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Johnson's Russia List


April 8, 1998  
This Date's Issues: 2139 2140  

Johnson's Russia List
8 March 1998

[Note from David Johnson:
1. Reuters: Russia to clamp down on capital flight.
2. Reuters: Yeltsin, Duma still split over PM ahead of vote.
3. The Independent (UK): Phil Reeves, Yeltsin fights to put 
cabinet back together again.

4. Chicago Tribune: Elizabeth Williamson, RUSSIAN MUSEUMS FIND 

5. St. Petersburg Times editorial: Kiriyenko Means an Active 
Yeltsin, Beware.

6. Michael Lelyveld (RFE/RL): Moscow's New Caspian Policy?
7. The Irish Times: Seamus Martin, Mr Berezovsky: the hidden 
hand behind the Kremlin.

8. Moskovskaya Pravda: Maksim Galkin, "Chubays Illuminated the 
Great Path for Us--Who Is Mary Without John, What is the Government 
Without Chubays?" (Chubays Said Discredited by Corrupt Friends).

9. Pravda: Aleksandr Samovarov, "Authorities and Opposition
Compromise. Will S. Kiriyenko Become Russian Premier?"]


Russia to clamp down on capital flight

MOSCOW, April 7 (Reuters) - Russia's Interior Ministry pledged on Tuesday to
clamp down on an illicit outflow of billions of dollars a year from companies
and individuals seeking to stash away money abroad, much of it embezzled. 

But the ministry also lashed out at other government bodies for failing to
keep track of suspect capital flows, and said a new joint programme to stop
the haemorrhage would also target laxity and abuse of office at the central
bank and elsewhere. 

Illicit outflows are variously estimated at between $12 billion and $200
billion a year, depriving the government of tax revenue and the economy of
capital and keeping workers from being paid for months at a time. 

Kuzma Shalenkov, deputy head of the ministry's main directorate on economic
crime, told a news conference that between 1995 and 1997, Russian exporters
had failed to receive payment for $12 billion worth of goods shipped abroad. 

These included, astonishingly, $3.1 billion for nuclear reactors and equipment
and $762 million in unpaid bills for spacecraft. 

In addition, public and private bodies' own debt arrears were estimated at 70
trillion "old" roubles on January 1, 1998 -- now redenominated as 70 billion
"new" roubles. 

"If you divide 70 trillion roubles by 6,000, the (old) exchange value of the
dollar -- you'll see that an additional $10-11 billion have been transferred
abroad as payments under sham import contracts...That's where the hard
currency so badly needed by the Russian economy goes," he said. 

Shalenov said studies had shown that some 60 to 70 percent of Russian
commercial or public credits were embezzled or misappropriated and never

In one such case, $63 million was lent to the Chukotka autonomous area in the
Russian far east to develop the gold industry and pay for resettlement
programmes. But the money was instead invested with two Moscow banks which
subsequently went bankrupt, and some $25 million were lost. 

A programme announced last month with other government agencies including the
central bank contains a plan to make the illicit transfer of capital a crime
in its own right. 

But Shalenov added: "We have a system, but it is not functioning
properly...This programme is also aimed at the agencies of currency control.
There is sloppiness, there is abuse of office. We will check and ask them why
they are not fulfilling their duties." 

Shalenov also said the ministry intended to send a flurry of enquiries to
finance authorities abroad asking them for information on Russian citizens who
had brought in large sums of money or invested heavily in property. 

"In the Maltese capital Valletta they have a street called Red Oilmen's
street..." he said. 


Yeltsin, Duma still split over PM ahead of vote
By Gareth Jones 

MOSCOW, April 8 (Reuters) - Boris Yeltsin and his parliamentary foes remained
at odds on Wednesday over the president's controversial choice of prime
minister despite Kremlin talks that tried to end Russia's political crisis. 

Two days ahead of a parliamentary debate on Sergei Kiriyenko's nomination,
deputies were weighing up whether to risk Yeltsin's wrath and vote against the
35-year-old former banker whom many regard as too young for the job. 

Yeltsin has said he will dissolve the State Duma lower chamber and call early
parliamentary elections if it rejects Kiriyenko. The Duma has three chances to
approve the president's candidate. The first vote is expected after Friday's

``I don't think (Kiriyenko) will get through on Friday,'' said Communist
leader Gennady Zyuganov after Tuesday's ``round-table'' talks convened by
Yeltsin in the Kremlin. 

``The country is in crisis, it needs a strong, competent government of
professionals who understand its problems,'' he said, reiterating his party's
view that Kiriyenko lacks the experience and political clout to be an
effective leader. 

But despite the tough rhetoric from both sides, there was a smell of
compromise in the air as Kiriyenko continued his charm offensive, trying to
win over sceptical deputies. 

