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Johnson's Russia List


May 12, 1998  
This Date's Issues: 2175  

Johnson's Russia List
12 May 1998

[Note from David Johnson:
2. Jamestown Foundation Monitor: RUSSIA MEDIA ELITE CONSOLIDATES 

3. The Nation editorial: Post-Yeltsinism?
4. AP: White House Praises Yeltsin Cabinet.
5. Reuters: Struggle for resources overshadows C.Asian summit.
6. Moscow Times editorial: Bright Side To Russia's Fiscal Crisis.
7. Moscow Times: Stephanie Baker-Said, Russia Sticks to Radical 
Job Cuts.

8. Journal of Commerce: Norman Levine, Central Asia is centrally

9. Yuri Luryi: Re 2172-Belin/Duma.
10. Komsomolskaya Pravda: Yevgeniy Umerenkov, "The View From
the Sixth Floor": "Are We Threatened With a New 'Cold War'?" 

11. Pravda: Denis Garifullin, "Will Oligarchs Take New Premier in


Date: Mon, 11 May 1998
From: Russian Info&Business Center <> 

May, 15th, Friday
7 p.m.

RUSSIAN BALLET Performance at the 
Russian Embassy Concert Hall
Sponsored by Russian-American Chamber of Commerce
A must see events for music and dance lovers!
Prima Ballerina from Bolshoi Theatre, Moscow
Prima Ballerina from Kharkov Academic Theatre, Ukraine
Soloists from Russian Ballet Theatres
International Ballet Theater, USA
Location: Russian Embassy Concert Hall, 2650 Wisconsin Ave. (entrance from
2645 Tunlaw Rd., N.W.)
Time: 8:00 pm
Format: Concert, Reception to follow the concert
Art exhibit and sale of Mikhail Shemyakin's artworks and other famous
Russian & Ukrainian artists (starts at 7 pm), open bar, buffet
Tickets: $39 (including reception after the performance, Russian style)
Note: Tickets available by reservation only from Russian Information Center
No tickets at the door 
at 202-546-2103, fax 202-546-3275
P.O. Box 15343, 420 7th St., SE
Washington, DC 20003

May, 17th, Sunday

Sponsored by Russian-American Chamber of Commerce
Featuring Ludmila SEMENYAKA, 
Prima Ballerina from Bolshoi Theatre, Moscow
Prima Ballerina from Kharkov Academic Theatre, Ukraine
International Ballet Theater, USA
Location: French Embassy, 4101Reservoir Rd., N.W.
Time: 6:00 pm
Format: Concert, Reception to follow the concert
Art exhibit and sale of Mikhail Shemyakin's artworks (5 pm), open bar, buffet
Tickets: $39 (including reception, Russian style)
Note: Tickets available by reservation only from Russian Information Center 
at 202-546-2103, fax 202-546-3275
P.O. Box 15343, 420 7th St., SE
Washington, DC 20003


Jamestown Foundation Monitor
11 May 1998

University's Davis Center for Russian Studies on Wednesday, May 6, Anne
Nivat, a fellow at the center, summarized her recent research on the mass
media in Russia. Media and politics are so tightly intertwined that "the
list of media owners is a who's who of the new Russian elite."

Dr. Nivat noted that half a dozen conglomerates--some private, some based in
state institutions--now dominate the national print and electronic media in
Russia. These moguls are all homegrown, in contrast to the situation in
east-central Europe, where foreign corporations have bought up most of the
leading media outlets. The businessmen who took over the formerly

state-controlled media have a variety of goals. Some of them use the media
to make money, others use media control to bargain for political favors from
the state, and some see a compliant media as a way of legitimizing their
newly-won economic and political power in the eyes of the Russian masses.
For some top financiers, "a newspaper is like a Mercedes 600," a fashion

The first and most successful conglomerate to emerge was the Media-Most
company, which was assembled by Vladimir Gusinsky and runs newspapers like
Segodnya and Itogi and the commercial TV station NTV. The highly profitable
NTV is used to subsidize Media-Most's print operations. Gusinsky, who
personally owns 70 percent of NTV shares, was awarded the license by
presidential decree in 1993. It could be revoked at any time: not
surprising, therefore, that NTV rallied to help reelect Boris Yeltsin in 1996.

A small number of print media are profitable and have managed to retain
their political independence. These include the economics-oriented
Kommersant-Daily, the daily Moskovsky komsomolets and weekly Argumenty i
fakty. Critics argue that the latter two papers have become increasingly
tabloid and apolitical in order to maintain their large readerships. 

...AS LIKELY FUTURE TRENDS EMERGE. Not only do the media moguls differ in
their aims, they also diverge in the degree to which they try to impose a
unified structure and style on their media holdings. The media outlets
controlled by Moscow Mayor Yuri Luzhkov, or those owned by Gazprom or
LUKoil, are run in a different way from Media-Most, with less focus on
making money and winning readers. 

