnov promised that the situation would improve soon. "Moscow's Mayor
(Yury) Luzhkov, who was here for the opening ceremony, promised to build
a modern speed skating arena in our capital," he said. "And as you know,
when he says something he delivers."
But the Russian Olympic chief said his country was still lagging behind
in terms of technological progress in winter sports.
"Honestly speaking, our team here is like a lame duck," he said. "We are
way behind the other top nations and must always try to catch up with
He also said that the Russian successes over the years have been like a
"bone in the throat" to some.
"There are some that would rather hear about our doping scandals than
our sports achievements," he said.
Smirnov promised that his country's athletes would perform better at the
2000 Summer Olympics.
"I'll guarantee you that we'll do a much better job in Sydney than in
Atlanta," he said. "In Australia we won't be subjected to such biased
judging like in the U.S. and we won't face such brutal American
Los Angeles Times
February 16, 1998
Russia's Risky Strategy
Old habits die hard, old national imperatives endure. A Russia that
starting in the 19th century schemed to gain influence and power in the
Persian Gulf has become increasingly outspoken in emphasizing its
differences with the United States over how to deal with Iraq. At times
in recent days high Russian officials seem to have implied that these
differences are fundamental enough to jeopardize the cooperative
relationship that has developed between Washington and Moscow since
Soviet communism collapsed a little over six years ago. If so, Russia
has adopted a high-risk strategy indeed.
What's more likely is that Russian leaders for now are more
interested in trying to impress the folks at home and playing to Arab
opinion than they are in confronting the United States. Except for its
nuclear forces Russia has all but ceased to be a military power, too
poor to send its fleet to sea or even to adequately feed its shrunken
and demoralized army. That is a continuing humiliation for a country
that for so long boasted of its military might and its readiness to use
force to further its interests. The simple truth is that Russia today is
in no position to threaten military intervention in the Middle East, as
it did in decades past. But it can make threatening noises, as President
Boris Yeltsin did recently with his somewhat daffy warning that U.S.
military action against Iraq could ignite a world war. Such statements
do not enhance Moscow's credibility.
Russia of course has genuine interests in Iraq. For one thing,
Baghdad owes it nearly $8 billion for weapons provided during the Soviet
era, a debt Moscow can hope to collect only when U.N. sanctions are
lifted and Iraq again starts to earn substantial oil revenues. Russia
has also signed lucrative contracts with Iraq that anticipate a
reopening of post-sanction commercial relations. So Russia has a major
economic stake in seeing the sanctions end and a major political stake,
in Iraq and the larger Arab world, in appearing sympathetic to Baghdad
in its confrontation with the United States. All this has led to Moscow
acting more and more like Saddam Hussein's lawyer.
Russian Defense Minister Igor D. Sergeyev, meeting in front of TV
cameras with Defense Secretary William S. Cohen in Moscow the other day,
pushed the point, expressing "deep concern over the possible costs to
U.S.-Russian military relations" if the United States takes military
action against Iraq. This apparent threat to reduce or end military
cooperation--which among other things involves U.S. help in disposing of
a big part of Russia's nuclear arsenal--is sure to be taken up by those
in Congress who remain deeply suspicious of Russia.
Sergeyev asked, "Is America ready for all the possible
consequences" of using military power to try to force Iraq to stop
hiding its prohibited weapons of mass destruction? A more apt question
is whether Moscow is really ready to risk its expanding web of relations
with the United States for dubious gains in Iraq. At some point Russia's
rhetorical game could well invite substantive consequences. Moscow
should weigh the risks of that very carefully.
February 16, 1998
SHEVARDNADZE'S ENEMIES ARE MANY
Twice in the last 30 months, President Eduard Shevardnadze of Georgia has
narrowly escaped assassination attempts. This week, his motorcade was ambushed
by more than two dozen attackers armed with a grenade launcher and machine
guns. A 10-minute battle raged in which one of Shevardnadze's bodyguards and a
would-be assassin were killed.
"What do Eduard Shevardnadze's enemies want?" the 70-year-old Georgian
leader mused at a political meeting the following day. The answer to that
question seems all too obvious. A better one would have been: Which of
Shevardnadze's legion of enemies was behind this latest effort to rub him out?