The earnest, bespectacled technocrat has gained in political stature over the
past two weeks since Yeltsin sacked veteran prime minister Viktor Chernomyrdin
and nominated Kiriyenko, energy minister in the outgoing cabinet, to succeed

On Tuesday a parliamentary official showed Reuters outline notes of what he
said was Kiriyenko's planned speech to the Duma on Friday. 

The outline included pledges to conduct a more active industrial policy,
combat poverty and tackle delays in public sector wages -- all likely to
appeal to the Communists and their allies who dominate the chamber. 

It also offered parliament some say in policy but made clear there would be no
fundamental change in Russia's liberal economic course -- something the
Communists have long demanded. 

The parliamentary official said the outline had been distributed to
participants at the round table, who included the parliamentary faction
leaders and trade union chiefs. 

The union leaders were clearly encouraged by Kiriyenko's words on ending
Russia's chronic problem of wage arrears, which proved one of the main
failures of Chernomyrdin's government. 

Mikhail Shmakov, head of the Federation of Independent Trade Unions, told
Russian television the round-table talks were very constructive and he thought
Kiriyenko would be approved by the Duma, though perhaps not on the first vote.

Russia's trade unions, supported by the Communists and other opposition
parties, plan to hold nationwide strikes and demonstrations on Thursday to
protest against the wage delays, which affect millions of people including
doctors and teachers. 

Keen to defuse the protests and to project a benign, paternal image, Yeltsin
told Tuesday's round-table participants he wanted 1998 to be a ``non-
confrontational year.'' 

But even after the current political crisis ends, Russian society will remain
sharply divided between haves and have-nots. 

And a bigger political confrontation -- over who succeeds Yeltsin in the
presidential election due in mid-2000 -- is already looming larger on the

Chernomyrdin, 60 this week, declared his candidacy after being sacked and won
a rather lukewarm endorsement from Yeltsin. 

But on Tuesday the stolid former gas industry chief earned a significant vote
of confidence from one of Russia's richest and most influential men -- oil and
media tycoon Boris Berezovsky, who called on business to back the ex-premier
in order to rally the forces of market reform. 

Berezovsky was a key figure in Yeltsin's re-election in 1996 and remains a
force in the president's inner circle. 

Russia's new business elite remains worried that rival candidates, such as
Moscow mayor Yuri Luzhkov or liberal deputy premier Boris Nemtsov, could split
the establishment vote, creating a risk that Zyuganov or another left-winger
might win.


The Independent (UK)
8 April 1998
[for personal use only]
Yeltsin fights to put cabinet back together again
By Phil Reeves in Moscow 

BORIS YELTSIN'S lonely quest to persuade parliament to accept his 
green-horn nomination for prime minister entered its third week 
yesterday with few signs that a swift end is near to the limbo that has 
engulfed the Russian government. 

The beleaguered president can never have expected to emerge from 
yesterday's carefully orchestrated meeting with his parliamentary foes 
with any concrete triumph, but he will have hoped to make more headway 
than he actually managed. 

The key players left the encounter sounding unimpressed by Mr Yeltsin's 
efforts to cajole them into supporting the 35-year-old ex-provincial 
banker and (briefly) former energy minister, Sergei Kiriyenko. His 
nomination goes to the vote in the State Duma, or lower house, on 

Mr Yeltsin invited them to the Kremlin with promises that he would 
listen. But even in his hour of need he made sure it was his show. 
Reporters and camera crews were allowed to cover his monologue, in which 
he called for a government of "business-minded people", talked of making 
1998 a year of "non- confrontation" in politics, but repeated his 
opposition to a coalition government. 

He complained Russia has spent two weeks without a government following 
his sudden, and - as it turns out - highly disruptive decision to fire 
Viktor Chernomyrdin and his administration. "It is very serious, of 
course. If it continues, we will lose out even more," he said. 

While he allowed himself 20 minutes to browbeat the gathering of several 
dozen party, trade-union and regional leaders, others were kept on a 
tighter leash. As soon as he and his close ally, Yegor Stroyev, speaker 
of the upper house, had finished talking, the press was ushered out. 
Everyone else was allocated five minutes each. 

The timing of the meeting not only reflects Mr Yeltsin's anxiety to put 
the government back together again. Tomorrow sees a day of protests and 
marches over Russia's huge wages arrears; Mr Yeltsin was evidently keen 
to appear to have tried to mend some bridges beforehand. However, he did 
not get very far. Afterwards, Gennady Zyuganov, leader of the Communist 
Party, which holds 138 of the Duma's 450 seats, said Mr Kiriyenko's 
candidacy was unlikely to be approved. 

Mr Zyuganov's party, the largest in parliament, has been particularly 
strong in its criticism of Mr Kiriyenko, who favours market reforms. The 
liberal Yabloko party (45 seats) is also opposing him. So far, outright 
support has come only from the Liberal Democrats (51). The 
pro-government Our Home is Russia has yet to decide which way to vote. 