Because of this diversity, Dr. Nivat suggested that further restructuring
and concentration of media ownership is likely. No radical changes should be
expected, however, until after the 2000 presidential election, because the
media elite is fearful that the election of a new outsider as president
could upset their cozy position. 

Another factor which will propel change is the unfolding struggle for
control of regional media as the conglomerates seek to expand beyond Moscow.
Most of the audience, not to forget advertising revenue, are now being
served by regional media. The share of national newspapers (about twenty
dailies in Moscow alone) in total circulation has shrunk from 70 percent in
1990 to 30 percent in 1997. Similarly, national television stations are
fighting to build networks among the 600 regional TV stations. 

Many Russian journalists bemoan the rise of mogul-controlled media. They are
nostalgic for the days of perestroika, when journalists spoke for the
nation. The new media merely serve as a vehicle for political intrigue
(slinging mud against opponents) and do not promote a rational public debate
of political issues.

Nivat pointed out that the commercialization of the media has led to a
tripling (or more) in typical salaries at the leading papers. One Izvestia
journalist made $1 million from selling his 0.7 percent share in the
newspaper to Lukoil in 1997. Journalists have thus benefited personally from
the changes, and should not portray themselves as victims of the bankers'
wars. Also, the higher wages have largely eliminated the pernicious practice
of journalists taking money to write individual stories, which came to
prevail in the early 1990s. 

Now, at least, it is clear which magnate controls which paper. At a national
level, there is a limited pluralism of opinions, though opposition voices
are largely excluded. The real problems come at local level, where regional
bosses often strive to squeeze out dissenting opinion, Moscow Mayor Yuri
Luzhkov being a prime example.


The Nation
May 18, 1998

The Russian Parliament's confirmation of Sergei Kiriyenko as Prime Minister
was not the great victory for Yeltsin proclaimed by most Western analysts. The
three-week showdown between the Parliament and Yeltsin revealed that he has
become an isolated leader-a President without a party, popular support or the
reliable loyalty of any significant segment of the country's political and
financial elites. Moreover, as a result of the crisis he precipitated, Yeltsin
is no longer perceived as the "guarantor of stability" (his entourage's term)
but as an increasingly capricious autocrat whose behavior is destabilizing the
already fragile system. Yeltsin won the struggle with Parliament only after
dubious maneuvering, including a threat to rewrite the electoral laws if new
elections were required, buying off Moscow's deputies by giving its ambitious
mayor even more publicly owned assets and offering other parliamentarians
money and privilege for their votes.
The financial oligarchs who pooled their post-Soviet plunder and media
to support Yeltsin's re-election campaign in 1996 are now bitterly divided,
but none any longer look to Yeltsin as the protector of their property and
personal security. Above all, the country remains in profound economic crisis.
Inflation is held down, in part, by depriving millions of workers, state
employees and soldiers of their wages. Industrial production has dropped by 50
percent since 1991, and domestic investment is plummeting. The government is
run like a shaky S&L: Yeltsin recently took money Japan had lent Russia and
gave it to miners protesting months of unpaid wages-the same money he had just
promised to the increasingly destitute and embittered army. 
Lest anyone believe reports of an impending Russian economic takeoff, even
Kiriyenko admitted that one-third of the Russian population lives at or below
the poverty line and that there is no sign of economic growth. But he
represents no new policies. Reports that Yeltsin picked Kiriyenko to take on
Russia's "crony capitalism" are myth. The system is Yeltsin's creation, as is
Without a radical change in economic course, little will improve. Not
just the
Communists but virtually all opposition parties, including the pro-capitalist
democratic party Yabloko, headed by Grigory Yavlinsky, are demanding
fundamental changes in the regime's monetarist economic policies. So are
leading candidates for the presidency in 2000, foremost among them Gen.
Aleksandr Lebed-whose victory in the first round of Krasnoyarsk's
gubernatorial race on April 26 was a crushing defeat for Yeltsin. General
Lebed, who is deeply feared by the regime, is calling for a different economic
policy, which might be roughly characterized as an F.D.R.-style New Deal, to
get Russia out of its seven-year depression.
Even Deputy Treasury Secretary Lawrence Summers, who has done as much as any
U.S. official to foster the current Russian economic system, is alarmed. In
March he warned that Russia is plagued by the same kind of crony capitalism
that helped cause the Asian financial crisis. There can be "no worse news to
come out of Russia," Summers said, "than that after years of throwing off one
defunct economic model, it is on the verge of entrenching another questionable
Clearly, the post-Yeltsin era is rapidly approaching, and it seems that the
future belongs to the opposition. But which opposition? On the one hand, in
the eyes of millions of Russians the Communist Party leadership has emerged
from the confrontation between the Parliament and the President as having been
principled in its adamant opposition to Kiriyenko-a poll showed that the party
would almost double its strength in new elections. On the other hand, if Lebed
wins the Krasnoyarsk runoff in May, becoming the governor of a mineral-rich
region four times the size of Texas, his victory will be due largely to
traditional Communist voters. The best hope of the Yeltsin regime and its
financial cronies may turn out to be the conflicting ambitions and bitter
relations between General Lebed and Communist leader Gennady Zyuganov. 
Katrina vanden Heuvel