Despite his glowing reputation in the West, based on his admirable
achievements as a reformist foreign minister under Mikhail Gorbachev,
Shevardnadze has been making enemies for decades, and there is a long list of
possible suspects in this week's plot.
As top cop and later Communist Party boss in Georgia during the Soviet era,
Shevardnadze imposed Moscow's will on this feisty and cultured Caucasian
region, mercilessly cracking down on Georgian nationalists and organized crime
And while his work with Gorbachev won him acclaim abroad, he was widely
despised at home for his key role in dismantling the Soviet system and its
empire of satellite states. To this day, many Russians blame Gorbachev and
Shevardnadze, instead of the nutty communist system, for reducing their once-
proud country to bankruptcy and powerlessness.
When Georgia became an independent nation, Shevardnadze was catapulted to
power there by armed thugs who overthrew the first post-Soviet government. His
murderous supporters then launched a brutal assault on the breakaway province
of Abkhazia that quickly became an orgy of massacre, looting and rape.
Ultimately, Shevardnadze turned on those who had brought him to power,
which provoked a botched effort to kill him in 1995. As president of Georgia,
he has angered Moscow by forging close ties with Washington at a time when
Russia and the United States are competing for access to rich Caspian Sea oil
The slain assailant in this week's attack has been identified as a Chechen,
feeding speculation that oil played a role. Chechnya and Georgia are possible
routes for pipelines transporting oil from Caspian Sea fields.
Still, U.S. and Russian experts dispatched to help investigate the attack
will have lots of theories to run down. The only thing certain is that the
Georgian leader will have to keep looking over his shoulder for as long as he
remains in power.
15 February 1998
On the margins of the current crisis with Iraq lurks an
issue which is likely to eventually loom taller, namely the revival of
serious divisions between Washington and Moscow.
Russia may now be a nation weakened economically and diplomatically by
all the trauma of the post-Soviet years. Yet it will not remain so
forever, perhaps not even for long. While US policymakers may seem to
value the West's new friendship with Russia, that apparently is not the
perception of the Russian public. Russians are not Americans. They have
a different worldview, a vastly different historical perspective,
different neighbors, and even in difficult times, a different opinion of
their own importance.
American leaders, especially President Bill Clinton, constantly
reiterate that they respect Russia's status in world affairs. Clinton is
no doubt sincere, and he has developed close personal rapport with
President Boris Yeltsin. But "Bill and Boris" will not be in power much
longer, and the interests of such huge nations cannot be built on the
whimsical friendship of one pair of leaders, nor on the mutual dislike
of some future pair.
As best we can judge, the Russian public is irritated by constant
demands to toe some American policy line or other. The quite serious
disagreement over Iraq is only the latest incident that Russians
perceive as stemming from the US view that the West "won" the Cold War.
On such an emotive issue as national pride, perception is all, riding
roughshod over any facts that seem to contradict. Politicians have a
duty to nurture correct public perceptions, which is as important as
their obligation to deal with correct facts.
The first serious American-Russian disagreement came over Moscow's
bitter opposition to the expansion of NATO eastwards.
Russian anger has been perfectly understandable - NATO policy has been
handled with arrogant disregard for those important Russian perceptions.
The two main symbols of the Cold War were the Warsaw Pact and NATO. The
Warsaw Pact was disbanded, and it would have made sense to do the same
with NATO - on paper at least - and then reconstruct a whole new Western
defense system in full consultation with the Russians. The result would
have been the same, but imaginative diplomacy would have removed that
Russian feeling that old enemy NATO was simply "occupying" the former
Soviet sphere of influence. As a result, the Duma has kept the important
START II missile-reduction treaty on ice.
The West should take care not to cast Russia in the role of "bad guy"
over Iraq, nor over any other issue. The fact that Russia has different
views on Iraq is not necessarily sinister - just different, or even
pragmatic. Moscow is owed billions of dollars by Iraq since the Soviet
days, therefore a country with an economy as fragile as Russia's just
might be interested in having UN sanctions lifted so it can get some of
its money back.
Washington, for its part, has been critical of Moscow's relations with
Iran because of fears that Russia might be transferring nuclear and
missile technology to Teheran. That is a very valid concern - but such
matters require diplomacy clear of hypocrisy. There are reports this
weekend that whatever biological warfare capability Saddam Hussein may
have was probably supplied by British firms. Commercial irresponsibility
is hardly exclusively Russian.