Mr Kiriyenko's chances of being confirmed at the first attempt look 
weak, although it is not impossible. If the Duma rejects him three 
times, parliament must be dissolved and elections held. It is 
unlikelymany of theelite at yesterday's meeting truly want to go before 
the electorate before it is absolutely necessary, but the bartering 
process may go down to the wire - leaving Russia lost and rudderless for 
more days yet. 


Chicago Tribune
7 April 1998
[for personal use only]
By Elizabeth Williamson. Special to the Tribune. 

Street-smart, savvy and feasting on post-communist spoils, bankers are the
fattest cats in Russia. They sport Italian suits, travel with legions of
bodyguards, spend their holidays on the beach in Cannes or the slopes in
Chamonix. They don't know much about art.
Now they're Russia's first home-grown cultural patrons.
In what promises to become a trend, two of Russia's largest museums, the
State Hermitage Museum and the Russian Museum, have received pledges of money
and expertise from two of Moscow's biggest banks. For the bankers, who possess
everything but respectability, the agreements are an image booster; for the
cash-starved museums, they're a lifeline.
"Do they have the right to be patrons of art? Did the Rockefellers,
Morgans, Carnegies, the robber barons, did they have a right to be patrons?"
asks the Hermitage's director, Mikhail Piotrovsky. "Culture is bigger than all
of us. . . . Nobody understands the reality of the Hermitage more than
(Russian) business interests."
That reality is grim. After the collapse of the Soviet Union, a cash-
strapped Moscow failed to fulfill its mandate to support Russian cultural
institutions, including the museums, which are more than 90 percent state-
funded. By 1996, funds were so scarce that St. Petersburg's museums, theaters
and universities staged a citywide protest, threatening to close unless Moscow
ponied up. But after an initial bailout, the situation has changed little. The
Hermitage, for example, received only 40 percent of last year's operating
budget, enough to pay salaries and utilities but nothing else.
Enter Vladimir Potanin, one of the country's seven most powerful bankers,
who gave a symbolic $50,000 to fund Hermitage's scholarly publications. More
important, Uneximbank now is on line to fund a feasibility study for
development of the decaying, nearly vacant General Staff building, a huge,
czarist-era soldiers' quarters adjacent to the Hermitage. Then, it is hoped,
the bank will help pay for the $150 million project, which would add exhibit
space and restoration laboratories, a wax museum, restaurants and a cinema.
Asked about his artistic preferences at a press conference announcing the
agreement, Potanin expressed a partiality for landscapes. "I like pictures
with no people in them," he said. "When I see faces I feel I have to persuade
Of course, Potanin's generosity likely had less to do with art than with
saving face. Uneximbank's gift came in the aftermath of a scandal in which the
bank was accused of bribing then-Deputy Prime Minister Anatoly Chubais and
several government colleagues, paying them a $500,000 advance on a book about
privatization. The advance was seen by the state Duma as a bribe to secure a
sweet deal in an auction of shares in the state telecommunications company.
Not to be outdone, the St. Petersburg branch of Moscow giant Inkombank
inked a similar museum deal within two weeks of the Uneximbank agreement. The
bank donated $85,000 to the Russian Museum for a collection catalog, then
pledged its support for a two-part, $25 million plan: phase one to be
completed in time for March's 100th anniversary celebration, the second to
coincide with the city's 300th birthday in 2003.
Many say a major factor in the close timing of the agreements is the battle
between the two financial institutions for ownership of the city's three major
shipyards. "Banks are welcome to compete in cultural (patronage)," says Vadim
Zingman, Inkombank's 28-year-old president. "That is the most decent way of
The banks' feuding, their unsavory deals, their love of landscape art --
none of this fazes the museums.
"Someone has to make these Russian businessmen civilized. If not us, then
who?" Vladimir Gusev, director of the Russian Museum, says with a smile.
Ironically, the problems that plague the museums are the same ones that
made the bankers rich. Lacking a federal treasury in the impoverished
environment that followed communism's collapse, the state deposited all its
funds with the new banks, money they then used to their own advantage. In the
mid-1990s, the banks lent money to the struggling federal government in
exchange for bargain-basement deals on the country's most valuable state
industries, which they bought through rigged privatization auctions.
The banking elites battle regularly over property and influence in the
Kremlin, and they've been accused -- mostly by each other in the newspapers
they own -- of everything from investor scams to contract murders. Now it
looks as though art patronage has become their new playing field.
In a cultural world so destitute, institutions are willing to overlook the
banks' faults in accepting their largesse. While the biggest museums do
attract money from Western corporations like Coca-Cola, IBM and Honeywell,
when it comes to international arts foundations they encounter a credibility

