July 8, 1998   
This Date's Issues: 2252• 2253 • 

Johnson's Russia List
#2252
8 July 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Interfax: Poll: Nearly Half of Russians Believe Russia Faces 
Demise.
2. Itar-Tass: Prosecutor: Russian Corruption Has Historical Background.
3. Moscow Times: David McHugh, NEWS ANALYSIS:U.S.-Russia Summit Can't 
Wait for START II.
4. Craig Anderson: More on Vorkuta.
5. Nezavisimaya Gazeta: Alexander Konovalov, ON RUSSIA'S NUCLEAR POLICY
Russian Security Council discussed nuclear problems.
6. Reuters: Timothy Heritage, Russian economic woes may dominate summit.
7. Reuters: Russia says West hypocritical on arms deployment. (CFE).
8. Alvin Rabushka: Book on Russian banks.
9. Joan Seder: Reality.
10. Timothy Thompson: This Week's Economic Crisis in Moscow.
11. Baltimore Sun: Kathy Lally, Corruption in Russia wears police uniform.
Saratov crusader loses battle for honesty.]

*******

#1
Poll: Nearly Half of Russians Believe Russia Faces Demise 

MOSCOW, July 2 (Interfax)--Some 44% of Russians believe that Russia is
facing a possible split into several independent states, and 35% say no
split will occur, according to a poll by the Public Opinion Fund.
Moreover, 72% of the respondents that believe a breakup is possible
said they feel that the threat to Russia's integrity has increased in
recent years.
Respondents were asked an open question with no standard replies:
which region of Russia could be the first to secede. Concrete answers came
from 35% of those polled. The region cited most often was Chechnya (26%);
followed by the Caucasus (21%); Tatarstan (11%); the Russian Far East, the
Primorye region, and Sakhalin (8% each); Dagestan (7%); Siberia (6%); and
Krasnoyarsk region (6%).
Some respondents who preferred not to specify regions gave indirect
replies, citing "republics with ethnic strife," "regions close to China,"
"Moslem republics," "enclaves and extreme regions," "major industrial
centers," "regions that stand on their feet independently" and "those that
have proper governors."
The figures reached Interfax from the Public Opinion Fund on Thursday,
following a poll of 1,500 urban and rural residents across Russia conducted
June 6.

********

#2
Prosecutor: Russian Corruption Has Historical Background 

MOSCOW, July 2 (Itar-Tass)--Corruption has deep historic and social
roots in Russia, Prosecutor General Yuriy Skuratov said at a press
conference on Thursday.
"The officialdom in Russia never was very law-abiding. And now the
total situation here is obviously not good," he said.
He said "corruption has spread to all levels of the state mechanism,"
from the federal centre to municipalities.
Skuratov said mostly prone to corruption are privatisation, foreign
trade and management of financial flows. However, no state in the world is
free from the corruption problem, he added.
The corruption rate in every nation is directly proportional to the
historic background, mentality, economic stability or lack thereof and, not
the least, legal and social protection of public servants, Skuratov said.
He said he finds explainable the motivation of most of corrupt
officials "to sell their services while they are finding demand" at times
when firm legislative guarantees and legal regulation of public service are
lacking.
The motive is an "insecure future after retirement". Skuratov said.
He said Russia's key manifestation of corruption is bribery. About
5,500 criminal cases on bribe-taking is instituted annually, with some
3,200 taken to court.
Skuratov said corruption found its way into the law enforcement
system.
Forty-eight corruption cases against prosecutor officials were opened
in 1997, as against 2,500 against police officers.
Skuratov said he agreed with the need to get rid of corrupt officials,
adding that an important consideration is "to conduct planned prophylactic
work, raise the salary level and improve social conditions".

*******

#3
Moscow Times
July 8, 1998 
NEWS ANALYSIS:U.S.-Russia Summit Can't Wait for START II 
By David McHugh
Staff Writer

>From looming economic collapse in Russia to the prospect of more war in 
the Balkans, Bill Clinton and Boris Yeltsin face too many hot issues to 
postpone their next summit any longer -- despite the Russian 
parliament's refusal to ratify the START II arms treaty. 

While nuclear disarmament is still a priority, the U.S. president's 
hints that he would put off a Moscow summit until after ratification had 
only backfired by causing indignation in the communist-dominated State 
Duma, the lower house of parliament. 

That was the consensus Tuesday among several U.S. and Russian foreign 
policy experts. 

"I think they've given up on getting START II ratified by the Duma, 
because it was almost counter-productive," said Keith Bush, a Russia 
expert at the Center for Strategic and International Studies in 
Washington, D.C. "The forces in the Duma resented having that pressure 
put on them." 

"And there are so many other issues which should be dealt with at the 
top level, which overrode the desire to get START II ratified, "Bush 
said, citing "particularly Russia's economic situation, which I would 
call a crisis." 