White House Praises Yeltsin Cabinet
11 May 1998
AP White House Correspondent

WASHINGTON (AP) - In a glowing appraisal, the White House called Boris
Yeltsin's Cabinet shakeup two months ago a bold step that produced ``probably
the most reformist government in seven years of Russian democracy.''

The record suggests Yeltsin ``made a gamble and won,'' national security
adviser Sandy Berger said Monday.

The warm assessment sets a positive tone for President Clinton's planned
meeting with Yeltsin on Sunday in Birmingham, England, after the annual summit
of leading industrialized nations.

It will be the first full discussion between Clinton and Yeltsin since they
met at last June's summit in Denver. Since then, relations between Washington
and Moscow have been strained by divisions over Iraq and Kosovo, and the U.S.
push to expand NATO.

Clinton will leave Washington on Tuesday, stopping first in Germany to
celebrate the 50th anniversary of the Berlin Airlift, which delivered food,
clothes, medicine and coal to the besieged city when the Red Army cut off all
ground access. On Thursday, the president will fly to Birmingham to join
Yeltsin and the leaders of Britain, France, Germany, Italy, Canada and Japan.

Briefing reporters on Clinton's trip, Berger praised Yeltsin's government
shakeup as one in a string of positive developments since the end of the Cold

Yeltsin fired his Cabinet members in March, complaining they weren't moving
fast enough on economic reforms. He replaced them with younger politicians -
Prime Minister Sergei Kiriyenko is only 35 - who have been ordered to move

``I think that President Yeltsin does have a grip on power, does have control
of his government,'' Berger said. ``I think he took a rather bold action ...
in dismissing a government. He felt it was not moving swiftly enough toward
meeting the ... economic needs of his people. ''

Yeltsin has assembled a new government that is young and ``does not carry
enormous baggage, that has generally been pragmatic and committed to reform,''
Berger said. ``I find that very encouraging.''

He said the fact that Kiriyenko was so young was ``not necessarily a handicap
when you're talking about trying to remake a system which has been frozen for
all of those years in a command economy.'' Further, Berger said Yeltsin's
other deputies ``are all men of enormous competence and professionalism.''

Berger said Russia still faces formidable problems in expanding its economy,
attracting investment, collecting taxes and meeting other challenges. ``We
want to help them do that, but I think in many ways the events of the last
month suggest that President Yeltsin made a gamble and won,'' he said.

Administration officials made clear that a primary Clinton objective in
Birmingham will be to keep up pressure on Japan to deal with its economic
problems more aggressively.

Clinton will meet Japanese Prime Minister Ryutaro Hashimoto on Friday to press
Japan to stimulate its domestic economy, strengthen its shaky banking system
and increase economic deregulation, aides said.

Japan, the world's second largest economy, is on the brink of recession and
the worry in Washington is that further weakness will aggravate economic
troubles elsewhere in Asia.

``Japan is very much the engine of growth in the Asian region, and nothing is
probably more important for restoring the economic recovery of Asia as this
economic recovery of Japan itself,'' said Gene Sperling, who heads Clinton's
National Economic Council.

Sperling said U.S. and Japanese trade negotiators would work in Birmingham
toward agreements to expand access for American companies in
telecommunications, financial services, housing and pharmaceuticals and to
loosen restrictions on foreign goods in Japan's distribution system.


Struggle for resources overshadows C.Asian summit
By Philippa Fletcher 

ALMATY, May 11 (Reuters) - Ten states grouped near the Caspian Sea pledged on
Monday to make the most of their rich natural resources by increasing

But competing commercial interests and diverse views on the role of Islam in
the volatile region overshadowed their efforts at integration. 

Six former Soviet republics, all with large Moslem populations, joined forces
with Afghanistan, Pakistan, Iran and Turkey in the Economic Cooperation
Organisation (ECO) in 1992, aiming to break Russia's hold over their

At their fifth summit, held in Kazakhstan's commercial capital Almaty at the
foot of the Tien Shan mountains near China, they hailed newly-signed
agreements on easing cargo transit between them and fighting customs fraud and

They also issued an Almaty Declaration, which welcomed integration efforts
made so far and, together and individually, called for more. 