Freeing up state money
"The competition for grants in the West is intense. Funders look for a
sense of security, of where money is going once grants are made," says Jane
Siena Talley, an employee on loan from the Getty Conservation Institute to
head the St. Petersburg International Center for Preservation, a consultancy
aimed at preserving the city's cultural treasures.
"Most funders from the outside want to see some type of recordkeeping,
business activities operating inside the institutions that they're comfortable
with. . . ."
Until the banks came along, the art museums also came up empty when they
tried to plumb local sources of funds. There are as yet no tax benefits in
Russia for philanthropy. The few wealthy "new Russians" who did propose
sponsorship were rejected when they coupled their offers with absurd requests:
for gifts of artwork, or for permission to post garish advertising in
galleries. The banks have made no such demands, the museums say.
The museums believe the bankers' obvious pull with the government will help
free up state money still in arrears. What's more, their wily ways in finance
offer expertise unknown within the museum's academic world. For example, state
museums here are prohibited from building endowments, and museum directors
hope the banks will help them work out a serviceable alternative.
"This is exactly what we need," says Piotrovsky. "Advice on how to use
money and how to get money from the government."
If the promised expertise comes through, international funders may be
encouraged enough to loosen their purse strings as well.
Says Getty's Talley: "I think they correctly detect the challenge ahead:
(It) lies with building up a local constituency that will support them in
their new economic climate."
Because the Russian Museum's collection of 400,000 Russian works is less
attractive to international funders than Hermitage's trove of three million
works from all over the world, Gusev is casting his lot with the locals.
"We're grateful for the help we get from abroad, but I figure we have to
look for funding in Russia," he says.
Last year, the museum was "given" four historic buildings by the city
government: its home, the Mikhailovsky Palace; the Mikhailovsky/Engineers'
Castle, across the road; the Stroganov Palace, on fashionable Nevsky Prospect;
and the Marble Palace, on the Neva River. All four sites are in need of
massive renovation.
Gusev's newly hatched plan to find sponsors for the work is titled "Russian
Business for the Russian Museum." The pitch is hundreds of pages long, selling
would-be patrons on underwriting everything from palace rehab to sculpture
Experts and museum heads dismiss the notion that bank sponsorship has put
the integrity of the museums in danger.
Says Talley: "Russian philanthropy will develop under its own terms. We all
have our issues; some people don't want to take money from (tobacco giant)
Philip Morris. I personally don't see what is at risk here at the moment."
"They seem to understand that culture is more subtle; they understand that
they don't know as much as the professionals," adds Piotrovsky. "But it's up
to us. We have to put (agreements) in a way that nobody even thinks about
Perhaps the best safeguard is the simple fact that without the museums'
international status they are worthless to the bankers.
As Piotrovsky puts it, "If we don't keep our reputation, we'll have


St. Petersburg Times
APRIL 6-12, 1998
Kiriyenko Means an Active Yeltsin, Beware 

IN "THE Dark Side of Camelot,: Seymour Hersch offered a portrait of former
U.S. president John Kennedy in the White House as someone who abused
amphetamines to get
high; who was having recreational sex left and right with prostitutes and
with other women
not his wife; who would roll out of bed at noon, shuffle some paperwork for
a couple of
hours and then spend the rest of the day relaxing at pool side. Hersch
quotes Kennedy's
former Secret Service bodyguards, who tell him they were bemused by
Kennedy's frat house
lifestyle. They wondered, when is he going to start working?
Reviewing Hersch's book for The New Yorker, American author Gore Vidal
was quick to see
a bright side in Kennedy's weak work ethic. Vidal argued that America was
better off when
Kennedy wasn't at work - because when he did show an interest in running the
free world,
it manifested itself in plots with the mafia to assassinate Fidel Castro,
escalations of
American military involvement in Vietnam or botched invasions of Cuba.
Here in Russia 30 years later, we are blessed with Boris Yeltsin, another
famous as a decisive ruler and a hard partier. Much like Kennedy, Yeltsin
has spent much
of his rule otherwise occupied - by illness, or alcohol, or vacation, or
convalescence, or
even by the deep fits of depression he has admitted being susceptible to.
It has long been fashionable in Russia to complain that Yeltsin does not
pay enough
attention to his job. This was particularly true before his 1996 bypass
operation; up
until then, the big question was often, when is Yeltsin going to start working?
And again, the bright side of the coin has been that the relaxing Yeltsin
isn't hurting
anyone, while the active Yeltsin blew up the White House, killing more than
100 people,
ordered a bizarre bombing campaign against civilian centers in Chechnya that
killed about
100,000 civilians (about what U.S.-led forces killed in Iraq during the 1991
Gulf War),
and signed off on a blizzard of corruption whose winds blow to this day.
Now we have his new pick for prime minister, Sergei Kiriyenko, 35.
Kiriyenko is an
untried unknown; some have compared him to former U.S. vice president Dan
Quayle, but that
does Quayle a disservice - at least he stood for something. Kiriyenko is at this
point obstinately insisting he stands for nothing other than what Yeltsin
tells him.
Much praise is nevertheless being heaped on Kiriyenko, both here and
abroad, on grounds
that he is young and "honest" and a "reformer." Time will tell as to
the honesty or the reforming. It's worth remembering that Boris Nemtsov -
patron (both are from Nizhny Novgorod) - was also praised as honest (though
Nemtsov has
never explained how he could get a $90,000 advance on a book, "The
that was printed in 25,000 copies and is retailing, slowly, for $1).
Kiriyenko, for his
part, has never explained exactly how he used the Nizhny Novgorod pension
fund to create
the private Garantiya Bank he headed - could that be honest?
But of course, Kiriyenko is not a prime minister but a homunculus for
Yeltsin - who's
suddenly decided he's coming back to work, and may even run for a third term. 
Either way, a more active Yeltsin means little good for Russia. 