In addition, Clinton has just returned from a well-received summit with 
Chinese leaders. He embarked on the summit saying that the relationship 
with China was too important to neglect despite differences on human 
rights -- a decision that drew fire from critics who accused Clinton of 
appeasing a repressive government. 

That same logic can be applied to the U.S. relationship with Russia, 
says Michael McFaul, a Russia scholar from Stanford University in 
California. 

"I don't think it's accidental that it is after, or actually on, the 
trip to China that he decides he needs to go to Russia as well," McFaul 
said. "I think those that advocate engagement on Russia say, well, let's 
do the same here." 

Once START II no longer seems like a U.S. demand, he said, prospects for 
ratification could improve. 

Russia's financial crisis is likely to top the agenda for the meeting, 
announced Monday and to be held in September. But Russia and the United 
States also face festering disagreements over conflict in the Yugoslav 
province of Kosovo, over Iraq, and over Russian sales of nuclear and 
weapons technology to Iran. 

The State Duma, or lower house of parliament, last month decided to 
postpone consideration of START II until its fall session, which begins 
Sept. 21. Clinton, whose last summit with Yeltsin was in March 1997 in 
Helsinki, faced a potentially long wait for the next one -- and 
questions in the United States about his ability to handle relations 
with Russia. 

Alexander Golts, chief defense correspondent with Itogi magazine, said a 
summit was necessary because the relationship depends not so much on 
cultural or economic ties as on the warm personal relationship between 
the two leaders. 

Relations "still depend very much on friend Boris and friend Bill," 
Golts said. "We still have anti-Americans in our ruling class, just as 
you have anti-Russian feeling in your ruling class. We need contacts 
between our two presidents to overcome these differences." 

Economics will be at the top of the list, especially if Russia has not 
wrapped up an assistance package from the International Monetary Fund by 
the time the two leaders meet. 

Yeltsin, facing the possible collapse of the ruble, will undoubtedly 
press Clinton to use his clout with the IMF to help Russia. Clinton, who 
promotes relations with Russia as one of his administration's successes, 
has a vested interest in seeing Yeltsin succeed and economic reform 
continue. 

The two sides may have less common ground in regards to Kosovo, where 
Serbian authorities are cracking down on separatist ethnic Albanian 
forces. The U.S. has pressed for tougher economic and military measures 
to discourage Yugoslav President Slobodan Milosevic, citing fears of a 
wider Balkan war. But Russia has opposed stern measures against the 
Serbs, whom they view as traditional allies. 

The U.S. side has also expressed concern over deals to sell nuclear 
reactors to India, currently engaged in a nuclear arms race with 
neighboring Pakistan. Moscow and Washington have also frequently 
disagreed on how tough the international community should get with Iraqi 
President Saddam Hussein. 

In any case, START II may be a dead letter. Golts put chances for 
passage at 60-40 in favor of ratification. The treaty, signed in 1993 
and ratified by the United States in 1996, would slash both sides' 
nuclear arsenals from about 6,000 to no more than 3,500 warheads. 

Golts and several other analysts said ratification depends on the 
tension level in Russia's domestic politics, with Duma deputies using it 
as a bargaining chip in the running battles with Yeltsin. 

"It is nothing but an instrument of domestic political fighting," Golts 
said. "If there is peace between the president and the parliament it 
will pass." 

******

#4
From: craig.a.anderson@ArthurAndersen.com
Date: Tue, 7 Jul 1998 17:25:55 -0400
Subject: More on Vorkuta

I would like to add my voice to Garfield Reynolds' and agree that the piece
on Vorkuta was the best journalism on Russia I've seen in a long time.
Anyone concerned about the future of Russia needs to read and reread that
piece and take the lessons to heart. Was there another path that Russia
could have followed or did the fundamental flaws of socialism lead
inexorably to Vorkuta? Who knows? And does the cause really matter now?
Russia is in agony and the eXile captures this way, way better than anybody
else. Thank you, Matt, for having the desire and the guts to go into
Vorkuta and tell us what it is like there.

Regards,
Craig A. Anderson

*******

#5
>From RIA Novosti
Nezavisimaya Gazeta
July 4, 1998
ON RUSSIA'S NUCLEAR POLICY
Russian Security Council discussed nuclear problems
By Alexander KONOVALOV, President, Institute of Strategic Evaluations