``The region has vast potential and resources,'' said Pakistan's Prime
Minister Nawaz Sharif. 

``The member states of this organisation have the will and determination to
work for mutual benefit. This should be our approach while defining projects
and proposals for the future.'' 

But they remained split over how to exploit the energy resources of the
Caspian Sea and where to build crucial pipelines to take their vast oil and
gas resources -- second only to the Middle East by some estimates -- to

Uzbek President Islam Karimov did not sign the transit deal and criticised his
fellow presidents' warm words, saying integration meant nothing while
conflicts remained unsolved in their midst. 

Tajikistan, Azerbaijan and Afghanistan are all riven by conflicts, although in
the first two ceasefires are in place. 

Continued fighting in Afghanistan and an unresolved conflict between
Azerbaijan and Armenia over Nagorno-Karabakh have hampered plans to find new
routes to take oil and gas to market. 

The takeover of the Afghan capital Kabul by the purist Islamic Taleban has
also spread fear among leaders of some of the other former Soviet republics
that Islamic fundamentalists might destabilise their countries. 

One by one, leaders of the 10 states called for peace, brushing aside their
divisions over who is to blame for the fact that settlements have not been

Karimov, who has accused Pakistan and Iran of backing Islamists in his
republic, noted the leaders had agreed to try to put politics to one side and
concentrate on economics. 

``Nevertheless we are well aware that until there is a durable and lasting
peace in these ECO member-countries, one can hardly speak of full-fledged
economic cooperation within the framework of our community,'' he said. 

The summit's host, Kazakh President Nursultan Nazarbayev, said different
political approaches should not get in the way of economic cooperation. 

``The states are developing in different ways after independence and of course
there are various ideologies. Some states are Islamic, some are secular
states. But we are not talking about that, we are talking about practice,'' he

``Everyone wants good roads, everyone wants communications, everyone wants to
allow transport routes including oil and gas. Here there's no disagreement,''
he said. 


For more articles from The Moscow Times, check out their website at

Moscow Times
May 12, 1998 
EDITORIAL: Bright Side To Russia's Fiscal Crisis 

Can slumping oil prices and chronically low tax revenues be good for 
Russia? If they help the government push through the drastic job cuts 
promised by First Deputy Finance Minister Alexei Kudrin, it seems they 

Speaking in Kiev on the sidelines of the annual general meeting of the 
European Bank for Reconstruction and Development, Kudrin said that more 
than 200,000 state employees would be sacked as part of budget cuts to 
make up for revenues lost to lower oil prices and meager tax receipts. 
He did not say when the cuts would happen, but the very fact that he 
brought them up at all suggests a new resolve on the part of Russia's 
government: Several weeks ago, before President Boris Yeltsin fired the 
old Cabinet, the job cuts issue was taboo. 

Kudrin first publicly mentioned the cuts in March, though they are an 
integral part of an austerity plan agreed upon with the International 
Monetary Fund last year. The logic is simple: Russia can't afford to pay 
the miserly wages of its bloated government apparatus, so it should fire 
the superfluous employees and pay the rest better. Not only would the 
job cuts solve some of the wage arrears that have been dragging down the 
economy, but higher pay could boost morale and cut graft, while the fear 
of being deemed redundant might light a fire under the seats of those 
bureaucrats who remain. 

Unfortunately, much of Russia's media didn't pick up on this logic. 
Instead, they focused on the fact that some education and medical 
workers could lose their jobs. Faced with reports that the government 
was out to get doctors and teachers, Yeltsin, apparently having 
forgotten about his country's agreements with the IMF, lambasted Kudrin 
for even suggesting such a barbaric reform. "I have never heard anything 
about it, and this issue has never been discussed," Itar-Tass quoted the 
president as saying in late March. "This is either provocation or 
[Kudrin] simply invented that." At the time, Kudrin backpedalled, saying 
that the layoff plan had not been finalized. 

This time around, Kudrin's words will hopefully go unpunished, and the 
cuts will go ahead. The government, having slashed its own ranks, is in 
a good position to demand similar belt-tightening throughout the 
country, and Russia's fiscal predicament provides an excellent excuse. 

The hard part is deciding exactly what to cut. Remembering the previous 
media reaction, Kudrin specified this time that doctors and teachers 
will not be affected, but he still must traverse a political mine field. 
One place to look might be in Yeltsin's own Byzantine administration, 
which duplicates many of the government's functions. May pragmatism 


Moscow Times
May 12, 1998 
Russia Sticks to Radical Job Cuts 
By Stephanie Baker-Said

KIEV -- Forced into a fiscal corner by slumping oil prices and 
chronically low tax revenues, the Russian government is pressing ahead 
with a controversial plan to slash more than 200,000 government jobs. 