Russia: Moscow's New Caspian Policy?
By Michael Lelyveld

Boston, April 7 (RFE/RL) -- Russia's new policy toward division of the
Caspian Sea and export pipelines is good news for Turkmenistan, but not good
Recent statements from Moscow suggest that Russia is becoming far more
conciliatory toward the Caspian littoral states and their demands for a
division of the sea into national sectors.
Last week, Russian First Deputy Foreign Minister Boris Pastukhov
confirmed the new attitude during a meeting with Azerbaijan President Heidar
Aliev, saying that Moscow no longer opposes a sectoral division, despite its
previous objections for more than three years.
Russia now believes that the seabed should be divided, giving the states
control over petroleum resources. But the surface and the water itself
should be shared to allow navigation and other uses by all states, Pastukhov
THe change may be encouraging for Turkmenistan as it prepares to award
billions of dollars in contracts for its offshore Caspian oil fields. While
Moscow can do little to stop these projects in any case, its agreement will
lift a legal cloud over all Caspian investment.
Russia has shown similar willingness in recent weeks to put its
competition for Caspian pipeline routes on a practical rather than a
political footing. Three weeks ago, and just one week before his dismissal,
former Prime Minister Viktor Chernomyrdin said that economics, not politics
would determine the pipeline choice. Last week, acting First Deputy Prime
Minister Boris Nemtsov sounded the same note, saying that the decision would
be based "purely on economics."
Such pronouncements would be welcome indeed if they signify that Russia
is ready to end its political maneuvers in the region and get down to the
business of opening competitive access for exports. But in the weeks since
the Chernomyrdin statement, it is gradually becoming clear what he meant.
Nemtsov's repetition of Chernomyrdin's phrases, even after the prime
minister's ouster, suggests that there has been a coordinated shift in
strategy on the Caspian, but no change in Russia's motives. There are also
so many loopholes in the new Russian policy that the republics should be
skeptical about whether it is anything more than a change in words.
For one thing, the Russian formula on dividing the Caspian would allow
national ownership of the seabed, but it is not clear that it would cede
jurisdiction over development because drilling platforms must be placed on
the surface which would be commonly controlled. Unless an exemption is
provided, the sectoral concession would be meaningless.
Moscow is also opposing construction of a trans-Caspian pipeline to join
Turkmenistan and Azerbaijan on the grounds that it would pose an
environmental risk. Its position on the shared control of the water would
allow it to block such a pipeline which must run through it. While Russia's
concern for the environment is laudable, it has shown little regard for
ecology in previous petroleum development on its own territory.
U.S. energy analysts say that the point of opposing a trans-Caspian line
is to block American plans for a complete east-west pipeline route,
connecting not only Baku with the Turkish port of Ceyhan but joining the
petroleum resources of Turkmenistan and Central Asia as well.
The implication for Turkmenistan is that Russia will continue its
campaign to control the major pipeline access to the country. Without
pipelines, the right to develop Caspian resources is largely academic.
Russia's intentions for the Caspian may also be seen in the plans that it
has also announced to raise the capacity of its oil pipeline from Baku to
Novorossiysk on the Black Sea.
Officials say they are prepared to increase the route's annual capacity
to 17 million tons in the near future. By building a bypass around Chechnya,
they would raise capacity to 30 million tons. When combined with Russia's
opposition to trans-Caspian lines, the moves appear to be aimed at keeping
just as much control over the region's resources as before.
If Russia is truly changing its policies, it should make its statements
unambiguous by guaranteeing that it will not block access to the republics'
resources or outlets for their exports by any means.
While Moscow's approach may be new, the results so far are the same.
Turkmenistan's problems in exporting gas to Ukraine seem to demonstrate how
little has changed.
Despite announcements weeks ago of an agreement in principle to allow
sales of Turkmen gas to Ukraine, no shipments over Russia's pipelines have
materialized. While deliveries remain stalled, Ukraine's economy has
worsened, making payment less likely if shipments do take place. In the
meantime Gazprom has made its own deal with Ukraine giving priority to
Russian claims.
If Moscow has truly decided that economics and not politics will be the
principle for the region's petroleum exports, it can show it by loosening
its grip on the republics, allowing them to compete in foreign markets on
the basis of fair access and transit rates.
Michael Lelyveld is national correspondent for the Journal of Commerce.
This analysis was written for RFE/RL.