Apart from discussing the situation in the North Caucasus,
the July 3 session of the Russian Security Council also addressed
the problem of the national nuclear policy and the image of
nuclear forces, which speaks volumes. It is clear that the
situation in the North Caucasus presents a direct threat to the
stability and security of Russia, its territorial integrity and
state sovereignty. The issues of nuclear weapons and nuclear
policy, although less avidly discussed by the public, are also
very important for national security and call for making prompt
decisions. There are grave reasons for this. 
The domestic and international situations have changed
dramatically. Today Russia does not have the economic and
technical possibilities, or military and political reasons for
maintaining the nuclear arsenals it inherited from the Soviet
Union. At the same time, the economic crisis delivered a very
hard blow at all-arms forces, their equipment and combat
readiness, and put in question their ability to reliably ensure
national security in case of a large military conflict. 
Russia, which was used to relying on substantial quantity
superiority in conventional weapons over any possible coalition
of potential military opponents during Soviet times, found itself
in a situation where NATO has several times more conventional
weapons of better quality. The decision on the NATO enlargement
only strengthened the feeling of Russia's growing military
vulnerability, and the current level of Russia-NATO partnership
is not enough to remove these fears.
The economic and demographic situation in Russia, especially
in the Far East where China is growing stronger economically and
militarily with every passing day, and the growth of radical
sentiments in the Islamic south close to Russian borders are
objectively increasing the role of nuclear weapons in Russia's
military policy. This is not a case of the revival of the siege
mentality, as Russia does not regard any country as a potential
military opponent. Rather, it is a recognition of the obvious
fact that today Russia cannot wage a large-scale conventional
war.
However, this is not the only or the crucial trend
influencing the elaboration of the national nuclear policy. The
end of the cold war and the establishment of partner relations
with former opponents rendered impotent many postulates of the
nuclear strategy of the period of open confrontation. Economic
and political factors have more weight than military ones in
determining the role and influence of any country in the world.
The economic weakness and political instability of Russia make
many politicians and experts regard nuclear weapons as well-nigh
the only factor enabling Russia to claim the status of a great
power. 
Another major factor complicating the situation and adding
incredible weight to the consequences of decisions on nuclear
issues made in Russia today is related to the possibility of the
enlargement of the nuclear club's membership after the nuclear
tests carried out by India and Pakistan. Russia is not interested
in the collapse of the non-proliferation regime, the spread of
nuclear weapons and the appearance of new nuclear powers close to
its borders.
And lastly, the importance of tasks facing the Russian
Security Council is determined by the situation with the
ratification and implementation of nuclear arms control and
reduction treaties, above all the ratification of the START-2
Treaty. By ratifying or blackballing the START-2, the State Duma
will determine not so much the composition and structure of the
Russian strategic nuclear forces, as of the American ones. 
Missiles, submarines and bombers are growing obsolete and
removed from combat duty. Russia does not have the economic or
technical possibilities, or military reasons for replacing the
scrapped weapons with new ones. So, by the beginning of the next
century the Russian strategic nuclear forces will be reduced to
2,000-2,500 warheads, i.e. the ceilings envisioned for the
START-3 treaty. At the same time, the Americans can well maintain
6,000 warheads on strategic delivery vehicles, the ceiling
stipulated in the ratified START-1 treaty. This will seal the
multiple superiority of the USA and deprive Russia of the ability
to act as an equal partner in the nuclear dialogue. 
Regrettably, the issue of the ratification of the START-2 by
the State Duma has been burdened with unjustified political
weight and is used as an instrument of pressure on the executive
authorities for reaching goals which have nothing in common with
national security. But even the opposition is growing to
understand now the importance of this treaty for Russia. 
Yuri Maslyukov, member of the Communist Party faction and
chairman of the Duma committee on the economic policy, made a
substantiated and professional address to the Duma deputies,
calling on them to ratify the treaty, albeit on certain
conditions. Apart from representing the Duma's largest opposition
faction, Maslyukov used to hold high posts in the defence
industry and even chaired the Military-Industrial Commission at
the USSR Council of Ministers, an agency which made crucial
decisions on military-technical questions. 
If Russia stops the Russo-American process of mutual
reductions of nuclear arsenals and hints that nuclear weapons are
the only means of reliably ensuring national security in
conditions of economic weakness, this will serve as a powerful
impetus for the threshold countries to cross the nuclear
threshold. In fact, decisions made in Russia today will face the
world with a choice: Either international security will be
ensured on the basis of cooperative attitude and reliance on
international organisations, with continued reduction of the
nuclear arsenals of the nuclear powers, or many countries will
decide that their own nuclear bomb in the backyard is the most
reliable method of ensuring security. 
This is why the discussion of Russia's nuclear policy, the
composition and structure of its strategic and non-strategic
nuclear forces is so important both for military security and for
long-term state policy. 
The opposition conditions the ratification of the START-2
Treaty on the answer to the following question: What will be the
structure and the composition of the national nuclear forces at
the beginning of the 21st century? Judging by the discussion at
the Security Council session, the contours are already visible.
The core of the Strategic Missile Force will be the Russian-made
Topol-M missile system, which passed the tests with flying
colours and is supplied to two regiments on combat duty. Andrei
Kokoshin, who was then First Deputy Defence Minister, and Igor
Sergeyev, then commander of the Strategic Missile Force, did much
to ensure the creation and production of that system. 
Kokoshin, Sergeyev and Koptev played the star roles at the
Security Council session. 
The Security Council, the Defence Ministry and the Russian
Space Agency came to the conclusion that we should focus our
attention on the maintenance and modernisation of the systems
which are reliable and have a major spark of life in them. It has
been determined that strategic submarines armed with
intercontinental missiles can remain on combat duty in the navy.
A set of measures was suggested at the Security Council session
to ensure the maintenance and development of the naval component
of the national strategic nuclear forces.
Operational-tactical and tactical nuclear weapons, in
particular the third-generation long-range Tu-22M3 Backfire
bomber, constitute another major component of the national
strategic nuclear forces. Russia has considerably more such
bombers than the number of comparable aircraft in China and
France taken together. Experts say that these planes can reliably
work at least until 2020. The combat effectiveness of strike
nuclear systems is determined by the quality of early warning,
combat control and strategic reconnaissance systems. 
The situation is critical in this sphere. Five out of the
eight powerful Soviet AWACS radars are now located on the
territory of new independent states. Russia cannot build more
such radars, which consume incredible amounts of power. That is
why it was suggested at the Security Council session that we
should create new radars, which would be cheaper and consume less
energy.
Nuclear policy plays a no less important role than the
composition and structure of the nuclear forces. Judging by the
results of the Security Council session, Russia plans to preserve
the right to be the first to use nuclear weapons in a
conventional war in case of a situation critical for national
security. Maybe Russia will follow the US example and proclaim
readiness to use nuclear weapons in reply to the threatened use
of chemical or bacteriological weapons against it. 
However, this does not mean that we no longer need to
determine the essence of nuclear deterrence today, after the end
of the cold war and ideological confrontation. Who and against
what do we plan to deter with the help of nuclear weapons? The
more so that other nuclear countries are changing the composition
of their nuclear forces and their nuclear doctrines.
China is the only state which officially pledged never to be
the first to use nuclear weapons. It did so 20 years before the
Soviet Union. The USA, Britain and France never made this pledge.
Moreover, the French doctrine provides for the delivery of
pre-emptive nuclear strikes. 