Speaking in Kiev at the annual meeting of the European Bank for 
Reconstruction and Development, First Deputy Finance Minister Alexei 
Kudrin said the layoffs would go ahead as part of a larger effort to 
save about 68 billion rubles ($11 billion) this year. 

"The biggest part of the cuts will come from reducing the state 
apparatus," Kudrin said Sunday. He said the government was discussing 
plans to lay off a minimum of 200,000 public-sector workers at the 
federal level alone, suggesting the cuts could be deeper. 

The public-sector cuts have been a politically charged issue since 
Kudrin mentioned them in a March interview. At the time, Russian and 
foreign media reported that the layoffs would target doctors and 
teachers. President Boris Yeltsin lambasted the first deputy finance 
minister and denied any knowledge of the plan, the framework of which 
had already been agreed with the International Monetary Fund last year. 

But Sunday, Kudrin said the plan had the backing of Prime Minister 
Sergei Kiriyenko, though it still needed final approval from the 
government. He denied media reports that the job cuts would hit health 
and education employees, saying the focus would be on weeding out 
unnecessary administrative workers. 

"The federal government is not responsible for paying teachers -- that's 
the task of the local authorities," he said. 

The job cuts are an essential part of the Russian government's attempts 
to start living within its budgetary means, which have been severely 
diminished by sagging oil prices, meager tax receipts and high interest 
rates. Kudrin estimated that the oil price slump alone had cost the 
Russian budget $1.5 to $2 billion in lost tax revenues. 

The government is currently in negotiations with the IMF on measures to 
reduce spending and boost sagging tax revenues as part of a $10 billion 
loan program. An IMF mission is scheduled to return to Moscow later this 
month to review Russia's macroeconomic indicators and decide whether to 
resume loan payments. But by most accounts, Russia has fallen short of 
its revenue targets so far this year. 

But the Central Bank chairman, Sergei Dubinin, said the IMF was not 
blaming the Russian government. 

"This is a typical external shock," he said. "It is not a question of 
who's guilty but rather what should be done. Once we find the proper 
response, we will have an understanding about disbursing the funds." 

A decision to unlock funding would send an important signal to 
international investors that Russia is cleaning up its public finances. 

Kudrin said the tax problems had been exacerbated by a new government 
rule that taxes be paid only in cash, effective from the beginning of 
this year. Previously, the government accepted various monetary 
surrogates, such as promissory notes, which helped boost collection 
figures on paper, but fueled the circle of nonpayments choking the 

"Cash income is growing, but not at the tempo we wanted," Kudrin said. 
He declined to give figures. 


Journal of Commerce
May 12, 1998
[for personal use only]
Guest Opinion
Central Asia is centrally important
Norman Levine is executive director of the Institute for International 
Policy in Glendale, Ariz., and editor of "The US and the EU: Economic 
Relations in a World in Transition" (Univ. Press of America). This 
article was distributed by Bridge News.

Central Asia is a part of the world little known to most Americans. But 
the tiny republic of Armenia has enormous geopolitical significance for 
American interests in this region.

This mountainous country in the Caucasus will help determine the fate of 
the Commonwealth of Independent States, and the route through which oil 
and natural gas will be transported out of the Caspian Sea to the West.

The commonwealth emerged out of the ruins of the former Soviet Communist 
empire. Created in 1991 by Russian leader Boris Yeltsin, the 
commonwealth is today a loose confederation of republics that under the 
Stalinist system had been dictatorially manipulated by the commissars.

Armenia and Azerbaijan are neighbors, but it was the sad destiny of some 
of the Armenian people to get trapped in a small enclave inside 
Azerbaijan, an Armenian island known as Nagorno-Karabakh.

Similar to the situation in Northern Ireland, the desire on the part of 
these two branches of the Armenian people to reunite, and the desire on 
the part of the Azeris to hold onto their ancient lands, has given rise 
to an intermittent seven-year war between these two countries.

To bulk up the diplomatic indispensability of Russia in the 
commonwealth, Mr. Yeltsin has tried to mediate an end to the conflict 
over Nagorno-Karabakh.

On the economic level, the Russians are seeking an end run around 
Armenia. On the question of oil pipelines flowing out of the Caspian 
Sea, the Russians prefer a northern route, a pipeline tunneling from 
Baku in Azerbaijan through essentially Russian lands to exit at the 
Black Sea at the seaport of Novorossisk.

Armenia is landlocked, but Azerbaijan is blessed with hundreds of miles 
of frontage on the Caspian Sea and is the fortunate heir to some of its 
richest oil fields.

If the pipeline out of Baku fields took the northern route and basically 
burrowed through Russian territory, Moscow would enrich itself with a 
jackpot of transit fees.

There's more to the story, though. Moscow would also dominate one of the 
largest supply lines of energy to the West, one that's second only to 
the Persian Gulf.