There will always be foreign policy disputes and conflicts of interest
among big states. A little mutual respect goes a long way toward
resolving them. Russia is an important, independent, diverse and
cultured nation. One day it will restore its recently-lost global clout.
Respect and understanding from the West now, and less bossiness, will
yield some dividends when that day comes.
23 February 1998
[for personal use only]
Yeltsin's War Games
As diplomacy ebbs, an American air war against Iraq draws closer. But whose
side is Moscow on?
By Russell Watson and Bill Powell
President Boris Yeltsin is Bill Clinton's friend and "partner," Russia's
avatar of democracy, free markets and cooperation among great powers. His
foreign minister, Yevgeny Primakov, is Saddam Hussein's old pal, a former KGB
mischief maker now engaged in an energetic push to restore Russian influence
around the world, particularly in the Middle East. Until recently, it appeared
that Yeltsin was keeping Moscow squarely on America's side. But at 67, the
Russian leader is still in fragile health after heart surgery in 1996 and
sometimes seems erratic or befuddled in public. Two weeks ago he confounded
his own aides by warning, twice, that Clinton would risk "world war" if he
bombed Iraq. While Yeltsin dodders, Primakov dickers, pursuing a diplomatic
solution to the latest crisis in the Persian Gulf and encouraging Saddam to
think he can get away with defying the United Nations. Now, for the first time
since the end of the cold war, it isn't clear what side Russia is on.
The mystery deepened last week when The Washington Post reported a Russian
deal to sell biological-warfare equipment to Iraq. And when Defense Secretary
William Cohen visited Moscow, his normally stolid Russian counterpart, Defense
Minister Igor Sergeyev, lambasted him in front of reporters for Washington's
"uncompromising and tough stand" on Iraq, warning that a U.S. attack could
harm relations with Moscow. Cohen replied politely that things might be worse
"if we fail to act." Action could come soon. The U.S. commander in the gulf,
Marine Gen. Anthony Zinni, said last Wednesday his forces would be ready to
attack "within a week or so," which means air raids could begin during the
next window of opportunity: after the Winter Olympics end and the night sky
over Baghdad becomes moonless. In Washington, a reporter asked Clinton whether
he could order a strike against Iraq even "if Russia says 'nyet'." The
president replied: " 'Nyet' is not 'no' for the United States."
This week the Clinton administration planned a blitz of public diplomacy to
churn up support for a possible military action against Iraq. The president
scheduled a speech at the Pentagon, while top officials were recruited for a
"town hall" meeting on Iraq in Ohio. The administration also tried to prepare
the public for American casualties. "The truth is, war is a dirty thing," Gen.
Hugh Shelton, the chairman of the Joint Chiefs of Staff, told reporters.
"We're serious," said a White House official. "We're explaining the mission to
Yeltsin, in contrast, was looking feeble. During a visit to Rome last week,
he seemed confused at times. When Pope John Paul II signaled the end of their
audience by rising to his feet, Yeltsin forced him to sit down by saying
loudly: "Holy Father, we haven't finished yet." At a banquet with the pope, he
delivered an expansive toast professing, among other things, his "boundless
love" for "Italian women." While the boss was away, Yeltsin's government
couldn't--or wouldn't--prevent an anti-American publicity stunt by
ultranationalist Vladimir Zhirinovsky, who flew a planeload of relief supplies
to Baghdad, where he called Clinton a "sex maniac."
Economically and politically, Yeltsin cannot afford to ruin his
relationship with Washington; he needs the financial aid even more than the
stature it confers upon him. But protecting Iraq is a matter of strong self-
interest for the Russians. Baghdad owes them $7 billion or more in prewar
debt, mostly for arms purchases. And in the last two years, according to some
estimates, Russian companies have signed more than $10 billion worth of
contracts to develop Iraqi oilfields and to sell Baghdad a wide variety of
industrial and military equipment. Russia won't get any of that bonanza until
the U.N. economic sanctions on Iraq are lifted. National pride is also at
stake. Russians know they lost the cold war, but they don't like having their
noses rubbed in it. "Russia wants to be a player for reasons of prestige as
well as economics," says Tim Trevan of the International Institute for
Strategic Studies in London, a former adviser to the U.N. arms inspectors.