********

#6
ANALYSIS-Russian economic woes may dominate summit
By Timothy Heritage

MOSCOW, July 7 (Reuters) - Russia's financial crisis is set to be a key issue
at a September summit between Boris Yeltsin and Bill Clinton, especially if
Moscow does not win a new international loan soon, Russian experts said on
Tuesday. 

The first Russian-U.S. summit in 18 months, announced on Monday, offers the
two presidents a chance to discuss differences on issues ranging from Iran,
Iraq and Kosovo to NATO's planned expansion into eastern and central Europe. 

But financial problems which threaten Russia's economic reforms and political
stability could become the main issue if Moscow does not win an International
Monetary Fund (IMF) loan to help it meet its short-term debt obligations. 

Yeltsin will seek, and is likely to get, a clear message of support for reform
from Clinton. But he may also seek backing for Russia's efforts to win extra
international assistance to see it through the crisis, political analysts
said. 

"Moscow will hope the United States will use its influence with the
international community to ease Russia's crisis," said Boris Makarenko, deputy
director of the Centre of Political Technologies think-tank. 

But he added: "The support of the international community would offer only a
breathing space for the Russian economy, not save it completely." 

White House spokesman P.J. Crowley signalled that Russia's economic problems
would be high on the agenda when he confirmed the summit would take place in
Moscow in early September. 

"We have a range of important issues to discuss with the Russian president,
from Kosovo to the Russian economic situation," Crowley told reporters in
Washington. 

He said Clinton and Yeltsin were likely to discuss Russia's progress in
implementing reforms called for by the IMF and any needs for additional
financial support. 

Russian and IMF officials said on Tuesday that they had reached a broad
understanding of the major conditions necessary for a new aid package. But the
Western negotiators also said Russia must get its financial house in order
beforehand. 

Although Yeltsin says he will not seek a new presidential term in an election
due in the year 2000, Washington continues to see him as vital for reforms. 

"Clinton still continues to support Yeltsin and sees him at least as better
than any alternative," said Viktor Kremenyuk, deputy director of the USA and
Canada Institute think-tank. 

The need to support Yeltsin and Russia in their hour of need may have
persuaded Clinton to put aside objections to holding a full summit before the
opposition-dominated State Duma, or lower house of parliament, ratifies
START-2. 

The U.S. Senate has ratified the 1993 treaty, which sets out cuts in U.S. and
Russian-deployed nuclear warheads from about 6,000 each to no more than 3,500
each. The Duma has held back, partly because of costs and partly for political
reasons. 

The Duma has made clear it will not ratify START-2 before September,
especially because the opposition's conflicts with Yeltsin have deepened in
the last few months. 

A long gap between summits would benefit neither Yeltsin, who uses such
meetings to boost his efforts to portray Russia as a major world power, nor
Clinton. Their last formal summit was in Helsinki in March 1997. 

"Failure to have a summit soon might be counter-productive for Clinton. He
could be accused of being unable to manage U.S. relations with a major power,"
Makarenko said. 