U.S. policy in the Caucasus and Central Asia is to both weaken the 
commonwealth and control the oil and gas pipelines streaming out of the 
Caspian Sea. It is a policy of neo-containment in the post-Cold War era. 
In order to achieve both goals, the Clinton administration has made 
Yerevan, the capital of Armenia, one of the largest recipients of 
American foreign aid.

Yerevan stands right behind Israel and Egypt as a major beneficiary of 
U.S. economic generosity, excluding military aid.

The policy of buying Yerevan has implications for Cold War II between 
the United States and Russia over oil and gas pipelines.

In terms of the Baku oil, the White House prefers a pipeline stretching 
from Azerbaijan across Armenia to Turkey.

This southern route would not only knock Russia out of the picture, but 
the pipeline would end in Turkey, a U.S. friend and trusted ally in the 
NATO alliance.

The U.S.-Russia struggle over control of the Caucasus and Central Asia 
was recently brought to the banks of the Potomac River when President 
Saparmurat Niyazov of Turkmenistan was feted at the White House by 
President Clinton.

Turkmenistan sits atop Iran like a giant hat, and it too borders the 
Caspian Sea, just across from Azerbaijan. It's also a member of the 
commonwealth and recently signed an agreement with Iran to ship natural 
gas to the mullahs in Tehran.

Just for showing up in Washington, Mr. Niyazov was given $750,000 for a 
pipeline study as well as a guarantee that James Harmon, president of 
the U.S. Export-Import Bank, would visit Turkmenistan to help finance 
the export of U.S. goods to that country.

The $750,000 is intended to make Mr. Niyazov dependent on the United 
States and to help drive a wedge between him and the commonwealth. It is 
also intended to improve the positions of Mobil and Exxon in this 

Although not yet feasible, in the future Mobil and Exxon hope to run oil 
and gas pipelines not north to Russia, but south through Afghanistan, 
Pakistan and India to waiting tankers in the Indian Ocean.

The Caspian Sea is the great wheel turning the fortunes of Central Asia. 
The American policy of diplomatically and economically isolating Russia
spins around that great watery hub. 


Date: Mon, 11 May 1998
From: Yuri Luryi <>
Subject: 2172-Belin/Duma, 

Allow me to comment on Laura Belin's opinion about "however lopsided toward
presidential power the Russian constitution may be..." I am quite perplexed
that neither the Russian lawyers, nor the Media people did not read the
with due attention. Let me explain, how the Duma could reject Kiriyenko without
being dissolved (although, in my opinion, he was a suitable, experienced
(1) According to Art. 11, s. 4 of the constitution, President must dissolve
Dima, after the latter declines three "candidaturES" (emphasis mine). The
plural of that word obviously means not the same candidature, but three
different candidatureS. The purpose of that law is, on the one hand, to
prevent both the stubborness or the inactivity of the president in his DUTY
to find one or two more candidatures, in case the first one was declined.
On the other hand, it prevents Duma from the partisan sabotaging its DUTY
to consider presented candidatures, and to approve or to decline it.
Nothing abnormal is, if one or even two different candidates are declined.
But three declined candidatures might signal that something is wrong with
the Duma. So, the dissolution of Duma in such a case means new elections
and giving the peoples an opportunity to be the Supreme Judge in the
conflict between the Duma and the President. That is the idea of the law.
My statement about presidential duty to submit NEW candidature, if the
previous one was declined, is shared by the
authors of the Annotated Text of New Constitution (p.342). Ironically
enough, that Commentary has been prepared by the Research Institute
attached to the Government.

(2) The duty imposed on the President (to present twice new candidatures)
means the prohibition for both the President and the Duma to act
differently. Not only president did not have a right to present the second
and the third time the same candidature. In its turn, the Duma did not have
a right even to ACCEPT for the second consideration the same, declined
already, candidature. The legal obligation of the Duma was to refuse to
accept for the second consideration, that is for RE-CONSIDERATION of the
same candidature.
(3) Let us imagine that Duma, instead of illegal reconsidering and
declining the same candidature, returns that candidature to the president,
as once already considered and declined. At the same time, the Duma informs
the President that it is ready to accept for consideration any NEW
candidature. What could the president do? He has neither the duty, nor the
right to dissolve the Duma for the refusal to accept once declined
candidature for reconsideration. Refusal to accept for COSIDERATION is not
the same as the refusal to approve the submitted candidature AFTER IT WAS
considered. Had the Duma acted according to the law,
the stubborn president would have been compelled to follow the law.
Instead, the
Duma outsmarted itself. Why? It is is still a puzzle, at least for myself.
So, the Russian constitution is less lopsided toward the presidential
power, as it may look at the first glance.
With all good widshes,
Yuri Luryi.
p.s. I am not of the "Chicago Tribune"-:)


Paper Views 'Unusual' Kennan Warning of 'Cold War' 

Komsomolskaya Pravda
6 May 1998
[translation for personal use only]
Article by Yevgeniy Umerenkov under the rubric "The View From
the Sixth Floor": "Are We Threatened With a New 'Cold War'?"