The Irish Times
7 April 1998
[for personal use only]
Mr Berezovsky: the hidden hand behind the Kremlin
A wealthy conspirator seems to have goaded the Russian President into
sacking his cabinet, Seamus Martin reports

Friday's vote on the confirmation of Mr Sergei Kiriyenko (35) as prime
minister of Russia will be the culmination of one of the most bizarre series
of events in the increasingly weird arena of Russian politics.
For all the efforts of his spin doctors to portray President Boris
Yeltsin's sacking of his entire cabinet as a move to improve Russia's
economy, the real story emerging is one of precipitate and unplanned action
by a president goaded into anger by the machinations of political schemers
in the Kremlin.
The name most frequently mentioned in this regard is that of Mr Boris
Berezovsky, a wealthy conspirator who, according to the US magazine Forbes,
is personally worth £2.2 billion. Forbes had earlier accused Mr
Berezovsky of links with organised crime and the
mathematician-turned-businessman tried, unsuccessfully, to win damages for
libel. Starting business as a car dealer after the collapse of communism in
Russia, Mr Berezovsky, a mathematician by training, quickly became a member
of Russia's new super-rich class. He now owns a newspaper, two banks, a
number of oil companies and has key holdings in Russia's national airline,
Aeroflot. He also holds important blocks of shares in two of Russia's TV
channels. Mr Berezovsky's political clout has been enhanced through his
close associate, Mr Valentin Yumashev, who is also Mr Yeltsin's powerful
chief of staff in the Kremlin.
The scenario of Russia's latest political convulsion was an astounding
one. The president had just returned to the Kremlin after one of his
increasingly frequent bouts of illness. Usually under these circumstances Mr
Yeltsin takes a dramatic decision in order to show that he is back at his
desk in robust form, but no-one expected the entire cabinet, least of all
the Prime Minister, Mr Viktor Chernomyrdin, to be ousted from office with a
single stroke of Mr Yeltsin's pen. The newscaster who told Russia of the
sackings on the 11.00 a.m. bulletin on March 23rd felt obliged to add the
following words at the end of his report: "It's really true, I'm not joking."
Mr Yeltsin himself looked ill later in the day on TV when he announced
that he would take over the prime minister's job himself. Later still he did
a U-turn and announced that Mr Kiriyenko, a political neophyte from Nizhniy
Novgorod, would take over temporarily.
In the next few days Mr Yeltsin had an important meeting. Observers were
stunned at the president's mental confusion. In conference with the German
Chancellor, Dr Helmut Kohl, and President Jacques Chirac of France, the
Russian leader appeared to believe he was holding a press conference
scheduled for later in the day. His spokesman, Mr Sergei Yastrzhembsky, had
to intervene several times to let the president know what was happening.
In the days immediately before and after the sackings, therefore, Mr
Yeltsin's judgment was questionable to say the least. Just before the
cabinet was dismissed, Mr Berezovsky flew into Moscow from Switzerland where
he had been in hospital after a wintersports accident. The day before Mr
Yeltsin fired his cabinet, Mr Berezovsky is reported to have had a two-hour
meeting with Mr Yumashev and Mr Yeltsin's daughter, Ms Tatyana Dyachenko,
who is known to exert a strong influence on her father.
It is known that details of the privatisation of the state oil company
Rosneft announced by Mr Chernomyrdin had angered Mr Berezovsky, who
considered the terms unfavourable to his personal interests.
According to reports in the Russian media, a six-hour meeting was held on
the evening of March 22nd between Ms Dyachenko, Mr Yumashev and Mr Yeltsin.
Next morning the president let loose his political bombshell. Mr Berezovsky
would have relished the dismissal of Mr Chernomyrdin and Mr Chubais for
personal as well as business reasons, but Mr Yeltsin was now in full spate.
Instead of appointing Mr Berezovsky's preferred candidate, the cautious Mr
Ivan Rybkin, Mr Yeltsin unpredictably opted for the almost unknown Mr
Kiriyenko as the new prime minister.
Since then Mr Yeltsin has yielded to pressure from the opposition-led
State Duma to set up a round table for the selection of the new cabinet,
indicating that Mr Kiriyenko's freedom of action as prime minister may be
somewhat circumscribed.
In the meantime, Mr Berezovsky has been giving interviews in the Russian
press in connection with the murder of Russia's most popular TV personality,
Alexander Listyev, who was killed by a sniper's bullet in March 1995. He
told the popular Komsomolskaya Pravda newspaper that he knew who had
ordered Listyev's murder and then went on to accuse the former head of the
Kremlin bodyguards, Gen Alexander Korzhakov, of organising a number of
assassination attempts. Gen Korzhakov had previously accused Mr Berezovsky
of ordering the contract killings of business rivals.
Links between politicians and criminals are fairly common in Russia and
the most dramatic in recent weeks took place in Mr Kiriyenko's home town of
Nizhniy Novgorod (formerly Gorky) with the election of Mr Andrei Klimentyev
as mayor of Russia's third largest city last week. Mr Klimentyev had been
convicted on a number of criminal offences in the past but still managed to
convince the voters that he was the man for the job.
The Kremlin was not pleased with the result and Mr Klimentyev was
unseated for "promising material advancement to the electorate". On hearing
of the decision to overturn the result, Mr Klimentyev announced that he
would get 90 per cent of the vote in the re-run.
Mr Klimenteyev's fellow townsman, Mr Sergei Kiriyenko, was born Sergei
Israitel to a family of mixed nationality in Sukhumi, Georgia 35 years ago.
He fought his way up in the tough school of Nizhniy Novgorod politics before
being brought to Moscow last year by the deputy premier, Mr Boris Nemtsov,
another native of the third city. He made his name as an astute businessman,
buying commodities cheaply in Russia and selling them for large profits in
the West in the early days of the Russian market economy when there were
vast differences in the price levels of certain goods.
He is not known to be close to Mr Berezovsky, a fact which may make his
stay as prime minister somewhat tenuous.