"Russia has always been on Clinton's list of successes and he wants to keep it
that way." 

Relations between Washington and Moscow are much better than in the Cold War
days but have cooled since the honeymoon period at the time of the Soviet
Union's collapse in 1991. 

The two sides differ over NATO's plans to embrace central and eastern European
countries which used to be in the Soviet bloc, sales of Russian arms and
nuclear technology to Iran, and how to handle Iraq and violence in Kosovo. 

Russian sensitivities over U.S. relations with other former Soviet republics
suggest problems lie ahead in the next few years, in particular over the
Baltic states and the oil and gas-rich Caspian Sea area. 

"Almost all the important issues are frozen, there is very little chance of
movement," Kremenyuk said. 

Makarenko added: "I do not expect any major agreements." 

The good personal relationship between Yeltsin and Clinton has helped iron out
wrinkles in the past and any meeting between them offers at least some hope of
progress, particularly as summits are carefully prepared and orchestrated
beforehand. 

Regular Russian-U.S. talks also give Washington a chance to help foster
democracy and economic reforms in Russia, something which many analysts
believe serves U.S. interests. 

*******

#7
Russia says West hypocritical on arms deployment

MOSCOW, July 7 (Reuters) - Russia accused the West on Tuesday of applying
double standards over the deployment of arms in Europe. 

The foreign ministry said the NATO western defence alliance appeared to want
to maintain rigid restrictions for Russia laid down in the Conventional Forces
in Europe (CFE) Treaty while allowing itself room for manoeuvre. 

A ministry statement said little progress had been made in negotiations on
updating the 1990 treaty to take account of changes in Europe since the end of
the Cold War. It said the talks would likely reach a decisive stage this
autumn. 

``In short, the main components of the military balance ensuring stability in
Europe remain unresolved,'' it said. 

The 30-nation treaty limits the number of tanks, artillery pieces, aircraft
and other non-nuclear arms the states can hold. 

A new deal would replace the old idea of a balance between NATO and Warsaw
Pact members with individual national arms limits and ``territorial ceilings''
determining the areas where national and stationed equipment will be allowed. 

An interim agreement was reached last year but differences remain, especially
over NATO's plans to take in new members from former Soviet bloc countries and
Russia's continued deployment on the territory of some other former Soviet
republics. 

The foreign ministry criticised a report by the U.S. administration to
Congress and dismissed charges that Russia was not sticking to existing
limitations of the CFE. It did not say when the report had been made. 

``We regret, of course, that the report lists obligations that are supposedly
not being fulfilled by the Russian Federation, the more so that the report
abounds in distortions.'' 

``In our opinion, the treaty is being successfully implemented. As to its
adaptation, everything is quite the opposite -- the situation today is
extremely unsatisfactory and nobody will succeed in masking this,'' it said. 

The ministry also criticised a NATO document issued last month on temporary
deployment of conventional forces and changes in the levels laid down for
various territories. 

``Already today we are forced to note the very one-sided nature of these new
proposals. This is patently illustrated by NATO's desire to retain in the CFE
rigid additional flank restrictions for Russia while pressing for an actual
freedom of action for itself in the centre of Europe,'' it said. 

The ministry said, however, that it was optimistic a solution could be reached
in the coming months. 

``We would like to hope that on the final lap our common efforts will bring
about the sort of renewal of the CFE that will ensure stability and security
in Europe.'' 

********

#8
Date: Tue, 07 Jul 1998 
From: Alvin Rabushka <rabushka@hoover.stanford.edu>
Subject: Book on Russian banks

You may wish to bring the following book release to the attention of your
Russian email distribution list.
Announcing the Publication of:
Michael S. Bernstam and Alvin Rabushka, Fixing Russia's Banks: A Proposal
for Growth (Stanford: Hoover Institution Press, 1998). (Price: $16.95;
$4.00 shipping and handling)

Ordering Information:
Hoover Institution Press
Stanford University
Stanford, California 94305-6010
Phone: (800) 935-2882 or (650) 723 3373
Fax: (650) 723 1687

Summary of Book: 
There are many more U.S. dollars under mattresses in Russia today than the
total value of all ruble deposits in Russian banks. This fact highlights
the failure of the Russian government to foster the establishment of real
banks that would fulfill the fundamental role of banks everywhere—financing
production by mobilizing household savings and lending them to productive
enterprises.
Fixing Russia's Banks documents how Russia's financial system is built on
what Michael S. Bernstam and Alvin Rabushka call ersatz banks. These
inferior imitation banks have served largely as tools of the government to
redistribute public funds to favored firms. The highly-vaunted achievements
of privatization, removal of price controls, and foreign trade
liberalization have failed to produce growth due to the lack of private
financing. National income has declined nearly 40 percent since 1992, with
no recovery in sight.
Bernstam and Rabushka painstakingly reconstruct the balance sheets of
Russia's commercial banks. They show that the banking system has been
collectively insolvent since 1991. Russian banks have been kept afloat by
injections of inflationary credit, by preferred sales of high-interest
bonds, and by sales of shares in state-owned natural resource firms to them
at bargain-basement prices for final resale to foreigners.
The failure to fix Russia's banks risks financial catastrophe and further
economic stagnation or decline. Bernstam and Rabushka offer a bold,
intriguing, provocative proposal, resting on an elaborate strategy of
debt-for-equity swaps, that would fix the banks, reduce government debt,
strengthen the independence of the Central Bank, and lay a solid foundation
for sustained economic growth.