The last and purely theoretical possibility that NATO would not, after
all, move eastward has disappeared: The U.S. Senate has ratified a
blueprint for the bloc's expansion. And, yet again, the warning promptly
followed: "This is the start of a new Cold War." But why should that
frighten us? We have heard about a "cold peace" too. But we go on living,
just the same...
But this time the warning is unusual. Because it comes from across
the ocean, from George Kennan, the patriarch of American diplomacy. He was
the one who, at one time, argued the need to "roll back" communism and
create the North Atlantic Alliance. And now, in an interview for The New
York Times, he has stated on the subject of the bloc's expansion: "I
believe this is a tragic mistake. Nobody is threatening anybody anymore. 
The Senate's decision will make our country's founding fathers turn in
their graves...."
How the American founding fathers will react is a rhetorical question.
But what should we do? Tear our hair out? Ask -- even if we get no reply
-- to be allowed to jump on the last car of the departing train? Take
offense and make some kind of threat? Or pretend it does not concern us?
To all appearances, not only are "ordinary people" not concerned about
Honduras [as an example of a remote and irrelevant country] anymore, they
are not concerned about NATO either. There are plenty of other problems in
life. But all the same, it is necessary to define some kind of position.
Poland, Hungary, and the Czech Republic are rejoicing: They have
admitted us to the most elite alliance! Yesterday's ally has joined
someone else -- who is the lucky one? "Against whom" will the Poles be
making friends with NATO? If there is no enemy, where can one be found? 
It's a headache.... "I was particularly alarmed by references to Russia as
a country desperately wanting to attack Western Europe," Kennan stressed in
the interview.
We are assured that there is no need to fear NATO, the bloc will not
do anything bad to Russia. It will only do it good. As [satirist]
Zhvanetskiy said: Hold onto me, or else I can't be held responsible for my
actions... Let us listen to Kennan again: "Russian democracy is developed
no less, if not more, than in those countries that we have just pledged to
defend against Russia."
But it's no use brandishing your fists after the fight. The alliance
is at our doorstep. Even if we don't bend over backward to welcome them,
we must make friends with our neighbors. Politicians always want to move
the borders of blocs. But Europe is still where it was. And Russia too is
still in its place.
Let's just hope there is no cold spell on the way.