Chubays Said Discredited by Corrupt Friends 

Moskovskaya Pravda
27 March 1998
[translation for personal use only]
Article by Maksim Galkin: "Chubays Illuminated the Great Path for Us--
Who Is Mary Without John, What is the Government Without Chubays?"

It would seem objectively that something important is happening today;
possibly the foundation for Russia's future development is being laid. But,
paradoxically, the main theme of the day is not the retirement of the
government, but Anatoliy Chubays's attitude toward it. This is a person who
is associated not so much with the victory of the reformers as with the
misfortune of the Russian economy. Apparently it is precisely the opinion
of the ex-deputy prime minister that should provide certain hints of the
future. In other words, Chubays's departure from the government (where to,
is another matter) is occurring as a triumph—he is the hero of the
day. But though he is abandoning the chair of first deputy prime minister,
Chubays is still leaving something of himself in the White House—a
charisma, a shadow, his team.
A couple of days ago in the Russian Federation State Duma there was a
presentation of a new picture by the Pskov artist Bystrov: "Anatoliy
Chubays and His Comrades Write a Book on Privatization." Their names are a
symbol of the times; when we say "Chubays" we imply "privatization." And
many people associate privatization not only with the formation and
development of the Russian market but also—and mainly—with the
establishment of a new caste in our society: the notorious oligarchs
against whom Boris Nemtsov declared war. Incidentally, it is difficult to
say how successful this approach of the second first deputy prime minister
will be. For now the television cameras are traitorously filming footage
that is too revealing in the current situation: On the day of the ouster,
"writers"--that is to say, oligarchs—crowded into Nemtsov's
reception room.
To be sure, in one interview Boris Nemtsov tried to distance himself
from his colleagues' policies. Leaving the Chubays government, Nemtsov
stated, means that the "seven banker policy" will no longer exist.
Seven years of reforms have created not only "stars" of Russian
politics (several of them are depicted in the work by the Pskov artist) but
also created a system of "in people" (the picture by the Pskov artist and
Nemtsov's reception room are the facade, as it were, for this system). In
other words, the old course (using the terminology of some analysts,
"succession"), the Gaydar-Chubays course, will be continued. Although it is
this course, so strictly pursued by Chubays's team, that led to the current
government crisis.
There are too many names in Russian politics today and too few
specific deeds. Too few not because there are 12 of them, but because the
problems existing today are more difficult and they are not being
solved--the government will still be retired without paying its debts
to budget-financed workers and pensioners, in spite of a whole
constellation of political celebrities who are working or have worked in
it. The costs of personification... Therefore it is no wonder that the
acting chairman of the Russian Government so categorically refuses to speak
about the possible composition of the new cabinet. Sergey Kiriyenko quite
fairly asserts that the main thing is not personalities, the main thing is
the tasks facing them. Apparently, all the preceding history of Russian
changes are so imbued with the spirit of charisma exhaled by the young
reformers that on the Russian Olympus there is nothing left to breath. The
young acting official decided to ventilate the premises.
But what lies at the basis of the young reformer image? Succession?
Continuity? Not at all—it is the system. The system created by Gaydar
and fine-tuned by Chubays, which is now apparently self-sufficient.
In the meantime, according to an Interfax report, the Moscow Procuracy
is making accusations against two highly placed workers of the Russian
Federation State Property Committee, the nest out of which the young
reformers flew. On Tuesday, that is, the day after the ouster, an
accusation of embezzlement of state property was made against the former
first deputy chairman of the State Property Committee, Aleksandr Ivanenko.
Additionally, the former chief of the Administration for Privatization of
Enterprises of the Nonindustrial Sphere of the State Property Committee,
Boris Veretennikov, is being accused of misappropriation of property. The
fact that it is Chubays who is the "father of privatization" and the fact
that the State Property Committee is his patrimony also...
Former bureaucrats, particularly Ivanenko, are being accused of giving
instructions to have Moscow apartments—which people obviously
need—handed out in gross violation of the law. Among those who
received apartments were the ex-deputy prime minister of the Russian
Federation and former head of the State Property Committee, Alfred Kokh,
the former director of the Federal Service for Bankruptcy Cases, Petr
Mostovoy, and another former head of the State Property Committee, Sergey
Belyayev... In general, all these faces are familiar. They are chicks out
of Chubays's nest.
Another hero, who also published a very popular book, says:
"Muscovites have been demoralized by the apartment issue." The Procuracy
could probably establish precisely how many citizens who took advantage of
the generosity of the State Property Committee were actually in need of
better living conditions, whether they waited on the list for better
housing, how justified their orders were... All this is very interesting,
the apartment issue indeed holds an unusual amount of interest for us.
Incidentally, Chubays's signature is on the accounts for payment for the
At the same time, Interfax reports, that same Procuracy filed another
criminal case—against the former deputy prime minister Kokh on the
count of "abuse of official authority" in connection with the receipt of
$100,000 for an unpublished book on privatization in Russia (another
subject for a painter).
And so the Moscow Procuracy is already directly accusing Anatoliy
Chubays's advisers of violating the law, and by using their official
positions. And the key word here is "privatization" and the key figure here
is Chubays. The Chubays whom Moscow is seeing off in triumph. But this is
Moscow. And beyond the Moscow Ring Road there is hunger, unemployment, and
unpaid wages. And it is as though some financial pyramid has crumbled,
having tricked millions of investors who in any case were not inspired to
work and achieve exploits.