ABOUT THE AUTHORS
Michael S. Bernstam is a research fellow at the Hoover Institution
Alvin Rabushka is a senior fellow at the Hoover Institution

*******

#9
From: "Joan Seder" <jseder@eurekanet.com>
Subject: Reality
Date: Tue, 7 Jul 1998

A 2-center on the eXile controversy and subsequent life-in-Russia articles:
truth is more obscene than fiction. Thus, where is the outrage over the
obscene reality of daily, economically-forced prostitution versus potential
drunken-fun/fictional/real rape at a nightclub? Where is our outrage over
living a life in a real world of four-letter words head deep in shit? Do we
feel no outrage over US tax dollars fueling world-class greediness? Is
there no sense of obscenity when scientists to lowly conscripts kill
themselves for want of a paycheck? Where is the outrage that Moscow Cool
in the current dustbin of history is the exported US drug culture and
bottom-line international robber baron mores? Where is the outrage,
period? Do we have to wait for some future dissertation to put an
arm-chair perspective on how the West helped Russia lose its people? When
21st demographics reduce a nation of 140 million to 70 million, will we
have found the guts to call today's morality obscene? When my fellow Cold
War baby-boomers are all gone, how will history treat the emptiness of our
former idealism when push came to shove and our Russian cohorts found only
our backsides exposed to the sum-total of their anguished failure? I'm not
the first to say it: Khrushchev got it wrong -- we will bury ourselves, no
help needed.

Since the American press corps is reporting the goings-on for US audiences,
how about some real reporting -- details, facts, objectivity -- on what our
tax dollars are doing to/for Russia. Having put an on-going effort into an
unsuccessful attempt to gain funding access for a strategy aimed at
creating jobs, I would welcome news about some group out there successfully
demonstrating how to transcend USAID rhetoric. Perhaps someone reading JRL
can point me to one of the 250,000 Russian small business owners USAID says
it has successfully helped. So far, my attempts to find one of these lucky
people eludes my expertise or contacts within the Russian small business
sector. Trust me, I've asked. And, I would certainly like to hear from
any fellow JRLers who might have an inclination to work with the US
non-profit, Russkaya Artists' Group, as we keep seeking ways to tear down
the residual remains of the Cold War evil empire bashing that harm real
people. Perhaps there are others wanting to open American eyes to the vast
folkloric culture (yes, there is a cultural world beyond boxes, dolls,
icons, museum paintings, and Romanov jewels) of what was, for many of us,
the world of our grandparents and is now the threatened heritage of
new-found friends. Are you out there?

Regards,
Joan Seder
Co-Founder, Russkaya Artists' Group
jseder@eurekanet.com

********

#10
Date: Tue, 07 Jul 1998 
From: Timothy Thompson <timothy@halcyon.com>
Subject: This Week's Economic Crisis in Moscow

It looks like an interesting week in Moscow.
Two big Western companies, Shell and BP, have announced pullouts from
the bidding on Rosneft, one of the major Russian oil producers. The
Russian government had already figured in an anticipated $1.4B from the
sale into their budget numbers. Various investment bankers on the
scheme suggest the Rosneft shares are worth less than $700M. The
Russians can halt the sale and be $1.4B short or they can push forward
the sale and be $700+M short. Devil's choice. 
Russian markets reacted to the news with yields touching 120% on
Russian government bonds. It seems the pessimists are betting on
devaluation of the ruble.
Mr. Chubais announced that the IMF crowd would come in later this week
with a major new bailout announcement. While a fresh $10-$15B would pay
current state obligations, it's hard to see where Russia will find the
new revenues to service this debt much less pay down the principle. 
Without attracting the world attention of, say, the shelling of the
Duma in 1993, it seems that most of the Russian economic reforms since
1991 are being put to the hard test in Moscow this week. All of
Yeltsin's people have been saying for at least two years that the
stability and value of the ruble is essential to the new Russian
economy. It looks now, if devaluation is announced, that they have
passed judgment on themselves in advance. 
It's interesting that they are two schools of thought on the "big
bailout." Most of the IMF crowd argue that a collapse of the ruble will
bring down the Russian economy and begin a dangerous worldwide
destabilization of developing economies -- ultimately resulting in a
worldwide recession. The other side, most notably championed by George
Schultz in the US, argue that all this infusion of Western aid is futile
in the face of massive capital flight from Russia. It's like pouring
more water into a bucket full of holes. They advocate forcing a crisis
in order to get needed structural reforms which will, in turn, attract
repatriation of overseas Russian capital (variously estimated at $25B to
$200B). 
Perhaps there is even a third school of thought, almost exclusively
Russian, led by General Lebed, about all of this: How will Russia ever
repay all of this borrowed money? Is Russia making herself a permanent
beggar in the street? 
It seems the cyclone that ripped through Moscow last month is a good
metaphor for this week's economic crisis. Moscovites said it felt like
the end of the world, but it was only a bad windstorm that passed after
30 minutes. There was great damage, but life went on. Is the economic
crisis this week the end of the Russian economy or simply a turbulence
that will pass?