"Basically, [Moscow] feels there is a need for an alternate voice to the
American one. And if there is a Russian voice, then it has to be different
from the American voice."
"I am not anti-American," Primakov insisted to reporters. But Russia was
getting a very bad press in America. The Washington Post reported on Thursday
that U.N. arms inspectors had found a document suggesting that the Russian
government had agreed in 1995 to sell Iraq a huge fermentation vessel that
could be used to make biological weapons (or civilian products, such as animal
feed). Citing unnamed sources, the Post also reported that Russia had spied on
the U.N. inspection teams, tipping off the Iraqis to their plans. The Russians
denied these "crude inventions" and accused the administration of leaking the
story to "thwart the intense effort Russia is making... to achieve a
Western officials confirmed that inspectors had found paperwork on a deal
for fermentation equipment, but it wasn't known whether the vessel was ever
delivered. Some U.S. officials questioned whether the Russian government had
ever approved such a transaction. "The Washington Post article took the
flimsiest piece of evidence and played it as hard as possible," complained a
senior White House aide.
Which isn't to say the Russians haven't violated the sanctions to sell
Baghdad military gear or "dual use" equipment that can be put to both military
and civilian purposes. There have been dozens of documented cases in which
sensitive Russian technology has found its way to rogue states, often without
the Kremlin's knowledge or approval. Estimates of the total price tag on the
illicit traffic in expertise, weapons or other products sold worldwide run as
high as $30 billion, a hugely significant sum in cash-starved Russia. U.S.
intelligence believes senior Russian military officials have enriched
themselves on illegal sales. Well-placed sources say the United States has an
intelligence intercept of a meeting in Moscow at which top Russian defense
officials discussed "what bank accounts would be set up for people in the
room" to benefit from a deal to sell military equipment abroad.
The largest purchaser of illicit Russian goods and services appears to be
Iran. But Iraqi purchasing agents have also been busy. In 1994 Russia's
Federal Security Service (FSB), the successor agency to the KGB, thwarted an
attempt by Lt. Gen. Anatoly Kuntsevich, former deputy head of the Russian
chemical-weapons forces, to sell five tons of nerve-gas components to agents
of the Syrian government. The FSB concluded at the time that the material's
ultimate destination was Baghdad. (Kuntsevich was detained for two months and
then released; he now sits on the parliamentary committee on chemical-weapons
safety.) In December 1995 U.N. weapons inspectors fished about 30 Russian
missile gyroscopes out of a canal in Iraq. The devices, which are used in
guidance systems, came from a high-security Russian factory that was
dismantling nuclear missiles under terms of the START I arms-reduction treaty.
Iraq's purchase of the equipment was brokered by a middleman in Jordan, and
apparently the Russian government wasn't involved. "They were only
gyroscopes," says former arms inspector David Kay, "but what if they had been
tactical nuclear components?"
U.S. experts who monitor the military black market say Iraq's reliance on
help from Russia has tapered off since the end of 1995. The Iraqis have
rebuilt their potential for weapons of mass destruction, partly by developing
their own expertise. "They really don't need the Russians now," says a
Pentagon official. If diplomacy fails, Saddam's weapons capability will be the
primary target of a U.S. bombing campaign. "Iraq's weapons of mass destruction
and its capacity to lash out at [its] neighbors will be significantly
diminished," the president's national-security adviser, Sandy Berger, promised
in a speech. "We cannot destroy everything; we can have a real impact." Iraqis
could see it coming. "They will bomb us," Iraq's chief U.N. delegate, Nizar
Hamdoon, said fatalistically. "It will be a shooting gallery." When the
shooting ends, the Iraqis will still know how to rebuild their weapons
potential with illicit help from needy foreign friends.
With Melinda Liu and Gregory L. Vistica in Washington, Gregory Beals at the
United Nations and bureau reports
FOCUS-IMF all ears as Yeltsin to address nation
By Brian Killen
MOSCOW, Feb 16 (Reuters) - Russian President Boris Yeltsin is unlikely to
announce radical new economic measures in his annual address to parliament on
Tuesday but analysts say he will stress his commitment to reform and budget
The International Monetary Fund will pay particularly close attention to the
keynote speech, which coincides with a visit to Moscow by IMF Managing
Director Michel Camdessus that could be vital in ensuring continued economic
stability this year.