Pravda Seeks Reasons for Choice of Kiriyenko 

5 May 1998
[translation for personal use only]
Article by Denis Garifullin: "Will Oligarchs Take New Premier in Hand?"

Government behind-the-scenes "experts" are saying that, having
suffered a relative fiasco with the "joker" Boris Nemtsov, the president
has not lost interest in the Nizhniy Novgorod team itself and has plumped
for its toughest and most practical representative, Sergey Kiriyenko.
The naivety of this theory is particularly striking when you read its
hidden message: that the new government should in no way be linked to the
notorious oligarchs. Just wait, let's think about it.... It is linked,
and how! Although if Viktor Chernomyrdin was effectively a Gazprom
lobbyist, things are slightly more difficult with Kiriyenko.
The most obvious scenario for his nomination as premier is a political
one. The appointment of the little-known fuel and energy complex minister
as acting premier was preceded by a TV interview with Boris Berezovskiy. 
The "eminence grise" of the corridors of power complained that most of the
authorities' current representatives were either unpopular among the people
or incapable of continuing the reform policy. The young financier with his
attractive smile was to fill that vacuum.
Indeed, during his short stint as minister of fuel and energy
Kiriyenko demonstrated a more than loyal attitude toward the Yuksi oil
company, the joint brainchild of Berezovskiy and Menatep Bank.
While participating in the Gore-Chernomyrdin Commission, Kiriyenko
actively helped to "launch" the agreement on the development of the Ob
field on production-sharing terms between the Yukos Company (Yuksi's
predecessor) and Amoco, one of the transatlantic "seven sisters" of the
major oil business. This plan had been stalled for some years, not least
because Yukos had failed to win under Chernomyrdin the kind of strong state
support that Gazprom or Lukoil, say, had achieved during the same period.
No less plausible is another theory -- that Kiriyenko is Lukoil's man.
This is a company which had always been considered loyal to Viktor
Chernomyrdin, but at the same time has been aggressive and dynamic and has
always tried to have lobbyists of its own.
Indeed, the Norsi-Oil Company, which Kiriyenko headed for several
months before moving to the capital, is effectively made up of just Nizhniy
Novgorod's Nefteorgsintez and does not have a production base of its own. 
In the past year or two Lukoil has become the main raw-material supplier to
the Nizhniy Novgorod company, effectively bringing the local oil refinery
under its control.
On arriving at the ministry, Kiriyenko supported virtually all Lukoil
initiatives -- from agreements on the transportation of Caspian early oil
to the company's purchase of a controlling stake in the
Arkhangelskgeologiya Joint-Stock Company and the transformation of Lukoil
into a participant in the plans to develop the resources of the
Timano-Pechora province....
There would have been nothing more for Kiriyenko to do but continue
his predecessor's work and bring it to its logical conclusion with a former
banker's inherent business savvy.
Other theories deserve attention too. One of Kiriyenko's successful
initiatives was to clear the oil companies' arrears to the budget. We
would recall that, in order to obtain at least some of the payments not in
the form of offsets but in the form of "hard cash," the financier-minister
proposed a deal whereby those who paid "in full form" would gain additional
access to the state-controlled export pipeline. Once again it was Lukoil
specialists who were the architects of this idea. On the other hand,
Surgutneftegaz also turned out, apart from the initiator, to be one of the
companies that most successfully exploited the "money-for-exports" plan.
And now we would recall that Surgut is currently one of the major
shareholders in Uneximbank. And there is an obvious political and monetary
link within the Chubays team. Confirmation of that is the recent election
of the "main reformer" to the YeES Rossii [Unified Energy System of Russia]
Russian Joint- Stock Company Council of Directors against the will of the
power generation people but with the obvious (or ill-concealed?) support of
state representatives. Although even there Kiriyenko could behave on the
basis of the same logic of supporting the strongest without pushing the
situation into overt conflict.
The gas sector's relaxed reaction to Kiriyenko is equally explicable. 
The former regional bank leader, who knows the "value" of barter and mutual
offsets at first hand, has proved to be someone whom the "gas generals" at
local level can understand. One of them, incidentally, noted in
conversation that Kiriyenko's candidacy for the premiership suits people in
the sector perfectly. Although Sergey Vladilenovich could not be termed
the direct nominee of Gazprom or Nizhniy Novgorod's Volgotransgaz.
So, as the candidate of major representatives of the Russian "oil
sector" from the outset, Kiriyenko is actively expanding his support group.
Not least those who were not formerly noted for their sympathies toward
the fuel and energy complex -- the Army leadership, for instance.
The promising statements for the TV cameras about the "eternal
friendship" between Marshal Igor Sergeyev and the young oil "general" also
have a real economic agenda behind them. The military were among the first
to conclude contracts for the supply of energy resources for Army needs
"targeting" next winter. The slogan of energy saving has been successfully
incorporated in military reform too: The funds allocated by the budget for
Army financing will make it possible to acquire no more than 60-70 percent
of the fuel and electricity that the troops used to use. Supplies are being
cut, but a dialogue is taking shape. And that is a political success.
It is also interesting that Kiriyenko's allies may also include
departments that are not so powerful but are prestigious in their own way.
The Ministries of Culture and Education, for instance. Their interest
is obvious whenever the question of budget distribution arises. Even with
the toughest of restrictions, artistes and teachers use more power and heat
than is funded by the federal budget. The leaders of the "official" trade
unions have also shown an entirely benevolent interest in Kiriyenko.
So far the theory that the young manager produced by the authorities
usually gears himself to structures that maintain a strictly executive
hierarchy seems near the mark. But he does not try to please everybody;
instead he tries to incorporate them in his own systems of checks and
balances. And he tries to meet supplicants' interests according to the
principle that everyone should get as much as they are supposed to get
under the existing political hierarchy.
The people who are not among Kiriyenko's favorites are equally
noteworthy. These are, above all, the power generators who, after several
years of economic freedom, are being trained by the former minister to get
used to strict state regulation. Plus a considerable proportion of "coal
generals" who are unhappy that, following the liquidation of Rosugol, the
Ministry of Fuel and Energy has tried to take the reins of management of
the sector into its own hands but seems not to have moved from destruction
to creativity.
The only thing that, it seems, the apologist for strict centralization
is failing to take into account is... the regional factor, which has cost
more than one politician his position. In his first "appearance" at the
Federation Council Kiriyenko seemed to please everyone. But meeting the
senators in the capital is one thing, meeting a governor on his home turf
is another. For instance, how will energy supplies to regions obtaining
subsidies from the center shape up this year? And how will regional
leaders react to the strengthening of the departmental executive hierarchy?
The answers to these questions will become clear only once the new
cabinet's long-term programs "start working."
For the time being Kiriyenko himself will have to be not so much a
strategist as a tactician. His main aim is to stay in power at the White
House for as long as possible and to prepare a "fallback position" in the
event of his sudden dismissal. Consequently, his policy will be
reminiscent of a well-known game of chance -- bet on the strong runner and
you won't lose.


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