*******

#11
Baltimore Sun
July 6, 1998
[for personal use only]
Corruption in Russia wears police uniform
Saratov crusader loses battle for honesty 
By Kathy Lally 
Sun Foreign Staff 

SARATOV, Russia -- His friends call Igor Lykov the last honest cop in
Russia. They always chided him for it, telling him his crusade to uphold
the law was lunacy in a country like this one.

Lykov laughed off the admonitions. He couldn't live any other way, and he
didn't.

The doorbell rang at 10 on a Saturday night. Lykov was going over some
papers, evidence related to corruption. His 15-year-old daughter, Lida, was
in the kitchen with a girlfriend. When he opened the door, two shots rang
out from the shabby, dark, fourth-floor hallway. He staggered into the
kitchen, calling Lida's name, and then he fell. He died in front of her.

Lykov was a provincial policeman in a solitary battle. He felt a compulsion
to slash away at the tentacles of corruption that gripped nearly every
institution in this country.

"He was killed because he was better than others," says Sergei Grigoriants,
chairman of the Glasnost Public Foundation, a Moscow human rights
organization. "He was braver and more honest than others. It's a very great
loss for the country. I personally don't know anyone else like him."

Lykov was a tough but gentle 47-year-old police major assigned to the port
in this Volga River city 500 miles southeast of Moscow. He had the
deceptively sleepy-eyed look of a Robert Mitchum. His job was catching the
brigands poaching sturgeon and caviar, but when he stumbled upon corruption
in other departments, among policemen or court officials or intelligence
officers, he was morally unable to look the other way. He insisted on
intervening. He was killed in a contract murder, his family and friends
say, because he spoke up once too often.

"Maybe there are other honest policemen," Grigoriants says. "There are
other policemen who don't take bribes. But there are none fighting as
effectively as he did, and it's awful that it all ends in murder."

Corruption in Russia is staggering in its pervasiveness. It is a condition
inherited from the past, from a system where everyone was entitled to the
same kind of food and housing and jobs and vacations, but there was never
enough to go around, so citizens had to resort to bribery to get their
share. The new system has encouraged them to refine those arts.

In Moscow, police Chief Vladimir Abramov says 60 percent of the city's
robberies and assaults are committed by criminals wearing a police uniform
-- many of them former police officers who quit and went over to the other,
more profitable, side.

Saratov is no different, says regional Gov. Dmitri Ayatskov.
"Unfortunately, the police are very corrupt," he says. "In the last few
months, there have been crimes committed almost every day where police take
part. They take bribes. They sell drugs. They sell weapons."

Police have both opportunity and need -- even an experienced policeman like
Lykov, with 25 years on the force, earns only $200 a month. With salaries
low and living costs high, many public servants feel they have no choice
but to live on bribes. Bribes have become an expected part of their salary.

Russians spend $6 billion a year bribing officials, says Georgy Satarov, a
former aide to President Boris N. Yeltsin who is president of the
Information Science for Democracy fund.

In addition, he reports, 10 percent of the profits of small and medium
businesses are siphoned off into corrupt deals, which result in higher
prices for goods and services. He estimates $50 billion a year is lost to
corruption -- more than the nation spent on science, education, health and
culture last year.

How could any one person stand up to all of that?

Not a day passed that Inna Grigoryevna Shvidenko, Lykov's sister-in-law,
did not remind him he was in danger, that he should think of his two
motherless children, Lida, 15, and Ilya, 20. Their mother, Alyona, died
nine years ago from cancer. She was a doctor, and her family blamed her
illness on exposure to faulty equipment used to administer sonograms.

"Not many people could understand his idealism," says Shvidenko, also a
doctor. "Such character is rare, and most people didn't understand it.

"He acted according to his ideals, his convictions and his upbringing. He
never changed his convictions. If that's good or bad, it's not up to us to
make judgments."

Grigoriants and Lykov met about six years ago, after Lykov was arrested and
charged with violating state secrets because he criticized the KGB in
Saratov. Lykov had been quoted in a local newspaper complaining that the
KGB recruited informers by entrapment, pushing them into compromising
situations and then threatening to expose them unless they worked as
informants.