In a sign that Russia feels it has weathered the storm whipped up by the
financial crisis late last year, the central bank announced that it would cut
its key refinancing rate to 39 percent from 42 percent on Tuesday.
Russian shares, which have been recovering slowly from Asian-inspired losses,
advanced across the board in response to the rate cut -- the first since early
October. Central bank officials said the decision reflected market realities.
``The lowering of rates is effectively an expression of the positive trend of
the market,'' Konstantin Korishchenko, head of the bank's open market
operations department, told Reuters.
Treasury bill yields have dropped by 13 percentage points this month as
investor confidence has picked up and fears have diminished of a rouble
devaluation, rumours of which triggered a sharp rise in rates on February 2.
Kingsmill Bond, head of Russian research at Deutsche Morgan Grenfell in
London, said Treasury bill yields had been at absurd levels and he believed
they would come down further from present levels of about 30 percent.
``Yields will continue to come down as people feel more globally comfortable
with investing in emerging markets and as they realise the extent to which
their concerns over Russia were overblown,'' Bond said.
Yeltsin, still making last minute changes to his speech, on Monday discussed
with Prime Minister Viktor Chernomyrdin the state of the financial markets and
the forthcoming IMF visit.
The talks also touched on the draft 1998 budget, which may be approved by
parliament's lower house, the State Duma, this week and is likely to be high
on the agenda for Camdessus when he meets Yeltsin, Chernomyrdin, Finance
Minister Mikhail Zadornov and other officials.
The IMF is keen that the budget targets should be realistic and conform
own 1998 economic programme for Russia, but Deputy Finance Minister Oleg
Vyugin acknowledged last week that there might be a shortfall in revenues.
IMF officials say Camdessus will be looking at ``any additional steps
by the Russian authorities in the context of a bold programme to address
underlying fiscal and structural weaknesses.''
``The IMF has to play a delicate balancing act,'' Bond said. ``On the one
they are trying to encourage the government to make the necessary changes in
two key areas -- to have a realistic budget and get tax collection up to
``It needs to keep the pressure on very significantly, but they want to
maintain the confidence in the markets, or else the government will be in a
much weaker position than it is now,'' he said.
Alasdair Breach, an economist at the Russian European Centre for Economic
Policy, said Yeltsin's address was likely to focus more on consolidating
reforms than on any radical changes.
But he said it was important to satisfy the IMF and to ensure disbursal of a
new tranche of $670 million under a $9.2-billion loan programme. A finance
ministry spokesman said Russia expected funds in addition to this tranche, but
he was unable to say if the extra funds were already earmarked for 1998.
``It'll be a real blow if they don't come up with an agreement and recommend
disbursing the new tranche,'' Breach said, adding that fiscal and budget
discipline was essential.
The analysts were optimistic about Russia achieving a revised target of 1.2
percent growth in gross domestic product this year, although underlying
problems such as weak corporate governance will hinder foreign investment.
Bond thought two percent growth was possible this year and he saw investors
returning cautiously to the market this year.
``There is no great impetus to buy right now, but if we do see stability
taking hold on emerging markets, Russia continues to have the same
extraordinary potential that it had before.''
Duma Commission Recommends Gov't Stop Privatization of Strategic Firms
16 February 1998
MOSCOW -- A State Duma commission that investigated the sale of shares
in four major Russian companies has recommended that the government halt
privatization of strategically important enterprises until a list of
these firms has been legislatively approved.
The commission's main conclusions were based on a report by the Russian
Federation's Counting Commission.
A draft resolution on the results of the investigation approved Monday
states that auctions and tenders for the sale of shares in Svyazinvest
telecom holding, Sibneft and Tyumen Oil Company (oil) and metallurgical
giant Norilsk Nickel violated the law on certain counts.
Discussing the Sibneft privatization, Counting Commission spokesman
Sergei Burkov announced that the starting price in the sell-off of
Sibneft's 51 percent stake was considerably understated. Moreover,
affiliated companies took part in the auction and budget money was used
as a means of payment when the stake was mortgaged in 1995. Burkov said
that on the eve of the auction, $137 million worth of the Finance
Ministry's temporarily free currency resources were placed with
Stolichny Bank, which was one of the winners of the auction.