Paper Expects 'Compromise' Over Kiriyenko Candidacy 

4 April 1998
[translation for personal use only]
Article by Aleksandr Samovarov: "Authorities and Opposition
Compromise. Will S. Kiriyenko Become Russian Premier?"

The question of power has always been very important in society's
life. For any politician it is like "two twos are four." And if the
ordinary people (those of them who still track the ups and downs of the
political struggle) are quietly getting fed up with the "games" over S.
Kiriyenko, the players themselves are continuing to divide up power
It has to be admitted that their position is difficult -- both in the
case of B. Yeltsin and in the case of the Communists. The president, by
removing V. Chernomyrdin from his post, destroyed the quite harmonious
system of relationships with the "elite." The Communists lost what had
seemed to be a reasonable chance of "merging" with the elite by the year
2000. But B. Yeltsin also suffered considerable damage. In the two years
to go before elections that will be decisive for Russia's history he has
been forced to "deploy" the totally unknown S. Kiriyenko. This all smacks
of adventurism.
The deputies, of course, were infuriated. And it was not a question
of S. Kiriyenko necessarily being worse than V. Chernomyrdin, but of B.
Yeltsin refusing for the umpteenth time to take the Duma into account in
any way whatsoever.
Hence the violent reaction to events from the leaders of the Communist
Party of the Russian Federation [CPRF]. Following the closed-doors plenum
Thursday [2 April] Gennadiy Zyuganov stated that the CPRF faction will not
support Sergey Kiriyenko's candidacy for the premiership "on either the
first, second, or third votes" in the State Duma.
Does this mean we can expect the Duma to be dissolved, since the
president had previously demanded as an ultimatum that S. Kiriyenko be
Things are not that simple. We cannot fail to recognize the fact that
since 1993 the authorities and the opposition have, albeit with difficulty,
nonetheless organized something akin to a dialogue.
The "big four" meets. B. Yeltsin, Ye. Stroyev, G. Seleznev, and S.
Kiriyenko sit down at the "negotiating" table. S. Kiriyenko sets out some
program of action and it pleases the president (which is unsurprising) and
the leaders of both houses of parliament (!).
In the opinion of the highly experienced politician Ye. Stroyev, "the
situation with respect to the premier's appointment will not be delayed." 
He advocated a broad debate on S. Kiriyenko's program. "We need to give the
State Duma and society the right to discuss the subject."
Zyuganov took roughly the same tone: "We believe that it is only
by pooling the efforts of the Duma, the Federation Council, local
legislators, labor collectives, and the working people's masses that we can
democratically and peacefully emerge from this very difficult
Gennadiy Andreyevich expects a great deal from the 9 April protest
action. Of course, if Russia "rises up" from the Pacific to the Atlantic
and the Arctic, B. Yeltsin will forget S. Kiriyenko straightaway -- even
what his name is. What if the protest were to go beyond the ordinary
bounds of such events?
Is there any point in the CPRF's engaging, without mass support, in
confrontation with the authorities if they are prepared to smoke a "peace
As for the coalition government on whose creation the CPRF is
insisting, there is no point in B. Yeltsin rushing to form one.
If the state starts splintering, that will be the time for a
"government of national confidence." Although historical experience shows
that sometimes such governments appear too late.
It sounds banal, but the people have the last word. As long as the
people are patient, a compromise will be reached within the authorities. 
That is what it is all about -- not about S. Kiriyenko's program.


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