He was fired for that, but appealed his dismissal in court and was
reinstated. Many of his superiors thought he was nothing but a
troublemaker. They disciplined him 17 times. They harassed him constantly.
He refused to bow to pressure and managed to get 15 corrupt policemen
fired. Recently he got a young woman out of jail who had been arrested not
because she had broken any law, but because a policeman was angry with her.

"A person who won't compromise is not very easy to be around," says
Shvidenko. "Always telling your boss what you think -- no one wants that."

His last supervisor, Lt. Col. Anatoly D. Shteinberg, says Lykov wasn't
particularly useful in port matters. "He was always going to court, and
someone had to fill in for him," he says. "So it wasn't very convenient for
us. Of course we all knew about him. He destroyed the career of many
officials, and many of his colleagues kept their distance because he had
many enemies."

Lykov wasn't motivated by ideology -- only by the undeterrable pursuit of
justice. His best friend was Aleksandr F. Pronin, who was a KGB agent in
Saratov until he retired last year. He also had a warm, trusting friendship
with Grigoriants, who had been a dissident pursued by the KGB in Soviet times.

Lykov met Pronin in 1984, when Pronin was assigned to the KGB department
responsible for watching the police department.

"He of course was an extraordinary person," says Pronin, 52. "Nobody could
understand why he was involved in problems that didn't affect him directly.
I told him he had to think of his children."

Lykov was never vindictive, he says. "His idea was not to punish everyone
but to stop crime," Pronin says.

Once Lykov complained to Pronin that his telephone was being tapped. Pronin
the KGB manlaughed at him.

"I told him telephones exist to be tapped," says Pronin, who runs a
business offering protection from bugging.

Grigoriants had emerged unchastened after 9 1/2 years in Soviet prisons,
still fighting for human rights and determined to force the KGB into
becoming a law-abiding organization. For the past several years he has
arranged annual conferences called "KGB: Yesterday, Today, Tomorrow."

On a sunny afternoon at the end of April, Grigoriants organized a news
conference in Moscow to discuss corruption among the police and
intelligence services. He invited Lykov.

Lykov sat at his right, talking about how he had come to the human rights
fight in 1992 after discovering that a group of policemen was swindling
elderly citizens out of their apartments in Saratov.

Afterward, Lykov chatted with a reporter and invited her to visit Saratov.
She agreed. They shook hands and parted. As Lykov walked toward the subway,
he mentioned someone was following him. The next day he left on the 16-hour
train journey home. The day after that, he was dead.

That Saturday night, Svetlana Baronova, a lawyer, neighbor and former
police detective, talked with Lykov by telephone. They had worked together
until 1990, when Baronova left the police force.

"I didn't get along there," she says. "Like Lykov I sometimes liked to
speak the truth, and people don't always like it."

On the phone that night, Baronova says, Lykov told her he was working on
something affecting people in high places, and that the case was coming
together for him.


"I told him, 'You're an idiot. You'll be killed. You have motherless
children. Do you want to leave them without a father, too?'

"He laughed. He said, 'You live nearby. You'll take care of them.' Two
hours later, he was killed."

She saw him as a quixotic figure. "Maybe you catch one or two of the bad
ones," she says, "but it's not worth your peace of mind and your happiness.
You can't change the system. I know. I burned myself out on it."

She says Lykov must have been killed by what's known as the mafia -- a
fusion of law enforcement officials and criminals.

"I believe those who ordered the murder are from somewhere within law
enforcement," Baronova says. "I can't say whether they were the police, the
security services, the prosecutors or who it was. But I do believe they
were from law enforcement."

Lykov left two unusually self-possessed and studious children. Ilya is in
medical school and wants to be an anesthesiologist. Lida is in high school
and thinking of either medicine or languages. So far, they have money for
food. About 200 people pressed into the courtyard of their apartment
building the day of the funeral and left what little money they could. They
both have jobs for the summer. They have a loving aunt. But their parents
are gone, and so is any income.

They are proud of their father. He taught them honesty. But they don't know
if anything will change. And though police and prosecutors are still
investigating, they don't know if the murder will ever be solved.

"Even 10 people like him can't stop the corruption," Ilya says. "It's a
political matter."

Still, others go on. "We live in a dangerous country," says Grigoriants. He
bows his head for a moment. His hands tremble. "I know," he says. "I know."

Three years ago, someone who didn't like Grigoriants pursuing the KGB
called him. "If you don't stop, we'll kill your son," the voice said.

Not long after, his son was hit and killed by a car on a quiet street where
an accident seemed unlikely.

"There should be a happy ending, as in a fairy tale," Baronova says. "If
you didn't believe that, you couldn't go on living.

"I think Igor did not fight in vain, even though I told him he couldn't
change the world. I believe everything that is good in life is based on
good deeds like his. That's why they were afraid of him. That's why they
killed him."

*******