However, a dissenting view was offered by Counting Commission member
Vyacheslav Kuznetsov, who checked on the legality of the sale. He said
that there were no serious violations of the law in Sibneft's
privatization. The starting price was not understated because it was
established on the basis of the method approved by the government, he
said. The participation of affiliated companies does not violate the
law, because there are no legal acts banning their participation in such
auctions. Nor can one prove the fact that budget money was used as a
means of payment at loans-for-shares auctions, Kuznetsov said.
The Duma commission said it took Kuznetsov's opinion into account in
drawing its conclusions, which will be submitted to the lower house.
The Prosecutor-General was asked to organize its own investigation to
ensure that the companies have been privatized in accordance with
Russian legislation. The document also contains a number of
recommendations for the government to revise privatization legislation.
According to the draft resolution, the commission's findings will be
referred to the Russian president for deliberation.
Russia: Idle Workers Plague Industry
By Tony Weselowsky
Prague, 11 February 1998 (RFE/RL) -- In Gogol's "Dead Souls," the
protagonist Chichikov takes a unique, albeit bizarre, approach to raise his
social standing. He roams the countryside, buying from provincial landlords
lists of their dead serfs to be used in later business deals as if they were
Oddly enough, today's Russian labor force in certain ways resembles
Gogol's 19th century satire of Russian serfdom and bureaucracy. Like the
absurd list Chichikov collects, Russian industry is plagued with similar
rolls of idle workers, or as one specialist on Russian unemployment calls
them, "dead souls." Whether lists of peasants or workers, what exists on
paper belies reality.
"You'll go to a Russian firm, a big factory, the people on their books
are either called administrative leave or unpaid wages," Guy Standing
explained recently in an interview with RFE/RL. "They're expected to turn
up, but they're not being paid, are actually unemployed, but they're just
kept on the book."
Standing, author of 1997's "Russian Unemployment and Enterprise
Restructuring: Reviving Dead Souls," says the swelling ranks of idle Russian
workers mask what is, contrary to official statistics, massive unemployment.
"What we found in fact is that if you look at the enterprises, you find
that something like a third of the workers are either suffering from wage
arrears, for months and months, or are unpaid leave, administrative leave.
So you can essentially say that a third of those people, called employed,
are not really employed," said Standing, whose research is based on seven
rounds of surveys initiated in 1991.
Russian workers have become pawns, like Chichikov's dead souls, in a
vicious circle that Russian industry, known for its labor paternalism during
the Soviet era, has little interest in resolving, according to Standing.
"The irony is that it doesn't cost the enterprises anything if they just
keep their workers on the books, unpaid. But if they lay them off, then they
have to pay them severance pay so it costs them," explains Standing.
He said workers are left with few options.
"If they quit the enterprise, they would lose entitlement to the
severance pay, and in all likelihood, in reality, to unemployment benefits,
at least for awhile," says Standing. "So they just keep their work history
book on, and some of them try to earn money in the black economy. Some are
just desperate in the street begging, and in some cases, they're suffering
social illnesses and dying."
Those without the chutzpah to work as so called "chenyoki" -- small time
traders commonly seen lugging their wares to outdoor markets -- find little
solace from the state's underfunded unemployment scheme.
"In practice those people that do get unemployment benefits are only a
tiny percentage of the unemployed and those that receive benefits, the
average amount comes out to be equal to the minimum wage," says Standing,
noting that the minimum wage is calculated at about 20 percent of the
official subsistence income.
"In other words, if you receive the minimum wage, you're in chronic
poverty," says Standing. But getting even a few roubles as unemployment
would cast you as lucky in today's Russia. Like the rest of the country's
economy, Russia's unemployment fund is trapped in a non-payment problem of
its own, as Standing explains.
"The enterprises say they don't have any money for the unemployment fund,
but we've got these shoes, or unsold anything they produce, 'we can't sell
them, you take these instead of the money we would pay into the employment
fund and you give those out to the unemployed."
Chichikov envisioned growing rich through his scheme. Being paid in
footware, the dreams of Russian workers may not be so lofty.